Name of Case: Withler v. Canada (Attorney General)

Date of Decision: March 4, 2011

Supreme Court Panel: Chief Justice Beverley McLachlin, and Justices Ian Binnie, Louis LeBel, Marie Deschamps, Morris Fish, Rosalie Abella, Louise Charron, Marshall Rothstein and Thomas Cromwell

Judgment under Appeal: Judgment of the B.C. Court of Appeal dated December 23, 2008

Facts: The Public Service Superannuation Act and the Canadian Forces Superannuation Act provide federal civil servants and members of the Canadian Forces and their families with a suite of work-related benefits during employment and after retirement. The benefits under both plans include a package of survivor benefits provided to the surviving spouse and dependants of a plan member after his or her death, and one of those survivor benefits is a "supplementary death benefit" equal to twice the plan member's salary at the time of death or termination of employment.

This supplementary death benefit is only one part of a package of survivor benefits available under both Superannuation Acts. The survivor package also includes a defined-benefit indexed survivor's pension that pays 50 percent of the plan member's unreduced pension; a health care plan that reimburses 80 percent of a surviving spouse's extended health care expenses; a dental care plan; a children's allowance that pays a plan member's surviving spouse one-fifth of the member's pension if the plan member died leaving minor children; and a student's allowance payable to the children aged 18 to 25 of a deceased plan member while they are enrolled in full-time post-secondary education.

However, the supplementary death benefit under both Acts is subject to age-based "Reduction Provisions." For civil servants, the value of the supplementary death benefit is reduced by 10 percent for every year by which the plan member's age at time of death exceeds 65, while for members of the armed forces the value of the benefit is reduced by 10 percent for every year over age 60 at the time of death.

The surviving spouses or partners of plan members initiated two class actions in the British Columbia Supreme Court, pertaining to the plans, seeking a total of $2.5 billion in compensation for the difference between the supplementary death benefits that they had received and the value of the benefits they would have received without the reduction because of the plan member's age at time of death. They alleged that the "Reduction Provisions" used age as a determinant, not for any legitimate reason, but on the basis of age stereotyping – because the elderly supposedly either did not need the benefit or were not worthy of receiving it. Their position was that in reality they were in need of the death benefit as much as, if not more than, the partners of younger deceased plan members who received the full benefit and that its denial to them perpetuated the discrimination forbidden by the equality provisions of the Charter.

They relied on s.15(1) of the Charter, which provides that "[e]very individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability."

Case History: In a January 2006 decision, [2006] B.C.J. No. 101 (QL), British Columbia Supreme Court Judge Nicole Garson dismissed the actions, holding that "[t]he design of the whole benefit package is a balancing exercise that takes into account the whole population of civil servants, and members of the armed forces. It is integrated with all the other benefits and also balances the interests of the public to ensure that the civil service is treated equitably but not over generously."

Justice Garson concluded that, within the context of the entire benefit packages provided by the plans, the Reduction Provisions corresponded to the survivors' needs and circumstances, given that the scheme under the Public Service Superannuation Act addressed each survivor's need for a continued income stream, as well as for life insurance coverage at the time of his or her spouse's death. The judge ruled that the plans did not bear any of the hallmarks of discrimination and did not demean the survivors' dignity.

In a 2-1 decision on December 23, 2008, [2008] B.C.J. No. 2507 (QL), the British Columbia Court of Appeal dismissed the survivors' appeal, ruling that "the conclusions reached by the trial judge were not unreasonable and were not the result of faulty reasoning or use of the wrong comparator group."

Justice Catherine Ryan wrote for the majority that "[t]his case demonstrates the difficulty that arises when one attempts to isolate for criticism a single aspect of a comprehensive insurance and pension package designed to benefit an employee's different needs over the course of his or her working life.... The reasonable person would ... understand that crafting the correct combination of benefits to meet the needs of current and retired employees across the broad sweep of age, sex, family status and residence is a daunting task and that such a scheme could not be expected to meet the needs of everyone in all circumstances. In context, they would not reasonably consider the Reduction Provisions to be discriminatory."

In a dissenting opinion, Justice Anne Rowles held that "[a] contextual analysis of the differential treatment imposed by the Reduction Provisions leads to the conclusion that this legislative distinction violates the essential human dignity of surviving spouses whose [supplementary death benefit] has been reduced on the basis of the age of their spouses at death. This amounts to substantive discrimination." Justice Rowles considered that "a reasonable person in circumstances similar to the claimants would feel ignored and devalued by the Reduction Provisions. While the government is not required to provide a benefit, if it chooses to do so it must be provided in a non-discriminatory manner. The government cannot escape the claimants' assertion of discrimination by pointing to the fact that private employers incorporate reduction provisions into their life insurance schemes, for it is government action that must withstand Charter scrutiny." Finding that this discrimination could not be saved by s.1 of the Charter as a reasonable limit in a free and democratic society, Rowles held that she would have allowed the appeal.

The Supreme Court of Canada granted the survivors leave to appeal.

