Proceedings of the Standing Senate Committee on
Issue 32 - Evidence
OTTAWA, Wednesday, September 30, 1998
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-37, to amend the Judges Act and to make consequential amendments to other Acts, met this day at 3:37 p.m. to give consideration to the bill.
Senator Lorna Milne (Chairman) in the Chair.
The Chairman: We have before us Mr. David Scott, the author of the 1995 Commission on Judges' Salaries and Benefits.
We await your comments with some interest, Mr. Scott.
Mr. David Scott, Chair, 1995 Commission on Judges' Salaries and Benefits: I wish to reaffirm that I am one of the authors of this report. The other two authors are Michel Vennat, a distinguished lawyer with Stikeman Elliot in Montreal, and Barbara Rae, a very distinguished businesswoman from Vancouver. Ms Rae was an enormous resource for us, because she brought her background in personnel management to the job without the baggage of a connection to the judiciary. Since I have spent all of my life in the courts, I have a certain amount of baggage about the judiciary.
Senator Beaudoin: Your report is very interesting. I have a question about page 28 of your report, where you recommend that the Judges Act provide for the payment of a lifetime annuity to a common law spouse under legally applicable circumstances. I don't have any trouble with the whole question of paying out pensions, because that comes under section 100 of the Constitution. Everything is fine from that point of view.
When it comes to common law spouses, what do you mean by, "we recommend that the Judges Act allow for payments to a common law spouse, under legally applicable circumstances."
Does this refer to provincial law or to federal law? What do you mean by that?
Mr. Scott: We mean legal situations in which a person qualifies as a common-law spouse, which assumes a certain period of cohabitation. Our intent was not to define any circumstances in particular, but rather to take common-law spouses who had established rights in accordance with provincial law in all of the provinces, and to carry that forward for the benefit of the common-law spouses of judges.
Senator Beaudoin: Some of my colleagues will return to the issue of a common-law spouse.
Senator Murray: It is assumed that both parties to the common-law union are legally free to marry; that is to say, not married to someone else.
Mr. Scott: Let me begin by saying that I am not a family law lawyer. However, I do not think that the definition of a common-law spouse assumes freedom to marry. If I understand your question, you are saying that if the person is already married, he or she is incapable of being a common-law spouse.
Senator Murray: Well, he or she is certainly incapable or legally marrying someone else.
Mr. Scott: I could be quite wrong, but I do not think that precludes someone from being a common-law spouse. In my understanding such a person can qualify as a common-law spouse.
Senator Beaudoin: Let us return to the first question on the commission. I do not have any problem with the commission as such. Whether we like it or not, the fact is that the Supreme Court has already said that, in order to protect judicial independence, we need an organization such as the commission. I know that Mr. Justice La Forest is dissenting on this, but the majority of the court is of the opinion that to have judicial independence we need a commission such as this one.
What is your opinion on this? I understand that the report is not binding on the legislative and the executive branches, but that if Parliament or the government disagrees, they must justify themselves, and even in court if necessary.
Did you study that problem for your report?
Mr. Scott: Senator, as a result of reading some of the debates which were held here, the only thing that alarmed me somewhat was the suggestion from some witnesses that the triennial commission system works fine and that we should stick with it.
My colleagues and I were in complete agreement that the triennial commission system not only did not work well, but that it did not work at all. It might have looked very appealing, but nothing ever happened. We felt very strongly that it became, as we said in our report, a mechanism that allowed the government of the day to do nothing about the judges, because doing something about the judges is a very unpopular thing.
The discussion that we are now having is most unique. Previously, no one wanted to do anything for the judges because people believe that judges were well looked after. That is, they have tenure and pensions and everything else, so there is no reason no bother with them. Politically, it is very unappetizing to be preoccupied with judges.
When we were appointed and began our work, we read what had happened before. Every previous commission had said that the system did not work. The government not take up any of the meaningful ideas for reform in terms of issues such as pay and allowances, nor did it take up any of the suggestions for reforming the triennial commission system. The thrust of our report is that this must be fixed.
Luckily, the decision of the Supreme Court of Canada in the P.E.I. case came along at the same time. We certainly were not anticipating that, nor would we have developed any such notion, although I would defend it. We felt that the government should be forced to react to the views of the triennial commission. Further, we felt that it should be forced to table a bill; that the government should be forced to do something in order to legitimize the process of inviting citizens to take part in this lengthy study and then allowing it to drift off before a committee and disappear.
The most important thing to me is for this committee and anyone charged with responsibility to recognize that the triennial commission system does not work.
As I understand it, the bill does not provide for what the commission suggested, which was a requirement to table the bill -- and I understand that that may be an unrealistic expectation -- but that the government will have to respond in some way. Therefore we now have this overlay from the court, and the whole process will be subject to judicial review and the test will be rationality.
I confess that I read the very impressive statements before you from the law professors. I am not nearly as alarmed about it as they are. Constitutional substance aside, I believe that a test of rationality for a commission report such as this one will be a very easy threshold for the government of the day to meet. If it cannot meet rationality, then, constitutional imperatives aside, what is wrong with the notion that the court advanced?
As a member of this commission, I believe that something must be done to fix this problem. The bill goes a certain way to fixing it. The Supreme Court overlay is another question.
Senator Beaudoin: I understand your point of view, and I have great respect for it. The question is, what happens if the government does not like it? A strong majority of the court said that the executive and the legislative branches must justify their points of view. At the end, if there is what in French is called une impasse, then the court may rule on the basis of rationality.
Mr. Scott: Should the government be told that it has to give reasons? The judges do not like to be told that they have to give reasons, so for the judges to tell Parliament that they have to give reasons may be a bit offensive.
The bottom line is that it is a rationality test, and I am not nearly as alarmed about that as others are.
Senator Joyal: We have tried to understand the fundamental changes to the principle of our Constitution stemming from this proposal in Bill C-37. To put the issue simply, section 100 of the Constitution vested the responsibility to ensure appropriate compensation for judges in the Parliament of Canada. The triennial commission did not produce a satisfactory result in a reasonable period of time. It seems to us that, in the judges' opinions, we ought to go to the other extreme whereby Parliament abandons its responsibility to have the final say in the vote for the appropriation to pay the salaries. In my opinion this is wrong. It is one thing to say that Parliament filibustered, but to amend the system by including a time frame within it so that there is an end result, either in the affirmative or in the negative, is the proper way to manage Parliament's responsibility. I can understand that and I think a reasonable citizen can understand that.
What goes beyond common sense is that the commission has no parameters to decide what constitutes a proper increase. The bill contains no criteria that defines the scope of the commission to decide upon what is a fair increase for whatever reasons they think are just. The other problem is that if the government does not give effect to the recommendations of the House of Commons or the Senate committee, or its own financial policies criteria, then the court might decide that there is litigation and the government must justify its decision in the court. We are both judges and parties in a decision like that. That is where the fine-tuning of the solution that is proposed to us must be investigated.
You have spent a lot of time with learned peoples to study the compensation for judges. Is it the same way in other countries -- that is, do the judges have the last word on their pay increase and must the governments in those countries abide by commission reports because they do not have the capacity to say "No"? In Canada, the government civil service and the armed forces, among others, have had their salaries frozen. Judges are like other people; they make an effort. I am not against an increase in salaries at all. In fact, judges are underpaid in my opinion. However, in order not to go to the other extreme, we must protect the principles in the new system that we are putting into place. Can we not find a middle balance compared to what existed before, which did not produce a satisfactory result for the learned justices? Can we go the other way? There might be another way to fine-tune this.
Mr. Scott: The way you divide it out is the way to divide it. The decision of the court that the judges will have the last word on their salaries is one question; the whole question of the government having to meet a rationality test as proposed by the court is another question.
As far as the commission is concerned and the analysis of what is appropriate compensation, this has a historical base. Before 1981, there was no independent assessment of any kind. The triennial commission was established by statute as the basis of getting some independent input for Parliament about what is appropriate. Criteria for that would not be a good idea. How would you establish it? Would there be limits? No. The commission -- that is, assuming that it is appropriately selected in terms of make-up -- should be able to free-wheel in terms of what they think should happen. They then make a report. Up to that point, we have an appropriate historical basis for doing this.
What happens next? In our brief, we say that instead of nothing happening, something must happen.
Senator Moore: Within a set time-frame?
Mr. Scott: Yes. Otherwise, it is a screen of some design. Something must happen.
I accept the proposition that under the Constitution, Parliament will decide. Parliament should have the last word. We are talking about the mechanism for ensuring that something happens. This bill, which does not go as far as we hoped it would, says that within a fixed period of time government must react with a position statement. The court is saying that they must give reasons and the court will have this judicial review power. Whether or not people find that desirable is an interesting question. The court has spoken, so what happens next?
The task here is to fix on the nature of the commission, its make-up and its jurisdiction. It is important that that not get lost in the minds of some who are outraged about what the judges are doing to the vehicle of this judgment. I am more interested in what happens down the road and having a workable, practical commission that does the job.
