Judges of the Provincial Court (Man.) Date:, 2013 MBCA 74

Citation: Judges of the Provincial Court (Man.) Date: 20130821 v. Manitoba et al., 2013 MBCA 74 Docket: AI 12-30-07822 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Michel A. Monnin Madam Justice Freda M. Steel Madam Justice Holly C. Beard BETWEEN : THE JUDGES OF THE PROVINCIAL ) COURT OF MANITOBA, as represented ) by the PROVINCIAL JUDGES’ ) ASSOCIATION OF MANITOBA, as ) represented by JUDGE CHRISTINE ) HARAPIAK, JUDGE LEE ANN MARTIN, ) JUDGE JOHN COMBS, JUDGE MARY ) KATE HARVIE, JUDGE SHAUNA ) K. D. Labossiere and HEWITT-MICHTA, JUDGE JOHN GUY, ) L. K.

Troup JUDGE LAWRENCE ALLEN, JUDGE ) for the Appellants LINDA GIESBRECHT, JUDGE ) KRYSTYNA TARWID, CHIEF JUDGE ) KEN CHAMPAGNE and ASSOCIATE ) S. Dawes and CHIEF JUDGE MURRAY THOMPSON ) D. G. Bartel ) for the Respondents ) (Applicants) Respondents ) ) Appeal heard: - and - ) December 13, 2012 ) ) HER MAJESTY THE QUEEN IN RIGHT ) Judgment delivered: OF THE PROVINCE OF MANITOBA and ) August 21, 2013 THE HONOURABLE ANDREW SWAN, ) MINISTER OF JUSTICE ) ) ) (Respondents) Appellants ) TABLE OF CONTENTS Page

PART I Introduction .................................................................... 2

PART II Overview ........................................................................ 5 2.1 Report of the 2008 Judicial Compensation Committee ...... 6 2.2 Government’s Response to the Recommendations .......... 11

PART III Relevant Legislation ..................................................... 13

PART IV Decision of the Application Judge ................................. 16

PART V Analysis and Decision ................................................... 18 5.1 Standard of Review ........................................................ 18 5.2 Did the Application Judge Err in his Application of the Appropriate Legal Test? ................................................ 20 • What is the legal test? .............................................. 20 • What constitutes the Government ’s Reasons? ........ 24 • Appropriate Level of Deference ............................... 25 • Application of the Law to the Facts ........................ 29 • Salary Differentials for Administrative Judges ........ 40 5.3 Interest .......................................................................... 40 5.4 Remedy ......................................................................... 50 5.5 Costs – Did the Application Judge Err in Awarding Solicitor-Client Costs? ................................................... 55

• Is reprehensible conduct which occurs only before the commencement of litigation grounds for solicitor-client costs? .......................................... 58 • Did the application judge exercise his discretion appropriately on the facts of this case? ................................................................. 61

PART VI Conclusion .................................................................... 67 STEEL J.A.

PART I Introduction [1] This appeal concerns the Government of Manitoba’s (the Government) response to the recommendations of theJudicial Compensation Committee (JCC) appointed in 2008, the 7th Judicial Compensation Committee to be held in Manitoba. ThatCommittee made recommendations respecting the salaries and benefits to be paid to judges of the Provincial Court for the fiscal years2008, 2009 and 2010.

The Government rejected several of the Committee’s recommendations, the most important of those being therecommendation in respect of salary increases. [2] Provincial Court judges are appointed by the Provincial Government. Their salaries are paid by the ProvincialGovernment. However, the Provincial Government is often a litigant in Provincial Courts in many and diverse matters. It is, therefore,imperative that the judicial independence of the Provincial Court judges be closely guarded and that the public perception of theirjudicial independence be spotless. See 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 (AttorneyGeneral); Minc v. Quebec (Attorney General), 2005 SCC 44, [2005] 2 S.C.R. 286 (Bodner) (at para. 6): …. Judicial independence serves not as an end in itself, but as a means to safeguard our constitutional order and to maintain publicconfidence in the administration of justice … [3] Judicial independence is composed of several factors, one of them being financial security, both for the individualjudge and the court as a whole.

It would be wholly inappropriate for the judges to bargain and negotiate with the Government directlyabout their salaries or working conditions.

Judges cannot threaten to strike and the Government cannot threaten to lock them out. [4] While some jurisdictions (including Manitoba) had some form of judicial compensation committee process in placeprior to 1997, the process as it now exists came into being as a direct result of the 1997 Supreme Court of Canada decision in Referencere Remuneration of Judges of the Provincial Court of Prince Edward Island; Reference re Independence and Impartiality of Judges ofthe Provincial Court of Prince Edward Island, (SCC), [1997] 3 S.C.R. 3 (the P.E.I.

Reference). [5] In that decision, the Supreme Court considered cases which originated from Manitoba, Alberta and Prince EdwardIsland, all of which concerned the independence of the judiciary. The court held that an independent judicial compensation committeeshould be established to determine the issue of salary and benefits of judges.

A panel of three people would hear representations fromboth the judges and the government and make recommendations to the government. [6] These committees were intended to remove the issue of judges’ compensation from the political sphere and to avoidconfrontation between governments and the judiciary. “The constitutional function of this body is to depoliticize the process ofdetermining changes or freezes to judicial remuneration” (Reference at para. 166). [7] Every federal, provincial and territorial jurisdiction across Canada now has some form of judicial compensationcommittee responsible for making recommendations to government concerning appropriate compensation for judges for the period ofthat committee’s mandate.

To this end, The Provincial Court Act, C.C.S.M., c. C275 (the Act), requires the Government to set up ajudicial compensation committee every three years. The recommendations of the JCC are not binding on the Government, with oneexception, to be mentioned later. However, if the Government rejects or varies the recommendations, it has to provide a rational reason

for doing so and the process must be properly followed. [ 8 ] The Government rejected most of the recommendations of the 2008 JCC, giving several reasons for doing so. The Provincial Judges’ Association of Manitoba (the judges) argued, and the application judge agreed, that the Government did not have a sufficient reason for rejecting the recommendations and ordered that the recommendations of the 2008 JCC be implemented. [ 9 ] I agree with the application judge.

The reasons of the Government rejecting the recommendations of the 2008 JCC do not pass the test of simple rationality set out by the Supreme Court of Canada in the Bodner case. I would dismiss the appeal for the reasons that follow.

PART II Overview [ 10 ] In May 2008, pursuant to s. 11.1(2) of the Act , the Lieutenant Governor in Council appointed a JCC to investigate, report and make recommendations respecting the salaries and benefits to be paid to the judges for the fiscal years 2008, 2009 and 2010. Written submissions were made by both parties and the hearing in front of the JCC took place in August 2008.

Because of certain developments in the global and national economy that occurred after the hearing, the parties were invited to make further submissions, which they did, although neither party changed its position despite these economic developments.

The JCC issued its report in June 2009. [ 11 ] The JCC made recommendations with respect to judicial salaries, salary differentials for administrative judges, interest payable on the retroactive salary recommendation, extended health benefits, life insurance, maternity and parental leave, parking and costs. [ 12 ] The JCC report was tabled in the Legislature in September 2009. Manitoba, Legislative Assembly, The Standing Committee on Legislative Affairs , 39th Leg., 3rd Sess., vol.

LXI, No. 9 (26 October 2009) (the Standing Committee) considered the JCC report and then met on October 26, 2009, where counsel for the judges made a presentation and answered questions. Immediately following the presentation, the Standing Committee passed a motion which had been prepared and printed earlier and included three schedules. The first

schedule listed the recommendations of the JCC that were accepted. The second

schedule listed the recommendations of the JCC that were rejected and the reasons offered to justify the rejection of those recommendations. The third

schedule listed the recommendations made by the Standing Committee in substitution for recommendations made by the JCC.

