Ontario Judges' Association et al. v. Her Majesty the Queen in Right of the Province of Ontario as Represented by the Chair of the Management Board

[Indexed as: Ontario Judges' Assn. v. Ontario (Management Board)]

58 O.R. (3d) 186

[2002] O.J. No. 533

Docket No. 483/00

Ontario Superior Court of Justice

Divisional Court

O'Driscoll, Then and Dunnet JJ.

February 15, 2002

Courts -- Judges -- Remuneration -- Government of Ontario rejected pension recommendations of Remuneration Commission established pursuant to Courts of Justice Act -- Application for judicial review of that decision dismissed -- Standard of review of decision was that of simple rationality -- Government of Ontario's decision met standard of simple rationality -- Government entitled to seek expert advice on cost of recommendations before accepting or rejecting them.

The applicant judge's association brought an application for judicial review of the decision of the Government of Ontario rejecting and failing to implement any of the pension recommendations of the Fourth Triennial (1998-2001) Remuneration Commission established pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43.

Held, the application should be dismissed.

The affidavits of the leader of the accounting firm that provided actuarial information to the Government of Ontario were admissible on the application. The Government was entitled to seek advice on the cost of the Commission's recommendations before accepting or rejecting those recommendations, and was entitled to put before the court the advice given when called upon to justify its decision in a court of law.

Paragraph 28 of the framework agreement between the parties was permissive and not mandatory. Neither side was obliged to return to the Commission after the Commission had rendered its report.

The standard of review of the decision of the Government was that of simple rationality. The decision met that standard. It gave serious consideration to the Commission's recommendations. The reasons were clear, logical, relevant and consistent with the Government's position taken before the Commission. There was no evidence that the judges of the Ontario Court of Justice were anything but qualified, or that the Government was unable to attract the ablest of candidates because of the amount, structure or features of the applicant's pension plan.

APPLICATION for a judicial review of a decision of the Ontario Government rejecting pension recommendations.

Cases referred to British Columbia Legislative Assembly Resolution on Judicial Compensation, Re (1998), 1998 6193 (BC CA), 51 B.C.L.R. (3d) 139, 160 D.L.R. (4th) 477 (C.A.), revg (1996), 1996 2208 (BC SC), 139 D.L.R. (4th) 325 (B.C.S.C.); Canada Post Corp. v. Smith (1994), 1994 10544 (ON SC), 20 O.R. (3d) 173, 118 D.L.R. (4th) 454, 24 C.R.R. (2d) 313 (Div. Ct.); Conférence des Juges du Québec v. Québec (Procureure Générale) (2000), 2000 6948 (QC CA), 196 D.L.R. (4th) 533 (Que. C.A.); Danson v. Ontario (Attorney General), 1990 93 (SCC), [1990] 2 S.C.R. 1086, 74 O.R. (2d) 763n, 41 O.A.C. 250, 73 D.L.R. (4th) 686, 112 N.R. 362, 50 C.R.R. 59, 43 C.P.C. (2d) 165 (sub nom. R. v. Danson); Keeprite Workers' Independent Union and Keeprite Products Ltd., Re (1980), 1980 1877 (ON CA), 29 O.R. (2d) 513, 114 D.L.R. (3d) 162 (C.A.); Masters' Association of Ontario v. Ontario (Attorney General), [2001] O.J. No. 1444 (Div. Ct.); Minnesota v. Clover Leaf Creamery Co., 449 U.S. (S. Ct., 1981); Newfoundland Assn. of Provincial Court Judges v. Newfoundland (2000), 2000 NFCA 46, 192 Nfld. & P.E.I.R. 183, 191 D.L.R. (4th) 225, 580 A.P.R. 183, 79 C.R.R. (2d) D-1, 50 C.P.C. (4th) 1 (Nfld. C.A.), revg in part (1998), 1998 14092 (NL SC), 163 Nfld. & P.E.I.R. 319, 160 D.L.R. (4th) 337, 503 A.P.R. 319, 32 C.P.C. (4th) 324 (Nfld. T.D.); Omni Health Care Ltd. v. C.U.P.E., Local 1909 (1987), unreported, January 29, 1987 (Ont. Div. Ct.); Ontario Federation of Justices of the Peace Assns. v. Ontario (1999), 1999 19929 (ON SC), 43 O.R. (3d) 541, 171 D.L.R. (4th) 337, 61 C.R.R. (2d) 21 (Div. Ct.); R. v. Ell, 2000 ABCA 248, [2000] A.J. No. 1101 (C.A.), affg (1999), 1999 ABQB 45, 240 A.R. 146 (Q.B.); R. v. Parker, 2000 5762 (ON CA), [2000] O.J. No. 2787 (C.A.); Reference re Anti-Inflation Act, (1975) (Canada), 1976 16 (SCC), [1976] 2 S.C.R. 373, 68 D.L.R. (3d) 452, 9 N.R. 541; Remuneration of Judges of the Provincial Court of Prince Edward Island, Re, 1997 317 (SCC), [1997] 3 S.C.R. 3, 121 Man. R. (2d) 1, 156 Nfld. & P.E.I.R. 1, 150 D.L.R. (4th) 577, 217 N.R. 1, 483 A.P.R. 1, 158 W.A.C. 1, [1997] 10 W.W.R. 417, 46 C.R.R. (2d) 1 , 118 C.C.C. (3d) 193 (sub nom. Provincial Court Judges Assn. (Manitoba) v. Manitoba (Minister of Justice)); Windsor Board of Education v. Windsor Women Teachers' Assn. (1991), 1991 8355 (ON CA), 86 D.L.R. (4th) 345 (Ont. C.A.) Statutes referred to Canadian Charter of Rights and Freedoms, s. 11(d) Courts of Justice Act, R.S.O. 1990, c. C.43, s. 51.13, Schedule, App. A Rules and regulations referred to O. Reg. 67/92 ("Courts of Justice Act") Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 39.01(5)

C.M. Mitchell and S.M. Barrett, for applicants. L. Sterling, S. Hanley and L. McSweeney, for respondent.

