Name of Case: Bodner v. Alberta; Provincial Court Judges' Association of New Brunswick v. New Brunswick (Minister of Justice); The Ontario Judges' Assn. v. Ontario (Management Board); Procureur general du Québec c. Conférence des juges du Québec

Supreme Court Panel: Chief Justice Beverley McLachlin and Justices John Major, Michel Bastarache, Ian Binnie, Louis LeBel, Marie Deschamps, Morris Fish, Rosalie Abella, and Louise Charron

Court appealed from and date of judgment: Judgment of the Alberta Court of Appeal dated November 22, 2002; Judgment of the New Brunswick Court of Appeal dated August 20, 2003; Judgment of the Ontario Court of Appeal dated October 29, 2003; Judgment of the Quebec Court of Appeal dated May 31, 2004

Facts: In 1997, the Supreme Court of Canada held that judicial compensation should be reviewed by independent commissions in order to preserve judicial independence (Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, [1997] 3 S.C.R. 3). After establishing judicial remuneration commissions with broad powers to fix judges' salaries, however, four provincial governments - Alberta, Ontario, New Brunswick, and Quebec - refused to implement some or all of the respective commissions' recommendations. Judges' Associations in each province took the dispute to the courts, asking for judicial review of the governments' decisions on the basis that the governments had not met the required standard of justification for departing from the commissions' recommendations. While it was clearly established in the 1997 P.E.I. Reference that the standard of justification was one of "simple rationality," there was no judicial consensus on the interpretation of this standard. In assessing whether a government met the standard, provincial courts of appeal developed significantly different approaches. As a result of these diverging interpretations in the case-law, the Supreme Court agreed to hear an appeal of all four cases.

Case history: New Brunswick: Provincial Court Judges' Association of N.B. v. New Brunswick (Minister of Justice)

The New Brunswick Court of Appeal adopted a deferential approach to the provincial government in applying the standard of "simple rationality." Based on the Judicial Remuneration Commission's first report in 1997, the province raised Provincial Court judges' salaries by 40 percent over three years. When the next Commission in 2001 recommended increasing the Provincial Court judges' salaries to 85% of the salary of federally appointed judges (i.e., from $142,000 to $170,000 over 3 years), the province refused to follow the recommendation, taking the position that salary levels, adjusted for inflation, were adequate and further, that it was not appropriate to link provincial court judges' salaries to those of federally appointed judges. The New Brunswick Court of Queen's Bench allowed in part the Provincial Court Judges' Association of New Brunswick's application for an order requiring the province to implement the Commission's recommendations. Ruling that the standard of "simple rationality" required only that the government "articulate a legitimate reason for why it has chosen to depart from the recommendation of the commission, and if applicable, why it has chosen to treat judges differently from other persons paid from the public purse," the reviewing Court ruled that the government's reasons for rejecting the salary hike were adequate, but that its reasons for rejecting recommendations concerning vacations, pensions and benefits were not. The New Brunswick Court of Appeal affirmed this decision, stating: "Applying the review standard of simple rationality, the Government's decision to reject the 2001 Salary Commission [recommendations] must stand." The judges appealed.

Alberta: Bodner v. Alberta

In 2000, a Justice of the Peace Compensation Commission recommended an increase in salary for Alberta Justices of the Peace from $55,000 to $105,000 per annum over the 1998-2003 period, as well as increased pension and vacation benefits. The government rejected the specific increases recommended, which were based on a 2/3 relationship with Provincial Court judges, but proposed a modified amount ($85,000), on the basis that the raises should not significantly exceed those of other professionals in comparable groups. The Alberta Court of Queen's Bench granted the Justices of the Peace's application for judicial review, ruling that the government's reasons for rejecting the Commission's recommendations did not meet the standard of "simple rationality" set in the P.E.I. Reference. The Alberta Court of Appeal agreed. In the Court's view, "exceptional circumstances" were required before the government could interfere with a Commission recommendation, and even then the government's reasons must themselves be "reasonable." The government appealed.

