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In Newfoundland (Treasury Board) v. N.A.P.E. the Women’s Court of Canada reverses the Supreme Court of Canada’s 2004 decision that the erasure of pay equity obligations under Newfoundland and Labrador’s Public Sector Restraint Act was a justifiable violation of women’s equality rights. The Women’s Court finds that a full and substantive account of the equality rights violation under the Canadian Charter of Rights and Freedoms is required in order to provide for a more comprehensive and contextual analysis of the arguments used to justify the infringement of these rights. Examination of the equality issues in N.A.P.E. includes consideration of the history of sex-based wage discrimination and of pay equity as a legal remedy for such discrimination. Against this backdrop, the Women’s Court finds that the erasure of pay equity results in material and symbolic harms and is a clear violation of women’s right to substantive equality. A survey of international law principles on pay equity supports this finding. In considering section 1, the Women’s Court examines the notion of substantive democracy as a counterpart to substantive equality, holding that section 1 of the Charter should be interpreted so as to avoid a conflicting relationship between rights and democracy. The Women’s Court finds that fiscal considerations should never suffice as a pressing and substantial basis for overriding equality rights and, in any event, that the government did not meet its evidentiary burden in proving that a fiscal crisis existed in this case. The government also failed to meet its justificatory burden at the minimal impairment and proportionality stages of the section 1 analysis, a conclusion supported by international law. The Women’s Court decides that the government must comply with its pay equity obligations to the workers represented by NAPE.

Reconsideration of Newfoundland (Treasury Board) v. N.A.P.E., [2004] 3 S.C.R. 381 (judgment of the Supreme Court of Canada reversed).

The decision of the Women’s Court of Canada was delivered by:

JENNIFER KOSHAN

I. Introduction

1. In April 1991, the Newfoundland and Labrador government (referred to throughout as the government) passed wage restraint legislation, the Public Sector Restraint Act (PSRA), S.N. 1991, c. 3 rep. and subs. S.N.L. 1992, c. P-41.1, which imposed cost-cutting measures on the wages of its own employees. One effect of this legislation was to extinguish the government’s obligation to pay $24 million in pay equity adjustments owed to workers in predominantly female bargaining units, who were predominantly women workers. In the government’s own words, ‘‘[e]ssentially what that does is it erases an obligation we had there of approximately $24 million’’ [emphasis added] (Newfoundland (Treasury Board) v. N.A.P.E., [2004] 3 S.C.R. 381 (NAPE SCC), Exhibit DC-8, House of Assembly Proceedings, 19 March 1991, Appellant’s Record, Volume IV, at 644-5).

2. The Newfoundland and Labrador Association of Public and Private Employees (NAPE) challenged the government’s legislative action as a violation of the employees’ equality rights under section 15(1) of the Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act 1982, being Schedule B to the Canada Act, 1982 (U.K.), 1982, c. 11. The courts and Arbitration Board held that the impugned legislative measure did infringe the employees’ section 15(1) equality rights. The Arbitration Board also held that the government failed to meet its obligation under section 1 of the Charter to justify this infringement. However, the courts disagreed. From the Newfoundland Supreme Court to the Supreme Court of Canada, the courts held that the infringement was demonstrably justifiable as a reasonable limit on equality rights in a free and democratic society.

3. The Women’s Court of Canada disagrees with the conclusion reached by the courts below. In our opinion, the courts failed to hold the government to account for its decision to erase a substantial portion of its pay equity obligation. The government argued that it was required to make hard choices to address a fiscal deficit and that significantly reducing its pay equity obligations was one of these hard choices. We respectfully disagree. In our opinion, reducing pay equity obligations was a politically more expedient choice for the government than finding a way to fulfil these obligations. It was also a choice that did not comply with the government’s obligations to respect and uphold women’s equality rights under the Charter, even in times of fiscal deficit. Our reasons are set out in the following decision.

II. Factual Context

4. NAPE is a union that represents workers employed by the government. In this case, Newfoundland and Labrador was acting both as government and as employer.

A. Pay Equity Negotiations and Agreement

5. In June 1988, after lengthy negotiations, NAPE and the government reached a pay equity agreement. The agreement opened with an acknowledgment that there was sex-based wage discrimination in the public sector. The stated purpose of the agreement was ‘‘[t]o achieve pay equity by redressing systemic gender discrimination in compensation for work performed by employees in female dominated classes’’ (NAPE SCC, Exhibit C-1: Collective Agreement between the NAPE Hospital Support Staff and Her Majesty the Queen in Right of Newfoundland and the Newfoundland and Labrador Health Care Association, Appellant’s Record, vol. IV, at 586).

6. When the pay equity agreement was reached, NAPE and the government did not know the extent of the discrimination and thus did not know the amounts owing in pay equity adjustments. The agreement established a process for identifying the discrimination and then remedying the discrimination once its scope was determined. The agreement also included a five-year, phased-in implementation process for the pay equity adjustments. During the first four years of the implementation period, the government was required to spend up to 1 per cent for each relevant payroll. If a job class did not receive its full pay equity adjustment by the end of the fourth year, the government was obliged to pay the full amount of the remaining adjustment in the fifth and final year of the implementation period.