The Standing Committee rejected the most significant recommendations of the JCC, specifically those relating to salary, salary differentials for administrative judges and interest. [ 13 ] The report of the Standing Committee was presented in the Legislature in December 2009, and the Legislature voted to concur with the report of the Standing Committee. 2.1 Report of the 2008 Judicial Compensation Committee [ 14 ] The JCC heard testimony from four expert witnesses: two economists and two actuaries.

Both the judges and the Government told the JCC that it should consider salary information that became available after the conclusion of the hearing, but before the JCC issued its report. [ 15 ] In discharging its mandate, the JCC was required by s. 11.1(16) of the Act to consider the following six factors: 1. the nature of the Provincial Court judge’s role and the independence of the judiciary; 2. the need to attract and retain excellent applicants to the judiciary and the statistics with respect to the recruitment, retention, resignation and retirement of Provincial Court judges; 3. the need to provide fair and reasonable compensation for Provincial Court judges in light of prevailing economic conditions in Manitoba and the overall economic and financial state of the Manitoba economy; 4. the principle that public resources must be managed efficiently and effectively in the context of the Government’s current financial position; 5. the cost of living and the growth or decline in real per capita income in Manitoba; 6. the manner in which the compensation package paid to Provincial Court judges in Manitoba compares to judicial compensation packages in other jurisdictions in Canada, having regard to the differences between the jurisdictions. [ 16 ] It is useful to review the 2008 JCC Report ( “Report and Recommendations of the Judicial Compensation Committee” by Colin R.

MacArthur, Q.C., Victor H. Schroeder, Q.C. & David M. Shrom, June 9, 2009) in some detail, since some of the Government’s reasons for rejecting the 2008 JCC Report, allege that the JCC did not consider certain factors which it should have, or did consider certain others which it should not have. [ 17 ] In its 2008 JCC Report, the JCC referred to those six factors specifically and stated that “[t]he Committee understands its obligation is to balance all of the Factors in an objective, impartial manner to arrive at a rational conclusion, which is justified by reasons” (see the 2008 JCC Report at p. 70).

It also pointed out that, while it is required to consider all six factors, it may also consider other factors, as long as it identifies the basis for its recommendation.

[ 18 ] Additionally, the Act requires that the JCC Report must include information as of April 1 of the year of the committee’s appointment, regarding the salaries paid to the Chief Judge, Associate Chief Judge and full-time judges of the Provincial Courts in the provinces of New Brunswick, Nova Scotia and Saskatchewan (the three provinces), and the designated averages of the salaries paid to the Chief Judges, Associate Chief Judge and full-time judges for the three provinces ( s. 11.1(17) of the Act ).

The JCC was able to obtain current information from both Nova Scotia (2008-2011) and Saskatchewan (2009-2012) to use in its report. In coming to its decision, the JCC took into account that it did not have current information for New Brunswick. [ 19 ] Aside from the consideration of the mandatory statutory factors, the JCC reviewed the past reports from the other JCCs and noted certain principles that have been consistently followed.

For example, it found that the most appropriate comparator in assessing its recommendation for salaries and benefits was salaries and benefits paid to Provincial Court judges in other jurisdictions. It specifically rejected the position advanced by the Government that salaries and benefits paid to senior public servants was an appropriate comparator.

The JCC reasoned that, since the Act specifically requires the JCC to consider the salaries and benefits paid to Provincial Court judges in other jurisdictions in Canada, but makes no mention of the compensation levels of senior civil servants, that was a compelling statement of provincial public policy. [ 20 ] In addition, again consistent with the recommendations of other JCCs (for example, JCC 4 appointed February 2001 and JCC 5 appointed March 2005), it held, that based on the Government’s economic performance, Manitoba Provincial Court judges should be paid at, or near, the mid-range of salaries paid to Provincial Court judges across Canada. (See JCC 5 at p. 39 of its report and JCC 6 at p. 36 of its report, indicating that Manitoba’s economy operates in the middle range of the provinces in Canada.) [ 21 ] On the other hand, the JCC accepted the submission of the Government that the reference in the sixth factor to other jurisdictions in Canada referred to the nine other provinces of Canada and did not include, as submitted by the judges, the federal judiciary. [ 22 ] Of particular importance in coming to its decision was the need to consider the economic situation of the province balanced against the need to provide fair and reasonable compensation to Provincial Court judges.

The JCC reviewed the economic evidence presented by the parties in some detail, both initially and after further evidence was submitted as a result of the downturn in the global economy. It did fine-tune its recommendations as a result of the caution urged upon it by the Government. [ 23 ] In this regard, it concluded that: …. The Committee is convinced that Manitoba’s economy is performing at least in the middle pack of Canadian provinces.

If anything, the economic outlook prior to August 2008 was stronger than it was in March 2003 when JCC5 described the Manitoba economy as ranking in the middle range of the provinces in Canada. [ 24 ] There also is little disagreement between the judges and the Government that, compared to other provinces in Canada, Manitoba continued to perform well. The Government has specifically acknowledged that fact in its subsequent submissions.

However, despite the fact that Manitoba continues to perform well in comparison to most other provinces, according to forecasts received by the JCC, Manitoba is in decline. [ 25 ] The JCC did endorse the position of the Government that it must proceed prudently in assessing the economic situation, notwithstanding the relatively good performance of Manitoba, because of the severe economic downturn and uncertainty for the economic future of the province.

Taking this into account, the JCC adjusted its proposed recommendation downwards. [ 26 ] In addition, the salary recommendation in each of the subsequent years was made taking into account the fact that the Manitoba JCC did not have the New Brunswick comparable for 2008 and, since it must be assumed that when it comes in it will be higher than the 2007, that means that Manitoba Provincial Court judges will be paid less than the binding average provided for in the Act . [ 27 ] In the result, the JCC recommended judges’ salaries be increased by five per cent in 2009 and 2010.

The recommendation for 2008 was less than the “designated average.” By virtue of s. 11.1(23) (

c) of the Act , when the salary recommendation of the JCC is the same or less than the average salaries of the judges from New Brunswick, Nova Scotia and Saskatchewan, it is binding on both the Government and the judges. [ 28 ] With respect to salary differentials for the Chief Judge and Associate Chief Judges, the recommendation was eight per cent and five per cent, respectively, above the other judges’ salary.

The JCC also recommended that interest be paid on retroactive salary adjustments from April 1, 2008, until the date of payment. [ 29 ] Recommendations were also made with respect to maternity and parental leave policy, parking rates and premiums for life insurance coverage for judges. 2.2 Government’s Response to the Recommendations [ 30 ] The 2008 JCC Report was tabled in the Legislature on September 28, 2009. At the outset of the meeting of the Standing Committee, for about one hour, counsel for the judges made a presentation and answered questions asked by various members of the Standing Committee.

Counsel also provided the members with current salary information in respect of the New Brunswick judges. [ 31 ] The report of the Standing Committee was presented in the Legislature on December 1, 2009. The Legislature voted to concur with the report on December 14, 2009.

[ 32 ] The Government rejected the recommendations of the JCC with respect to salaries and salary differentials. Instead, for 2009, it substituted a 2.9 per cent increase and, for 2010, a one per cent increase, but with the increase to be effective only on the last day of that fiscal year, being March 31, 2011. The Government also rejected the recommendation with respect to interest. [ 33 ] In rejecting the recommendations of the JCC regarding the salary increase, the Government provided the following reasons: 1.