Senator Joyal: I totally agree with you, as do some of my colleagues around the table, when you talk about a time-frame and trying to establish some kind of compelling agenda so that we arrive at the end of that process to have it resolved. That is a common understanding.
I have a slight reservation about your statement that you do not want criteria. Even the Supreme Court of Canada said that the commission should have some criteria. The judgment of the majority of the court was that the body must convene if a fixed period of time has elapsed since its last report in order to consider the inadequacy of judges' salaries in light of the cost of living and other relevant factors. Even the Supreme Court of Canada has recognized that there must be some factors.
We cannot abandon to a commission the overall open-ended door to say, "Let us discuss whether or not we must increase judges' salaries." Perhaps judges in Australia had an increase last year. Our judges may say, "We work as hard as them, so we should have the same increase." There must be some criteria. Treasury Board negotiates with the union and they have criteria. The Government of Quebec will open negotiations with teachers, with unions, and with all the other services. They have some criteria such as equity, pay, and a lot of other principles that they want to implement.
It does not hurt my sense of democracy or fairness with judges if the commission is bound to follow specific criteria rather than offering us a general report that judges are nice people who are learned and forego part of their freedom to live in society because they are seen as symbols of rectitude, and so on. We all know that.
Let us frame the mandate of the commission so that Parliament has a fair perception that those people are not just looking for any kind of increase -- especially if we bound them to have a result at the end of the road. It is one thing to have everything on one side and nothing on the other side. I think it is a fair balance of the two. Even the court has recognized that.
Mr. Scott: I am not disagreeing with you. I am not saying that the commission should function arbitrarily. I am not sure how much needs to be said. The court said, "and other relevant criteria." Will we now statutorily define the criteria? These previous triennial commissions -- and let us exclude ours for the moment -- followed the same process, namely, analyzing what salaries were in the private sector, what they were in the practising bar, and what they were in the government. They were then compared, as were the cost-of-living increases. That is the relevant criteria.
If you talk about hard criteria, such as whether the judges' salaries should be measured against the salaries of civil servants, our American friends are in the process of trying to disengage that right now. There is a kind of lock-step arrangement there and they are trying to eliminate it. I am not saying that there should not be any criteria, but once you start down the road of developing criteria, you may create a monster. These commissions should take into account all the relevant factors -- certainly not irrelevant factors or arbitrary factors. You would not confine it to cost-of-living increases, although it would be a logical thing to consider. I am not sure what the relevant criteria would be.
Senator Joyal: When you did your report, you followed a certain number of criteria. What are they?
Mr. Scott: Those were exactly the criteria that anyone would use to complete this task. No one provided us with criteria. The criteria were: what the judges are making now, what they made previously, what they are making elsewhere, what groups comparable to them are making, and the judges' situation. The problem of what to consider was not a large one. The process of determining what to consider was important, but we were not stuck on it.
We were stuck on the question of whether we should be bound by some public service compensation level. That has been a traditional debate in these commissions. However, that aside, I do not think there was much problem deciding what to consider.
Senator Bryden: It is my understanding that under the bill the recommendation of government, based on the commission's report, will be presented to Parliament and enacted by Parliament. Is that correct?
Mr. Scott: Yes.
Senator Bryden: It is also my understanding that there are at least two places where the court now says clearly that it can intervene. First, it can intervene if the commission itself, like any other administrative tribunal, is alleged to have gone outside its jurisdiction. In such a case, it can quash the decision reached by the commission. The court probably cannot substitute its own position, but it can ask the commission to take the matter up again. That is the normal administrative law procedure.
The courts appear to be taking the position that, if the government acts on the commission's report and someone says that the government has made an irrational decision, that person can make an application to the court for a judicial review of the government's decision. That review could, in a proper case, allow for the quashing of that decision. Is that true?
Mr. Scott: Yes. My understanding is that the theme of the judgment is that the rationality test is tied to undermining independence. In other words, the basis for going this route is the question of preserving independence. I do agree with what you have said, however.
Senator Bryden: I do not want to bring in "the ubiquitous reasonable man," which is where the rationality test takes us, but I would like to go one step further.
The commission makes its recommendation, which is accepted by the government. The government drafts a bill and presents it to Parliament. Parliament debates the bill and rejects it. On the independence test under the Constitution, is it possible for an application to be made to a judge to quash the act of Parliament because it is in violation of the Constitution Act, which gives independence to judges?
Mr. Scott: Forgive me, because I am the furthest thing from a parliamentarian. If Parliament rejects the bill, however, is there an act of Parliament at all?
Senator Bryden: Let me just vary the question a bit. Let us say that the act of Parliament is passed, but it grants the judges only $1.
The concern that some of us have is that, after documents such as the Charter of Rights and Freedoms, Parliament has been allowed to keep very few real parliamentary rights vis-à-vis the courts. The time when Parliament was supreme went out the window with the Charter of Rights and Freedoms. Parliament has always jealously guarded its right to appropriate taxes -- the citizens' dollars.
That is what is troubling a number of us. Are the courts now saying, under the guise of protecting the independence of the judiciary, that the judiciary can override decisions made at the parliamentary level, and say that a particular judgment is irrational and interferes with the constitutional independence of the judiciary?
Mr. Scott: I believe that is what is being said. I will come to the reasons for that in a moment. If the government tables a bill that is not highly recommended by the commission, and the bill becomes law, it is my understanding that the case is saying that the courts, on judicial review, can intervene. That is a bit of a misnomer in terms of judicial review, because it would be questioning the constitutionality of a statute. However, that is the way the court would intervene. It would be confronted with this statute, and it would be exactly the same if the government proposed that the recommendations be followed and Parliament rejected it. I believe that you have analyzed that correctly. I may have this wrong, but that is my reading of it.
What happens if Parliament passes a bill which is deliberately drafted with a view to controlling the behaviour of judges by attacking them economically? What happens if the commission says that the judges have not had a pay raise for 40 years and they are on the poverty lines, yet Parliament attempts to further reduce their salaries? What mechanism do we have to deal with that?
Senator Bryden: The answer to your question is that you would get another Parliament. In a democracy, the final arbiter used to be the people who elected the parliamentarians and if the parliamentarians acted that ridiculously, the parliamentarians got voted out of office.
I hope I am not over-simplifying this, but the concern is that, in addition to all the other powers that now reside in the Supreme Court, we will now give the justices the power to tax. That is, they will be in a position to reject Parliament's decision that the people of Canada cannot afford to do a certain thing, even though it was recommended by the commission and by the government, and to increase the amount of money allocated for judges. We can go through this whole process and have the court says that the result is not acceptable.
Do the justices then fix the amount, or do they do the normal thing, which is to say, "Go back and try again"?
Mr. Scott: I think they say, "Go back and try again."
Senator Bryden: That is of real concern to many of us who grew up believing that Parliament had some power.
Mr. Scott: I understand that, and I suppose it depends upon one's point of view. I look at it entirely from the point of view of the independence of the judiciary. To take a far-fetched example, if a Parliament duly elected by the citizenry concluded that the judiciary was out of control and that therefore Parliament would undermine it economically, it would be modest comfort only to know that the Governor General might not sign the bill into law, or that we could have an election. Presumably, by this time Parliament is uttering the will of the people.
I understand what you are saying. I understand the concern.
I would be very surprised if the judges of the Supreme Court of Canada, and their numbers who supported this notion, contemplated it extending as far as you have described it.
Senator Bryden: I am sure they did not. We are here to try to make sure that we understand all the implications of what is being stated here.
It bothers me as an individual that this is the only time in 130 years that, to preserve the independence of our judiciary, the Supreme Court is requesting the right to review. It was never required before. Why is it necessary, all of a sudden, at this stage?
The Chairman: To follow up in the same area, if the court quashed a bill of this nature, they would not then have the power to tax, because what would stand at that point would be the previous bill, would it not?
Senator Bryden: Quashing it means that we must try it again.
Mr. Scott: It means that the existing regime would continue.
Senator Bryden: It is an indirect ability, because they could go back and say, "Add another 10 and another 10 until we get something that is acceptable."
If the judges rule and say that they will quash the bill for Constitutional reasons, does the notwithstanding clause then come into effect, or is there no ability for it to operate in that situation?
Mr. Scott: No, it does not come into effect in that situation.
Senator Murray: The process that is provided for in this bill is that the commission submits its report and the Minister of Justice is obliged to table it in each of the Houses of Parliament within 10 days, effectively. The report must then be referred to this committee, to the Senate, and to our counterparts in the House of Commons. They have 90 sitting days to report their findings. It then says that "the Minister of Justice shall respond to a report within six months after receiving it."
Are we certain that the obligation is there is for the Minister of Justice to respond to the commission's report or to the parliamentary committee? If you look at the marginal notes on page 4 there is "Report by Committee," "Definition of `sitting day'," and then "Response to report." I ask the question because it is quite normal under the rules in the House of Commons that the government is obliged to respond to reports of parliamentary committees within a certain period of time. We do not have a similar rule in the Senate.