BY THE COURT: --

I. Nature of Proceedings

1The applicants (the Association), now known as "The Ontario Conference of Judges", seek judicial review and an order quashing and setting aside the decision of the respondent (Government of Ontario), dated February 1, 2000, which rejected and failed to implement any of the pension recommendations (dated May 20, 1999) of the majority (tripartite) Fourth Triennial (1998-2001) Remuneration Commission (Commission), established pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 51.13, Appendix "A" of the framework agreement ("Agreement") as set out in the Schedule to the Act, and Ontario Regulation 67/92 ("Regulation").

2The Agreement provides, in part:

2. The purpose of this agreement is to establish a framework for the regulation of certain aspects of the relationship between the executive branch of the government and the Judges, including a binding process for the determination of Judges' compensation. It is intended that both the process of decision-making and the decisions made by the Commission shall contribute to securing and maintaining the independence of the Provincial Judges. Further, the agreement is intended to promote co-operation between the executive branch of the government and the judiciary and the efforts of both to develop a justice system which is both efficient and effective, while ensuring the dispensation of independent and impartial justice.

3. The parties agree that in 1995, and in every third year after 1995, the Commission shall conduct an inquiry respecting:

(a) the appropriate base level of salaries,

(b) the appropriate design and level of pension benefits, and

(c) the appropriate level of and kind of benefits and allowances of provincial judges. . . .

27. The recommendations of the Commission under paragraph 13, except those related to pensions, shall come into effect on the first day of April in the year following the year the Commission began its inquiry, except in the case of salary recommendations which shall come into effect on the first of April in the year in which the Commission began its inquiry and shall have the same force and effect as if enacted by the Legislature and are in substitution for the provisions of any schedule made pursuant to this Agreement and shall be implemented by the Lieutenant Governor in Council by order- in-council within sixty days of the delivery of the Commission's report pursuant to paragraph 15.

28. The parties agree that the Commission may, within thirty days, upon application by the Crown or the judges' associations made within ten days after the delivery of its recommendations and report pursuant to paragraph 15, subject to affording the Crown and the judges' associations the opportunity to make representations thereupon to the Commission, amend, alter or vary its recommendations and report where it is shown to the satisfaction of the Commission that it has failed to deal with any matter properly arising from the inquiry under paragraph 13 or that an error relating to a matter properly arising from the inquiry under paragraph 13 is apparent on the report, and such decision is final and binding on the Crown and the judges' associations, except those related to pensions.

29. The parties agree that the recommendations with respect to pensions, or any reconsideration under para. 28 of a matter relating to pensions, shall be presented to the Management Board of Cabinet for consideration.

3The Agreement and Regulation govern the jurisdiction and terms of reference of each Triennial Commission. Pursuant to para. 27 of the Agreement, the Commission's recommendations as to salaries, benefits and allowances are binding on the Government of Ontario. However, the Commission's recommendations as to pensions are not binding on the Government of Ontario.

4For the reasons which follow, the application fails.

II. Chronology and Background

5Prior to the Commission's report, the base salary of a judge of the Ontario Provincial Court was $130,810 per year.

6Prior to the same Commission's Report, the Ontario Judges' Pension Plan provided a benefit at retirement after age 55 with at least five (5) years of service. The key features of the pension plan were:

-- An unreduced pension is payable to a judge who retires on or after meeting her Basic Service Requirement (which is when the judge is at least age 65 and her age plus service equals at least 80). The initial annual pension is equal to a percentage of the judge's final salary received before retirement. The percentage is equal to 45 per cent after meeting the Basic Service Requirement, plus an additional 1 per cent for each year of service in excess of 15 years prior to 65, plus 1 per cent for each year of service after age 65.

-- If a judge chooses to retire before meeting her Basic Service Requirement, the percentage that would otherwise be payable is reduced by 5 per cent for each year between 60 and Basic Service Requirement and by 2 per cent for each year between age 55 and 60. Special rules apply for judges appointed on or after age 60.

-- The pension benefit is increased each year in retirement at a rate equal to the rate of increase in salary for active judges.

7The pension plan under review by the Commission is the product of the 1992 Commission and was adopted by the Government of Ontario. The 1992 Commission retained a team of actuaries representing the Commission, the Judges' Association and the Government. The actuaries noted a shift towards a younger age of appointment. The 1992 Commission recommended, and the Government accepted, amendments to the pension plan which provided for an additional accrual of 1 per cent of final salary for each year in addition to 15 years of service prior to age 65. The Second (1992) Triennial Report said, in part, at p. 12:

56. . . . Given that actuaries for the two parties as well as the Commission participated in the development of the rationale for the present recommendation, we are satisfied that it is a sound one that should be implemented.

8The Commission held hearings on nine (9) days commencing on November 26, 1998 and ending on February 15, 1999. No viva voce evidence was heard by the Commission; it was a paper hearing".