The salary increase recommendation failed to properly take into account the six factors the JCC must consider; 2. the salary increase recommendation went beyond what is appropriate or necessary for maintaining judicial independence; 3. the salary increase recommendation did not adequately take into account the value of the existing salary level, pension and other benefits in attracting and retaining a pool of highly qualified candidates; 4. the salary increase recommendation failed to take into account the value of the maternity and parental benefits which were accepted by the Standing Committee or the fact that the 2008 salary increase resulted in a significant increased cost to Manitobans; 5.

The salary increase recommendation did not fairly and reasonably consider the total compensation paid to judges in Manitoba.

In particular, it failed to acknowledge the pension payable to judges, which is currently among the most generous in Manitoba; 6. the salary increase recommendation was inconsistent with other public service salary increases and the current policy of negotiated wage restraint in the public service, absent special circumstances; 7. the substituted salary increase proposed provided fair and reasonable compensation, having regard to prevailing economic conditions in Manitoba, while still preserving judicial independence and the ability to attract and retain candidates for the judiciary; 8. the salary increase recommendation was based on a national average rather than the average arrived at by comparing judicial compensation in Saskatchewan, Nova Scotia and New Brunswick; and 9. the salary increase recommendation was inconsistent with the JCC’s own findings about the economic conditions of the province that it was a time for prudence and that the Provincial Court judges were part of the Manitoba community.

PART III Relevant Legislation [ 34 ] All of s. 11.1 of the Act is attached to these reasons as an appendix. The following provisions are the most relevant: Factors to be considered 11.1(16) In making its report and recommendations, the compensation committee must consider the following factors: (

a) the nature of the judges’ role and the independence of the judiciary; (

b) the need to attract and retain excellent applicants to the judiciary and the statistics with respect to the recruitment, retention, resignation and retirement of judges; (

c) the need to provide fair and reasonable compensation for judges in light of prevailing economic conditions in Manitoba and the overall economic and financial state of the Manitoba economy; (

d) the principle that public resources must be managed efficiently and effectively in the context of the government’s current financial position; (

e) the cost of living and the growth or decline in real per capita income in Manitoba; (

f) the manner in which the compensation package paid to judges in Manitoba compares to judicial compensation packages in other jurisdictions in Canada, having regard to the differences between jurisdictions. Report given to minister and judges 11.1(20) Within 180 days after the compensation committee is appointed, it must give its report, including recommendations, to the minister, the Chief Judge, the Associate Chief Judges and the judges of the court. Until the report is tabled in the Legislative Assembly,

it is confidential and must not be made public or disclosed to a person outside the government or the provincial judiciary. Request to clarify report 11.1(21) Within seven days after the report of the compensation committee is submitted, the chief judge, an associate chief judge, a judge of the court or the minister, may request the compensation committee to clarify the report or a part of it. The compensation committee must consider the request and provide any clarification to the persons who received the report under subsection (20) within 15 days after the request is made.

The report is not considered to be submitted until the clarification is provided. Minister to table report 11.1(22) The minister shall table the report of the compensation committee in the Assembly within 15 days after it is submitted if the Assembly is sitting, or if it is not, within 15 days after the beginning of the next sitting. When recommendations re salaries are binding 11.1(23) For each year for which the compensation committee makes recommendations, the following recommendations are binding on both the government and the judges: (

a) the salary recommended for the Chief Judge for the year, if the chairperson of the compensation committee certifies with respect to that year that the recommended salary is equal to or less than the chief judge’s designated average; (

b) the salary recommended for an Associate Chief Judge for the year, if the chairperson of the compensation committee certifies with respect to that year that the recommended salary is equal to or less than the associate chief judge’s designated average; (

c) the salary recommended for a judge of the court other than the Chief Judge and an Associate Chief Judge, for the year, if the chairperson of the compensation committee certifies with respect to that year that the recommended salary is equal to or less than the judge’s designated average. Referral to standing committee 11.1(24) Within 20 days after the report of the compensation committee is tabled, the recommendations of the compensation committee, except those that are binding on the government under subsection (23), must be referred to a standing committee.

Completing report 11.1(25) The standing committee must complete its report to the Assembly within 120 days after the date of referral. Reporting to Assembly 11.1(26) The chairperson of the standing committee must present the report to the Assembly within five days after the report is completed if the Assembly is sitting, or if it is not, within five days after the beginning of the next sitting. Report of standing committee re recommendations 11.1(27) With respect only to those recommendations of the compensation committee that have been referred to it, the standing committee may in its report (

a) accept one or more of the recommendations; (

b) reject one or more of the recommendations; or

(

c) reject one or more of the recommendations and set the salaries or benefits that are to be substituted for the salaries or benefits proposed by the rejected recommendations; and if the standing committee rejects a recommendation, it must provide reasons for each recommendation rejected.

PART IV Decision of the Application Judge [ 35 ] The application judge reviewed the two leading Supreme Court of Canada cases in this area, the P.E.I. Reference case and the Bodner case, and identified his role in conducting the judicial review as being deferential and limited in scope. His role was to determine whether the Government’s reasons for refusing to follow the recommendations of the JCC were rational and supported by a factual foundation.

If they were, then there were no grounds for judicial intervention. [ 36 ] He examined the recommendations of the JCC and the Government’s response in light of the jurisprudence. He noted that, with respect to the reasons given by the Government in rejecting the salary increases recommended by the JCC, the Government led no evidence as to what agreements had been reached with various sectors of the public service for the years 2009 and 2010 at the JCC hearing.

He also noted that, by December of 2008, there was evidence before the JCC that the economic crisis had subsided, which evidence was not contradicted by the Government. [ 37 ] He concluded 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 interests in terms of not raising the expectations of employees in the public sector with whom the Government had yet to bargain. [ 38 ] He compared the position taken by the Government of Manitoba to that taken by the Government of Quebec before a compensation commission established in that province and concluded in his reasons (at para. 79): In my view, the position taken by the government here is as tainted as was the position taken by the government in Québec 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. [ 39 ] The Government alleges that the application judge erred on five grounds, as follows: 1.

By failing to properly apply the applicable legal test, including the obligation to conduct a limited review with deference to the Government’s decision; 2. by failing to apply the appropriate remedy, which was to remit the matter back to the Government; 3. by adjudicating on irrelevant matters; 4. by improperly finding the Government acted in bad faith; and 5. by awarding solicitor-client costs. [ 40 ] The Government is not appealing all aspects of the application judge’s ruling. There is no appeal with respect to the extended health benefits, life insurance, maternity and parental leave or parking.

There is an appeal with respect to salaries, salary differentials for administrative judges, interest payable on the retroactive salary recommendation and costs. [ 41 ] Although there is no appeal with respect to the ruling on life insurance or the effective date of the maternity and parental leave policy and parking, the history of the parties’ dealings on these issues and the Government’s treatment of those recommendations are relevant to the finding by the application judge of bad faith on the part of the Government and the consequent award of solicitor- client costs.

Therefore, those issues will be addressed later in these reasons in the discussion on costs.

PART V Analysis and Decision 5.1 Standard of Review [ 42 ] In the Bodner case, the Supreme Court of Canada was quite explicit on the nature of the standard to be applied by a court reviewing a government’s response to the recommendations of a judicial compensation committee. The standard of judicial review is one of simple rationality. The role of the reviewing court is to conduct a deferential, limited form of judicial review.

This deferential review acknowledges the government’s unique position and accumulated expertise and its constitutional responsibility for management of the province’s financial affairs (see Bodner at para. 30 ). [ 43 ] That is the standard that should have been applied by the application judge to the decision of the Government not to follow the JCC recommendations.