I am not aware that ministers or the government are obliged by statute to respond to reports of other commissions, although they may be obliged to do so.
Mr. Scott: The intent is that the minister respond to the report of the commission. Whether that is regarded by senators as desirable or otherwise, I believe that is the intent. That is because we, and a succession of commissions before us, were of the view that the government should be required to respond rather than simply say nothing. That is my understanding, but I could be wrong.
Senator Murray: We should probably ask the minister.
The Chairman: That is a good question to ask the representatives of the department when they return here.
Mr. Scott: I think that is correct.
Senator Beaudoin: In the same line as the one taken by Senator Bryden, is it true that if the government is resisting the commission's recommendation, the government may have to justify its stand? If I understand the bill correctly, it means that the burden of evidence is on the shoulders of the legislated branch of the state. It is not often that we have that, but it is there. The court ruled on this in the provincial court judges reference.
However, the court may intervene only if it is not rational. That is the way I read the statute. It does not mean -- and I would object strongly to this -- that the court itself would fix the salaries. That would be quite unacceptable. I cannot see how we can go that far.
What is your understanding of this? In other words, the court may say: Your refusal is not rational. That means you must try again.
Mr. Scott: That is correct.
Senator Beaudoin: That does not mean more, which is quite something.
Mr. Scott: As Senator Beaudoin says, it is quite something.
Senator Beaudoin: At least the power of the court is on the irrationality, not on the question of taxation or things of that sort. I know it is close.
Mr. Scott: Rightly or wrongly, it is on rationality as measured by the undermining of independence. It is not economic rationality or some other rationality. I could be wrong, but that is the way I read the judgment. The court is concerned only with the issue of independence, so the rationality is at issue.
Senator Beaudoin: What was raised by Senator Bryden is that the last word is given to a court in a court case.
Mr. Scott: Yes, but it is not given to them to fix their salaries.
Senator Beaudoin: It is not to fix the salaries, so it means to try it again?
Mr. Scott: That is correct.
Senator Beaudoin: The court was not unanimous, but they do not need to be unanimous on this. There was a strong majority to that effect in the court.
Mr. Scott: That is correct.
Senator Beaudoin: We cannot go further than that on that precise question. We may like it or dislike it, but the fact is that there is already one advisory opinion of the court that says that the mechanism of a commission is good. We must abide by the decision of the Supreme Court of Canada.
I cannot see how we may use the notwithstanding clause in this because it is not a Charter case. It is a basic principle of the Canadian Constitution that is judicial independence. This is a difficult debate. The legislative area and the judiciary have been separate in Canada for 300 years. It is one of the basic principles of our Constitution. However, in a case like this it is a bit technical. I am glad that we must solve an interesting question like that.
Senator Sparrow: Let us say that there were no recommendations in the report that the status quo be maintained. What would happen then?
You suggested that that report must go to Parliament. If there was a status quo, you suggest that it still must go to Parliament with no changes. If they did in some way or other go to the house, the judge would determine whether Parliament had made an irrational decision.
Could the irrational decision have been made by the commission? That recommendation had gone, and now the government -- Parliament -- backed that decision, and it was irrational in both cases? Does the court still decide that the commission was irrational, as well as Parliament? If in fact there was no report, could that be considered an irrational decision because there was no recommendation for any changes?
Mr. Scott: I think that Senator Bryden's point is the correct one. If the commission exceeds its jurisdiction by irrationality, if that is possible, then judicial review would lie anyway.
My sense of the rationality here at issue is the government's response to the commission's report rather than the commission's report itself. In other words, the point of the independent commission is that it will be an independent adviser to government, and the concern is that governments are arbitrarily ignoring it. If the commission itself, by its methodology or what it says, is demonstrably irrational or lacks in jurisdiction or whatever, I believe that judicial review would lie anyway, whatever this case provides.
The irrationality or rationality is in the government's reaction to the commission's report. That is what I understand the Supreme Court of Canada is dealing with in the P.E.I. case.
Senator Sparrow: But if both decisions were irrational, in the opinion of a judge, what then?
Mr. Scott: I suppose that if the commission's decision were irrational to a level which merited judicial review, that would be the first step. Obviously, if the judges were challenging it, the first step is to either be supporting the commission's decision or attacking it. This is all premised on the proposition, as I appreciate it, that this independent commission will make a rational recommendation that will be arbitrarily rejected by government.
Senator Pépin: According to clause 45, a judge who is in receipt of an annuity can leave his pension to his common law spouse whom he has lived with for at least one year. Some people have pointed out to us that in most provinces, the requirement is three year's cohabitation. Could you explain this to us?
Mr. Scott: I have read what has been said to your committee about this. Certainly, three years is the provincial standard in many jurisdictions. I am not an expert in this area so I will be of no use to you. However, my understanding is that this is an expression of the regime in place in other areas. However, I have no idea whether this is a departure or whether this is an expression of the statutory regime in place in the provinces. I am just not on top of this. My recollection was that it was three years, but obviously this one-year provision is defensible based on the survivors' benefits, which do not apply to judges. I am sorry that I am of no help.
Senator Beaudoin: Someone said that this bill is harmonizing the situation of judges with that of people in other areas of the public service, such as the RCMP.
The Chairman: I believe that it is harmonizing it with the public service.
Senator Beaudoin: Yes, and even members of Parliament.
The Chairman: Yes. We will hear from another witness who is knowledgeable in this area. We can ask the question again then.
Senator Joyal: Did you study how other common-law systems comparable to Canada deal with this issue of judges' compensation to protect the principle of the judiciary's independence?
Mr. Scott: We did. While walking here from my office, I was wondering where our research papers had gone. They have all gone back to the judicial affairs centre and I will see if I can find them.
We did a study of that. As I am sure you have been told, in some Australian states they have negative resolution. I believe they have that in New South Wales. In others, they have commissions that have powers to recommend only. I could not list them for you, but the one most aggressively favourable to the judges is the negative resolution system, which is in place in New South Wales, Australia. The report is tabled and if there is no bill rejecting it, it becomes law.
Senator Joyal: Do you know the system in the U.K. generally?
Mr. Scott: I cannot recollect it. We did a study of that, but I cannot now remember what we learned. I will find out and send it up to the clerk.
Senator Joyal: I should like to come back to the question of rationality. As you realize, it is something that bothers us a lot. You say that the test would be rationality in reference with the maintenance of independency of the judiciary.
Let us take an example that we have experienced in the last years. We were in a difficult economic situation in terms of budgetary issues in Canada and the government decided to institute freezes all over the place. The judges were frozen, too, in terms of compensation.
Let us imagine that some time in the future the same situation arises and the government once again institutes freezes. The commission studies the workload of the judges and concludes that their workload has increased and they request a 2 per cent increase, which seems reasonable in a difficult time. However, the committees of the House of Commons and the Senate recommend against the commission's request, as does the Minister of Justice.
In such a context, where everyone is hit, where, in your opinion, does the maintenance of the rationality principle in relation to the independency of the judiciary stand?
Mr. Scott: A freeze across the board is rational. However, the judges did not always think that. It is very interesting what the Chief Justice said in the P.E.I. case. He said that a freeze across the board, although effectively a reduction, would be defensible.
The judges did not always think that. They did not like to be aligned with the executive branch of government, so they did not like to be swept in with other public servants. In respect of this last freeze, there was a lot of criticism on the part of the judges.
I read in the judgment that the chief justice acknowledges that an across-the-board freeze, where everyone bears the burden, would be rational. I regard that as an advance in judicial thinking. It would be rational, but the question is: What would be irrational? I am not sure of the answer to that question. I suppose that is part of the troubling nature of the problem, because what would be irrational in the face of what is perceived in society as unwarranted judicial activism is a massive reduction in compensation affecting only judges. The judges might regard that as an obvious attempt to undermine their independence and to control their behaviour.
Cases such as the one in P.E.I. have involved efforts include some independence problem associated with salaries. It arose from the fact that the executive branch set the salaries for judges, and the judges had no say whatsoever in the matter. There is always an effort to get the hook of independence into the question. That is why it is not just rationality per se, but rationality as tested by the stability of the independence of the judiciary.
Senator Joyal: On the same basis of your answer, a judge would recognize that when an effort is requested from everyone, it ought to be borne fairly by the judiciary, too. They are part of society as such.
Why are people so reluctant to have the criteria that the commission would follow mirror the criteria that Treasury Board follows when putting forward proposals that are within the framework of the government purse? Essentially, that is what Treasury Board must do when putting together a proposal for the unions. It would seem to be in accordance with the capacity of the taxpayers to pay at this point in time.
Mr. Scott: Perhaps I am pushing this point too far. I am not saying that there should not be any criteria, but at a certain point the criteria become developed enough that you do not need an independent commission. That is, you need only apply the criteria. You could say that the remuneration for the judiciary should be measured by the salaries of deputy ministers or by the incomes or benefits received by deputy ministers. That is the end of it.
