HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA v. THE LIEUTENANT GOVERNOR IN COUNCIL, 2003 ABCA 102

Alberta v. Bodner, 2003ABCA 102 Date: 20030331 Docket: 01-00464 IN THE COURT OF APPEAL OF ALBERTA ____________________________________________________ REASONS FOR DECISION OF THE HONOURABLE MADAM JUSTICE PAPERNY (IN CHAMBERS) ____________________________________________________ BETWEEN: HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA AND THE LIEUTENANT GOVERNOR IN COUNCIL APPELLANTS - and - CHEREDA BODNER, ROBERT LEE, ROBERT PHILP, TIMOTHY STONHOUSE, WILLIAM MARTIN, WALDO B. RANSON, GLENN MORRISON, Q.C., JOHNATHAN H. B. MOSS, DAVID M. DUGGAN, MARK W. GRUMAN, PATRICK McILHARGY, JOHN R. SHAW, AND GREGORY FRANCIS RESPONDENTS APPLICATION FOR A STAY OF EXECUTION COUNSEL : P. A. Smith, Q.C. S. H. Chen

For the Appellants E. P. Groody K. L. Reiffenstein For the Respondents ___________________________________________________ REASONS FOR DECISION OF THE HONOURABLE MADAM JUSTICE PAPERNY (IN CHAMBERS) ____________________________________________________ I. INTRODUCTION [ 1 ] The Queen in Right of Alberta and the Lieutenant Governor in Council (“the government”), seek a stay of execution of the judgment of this Court pending disposition of the application for leave to appeal to the Supreme Court of Canada.

The government must satisfy the tests of irreparable harm and balance of convenience to entitle it to the relief sought. However, the evidentiary foundation tendered in support raises allegations of irreparable harm which appear to directly affect this Court. This in turn raises considerations of judicial impartiality and independence. II. FACTS [ 2 ] The background facts are set out in detail in the judgments of Clark, J. at (2001), 2001 ABQB 650 (CanLII) , 296 A.R. 22 and the reasons of this Court at 2002 ABCA 274 (CanLII) , [2002] A.J.

No. 1428 . [ 3 ] Briefly, an independent judicial compensation commission (“the Commission”) was established by the government to make recommendations on the salary and benefits for Alberta justices of the peace. It did so. By Order in Council 174/2000, the government rejected the Commission’s key recommendations and set significantly reduced salaries. The respondent justices of the peace brought an application for judicial review alleging that the government’s reasons for rejecting the Commission’s recommendations were unconstitutional.

The Court of Queen’s Bench agreed that the government had failed to put forward any legitimate reason to reject its commission’s recommendations and ordered that the recommendations become binding on the government. The government appealed that decision to this Court.

A stay of the Court of Queen’s Bench judgment was granted on December 18, 2001 pending disposition of the appeal. [ 4 ] In reasons dated November 22, 2002, this Court dismissed the appeal, agreeing with the conclusions of the learned chambers judge that the reasons offered by the government to reject the Commission’s recommendations failed to meet the constitutional standard of justification. [ 5 ] As a result, the government owes the justices of the peace the recommended increase from April 1, 1998 until March 31, 2003 totaling $3.29 million.

[ 6 ] On December 18, 2002, the government filed a notice of application for leave to appeal to the Supreme Court of Canada. III. TEST FOR GRANTING A STAY [ 7 ] In Alberta, successful litigants are generally entitled to enjoy the fruits of the judgment they have obtained even if the matter is being appealed: Alberta Provincial Judges’ Association v. Alberta (1999), 1999 ABCA 156 (CanLII) , 237 A.R. 101 (C.A.) ; Edmonton (City) v. Westinghouse Canada Inc. (1996), 1996 ABCA 278 (CanLII) , 42 Alta. L.R. (3d) 356 (C.A.) ; and Alberta v. Bennett , 1992 ABCA 227 (CanLII) , [1992] A.J. No. 727 (C.A.) .