Ontario: The Ontario Judges' Assn. v. Ontario (Management Board)

In Ontario, a "Framework Agreement" setting out the jurisdiction and terms of reference for judicial compensation commissions stipulated that a commission's recommendations on salary, benefits, and allowances were binding on the province, while recommendations concerning judicial pensions were not. Accordingly, the Ontario government instituted a 28 percent pay increase recommended by the Provincial Judges' Remuneration Commission, but decided not to adopt the Commission's recommendation to improve judicial pensions on the basis that, among other reasons, the 28 percent salary increase would automatically increase the value of a judge's pension benefit. The judges applied for judicial review, but the Divisional Court dismissed the application, ruling that the government's reasons for rejecting the pension proposals were clear, logical and relevant. The Ontario Court of Appeal affirmed this decision, ruling that the government had met the standard of "simple rationality" by articulating a legitimate reason for not accepting the commission's recommendations. Rejecting the Alberta Court of Appeal's view in Bodner that the government should be held to a strict standard of review, the Court of Appeal ruled that the government was only required to demonstrate the rationality of its own decision, and concluded: "[I]t was not irrational for the Government to respond to the Commission, in effect, that a 28 percent increase in judges' salary and pension is enough at this time, in light of economic conditions in Ontario and the Government's treatment of other people who receive their salaries and wages from the public purse." The judges appealed.

Québec: Procureur General du Québec c. Conférence des juges du Québec

In 2001, a committee established to review the remuneration of Québec provincial and municipal judges recommended, among other changes, that the salaries of judges of the Court of Quebec be increased from $137,333 to $180,000 in 2001, based on the fact that provincial judges in Quebec exercised a broader civil and criminal jurisdiction than other provincial court judges in Canada. The government rejected the principal recommendations of the committee, and instead decided to limit the provincial judges' salary to $148,320 in 2001, after noting that the judges had previously received a substantial increase. The Québec Superior Court granted the judges' application for a declaration that the National Assembly's resolution was unconstitutional. The Québec Court of Appeal agreed with the Superior Court, ruling that the government of Quebec did not meet the test of rationality since it did not address the committee's recommendations or the basis for them. In addition, the salary of Quebec's provincially appointed judges was found to be lower than in most other provinces. After reviewing the government's reasons for rejecting the committee's recommendations, the Court of Appeal concluded that the government had not met the burden of justifying its position and dismissed the appeal. The government appealed.

Supreme Court's decision (unanimous): The judges' appeals in the New Brunswick, and Ontario cases were dismissed, and the appeal of the judges in the Quebec case was allowed, as was the government's appeal in the Alberta case.

Reasons: In a unanimous decision delivered by “The Court,” the Supreme Court held that the recommendations of judicial remuneration commissions are not binding unless the legislature provides otherwise, since “decisions about the allocation of public resources belong to legislatures and to the executive.” Clarifying the standard of review, the Supreme Court ruled that a government may depart from a commission’s recommendations, as long as the government’s purpose is not to curtail the judges’ independence or politicize the process, the decision is justified by legitimate reasons that clearly and fully address the commission’s recommendations, and reliance is placed on a reasonable factual foundation. Moreover, the Court held, while a process of judicial review of a government’s decision is available, that process should be “deferential,” since the government has accumulated expertise and constitutional responsibility for management of the province’s financial affairs.

Friction increasing with litigation over commission reports, Court observes

Declaring that "[l]itigants who engage our judicial system should be in no doubt that they are before a judge who is demonstrably independent and is motivated only by a search for a just and principled result," the Court accepted that judicial salaries are key to ensuring "judicial independence." As required by the P.E.I. Reference, judicial compensation commissions "were intended to remove the amount of judges' remuneration from the political sphere and to avoid confrontations between governments and the judiciary." In particular, the Court observed: "The often spirited wage negotiations and the resulting public rhetoric had the potential to deleteriously affect the public perception of judicial independence. However independent judges were in fact, the danger existed that the public might think they could be influenced either for or against the government because of issues arising from salary negotiations." Although judicial compensation commissions appeared to be functioning "satisfactorily" in some provinces and at the federal level, the Court found that "[i]n other provinces, however, a pattern of routine dismissal of commission reports has resulted in litigation. Instead of diminishing friction between judges and governments, the result has been to exacerbate it."

Government can reject commission's recommendations, if legitimate reasons given, Court rules

Clarifying the main points of the P.E.I. Reference, the Court affirmed that, although "the commission's work must have a 'meaningful effect' on the process of determining judicial remuneration," "the Constitution does not require that commission reports be binding, as decisions about the allocation of public resources belong to legislatures and to the executive." In short, the Court declared: "Unless the legislature provides that the report is binding, the government retains the power to depart from the commission's recommendations as long as it justifies its decision with rational reasons." Observing that "[u]ncertainties about the nature and scope of the government's responses are the cause of this litigation," the Court stated: "Reasons that are complete and that deal with the commission's recommendations in a meaningful way will meet the standard of rationality … Bald expressions of rejection or disapproval are inadequate." Observing that the P.E.I. Reference states that the government's response "is subject to a limited form of judicial review," based on "simple rationality," the Court set out a new three-step test for reviewing courts to follow in evaluating the government's response, which "dispenses with many of the rules that have dominated the discourse about the standard since the Reference." Under the new test, the reviewing court must consider: (1) whether the government has "articulated a legitimate reason for departing from the commission's recommendations," (2) whether the government's reasons "rely upon a reasonable factual foundation," and (3) "[v]iewed globally," whether the commission process has "been respected" and whether the purposes of the commission, i.e. "preserving judicial independence and depoliticizing the setting of judicial remuneration," have been achieved.