7. Most of the workers affected by the impugned legislation were in the health care sector, and many were employed as hospital and nursing home support workers. The pay equity implementation date agreed to for these workers was 1 April 1988. By 1 April 1991, the parties had determined that approximately 4,700 workers were owed pay equity adjustments. The government said that these payments represented a cost of approximately $24 million. Under the pay equity agreement, the government was obliged to make the first four pay equity adjustments to the affected employees on 1 April 1991. These four pay equity adjustments were those owing effective 1 April 1988, 1 April 1989, 1 April 1990, and 1 April 1991.

B. The Public Sector Restraint Act and Its Impact

8. The PSRA was passed in April 1991 at the same time as the pay equity job evaluation process for the health care support and hydro workers was being completed.

9. The PSRA imposed restraints on public sector wages in two ways. First, section 5 of the PSRA voided any scheduled increases in pay scales under collective agreements. This form of restraint applied to all of the public sector, including employees in female-dominated jobs who were still being paid discriminatory wages.

10. Second, section 9(1) of the PSRA specifically targeted the pay equity adjustments owed to employees in female-dominated jobs under the pay equity agreement. Section 9(1) was interpreted to void the government’s obligation to make pay equity adjustment payments for any period prior to 1 April 1991. As a result, on 1 April 1991, the affected employees received only the first pay equity adjustment, instead of the first four pay equity adjustments that were due on this date. Thus, these workers never received the pay equity adjustments they were owed on the work they did between 1 April 1988 and 1 April 1991. In addition, the deadline for the government’s obligation to implement pay equity was postponed for three years.

11. The PSRA imposed restraints for a two-year period from 1 April 1991 to 31 March 1993. When the government wanted to continue cost-cutting measures after the end of the legislated restraint period, it reached an agreement with NAPE to take back 1.5 sick days per employee, to reduce the employer’s contribution to the pension plan, and to further extend the pay equity implementation period. Under the renegotiated pay equity implementation agreement, the government was no longer required to pay the full amount of pay equity adjustments owed in the fifth year of the implementation period. Instead, the government was obliged to pay 2 per cent of the payroll per year until the pay equity adjusted rate was fully implemented. Under the extended pay equity implementation period, it took up to ten years for some employees to receive their full pay equity adjustment. Moreover, this renegotiated agreement did not restore the three years of pay equity adjustments for the 1988–91 period that were taken away by the PSRA.

12. Thus, the net effects of the PSRA on workers in the affected female dominated job classes were:

. to freeze their discriminatory wages for the period from 1991 to 1993;

. to erase the government’s obligations to make pay equity adjustment payments on work performed between 1 April 1988 and 1 April 1991; and

. to extend the pay equity implementation period by three years by effectively moving forward the implementation date from 1 April 1988 to 1 April 1991.

III. Judicial History

A. Arbitration Decision (NAPE SCC, Appellant’s Record, Volume I, at 2-137)

13. NAPE challenged the validity of section 9 of the PSRA by way of a grievance under its collective agreement with the government. The Arbitration Board unanimously held that section 9 infringed section 15 of the Charter because it had an adverse impact on women who were already negatively affected by sex-based wage discrimination.

14. A majority of the Arbitration Board also held that the government failed to justify this infringement under section 1 of the Charter. All members of the board agreed that the government had a pressing and substantial need to save money and that there was a rational connection between this objective and section 9 of the PSRA. They disagreed about whether the government had met the proportionality requirement or not.

15. In the view of the majority, the government’s evidence established that further lay-offs were the only alternative to erasing the pay equity obligation that it considered. The majority concluded that there were other alternatives that the government should reasonably have considered. These alternatives included suspending the regular step increases and the reclassification increases that continued during the restraint period. They also included the type of across-the-board cost reduction measures—that is, cutting employees’ sick days and reducing the employer’s pension contributions—that were taken after March 1993. Thus, it appeared to the majority that the government’s decision to Vol. 18 2006 331 unilaterally void its pay equity obligations for a three-year period was probably the most rights-infringing measure:

[T]here is more than sufficient evidence in this case to establish that several other less restrictive means were available to government which would have minimized the infringement. In my view, government should not be accorded a measure of deference or flexibility here because it limited its consideration of alternatives to only one option, i.e. 900 layoffs, a choice which was probably the most severe of any that could have been contemplated at the time. Moreover, it is not really clear that government seriously considered layoffs as an option. Indeed, the reference in Hansard to 900 layoffs could be interpreted as an attempt to describe by way of example what would have been the equivalent cost of the pay equity adjustments involved in terms of jobs. Under the circumstances, it is my view that government did not reasonably attempt to minimize the infringement. Rather, it probably chose the most restrictive means available to achieve its objective (NAPE SCC, Appellant’s Record, vol. I, at 102).