9In its majority report, the Commission decided:

(a) commencing April 1, 1998, the base salary of an Ontario Court judge shall be increased from $130,800 to $150,000 per year;

(b) commencing April 1, 1999, the base salary shall be $160,000 per annum, and

(c) commencing April 1, 2000, the base salary shall be $170,000 per annum

[These increases amount to a combined salary increase of 28 per cent.]

(d) legal fees incurred by the judges' association should be paid as an allowance by the Government of Ontario for each Triennial hearing;

(e) adjustments/awards of allowance and benefits regarding judges' robes, dental plan, implants, drug plan, vision care, hearing aids, physiotherapy coverage, certain diagnostic tests, life insurance and annual vacation.

[Under para. 27 of the Agreement, the above decisions and awards regarding salary and benefits are binding on the Government of Ontario.]

(f) with regard to pensions, the majority report of the Commission (not binding on the Government of Ontario) urged the Government to implement one of three (3) options, to be effective on April 1, 1999:

(1) move the Provincial Plan to the level of the Superior Court Judges appointed under s. 96 of the Constitution Act, that is, a replacement ratio of 66 2/3 [per cent] of salary at the date of retirement eligible at 65 years after 15 years of service with a 7 [per cent] contribution rate by the judges. (Option 1)

(2) move to a 20 year accrual rate of 3.3 [per cent] so that after 20 years of service a Provincial Judge could retire at 65 years of age with a pension of 66 2/3 [per cent] of his salary at the date of retirement. (Option 2)

(3) the entire range of percentage of salary be increased by 10 [per cent] so that a person appointed as a Provincial Judge at 50 years of age and retiring at 65 years of age would receive 55 [per cent] of salary at the date of retirement as opposed to the current figure of 45 [per cent]. (Option 3)

At p. 68 of the majority report, it states:

Whichever of the three options are chosen, and we hope that the Government would choose one of them, and preferably option 1 or 2, the increased annual costs are not great.

(4) with regard to the Rule of 80, the majority report stated at page 70:

We recommend that a Rule of 80 be enacted, and that the early retirement reductions be eliminated. If they are not eliminated, they should be restructured at reduced levels, with the lower percentages coming the closer one gets to 65 years. One option that the judges suggested is that the current reduction factors be reversed, such that there would be a 5 [per cent] reduction between ages 55 and 59 and only 2 [per cent] between ages 60 and 64. If there is to be a reduction factor, we agree with the suggestion for reversal of the current plan.

10The Commission's report did not cost out what any of its pension recommendations would cost the public purse.

11By letter, dated August 23, 1999, PriceWaterhouseCoopers LLP ("PWC") answered the Government of Ontario's request for a proposal for an analysis of the pension recommendations made by the Commission.

12On December 31, 1999, the Government of Ontario, via the Chair of Management Board of Cabinet ("MBC"), entered into a "Contract for Actuarial Valuation Services" with PWC. "Appendix A" to the contract required PWC to:

1. Examine the Commission's pension recommendations.

2. Endorse or reject those recommendations, in part or in whole.

3. Propose other options that would meet the Commission's objectives.

4. Cost the Commission's pension options and the sensitivity of these costs to the assumptions employed in developing them.

5. Advise as to any implications associated with the Framework Agreement (between the government and the judges) with respect to:

-- the principle of judicial independence.

-- The competitiveness of the current Ontario pension compensation package as compared to that in other jurisdiction, [sic] and its adequacy in attracting qualified candidates to the Ontario bench. [The report will test the Commission's assertion that the Ontario compensation package is competitively inferior compared to other jurisdiction, [sic] particularly the federal arrangements.]"

13PWC's team consisted of a senior team member (Paul Love), an actuary (Mario Chassé, assisted by Jason Vary), a senior lawyer and pension expert (Mark Eagles) and a junior lawyer with pension expertise (Deborah Baird).

14It appears from para. 3.1 of the contract that the PWC commenced work as of October 12, 1999.

15Because PWC was unable to reproduce the cost estimates prepared by Watson and Wyatt ("WW"), which were provided to the Commission during the hearings, as set out in "Pension Costs of the Ontario Judges' Association", dated December 16, 1999, and because PWC was unable to be certain that they (PWC) understood what WW, the Association's actuaries, had calculated, the Government of Ontario called for a meeting with the Association and WW to find out what might have caused the discrepancies.

16On December 1, 1999, a conference call was held. Present on the call were: Mario Chassé and Mark Eagles of PWC, Kim Majid of WW, Frances Gallop, of counsel for the Government of Ontario and Michael Mitchell, of counsel for the Association. PWC did not obtain the answers to their actuarial questions from Mr. Majid of WW. PWC asked that they receive the information by December 6, 1999.

17Neither WW nor counsel for the Association asked for any of PWC's information, assumptions or calculations. Counsel for the Association stated that the Association would cooperate in obtaining the information requested, but that it was "without prejudice" to any position the Association might take on PWC's costings in future litigation.

18On December 6, 1999, nothing had been received by PWC or the Government of Ontario from WW or the Association or its counsel.

19On December 6, 1999, Paul Love, then the senior member of the PWC team, together with a Government representative, met with the Chair of MBC, the Honourable Chris Hodgson ("the Chair"). PWC's presentation was made having regard to both the WW calculations and PWC's calculations. At the December 6, 1999 meeting, the Chair received legal and other advice from Government of Ontario staff.

