IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Provincial Court Judges’ Association of British Columbia v. British Columbia (Attorney General),

 

2012 BCSC 1022

Date: 20120711

Docket: 12-0910

Registry: Victoria

Between:

Provincial Court Judges’ Association of British Columbia

Petitioner

And:

Attorney General of British Columbia

Respondent

Before: The Honourable Mr. Justice Macaulay

Reasons for Judgment

Counsel for the Petitioner:

J.J. Arvay, Q.C. and
B. Elwood

Counsel for the Respondent:

J. Penner

Place and Date of Hearing:

Victoria, B.C.

June 5-7, 2012

Place and Date of Judgment:

Victoria, B.C.

July 11, 2012


 

[1]             The petitioner, Provincial Court Judges’ Association (“PCJA”), represents the judges of the Provincial Court of British Columbia (“PCJs”) on a number of matters, including judicial independence and compensation. Where a branch of government, including the judiciary, disagrees with the process leading to a statutory decision concerning a matter relating to judicial independence, judicial review is required to determine whether the process met the applicable constitutional standards. This is such a case.

[2]             In a constitutional democracy, tensions that exist between the legislative, executive and judicial branches of government must be resolved within the constitutional framework. No single branch of government is entitled to trump another; instead, all branches must respect their overall and particular constitutional obligations. In conducting this judicial review, it is important to acknowledge the important and essential roles of each of the three branches in the democratic process, as well as their role in the particular process.

[3]             Directly at issue in this case is the conduct of the process under the Judicial Compensation Act, S.B.C. 2003, c. 59 (“JCA”). That process is constitutionally necessary to determine the remuneration, allowances and benefits of PCJs (collectively “remuneration”) in British Columbia.

[4]             As will become apparent below, the Legislative Assembly (“LA”) has the statutory authority to make the final decision, but the executive branch (“Cabinet”) formulated the response (“government response”) that the LA ultimately accepted and adopted as its own. Constitutionally, PCJs are not permitted to negotiate their remuneration with the Cabinet or the LA and must, instead, participate in, and rely on, the JCA process. Accordingly, all three branches are involved in the process.

[5]             As at May 2010, there were 111 full-time and 35 part-time PCJs. These judges sit on cases at approximately 100 locations in 88 communities throughout the province. The cases include criminal law, family law, child protection proceedings, and, as well, civil proceedings involving up to $25,000.

[6]             As I will later describe in detail, constitutional convention requires the interposition of an independent commission, referred to by the Supreme Court of Canada in Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island; Reference re Independence and Impartiality of Judges of the Provincial Court of Prince Edward Island, R. v. Campbell; R. v. Ekmecic; R. v. Wickman, Manitoba Provincial Judges Assn. v. Manitoba (Minister of Justice), [1997] 3 S.C.R. 3 (“PEI Reference”), as a form of “sieve” between the PCJs, on the one hand, and the Cabinet or the LA, on the other, in dealing with issues of remuneration. The government response, to which I referred above, relates to the recommendations of the British Columbia Commission.

[7]             In British Columbia, the Judges Compensation Commission (“JCC or commission”) is an independent tribunal formed every three years with a mandate under the JCA to report to the Attorney General and the Chief Judge of the Provincial Court “on all matters respecting the remuneration, allowances and benefits of judges” (s. 5(1)(a)) and “make recommendations with respect to those matters for each of the next 3 fiscal years” (s. 5(1)(b)). We are concerned here with the 2010 JCC.

[8]             A five person JCC was appointed in 2010 pursuant to s. 2 of the JCA, as amended. The Acting Chief Judge appointed Brian Kenning and Robin McFee, Q.C., to the commission. The Attorney General appointed John Dustan and Geoffrey Cowper, Q.C. The four members appointed George Morfitt, F.C.A., who then sat as the chair. The commission recommendations were with respect to the three fiscal years beginning April 1, 2011, 2012 and 2013.

[9]             The commission invited submissions from the public and some specific parties or entities. The commission received written submissions from the PCJA, the government, the Chief Judge, the Judicial Council of British Columbia, the Law Society of British Columbia and the Canadian Bar Association, British Columbia Branch. 

[10]         In addition, the commission conducted public hearings over three days in June 2010 during which it received oral submissions from four PCJs on behalf of the PCJA; a submission from the Chief Judge; and also, submissions from representatives of the Judicial Council and the Canadian Bar Association. The commission also received oral submissions on behalf of government from Assistant Deputy Attorney General Fyfe. In addition, the commission heard from the following persons: Donald Smith, a pensions and benefits actuary; Ian McKinnon, a consultant in public policy and statistical analysis; and Graham Whitmarsh, the Deputy Minister of Finance. The commission conducted the hearings in an informal manner and did not require witnesses to be under oath.

[11]         On August 20, 2010, the commission issued its preliminary report to the Attorney General and to the Chief Judge, as required by s. 5(1) of the JCA. After an opportunity for the minister or the Chief Judge to request clarification, as provided in the JCA, which neither sought, the commission issued its final report addressed to the same officials on September 20, 2010, as required by s. 5(3). While there are some differences between the preliminary and final report, counsel did not suggest that any were significant.

[12]         I digress momentarily to set out some of the important statutory provisions. The main responsibilities of the commission are found in ss. 5(5) and (6) of the JCA. Those sections read:

5.         (5)        In preparing a report, a commission must consider all of the following:

                        (a)        the current financial position of the government;

                        (b)        the need to provide reasonable compensation to the judges or judicial justices;

                        (c)        the need to maintain a strong court by attracting qualified applicants;

                        (d)        the laws of British Columbia;

                        (e)        any other matter the commission considers relevant.

            (6)        Before preparing a report, a commission may

                        (a)        write and receive submissions,

                        (b)        hold hearings in the manner the commission may decide, and

                        (c)        with the approval of the minister, engage and retain consultants the commission considers necessary.

Section 6 of the JCA governs the final decision-making respecting the remuneration of PCJs and the next step in the process. It reads:

6.         (1)        The minister must lay the final report of a commission before the Legislative Assembly, and must advise the Legislative Assembly about the effect of subsection (3),

                        (a)        within 7 sitting days of the Legislative Assembly after the date on which the minister receives the report, and

                        (b)        if the Legislative Assembly is prorogued or dissolved within 16 sitting days after the date on which the report is laid before the Legislative Assembly and the Legislative Assembly has not passed a resolution under subsection (2), within 7 sitting days after the opening of the next session.

                        (c)        [Repealed 2012-6-6.]

            (2)        The Legislative Assembly may, by a resolution passed within 16 sitting days after the date on which a report is laid before the Legislative Assembly under subsection (1),

                        (a)        reject one or more of the recommendations made in the report as being unfair or unreasonable, and

                        (b)        set the remuneration, allowances or benefits that are to be substituted for the remuneration, allowances or benefits proposed by the rejected recommendations.

            (3)        If a recommendation is not rejected by the Legislative Assembly within the time limited by subsection (2), the judges or judicial justices are entitled to receive the remuneration, allowances and benefits proposed by that recommendation beginning on April 1 of the year following the year referred to in, or applicable under, section 2(1) or 3(1).

            (4)        If the Legislative Assembly does resolve to reject a recommendation under subsection (2)(a), the judges or judicial justices are, in respect of that recommendation, entitled to receive the remuneration, allowances and benefits set by the resolution under subsection (2)(b) beginning on April 1 of the year following the year referred to in, or applicable under, section 2(1) or 3(1).

            (5)        If the 16 sitting days specified in subsection (2) end after April 1 of the year for which the recommendations in the report, subject to subsection (2), were to apply, the recommendation applicable under subsection (3) or the resolution applicable under subsection (4) is retroactive to the extent necessary to give effect to the recommendation or resolution on April 1 of that year.

            (6)        If a resolution referred to in subsection (2) or a recommendation referred to in subsection (3) conflicts with a provision of this Act, the resolution or recommendation prevails over that provision to the extent of the conflict.

            (7)        A resolution referred to in subsection (2) or a recommendation referred to in subsection (3) may set different salaries for different responsibilities.

As is apparent from the foregoing, the statutory scheme in this province for setting remuneration does not require the Cabinet, or even the Attorney General, as the minister responsible for laying the final report of the JCC before the LA, to take an active role in responding to the report or recommending a particular outcome by the LA. The requirement for a government response derives, instead, from PEI Reference.

[13]         The current statutory scheme may be traced back in its essential form to at least the enactment of s. 13 of the Provincial Court Act, R.S.B.C. 1996, c. 379. This is significant because the model predates the decision in PEI Reference. I will discuss the impact of PEI Reference and other more recent Supreme Court of Canada authority later in my reasons.