I believe in the notion that for the judiciary, who are independent of government, there should be some mechanism for determining what is appropriate in terms of compensation.
I am not saying that we do not need criteria. What I am saying is that we need to determine the nature of the criteria. Will we consider the benefits received by deputy ministers? If so, at what levels? If you get to that point, then you do not need an independent commission, do you?
Senator Joyal: In the United States they have criteria, and they fix the level of compensation to avoid that kind of discretionary involvement of elected people, thereby protecting the independence of the judiciary.
When you put forward some criteria, is that not a way to contain the independence of the judiciary? In that situation you apply the criteria and then there is no discussion.
Mr. Scott: Except for the fact that such a solution presumes that criteria provide the complete answer. There is some judgment in here somewhere, and where there is judgment there is an opportunity to lobby for the judgment to go one way or the other. The way we get into this area is that judges cannot lobby; therefore, you must have an independent commission.
In the United States, there is an enormous boon from removing the link between judges' salaries and bureaucrats' salaries. That is not entirely the work of the judiciary. There is a feeling that the judiciary, as a separate branch of government, should be dealt with separately. The criteria change from time to time, depending upon the attractions of the bench. About four years ago, it was much more attractive to consider an appointment to the bench than it is now. People flocked to be appointed to the bench over the last 10 years. Before that, they did not do so, and they certainly are not doing so now.
You are trying to develop a system that matches what is available outside the judiciary in order to attract the right people. I would not favour simply establishing a set of criteria that says that judges will be treated like a certain group of people with all the same criteria. If you do that, you do not need an independent commission.
Senator Joyal: You said that there is a movement in the United States to deregulate the compensation mechanism for judges. Is that not a way for those people who fight for judicial activism to submit judges to the appreciation of discretionary compensation decisions?
Mr. Scott: The first group pushing for the removal of such a linkage is the judges. They feel that their situation and the need to attract the right people to the judiciary will not be addressed by putting them into a category with federal public servants and that, since they are a separate branch of government, they should be dealt with separately. The motives of others is another question, but that is a hot topic in the U.S. now.
Senator Joyal: I understand your point. Besides the cost of living index, the economic growth of Canada, and the objective that the government is pursuing in its budgetary policy involving salaries, you add the criteria of putting enough money on the table so that there will be enough candidates interested in the profession.
Mr. Scott: Yes, the right candidates.
Senator Joyal: In other words, we must make the package attractive enough to attract those we want to have, and not those who are looking for another job because they feel they are underpaid. Is that what you have in mind?
Mr. Scott: Yes.
The Chairman: I am rather surprised, Mr. Scott, to hear you say that this is not a position that people are avidly seeking. Most members of Parliament would be surprised to hear that, too.
Mr. Scott: But are they the right people? That is the question. From sea to sea, we have had a tremendous judiciary in this country. In my province of Ontario, the Court of Appeal has always had the top lawyers in the profession. This is not true in other countries. In other countries, the judiciary is frequently made up of people who have been appointed to the bench early in their lives. There is a completely different atmosphere in the judiciary. I make no apology for pushing hard for the idea that there should be enough independence in the effort to assess what judges should be paid to attract the right people. The right people are not necessarily Bay Street people, but people from communities across the country. We need to have the top people in the judiciary.
Senator Lawson: On the issue of criteria, I agree with Mr. Scott. I think it would be a serious mistake to try to have fixed criteria. I heard Senator Joyal say that the Treasury Board has some criteria, and I am sure that the executive board does. Every union does, but it is floating, flexible criteria that works on each individual occasion. You keep the ones which work, and if they do not work next time, you change them to meet the changing circumstances.
I have been involved in negotiations for over 40 years and I have learned that it is impossible to have fixed, rigid criteria. One or two criteria are obvious, such as the cost of living, but you simply cannot work within a strict framework.
Those parties with bargaining rights have flexible criteria. To attempt to apply it in this situation would be impossible. I agree with you that there is no point in having a commission if you are to have rigid criteria. Rather, it should be binding arbitration or binding conciliation, as it was in the old days: Fix it and leave it, with no appeal.
Mr. Scott: I do not think that a lot of people genuinely believe that there is a problem in attracting the right people to the bench. However, in reality, the opposite is true. We have some of the most wonderful people on the bench. Yet, every once in a while you get a rush of people who want to be judges and you see a hint of the other side of the coin, which is very unappealing. You see people who want to be judges because they perceive it to be easier work and because they are attracted by the pension, et cetera. Those people we positively do not want. They end up losing their spirit for it in no time at all, and the result is a disaster.
However, taking the point about the criteria, we do always have to be measuring how we compensate our judges against that body of people from which we are drawing to ensure that we are competitive. We obviously do not pay anything like the incomes that are given up, but we must pay enough to ensure that it will not be such an enormous step down that people will not do it.
Senator Bryden: It is interesting that the tremendous courts that we all know and have practised before have all come about without this type of protection. I do not know why we have to go further with it at this particular time. There was an old saying in law school that A students make professors, B students make judges, and C students make money.
As you know, the fact that a given lawyer is making $500,000 a year doing estates and commercial law in no way indicates that he is better than the carefully practising lawyer, even an independent practitioner, who is eking out enough to pay his secretary and his overhead and clear $80,000 or $100,000.
Mr. Scott: That is so.
Senator Bryden: I should like to go back to the issue of criteria or guidelines. Senator Lawson and I have both been in the labour business for a long time. The ability to go to economic warfare is in some instances removed in the public interest. For example, firefighters and sometimes police have the right to strike removed from them and replaced by arbitration.
In most statutes that make arbitration the final decision-maker, there are criteria laid out. If there are not criteria, you cannot take into account the employers' ability to pay. Therefore, the fact that the Province of Prince Edward Island could not afford to pay a 25 per cent increase would not be a factor that an arbitrator could take into consideration. Now they must because it is on the list. In other words, in your deliberations you must take the following into account.
There are criteria for the commissions in many provinces already. The Provinces of Ontario, British Columbia, Alberta, Quebec and Prince Edward Island have them. The act of Prince Edward Island, for example, includes as criteria the need to provide fair and reasonable compensation to judges, the management board policy and other relevant considerations respecting judges' expenses, any changes in the cost of living, the need to attract excellent candidates, the prevailing economic conditions in the province and the overall state of the provincial economy, and the salaries and benefits paid to other provincial court judges in other Canadian jurisdictions. I do not see it here, but it says probably "and any other relevant criteria," but under the ejusdem generis rule you do not get too far away from that sort of stuff.
New Zealand's statute includes very interesting criteria. They are: the need to achieve and maintain fair relativity with the levels of remuneration received elsewhere; the need to be fair, both to the persons or group of persons whose remuneration is being determined, and to the taxpayer or ratepayer; and the need to recruit and maintain competent persons. Those are criteria which the commission must take into account.
Mr. Scott: I started this by sounding as if I do not agree with Senator Joyal on this. I am saying that those are as obvious as they can be. It is not as though they are very earth shattering. While you were speaking, I wrote: "What would the criteria be? What others are being paid, what is being paid elsewhere, what is the cost of living, what is needed to attract the right candidates, and what is the state of the economy."
Senator Bryden: Then put it in the statute.
Mr. Scott: I have no problem with that, but once you go beyond that the problems arise.
Senator Bryden: The commission is to be comprised of three people -- one nominated by the judiciary, one nominated by the Minister of Justice of Canada, and a third, who will be the chairman, agreed upon by the first two.
As Senator Lawson and I know, in the real world people sometimes cannot agree on who the third person will be. There is no provision in the bill for what happens in that circumstance.
I asked the minister what would happen in such a case and her response was that the first two people chosen would be fired and the process would start all over.
I presume that if one party -- presumably the government -- wanted to stonewall the process, it simply would not agree to the chair.
Mr. Scott: That is interesting because most arbitration statutes provide that in the event of a deadlock you apply to a judge -- which would be inappropriate in this case.
Senator Bryden: That is my next point. To break a deadlock you apply to a judge, and the judge would have some degree of interest in who is appointed as chair. That is odd.
Mr. Scott: It is odd. The minister may be right. The minister could tell the two persons who were appointed that if they cannot agree within 10 days, their appointment will be revoked and two will be found who can agree.
Senator Bryden: The minister does not have the power to do that under the statute. They would just have to come to some agreement.
If the judiciary continued to quash recommendations of the government to Parliament, or if they had the ability to quash or find ultra vires under the Constitutional a decision of Parliament, I assume that the status quo would remain in place until a change was finally effected through legislation. Therefore, it is not particularly in their interest to be totally unreasonable.
Senator Moore: They can still change the legislation.
Senator Bryden: That is right, but I am a little concerned in that this whole issue basically grew out of judicial disobedience in P.E.I., where the provincial court judges took the position that they could not handle these cases because they were biased.