20On December 9, 1999, the matter was referred to Cabinet. No one from PWC was in attendance at the discussion at the Cabinet level.

21On January 14, 2000, after six (6) weeks without any response from Mr. Majid or his colleagues at WW concerning the material requested during the December 1, 1999 conference call, the Government of Ontario withdrew its request of WW, Mr. Majid, the Association and its counsel.

22On February 1, 2000, the Chair of MBC, communicated the Government's written decision and its written reasons regarding judges' pensions to the Chairman of the Commission, Mr. Stanley M. Beck, Q.C.

23On February 28, 2001, the Judges' Association commenced this application for judicial review.

24On this application, counsel for the Association have filed the affidavit of Vanessa Payne, a partner in the law firm of the solicitors for the Association, together with affidavits (sworn May 30, 2001 and June 4, 2001) of Senior Judge R. Lloyd Budgell. In his affidavit, Judge Budgell reports what Association's counsel and Mr. Majid told him they had heard or said during the December 1, 1999 conference call.

25The Fifth (2001-2004) Triennial Commission's mandate commenced on July 1, 2001, some fifteen (15) days before argument of this application.

III. The Government's Response of February 1, 2000

As required under the Framework Agreement between the Government and Provincial Judges' Association, Management Board of Cabinet ("Management Board") has considered the pension recommendations from the report of the Fourth Triennial Provincial Judges Remuneration Commission ("the Commission"). Management Board has decided not to implement any of the recommendations of the Commission concerning pensions for the following reasons:

1. The current pension entitlements are appropriate and their value has already increased as a result of salary increases awarded by the Commission. The salary increase awarded by the Commission increased the value of a judge's pension benefit by approximately 28 [per cent].

2. Ontario judges' pensions will not erode over time, because they are automatically protected by the fact that the benefit formula is based on the final salary at retirement and indexed thereafter. Ontario's retired judges' pensions increase at the actual rate of increases in active judges' salaries. Retired judges' pensions have increased as a result of the Commission's salary increase award.

3. Increases to Ontario judges' salaries have significantly narrowed the gap with federal judges. Although there is not parity, the Commission did not endorse parity.

4. In 1991, actuaries, representing the Judges, the Government and the Second Triennial Commission, reviewed the judges' pension plan. The actuaries noted a demographic shift toward a younger age of appointment, which was apparent then. Based on the design options presented by the actuaries, the Commission recommended and the Government accepted some significant changes. Since 1991, no other significant demographic changes have occurred.

5. A 75 [per cent] replacement ratio (of retirement income to final salary) is achievable under the current pension arrangement when one considers the likely pre-appointment savings of judges.

6. For a typical judge, the value of the pension provided by the Ontario judges' pension plan is not only comparable, but is superior to the pension provided to provincial judges in all other provinces and territories. For a typical judge, the value of the Ontario judges' pension is approximately 4.75 [per cent] higher than the next closest province or territory.

7. The Commission's recommendations concerning pensions are not appropriate under the Government's continued fiscal restraint. Management Board cannot look at an issue in isolation, but must view it within the framework of balancing competing interests for the Government's limited resources. In balancing competing interests, it attempts to maximize social utility, considering that the taxpayers of Ontario will bear the cost. Government must continue to ensure that taxpayer dollars are spent more effectively and efficiently as it moves toward a balanced budget. The Government's announcement of $300 million in expenditure reductions on November 18, 1999 is evidence of the Government's continued commitment to fiscal restraint to strengthen the Ontario economy.

Management Board carefully considered the recommendations. It decided to keep the existing terms of the pension plan unchanged.

IV. The Issues

A. The admissibility of the affidavits of Owen M. O'Neil, sworn May 7, 2001 and June 7, 2001.

26In his affidavit, sworn May 7, 2001, Owen M. O'Neil deposed:

1. I am a Fellow of the Faculty of Actuaries of Scotland and a Fellow of the Canadian Institute of Actuaries. I have been a member of the Actuarial Liaison Committee with the Pension Committee of Ontario, a member of the Canadian Institute of Actuaries' Committee on Liaison with Government Authorities on Pensions and Social Security Matters, and am currently Chairperson of the Pension Compliance Committee of the Institute.

2. I have over 30 years experience as a consulting actuary and am currently the leader of the Global Human Resource Solutions practice of PricewaterhouseCoopers LLP in Canada. I consult to clients in the area of pension plan design and the financing of pensions and other post retirement arrangements. I also have extensive experience in the design and funding of non qualified supplementary pension programs. Prior to joining PricewaterhouseCoopers LLP, I was a partner for 10 years at Towers Perring, and prior to that spent 14 years at William Mercer where I was a Managing Director. Throughout my career I have consulted to some of Canada's leading corporations and institutions, including Queens University, Moore Corporation, Molson Breweries, Toyota and Four Seasons Hotels. Attached as Exhibit "A" is a copy of my resume.

3. As part of our engagement, we were asked to determine if the estimated costs of implementing various recommended changes to the Ontario Judges' Plan, as calculated by actuaries at the firm of Watson Wyatt, were reasonably accurate. Watson Wyatt had been engaged by the Ontario Judges Associations and their cost calculations had been part of the judges' submission to the Commission. Attached as Exhibit "C" are the pension cost calculations of the Judges Associations carried out by Watson Wyatt, dated December 16, 1998, which were provided to the Commission.