[14]         In fact, the Cabinet plays, and did play in this case, an important role in the process. After receiving a submission from the Attorney General, Cabinet considered and formulated the government response to the final report of the 2010 JCC.

[15]         This resulted in the Government Response to the Report of the 2010 JCC dated May 2011.

[16]         The government response opens, as follows:

This document supplements the corresponding motion by presenting the reasons of the government of British Columbia (“government”) for the rejection of, and substitution of, recommendations contained in the Final Report of the 2010 British Columbia Judges Compensation Commission (“the Commission Report”) and is prepared pursuant to the requirements of section 6(2) of the British Columbia Judicial Compensation Act (the “Act”).

As I have already pointed out, s. 6(2) does not require a response from Cabinet on behalf of the government, although nothing in the JCA precludes Cabinet from formulating and advising the LA of the government’s response to assist the latter in reaching a statutory decision. It is not open, however, to Cabinet, in doing so, to then shield its own participation in the process from scrutiny upon judicial review. 

[17]         The content of the government response is important. As to the 15 recommendations in the final report of the JCC, the response states:

·                  Four recommendations are rejected and substitutions made;

·                  Two recommendations are rejected but with a response by government that is similar but with implementation deferred;

·                  One recommendation is accepted in part; and

·                  The remaining eight recommendations are accepted.

The response goes on to set out the basis for the government’s contention that, where recommendations are rejected, the rejection is on the basis that the recommendations are unfair or unreasonable for the detailed reasons set out in the report.

[18]         On May 30, 2011, then Attorney General Penner put a Notice of Motion before the LA, which read, as follows:

I give notice that on May 31, 2011 I shall move the following Motion:

That pursuant to section 6(2) of the Judicial Compensation Act the Legislative Assembly reject seven of the fifteen recommendations of the Final Report of the 2010 British Columbia Judges Compensation Commission as laid before this Assembly on May 3, 2011, as unfair and unreasonable for the reasons outlined in the Government Response to the Report of the 2010 Judges Compensation Commission filed in this House today:

1.         The recommended salary increase for April 1, 2013 to March 31, 2014 of an amount based on the cumulative change in the British Columbia Consumer Price Index (the “BC-CPI”) over the preceding three-year period is rejected. The salary increase for April 1, 2013 to March 31, 2014 is set at zero.

2.         The recommended increase in the pension accrual rate for judges from 3% to 3.5% effective April 1, 2013 is rejected. The pension accrual rate is set at 3%.

3.         The recommended increase in the pension contribution period for judges from age 71 to age 75 effective April 1, 2011 is rejected. The end of the pension contribution period is set at age 71.

4.         The recommendation that the cost of long-term disability benefits be separately funded by government outside of the budget of the Office of the Chief Judge is rejected. The method for budgeting the cost of long-term disability benefits will remain within the budget of the Office of the Chief Judge.

5.         The recommendation that long-term disability benefits be extended to judges to age 75, effective April 1, 2011 is rejected but in substitution the long term disability benefits to judges will be extended to age 75 commencing on April 1, 2013.

6.         The recommendation that judges be enrolled in the government flexible benefits plan, effective April 1, 2011 is rejected but in substitution the judges will be enrolled in the government flexible benefits plan, commencing April 1, 2013.

7.         The recommendation that, effective April 1, 2011, the Senior Judges Program be expanded by an amendment to the Judicial Compensation Act is rejected. The recommendation to increase the possible number of sitting days for senior part-time judges at the discretion of the Chief Judge, with a three-year "sunset clause" is rejected. The following recommendation is substituted:

            a.         the Legislative Assembly accepts in principle that part-time judges should be permitted to exceed the existing remuneration caps but recognizes this requires legislative amendment at a future sitting and is outside the scope of the Judges Compensation Commission;

            b.         the Legislative Assembly recommends that the remuneration caps limiting a senior part-time judge's salary to no more than 40% of the salary of a full-time sitting judge and the combination of salary and pension benefits to no more than 100% of the salary of a full-time sitting judge be removed;

            c.         the Legislative Assembly recommends that a future legislative amendment should allow the Chief Judge, using discretion and if adequate budgetary resources exist, to authorize one or more part-time judges to provide coverage to meet urgent and unforeseen needs resulting from illness or injury; and

            d.         the Legislative Assembly also accepts that these changes should be reviewed after three years.

That the Legislative Assembly accept the remaining recommendations contained in the report.

The Attorney General and one member of the opposition spoke in favour of the motion. The LA then approved it. In doing so, the LA effectively adopted the government response in its entirety for the reasons expressed in the response.

[19]         It is not my function to agree or disagree with the substantive positions evidenced by the final report of the JCC or in the government response as adopted by the LA. It is apparent from PEI Reference, and other decisions, that my concern is with the process and whether it met the constitutional and administrative law standards set by the Supreme Court of Canada with regard to determining remuneration for PCJs. I have concluded that it did not.

[20]         In PEI Reference, Lamer C.J., for the majority, identified the context for the constitutional protection given to the financial security of PCJs. In short, financial security is an aspect of judicial independence.

[21]         Judicial independence is itself a means of securing important societal goals including the maintenance of public confidence in the impartiality of the judiciary. That confidence is essential to the effectiveness of the court system.

[22]         As Lamer C.J. stated: “Independence contributes to the perception that justice will be done in individual cases” (para. 10). Judicial independence is also necessary for the maintenance of the rule of law including “the constitutional principle that the exercise of all public power must find its ultimate source in a legal rule” (para. 10).

[23]         Judicial independence is an unwritten constitutional principle that can be traced, in part, from, but not only to, s. 11(d) of the Charter and ss. 96-100 of the Constitution Act, 1867 (paras. 83-92). Previously, in Valente v. The Queen, [1985] 2 S.C.R. 673, Le Dain J., for the court, identified three core characteristics of judicial independence: security of tenure, financial security and administrative independence (PEI Reference at para. 115). In addition, Valente established two dimensions of judicial independence: the individual independence of a judge, on the one hand, and, on the other, the institutional or collective independence of the court of which the judge is a member (para. 118).

[24]         In PEI Reference, Lamer C.J. identified three components to financial security for the courts, all of which “flow from the constitutional imperative that, to the extent possible, the relationship between the judiciary and the other branches of government be depoliticized” (para. 131). He summarized the components as follows:

133.     First, as a general constitutional principle, the salaries of provincial court judges can be reduced, increased, or frozen, either as part of an overall economic measure which affects the salaries of all or some persons who are remunerated from public funds, or as part of a measure which is directed at provincial court judges as a class. However, any changes to or freezes in judicial remuneration require prior recourse to a special process, which is independent, effective, and objective, for determining judicial remuneration, to avoid the possibility of, or the appearance of, political interference through economic manipulation. What judicial independence requires is an independent body, along the lines of the bodies that exist in many provinces and at the federal level to set or recommend the levels of judicial remuneration. Those bodies are often referred to as commissions, and for the sake of convenience, we will refer to the independent body required by s. 11(d) as a commission as well. Governments are constitutionally bound to go through the commission process. The recommendations of the commission would not be binding on the executive or the legislature. Nevertheless, though those recommendations are non-binding, they should not be set aside lightly, and, if the executive or the legislature chooses to depart from them, it has to justify its decision -- if need be, in a court of law. As I explain below, when governments propose to single out judges as a class for a pay reduction, the burden of justification will be heavy.

134.     Second, under no circumstances is it permissible for the judiciary -- not only collectively through representative organizations, but also as individuals -- to engage in negotiations over remuneration with the executive or representatives of the legislature. Any such negotiations would be fundamentally at odds with judicial independence. As I explain below, salary negotiations are indelibly political, because remuneration from the public purse is an inherently political issue. ...

135.     Third, and finally, any reductions to judicial remuneration, including de facto reductions through the erosion of judicial salaries by inflation, cannot take those salaries below a basic minimum level of remuneration which is required for the office of a judge. Public confidence in the independence of the judiciary would be undermined if judges were paid at such a low rate that they could be perceived as susceptible to political pressure through economic manipulation, as is witnessed in many countries.

The political nature of public expenditures for judicial remuneration received further attention in the judgment. As pointed out: “[e]ven the most casual observer of current affairs can attest to this” (para. 142).

[25]         However, as with other issues that have constitutional implications, the decision-making process respecting judicial remuneration cannot be solely political. This is apparent from the following discussion of the salary reductions for some of the judges in the appeals as part of a salary reduction for civil servants generally:

142.     … The decision to reduce a government deficit, of course, is an inherently political decision. In turn, these salary cuts were often opposed by public sector unions who questioned the underlying goal of deficit reduction itself. The political nature of the salary reductions at issue here is underlined by the fact that they were achieved through legislation, not collective bargaining and contract negotiations.