[ 44 ] What, then, is the standard of review in this court? The Government argues that the applicable standard of review with respect to this appeal is correctness. The judges argue that the appeal deals with questions of mixed fact and law and submit that the standard of review is one of palpable and overriding error. [ 45 ] This is an appeal of a review of a decision of the Government under the Act , so the determination of the applicable standard of review is governed by the principles of administrative law and, in particular, Dr. Q v.

College of Physicians and Surgeons of British Columbia , 2003 SCC 19 , [2003] 1 S.C.R. 226, and more recently in Agraira v. Canada (Public Safety and Emergency Preparedness) , 2013 SCC 36 at paras. 45-47 . Our task on appeal with respect to the major ground of appeal is to determine whether the application judge correctly applied the legal test set out in Bodner . Accordingly, if the application judge chose the wrong standard of review or incorrectly applied the correct standard of review, this court would be justified in intervening.

Moreover, if the application judge committed palpable or overriding error with respect to the facts and the evidence referred to in his analysis, this would also justify intervention. (See Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235.) His decision on costs was a discretionary one and should not be varied unless he proceeded on a wrong principle, a misapprehension of the evidence or the decision was clearly unjust. 5.2 Did the Application Judge Err in his Application of the Appropriate Legal Test?

What is the legal test? [ 46 ] Both parties agree that the legal test applicable to the matters at issue was set out by the Supreme Court of Canada in the Bodner case. The difference between the parties arises from the application judge’s application of the Bodner test.

Before commenting on the application judge’s application of the law to the facts, I believe it would be helpful to set out the law in this area. [ 47 ] In the Bodner case, Provincial Court judges in New Brunswick, Ontario and Quebec, justices of the peace in Alberta and municipal court judges in Quebec sought judicial review of their governments’ decision to reject certain compensation committee recommendations relating to their salaries and benefits. [ 48 ] The Supreme Court of Canada took the opportunity to set out the principles that apply in these situations and to clarify the operation of the committees that they recommended be set up in the P.E.I.

Reference case in 1997. [ 49 ] They held that the JCC recommendations are not binding upon a legislature, unless the legislature provides otherwise. The government may choose not to follow the recommendations, but it must justify its decision with rational reasons and those rational reasons must have a reasonable factual foundation ( Bodner at para. 39 ). [ 50 ] As indicated earlier in these reasons, the role of the application judge upon review is to conduct a deferential, limited form of judicial review. The standard of judicial review is one of simple rationality.

The test developed in Bodner is composed of three parts: 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? 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? [ 51 ] In Bodner , the court explained what would be “legitimate reasons” (at paras. 23-24): 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.

The response must be tailored to the commission’s recommendations and must be “legitimate” ... which is what the law, fair dealing and respect for the process require. …. [ 52 ] Reasons that are complete and that deal with the committee’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, and bald expressions of rejection or disapproval are inadequate.

Instead, the reasons must show that the committee’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 ( Bodner at para. 25 ). [ 53 ] With respect to the second part of the test, the reviewing court “must determine whether the government has explained the factual foundation of its reasons in its response” ( Bodner at para. 36 ). The court must also consider whether it is rational for the government to rely on the stated facts or circumstances to justify its response.

While the government may expand upon the factual foundation in affidavit evidence before a reviewing court, “[a]bsent new facts or circumstances, as a general rule, it is too late to remedy that foundation in the government’s response before the reviewing court” ( ibid. ).

[ 54 ] In applying the third part of the test, the reviewing court is to consider the overall process from a global perspective. The focus shifts to the totality of the process and of the response. Although a court may find fault with certain aspects of the process followed, the court must weigh and assess the government’s participation in the process and its response in totality, and determine whether the government has respected the purposes of the committee: preserving judicial independence and the depoliticization of the remuneration process.

In other words, has the government engaged in a meaningful way with the process of the commission? As Bodner stated (at para. 43 ): A court should not intervene every time a particular reason is questionable, especially when others are rational and correct. To do so would invite litigation, conflict and delay. This is antithetical to the object of the commission process.

If, viewed globally, it appears that the commission process has been effective and that the setting of judicial remuneration has been “depoliticized,” then the government’s choice should stand. [ 55 ] Also, at the third stage, looking at the matter from a global perspective, if the government has participated actively in the process, it must be shown greater deference than if it had ignored the process (see Bodner at para. 83 ). [ 56 ] So, in

summary, the reviewing court is to conduct a limited, deferential review and determine whether the government’s reasons for not following the recommendations of the committee were rational. The reasons will be rational where there existed evidence of a reasonable factual foundation for the government’s decision to depart. The evidence must be reviewed globally and not piece by piece. [ 57 ] The Government argues that while the application judge stated the law correctly, he did not apply those principles correctly to the facts and he did not accord the Government the appropriate level of deference.

In addition, the Government submits that the application judge failed to explain why the evidence relied on by the Government was not accepted and also failed to consider the evidence as a whole, as he was required to do. What Constitutes the Government’s Reasons? [ 58 ] One point that should be clarified is exactly what constitutes the Government’s reasons for rejecting the JCC recommendations. [ 59 ] In

Schedule B of the Motion of the Standing Committee, one finds the seven recommendations that are rejected, followed by a

section headed: The Reasons: In reviewing the report of the Judicial Compensation Committee, the standing committee has examined each of the recommendations individually and collectively. The reasons for rejecting these recommendations are as follows …. …. [ 60 ] The reasons of the Government are set out in the following 11 paragraphs.

In its factum, the Government relies on these paragraphs as constituting its reasons for rejecting the recommendations related to salary increases, salary differentials for administrative judges and interest. [ 61 ] At the hearing, counsel argued that, as part of the factual foundation for the Government’s position, the court should also take into account as reasons the questions and answers reported during the discussion at the Standing Committee.

For example, reliance is placed on a comment by the Honourable Rosann Wowchuk that “[t]hese numbers were derived on, based on government’s dealing with all parts of the public sector and where we are given the economic times.” [ 62 ] I reject the argument that the reasons of the Government should include all the discussion, questions and answers reported in Hansard.

As Bodner indicates, if called upon to justify its decision in a court of law, the government may not advance reasons other than those mentioned in its response, although it may provide more detailed information with regard to the factual foundation upon which it has relied (see paras. 8, 21, 26-27). [ 63 ] In this case, I take the reasons for the rejection of the JCC’s recommendations to be the reasons stated in

Schedule B of the report of the Standing Committee. They are clearly identified as “reasons.” It is not for this court or any court for that matter, to scour all the legislative proceedings and put together reasons for the Government’s rejection from the questions and answers of the members of the Standing Committee.

Appropriate Level of Deference [ 64 ] The Government submits the application judge erred by concluding that the degree of deference to be shown by the court to the actions of the government “depends upon, and is proportional to, the degree to which the Government has participated in the process” (at para. 44). Instead, it submits that deference is always to be given, with greater deference being shown when the Government participates in the process than if it had ignored the process.

Here, it is argued, the Government participated fully in the process and should be afforded the greatest deference. [ 65 ] It is correct that deference is always to be shown to the Government and the application judge clearly stated that deference is appropriate. He repeats several times that the standard is one of deference to the Government (for example, see para. 50).

[ 66 ] However, it is also correct that the application judge stated that the degree of deference to be shown by the court depends upon, and is proportional to, the degree to which the Government has participated in the process. In so doing, he was simply following the Supreme Court’s admonition in Bodner when it stated, in referring to the third part of the test and the need for a holistic analysis, “[t]hus, the Government has participated actively in the process and it must be shown greater deference than if it had ignored the process” (at para. 83). [ 67 ] I see no error here.