4. We were also asked to compare the compensation and pension benefits package received by a "typical" judge in each Canadian jurisdiction and we looked at the replacement ratio that a "typical" Ontario judge could expect to receive in retirement.

5. Our first step was to attempt to reproduce the Ontario Judges' Plan cost calculations that were reported by the government's actuary in an actuarial valuation report as at March 31, 1998 which was based on the pre-Commission award salary level of $130,810. We were provided by MBS with active member data used in preparing that report. We were able to successfully reproduce the liability numbers in that report within reasonable limits, and were thus confident in our ability to calculate any changes to those costs. Attached as Exhibit "D" is the Government's actuarial valuation report as at March 31, 1998.

6. Our next step was to try to reproduce the annual cost estimates reported by Watson Wyatt. Watson Wyatt's cost estimates were calculated prior to the salary increases awarded by the Commission, and so our calculations were also done on this basis. In a submission made by the Ontario judges to the Commission, Watson Wyatt indicated the assumptions that they used to calculate various cost estimates contained in the Judges' submission to the Commission (the "WWW Assumptions") and we tried to duplicate their results using the WWW Assumptions. These calculations were carried out as at March 31, 1998. These assumptions are attached as Exhibit "C".

7. We were, however, unable to reproduce all of the Watson Wyatt cost estimates. Even for those cost estimates which we were able to reproduce within reasonable limits, we were unable to be certain that we understood what Watson Wyatt had in fact calculated.

8. In the normal course of reviewing another actuary's results, if an actuary cannot replicate the results produced by another actuary or is uncertain about assumptions, methods or benefits valued, he or she will contact that other actuary to determine where the differences lie. In this case, after making arrangements with the Commission and the respective lawyers for each party, we arranged a conference call on December 1, 1999 with Watson Wyatt and lawyers for Ontario Judges and for the Ontario Government and asked specific questions as to what assumptions and methodologies they had used and what benefit provisions they had valued in arriving at their cost estimates. In our opinion, a brief review of their file would have enabled Watson Wyatt to fully respond to our questions and thereby identify errors, discrepancies or reasons for differences between their calculations and ours.

9. During the conference call Watson Wyatt indicated that they would respond to our request. The judges' lawyer indicated that their agreement to answer our questions was made without prejudice to the judges' position in this matter. We never, however, received any response from Watson Wyatt or the judges' legal counsel with respect to our questions in time for us consider it before we were required to present our analysis. We understand that the Government therefore withdrew its request for information on January 14, 2001 and our calculations were based on the information available to us in December.

10. We then calculated the additional annual cost of the current pension plan as at March 31, 1998 resulting solely from the initial salary increase recommended by the Commission ($152,560). We next calculated the added cost to the various recommended pension increases as at March 31, 1998 using the 1998 salary increase awarded by the Commission, as this provided a more accurate picture of the cost of the recommended enhancements as at that date.

11. All of our cost calculations were done as at March 31, 1998 using the valuation methodology used by the government's actuary (for consistency). Where any increase in judges' salaries was reflected in our cost calculations, our calculations included the additional cost related to retired judges as, under the Ontario Judges Pension Plan, pensions of retired judges get increased at the rate of increase in active judges' salaries.

27In his cross-examination on June 5, 2001, Mr. O'Neil deposed that he had worked with KPMG until July 1999 and did none of the work on this file. He testified that the PWC partner who had been in charge of the file, Paul Love, had been seconded to another assignment at PWC and that he, O'Neil, now the leader of the Global Human Resources Solutions Practice at PWC, was in charge of the file. Mr. O'Neil deposed that he had sat down and reviewed all the actuarial work with Mario Chassé and Jason Vary and had spoken to them as well as to Mark Eagles and Deborah Baird.

28On cross-examination, Mr. O'Neil stated:

A. My purpose was to review the work that was done to make sure I could sign an affidavit, so I had to be comfortable with the work.

29In paras. 64-66, 72 and 96-97 of their factum, counsel for the Association submit that paras. 11-17 and 19-78 of Mr. O'Neil's affidavit, sworn May 7, 2001, and all of his affidavit sworn June 7, 2001 should be excluded from this application. Counsel for the Association submits that to admit the impugned PWC evidence relating to costing of the judges' pension would "render the proceedings of the Commission ineffective, and would allow the Commission processes to be evaded and blind- sided". It is further submitted that "it is not open to the Government to seek to alter or bolster" its February 1, 2000 reasons using the PWC material when no mention of the PWC material was made in the Government of Ontario's February 1, 2000 decision and reasons. It is also submitted that because Mr. O'Neil has no first-hand knowledge of these contentious matters, rule 39.01(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 excludes the impugned affidavit evidence.

30Counsel for the Association relies on: Ontario Federation of Justices of the Peace Assns. v. Ontario (1999), 1999 19929 (ON SC), 43 O.R. (3d) 541, 171 D.L.R. (4th) 337 (Div. Ct.); Conférence des Juges du Québec v. Québec (Procureure Générale) (2000), 2000 6948 (QC CA), 196 D.L.R. (4th) 533 (Que. C.A.); Re Keeprite Workers' Independent Union and Keeprite Products Ltd. (1980), 1980 1877 (ON CA), 29 O.R. (2d) 513, 114 D.L.R. (3d) 162 (C.A.), application for leave to appeal dismissed, November 19, 1990; Windsor Board of Education v. Windsor Women Teachers' Assn. (1991), 1991 8355 (ON CA), 86 D.L.R. (4th) 345 (Ont. C.A.) at pp. 352-53; and Omni Health Care Ltd. v. C.U.P.E. Local 1909 (Ont. Div. Ct.), January 29, 1987 (unreported) at pp. 1-2.