16. As a remedy, the Arbitration Board declared that section 9 of the PSRA was void and ordered the government to comply with the provisions of the pay equity agreement as incorporated in the collective agreement.

B. Judicial Review by the Supreme Court of Newfoundland (Trial Division (1998), 162 Nfld. & P.E.I.R. 1)

17. The Supreme Court of Newfoundland, Trial Division, granted the government’s application for judicial review of the Arbitration Board’s decision. The court held that section 9 of the PSRA infringed section 15(1) of the Charter because its effect was to continue the government’s wage discrimination beyond the date when the government was obliged to eliminate this discrimination. However, the court held that the infringement was justified.

18. Justice Keith Mercer was of the view that the Arbitration Board failed to show the appropriate deference to government decision making on fiscal matters when it invoked alternative options that the government did not consider. In his view, government decisions about the expenditure of public funds belong within the government’s control because they ‘‘necessarily involve choices between the claims of various sectors of society’’ (NAPE, 332 N.A.P.E. CJWL/RFD Supreme Court of Newfoundland, Trial Division, at para. 88). Mercer J. held that the government fulfilled its justificatory obligation to demonstrate that it had considered reasonable alternatives when it stated that lay-offs were the only alternative.

C. Appeal to the Newfoundland Court of Appeal ((2002), 221 D.L.R. (4th) 513)

19. The Newfoundland Court of Appeal agreed with Mercer J. that section 9 of the PSRA infringed section 15 of the Charter and that this infringement was justified under section 1.

20. On the section 15 question, the Court of Appeal held that the infringement was linked to the government resiling from its commitment to make the pay equity adjustments, stating:

Once Government committed itself to pay equity it could not repeal that undertaking for the duration of the restraint period as it did in s. 9 of the restraint legislation without infringing section 15(1) of the Charter (at para. 339).

The Court of Appeal also agreed with the lower court that the Arbitration Board failed to accord the appropriate deference to the government’s fiscal decision making.

21. Justice William Marshall went even further to pose a more general challenge to the role of the Charter in Canadian constitutional law. In his view, the justificatory burdens that have been imposed on governments by the courts’ interpretation of section 1 were contrary to the separation of powers between the courts and the legislatures and should be re-examined. Marshall J.A. proposed that a new test be added for section 1, which would require courts to ask at every stage of the analysis whether the burden imposed on the government was displacing the proper balance between the role of the courts and the role of the legislature.

D. Appeal to the Supreme Court of Canada ([2004] 3 S.C.R. 381)

22. On appeal, the Supreme Court of Canada upheld the conclusion reached by the Newfoundland courts. On the section 15(1) question, Justice Ian Binnie, writing for a unanimous court, applied the framework from Law v. Canada (Minister of Employment and Immigration), [1999] 1 S.C.R. 497. The Court held that section 9 of the PSRA drew a distinction on the basis of sex because it targeted female-dominated classifications and that this distinction imposed substantive discrimination on the basis of the four contextual factors articulated in Law (at paras. 38-51). Vol. 18 2006 333

23. On the section 1 issue, the Supreme Court of Canada affirmed the general principle that governments are required to ‘‘demonstrate’’ their justification for limiting a Charter right. Likewise, the Court affirmed in principle the R. v. Oakes, [1986] 1 S.C.R. 103, framework for section 1 justification, thus rejecting Marshall J.A.’s opinion that this framework disturbs the separation of powers between the legislature and the courts (at paras. 104-16). In applying the Oakes framework, however, the Supreme Court of Canada agreed with the conclusion of the lower courts that the government met its section 1 justificatory burden.

24. We elaborate further on the Supreme Court of Canada’s reasons for decision where they pertain directly to our discussion of particular issues.

IV. Issues

25. Does section 9 of the PRSA infringe section 15(1) of the Charter? If so, is the infringement a reasonable limit prescribed by law as can be demonstrably justified in a free and democratic society under section 1 of the Charter?

V. Analysis

A. Section 15 of the Charter

26. The equality rights issue in this case is the constitutional validity of section 9 of the PSRA, which provides as follows:

9. (1) Notwithstanding the terms and conditions of a pay equity agreement contained in a collective agreement or added by agreement to an existing collective agreement, no pay equity agreement shall contain a provision which implements that pay equity agreement retroactively.

(2) Where there is a provision in a pay equity agreement which provides that the pay equity agreement shall be implemented retroactively, that provision is void.

(3) Notwithstanding the other provisions of this Act, a pay equity agreement may be negotiated or implemented, but the 1st pay equity wage adjustment date shall be the date on which the pay equity wage adjustment is agreed upon.

(4) This section applies whether the pay equity agreement is reached or the pay equity wage adjustment date is agreed upon before or after the date this Act comes into force.