143.     On the other hand, the fact remains that judges, although they must ultimately be paid from public monies, are not civil servants. Civil servants are part of the executive; judges, by definition, are independent of the executive. The three core characteristics of judicial independence – security of tenure, financial security, and administrative independence – are a reflection of that fundamental distinction, because they provide a range of protections to members of the judiciary to which civil servants are not constitutionally entitled.

The Attorney General emphasizes the next passage in the judgment to demonstrate improper politicizing of the remuneration process. While I agree that the passage provides an example, one that might fairly be characterized as extreme, I do not accept that it was intended as anything more. Nor is it the only possible example.

[26]         The particular example is as follows:

145.     With respect to the judiciary, the determination of the level of remuneration from the public purse is political in another sense, because it raises the spectre of political interference through economic manipulation. An unscrupulous government could utilize its authority to set judges’ salaries as a vehicle to influence the course and outcome of adjudication.

The court referred to the obvious threat to judicial independence in such an event and stated that the resulting salary change would be unconstitutional.

[27]         In the next section of the judgment in PEI Reference, also emphasized by the Attorney General, the court accepted as a general principle that:

147.     … the salaries of provincial court judges can be reduced, increased, or frozen, either as part of an overall economic measure which affects the salaries of all persons who are remunerated from public funds, or as part of a measure which is directed at provincial court judges as a class.

But it is necessary to state, and appreciate the implications of, the qualifier that was added:

147.     However, the imperative of protecting the courts from political interference through economic manipulation requires that an independent body – a judicial compensation commission – be interposed between the judiciary and the other branches of government. The constitutional function of this body would be to depoliticize the process of determining changes to or freezes in judicial remuneration.

As I discuss later in these reasons, the significant question that arises is whether the government, having failed to persuade the JCC that judicial remuneration should remain unchanged to achieve consistency with the government negotiating position with public sector unions, was rationally entitled to reject the recommendations of the JCC to achieve the same consistency. For this reason, it will be necessary to focus more closely on the independent, effective and objective role of the commission that is necessary for it to fulfill its mandate in the constitutional process.

[28]         PEI Reference assists in determining the role of the commission but it is also necessary to consider a further important Supreme Court of Canada decision, Provincial Court Judges’ Assn. of New Brunswick v. New Brunswick (Minister of Justice); Ontario Judges’ Assn. v. Ontario (Management Board); Bodner v. Alberta; Conférence des juges du Québec v. Quebec (Attorney General); Minc v. Quebec (Attorney General), [2005] 2 S.C.R. 286 (“Bodner”).

[29]         In PEI Reference, the court referred, first, to the constitutional requirement for the commission to be independent so that it can serve as a form of “sieve, to prevent the setting or freezing of judicial remuneration from being used as a means to exert political pressure through the economic manipulation of the judiciary” (para. 170). Second, the commission must make recommendations respecting remuneration of judges by “reference to objective criteria, not political expediencies” (para. 173).

[30]         Finally, and, as the court stressed, “most importantly, the commission must also be effective” (paras. 174 and 175). Three aspects of effectiveness were identified:

174.     First, there is a constitutional obligation for governments not to change (either by reducing or increasing) or freeze judicial remuneration until they have received the report of the salary commission. … Second, in order to guard against the possibility that government inaction might lead to a reduction in judges’ real salaries because of inflation, and that inaction could therefore be used as a means of economic manipulation, the commission must convene if a fixed period of time has elapsed since its last report, …

175.     Third, the reports of the commission must have a meaningful effect on the determination of judicial salaries.

It is the last mentioned that requires additional consideration here as there is no doubt that the British Columbia model under the JCA satisfies the first two aspects.

[31]         The JCA sets up a negative resolution model. Although the LA makes the ultimate decision to set judicial salaries, legislative inaction will result in the report of the JCC becoming binding.

[32]         This leaves the final aspect of effectiveness. As set out in the reasons, “to be taken seriously, the commission process must have a meaningful impact on the decision to set judges’ salaries” (para. 178).

[33]         To have that impact:

179.     What judicial independence requires is that the executive or the legislature, whichever is vested with the authority to set judicial remuneration under provincial legislation, must formally respond to the contents of the commission's report within a specified amount of time. Before it can set judges' salaries, the executive must issue a report in which it outlines its response to the commission's recommendations. If the legislature is involved in the process, the report of the commission must be laid before the legislature, when it is in session, with due diligence. If the legislature is not in session, the government may wait until a new sitting commences. The legislature should deal with the report directly, with due diligence and reasonable dispatch.

180.     Furthermore, if after turning its mind to the report of the commission, the executive or the legislature, as applicable, chooses not to accept one or more of the recommendations in that report, it must be prepared to justify this decision, if necessary in a court of law. The reasons for this decision would be found either in the report of the executive responding to the contents of the commission's report, or in the recitals to the resolution of the legislature on the matter. An unjustified decision could potentially lead to a finding of unconstitutionality. The need for public justification, to my mind, emerges from one of the purposes of s. 11(d)'s guarantee of judicial independence -- to ensure public confidence in the justice system. A decision by the executive or the legislature, to change or freeze judges' salaries, and then to disagree with a recommendation not to act on that decision made by a constitutionally mandated body whose existence is premised on the need to preserve the independence of the judiciary, will only be legitimate and not be viewed as being indifferent or hostile to judicial independence, if it is supported by reasons.

The standard of justification, in this context, means simple rationality:

183.     … It requires that the government articulate a legitimate reason for why it has chosen to depart from the recommendation of the commission … [The standard] has two aspects. First, it screens out decisions with respect to judicial remuneration which are based on purely political considerations, or which are enacted for discriminatory reasons. Changes to or freezes in remuneration can only be justified for reasons which relate to the public interest, broadly understood. Second, if judicial review is sought, a reviewing court must inquire into the reasonableness of the factual foundation of the claim made by the government …

Bodner, which I discuss next, also addresses effectiveness and, in particular, the requirement that the effect, or impact, of the commission’s decision be meaningful.

[34]         In Bodner, the court concluded that the commission’s recommendation need not be binding on government but the process must be open for it to have a meaningful effect (para. 19). This means, in part, that government may depart from the recommendations “as long as it justifies its decision with rational reasons” (para. 21).

[35]         The following passage from Bodner aptly illustrates the manner in which the government must respond to the commission recommendations:

22.       If the government departs from the commission's recommendations, the Reference requires that it respond to the recommendations. Uncertainties about the nature and scope of the governments' responses are the cause of this litigation. Absent statutory provisions to the contrary, the power to determine judicial compensation belongs to governments. That power, however, is not absolute.

23.       The commission's recommendations must be given weight. They have to be considered by the judiciary and the government. The government's response must be complete, must respond to the recommendations themselves and must not simply reiterate earlier submissions that were made to and substantively addressed by the commission. The emphasis at this stage is on what the commission has recommended.

24.       The response must be tailored to the commission's recommendations and must be "legitimate" (Reference, at paras. 180-83), which is what the law, fair dealing and respect for the process require. The government must respond to the commission's recommendations and give legitimate reasons for departing from or varying them.

25.       The government can reject or vary the commission's recommendations, provided that legitimate reasons are given. Reasons that are complete and that deal with the commission's recommendations in a meaningful way will meet the standard of rationality. Legitimate reasons must be compatible with the common law and the Constitution. The government must deal with the issues at stake in good faith. Bald expressions of rejection or disapproval are inadequate. Instead, the reasons must show that the commission's recommendations have been taken into account and must be based on facts and sound reasoning. They must state in what respect and to what extent they depart from the recommendations, articulating the grounds for rejection or variation. The reasons should reveal a consideration of the judicial office and an intention to deal with it appropriately. They must preclude any suggestion of attempting to manipulate the judiciary. The reasons must reflect the underlying public interest in having a commission process, being the depoliticization of the remuneration process and the need to preserve judicial independence.

26.       The reasons must also rely upon a reasonable factual foundation. If different weights are given to relevant factors, this difference must be justified. Comparisons with public servants or with the private sector may be legitimate, but the use of a particular comparator must be explained. If a new fact or circumstance arises after the release of the commission's report, the government may rely on that fact or circumstance in its reasons for varying the commission's recommendations. It is also permissible for the government to analyse the impact of the recommendations and to verify the accuracy of information in the commission's report.

27.       The government's reasons for departing from the commission's recommendations, and the factual foundations that underlie those reasons, must be clearly and fully stated in the government's response to the recommendations. If it is called upon to justify its decision in a court of law, the government may not advance reasons other than those mentioned in its response, though it may provide more detailed information with regard to the factual foundation it has relied upon, as will be explained below.

The judgment goes on to address the scope and nature of judicial review where the government refuses to accept the commission’s recommendations.