The application judge is reflecting the fact that the court is analyzing the process as a whole and trying to determine whether the Government participated wholeheartedly and effectively in the process or whether its actions simply showed it “was going through the motions.” The whole point of the committee process is to “depoliticize” the setting of judicial remuneration.

Is the Government truly committed to the process or is it simply going through the process because the Supreme Court has stated that it must? [ 68 ] The application judge refers to several incidents which, taken as a whole, he found reflected the fact that the Government was not meaningfully considering the recommendations of the JCC.

He is entitled to do that, especially in the third stage. [ 69 ] So, for example, the application judge concluded that the process became politicized when the Standing Committee passed a motion, which counsel for the Government acknowledged was prepared before the hearing, immediately after hearing from counsel for the judges, thereby showing that they did not consider anything she had to say.

Not only was this an example of a disregard for the process, but it was also, according to the application judge, an example of bad faith. [ 70 ] On appeal, the Government argues that this reflected the application judge’s misunderstanding of the process. The Standing Committee had a number of months to review the JCC’s recommendations. At the meeting held on October 26, 2009, the Standing Committee was not obligated to hear from counsel for the judges.

The fact that the Standing Committee was not persuaded to change its position with respect to the JCC recommendations was not a wanton disregard of process or evidence of bad faith. [ 71 ] It may or may not be evidence of bad faith. However, the Act made the salaries of the judges in the three comparison provinces of crucial importance in determining the salary of the Manitoba judges. When the JCC made its recommendation, it stated specifically that it did not have up-to-date information about the salary of New Brunswick judges. Counsel for the judges was now providing that information to the Standing Committee.

Surely, the fact that it did not even cause the Standing Committee a moment’s reflection is indicative of the Government’s lack of consideration of the JCC process and something that the application judge was entitled to consider. [ 72 ] There were other such examples, not so much of malice or bad faith, but rather, of a lack of attention and respect for the process. For example, the JCC recommended that the maternity and parental leave policy be effective as of April 1, 2008. Without explanation, the Standing Committee made it effective on the date it was approved by the Legislative Assembly.

The fact that this was unintentional and an oversight is confirmed by the fact that counsel for the Government wrote to counsel for the judges on November 23, 2010, confirming that the Government did not take issue with the fact that the implementation date was to be the date recommended by the JCC. [ 73 ] Again, in its substituted salary adjustment for 2010, the effective day of the salary adjustment was the very last day of the 2010 fiscal year.

This strange departure from the previous consistent practice of effective adjustment on the first day of the fiscal year (April 1) was never suggested or mentioned in front of the JCC and never explained by the Standing Committee in its reasons. Since the Supreme Court mandated the JCC process in 1997, the practice had been for increases to be implemented on the first day of the fiscal year in question. Application of the Law to the Facts [ 74 ] I agree with the application judge that the Government’s reasons for rejecting the JCC salary recommendations do not meet the level of simple rationality.

They are conclusory, are not supported by a factual foundation and do not come to grips meaningfully with the JCC recommendations. In many ways they are simply a repetition of its arguments in front of the JCC. As was stated in Bodner , to constitute legitimate reasons, the Government must not simply reiterate earlier submissions that were made to, and substantively addressed by, the JCC. Bald expressions of disapproval are inadequate, as are simple statements that the salary increases are unfair or unreasonable in the current economic climate.

One must explain why (see Bodner at para. 30 ). [ 75 ] For example, the Government’s first reason for rejecting the salary increases in 2009 and 2010 is that the JCC failed to properly take into account or balance the six factors set forth in the legislation. It does not explain how the JCC failed to properly balance those factors. In fact, the report of the JCC goes through each of the six factors in great detail, explains its understanding of the position taken by each of the parties on each of the factors and further explains why it balances the factors in the way that it does.

I agree with the application judge that the Government failed to “justify what different weights ought to have been given by the JCC to those factors” (at para. 83). (Also see Bodner at para. 26 .) [ 76 ] Another example of the conclusory nature of the Government’s objections is its second reason that the recommended salary increase goes beyond what is considered appropriate and necessary for maintaining judicial independence. The JCC spent many pages reviewing the evidence and explaining how it reached its decision.

To simply say the salary increase is inappropriate, without more, is not a reason; it is an opinion without any evidentiary support or justification. No factual foundation is asserted by the Government in articulating the position it took in departing from the JCC’s recommendation. [ 77 ] The third reason asserted by the Government is that the JCC did not adequately address the Government’s position that existing salary levels, together with the value of pension and other benefits, were more than adequate to attract and retain an acknowledged pool of highly qualified candidates.

But, the JCC agreed with the Government on this point, and it makes no sense for the Government to rely on this point as a reason to reject the recommendations of the JCC (see the 2008 JCC Report at p. 53).

[ 78 ] The fourth and fifth reasons are similar, in that both argue that the JCC failed to adequately take into account either the binding salary increase payable as of April 2008 or the other benefits being paid to the judges, such as maternity leave and pension benefits which, together, result in a generous compensation package and an increased cost to Manitobans. Neither of these arguments is accompanied with any factual foundation. The assertion stands by itself.

The Government provided no context or detail of the actual increase in cost and failed to bolster its assertion with any evidence. [ 79 ] In fact, the JCC went to great lengths to explain the rationale for recommending a five per cent increase in the years subsequent to 2008. It is obvious from a reading of the JCC report that it was aware of the fact that the salaries paid to the judges were but part of a total compensation package.

In the 2008 JCC Report, the first statement made by the JCC under the heading “The Committee’s Recommendation Regarding Salary” is as follows: The Committee has the responsibility to recommend a salary to be paid to [Provincial Court Judges], which forms part of a total compensation package, and the Committee must be mindful that the expense of the compensation package is borne by the taxpayers of Manitoba. [ 80 ] Further, in its concluding remarks on the issue of salary increases, the JCC made the following statement: The Committee has made this recommendation that such an increase will be greater than that received by many Manitobans over the next three years.

Nonetheless, the Committee is satisfied, given the continuing relative strength of the Province’s economy, such an increase is necessary to providing a fair and reasonable salary as part of a compensation package. [ 81 ] The same problem is present with the Government’s sixth reason. Instead of meaningfully responding, the government “simply reiterate[s] earlier submissions that were made to and substantively addressed by the commission” ( Bodner at para. 23 ).

In that sixth reason, t he Government states that the increases in salary recommended would be unfair and unreasonable to the Government in relation to other public service salary increases in order to maintain what the Government regards as the greater good of the public service. The Government also took the position that the recommendations were inconsistent with the current policy of negotiated wage restraint in the public service absent special circumstances. [ 82 ] Yet the Government led no evidence as to what agreement had been reached with various sectors of the public service for the years 2009 and 2010.

The uncontradicted evidence was that, by December of 2008, the economic crisis had subsided.

Moreover, no evidence was tendered by the Government during the course of the hearing conducted by the JCC as to the level of salary increases that had already been negotiated with different segments of the public sector for the years 2009 and 2010. [ 83 ] As pointed out by the application judge (at para. 103): If the government wanted to argue that the JCC’s recommendation for salary increases for judges should be consistent with the government’s policy of “negotiated wage restraint in the public service”, the government ought to have tendered evidence at the hearing conducted by the JCC as to the results of that policy in terms of salary increases to be paid to various sectors of the public service.