(5) In this section ‘‘pay equity agreement’’ means an agreement between a public sector employer and a group of public sector employees to recognize the compensation practice which is based primarily on the relative value of the work performed, irrespective of the gender of employees, and includes a requirement that no employer shall establish or maintain a difference between compensation paid to male and female employees, employed by that employer, who are performing work of equal or comparable value.

27. Although the other courts hearing this case all held that the impugned legislative measure infringed section 15(1), they did so with a relative ease that is troubling in view of the similar ease with which they accepted as justifiable the government’s decision to erase its pay equity obligations. In contrast, we undertake a detailed section 15 analysis because we believe that this type of examination of the equality rights issue is critical to properly ground the section 1 analysis. 28. Our discussion of the equality rights issue is divided into three parts. In the first part, we set out our approach to a substantive and contextualized analysis of the application of section 15(1) of the Charter in this case. In the second part, we outline some of the difficulties with the Supreme Court’s approach in Law, supra, in terms of addressing section 15(1) claims generally and in its application to this case. In the third part, we draw on international law principles to support our analysis of section 15(1) of the Charter.

(1) Substantive Equality Framework

29. The text of section 15 of the Charter states:

15. (1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

(2) Subsection (1) does not preclude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups including those that are disadvantaged because of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

30. Beginning with the Supreme Court of Canada’s decision in Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143 at 164-71 (per Justice William McIntyre), Canadian courts have rejected an abstract and formalistic approach to equality rights in favour of a contextual and substantive approach.

31. In Andrews, the Supreme Court of Canada posed two questions for a substantive approach to equality rights under the Charter: (1) is there a distinction in treatment; and (2) is this distinction discriminatory? In the Andrews framework, the question of whether the distinction is based on a prohibited or analogous ground was part of the answer to the question of whether the distinction is discriminatory.

32. A fundamental principle of a substantive equality approach is that the focus should be on the effects of the differential treatment or action. Moreover, these effects must be looked at not simply by themselves but also in their historical, social, political, and legal context (Andrews, at 152, 164-9, 174-5, and 180-1; Eldridge v. British Columbia (Attorney General), [1997] 3 S.C.R. 624 at paras. 60-1, 64-9, and 77; Law, at paras. 39, 42-3, 51, 54-5, 64-5, 70, and 85-6).

33. The pay equity agreement between NAPE and the government was reached in a context where discrimination is legally recognized as a significant cause of the gap between women’s wages and men’s wages and pay equity is recognized as a legal remedy for sex-based wage discrimination. A contextual analysis of the pay equity agreement between NAPE and the government and of the effects of section 9 of the PSRA is therefore necessary to the section 15 analysis in this case.

(a) Social Context of the Pay Equity Agreement

34. The principle of ‘‘equal remuneration for work of equal value’’ was one of the founding principles of the International Labour Organization, which was established in 1919 (Constitution of the International Labour Organization, Part XIII, Versailles Treaty, 28 June 1919, Article 427). This principle recognizes that the economic value of work is not inherent to the job or to the person doing the job. Economic value is socially defined and ascribed. In unionized workplaces, the union and the employer negotiate this value. In non-unionized workplaces, employers may negotiate this value with employees, or they may determine it unilaterally.

35. In 2004, almost one century after the principle of pay equity was introduced, the Federal Task Force on Pay Equity reported that the wage gap between women and men in industrialized countries continued to hover around 25 per cent. For Canada, the task force reported that women’s average employment income in the year 2000 was 70.8 per cent of men’s average income (Pay Equity: A New Approach to a Fundamental Right (Ottawa: Pay Equity Task Force, 2004) at 10 and 12). This wage gap affects women as a group and tends to be even more pronounced for Aboriginal women, women with disabilities, poor women, and racialized women (Pay Equity, at 41; and Pat Armstrong and Hugh Armstrong, The Double Ghetto: Canadian Women and Their Segregated Work, 3rd edition (Toronto: McClelland and Stewart, 1994) at 45-9).

36. In the Canadian labour market, as in other labour markets, women tend to be clustered in jobs that are less well paid than the jobs in which men predominate. The term ‘‘occupational segregation’’ is often used to refer to the fact that women and men tend to perform different types of work in the labour force. Statistics for Canada for 2002 indicated that 70 per cent of all female workers in Canada worked in the areas of teaching, nursing, and related health occupations, clerical or other administrative positions, and sales and service occupations (Pay Equity, at 14-15, citing Statistics Canada, Women in Canada: Work Chapter Updates (Ottawa: Statistics Canada, 2003) at 8-9). Occupational segregation, like economic value, is the result of social practices. Many different social practices combine to produce workplaces in which women and men do different jobs.