[36]         In that regard:

29.       The Reference states that the government's response is subject to a limited form of judicial review by the superior courts. The government's decision to depart from the commission's recommendations must be justified according to a standard of rationality. The standard of judicial review is described in the Reference as one of "simple rationality" (paras. 183-84). The adjective "simple" merely confirms that the standard is rationality alone.

30.       The reviewing court is not asked to determine the adequacy of judicial remuneration. Instead, it must focus on the government's response and on whether the purpose of the commission process has been achieved. This is a deferential review which acknowledges both the government's unique position and accumulated expertise and its constitutional responsibility for management of the province's financial affairs.

31.       In the Reference, at para. 183, a two-stage analysis for determining the rationality of the government's response is set out. We are now adding a third stage which requires the reviewing judge to view the matter globally and consider whether the overall purpose of the commission process has been met. The analysis should be as follows:

(1)        Has the government articulated a legitimate reason for departing from the commission's recommendations?

(2)        Do the government's reasons rely upon a reasonable factual foundation? and

(3)        Viewed globally, has the commission process been respected and have the purposes of the commission -- preserving judicial independence and depoliticizing the setting of judicial remuneration -- been achieved?

The court went on to review each of these analytic stages.

[37]         The first stage is a “screening mechanism” requiring the government to provide a “legitimate” reason for any departure from the commission’s recommendation. Legitimacy is now to be determined in accord with paras. 23-27 of the judgment set out above (all at para. 32). In my view, to the extent that PEI Reference, at para. 183, also set out above, arguably supports a more restrictive interpretation of legitimacy, it is no longer the law.

[38]         The second stage is a deferential standard; it does not require the government to establish exceptional circumstances to justify not accepting the commission’s recommendation (para. 34) but it does require, in this case, the analysis of two factors:

          1.       Has the government explained the factual foundation of its reasons in its response; and

          2.       Is it rational for the government to rely on the stated facts or circumstances to justify its response (paras. 35–37).

In general, “it is too late to remedy that foundation in the government’s response before the reviewing court” (para. 36).

[39]         The third stage requires the following:

38.       At the third stage, the court must consider the response from a global perspective. Beyond the specific issues, it must weigh the whole of the process and the response in order to determine whether they demonstrate that the government has engaged in a meaningful way with the process of the commission and has given a rational answer to its recommendations. Although it may find fault with certain aspects of the process followed by the government or with some particular responses or lack of answer, the court must weigh and assess the government's participation in the process and its response in order to determine whether the response, viewed in its entirety, is impermissibly flawed even after the proper degree of deference is shown to the government's opinion on the issues. The focus shifts to the totality of the process and of the response.

While the outcome of an application of the three-stage test will necessarily depend on the particular circumstances, the court did go on to identify two scenarios that would not pass.

[40]         Neither a “bald expression of disagreement” with a recommendation nor a “mere assertion that judges’ current salaries are ‘adequate’” will suffice. There can be no “complete code” for government to follow in its response “and reliance has to be placed on their good faith” (all at para. 39). Of course, the reverse must also be true; demonstrable bad faith by government in its response will lead to a conclusion that the constitutional standard has not been met.

[41]         For further illustrative guidance, I have reviewed the practical application of the Bodner rationality test to the various government responses under consideration with respect to the appeals before the court at that time and, as well, in two post-Bodner cases: Ontario Deputy Judges Association v. Ontario (2009), 98 O.R. (3d) 89 (Ont. S.C.) (“Ontario Deputy”), and Manitoba Provincial Judges’ Assn. v. Manitoba, 2012 MBQB 79 (“Manitoba Judges”). 

[42]         In Bodner, the application resulted in the conclusions set out below:

          New Brunswick

·                 The government’s response met the standard of rationality (para. 59);

·                 The response raised legitimate concerns relating to the adequacy of the judges’ existing salary and the excessiveness of the recommended raise (para. 69);

·                 There was a reasonable factual foundation that provided a rational basis (para. 81); and

·                 Viewed globally, and with deference, the response demonstrated that the government took the process seriously and participated actively even though the justification for departing from the commission’s recommendations was unsatisfactory in several respects (para. 83).

          Ontario

·                 Also met the standard of rationality (para. 102);

·                 Reasons were legitimate and did not reveal any improper motive. Instead, the reasons reflected the depoliticization of the process and the need to preserve judicial independence (para. 98);

·                 There was a reasonable factual foundation (para. 99);

·                 Viewed globally, the objectives of the commission process were achieved. Ontario respected the process, took it seriously, and gave it meaningful effect (paras. 100-101).

          Alberta (Justices of the Peace)

·                 With one exception, met the standard of rationality (para. 133);

·                 Reasons were legitimate. For example, the government accepted that an increase in compensation was needed (para. 124);

·                 The government set out the factual basis upon which it relied and reliance was, for the most part, rational (para. 128);

·                 Viewed globally, the commission process was effective. The government accepted the bulk of the recommendations in a depoliticized process (para. 131).

          Québec (provincial court judges and municipal court judges)

·                 Did not meet the standard of rationality (para. 165);

·                 No evidence of improper political purpose or intent to manipulate or influence the judiciary but, on the core issue of judicial salaries, the response failed to address the most important recommendations of the commission. “Rather than responding, the Government appears to have been content to restate its original position without answering certain key justifications for the recommendations” (para. 159);

·                 Viewed globally, an adequate answer on a number of more peripheral issues will not save a response that is flawed in respect of central questions (para. 165).

Of significance in the present case is the following respecting the Québec government:

160.     ... [The Government] also stressed the need to retain a linkage with the salaries paid to certain classes of senior civil servants. It underlined its concerns about the impact of the recommendations on its overall labour relations policy in Quebec's public sector. The submissions seemed to be focussed more on concerns about the impact of the judicial compensation committee process than on the objective of the process: a review on their merits of the issues relating to judicial compensation in the province. After the Committee submitted its report, the Government's perspective and focus remained the same. Its position is tainted by a refusal to consider the issues relating to judicial compensation on their merits and a desire to keep them within the general parameters of its public sector labour relations policy. The Government did not seek to consider what should be the appropriate level of compensation for judges, as its primary concerns were to avoid raising expectations in other parts of the public sector and to safeguard the traditional structure of its pay scales.

While these issues do not present in exactly the same way in the present case, I will set out later how they do arise and the impact that it had on the commission process.

[43]         Turning to Ontario Deputy, the commission recommended an initial increase to the per diem rate paid to deputy judges, the prime adjudicators in Small Claims Court, along with a second increase, to take place four years later.

[44]         The government accepted the former but rejected the latter and, instead, continued the per diem rate as initially increased. The Divisional Court concluded that the government gave legitimate reasons for varying the recommendations and there was no evidence of “political or discriminatory” considerations or any improper motive (paras. 40 and 46). No issue was raised as to adequacy of the factual basis that government relied upon.

[45]         In Ontario Deputy, the government relied on economic and labour data that were before the commission and, as well, forecasts in determining its position where historical data was not available. In addition, on the application for judicial review, the government attempted unsuccessfully to rely on new material relating to the later economic downturn in the global and local economies. The Divisional Court refused to consider the additional evidence because the government had not relied on it in its response but found a reasonable factual foundation to exist without regard to it. Finally, the court concluded that the government’s response, viewed globally, respected the commission process and depoliticized the relationship between the three branches of government (para. 65).

[46]         The result in Manitoba Judges offers a marked contrast to Ontario Deputy and is much closer to the outcome in Bodner respecting Québec. Justice Oliphant stated that, in analyzing the government response and the reasons advanced in justification:

73.       … I approach my task with due deference to the government, remembering that the degree of deference to be shown is proportional to the government’s participation in the process. I am of course cognizant of the fact that it is the government’s responsibility and obligation to allocate financial resources and that the government does have the power to determine judicial compensation. As was noted at para. 22 of Bodner, though, that power is not absolute. The government is bound to act in a manner consistent with its constitutional obligations to the judiciary.

As to the government’s rejection of the commission’s recommended salary increases, he stated:

77.       I agree with counsel for the judges who submitted before me that instead of attempting to assist the JCC in arriving at an appropriate level of compensation for the judges, the government had taken a position that would protect its interest in terms of not raising the expectations of employees in the public sector with whom the government was yet to bargain.

79.       In my view, the position taken by the government here is as tainted as was the position taken by the government in Québec [with reference to Bodner, at para. 160] because the government was doing its best, in responding to the JCC’s recommendations, to protect its bargaining position with public-sector groups rather than focusing, as it was required to do, on what the appropriate level of compensation for judges should be.

Justice Oliphant concluded that the government response failed to do more than disagree with the recommendations and, in the circumstances, the government was required to do more. That failure led him to further conclude that the response was neither legitimate nor rational (para. 83). 