Court upholds refusal by provincial governments (except Quebec) to implement commission recommendations

Applying this test, the Supreme Court affirmed the New Brunswick Court of Appeal's decision, ruling that the government's reasons could not be characterized as "being purely political or as an attempt to avoid the process," that the government's rejection of the recommended pay raise on the basis that it was "excessive" was "amply supported by a reasonable factual foundation," and finally, that the government "took the process seriously" and that "the principles of the Reference [were] respected." In particular, the New Brunswick government was entitled to consider that the salaries of federally appointed judges are based on economic conditions and lawyers' earnings in major Canadian cities, which differ from those in New Brunswick; that the recommended raises exceeded the raises received by senior provincial civil servants; and that they exceeded by far the changes in economic indicators since the last raise in 1988.

In addition, the Supreme Court affirmed the Ontario Court of Appeal's decision, ruling that the government's reasons for rejecting the commission's pension recommendations were "legitimate," did not "reveal political or discriminatory motivations," and demonstrated "a consideration of the judicial office and an intention to deal with it appropriately." Emphasizing that the "reasonable factual foundation" test "is one that reflects "a deferential standard to the government" which "does not require the government to demonstrate exceptional circumstances," the Supreme Court ruled that the government's alleged "need for fiscal restraint" constituted a "reasonable factual foundation" for rejecting the pension recommendations. Finally, noting that in this case "it appears that the commission process has been effective," the Supreme Court concluded that "Ontario's reasons, viewed globally, meet the 'rationality' test." Specifically, the 28 percent salary increase already received by the judges automatically increased the value of their pensions; no demographic changes had occurred since the pension structure was last reviewed in 1991; and Ontario was in a period of fiscal restraint, with many areas facing a reduction in expenditures.

Dealing next with the Alberta's government's appeal, the Supreme Court ruled that the province's reasons for rejecting the Commission's proposed pay increase were legitimate. Noting that the government discussed general fiscal policy, various comparator groups, inflation, and the roles and responsibilities of Justices of the Peace in its reasons, the Supreme Court held that "[t]he factual basis upon which the government sought to rely is … for the most part, rational." Finally, the Supreme Court concluded that "[v]iewed globally, it appears that the process of the Commission, as a consultative body created to depoliticize the issue of judicial remuneration, has been effective." Although the Supreme Court felt that one aspect of the government's reasoning was not reasonable (the government had compared the new level of compensation to the level at which compensation was frozen in 1991, a level which was not established through an independent commission process), it stated: "A court should not intervene every time a single reason is questionable, particularly when the others are rational. To do so would invite litigation, conflict and delay … antithetical to the object of the commission process." Concluding that the commission process "appears to have been effective" in depoliticizing the setting of judicial remuneration in Alberta, the Supreme Court allowed the government's appeal.

In one case, the Supreme Court held that the provincial government's position was wanting. Dismissing an appeal by the government from the Québec Court of Appeal's decision, the Supreme Court ruled that although the Québec government's response to the committee's recommendation of a substantial salary increase for provincial court judges did not "evidence any improper political purpose or intent to manipulate or influence the judiciary," the government's reasons regarding the "core issue of judicial salaries" did not meet the standard of rationality, because it failed to address the committee's "most important recommendations and the justifications given for them." In particular, the Supreme Court held that the government did not respond adequately to the committee's view that a substantial salary increase was justified because Québec provincial courts have a broader jurisdiction in civil and criminal matters than provincial courts elsewhere in Canada. The Court stated: "This failure went to the heart of the process. It impacted on the validity of the essentials of [the government's] response, which meant that it did not meet constitutional standards." While the government addressed a number of other committee recommendations head on, the Court observed, "an adequate answer on a number of more peripheral issues will not save a response which is flawed in respect of certain central questions." The Supreme Court concluded that "the overall assessment of the [government's] response confirms that it does not meet the constitutional standard of rationality." In the result, the Supreme Court confirmed the Court of Appeal's ruling that "the matter must be remitted to the government" for reconsideration.

Date of the Supreme Court's decision: July 22, 2005

Full text of the decision: http://www.lancasterhouse.com/decisions/2005/jul/scc-provincialjudges.htm