They were biased because the person who paid them was either reducing their pay or was not prepared to increase it. Therefore, in any case where you had the Crown, Regina, against Joe Blow, the judge might very well be prejudiced against Regina and let the guy off. To my mind, that is judicial disobedience, like civil disobedience. Finally, it bubbled up and the issue arrived here.
We are back at the arena of Senator Lawson and myself: Who has the most power? Parliament has the ability to refuse to pass the legislation, and the judges have the ability to say that, if that is true, they will not hear any cases. Somehow we have to be sure to avoid those circumstances.
About the question of criteria, there are some criteria already established by the courts. One of them we have not discussed because it does not happen very often. To my knowledge, it has happened only in one case at the inferior level.
In the case of provincial judges, the Supreme Court declared a reduction of salaries as invalid, as ultra vires. It forced the government to reimburse the judges.
When we read the question of independence of judges, we must take into account the fact that, in that case, we were concerned with the real problem because there were some reductions of judges at the provincial level.
I do not know in which constitution this is found but I remember having read a constitution that makes it impossible to reduce the salary of a judge. It is unconstitutional right at the beginning. There is no such thing in our country, but I guess we may infer from that that if there is a reduction, that is at least strike two for the government because it seems, prima facie, to go against the principle of the independence of the judiciary. What do you think?
Mr. Scott: I have two points on that. It is interesting that, in the P.E.I. case, the court concluded that an across-the-board freeze is, theoretically, a reduction. Because the cost of living is increasing, it is a reduction.
In the Beauregard case, the argument was that, after the judge's appointment, a change in the law requiring contributory pensions was a reduction. Chief Justice Dickson concluded that it was a reduction but it was a legitimate reduction. That case came from the Quebec Court of Appeal. There had been a bill in the house and, literally weeks after the judge's appointment, the law was proclaimed to the effect that judges, who before had free pensions, now had to make contributions. He interpreted that, not surprisingly, as a form of reduction of his salary. He sued Her Majesty and it went through to the Federal Court. He was successful at every level until the Supreme Court divided and he lost.
The court concluded -- and this was really the beginning in Chief Justice Dickson's notion of across-the-board, even-handed treatment. The conclusion was that everybody contributes to his or her pension so why should not judges contribute to theirs? They found there was nothing unconstitutional.
The argument was a constitutional one -- that salaries must be fixed and provided and that it is inappropriate to reduce them. It was rejected. A reduction without more is not necessarily, in contemporary terms, evidence of anything.
Senator Beaudoin: There may be a case where it might be justified.
Mr. Scott: It might be justifiable. I think it is the juxtaposition. In an interesting example, a bill was discussed in Arizona where, on the one hand, there was a lot of talk about judges being out of control -- which is the way it develops -- while, coincidentally, over here, there was a discussion about the level of their income being too high. If these things are discussed at the same time, it gives you pause and it is troubling. That is the kind of thing where a reduction may be seen.
Senator Fraser: Almost identical to that, I have been sitting here brooding about how this would play out in practice. I am really troubled by the notion of giving a profession the right to, effectively, control its own pay when its salaries are paid out of public money.
Senator Lawson: That is what MPs do.
Senator Fraser: MPs must go back to the public, which is why they get in such a dither every time they have to think about a pay increase. Judges do not.
I was comforted by the observation of the chairman that, if we are talking about salary increases, when a judge says no to a bill, he does not get any increase at all. He is stuck with the status quo. However, when it comes to reduction, I seriously wonder because then, if a judge says no to the bill, he does not get a pay-cut. He gets to keep what he has.
I have enormous respect for judges but it seems to me that some of their wisdom -- and the pension case you cited is one example -- goes out the window when their own interests are at stake. There was a situation in Montreal a few years ago where judges were actually arguing that, in order to preserve their judicial independence, they had to continue to have indoor parking spots, free, near the elevator.
Mr. Scott: Surely there must be more to the argument than that.
Senator Fraser: No, they were busy persons and did not want to have to walk the length of the garage nor pay for the space.
You have outlined a couple of interesting elements that suggest that, ultimately, the judiciary has come a long way, such as Justice Lamer's reference to an across-the-board freeze being fair, in particular.
I am trying to find out whether, in our present state, we could reasonably assume that, faced with cuts across the board, affecting everybody, in the situation of deflation or of dire budgetary stringency where government needs to reduce pay for everyone, the courts would sit still for that or stonewall.
Mr. Scott: I am confident that they would sit still now. I do not know that they would have done so 10 years ago.
Senator Fraser: You think we have come that far?
Mr. Scott: Yes, I do.
Senator Fraser: You think we can read that into Justice Lamer's comments?
Mr. Scott: Yes. I do not have the language at hand, but he virtually says that. If you have an across-the-board treatment that affects everyone based on economic conditions, of course the judges would be required to accept it. It seems self-evident.
Senator Fraser: Of course, but parking spots near the elevator also seems self-evident to me.
The Chairman: Thank you, Mr. Scott, for your help. You have kept the ball in our court.
Our next witness, Madame Lucie Laliberté, is a lawyer who has been doing research on women and pensions over the past 13 years. Her practice is focussed on family law. She is also the president of the Organization of Spouses of Military Members and has presented briefs on their behalf to the Government of the Province of Ontario, the House of Commons and the Senate Finance Committee. Ms Laliberté asked to appear before this committee because many of the proposed amendments in Bill C-37 are similar to those that she did research on for Bill C-35 and she thought that her experience would be of value to the committee, and the steering committee agreed.
Madame Laliberté, the floor is yours.
Ms Lucie Laliberté, Lawyer, Gahrns & Laliberté: I should like to raise one preliminary matter that arose from my discussions with the clerk before being allowed to appear here. I raised the issue that there is litigation on this matter before the courts at this time, and the clerk of the committee expressed some concern about that. For that reason I would like some direction.
I propose not to deal with the substance or the merits of the case, but it does relate specifically to the definition of "survivor benefit." I will keep my remarks limited to those issues that are raised in the case and also relate them to the issues that I found under Bill C-57.
Senator Beaudoin: Legally speaking, I do not see a big problem with this, if you are simply giving us the information you have in mind. As a committee of the Senate we have the right to hear witnesses. I understand your concern, but if you are prudent in your presentation, I do not see any problem.
Ms Laliberté: My concern was with the fact that the way it was presented to me, I might have declined to appear or I might have limited my presentation. I am a lawyer, so I worked my way around that. I appreciate your comments.
I will be speaking only to the issues relating to pension division and death benefits, including the survivor benefits in Bill C-57. I propose to start with a brief general comparison of the main provisions of the public service plans. The ones I am most familiar with are the CFSA, the RCMPSA and the PSSA, as opposed to some of the others that are covered there. I will then make a comparison with the Judges Act to show that the difference between the legislation is so significant that it cannot be said that what is happening is simply a harmonizing of those pieces of legislation.
The main point that I will be discussing is the fact that judges' pensions cannot be divided at source. No credit splitting is allowed, as is the case in all of the other pieces of legislation, including the Canada Pension Plan, and that significantly affects the impact on the survivor benefits part.
Before I deal with the actual problems, I should like to provide a different conceptual view of pensions as property and a contributory view of pensions as opposed to a dependency view of pensions.
I should like to start with the structure of the public service plans, specifically the three that I mentioned, first as they relate to marriage breakdown.
A credit splitting provision is allowed in all of those pensions. That is done pursuant to the Pension Benefits Division Act, which allows for an actuarial valuation of the pension plan and a lump sum transfer out of the plan into a locked-in RRSP for the spouse on marriage breakdown when it is done pursuant to a court order or to an agreement between the parties. As far as I can see, there is no such provision in the Judges Act.
There is also a provision in those pieces of legislation on marriage breakdown to allow for garnishment of salaries, as well as diversion of pension for support for children and spouses. The only thing I see in the Judges Act is that pension can be diverted; there is not a garnishment of salary for the purposes of support.
The next provision concerns what happens on death. In the public service plans there is what is called a supplementary death benefit pursuant to section 2 of the act. That is a declining term group life insurance benefit that is usually, with some exceptions, equivalent to two years' pay, paid out in a lump sum on the death of the member. That plan is contributory and the designation of the beneficiary is at the member's pleasure. It must be made, however, on a proper form. Situations have arisen where someone has designated a beneficiary in either a will or a separation agreement and it has not been upheld by the administrators of the plan.
It was originally designed to help defray the cost of funeral and other expenses when a person died. It has now been expanded to be much more than that. I relate this to section 46(1) of the Judges Act, but in the Judges Act it is only one-sixth of the pay, and that is to go to a surviving spouse on death. Under this amendment, there would not be a designation allowed. The beneficiary would be stipulated by the act.
There is also a provision for an annual allowance or a survivor benefit, which is generally 50 per cent of the pension benefit that is being paid or will be paid. That is to go to a surviving spouse, which does include a common-law spouse. However, the determination of who the surviving spouse is for the annual allowance, the monthly benefit, is also made by the administrator and not by the contributor. Contributors cannot designate who will receive the annual allowance or the survivor benefit. That is done totally at the discretion of Treasury Board, and we have been told that those decisions and the criteria that are used are governed by cabinet secrecy because, in essence, the legislation gives that power to the minister. We have had some difficulty trying to find out what the criteria are.