31Arguing for admissibility of the impugned affidavits of Mr. O'Neil, counsel for the Government of Ontario points out: (1) that Mr. O'Neil is the only expert to provide evidence on this application, (2) that Mr. O'Neil represents PWC, a firm whose pension expertise is recognized worldwide.

32In re-examination, Mr. O'Neil was asked these questions and gave these answers:

365. Q. Is there a policy at PriceWaterhouse regarding who should be the public spokesperson on any file?

A. It would normally be the most senior person on the team.

366. Q. And who is that in regard to this file?

A. In this file, it's me.

33Counsel for the Government of Ontario also submits that Mr. O'Neil is the natural spokesperson because he is the current leader of the PWC team that provided the actuarial information to the Government of Ontario. Moreover, counsel for the Government of Ontario points out that PWC's entire file of calculations and the "assumptions" utilized by PWC in its actuarial calculations has been produced. In contrast, Mr. Majid of WW has never filed any explanation for his costings. Mr. Majid was present and assisting Mr. Mitchell at the cross- examination of Mr. O'Neil. At Mr. O'Neil's cross- examination, neither PWC's assumptions nor PWC's pension calculations were challenged.

34Counsel for the Government of Ontario submits that Owen O'Neil's expert evidence is admissible because:

-- In constitutional litigation, courts have called for expert evidence to explain government action and provide the socio-economic context for government decisions;

-- The evidence is part of the constitutional judicial independence requirement that the Government "justify its decision in a court, if necessary"; and

-- Such evidence has been routinely admitted in other judicial independence cases on the basis that it has assisted the court in understanding the government's conduct.

Counsel for the Government of Ontario relies on: Danson v. Ontario (Attorney General), 1990 93 (SCC), [1990] 21 S.C.R. 1086 at pp. 1097-99, 73 D.L.R. (4th) 686; Canada Post Corp. v. Smith (1994), 1994 10544 (ON SC), 20 O.R. (3d) 173 at p. 187, 118 D.L.R. (4th) 454 (Div. Ct.); Provincial Judges Reference, supra, at paras. 180, 220; Masters' Association of Ontario v. Ontario (Attorney General), [2001] O.J. No. 1444 at paras. 6, 17 (Div. Ct.); R. v. Ell (1999), 1999 ABQB 45, 240 A.R. 146 (Q.B.), affd 2000 ABCA 248, [2000] A.J. No. 1101 (C.A.); R. v. Parker, 2000 5762 (ON CA), [2000] O.J. No. 2787 at para. 36n.1 (C.A.).

35We are of the view that after receiving the Commission's recommendations regarding the judges' pension, the Government of Ontario was entitled to ask "What will these pension proposals cost when coupled with the automatic effect on judges' pensions brought about by the 28 per cent salary increase?" We are of the view that the Government of Ontario was entitled to seek advice from whatever source it chose before accepting or rejecting the recommendations of the Commission. Moreover, in our view, the Government of Ontario is entitled to put before the court the advice given when called upon to "justify its decision in a court of law". Because the advice regarding pensions would only be sought and provided after the Government of Ontario had been advised of the Commission's recommendations, excluding extraordinary circumstances, the only avenue open to the Government of Ontario to justify its decision was to file affidavit evidence in order to place before the court what advice was sought and what advice was received. The preparation and filing by the Government of Ontario of the disputed affidavits were actions that arose out of necessity.

36With respect, we adopt the words of the British Columbia Court of Appeal in Re British Columbia Legislative Assembly Resolution on Judicial Compensation (1998), 1998 6193 (BC CA), 160 D.L.R. (4th) 477 at p. 493, 51 B.C.L.R. (3d) 139 (C.A.), per Hall J.A. (for the court):

It seems to me that if government, after due reflection and after having received advice from whatever quarters it thinks fit, comes to a fixed and settled conclusion that recommendations made by such committees are out of accord with fairness and reasonableness, then government is entitled to act according to its convictions. After all, the Cabinet and the Legislature do have, as someone must have, the ultimate control of the public purse. In the old case of Stockdale v. Hansard (1839), 112 E.R. 1112 (Q.B.), a case concerning the reach of parliamentary privilege, Lord Denman observed at p. 1156:

Nothing is more undoubted than the exclusive privilege of the people's representatives in respect to grants of money, and the imposition of taxes.

37It is ironic that counsel for the Association seeks to exclude the two (2) affidavits of Owen O'Neil, and yet they filed and rely upon two (2) affidavits, sworn May 30, 2001 and June 4, 2001, of the Honourable Justice R. Lloyd Budgell, as well as an affidavit of a partner of counsel for the Association setting out a summary of proceedings before the Commission.

38We do not accept the submission of Mr. Barrett, of counsel for the Association, that it was "outrageous conduct" for the Government of Ontario to retain PWC, independent actuaries, in order to find out "what would this cost". Indeed, we see it as an essential, prudent decision that enabled the Government of Ontario to make an informed response to the Commission's pension proposals. The Commission provided no calculations regarding the pension recommendations. Without an accurate "price tag", any Government of Ontario response would have been, at best, ill informed and perhaps uninformed.

Conclusions

39In our view, for the reasons set out in the above analysis, the two (2) impugned affidavits of Owen M. O'Neil are admissible in their entirety.