Issue(s): The essential questions on appeal to the Supreme Court of Canada were: (i) Do the Reduction Provisions in the Public Service Superannuation Act and Canadian Forces Superannuation Act violate the equality guarantee in s.15(1) of the Charter? (ii) What is the proper approach to discrimination analysis and the use of comparator groups under s.15(1) of the Charter, in particular, when examining large-scale statutory benefit schemes?

Supreme Court's Decision (9-0): The Supreme Court of Canada unanimously dismissed the appeal, ruling that "[t]he degree of correspondence between the differential treatment and the claimant group's reality confirms the absence of any negative or invidious stereotyping on the basis of age. The benefit scheme uses age-based rules that, overall, are effective in meeting the actual needs of the claimants, and in achieving important goals such as ensuring that retiree benefits are meaningful."

Reasons:

The Court began its analysis by reiterating the two-part test for discrimination under s.15(1) of the Charter discrimination, namely: (1) Does the law create a distinction based on an enumerated or analogous ground? (2) Does the distinction create a disadvantage by perpetuating prejudice or stereotyping?

The Court then set out the proper approach to comparison under s.15(1): "The role of comparison at the first step is to establish a 'distinction.' … It is unnecessary to pinpoint a particular group that precisely corresponds to the claimant group except for the personal characteristic or characteristics alleged to ground the discrimination. Provided that the claimant establishes a distinction based on one or more enumerated or analogous grounds, the claim should proceed to the second step of the analysis. This provides the flexibility required to accommodate claims based on intersecting grounds of discrimination. It also avoids the problem of eliminating claims at the outset because no precisely corresponding group can be posited."

"The analysis at the second step," the Court continued, "is an inquiry into whether the law works substantive inequality, by perpetuating disadvantage or prejudice, or by stereotyping in a way that does not correspond to actual characteristics or circumstances. At this step, comparison may bolster the contextual understanding of a claimant's place within a legislative scheme and society at large, and thus help to determine whether the impugned law or decision perpetuates disadvantage or stereotyping. The probative value of comparative evidence, viewed in this contextual sense, will depend on the circumstances."

The Court cautioned against a rigid "mirror" comparator group analysis, noting it "may fail to capture substantive inequality, may become a search for sameness, may shortcut the second stage of the substantive equality analysis, and may be difficult to apply. In all these ways, such an approach may fail to identify – and, indeed, thwart the identification of – the discrimination at which s.15 is aimed."

Applying the law to the facts, the Court held that step one of the s.15 discrimination analysis was clearly satisfied in this case: "[t]he Reduction Provisions reduce the supplementary death benefit payable to the surviving spouses of plan members over either 60 or 65 years of age. Surviving spouses of plan members who die before they reach the prescribed ages are not subject to the Reduction Provisions. This age-related reduction in pension legislation constitutes a distinction for purposes of s.15(1)…. It is obvious that a distinction based on an enumerated or analogous ground is established."

On the other hand, the step two requirement to show "substantive inequality" was not satisfied. The question to be determined at this step, the Court noted, was "whether, having regard to the relevant context, the impugned law perpetuates disadvantage or prejudice, or stereotypes the claimant group." "[A] central consideration [in this contextual enquiry]," the Court observed, "is the purpose of the impugned provision in the context of the broader pension scheme. It is in the nature of a pension benefit scheme that it is designed to benefit a number of groups in different circumstances and with different interests. The question is whether the lines drawn are generally appropriate, having regard to the circumstances of the groups impacted and the objects of the scheme."

As noted by the Court, "[p]erfect correspondence is not required. Allocation of resources and legislative policy goals may be matters to consider. The question is whether, having regard to these and any other relevant factors, the distinction the law makes between the claimant group and others discriminates by perpetuating disadvantage or prejudice to the claimant group, or by stereotyping the group."

The Court endorsed the trial judge's analysis in this regard, holding that "[the supplementary death benefit] is akin to life insurance.... For younger plan members, the purpose of the supplementary death benefit is to insure against unexpected death at a time when the deceased member's surviving spouse would be unprotected by a pension or entitled to limited pension funds. For older members, the purpose of the supplementary death benefit is to assist surviving spouses with the costs of the plan member's last illness and death."

The Court emphasized that the trial judge "noted that the supplementary death benefit is not intended to be a long-term stream of income for older surviving spouses. Long-term income security is instead guaranteed by the survivor's pension, which is offered under both the Public Service Superannuation Act and the Canadian Forces Superannuation Act, coupled with the public service's health and dental plans."

The Court rejected the dissenting opinion in the B.C. Court of Appeal, holding that "[i]t de-emphasized the operation of the Reduction Provisions on the death benefit in the context of the entire plan and lifetime needs of beneficiaries. The result was a failure to fully appreciate that the package of benefits, viewed as a whole and over time, does not impose or perpetuate discrimination."

Lancaster Reference: For analysis of the Supreme Court of Canada's decision, see Lancaster's Pension & Benefit Law eNewsletter, May 13, 2011, Issue No. 95.