I will say, though, that everything is defined by marital status on the death of the contributor and there is actually a clause to prevent there being two spouses. The first spouse can actually be deemed to be dead, to have predeceased the contributor, in order to give the survivor benefit to the common-law or second spouse.
We have been told by Treasury Board that they do not apply that any more, but it used to be applied when the first spouse was separated and cohabiting with someone else herself. They would then give the whole benefit to the person who was cohabiting with the contributor. The law is still on the books. It is the subject of a challenge right now but it is still in the discretion of Treasury Board to do that.
Having said that, when deciding who the survivor is, they closely scrutinize who is living with whom and what the marital status is of the parties. Therefore, if a person is divorced, that person can never get the survivor benefit. If there is a separation, one of the criteria is the length of time the parties have been separated. If they have been separated for 10 years, no matter who was there during the contribution period they would decide in favour the common-law spouse.
There is also a definition of "surviving spouse" that is similar to the proposed new definition. There is no definition of "spouse" in the Judges Act and there is no definition of "surviving spouse." Under the amendment, the definition of "surviving spouse" includes "common-law spouse," but it really does not exclude "divorced spouse." There has been testimony before you that it has been interpreted that way and that divorced spouses can never receive the survivor benefit. That is the subject of an ongoing challenge. I will discuss the reasons for that once I have gone through the basic structure of the act.
There is also a minimum benefit to be paid out under all of these plans. That minimum guarantees that five years of contributions will be paid to the contributor. By that I mean that if a person dies after contributing to the plan for 20 years, but not yet having started to collect a pension, the estate can receive up to five years' worth of the benefit. If they were retired for two years, for example, their estate is still entitled to three years' worth of contribution, and that is integrated with any survivor benefits.
For example, if a spouse received a survivor benefit, or the children received a survivor benefit, that is deducted from the five-year minimum before the payout is actually given to the estate. As a further example, to clarify that, if there is no survivor, there are no children, and the person dies one day after retirement, the estate would get five years' worth of contributions.
This appears to be similar to section 51 of the Judges Act, but the judges receive only a return of their contributions into the plan, if that happens.
The Canada Pension Plan also allows for credit splitting. There is a distinction made in all of these plans between the pension benefit itself, which is deemed to die with the contributor, and the survivor benefit, which is seen to be an add-on, something extra that is different from the pension benefit itself. That is very important because it causes problems later on when spouses separate or divorce.
It is also a significant difference with the Judges Act, because when credit splitting is not allowed it makes a real difference in determining the fairness of who gets the survivor benefit.
Senator Moore: What do you mean by credit splitting?
Ms Laliberté: By that I mean that there is a lump sum paid directly out of the plan. In the case of CPP, there is a lump sum value placed on the benefit and it is prorated. That is put into an account for the non-member spouse on marriage breakdown once there is an agreement or order of the court on that marriage breakdown.
By credit splitting under the public service plan I mean that under the Family Law Act the value of the pension is an asset to be divided between the parties. In terms of a credit split, the Pension Benefits Division Act says that once the Family Law Act has been applied and there is an agreement or an order in place, then there is a enforcement mechanism.
Senator Moore: Which establishes the value of the asset to be distributed between the two individuals, the former spouse and the current spouse.
Ms Laliberté: That is right, and that includes the division of all of their property; the value of the pension, the value of severance pay, the value of houses, cars and RRSPs -- whatever they have. You come up with a number at the end. Then you can go to the pension plan itself and tell them to put a certain lump sum amount into a locked-in RRSP for the other spouse. That is what I mean by credit splitting.
The plan determines what the value of the plan is and, in order to maintain the viability of the plan, they say that there is a maximum amount allowed to be transferred out of it. If there is a shortfall, the spouses have to determine how that shortfall will be met if they reach the maximum allowed under the act.
That is what I mean by credit splitting. There is also another way of doing that, for which we argued previously but which was not done, and that is to impose a trust on the plan, separate out the spouse's portion and give it to her on a monthly basis when the pension comes into receipt. That has been systematically rejected, but it would still seem to be a viable option and not difficult administratively, because it is already done for purposes of support.
I should like to look quickly at the Family Law Act as well before I make the links with this legislation. There has been some talk in previous testimony that the common-law definition of "spouse" in the Family Law Act applies to property divisions. It does not. It only applies to support.
It is not just a definition of three years. It can be less than three years if there are children of the relationship and it is a relationship of some permanence. It can be less than three years in the Family Law Act.
This also happens in a number of pieces of legislation where you can have two different definitions. It happens in the Succession Law Reform Act as well, where there is an extended definition of spouse there, under the dependency provision that actually includes former spouse, as well as common-law spouse and legal spouse.
I believe I have defined how the property division occurs already due to that first question. I will move on to a concept of looking at pensions that is different from what I have also heard in previous testimony, and that is not looking at it as a dependency or as stereotypically something that is given as a gift to someone.
The family law legislation regarding property and pensions in Ontario was changed in 1986 to reflect the fact that marriage is a partnership and that a pension is something that is earned by both parties. It is a deferred savings plan that is earned by both of the parties throughout the contribution period. That view of it was also supported in a Supreme Court of Canada decision called Clark v. Clark, which said that Mr. Clark's pension was security for their retirement. The wife's contribution to the marriage partnership enabled Mr. Clark to maintain his employment and accumulate the pension benefits.
We are trying to have a shift in thinking. Pensions are earned over a long period of time and all the legislation only looks at a specific point in time, which is the contributor's time of death. In our view, that is where the unfairness comes in, because if we start looking at it as something that the spouse has earned throughout the partnership, then the way we view survivor benefits as well will be very different.
Those are also some of the arguments that we have for a Charter argument under section 15(6) discrimination because, in virtually all cases, it is the woman who is the non-contributing spouse, particularly in the Canadian Forces. In this, I am assuming with the judges, given the make-up of the courts right now.
If we are looking at it not as a dependency or as a gift but something that is earned, then it will help when I define some of the unfairness and inequities that still exist in the previous legislation that has been changed and that may be implemented again under Bill C-57.
I also submit that having that view removes any moral dilemma, if you will, as between common-law spouses and married spouses. If we look at it as something earned during the contribution period, then it may be fair to divide credits if a common-law spouse was there through the contribution period because she was contributing to the earnings and it was that particular group whose income was generating the pension ultimately.
I see problems in Bill C-57 in what is left out of it, as well as what is in it. The very first problem is that there is no method of credit splitting and, if there are no other assets on marriage breakdown, a divorcing spouse must take the pension on what we call an if-and-when basis. That becomes very hazardous to a divorced spouse. Previous witnesses have said that if spouses are divorced, the wife can never get the survivor benefit. Since the pension itself dies when the member dies, she loses her pension entitlements. If she does not have proper insurance in place to protect her, she has lost all of those benefits.
As an example, if you are looking at a high-ranking military officer, the value of the pensions I have seen can be as high as $800,000. You could be talking about $400,000 that should go to the ex-wife, and if he were to die the next day she has no way of enforcing her entitlements.
The other problem with that is when the spouses are divorcing, if there is no other way of enforcing that entitlement as between the two spouses, it causes a dilemma for them upon divorce. With a judge's pension you are probably looking at values of over $1 million if you have a long-term pension. If he cannot come up with $500,000 to give her and there are no other assets, or the assets only cover $250,000 of it, for example, in a matrimonial home, if he dies and she cannot get the survival benefit, she has lost $250,000. That severely affects her long-term viability financially, and it also shows why it would be unfair then to split the survivor benefits in the way that this bill is suggesting.
Prior to 1986, when there was no credit splitting, or early on into the legislation, sometimes the spouses were given the property entitlement as support. Today we have credit splitting and it is now the subject of litigation. Women either do not have the money to change their agreements to make it property so that they can now do the credit splitting, or they expect that they will be able to get the survivor benefit and they, sadly, find out when the contributor dies that they have lost their support entitlements.
We also have members who divorced, for example, in 1978. Their support is still intact but they were never given a share of the pension, though they were there through the contribution period. That is why I am saying it is important to look at it as something that was earned. In that case, you could look at it as what we call a constructive trust. There is an unjust enrichment that goes on. If she was there through the contribution period, she earned those pension entitlements, on our argument. Now, when he dies, she does not get the survivor benefits. That is an ongoing problem. There are fewer and fewer of those women, but it is still happening.
We also have a situation where we have a divorced spouse suing a second spouse -- right now there are several of them -- to get those survivor benefits. That is ongoing. In our view, it is really unfair. She may already be destitute; she has lost her support; she did not get the pension; she is often on social assistance at this point, and she must litigate to get the survivor benefit.
In this particular situation, the second spouse has already separated and she has her own pension as well, so she is getting the survivor benefit and her own pension. The first spouse of 30 years is getting nothing and living off the largess of her family actually, her children, at this point in time. That is in spite of the fact that we have credit-splitting legislation right now.