40What actuarial information is disclosed in paras. 25 to 58 of the affidavit of Mr. O'Neil, sworn May 7, 2001?

41Before the Commission, the Government of Ontario submitted that the compensation and the pension of the Ontario Court Judges compared favourably to other provincially appointed judges. After the 28 per cent salary award of May 20, 1999, future salaries and pensions of Ontario Court judges rank first among judges in all provincial jurisdictions.

42The pre-salary award cost of the judges' pension, expressed as a percentage of salary, was 27 per cent. Putting into place the Commission's pension recommendations would increase the cost as a percentage of salary to between 42.9 per cent (increased accrual option) and 72.6 per cent (federal plan option with salary scale indexation). That is, the Commission's recommended pension supplements would produce an award added cost ranging from $8.4 million to $20.1 million.

43A summary of PWC's findings is set out in detail in the factum of the Government of Ontario at paras. 69-79.

44Much argument was addressed to the question of whether the present judges' pension plan put into place by the 1992 Commission could achieve a 75 per cent replacement ratio. The majority of the Commission never found that 75 per cent could not be achieved. PWC, basing its assumptions on pre-appointment savings on levels of R.R.S.P. contributions expressed as a percentage of earnings reported by Statistics Canada, concluded that a 75 per cent replacement ratio was achievable. PWC's working papers and calculations were disclosed to the Association and made part of the record of this judicial review. PWC's assumptions and calculations were not challenged on cross-examination.

B. The constitutional argument

45Counsel for the Association submits that the Government of Ontario has violated the requirements of the Agreement and effectively undermined the integrity of the Commission process. It is argued that in order to conform to the constitutional imperatives of s. 11(d) of the Canadian Charter of Rights and Freedoms and the Agreement, any rejection of the Commission's recommendations regarding pension must be based upon a process which involves public inquiry, justification and scrutiny of the process and be a process that permits the Association to participate. The argument alleges that in this case the Government of Ontario effectively rendered the process meaningless, blind-sided the Association regarding reasons for rejection of the recommendations and undermined the effectiveness and the importance of the operation of the Commission.

46The nature and the effectiveness of a Government's response in both a "positive response" and a "negative response" framework were extensively reviewed in Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, 1997 317 (SCC), [1997] 3 S.C.R. 3, 150 D.L.R. (4th) 577. There, Lamer C.J.C., for the majority, said at pp. 158-59 S.C.R.:

. . . I summarize the major principles governing the collective or institutional dimension of financial security:

1. It is obvious to us that governments are free to reduce, increase, or freeze the salaries of provincial court judges, 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.

2. Provinces are under a constitutional obligation to establish bodies which are independent, effective, and objective, according to the criteria that I have laid down in these reasons. Any changes to or freezes in judicial remuneration require prior recourse to the independent body, which will review the proposed reduction or increase to, or freeze in, judicial remuneration. Any changes to or freezes in judicial remuneration made without prior recourse to the independent body are unconstitutional.

3. As well, in order to guard against the possibility that government inaction could be used as a means of economic manipulation, by allowing judges' real wages to fall because of inflation, and in order to protect against the possibility that judicial salaries will fall below the adequate minimum guaranteed by judicial independence, the commission must convene if a fixed period of time (e.g. three to five years) has elapsed since its last report, in order to consider the adequacy of judges' salaries in light of the cost of living and other relevant factors.

4. The recommendations of the independent body are non- binding. However, if the executive or legislature chooses to depart from those recommendations, it has to justify its decision according to a standard of simple rationality -- if need be, in a court of law.

5. Under no circumstances is it permissible for the judiciary to engage in negotiations over remuneration with the executive or representatives of the legislature. However, that does not preclude chief justices or judges, or bodies representing judges, from expressing concerns or making representations to governments regarding judicial remuneration.

I note at the outset that these appeals raise the issue of judges' salaries. However, the same principles are equally applicable to judges' pensions and other benefits. [at p. 90 S.C.R.]

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. [at p. 92 S.C.R.]

By laying down a set of guidelines to assist provincial legislatures in designing judicial compensation commissions, I do not intend to lay down a particular institutional framework in constitutional stone. What s. 11(d) requires is an institutional sieve between the judiciary and the other branches of government. Commissions are merely a means to that end. In the future, governments may create new institutional arrangements which can serve the same end, but in a different way. As long as those institutions meet the three cardinal requirements of independence, effectiveness, and objectivity, s. 11(d) will be complied with. [at p. 111 S.C.R.]

Finally, I want to emphasize 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. 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. [at p. 117 S.C.R.]

47Counsel for the Association submits that the Government of Ontario breached the s. 11(d) Charter rights of the judges. It is submitted that when the PWC presented its actuarial findings and analysis to the Government of Ontario, the Government was obliged by the Charter and the Agreement to disclose to the Association the actuarial calculations of PWC which set out the costs of the Commission's pension recommendations. Counsel for the Association submits that in order to conform to the constitutional requirements of the Agreement and the integrity of the Commission process, the Government of Ontario was required to return to the Commission pursuant to para. 28 (supra) of the Agreement. This procedure would enable the Association to answer fully, before the Commission, PWC's actuarial findings and allow the Commission to make an objective judgment based on full information.

48In other words, counsel for the Association submits that on the facts of this case, a two-step, bifurcated hearing before the Commission was necessary in order to preserve the constitutional integrity of the Commission and the integrity of the Agreement.