[47]         Although Oliphant J. found it unnecessary to address the global view of the process as a separate topic, the following extracts reflect his strong views:

105.     The evident failure of the government to recognize that special circumstances exist when dealing with salaries and benefits for judges is of concern. First, while the judges are employed by the government, they are neither civil servants nor bureaucrats. Second, constitutionally, the judges form the third branch of government, namely, the judicial branch. Third, the judges are prohibited by law from negotiating with the government to obtain increases in salaries and enhancement to benefits. The judges cannot rely upon negotiation or binding arbitration in order to improve their situation in terms of salary and benefits. Instead, they must rely upon the JCC process established by another branch of the government - the legislative branch - for determining their salaries and benefits. More importantly perhaps, the judges must rely upon the good faith of the legislative branch of government to adhere to its constitutional obligations in rejecting or departing from recommendations made by the JCC.

106.     Presumably the government was well aware of the facts set forth in the preceding paragraph. That being the case, the government ought to have recognized that in dealing with salary increases and enhancement of benefits for judges, special circumstances exist that permit the government to except the judges from its general policy of "negotiated wage restraint in the public service”.

107.     In my view, it needs to be reiterated here that while the legislative branch of government bears the responsibility and authority for the allocation of resources, financial and otherwise, which means that it is the final arbiter of what the judges will receive in salaries and benefits, it must exercise that authority in a manner that is consistent with its constitutional obligations to the members of the judicial branch of government.

116.     No platitudinous statement in the world made by the government as to its commitment to the process can pass muster in the face of its conduct. The government, by its conduct, turned the process into one that became politicized. That flies in the face of the law as pronounced by the Supreme Court of Canada. The government's conduct negated rather than enhanced the concept of judicial independence, a concept that is in the public interest and acknowledged to be the cornerstone of every democratic society in the world.

[Emphases added.]

[48]         Returning to the present case, the PCJA accurately summarized the JCC final report in its written submission. After deleting the cross-references to the evidence in the submission, it reads:

B.        The JCC Report

25.       The JCC structured the report in four main parts: a review of the Commission's purpose and mandate; a summary of the 2007 JCC report; a review of the issues before the 2010 JCC; conclusions on the criteria it was required by s. 5(5) of the Act to consider; and a set of recommendations.

26.       On the criteria set out in s. 5(5) of the Act, the JCC concluded that:

            (a)        Significant enhancements to judicial salaries and benefits were not supportable for 2011/12 and 2012/13; however, it was reasonable to expect that the Provincial government will be in a position to support increases in the 2013/14 fiscal year to ensure fair and reasonable compensation for Provincial Court judges (pp. 186-87).

            (b)        The jurisdiction of the Provincial Court is expanding, its caseload is increasing and the cases that come before it are increasingly complex and varied in nature. Despite efforts to create efficiencies, the workload of Provincial Court judges continues to increase steadily, and travel is a regular and rigorous feature of the work of judges who sit outside the Lower Mainland (p. 188).

            (c)        While there are differences between the types of cases and functions of the Provincial Court and the Supreme Court, each plays a very important role in the administration of justice in British Columbia (p. 190).

27.       The JCC adopted the following passage from the report of the 2007 JCC:

            Judicial salaries must be set at a level that will continue to attract highly qualified lawyers from both the private bar and public service. British Columbians would not be well served by a Provincial Court that is overlooked for financial reasons by those lawyers best suited for it. While the Commission does not recommend that the salaries of Provincial Court Judges be tied to those of Supreme Court Justices, the Commission does recognize the importance of setting Provincial Court salaries with a view to minimizing the wage disparity between the two courts. (p. 194)

[49]         In total, the JCC made 15 recommendations. The government conveniently numbered them in its response, and I will adopt the same convention throughout my reasons, as follows:

The Commission made the following recommendations respecting the salaries of judges:

1.         No salary increase in fiscal year 2011/12.

2.         No salary increase in fiscal year 2012/13.

3.         Salary increase in fiscal year 2013/14 equal to the accumulated increase in the B.C. Consumer Price Index over the preceding three fiscal years, compounded annually.

4.         Chief Judge's salary to remain at puisne judge salary plus 12%.

5.         Associate Chief Judge's salary to remain at puisne judge salary plus 6%.

The Commission made the following recommendations respecting benefits for judges:

6.         Increase in the pension accrual rate from 3.0% to 3.5%, effective April 1, 2013.

7.         No change to the statutory pension plan contribution rate ratios of 24% for judges and 76% for government.

8.         Increase in the pension contribution period from age 71 to age 75, effective April 1, 2011.

9.         No change to annual leave.

10.       Extension of Long-term Disability (LTD) coverage to age 75, effective April 1, 2011.

11.       Separate funding of LTD benefits by government outside of the budget of the Office of the Chief Judge.

12.       Extension of life insurance coverage to age 75, with adjustments in benefit levels to the age 65-69 cohort so that the overall change is cost-neutral to government.

13.       No medical screening program.

14.       Enrolment of judges in the flexible benefits program, effective April 1, 2011.

15.       Increase in possible number of sitting days for senior part-time judges at the discretion of the Chief Judge, with a three-year "sunset clause."

[50]         In discussing the law as it applies to the obligation of government to respond to the report of the JCC, I am alive to the different roles in the process that may be assigned to the executive, or Cabinet, and the LA by the legislation in the particular jurisdiction. I recognize that, in this province, the LA is ultimately responsible for determining the salaries and benefits of PCJs.

[51]         However, it is Cabinet that developed the government response to the report of the JCC. The Attorney General then placed that response before the LA, along with the report. The LA accepted and thereby, in my view, clearly adopted the response as its basis for departing from the recommendations of the JCC.

[52]         As a result, the three-part Bodner test must focus on the government response to the JCC report that Cabinet developed and the LA ultimately adopted. The requisite good faith and commitment on the part of both the Cabinet and the LA necessarily applies to the whole of the process. Accordingly, it is relevant to consider the evidence respecting what took place before Cabinet.

[53]         The question of relevance in this regard first surfaced on a pre-hearing application that led to court-ordered production of a Cabinet briefing document (2012 BCSC 244; appeal dismissed, 2012 BCCA 157). Due to its significance in the chronology of events, I turn next to the evidence respecting the purpose of the Cabinet briefing document and to the content of the brief.

[54]         Neil Reimer is a senior analyst in the Ministry of Justice and Attorney General with responsibility for managing the government’s participation in the JCC process. In his affidavit, he deposed taking the following steps after receipt of the JCC final report:

16.       Following receipt of the final report, I spent many hours working with numerous other government staff to prepare detailed cost estimates of all of the Commission’s recommendations. In particular, other Ministry staff and I consulted with the Public Sector Employer’s Council, the Public Service Agency, the Ministry of Finance, and the Public Service Plan Board of Trustees.

17.       I then drafted a detailed submission to Cabinet for the Attorney General’s consideration and signature. The submission addressed all of the Commission’s recommendations and provided options, with estimated costs, for each recommendation. The submission was taken to Cabinet by the Attorney General, and Cabinet made the ultimate decision regarding which recommendations to accept and which to reject.

Mr. Reimer did not attach a copy of the Cabinet Submission as an exhibit to his affidavit. This led to the application to produce described above.

[55]         The document is entitled “Cabinet Submission - Request for Decision” and is signed by Mr. Reimer and the Attorney General. The submission is comprehensive in nature and commences, under the heading “Implications and Considerations,” by stating:

1.         The process for judicial compensation is different from collective bargaining. Government and the judiciary are constitutionally prohibited from negotiating over compensation. They instead make submissions to an independent commission under a process governed by the Judicial Compensation Act. Government’s response to commission reports is reviewable by the superior courts and must satisfy constitutional requirements.

2.         Other groups are linked by statute or negotiated agreements to judges’ salaries: Crown and legal counsel; Officers of the Legislature, and Masters of the Supreme Court. However, government’s response to the commission recommendations must address only judges’ compensation.

3.         The commission’s recommendations and government’s required response will have fiscal (and possibly precedential) impacts that extend beyond the current public sector compensation mandate.

The next heading is “Background / Context”.

[56]         Under “Background / Context”, the brief addresses costs, as follows:

The estimated cost of accepting all of the commission’s salary and benefit recommendations over the three-year period is $6.867 million in respect of judges alone, and $13.840 million for judges and other groups whose compensation is tied to that of judges.

The estimated cost of accepting the recommended responses in this cabinet submission over the three-year period is $2.984 million in respect of judges alone, and $5.210 million for judges and the other groups.

After identifying that the LA may only reject recommendations if they are “unfair” or “unreasonable”, the submission reminds that any rejection is “subject to judicial review and must be based on rational, factual and legitimate reasoning and must respect the commission process.” The line immediately following warns:

Therefore, the reasons for rejecting recommendations must address only judges’ compensation, not those of other groups who are linked to judges’ compensation by other agreements or legislation initiated by government.