The reverse of that is if there is a split of credits, or if the parties have a way of splitting the pension between them. If that clean break has been made and all those assets could buy out that share of the pension, then I would say that the witnesses before you are correct. The apportionment through the contribution period between a common-law spouse and a separated spouse may be right, except that there is a problem in that there is a distinction. You can get divorced after living separate and apart for one year, but you can sever all the property and support issues. A divorced spouse who does not have her pension entitlements cannot get the survivor benefits when the contributing spouse dies.
However, if the parties are just separated and already have an agreement or a court order in place, the separated spouse can get an apportionment of survivor benefits. That is a serious inequity, which already exists in the previous legislation and will be put into this legislation as well, if it goes through the way it is now designed.
I want to make one other point in terms of the differences, and I am not absolutely positive on this particular point. I only found out that I was appearing yesterday and I did not really know that this was happening on survivor benefits until Friday. In terms of the interest rate for return of contributions for judges, I am reading that as 4 per cent compounded yearly. My understanding is that, in all the other plans, it is only 4 per cent simple interest. That may have changed since our previous presentation, but that is also a significant difference between the two plans. It does not directly have an impact here, but it could in terms of valuing pensions for the purposes of marriage breakdown.
The Chairman: We believe that has been aligned to changes in the public service, but that is a question we may have to ask.
Ms Laliberté: It should be checked.
Senator Murray: Ms Laliberté, have you turned your mind to the amendments that would be needed to correct the deficiencies which you have outlined in this bill? I do not mean a legal draft, but have you eyeballed the bill?
Ms Laliberté: First, we are trying to get a definition of "surviving spouse" for the other pieces of legislation.
We do not want to go with an interpretation by the administrators of the plan because, as I said, we do not have one. We have an extended definition of surviving spouse that included "former spouse," the way we have in the Ontario act regarding succession law reform.
It would be a start. You would still have a problem because you would have to link that to whether there had previously been a division of the pension credits.
There is something that I left out and it may be pertinent here. When a spouse gets a lump sum transfer out of the Pension Benefits Division Act, the act stipulates that she cannot get a survivor benefit. I would submit that is fair because she has already got a split of the pension credit. You would have to allow for that if you extended the definition of former spouse. It would have to exclude a spouse if all the splits had been done fairly and there had been a clean break between the spouses.
Senator Murray: As a layman, I have some difficulty with some of these terms. What is a "former spouse"? A spouse from whom one is divorced?
Ms Laliberté: Yes. Also, if we are looking at this as earned benefits between two people, which are shared on marriage breakdown, that could be a common-law spouse. The Pension Benefits Division Act itself allows for a credit split for common-law spouses and a period of cohabitation.
Senator Murray: Forgive me, but can you offer a definition of common-law spouse or common-law union?
Ms Laliberté: No. That is because it depends on which statute you are examining, if you want a statutory definition. If we are looking at "common-law," it is determined in each individual case. In determining who is a common-law spouse and who is the spouse who will get the survivor benefit, they will look at the bank accounts and whether they are shared. They ask if they take vacations together. Are they sleeping together? Do they have children together?
Generally, if the courts are making that determination, they are looking at the mode of living of the parties and how closely they fit a traditional definition of legal spouse. They look at all of those things.
Senator Murray: It does not matter whether the parties to the common-law union are both legally free to marry?
Ms Laliberté: No.
Senator Murray: That is not taken into account at all?
Ms Laliberté: No, it is not taken into account. That leads to all of the newspaper articles about harems and that sort of thing. I think we can bypass that by looking at the contribution period: Who was there through the contribution period? Where it is fair, one can look at the work that was done, the family funds that were used or of which the family was deprived.
If you always go back to that point and look at it as an earned benefit of both spouses, not just the contributing spouse, you can bypass some of that. However, you still must come up with definitions.
Senator Murray: It is not fair to ask you for free legal advice, but you have come here and possibly you would provide to the chairman or to the clerk a brief outline, without necessarily doing the drafting, of the changes that you think would be necessary in this bill?
Ms Laliberté: I practise family law and I do not do much legislative drafting. I draft agreements and that sort of thing. I believe Treasury Board has already grappled with this issue and either did not want to, or could not come up with, some definitions.
We are looking back historically over years, particularly with the Canadian Forces, because they have had pension plans for the longest period as they tried to recruit and retain personnel for brief periods of time. They would disenfranchise a spouse if she was independently wealthy, way back. We need to free ourselves from the old history on this, bring ourselves up-to-date in concept.
I am prepared to do some of that but it is really difficult when you are dealing with such an old concept, which still looks at who the spouses are and their marital status on the day the judge dies. We are really still looking at stereotypes. You are saying that the person he is with right now is the person who should get all the benefits. Why is that?
We are focusing on "him" and it almost makes it look like there are two women fighting over this. The reality is that we focus on the contributor. It is the judge's benefit and the judge should get to decide who will receive it.
We are trying to shift away from that. Those are basically section 15 arguments.
Senator Murray: Have you looked at this bill in this context?
Ms Laliberté: Yes, I believe there are some section 15 Charter challenges in Bill C-37 related to the survivor benefits. There is already one in process based on the other legislation. What you are doing here, especially as it relates to the definition of "surviving spouse," is entrenching that. Everyone has been focusing on "common-law spouse," but I say this relates to former spouses and the depriving of benefits from spouses who were there for the whole contribution period.
Senator Joyal: I cannot resist the temptation to propose to you a specific case and then to try to pin down the principles at stake. Examples are always easier to understand.
Let us make the following case. A judge has a common-law spouse for, say, ten years. He has children with the person and then they break up. He lives with a person for one year, in a common-law situation. Who gets the money?
Ms Laliberté: Who gets the survivor benefit? I always want to be very clear. We are not looking at the pension benefit. We are looking at the survivor benefit. Under this legislation, in my view, the person who was there for one year receives the survivor benefit.
Senator Joyal: The bill does not recognize the common-law situation while in fact the judge may have had a "family" with the first person for 10 or 15 years. Of course, they are not legally bound in the ordinary concept of marriage, even though they may have some financial responsibility to one another for the child. For instance, that person would be totally deprived of the benefit of the surviving spouse within the framework of this bill.
Ms Laliberté: Under family law legislation, she would not get a share of the pension either, unless she could make a constructive trust argument of her own that he would be unjustly enriched. That first person of 10 years could be deprived of the pension benefit under family law and also deprived of the survivor benefit under this bill, if it becomes law.
Senator Joyal: My point is well made. The principle now at stake is the one that you stated in your opening remarks, namely, the test of dependency versus the test of partnership.
This rang a bell in our ears because we heard from the minister last week. She said that the department is reviewing the concept of "spouse" in the family unit on the basis of dependency.
I am puzzled by that. I wonder if we are going backwards by returning to the principle of dependency and not partnership, the way you have outlined it to us. Could you expand on that so that we can profit from your experience in your practice of law in that regard?
Ms Laliberté: I believe that it is a step backwards to have an overview of the whole legislation based on dependency. Although you find that there is a financial dependency, that is built up on the fact that you do not recognize all the unpaid work that these spouses are doing throughout the contribution period. That is where we moved ahead with family law legislation across all the provinces to make that distinction. Although there was a financial dependency, you did not want the person who was being paid for their labour getting all the financial benefits of the marriage partnership when the marriage broke down. The Supreme Court of Canada has spoken clearly on that in relation to support. That is why the family law legislation was changed in the mid-1980s to divide the value of the pensions assets.
Part of the problem is that survivor benefits have not been determined to be an asset. There is one case where the judge declined to put a value on the survivor benefit. To a certain extent, I see the reasoning in that decision because the judge, in this case, will never see that benefit. They thought they could not make that a benefit for the judge. It is possible that they could make the argument that the survivor benefit is actually the property of the spouse who is there throughout the contribution period. That has not been done yet. It may not be something that will happen in the other pieces of legislation because we have credit splitting. But, with the judges, you might find women litigating that aspect of it in order to get the survivor benefit, particularly if they have been deprived of the actual pension benefits themselves.
Senator Joyal: For me, the question of dependency does not put the two persons on an equal footing. There is always someone who waits for someone else to do something. This is contrary to equality on the spousal relationship. A spousal relationship -- be it a same-sex relationship or a heterosexual relationship -- whether or not they have children or both of them are billionaires, is an equal kind of relationship. Anything that accrues to one partner should benefit the other in the context of pension, even if they do not need the pension, because the spouse might be richer than the person who has contributed to the pension.
The question of dependency touches upon something that I have a reluctance to envisage in the principles that I think are right. I might be wrong, but that is how I see the situation.
Ms Laliberté: It is only support that is based on need and the ability to pay. Assets are determined and equalized between the parties in family law. It used to be that pensions and survivor benefits were based on need, but that is not, and should not, be the case any more. That is what I see the minister saying. I briefly read her comments and I feel that same apprehension. That is a step in the wrong direction. We should be looking at an equal partnership and then looking at the survivor benefits after that.