Stays of money judgments, in particular, are reluctantly granted: Wilkinson v. Eaton (T.) Co. , [1992] A.J. No. 568 (C.A.) . The onus is on the applicant to demonstrate a tripartite test for a stay: (1) there is a serious question to be tried; (2) irreparable harm will be suffered if the stay is not granted; and (3) the balance of convenience favours granting the stay: RJR-MacDonald Inc. v.

Canada , 1994 CanLII 117 (SCC) , [1994] 1 S.C.R. 311 ; and Westinghouse . [ 8 ] Where a government authority is the applicant, public interest is a special factor forming part of the consideration at both the second and third stages of the test: RJR-MacDonald Inc. . [ 9 ] The government submits four distinct forms of irreparable harm will be suffered without the stay. [ 10 ] First, it asserts that if it pays out the compensation now owing and then later succeeds before the Supreme Court of Canada, it may not be able to collect “with ease” the retroactive payments made to the justices of the peace totaling approximately $3,294,000.00.

The government alleges that recovery of the money will not simply be a matter of making deductions from monthly paychecks. It does not suggest an inability or unwillingness on the part of any of the justices of the peace to pay any judgment granted against them. [ 11 ] Second, the government argues there will be administrative costs associated with calculating the amounts owing to each of the individual justices of the peace and former justices of the peace.

The calculation will be complicated because of the varying periods of service, differing schedules and the ad hoc basis upon which most justices of the peace serve. The government argues this is an administrative burden which would be unrecoverable should the government succeed on appeal, but would not be incurred if a stay is granted. The quantum or extent of such a burden is not in evidence. [ 12 ] Third, the government claims the public interest will be harmed because the government will be obliged to pay money which it had not budgeted for.

It alleges that funding this judgment would result in it acting contrary to three statutes designed to implement a policy of deficit reduction, fiscal responsibility and accountability. [ 13 ] Fourth, the government contends there will be irreparable harm as it will be obliged to reduce expenditures in court services to compensate the justices of the peace as required. I must consider the ramifications of the third and fourth propositions before determining this application on its merits. IV. ANALYSIS

[ 14 ] The government submits that if a stay is not granted, it will be in breach of three statutes it has passed to ensure fiscal responsibility, debt reduction and accountability on the part of various government ministries. The government’s third quarter budget estimates an economic cushion of $1.8 billion. The government’s forecast for resource revenue is conservative, based on oil at US$28.86/barrel and natural gas at $4.65/mcf. Anticipated revenue has increased by $2 billion.

There is no explanation offered why an expenditure of $3.2 million would result in a deficit budget under the Balanced Budget and Debt Retirement Act , R.S.A. 2000, c. B-0.5, nor why the payment of this money will run afoul of government’s obligation to be deficit free under the Fiscal Responsibility Act , R.S.A. 2000, c. F-15 . [ 15 ] Despite its debt reduction and fiscal responsibility legislation, the government maintains sufficient financial flexibility to meet unanticipated needs and priorities.

By its second quarter, it had responded to unforseen expenditures in both emergent and non-emergent areas in the approximate amount of $1 billion. [ 16 ] The government also raises a breach of the Government Accountability Act , R.S.A. 2000, c. G-7 , as further justification for the granting of a stay. This legislation promotes business planning and accountability by government departments. Historically, remuneration of provincial judicial officers has been paid through the Department of Justice (“Justice”) budget.

When Justice filed its business plan for 2002-2005, the Minister of Justice advised that he took into consideration “all of the government’s policy decisions as of February 26, 2002, with material economic or fiscal implications.” The Minister was aware at that time of the Commission’s recommendations, the Queen’s Bench order implementing them and that an appeal to this Court had been expedited.

However, no expenditure for increased compensation to the justices of the peace was budgeted for. [ 17 ] Several possible conclusions may be drawn from this: Justice did not consider the amount to be paid to the justices of the peace material, Justice failed to budget for the amount, or Justice did not intend to pay the amount out of its budget.