37. Occupational segregation, and the compensation practices that are associated with it, are significant contributing factors to the sex-based wage gap. As Pat Armstrong and Hugh Armstrong have written, ‘‘[o]bviously there are not only men’s jobs and women’s jobs, but also men’s wages and women’s wages.’’ They go on to say:

In summary, wage differentials go hand in hand with occupational segregation. As Fox and Fox . . . conclude, ‘‘women systematically have been kept out of occupations in which men’s wages are high.’’ But the other half of the coin is that women’s jobs have been systematically underpaid relative to those of men (Armstrong and Armstrong, supra, at 45, citing Bonnie Fox and John Fox, ‘‘Women in the Labour Market, 1931-1981: Exclusion and Competition’’ (1986) 23 Canadian Review of Sociology and Anthropology 1 at 15).

38. Women as workers, and the jobs women do, tend to be ascribed second-class status in the labour force. As the Women’s Legal Education and Action Fund (LEAF) argued in its factum before the Supreme Court of Canada, women’s labour market subordination has been normalized through practices ‘‘that stereotype and marginalize women and their work’’ (NAPE SCC, factum of the intervenor LEAF, at para. 29, reprinted in Fay Faraday, Margaret Denike, and M. Kate Stephenson, Making Equality Rights Real: Seeking Substantive Equality under the Charter (Toronto: Irwin Law, 2006) 471 at 476-7)). Women have commonly been assumed not to be ‘‘breadwinners’’ but merely working for ‘‘pin money.’’ Their work has been assumed not to involve the exercise of skill and expertise but, rather, to involve ‘‘natural’’ sex-specific traits that have been deemed to be of little value. Occupational segregation has been ascribed to women’s choices rather than to workplace barriers. Women have been assumed to be selfless and unambitious (Nan Weiner and Morley Gunderson, Pay Equity: Issues, Options and Experiences (Markham, ON: Butterworths Canada, 1990) at 5-16; see also Pay Equity, supra, at 25-8; Judge Rosalie Silberman Abella, Report of the Royal Commission on Equality in Employment (Ottawa: Ministry of Supply and Services, 1984) at 245-9).

39. Wage discrimination has direct material consequences for women. Simply put, they do not earn as much money as men. This inequality has also compounded other employment inequalities that women experience. It has done so largely by reinforcing second-class status for women in the workplace. This second-class status, in turn, has been reflected in, and has reinforced, other systems and practices of sex inequality in employment, including insufficient provision for childcare and other family care responsibilities, parttime employment, precarious employment, and sexual harassment. Women experience these employment inequalities in different ways, depending upon their social class, race, and abilities (See Leah F. Vosko, Temporary Work: The Gendered Rise of a Precarious Employment Relationship (Toronto: University of Toronto Press, 2000) at 3-13 and 27-44; see also Judy Fudge and Rosemary Owens, eds., Precarious Work, Women and the New Economy: The Challenge to Legal Norms (Oxford: Hart Publishing, 2006); Ann Porter, Gendered States: Women, Unemployment Insurance and the Political Economy of the Welfare State in Canada 1945-1997 (Toronto: University of Toronto Press, 2003); and Cynthia Cranford, Leah Vosko, and Nancy Zukewich, ‘‘The Gender of Precarious Employment in Canada’’ (2003) 58 Relations industrielles/ Industrial Relations 454).

(b) Legal Responses to Sex-Based Wage Discrimination

40. The principle of ‘‘equal remuneration for work of equal value’’ calls for an examination of the compensation practices associated with the jobs women do and the second-class status ascribed to women’s jobs and women’s work. This principle was enshrined in 1951 in the International Labour Organization’s (ILO) Convention no. 100 Concerning Equal Remuneration for Men and Women for Work of Equal Value, General Conference, 34th Sess. (Equal Remuneration Convention) and has since been incorporated into the International Covenant on Economic, Social and Cultural Rights, 16 December 1966, 993 U.N.T.S. 3, Article 7; the Convention on the Elimination of All Forms of Discrimination against Women, 18 December 1979, 1249 R.T.N.U. 13, adopted by the UN General Assembly Resolution 34/180, Article 11; and the Beijing Declaration and Platform for Action, UN Doc. A/CONF.177/20 (1995) and UN Doc. A/CONF.177/20/Add.1 (1995), Article 167. Canada has ratified all of these conventions and has signed the Beijing Declaration.

41. In Canada, legal remedies for sex-based wage discrimination have generally taken two forms. Equal pay laws are one form of remedy. These laws are designed to address the direct discrimination that occurs when women are paid less than men for doing the same work or substantially similar work. First passed by provincial legislatures in the 1950s and 1960s, these legal provisions were often later incorporated into human rights statutes or employment standards statutes (in Ontario, for example, see Female Employee’s Fair Remuneration Act, S.O. 1951, c. 26; Ontario Human Rights Code, S.O. 1961-2, c. 93, s. 5; and Employment Standards Act, S.O. 1968, c. 35, s. 19). The equal pay remedy can be used where there is a relatively obvious comparison between women’s work and men’s work, but it is not available where there is no such obvious comparison to make.