The government provided no such evidence. [ 84 ] As stated earlier, this position of the Government is similar to the position taken by the Government of Quebec before a compensation committee established in that province. In referring to the Quebec Government’s positions, the Supreme Court of Canada had this to say ( Bodner at para. 160 ): .... 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 it pay scales. [ 85 ] The Government did not change its position when the JCC reconvened for further evidence as a result of the change in economic conditions. The Government simply “urged the JCC to pay attention to the factors set forth in the Act ” (at para. 100).

Nor does the Government allege that there were new and changed considerations that needed to be addressed by the Standing Committee. [ 86 ] This is in contrast to the situation in the case of Aalto v. Canada (Attorney General) , 2010 FCA 195 , [2012] 1 F.C.R. 290 . In the Aalto case, the economic conditions deteriorated from the time the committee issued its report and pay restraint had already been imposed on the federal public service.

The court agreed that it would not be appropriate to exempt the prothonotaries from these across-the-board measures ( see Aalto at para. 19 ). [ 87 ] In its seventh reason for rejection of the JCC recommendations, the Government stated that the substituted salaries

“would be more consistent with the government’s approach for public servants in the majority of the service” (at para. 75). The application judge rejected this rationale, stating that “special circumstances exist that permit the government to except the judges from its general policy of ‘negotiated wage restraint in the public service’” (at para. 106). [ 88 ] The Government submits that the application judge erred when he made the above statement.

It points to the Bodner case, where the Supreme Court makes clear that the case law does not require that the Legislature or the executive establish the existence of exceptional circumstances in order to justify a departure from the recommendations (at para. 34). [ 89 ] The law does not require that judges be treated differently in circumstances of economic restraint. As a matter of fact, it would be inappropriate if it were otherwise. As Lamer C.J. pointed out in the P.E.I.

Reference decision (at para. 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. …. [ 90 ] And further, Lamer C.J. went on to say that (at para. 184): ….

Across-the-board measures which affect substantially every person who is paid from the public purse, in my opinion, are prima facie rational. …. [ 91 ] However, in this case, the Government had not imposed across-the-board measures, either before the JCC recommendations or after.

Minister Wowchuk told the Standing Committee in October 2009, that the substituted salaries reflected “where we feel settlements can go” “given the economic times.” In other words, they did not want to raise expectations when they entered into bargaining with public servants. [ 92 ] Second, the Government had departed from its bargaining position in some public sector settlements based on “special circumstances” such as recruitment and retention. [ 93 ] Third, judges are different from public sector employees in that they must rely upon the JCC process and the good faith of the legislative branch.

They cannot negotiate. While judges’ salaries can and should be reduced or otherwise changed as part of an “across-the-board measure,” the government must first put its proposed measure to the JCC, unless the circumstances have changed after the report is issued. ( P.E.I. Reference at para. 147). [ 94 ] Counsel for the Government indicated that they were not arguing that the economic condition had worsened when the recommendations came before the Legislature. Rather, when the recommendations came before the Government, it was then in the process of developing a policy on wage restraints.

The Government now had a policy of fiscal restraint and the compensation for judges needed to be part of that plan. I fail to understand that argument. [ 95 ] In December 2008, the parties effectively agreed that the Government was comparatively well-positioned to deal with the uncertain economic conditions. When the Standing Committee met in October 2009, the evidence was that the Government’s economic position had further stabilized. [ 96 ] If the Government had adopted an across-the-board policy of wage restraints, then it is clear that the judges could have been subject to that policy.

This could have been the case, even if the across-the-board measure had been adopted after the report of the JCC had been filed. This was the situation in the P.E.I. Reference case (see paras. 147, 184). [ 97 ] But here no such measure was instituted. There was no evidence of such a measure being instituted with other groups. As in Quebec, this was a negotiating position on the part of the Government.

I would also point out, as did the JCC and the application judge, that, while the Act specifically mandates the JCC to consider the salaries of judges in other jurisdictions ( s. 11.1(16) ), it does not refer to other groups which are paid out of the public purse, as do the statutes in some of the other provinces. [ 98 ] Moreover, the Government did not provide this information to the JCC, nor is it referred to in the reasons of the Standing Committee.

As stated in Bodner (at paras. 11, 22-27 ), if information is available and the Government chooses not to present it to the JCC, then it cannot do so at a later time. The emphasis is on the JCC recommendations, and the Government’s response is to engage meaningfully with those recommendations.

The Government simply urged the JCC to act with caution, and the JCC agreed that fiscal restraint or caution was indeed appropriate. [ 99 ] The eighth reason advanced by the Government for rejecting the JCC’s salary recommendation is that its recommendations for 2009 and 2010 were based on the wrong assumption that previous JCCs had accepted, namely that salary increases should follow a national average.

The Government contended that the three-province average, which was utilized to determine the salary to be paid to the judges effective April 1, 2008, and which was binding upon it, was the appropriate comparator. [ 100 ] In looking at salaries from provinces across the country, the JCC was following one of the statutorily mandated factors in the Act . In any case, the evidence presented to the Standing Committee demonstrated that the JCC’s recommendation for the 2008 salary of $192,166 was less than the three-province average of $195,851.

Similarly for the year 2009, the JCC’s recommendation for a salary of $201,774 was less than the three-province average of $203,276. The JCC’s recommended salary of $211,862 for 2010 was greater

than the three-province average of $206,221, but that was based on outdated figures. When the figures were brought up to date, the three-province average became $214,010 for 2010 which was higher than the $211,862 recommended by the JCC.

This information was available to the Standing Committee just before they gave their reasons for rejecting the recommendations. [ 101 ] So, contrary to reason eight of the Standing Committee, the recommendations of the JCC were much closer to the three- province average that the Government relies on, rather than the “national average.” [ 102 ] The Government’s last reason for rejecting the salary recommended by the JCC is that the increases were inconsistent with the JCC’s own findings about economic conditions in the province. [ 103 ] The Government submits that the reasons provided by it were supported by its five-year economic plan.

The reasons were consistent with the economic conditions at the time, the policy of wage restraint being exercised by the Government and the minimal salary increases to most of the public sector. The economic conditions at the time meant that many Manitobans were receiving nominal salary increases, if any at all.

Consequently, increases of 2.9 per cent and one per cent, respectively, were more in line with the increases given to others from the public purse, as opposed to the five per cent for each year proposed by the JCC. [ 104 ] It should be noted that, although the Government did submit economic evidence to the JCC supporting its submissions, the JCC had other evidence which disagreed with some of the conclusions of the Government’s expert.

For example, Fletcher Baragar, Professor in the Department of Economics at the University of Manitoba, presented a more positive outlook for the Government’s economic situation and concluded that the Government’s economy was performing very well relative to both its provincial counterparts and the national average (see Fletcher Baragar, Update on the Manitoba Economy and the Province’s Fiscal Capacity (December 12, 2008)). [ 105 ] Moreover, I believe the response to this last point is similar to the others.

The Government failed to specify what facts were not taken into account or which findings were inconsistent. The JCC accepted the Government’s recommendation to be prudent and was entitled to weigh all the economic evidence adduced in coming to its conclusions. [ 106 ] The reasons of the Standing Committee do not explain why the prudent approach adopted by the JCC was not sufficient.

While the Government may not have to produce costing information, it has and obligation to explain, in a meaningful way, why it disagrees with the JCC recommendations. [ 107 ] Finally, looking at all of its reasons as a whole, t he Government argues that the application judge erred in not properly applying the third stage of the Bodner test which, as stated earlier, is where the judge must examine the Government’s reasons as a whole. Even if one or two reasons are flawed, if one can say that, as a whole, the Government’s reasons are rational, then the judge must defer to the Government.