The government offers no evidence why the justices of the peace cannot be paid from other Justice resources or why the monies cannot be paid from general government reserves, which at present are substantial. [ 18 ] The affidavit filed in support states that in order to implement the recommendations of the Commission, more will be paid to the justices of the peace than the budget allocated and “ the court services division ” of the department of justice “ will be required to further reduce expenditures in other service areas in order to accommodate the Commission’s recommendations.” Counsel for the government similarly argued in their written memorandum, “Implementation of the Commission’s recommendations will require further reductions in expenditures in service areas of the Court Services Division .” [Emphasis added.] [ 19 ] The provincial government is constitutionally obliged to provide services to the courts under s. 92(14) of the Constitution Act, 1867 .

The court services division of Justice provides administration to the three levels of court in Alberta, the Court of Appeal, the Court of Queen’s Bench and the Provincial Court. The services include registry services, court clerks, transcription services, sheriff’s services, mediation services, library services, security services and judicial support. This is but one of four core “businesses” of Justice but by far its largest, at least, as measured by budget requirements. [ 20 ] The budget for court services has diminished in recent years.

In the fiscal year 2000-01, court services budget was $102,803,000 out of a total Justice budget of $221,279,000. In the following fiscal year, court services was reduced to $85,314,000 despite increases in every other major Justice program. For 2002-03, the court services budget is $91,864,000 out of a total budget of $236,150,000.

This is $11 million less than the amount spent on court services two years ago, despite an increase in the overall Justice budget by $15 million. [ 21 ] These submissions and their effect on the courts engage the scope of the government’s responsibility to fund court services and the impact of non-funding on judicial independence. Is this constitutional obligation paramount to provincial legislation aimed at deficit reduction and financial accountability? Can that legislation be used to shield government resources from legal or constitutional demands?

If the government has a constitutional duty to fund court services, can it legitimately fund an increase in one area of court services by decreasing acknowledged needs in another? Can its statement that it will cut services reasonably be viewed as irreparable harm or a basis to tip the balance of convenience in favour of a stay? [ 22 ] The threat to cut court services affects the Court. As such, it is at the crux of my dilemma whether to entertain this application.

[ 23 ] When I raised this concern, counsel for the government advised that such action did not represent a threat but a fact. She did acknowledge that the effect of the position might well infringe adjudicative independence, but suggested it was an inevitable consequence of current fiscal realities.

Counsel for the justices of the peace took the view that any threat to cut court services was empty because the government could not fulfill it, presumably because it would be unconstitutional to do so, and ought to be disregarded. [ 24 ] Whether such cuts can legitimately be carried out raises the interrelationship between judicial administrative independence, as outlined in R . v. Valente , 1985 CanLII 25 (SCC) , [1985] 2 S.C.R. 673 , and the executive power to allocate public resources. For example: Can government act unilaterally in cutting services? If so, under what circumstances?

Can government impose unilateral budget restrictions and hiring freezes on court services only? Resolving the issue requires an analysis of the interaction between the division of powers on the one hand and the executive model of court administration on the other, and a reconciliation of the ambiguities that exist. [ 25 ] However important these questions are, the answers could reasonably be seen to affect this Court. Counsel for the government submitted that no conflict should be perceived because no reasonably informed person would think this Court would not apply independent judgment on these matters.

Counsel for the justices of the peace did not see a conflict given its characterization of the statement as hollow. However, both conceded that if there is a conflict, such conflict is inevitable. Thus, they have no objection to my deciding this application. [ 26 ] On reflection, however, I remain concerned by what I consider to be the basic propositions being advanced by government and, if correct, the consequences that logically flow from them. They are as follows: 1. If the government has to pay the Commission’s recommended salary increase, money will be removed from court services to do so. 2.