In spite of the warning, the brief quickly returns to the linkage question immediately under the next heading “SALARY”.

[57]         The brief estimates the effect of the commission recommendation respecting salary to be an increase of an estimated 6.121% in 2013/14 and provided a table setting out the amounts of the calculated increases, but goes on to state:

There are several other groups whose salaries are linked to judges by statute or negotiated agreement:  Crown and legal counsel, Officers of the Legislature, and Masters of the Supreme Court. The impact on these related groups’ salaries would be 6.12% or, in the case of Crown counsel and legal counsel, 7.39%. The cost of the additional 1.27% has not been included in the financial impacts of this submission.

The Commission is mandated to consider only the remuneration of judges. While the Commission’s recommendations have cost implications to government for all of the affected groups listed above, these related costs cannot be used as part of the legal justification for any departure from the Commission recommendations. The reasons for determining that recommended increases are unreasonable and/or unfair are subject to judicial review, and must be based on a consideration of the remuneration of Provincial Court judges in light of the criteria outlined in the Act.

[Emphasis in original.]

[58]         A footnote details that the compensation settlement between the Province and Crown counsel provides for 1.27% above any increases allocated to PCJs; the number of Crown counsel and legal counsel affected, the latter, who are, in turn, tied to Crown counsel; Officers of the Legislature are tied to the salary of the Chief Judge; and finally, that the remuneration of full and part-time Supreme Court Masters is equal to that of PCJs.

[59]         I find it curious that a senior ministry analyst and the Attorney General would appear to correctly set out the constitutional standards for setting the salary and benefits of judges in contrast to standards applicable to Crown counsel, legal counsel and Officers of the Legislature but not appreciate that the identical constitutional standards likely also apply to Supreme Court Masters who are judicial officers.

[60]         I also find the effective refrain in the submission unusual and questionable. In effect, the submission states that other financial information flowing from linkage must not be used to justify a departure from the JCC recommendation, as it would be unconstitutional to do so, but here is the amount for your consideration. The submission appears intended to remind Cabinet to take the information into account but not to include it in the government response that would ultimately be disclosed publicly.

[61]         In addition, the passages from Mr. Reimer’s affidavit set out above provide a misleading description of the Cabinet briefing document. The document does not just provide “options, with estimated costs, for each recommendation”; it goes far beyond. A fair reading of the Cabinet submission, both in its opening and insofar as salary increases (the single largest cost item) are concerned, is that, in spite of the warnings, the linked costs are an important factor for government to consider but must not be disclosed as such in the constitutionally mandated government response. 

[62]         One other aspect of the submission requires comment. Under the heading “Labour Relations,” the submission states, in part:

Government’s response has broader labour relations implications because, as noted above, the commission’s recommendations extend to 2013/14, which is further than the current public sector compensation mandate. Compensation enhancements for judges in 2013/14 may set a precedent for the next mandate.

This passage is found in the brief shortly after a reference to the Bodner finding against Québec (at para. 160). It is also curious that the submission moves again from identifying that which is not a proper consideration to pointedly identifying it as a factor for government to consider.

[63]         As earlier set out, the government response rejected four of the commission recommendations and made substitutions; accepted one recommendation in part; and accepted the remaining eight.

[64]         The first five recommendations of the commission related to salary increases. Four were accepted but the most significant, viewed from a government cost perspective, was not.

[65]         The government accepted the recommendations for no salary increases for puisne judges in 2011/12 and 2012/13 but rejected, as unreasonable, the proposed salary increase for 2013/14. The government also accepted the recommended salary increases for the Chief Judge and the Associate Chief Judge.

[66]         The balance of the commission recommendations related to benefits. In its response, the government accepted recommendations 7, 9, 12 and 13, as set out above; rejected recommendations 10 and 14 for immediate implementation, but, in substitution, agreed to the recommendations commencing April 1, 2013; rejected recommendation 15 but replaced it with another; and, finally, rejected recommendations 6, 8 and 11.  

[67]         Immediately below, I set out some of the detail of the government response as it relates to the recommendations, starting with the recommended increase to the salaries of puisne judges in 2013/14.

[68]         Not surprisingly, much of the information in the Cabinet submission was not included as part of the government justification in its response. In relation to the recommended salary increase for 2013/14, the essential part of the response is, as follows:

Government has determined that it must limit compensation increases paid by public funds. A compensation arrangement for judges that provides protection against inflation is not consistent with this determination. Protection against inflation has not been offered to employees in the public service. In pursuing its approach to deficit reduction, the government has established a ‘net-zero’ public sector compensation mandate. This mandate is an across-the-board measure affecting every person who is paid from the public purse. A similar approach is fair and reasonable for Provincial Court judges. The Supreme Court of Canada recognized, in the PEI Reference Case, that the guarantee of a minimum acceptable level of judicial remuneration is not a device to shield the courts from the effects of deficit reduction. The court recognized that “nothing would be more damaging to the reputation of the judiciary and the administration of justice than a perception that judges were not shouldering their share of the burden in difficult economic times.”

After referring to increases resulting from previous commission recommendations, the response states:

In light of the present uncertain fiscal situation for government, a recommendation of no increase in the salary of judges for the 2013/14 year, as well as the prior two years, is fair and reasonable. A further consideration is the uncertainty regarding the financial impacts government may face as a result of the Harmonized Sales Tax (HST) referendum being conducted in June of this year.

And concludes, respecting salary:

Maintaining judges’ salaries at $231,138 through fiscal year 2013/14 will not result in a salary that falls below a level necessary to attract high-quality candidates to the provincial bench or that would otherwise harm judicial independence.

To determine the meaningfulness and legitimacy of these responses, it is necessary to consider the position that the government took in its submissions to the JCC and the conclusions of the JCC set out in its report.

[69]         In its written submission to the JCC, the government stated:

Another key element in the government’s effort to contain spending is the institution of a “net-zero” public sector compensation mandate. This mandate requires that any enhancements to salary or benefits at any public sector compensation negotiations or arrangements must find off-setting savings, with the result that there is no net increased cost to government. The mandate applies to all current public sector processes, including judicial compensation.

 

While the total salary and benefits of Provincial Court Judges is a small percentage of the overall public sector compensation budget, the public compensation mandate of “net-zero” applies to them, as it does to every other component of the public sector. To be consistent, government applies the mandate to all groups regardless of the groups’ relative sizes.

The Province also wishes to dispel any idea that the net-zero mandate will apply for only two years. Notwithstanding the fact that the majority of new settlements are for the next two years, the mandate reflects the economic conditions faced by government and can be expected to continue until such time as improved economic conditions provide a basis for government to reconsider this mandate. There is no expectation, nor should there be any assumption in the commission’s recommendations, that there will be salary enhancements in the public sector in 2012/13.

The JCC understood the government position but, based on the economic evidence before it, clearly rejected it in this regard.

[70]         In its summary of issues relating to salaries in the final report, the commission described the government position, as follows:

The Government observes that due to the recent recession, growing provincial debt and deficit budgets forecast to continue through at least 2012/13, it has an obligation to contain spending. Accordingly, it has adopted a “net zero” public sector compensation mandate. This mandate requires that any public sector salary or benefits enhancement must be offset by savings elsewhere, so that there is no net cost to the Government.

The Government proposes that the judges accept the model that it has asked all members of the public service to adopt, which is to acknowledge the extraordinary character of contemporary economic events and the need for restraint in government spending.

Accordingly, the Government proposes no net salary increases for the period covered by the Commission’s mandate.

Under the heading “Financial Position of the Government”, the commission also analyzed the differing views between the PCJA and the government.

[71]         The JCC carried out this analysis in light of the report and oral presentation of Ian McKinnon, a consultant in public policy and statistical analysis, who had made similar presentations to three previous commissions. After setting out the content of the McKinnon presentation, the commission summarized the positions of the parties:

Overall, Mr. McKinnon’s conclusion is that despite the recession, British Columbia’s financial position is “solid”. The Association adopts Mr. McKinnon’s conclusions and invites the Commission to find that the provincial economy will recover by the 2013/14 fiscal year. Accordingly, the Association submits that its proposals concerning monetary enhancements to salary and benefits should take effect on April 1, 2013.

The Government does not dispute Mr. McKinnon’s evidence. However, it does submit that the Province’s ability to return to a balanced budget by the 2013/14 fiscal year depends upon two factors: (1) a disciplined approach to program spending reductions; and (2) continued economic growth.

A key element of the Government’s current fiscal policy is a “net zero” public sector compensation mandate …

Given that the Commission will be making recommendations for the period 2011/12 – 2013/14, the Ministry of Attorney General received from the Government a specific “net zero” mandate for its submissions to the Commission on Provincial Court Judges’ salaries and benefits that covers all three fiscal years.