Senator Joyal: Should we be looking at them as assets?
Ms Laliberté: That is right.
Senator Joyal: That is an important concept at stake in defining the surviving spouse. As you said, there is no definition of "surviving spouse" contained in the other legislation that you studied.
Ms Laliberté: There is no definition of "surviving spouse" in the Judges Act and they are adding something that already has no definition. That is problematic. There is no definition of "spouse" there, either.
When you leave the interpretation to Treasury Board or to the administrators, they have determined that the former spouse cannot be a surviving spouse. When you do not have the definition, it works both ways. Sometimes it is good, but in that case I think it is bad.
Senator Joyal: Do you think that the concept of assets underlined the principles of what you think a pension is?
Ms Laliberté: Yes, and it also leaves too much discretion to the administrators of the plan to decide who gets the benefits.
That is what happens if you do not have a definition. The administrators of the plan will then decide who the surviving spouse is or what the rationale is behind it.
I did not say a lot about that lump sum benefit, but the judge has no right to designate that. If there is no method of credit splitting, the spouse is only protected, if he dies, through insurance and lump sum benefits. You then preclude the parties from making an agreement between themselves that would allow the wife to receive that benefit to protect her own pension interests. It certainly is much more than what is needed for funeral expenses. That adds to that.
Senator Lawson: It is obviously a complex question -- both the issue of benefits and survivor benefits. We must proceed quite carefully concerning how we deal with it.
Recently, I received a letter from the U.S. government that said, "You may be entitled to social security benefits. Please report to the office." So I did. I had lived partially in the U.S., so I was entitled to benefits under social security. They said that they had to ask me a number of questions. I said, "All right." They said, "Do you have any ex-wives?" I said, "Is there a minimum number that you need to qualify for benefits?"
I phrased that rather badly, but our rules provide that if you have any ex-wives who lived with you in marriage for more than 10 years, each one is entitled to 50 per cent of the benefit you are receiving. Assuming your benefit is $1,000 a month and you have four ex-wives, over a 40-year period each one of them would receive $500 a month.
Ms Laliberté: You could quickly bankrupt the plan.
Senator Lawson: That is what I am saying. We are engaging in a dangerous area here. We must examine it carefully. The issue of fairness that you raise is very important. This may be a broader question that involves more than the Judges Act.
You mentioned the Canada Pension Plan, which is similar to social security. I do not know if any of those rules apply. It is absent from any of the provisions dealing with fairness, division, assets and beneficiaries. It seems like a very complex question.
Ms Laliberté: This is a very complex question. Although the CPP is being lumped in by the minister, it is very different again, in that there is credit-splitting. Therefore, the first spouse can have her credit put into her own account. Then it does not seem so bad if the common-law spouse of one year receives the survivor benefit. However, it could be. I do not want to say whether it is or is not, however, there are challenges to the survivor benefits under the CPP going on right now as well.
Senator Lawson: Canada Pension limit the number of ex-wives that you can have? Should there be a limit?
Ms Laliberté: For credit-splitting they prorate it.
Senator Moore: When you were speaking with respect to apportioning the annuity, proposed section 44.1 (1) states that "... if there are two surviving spouses ... each surviving spouse shall receive a share of the annuity prorated in accordance with subsection (2) for his or her life."
Ms Laliberté: That is an addition, right. I would like to clarify that this proposed section refers to marriage after the contribution period.
The Chairman: I do not believe so.
Ms Laliberté: That is right, it is not.
Senator Moore: In your remarks, you said that this bill is written such that there is no apportionment for the first spouse.
Ms Laliberté: If they are divorced, the divorced spouse is out.
Senator Cools: Is excluded from this.
Ms Laliberté: That is what I meant. If they are just separated, there is an apportionment. If they are divorced, there is not.
Senator Moore: That presumes that there is no separation agreement. It also presumes that the court order dealing with the divorce action did not stipulate apportionment.
Ms Laliberté: I do not think that is the case. That is the case for a separated spouse.
If the parties are divorced, even if there is no agreement or order in place regarding the pension, that spouse cannot get the survivor benefit, whether or not they have an agreement in place. A spouse who is separated, however, whether or not they have an agreement in place, can get that apportionment of the survivor benefit.
Senator Moore: Why is that? I am confused.
Ms Laliberté: There is no definition of surviving spouse, and the administrators have determined that a divorced spouse cannot be a surviving spouse, which is the subject of ongoing litigation with the other legislation as well.
I am submitting that that could easily lead to a significant amount of litigation here or inequities if the spouse cannot pursue the litigation.
Senator Moore: If the definition of surviving spouse included a former spouse who has not received an apportionment under any other statute or a separation agreement or a court order and divorce action, that would help you.
Ms Laliberté: It would help, but there is still a problem if there is no credit-splitting and she is getting her share of the pension on a monthly basis. If the spouse is divorced, she will lose her entitlement as soon as the judge dies, and if she is divorced she cannot receive the survivor benefit. Therefore, it helps but it does not go far enough.
Senator Moore: You said in your closing remarks that with respect to the lump sum benefit the judge has no right to designate the beneficiary. Did you mean he should not have the right?
Ms Laliberté: I am saying he should have the right.
Senator Moore: If he does not have the right, why?
Ms Laliberté: Under this amendment he would. He may now, however, I can come back and clarify some points. On my reading of the amendment, the statute says that it will go to the common-law spouse of one year.
The previous legislation did not designate who it was; it just said "surviving spouse." I do not know if it was the judge who would designate it or if it was the administrator of the plan under the Judges Act. I know that under the Canadian Forces legislation, for example, it is up to the member to designate who receives the lump sum benefit but not the survivor benefit.
I know it gets confusing. The member designates not the monthly benefit but the lump sum life insurance one-time payment. That allows the parties, when they are negotiating their separation agreement, to protect a spouse vis-à-vis pension entitlements and support entitlements in the event of the death of the other spouse.
Senator Moore: Turning to page 6, clause 9, a surviving spouse is not entitled to receive an annuity under this section if the surviving spouse has waived his or her entitlement to the annuity under a separation agreement entered into in accordance with applicable provincial law.
Should we be adding there "or in accordance with a court order or a divorce action between the parties"? I do not see any references here to divorce orders in divorce actions. We see mention of separation agreements.
Ms Laliberté: If you refer to separation agreements, normally you also include court orders.
I have another problem with that. Generally, that is not a provision of orders, you do not even look at the survivor benefit. My experience has been that administrators of the Public Service plan do not give effect to agreements between parties, court orders or wills when people are dealing with their survivor benefits.
Therefore, I had some concerns when I read this clause that the administrators may have to, now that it has been included; however, it is not something that is generally looked at when parties are separating and drafting agreements. I am not sure where it comes from, but I would say that if you were doing it by agreement, you should include court orders, because the two go hand in hand.
Senator Moore: At the top of page 8, clause 11, which deals with one-sixth lump sum, you are calling this the survivor benefit, right?
Ms Laliberté: No, this is a lump sum benefit.
Senator Moore: I am getting confused with the pension benefit and survivor benefit.
Ms Laliberté: It is confusing. This one is a lump sum payment separate from the survivor benefit.
It says, "...if a judge dies while holding office." I do not know what happens if the judge is not holding office. There is a different death benefit in the Judges Act, which is not referred to here. This looks like a benefit of a lump sum if the judge dies while in office, and that is the one that is designated in the statute to go to a surviving spouse.
Senator Moore: Would it be helpful if that proposed section included a phrase whereby each surviving spouse would receive a share of that lump sum in a prorated manner similar to what is in section 44?
Ms Laliberté: I suggest that that would be better than what is here, but the wording of this should be changed to allow the judge to designate who would get that lump-sum benefit in order to allow for what I spoke of earlier, which is protection for reasons other than just funeral expenses.
Senator Sparrow: They should be allowed to designate an individual or his estate?
Ms Laliberté: Yes, and they could do that by contract. It would be left to the judge and the spouses to determine who that would be on a breakdown. That would allow them to order their agreements on marriage breakdown as well as to protect the person who needed the protection or who was entitled to the protection.
Senator Lawson: We receive a statement every year that talks about the death benefit and asks who the designee is. I do not know why it would be different here.
Ms Laliberté: On the survivors' death benefit, although you can designate, you can only designate it on the specific form. Treasury Board has overridden giving the supplementary death benefit to someone who has been designated in a will or in a separation agreement. I would think that you would want to avoid that.
Senator Cools: I was very impressed by this witness's testimony. I wish to thank her. Apparently she has been working on this subject matter in respect of wives of people in the military. I thought that on such short notice she put together a remarkable presentation.
The Chairman: You have certainly demonstrated your intimate knowledge of your field. I thank you for coming and sharing it with us. As a consequence, I believe we will have many more questions to consider.
Ms Laliberté: Thank you for inviting me.
The committee adjourned.