In responding to the salary increases of judicial officers, the government can legitimately remove other monies allocated to the courts. [ 27 ] In justifying the first proposition, the government affidavit states that Justice is going through a period of economic restraint. Why this is so is unclear. As discussed above, the government offers no evidence why the judgment cannot be paid from general government reserves. I am unaware of any constitutional or legal compulsion for the money to be paid from court services or from Justice.

In the absence of a legitimate rationale for this position, a reasonable person might conclude that its purpose or effect was to apply pressure to the decision maker, in turn, casting doubt on its impartiality. [ 28 ] The second proposition following from the first, that the government is free to take the monies from court services to pay any funding increase to judicial officers, raises another concern: Despite commission recommendations calling for increases, the government believes it may simply choose not to put further money into court services.

Thus, any increase to judicial compensation will come at the expense of court services. If this is correct, there are additional consequences to the courts. First, in short order, there will be insufficient money in the government’s “court services” budget to fund either courts or their services adequately. This method of fiscal rationalization would erode any effectiveness of a judicial compensation committee.

Second, any court asked to rule on the government’s rejection of a commission’s recommendations for salary increases may be compromised if a decision that rejects the government reasons will result in a corresponding reduction in court services. Thus, the position advanced by government has serious implications to judicial adjudicative and administrative independence. The effect of these propositions is not merely incidental but material to the courts’ future operation.

The public could reasonably conclude that the court is in a conflict and call into question its impartiality. [ 29 ] The public perception of judicial independence is of utmost importance. Confidence in our judicial system is fundamental to democracy. If a court is perceived to be subject to financial sanction for decisions it makes, public confidence will, justifiably, be diminished.

Where the court is faced with the loss of services to it, if it fails to grant the order requested, it is reasonable to conclude that public trust in institutional impartiality is adversely affected. [ 30 ] Judicial adjudicative independence demands that individual judges and the institution as a whole are to make decisions free from outside influence and remain secure against interference in their decision making. This concept of independence is articulated in art. 2.02 of the Universal Declaration on the Independence of Justice (reproduced in S. Shetreet and J.

Deschênes, eds., Judicial Independence: The Contemporary Debate (Boston: Martinus Nijhoff, 1985) 447 at 450) which states: Judges individually shall be free, and it shall be their duty, to decide matters before them impartially, in accordance with their assessment of the facts and their understanding of the law without any restrictions, influences, inducements, pressures, threats or interferences, direct

or indirect, from any quarter or for any reason . [Emphasis added.] [ 31 ] Fortunately, this is not a case of inevitable conflict or necessity as that term is defined in the rehearing application for the P.E.I. Reference, 1998 CanLII 833 (SCC) , [1998] 1 S.C.R. 3 . The Supreme Court of Canada, pursuant to the Supreme Court Act , R.S. 1985, c. S-26, s. 65 , has the jurisdiction to hear this matter. Although the Supreme Court may also have an interest in the outcome, the application does not directly threaten the Supreme Court’s budget.

Thus, the public’s perception of partiality would be reduced. [ 32 ] I am obliged to recuse myself on the basis that a reduction in expenditures for court services will affect services to this Court, the Court of Queen’s Bench and the Provincial Court. I conclude, despite counsels’ view, that this is not a case of inevitable conflict as the Supreme Court of Canada can hear this application and any deleterious effect on impartiality and independence is of lesser magnitude. V. CONCLUSION [ 33 ] Courts cannot function unless there is public acceptance that judges have the moral authority to resolve disputes.

Judicial independence and impartiality are at the root of that confidence. [ 34 ] The position taken by government, that it will cut court services if a stay is not granted, places the Court in an untenable position. It is unwise and unnecessary to jeopardize public confidence in the impartiality of this Court by ruling on this application where the Supreme Court is available to hear the matter. I am unable to entertain this application and accordingly direct the parties to refer this matter to the Supreme Court of Canada.

APPLICATION HEARD on January 15, 2003 REASONS FILED at Calgary , Alberta this 31st day of March, 2003 ___________________________ PAPERNY, J.A.