42. Pay equity laws are a second form of legal remedy. The expression ‘‘pay equity’’ is linked with the legal remedy for non-explicit and systemic sexbased wage discrimination. The pay equity legal remedy typically requires that a gender-neutral job evaluation process be conducted to find a way of comparing women’s work with men’s work and of determining whether women’s work is under-valued and underpaid relative to men’s work. This process typically evaluates the work in terms of skill, effort, responsibility, and working conditions. An important goal is to attach value to the aspects of the job that are often discounted when economic value is assigned to women’s paid work. If the job evaluation process shows that women are paid less for doing work that is relatively equal in skill, effort, responsibility, and working conditions to men’s work, then women are entitled to have their wages equalized with the wages of the male comparator (for discussion of the legislated approaches to pay equity, see Pay Equity, supra, at 63-76).

43. In Canadian law, pay equity is conceptually and legally a human rights remedy for sex-based wage discrimination. Pay equity is considered a ‘‘human right’’ because it requires an examination of the impact of existing systems and practices and a re-evaluation of the value of women’s work in relation to men’s work. Pay equity legal remedies are designed to challenge labour market inequities and to provide a measure of redress for sex-based wage discrimination by moving towards equalizing the wages paid for women’s work in relation to wages paid for men’s work. As the Federal Pay Equity Task Force stated in its 2004 final report:

At the heart of the principle of equal pay for equal value is a concern with systemic discrimination, and with pay practices which have routinely overlooked or devalued important aspects of the work done by women. We think that the elimination of discrimination should be the central focus of pay equity legislation, and consequently that it should be characterized as human rights legislation (Pay Equity, at 150).

However, while pay equity remedies can challenge some labour market inequities and can provide a measure of redress for sex-based wage discrimination, they are not a solution to all of the problems of unequal wages, let alone all of the problems of discrimination against women in employment (see Judy Fudge and Patricia McDermott, eds., Just Wages: A Feminist Assessment of Pay Equity (Toronto: University of Toronto Press, 1991); Judy Fudge, ‘‘The Paradoxes of Pay Equity: Reflections on the Law and the Market in Canada and the PSAC’’ (2000) 12 Canadian Journal of Women and the Law 313-45; Ceta Ramkhalawansingh, ‘‘Employment Standards Legislation: A Primary Source of Women’s Employment Inequality’’ (1993) 2 Canadian Labour and Employment Law Journal 80-9; see also Pay Equity, Recommendations 6.9 and 6.10). The latter recommendations of the Federal Pay Equity Task Force recommend that pay equity legal obligations be expanded to apply to wage discrimination in relation to disability, visible minority status, and Aboriginal status.

44. The Supreme Court of Canada introduced its discussion of the legal issues in this case by stating: ‘‘Pay equity has been one of the most difficult and controversial workplace issues of our times’’ (NAPE SCC, at para. 30 [emphasis added]). The Court did not explain what it meant when it said that pay equity is a ‘‘difficult’’ and ‘‘controversial’’ issue. We believe that this statement reflects the fact that pay equity questions the legitimacy of compensation practices that produce relatively higher wages for men. Pay equity challenges the idea that compensation practices that systemically produce lower wages for women’s work are normal or natural. This challenge may be ‘‘difficult’’ and ‘‘controversial.’’ However, the effectiveness of equality rights would be significantly diminished if they did not require engaging with difficult and controversial issues.

45. Human and equality rights principles require us to examine social practices and systems from different perspectives and, in particular, from the perspective of groups who do not benefit equally from them. As Justice John Evans of the Federal Court wrote in Canada (Attorney General) v. Public Service Alliance of Canada, [2000] 1 F.C. 146 at paras. 117 and 151,

[T]he policy motivating the enactment of the principle of equal pay for work of equal value is the elimination from the workplace of sex-based wage discrimination. The kind of discrimination at issue here is systemic in 340 N.A.P.E. CJWL/RFD nature: that is, it is the result of the application over time of wage policies and practices that have tended either to ignore, or to undervalue work typically performed by women . . .

[T]he nature of systemic discrimination often makes it difficult to prove that the disadvantaged position in the workplace of many members of particular groups is based on the attributes associated with the groups to which they belong. This is because, as Dickson C.J. observed in Canadian National Railway Co., supra, at page 1139, systemic discrimination ‘‘results from the simple operation of established procedures of recruitment, hiring and promotion, none of which is necessarily designed to promote discrimination.’’ Accordingly, an employer’s wage policies and practices may be based on such deep-rooted social norms and assumptions about the value of the work performed by women that it would be extremely difficult to establish in a forensic setting that, if women were paid less than men performing work of equal value, that difference was based on sex.