The test is whether looking at the response as a whole, the Government responded in a meaningful way. [ 108 ] First, the application judge did step back and look at the reasons as a whole. He stated (at para. 125): …. Viewed globally, I found the government’s reasoning to be lacking in respect for the process and to negate rather than enhance the purposes of the JCC …. [ 109 ] Second, the whole cannot be greater than the parts.

If none of the reasons have a factual foundation, or a rationale, or if all of the reasons given are perfunctory, then looking at them as a whole cannot lead one to a different conclusion. [ 110 ] Third, even if one tried to look at the objections holistically and came to the conclusion that, generally, the objections to the JCC recommendations were based on the economic situation of the province, there was no factual foundation that would lead one to understand how, based on the economic evidence adduced at the hearing, the JCC erred in the conclusions they reached.

Salary Differentials for Administrative Judges [ 111 ] The JCC recommended differentials in 2009 and 2010 of an additional five per cent and eight per cent increase for the Associate Chief Judge, Senior Master and the Chief Judge respectively. [ 112 ] The Standing Committee relied on reasons similar to those regarding the recommendations for general salary increases to reject the salary differential recommendations.

The Government substituted the recommendation with a 2.9 per cent and one per cent increase for 2009 and 2010 respectively. [ 113 ] The arguments with respect to the salary differentials are the same as the arguments with respect to the general salary increase. Therefore, these reasons relating to the salary increase apply equally to this recommendation. 5.3 Interest [ 114 ] In its report, the JCC made an award that included interest.

It recommended that interest be paid on the retroactive salary adjustments and that it be set at a rate equal to the pre-judgment rate fixed by The Court of Queen’s Bench Act , C.C.S.M., c. C280 (the QB Act ), from April 1, 2008 to the date of payment. [ 115 ] The JCC held that the judges were delayed in receiving the salary and benefits to which they are entitled, while the Government had had the use of the money for some years.

This was no one’s fault, but there was an inherent unfairness in the system which could be remedied by payment of interest on the retroactive salary. [ 116 ] While acknowledging that no previous JCC had recommended a payment of interest and that the authority to award

interest was not explicitly spelled out in the Act , the JCC held that (the 2008 JCC Report at p. 84): …. However,

Section 11.1(3)(

b) does provide the jurisdiction of the Committee to make recommendations with respect to the benefits to be paid to [Provincial Court judges]. The Committee is of the opinion it has jurisdiction to make an award of interest. [ 117 ]

Section 11.1(3) (

b) of the Act refers to: …. (

b) the benefits to be paid, including pensions, vacations, sick leave, disability benefits, travel expenses and allowances, to the Chief Judge, an Associate Chief Judge and a judge of the court. [ 118 ] In affirming the award of interest, the application judge did not substantively comment on the reasoning of the JCC. However, I do not accept the argument of the Government that the application judge did not make a decision.

He could not have been clearer when he stated in his reasons that “the jurisdictional challenge advanced by the government in rejecting the interest recommendation is neither legitimate nor constitutionally adequate” (at para. 132). [ 119 ] Rather, the application judge appeared to rely on the fact that the Government did not raise the jurisdiction of the JCC to award interest during the course of the hearing before them (at para. 131): …. The challenge to the jurisdiction of the JCC came in the form of the motion passed by the Standing Committee, which deprived the JCC from addressing that issue directly.

I find this conduct on the part of the government to be inappropriate. It shows a total disregard and lack of respect for the process the government itself created for determining judicial salaries and benefits. [ 120 ] The Government has appealed and argues that the JCC cannot make recommendations that are beyond its jurisdiction and beyond the scope of its statutory mandate.

It submits that, since there is no inherent right to interest and since interest is not part of the definition of salary or benefit in the Act , the JCC acted beyond its jurisdiction. [ 121 ] Much time was spent on the argument that the Government did not raise the jurisdictional issue before the JCC and it was therefore precluded from raising it in court. [ 122 ] The judges say that, at no time during the hearing before the JCC or in its written submissions, did the Government in any way dispute or challenge the jurisdiction of the JCC to make a recommendation that interest be paid on retroactive salary adjustments.

Instead, the matter was argued on its merits, as to whether or not, in the circumstances, the JCC should exercise its discretion to recommend interest. On appeal, the Government maintains that it did, indeed, raise the issue of lack of jurisdiction in front of the JCC. Since the hearing was not recorded, reference was made to the notes made by various parties during the hearing to corroborate both sides of the argument. [ 123 ] The JCC either has the jurisdiction to award interest or it does not. It cannot be conferred by consent.

Administrative tribunals or agencies are statutory creations and they cannot exceed the powers that are granted to them by their enabling statute. In my view, the Government cannot be precluded from raising the issue of jurisdiction at this point in time whether or not it failed to do so at the hearing. [ 124 ] In the oft-cited decision of Bank of America Canada v. Mutual Trust Co. , 2002 SCC 43 , [2002] 2 S.C.R. 601, Major J. described interest as the time-value of money, explaining that (at para. 21): The value of money decreases with the passage of time.

A dollar today is worth more than the same dollar tomorrow. Three factors account for the depreciation of the value of money: (

i) opportunity cost (ii) risk, and (iii) inflation. [ 125 ] I agree with the Government’s submission, relying on the Bank of America case that historically a court’s ability to award either pre- or post-judgment interest was extremely limited. Circumstances where it was awarded at either common law or in equity were limited to select factual situations. See the discussion found in Mary Anne Waldron, The Law of Interest in Canada (Toronto: Carswell, 1992) at 142, and the extensive historical review found in Alberta v.

Nilsson , 2002 ABCA 283 , 320 A.R. 88. [ 126 ] However, there is obviously a distinction to be drawn between a court’s power to award interest on a judgment and the type of recommendation made by the JCC in the case at bar.

[127] The JCC is a statutory body and, while the Government is correct that it cannot make recommendations that are beyondthe scope of its mandate, tribunals can also obtain jurisdiction by necessary implication. See ATCO Gas and Pipeline Ltd v. Alberta(Energy and Utilities Board), 2006 SCC 4 at para. 51, [2006] 1 S.C.R. 140. Rothstein J. observed recently in R. v.

Cunningham, 2010SCC 10, [2010] 1 S.C.R. 331, that “[t]his Court has affirmed that courts can apply a ‘doctrine of jurisdiction by necessary implication’when determining the powers of a statutory tribunal” (at para. 19). [128] It is true that the JCC has the power to make recommendations only and does not have the adjudicative power that ismost often associated with a statutory administrative body.

Rather, its mandate is to “investigate, report and make recommendations”with respect to salary and benefits (see s. 11.1(3) of the Act). [129] While the law of necessary implication is most often associated with adjudicative decisions, it has been referred to andrelied upon even in cases involving recommendations. This is especially so in this case where the “recommendations” of the JCC are notsimple recommendations. The Government’s response must meet the test of simple rationality if the recommendations are not to befollowed. See, for example, Nishnawbe Aski Nation et al. v.

Eden, 2011 ONCA 187 at para. 34, 104 O.R. (3d) 321. [130] In identifying what powers are impliedly, as well as expressly, conferred on an administrative body, the court must applya contextual approach and consider, inter alia, the purpose and function of the statutory body. See Bell Canada v. Canada (CanadianRadio-Television and Telecommunications Commission), (SCC), [1989] 1 S.C.R 1722, followed in R. v. 974649 OntarioInc., 2001 SCC 81 at para. 70, [2001] 3 S.C.R. 575 (at p. 1756): ....

The powers of any administrative tribunal must of course be stated in its enabling statute but they may also exist by necessaryimplication from the wording of the act, its structure and its purpose. Although courts must refrain from unduly broadening the powersof such regulatory authorities through judicial law-making, they must also avoid sterilizing these powers through overly technicalinterpretations of enabling statutes. .... See also Sciberras v.