Conclusions

49In our view, para. 28 (supra) of the Agreement is permissible and not mandatory. Neither side is obliged to return to the Commission after the Commission has rendered its report. Moreover, even if the Government of Ontario had elected to return to the Commission, we are not persuaded that it was open to the Commission to reopen the matter because we are not persuaded that the Commission "had failed to deal with any matter properly arising from the inquiry under para. 13 or that an error relating to a matter properly under para. 13 is apparent on the report" (s. 28 of the Agreement).

50As stated earlier, the Commission did not attach any "price tag" to any of its pension recommendations. The Government of Ontario, as custodian of the public purse, was required to find out "how much will this cost". The same avenues were open to the Association. The Government of Ontario retained actuaries and ascertained the costs for the various recommendations. Counsel for the Association does not dispute those calculations.

C. Standard of review

51What is the standard of review to be applied to the response of the Government of Ontario, dated February 1, 2000?

52In the Judges' Reference case (supra), Lamer C.J.C. said [at pp. 110-11 S.C.R.]:

The standard of justification here, by contrast, is one of simple rationality. It requires that the government articulate a legitimate reason for why it has chosen to depart from the recommendation of the commission, and if applicable, why it has chosen to treat judges differently from other persons paid from the public purse. A reviewing court does not engage in a searching analysis of the relationship between ends and means, which is the hallmark of a s. 1 analysis. However, the absence of this analysis does not mean that the standard of justification is ineffectual. On the contrary, it 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, similar to the way that we have evaluated whether there was an economic emergency in Canada in our jurisprudence under the division of powers (Reference re Anti-Inflation Act, 1976 16 (SCC), [1976] 2 S.C.R. 373).

[Emphasis in original omitted]

53In Reference re Anti-Inflation Act, 1975 (Canada), 1976 16 (SCC), [1976] 2 S.C.R. 373, 68 D.L.R. (3d) 452, per Laskin C.J.C. at p. 423 S.C.R.:

In considering such material and assessing its weight, the Court does not look at it in terms of whether it provides proof of the exceptional circumstances as a matter of fact. The matter concerns social and economic policy and hence governmental and legislative judgment. It may be that the existence of exceptional circumstances is so notorious as to enable the Court, of its own motion, to take judicial notice of them without reliance on extrinsic material to inform it. Where this is not so evident, the extrinsic material need go only so far as to persuade the Court that there is a rational basis for the legislation which it is attributing to the head of power invoked in this case in support of its validity.

54In Newfoundland Assn. of Provincial Court Judges v. Newfoundland (2000), 2000 NFCA 46, 191 D.L.R. (4th) 225, 79 C.R.R. (2d) D-1 (Nfld. C.A.), Green J.A. (for the majority) said [at pp. 261-62 D.L.R.]:

On judicial review of a decision not to accept the recommendation of a commission, the review does not involve "a searching analysis of the relationship between ends and means" as would be required under an analysis pursuant to s. 1 of the Charter, but, rather, the search for a rational and supportable reason for the position taken.

Having said that, it is important to recognize that the "simple rationality" test does not require that the executive or the legislature demonstrate that the commission recommendation is wrong, irrational or unreasonable.

55In Minnesota v. Clover Leaf Creamery Co., 449 U.S. (S. Ct., 1981), the Supreme Court of the U.S.A. said at p. 464:

. . . States are not required to convince the courts of the correctness of their legislative judgments. Rather"those challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker." . . . Although parties challenging legislation under the Equal Protection Clause may introduce evidence supporting their claim that it is irrational, United States v. Carolene Products Co., 304 U.S. 144, 153-154, 58 S. Ct. 778, 784, 82 L. Ed. 1234 (1938), they cannot prevail so long as "it is evident from all the considerations presented to [the legislature], and those of which we may take judicial notice, that the question is at least debatable." Id., at 154, 58 S. Ct., at 784. Where there was evidence before the legislature reasonably supporting the classification, litigants may not procure invalidation of the legislation merely by tendering evidence in court that the legislature was mistaken.

Conclusions

56Applying the "simple rationality" test to the Government of Ontario's seven-part response, dated February 1, 2000 (supra), in our view, the Government of Ontario has met the test set out under each heading. There is no evidence that the decision was purely political, discriminatory or lacked a rational basis. The process (the Commission) used to determine the pension benefits exceeded judicial independence requirements.

57The actions of the Government of Ontario in retaining PWC actuaries to cost out the Commission's recommendations demonstrate that the Government of Ontario gave serious concern to the Commission's recommendations.

58We agree with the submissions of its counsel that the Government of Ontario's written decision meets the standard of simple rationality. The reasons are clear, logical, relevant and consistent with the Government's position taken before the Commission.

59There is no evidence that the judges of the Ontario Court of Justice are anything but qualified. There is no evidence that the Government of Ontario has been unable to attract the ablest of candidates because of the amount, structure or features of the Association's pension plan.

V. Result

60The application is dismissed.

V. Costs

61Prior to reserving judgment, we asked counsel for submissions regarding costs. Counsel for the Government of Ontario said that the respondent's position was that, if successful, the Government asked that it be awarded its disbursements. If unsuccessful, counsel for the Government submitted that her client should pay party and party costs. Counsel for the Association asked that costs be deferred to await the result of this judicial review application.

62In our view, the Government of Ontario should have its disbursements. If the quantum of disbursements cannot be agreed upon, then that issue shall be assessed.