46. As the Supreme Court of Canada held in British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 S.C.R. 3 at para. 41, a substantive approach to discrimination calls for the transformation of systems and practices that have discriminatory impact:

Under the conventional analysis, if a standard is classified as being ‘‘neutral’’ at the threshold stage of the inquiry, its legitimacy is never questioned. The focus shifts to whether the individual claimant can be accommodated, and the formal standard itself always remains intact. The conventional analysis thus shifts attention away from the substantive norms underlying the standard, to how ‘‘different’’ individuals can fit into the ‘‘mainstream,’’ represented by the standard . . . Referring to the distinction that the conventional analysis draws between the accepted neutral standard and the duty to accommodate those who are adversely affected by it. Shelagh Day and Gwen Brodsky [‘‘The Duty to Accommodate: Who Will Benefit?’’ (1996) 75 Canadian Bar Review 433], supra, write:

The difficulty with this paradigm is that it does not challenge the imbalances of power, or the discourses of   dominance, such as racism, ablebodyism and sexism, which result in a society being designed well for some and not for others . . .

As a formula, different treatment for ‘‘different’’ people is merely the flip side of like treatment for likes. Accommodation does not go to the heart of the equality question, to the goal of transformation, to an examination of the way institutions and relations must be changed in order to make them available, accessible, meaningful and rewarding for the many diverse groups of which our society is composed [at 462].

I agree with the thrust of these observations. Interpreting human rights legislation primarily in terms of formal equality undermines its promise of substantive equality and prevents consideration of the effects of systemic discrimination, as this Court acknowledged in Action Travail [Canadian National Railway Co. v. Canada (Canadian Human Rights Commission), [1987] 1 S.C.R. 1114], supra at paras. 40-1).

A substantive approach to equality rights under section 15 of the Charter similarly calls for the transformation of discriminatory systems and practices.

(c) Section 15 of the Charter and the Effects of Section 9 of the PSRA

47. In the government’s own words, section 9 of the PSRA erased three years of pay equity adjustments owed to women workers in the public service. From the perspective of the affected workers, and as articulated by LEAF, section 9 imposed a ‘‘disproportionate burden’’ of the government’s deficit reduction measures on women workers, who were subjected both to a general wage freeze affecting all public sector employees and to a claw-back of their pay equity payments (NAPE SCC, LEAF factum, at para. 39).

48. By erasing the government’s pay equity obligations from 1988 to 1991, section 9 revoked the compensatory redress owed to women workers for work done during the three years prior to the restraint period. Section 9 also forced women workers to wait three more years to begin to achieve wages equal to men’s wages. The courts below framed section 9 as a temporary measure that only delayed or postponed the implementation of the pay equity agreement. In our opinion, these efforts at minimizing the effect of section 9 are misguided and incorrect.

49. Section 9 was not a temporary measure. The affected employees lost forever the pay equity adjustments they were owed on work done between 1 April 1988 and 1 April 1991. They also lost forever the cumulative benefits that would have flowed from receiving the four pay equity adjustments they were entitled to receive on 1 April 1991, only one of which was actually received. This erasure additionally affected older workers and workers with disabilities who began to receive pensions or income replacement benefits between 1 April 1988 and 1 April 1991, since these benefits were permanently calculated upon their discriminatory wages.

50. Section 9 did not simply delay the implementation of the pay equity agreement. It permanently extinguished a significant portion of the government’s legal obligations.

51. As argued by LEAF, when the government’s fiscal health is subsidized by sex-based wage discrimination within its own workforce, economic and social inequalities continue to be imposed on women (NAPE SCC, LEAF factum, at para. 32). These burdens impose material inequalities that infringe section 15 of the Charter. The message that accompanies these burdens is that the government can avoid its responsibility for women’s social and economic inequalities. This message also infringes section 15 of the Charter.

52. A government witness in the grievance arbitration proceeding, Gerald Maloney, testified that the initiative taken by the government in 1993 to further extend the pay equity implementation period was driven in part by the perceived inequity of some employees receiving more than others during a period of ongoing fiscal restraint. In his words,

[t]he net . . . effect of that . . . was to, rather than make the final pay equity adjustment in that fifth year of 1995, it was to spread out the pay equity process over another four or five year period and gradually build up to the achievement of full pay equity. But it was driven by, by those two primary considerations, one being the difficulty we had with absorbing a $12 million expenditure at one time, and the second, the inequity, I guess, that we felt it was creating by giving one group a fairly substantial pay raise when there was another group, or most of the rest of the public sector, who were not going to get anything (NAPE SCC, Appellant’s Record, vol. III, at 548-49 [emphasis added]).

Maloney also suggested that section 9 of the PSRA was motivated by a similar concern that it would not be fair to provide pay equity adjustments when employee compensation packages were frozen:

The state of affairs we were faced with when we renegotiated this in 1994 was not unlike the state of affairs we were facing in 1991 whereby again to implement pay equity in 1991 as agreed to would have required us to make a very substantial retroactive payment in addition to increasing our salary bill in that year and would again have had the effect of giving one group of workers very substantial increases and very substantial retroactive cheques during a period when we were looking at most of the public sector saying, you can’t have anything (NAPE SCC, Appellant’s Record, vol. III, at 549 [emphasis added]).