Workers’ Compensation Board (Man.), 2011 MBCA 30 at para. 70, 262 Man.R. (2d) 277. [131] The function and/or purpose of the JCC is to investigate, report and make recommendations with respect to “salaries”and “benefits.” Neither word is defined in the Act. If one turns to Black’s Law Dictionary, the ??d., sub verbo “salary” is most oftendescribed as a form of “compensation” and s. 11.1(3) of the Act does speak to a “compensation” committee. As well, benefit is definedin Black’s Law Dictionary as an advantage, privilege, profit or gain. [132] The question therefore becomes whether, as a matter of statutory

interpretation, the power to recommend interest isnecessary for the JCC to carry out its purpose and function and can be found by necessary implication in the Act. [133] There have been a number of decisions where interest was awarded despite the absence of a specific reference to interestin the statute. Courts have held that the power to issue a compensatory order implies a power to award interest. See Public ServiceCommission (N.S.) v. Nova Scotia Government and General Employees Union, 2004 NSCA 55 at para. 38, 223 N.S.R. (2d) 57.

Thiswould be of special consideration where there is no provision in the statute under review to provide a remedy when there is substantialdelay from the time the benefits should be paid to when they are actually paid. See Tilley v. Workers’ Compensation Commission (Nfld.)(1990), (NL SC), 85 Nfld. & P.E.I.R. 358 at para. 3 (S.C. (T.D.)). [134] Another example, this time dealing with wages, arises in the case of Canada (Attorney General) v. Morgan andCanadian Human Rights Commission (1991), (FCA), 135 N.R. 27 (F.C.A.).

Morgan was an infantryman in theCanadian Armed Forces and complained of discrimination under the Canadian Human Rights Act. The applicable provision in theCanadian Human Rights Act allowed the tribunal to compensate an individual for lost wages.

On appeal to the Federal Court of Appeal,the court held that, although there was no specific provision expressly granting the tribunal power the give interest, “the tribunals wereright in considering that their power to assure the victim adequate compensation entitled them to award interest” (at para. 18). [135] So, it has certainly been the case that tribunals have awarded interest in situations where their enabling statute has notspecifically mentioned the payment of interest. Moreover, the JCC is entitled to deference in its

interpretation of its home statute (seeManitoba v. Russell Inns Ltd. et al., 2013 MBCA 46, 291 Man.R. (2d) 244, and authorities mentioned therein). [136] However, having stated that it was within the jurisdiction of the JCC to award interest does not mean that it must beawarded or that it must be awarded in every case or that, if awarded, the Government must accept the recommendation.

TheGovernment argues that, even if the JCC had the jurisdiction to award interest, the rejection of that recommendation and the reasonsprovided by the Government for that rejection were reasonable and should have been afforded deference by the application judge. [137] In this case, the JCC did exercise its discretion to award interest. As mentioned earlier, it explained why it did so and itsdecision was reasonable. [138] The Government was entitled to reject that recommendation if it gave a rationale for so doing. The Government’srationale was stated in

Schedule B as follows (Hansard at p. 265): The Standing Committee does not accept the view that awarding interest on retroactive salary increases is within the scope of benefits onwhich the Judicial Compensation Committee may make recommendations. Further, no such payments of interest have beenrecommended by any previous Judicial Compensation Committee.

The Standing Committee does not accept the characterization by the chair that interest falls within the scope of the “benefits” ascontemplated by The Provincial Court Act. If interest was intended, given the clear time lines within the legislation, interest would beclearly been spelled out. [139] As explained above, the jurisdiction of the JCC includes implied powers. Whether the power to award interest should beimplied is a matter of statutory

interpretation of the governing statute which the JCC was entitled to interpret, so long as theirinterpretation is reasonable. [140] Moreover, although there are time lines in the Act, those time lines are not always followed, often through no fault of theparties. For example, s. 11.1(2) of the Act mandates that a JCC shall be appointed on or before April 1 in every third year. In the case ofthis JCC, the Order-in-Council was not made until May 7, 2008. Next, the 2008 JCC was to report by November 7, 2008. For reasonsexplained earlier, the JCC did not submit its report until June 9, 2009.

The Legislature adjourned on June 14, 2009, and resumed onSeptember 28, 2009. The Legislature voted on the report of the Standing Committee on December 14, 2009. As we see, the matter isstill not settled well into 2013. [141] As well, the fact that something was not done previously is not a reason for not doing it. While it may be that no otherManitoba compensation committee has awarded interest previously, interest has been awarded on judges’ salaries by the courts ofQuebec, albeit based on a Canadian Charter of Rights and Freedoms rationale. [142] In Conférence des Juges du Québec v.

Québec (Procureure Générale) (2000), (QC CA), 196 D.L.R(4th) 533 (Qc. C.A.), the judgment of the court awarded interest (at para. 67): .... In the circumstance, it appears to us just and appropriate, in the words of s. 24(1) of the Canadian Charter of Rights and Freedoms,that all moneys owing to the judges and to the retired judges as of the date of the present decision bear interest at the legal rate from thetime that they became due. …. [143] See also, Procureur général du Québec c.

Conférence des juges du Québec, (QC CA), [2004] Q.J.No. 6622 (QL) (C.A.), where the court once again ordered that interest be paid on the retroactive salary adjustment, but only from thedate the recommendations would have been passed by the Legislature and “the government would have been able to pay the amountsrequired” (at para. 142). [144] I wish to emphasize, however, that if the application judge had found that, viewed holistically, the other reasons of theGovernment were rational and had a factual foundation, it may be that the rejection of interest altogether, or a change in the dates atwhich interest was payable, would have been acceptable as part of that rationale.

As Bodner indicated, “[a] court should not interveneevery time a particular reason is questionable, especially when others are rational and correct” (at para. 43). However, such was not thesituation in the case at bar, for the reasons expressed earlier. [145] In

summary, therefore, with respect to the jurisdiction of the JCC to award interest, as we have seen, even where a statutedoes not expressly authorize the payment of interest, that power may be implied from the wording of the statute and the structure andpurpose of the statutory body. [146] Taking into account the nature of interest as described in the cases, as well as the cases dealing with other tribunals thatmake compensatory orders, and the nature and purpose of the JCC, the JCC interpreted its jurisdiction in a reasonable manner andexercised its discretion both to recommend interest and to recommend it be payable as of certain dates. [147] The reasons of the Government in rejecting the award of interest do not satisfy the standard of simple rationality for thereasons given. [148] The payment of interest should be seen as making a remedy whole rather than as a punitive order.

The Government hashad the use of the judges’ money in the intervening period. 5.4 Remedy [149] The Government argues that the application judges’ failure to remit the matter back to the Legislature is an error of law.

The judges submit that the application judge did not make a palpable and overriding error in exercising his discretion and that, in theparticular circumstances, ordering implementation of the recommendations made by the 2008 JCC be implemented was the appropriateremedy. [150] The Supreme Court in Bodner made clear that, where a reviewing court finds that the government’s reasons for rejectingthe recommendations of a judicial compensation committee were flawed, the typical remedy would be to refer the matter back to theLegislature.

The court should not encroach upon the provincial legislature’s jurisdiction to allocate funds from the public purse and setjudicial salaries. [151] The court in Bodner stated (at para. 44):

In light of these principles, if the commission process has not been effective, and the setting of judicial remuneration has not been “depoliticized”, then the appropriate remedy will generally be to return the matter to the government for reconsideration. If problems can be traced

[…]