The commission then set out its conclusions respecting the economic forecasts under the heading “Analysis”.

[72]         Under that heading, the commission weighed the evidence in light of its responsibility under the JCA to consider the current financial position of government:

The reference in s. 5(5)(a) of the Act to “the current financial position of the government” should not be understood to be limited to the Government’s current financial circumstances alone. Since the Commission is required to make recommendations spanning the next three fiscal years, efforts at forecasting are relevant and helpful. Similarly, “the current financial position of the government” is not restricted to questions of affordability. Generally speaking, judicial compensation forms such a small part of Government expenditure that increases in that compensation will always be affordable.

For the purposes of its assessment the Commission has assumed that the Province will recover from its present economic circumstances and return to fiscal balance in 2013/14. The Commission does so recognizing that the difficulties of forecasting can be illustrated by the fact that the 2007 Commission felt confident in making its recommendations on the basis that there would be substantial budgetary surpluses to 2010/11. The 13.7% increase in judicial salaries which flowed from the 2007 Commission’s recommendations was based upon an economic forecast that was ultimately not borne out by actual events.

The Commission accepts that the global economic downturn has had a significant negative effect on the Government’s finances as compared to 2007. While the Commission is not bound by the Government’s “net zero” mandate, it is of the view that significant enhancements to judicial salaries and benefits are not supportable for the 2011/12 and 2012/13 fiscal years. However, the Commission has concluded that it is reasonable to expect that the Government will be in a position to support increases in the 2013/14 fiscal year which will ensure fair and reasonable compensation for Provincial Court Judges.

Later, after recognizing an additional factor, namely, the minimizing of the wage disparity between Supreme Court Justices and PCJs, in recommending the salary increase for puisne judges in 2013/14, the commission stated:

However, the Commission observes that Supreme Court Justices’ salaries are statutorily indexed against the eroding effects of inflation and is of the view that Provincial Court Judges’ salaries should be similarly protected. Accordingly, the Commission recommends that effective April 1, 2013, puisne judges of the Provincial Court receive a salary increase equal to the accumulated increase in the B.C. Consumer Price Index over the preceding three fiscal years, compounded annually.

In my view, the government response to the report of the commission respecting the recommended increase lacks legitimacy and rationality.

[73]         In standing by its “net-zero” mandate argued before the JCC and reiterating it as the principal basis for concluding that the recommended increase was unreasonable, the government diverted its attention from the evidence and conclusions of the commission as they relate to the constitutional requirements applicable to setting the salaries and benefits of judges. No party, including the PCJA, disagreed that judges must share the burden of economic downturns but that does not entitle government to avoid real involvement in the constitutional process for determining the salaries and benefits of judges. Instead, the primary concern of government throughout appears to have been to avoid the potential impact of accepting recommendations on other public sector bargaining units.

[74]         In the result, the continuing invocation and repetition by government at all stages of the process primarily consisting of the “net-zero” mantra is neither legitimate nor rational under Bodner.

[75]         In reaching this conclusion, I have fully taken into account the following passage from PEI Reference:

196.     Finally, I want to emphasize that the guarantee of a minimum level of judicial remuneration is not a device to shield the courts from the effects of deficit reduction. Nothing would be more damaging to the reputation of the judiciary and the administration of justice than a perception that judges were not shouldering their share of the burden in difficult economic times. Rather, as I said above, financial security is one of the means whereby the independence of an organ of the Constitution is ensured. Judges are officers of the Constitution, and hence their remuneration must have some constitutional status.

Chief Justice Lamer went on to point out that if Prince Edward Island established a commission in future that made recommendations that the legislature declined to follow as “part of an overall economic measure which reduces the salaries of all persons who are remunerated by public funds,” such a response would be prima facie rational (para. 201).

[76]         Prince Edward Island had, in fact, passed legislation that imposed an across-the-board cut that reduced the salaries of “substantially every person remunerated from public funds, including members of the P.E.I. Provincial Court.” That legislation was prima facie rational (para. 203). Nonetheless, the reduction in the judicial salaries was unconstitutional due to the lack of recourse to “an independent, objective, and effective process for determining judicial remuneration” (para. 200).

[77]         In my view, the passage from PEI Reference, considered in context, is illustrative but strengthens the requirement that government commit itself to the process. The factual matrix in the present case differs significantly from the scenario outlined above.

[78]         PEI Reference does not grant government a pass on its constitutional obligation, even in difficult economic times. The government reliance on the net-zero mandate cannot be permitted to trump the constitutional obligations applicable to setting judicial remuneration. The mandate is only a negotiating position for bargaining with public sector unions. Judges are not constitutionally permitted to participate in collective bargaining with government. The JCC understood that it was not bound by the net-zero mandate of government.

[79]         It is unfortunate that government chose not to participate meaningfully in the constitutional process. I agree with the PCJA that the approach taken by government rendered the process largely pointless. 

[80]         I must go a step further respecting the third stage of the Bodner test. Good faith participation in the constitutional process by government is essential if the goals of judicial independence and preservation of the Rule of Law are to be achieved. In British Columbia, the role of the Attorney General is vital to ensuring that Cabinet properly understands its role in the process with respect to formulating the government response.  

[81]         Accordingly, the Attorney General has the responsibility of advising Cabinet as to its constitutional obligations in formulating the government response to a JCC report. The Cabinet briefing document, signed by the Attorney General, evidenced, at best, a lack of good faith commitment to the constitutional process. At worst, it is a deliberate information shell game. The inappropriate emphasis on the costs associated with linked outcomes for some other non-judicial public sector employees appears intended as a “silent” answer to the commission’s conclusion that “judicial compensation forms such a small part of Government expenditure that increases in that compensation will always be affordable.”

[82]         As with the Québec government response in Bodner and the Manitoba government response in Manitoba Judges, the approach taken here does not demonstrate the necessary respect for the process and, in the result, the purposes of the JCC, preserving judicial independence and depoliticizing the setting of judicial remuneration, have not been achieved.

[83]         Given the fundamental importance of the salary issues, and keeping in mind the government position that the “net zero” mandate applied to both salary and benefits, it is not strictly necessary that I conduct a detailed examination of the issues respecting benefits. I intend to do so, nonetheless, but want to be clear that I consider the above conclusions sufficient to set aside the government response, even if the response, insofar as benefits is concerned, was to otherwise satisfy the three-part Bodner test.

[84]         I will, however, for the most part, limit my analysis in this regard to the first two aspects of the Bodner test and only in relation to the recommendations that the government rejected. The first two aspects of the test are:

          1.       Has the government articulated a legitimate reason for departing from the commission's recommendations; and

          2.       Do the government's reasons rely upon a reasonable factual foundation?

[85]         The JCC recommended an increase in the pension accrual rate from 3.0% to 3.5%, effective April 1, 2013 (recommendation 6). The government rejected the recommendation as unfair and unreasonable.

[86]         The recommendation of the JCC took into account that the average age of appointment for a PCJ is 53.3 years, and with the current accrual rate of 3.0% per year, “most judges will not reach maximum pension before mandatory retirement age at age 75 years.” The JCC expressed concern that judges may continue to sit on a full-time basis “past the point at which their capacity to do so may be compromised by age, simply to accrue the maximum pension benefit of 70% of salary.” The recommended change to the accrual rate, if accepted, would permit judges to accrue the maximum pension benefit after 20 years, or using the average age of appointment, by the age of 73.3 years.

[87]         The JCC considered the associated additional total annual cost of the proposed increase to the accrual rate of $1,272,500 for the first 15 years, and $1,082,000 thereafter, to be reasonable and also emphasized that the increase “will also serve to narrow the disparity between Supreme Court Justices’ and Provincial Court Judges’ compensation packages.” I note that the evidence before the commission revealed that the accrual rate for Supreme Court Justices is 4.67%.

[88]         According to the government response summarized below, the recommendation is unfair and unreasonable for five reasons:

          1.       The current 3.0% accrual rate is higher than the 2% accrual rate that applies to most members of the Public Service Pension Plan;

          2.       It is unreasonable to attempt to ensure that judges retire with the maximum pension benefit;

          3.       It is reasonable to expect that judges will have prudently saved for retirement during their careers as lawyers in private practice or, if in public service, will have already contributed to the Public Sector Pension Plan and be able to bring that accumulated service with them;

          4.       Given the current statutory division of pension contributions as between judges and government, the cost burden associated with a higher accrual rate would fall disproportionately on government; and

          5.       The commission failed to consider government’s proposal that the accrual rate might be increased if the contribution rates were rebalanced so that the effect was cost neutral to government.

The PCJA says that none of these responses is legitimate.

[89]         In submissions before me, the PCJA says that the first response simply reiterates the position that government took before the JCC and fails to address the basis for the recommended increase. It also says that the second response mischaracterizes the JCC recommendation. According to the PCJA, the committee sought to restructure the pension plan to encourage judges to make retirement decisions for reasons other than maximizing their pension benefit. The Attorney General denies that the government was unresponsive.

[90]         The PCJA also contends that the third response simply repeats an unsubstantiated government submission made before the commission that assumed lawyers in private practice, before their judicial appointment, will have saved for retirement. As a commission member pointed out at the time, most lawyers in private practice do not have pension plans and, in accepting appointments, may be giving up their highest earning years in exchange for a fixed salary and eventual pension with the result that they may feel forced to keep working until eligible for full pension. Another member of the commission pointed out that the government position on accrual rates was “thin on the ground.” 

[91]         I agree that the government response mischaracterizes the reasoning of the JCC. Nor does it rationally explain why, in the circumstances, the accrual rate applicable to non-judicial members of the plan was appropriate. Common sense suggests that the average age, apart from PCJs, at which contributions to Public Service pensions commence is long before age 53.3 years. At the very least, government is required to explain its reasoning for relying on the comparator to reject the recommendation.

[92]         As well, absent any empirical evidence respecting the pre-appointment retirement savings of private lawyers, the government response is not legitimate. It is nothing more than a reiteration of a submission made to and rejected by the JCC.  

[93]         Finally, I observe that the JCC did address the questions relating to the respective contribution rates. It concluded its discussion on the pension accrual issue, as follows:

The Commission recommends that there be no change to the statutory contribution ratio of 24:76. The statutory contribution ratio is part of the overall compensation package payable to judges, and the Commission is satisfied that it is set at a reasonable level. There was no evidence presented to the Commission that would justify a change in the contribution ratio at this time.

[Emphasis added.]

Having not presented evidence respecting the matter of contributions, and also having accepted recommendation 7 that there be no change to the contribution ratios, the government cannot legitimately justify its position in this way.

[94]         The JCC recommended increasing the pension contribution period from age 71 to age 75, effective April 1, 2011 (recommendation 8). According to the commission, this is appropriate because the Provincial Court Act was amended in 2008 to increase the age of mandatory retirement from 70 to 75 years. The proposed change would allow judges who sit beyond age 70 to continue making pension contributions until retirement. The commission recognized that implementing the recommendation would require government to request permission from the federal Minister of Customs and Revenue to permit the payment of benefits upon the date of actual retirement, something that the commission concluded, based on the advice of Mr. Smith, would occur “as a matter of course.”

[95]         In rejecting the recommendation, the government relied on information received from representatives of the Public Service Pension Plan that was not before the commission. The representatives apparently advised that either judges’ individual pension contributions would no longer be tax-deductible or government would be required to fund 100% of the necessary contributions for the judges. Government considered the latter outcome to be unfair and unreasonable. The government did not explain in its response any basis for the advice.

[96]         The Attorney General did not offer me any explanation for government’s apparent failure to present the information to the JCC. By contrast, Mr. Smith provided the only information before the commission. He testified that the change eventually encompassed by the recommendation could lead to a cost-savings to the pension plan because currently there are judges, age 71 and older, who receive both pension and salary.

[97]         Bodner recognizes that government may rely on new facts or circumstances that arise after the release of the commission’s final report but that does not, in my view, entitle the government to rely on information that was reasonably available to government but not put forward at the time of the hearing. To permit that approach could render the process meaningless.

[98]         I find the government response on this question less than legitimate. It fails to address the substance of the Smith evidence in a meaningful and timely way.

[99]         The final recommendation rejected in the government response related to the funding of long-term disability (“LTD”) benefits by government rather than out of the budget of the Office of the Chief Judge (recommendation 11). Otherwise, according to the commission, the Chief Judge does not have available the necessary funding to replace a disabled judge with a new appointee. The commission observed that this “adds to the caseload of an already overburdened Provincial Court judiciary.”

[100]     The government response rejected the recommendation on the basis that it is unreasonable and outside the jurisdiction of the commission. It stated that the recommendation did not address salaries or benefits because it would not affect eligibility and, further, that it “seeks to alter the relationship between government and the Office of the Chief Judge.”

[101]     According to the PCJA, the government response is irrational, in part, because the government, in response to another issue (recommendation 10), accepted, but deferred funding until 2013, LTD benefits for PCJs through to age 75. As all LTD benefits, regardless of the age of the recipient judge, are currently funded out of the budget of the Chief Judge, the PCJA says the deferral makes little sense. Nor is it sensible if the government only intended to accept responsibility for funding LTD benefits payable for judges aged 70 to 75 commencing in 2013.

[102]     Regardless of government’s intention, the only rationale set out in the response for the later implementation date was the two years remaining on the government net-zero mandate. With the change to mandatory retirement age in 2008, one would expect, as the commission recommended, an extension of entitlement to LTD benefits for ages 70 to 75.

[103]     According to the Attorney General’s submission, the reasoning in the response respecting the source of funding was both rational and correct in that the commission’s mandate “does not extend to the manner in which government funds the Judges’ benefits.”  [Emphasis in original.]

[104]     The JCA empowers the commission, in its report and recommendations “respecting the remuneration, allowances and benefits of judges,” to consider a non-exhaustive list of topics, including under s. 5(5)(e) “any other matters the commission considers relevant.” In order to consider changes to benefits, the JCC, in my view, is permitted to inquire into how such benefits are to be funded and make recommendations as necessary. It is not rational to characterize the recommendation as an attempt to alter the relationship between government and the Office of the Chief Judge.

[105]     The reality is that government ultimately pays judicial remuneration. Whether it chooses to do so by funding a budget to be administered by the Office of the Chief Judge, or in some other way, is largely an administrative matter between government and the Chief Judge. As I read the final report of the JCC, the commission was making its recommendations recognizing that the only source of any new funding for judicial remuneration is government.

[106]     The fact that the manner of funding is up to government to decide does not preclude the commission making recommendations about the need for funding. By diverting attention from the substance of the recommendation, the response was not legitimate. This leaves only the inadequate net-zero mandate as a basis for refusal.

[107]     The JCC also recommended the enrolment of judges in the flexible benefits program, effective April 1, 2011 (recommendation 14). As with the LTD benefits, government accepted the recommendation but delayed implementation until April 1, 2013. As with recommendation 10, the government relied on the net-zero mandate, saying in its response:

The reason for the later implementation is that these benefits increases, as recommended, would fall within the period when government has decided to restrict all public sector compensation increases – the two-year “net zero” mandate. It would be unfair and unreasonable to depart from this restriction and to provide these benefits to judges during this period.

I do not accept the reliance on the net-zero mandate as rational.

[108]     In the result, the government responses, viewed through a constitutional lens, do not withstand judicial review. The question of remedy is potentially complicated.

[109]     The PCJA seeks an order in the nature of certiorari quashing the resolution of the LA and a declaration that the government response to the JCC recommendations did not conform to the standard set out in the JCA and as embodied in the constitutional principles discussed above. The PCJA also seeks a declaration that the PCJs are entitled to the remuneration, allowances and benefits recommended by the 2010 JCC. During final oral submissions, the PCJA invited me to specifically direct the Attorney General as to the content of a new motion to be placed before the LA. Alternatively, the PCJA seeks an order remitting the Final Report of the 2010 JCC for reconsideration by government and the LA in accordance with these reasons and within the times set out in s. 6 of the JCA.

[110]     As I stated at the outset, it is not for me to decide the substantive questions relating to entitlement. Generally, Bodner recognized that the appropriate remedy, when the commission process has been ineffective, is to return the matter to government for reconsideration and that the court should avoid “issuing specific orders to make the recommendations binding unless the governing statutory scheme gives them that option” (para. 44).

[111]     In Manitoba Judges, Oliphant J. made specific orders but I am not prepared to do so here. I find no support in the JCA for me directing the Attorney General or the LA as to the substantive results. There is ample support for referring the matter back to give the government and the LA the opportunity to fully engage the process in compliance with the constitutional standards that I have set out in my reasons.  

[112]     I issue the order of certiorari as sought and declare that the government response and the LA motion respecting the 2010 JCC recommendations do not conform to the applicable constitutional principles. I direct the return of the matter to government and to the LA for reconsideration in accordance with these reasons within the time limited by s. 6 of the JCA.

[113]     The PCJA seeks an order for special costs but the Attorney General did not respond to the submission. The Attorney General may do so now, by written submission, to be filed and a copy forwarded to me via the Supreme Court Schedulers, within 30 days; the PCJA may reply in the same way within 15 days of receiving the submission of the Attorney General.

               “M.D. Macaulay, J.”               

The Honourable Mr. Justice Macaulay