53. The suggestion that it would have been unfair to make pay equity adjustment payments in a context where employees were not receiving wage increases reflects a fundamental misunderstanding of the purpose of pay equity adjustments. Pay equity adjustments are not a wage increase. They are a monetary adjustment that is required to remove discrimination in wages. As the majority of the Arbitration Board observed, this was far from being a situation in which the pay equity adjustments could be treated as an ‘‘increase’’ that might create morale problems among other workers. On the contrary, eliminating the pay equity adjustments had a ‘‘double demoralizing effect’’ on the women workers who were subject to the across-the-board wage freeze as well as to the confiscation of their pay equity adjustment (NAPE SCC, Appellant’s Record, vol. I, at 104). When the government and the courts characterize a pay equity obligation as a pay ‘‘increase,’’ as though it were a discretionary matter rather than a human rights entitlement, they reinforce the idea that women’s equality is a ‘‘frivolous luxury that must give way to other government objectives’’ (NAPE SCC, LEAF factum, at para. 36). The message communicated is that wage equality for women is not affordable for society.

54. In the public sector context, the under-valuation of women’s work results in the costs of government being subsidized in part by women workers. It appears to us that the government and the courts perpetuated the very discrimination that pay equity legal remedies are designed to remedy when they sought to minimize the effect of section 9 of the PSRA. Treating the negotiated pay equity adjustments not as an entitlement but rather as government largesse undermines the transformative goal of pay equity, which is to recognize the true value of women’s work and compensate it accordingly.

55. Even though the courts below consistently held that section 9 of the PSRA infringed section 15(1) of the Charter, their reasons for this decision say very little about sex-based wage discrimination and about pay equity as a legal remedy for this discrimination. In our view, their approaches to section 15(1) can only be described as minimalist. This minimalism glossed over the challenges posed by pay equity and is reflected in the Supreme Court of Canada’s statement that pay equity is ‘‘difficult’’ and ‘‘controversial.’’  In our view, these unexamined challenges contributed to a flawed analysis of what the government did when it erased three years of its pay equity obligation to women workers and what other measures the government could and should have considered. We believe that the ease with which the lower courts accepted the government’s section 1 argument stems from the want of a full and substantive account of why reneging on its pay equity obligation violated section 15.

(2) The Law Framework and its Application in This Case

56. Canadian courts have never formally rejected the substantive approach to equality first articulated by the Supreme Court of Canada in Andrews, supra. However, they have increasingly disagreed about what a substantive approach to equality means in the context of addressing the concrete claims brought under section 15 of the Charter.

57. In Law, supra, the Supreme Court of Canada re-articulated the legal framework for a substantive equality analysis. This re-articulation built on both the Andrews principles as well as the Court’s subsequent jurisprudence (see, for example, Brooks v. Canada Safeway Ltd., [1989] 1 S.C.R. 1219; Weatherall v. Canada (Attorney General), [1993] 2 S.C.R. 872; Miron v. Trudel, [1995] 2 S.C.R. 418; and Eldridge, supra).

58. The Law approach divided the two Andrews questions into three questions, which are: (1) is there a distinction in purpose or effect of the law; (2) is the distinction based on a prohibited or analogous ground of discrimination; and (3) is the distinction discriminatory in a ‘‘substantive’’ sense (at para. 39)? It then further divided the third question into what the Court called four contextual factors, which are: (1) is there historical or preexisting disadvantage, stereotyping, prejudice, or vulnerability experienced by the individual claimant or group; (2) does the ground on which the claim is based correspond to the actual need, capacity, or circumstances of the claimant or others; (3) does the legislation have an ameliorative purpose or effect for a historically disadvantaged group; and (4) what is the nature and scope of the interest affected by the impugned law (at paras. 62-75)?

59. The Supreme Court of Canada emphasized that these four contextual factors were not intended to be comprehensive nor were they intended to be applied formulaically. However, as noted by LEAF, a number of commentators have expressed concerns that this is precisely what has happened in the jurisprudence since Law (NAPE SCC, LEAF factum, at paras. 20-4). Critics have suggested that the Law approach has become a mechanically applied checklist instead of a meaningful contextual guide and that it disaggregates and disconnects the contextual factors instead of showing how they are related. They have expressed concerns that the Law framework has the effect of reintroducing an abstract and rationalizing formalism into the equality analysis, instead of providing a meaningful guide to a substantive approach to equality (NAPE SCC, LEAF factum, supra; Fay Faraday, Margaret Denike, and M. Kate Stephenson, ‘‘Introduction: In Pursuit of Substantive Equality,’’ in Making Equality Rights Real, supra, at 9-26; Beverley Baines, ‘‘Law v. Canada: Formatting Equality’’ (2000) 11(3) Constitutional Forum 65; Sheilah Martin, ‘‘Balancing Individual Rights to Equality and Social Goals’’ (2001) 80 Canadian Bar Review 299; June Ross, ‘‘A Flawed Synthesis of the Law’’ (2000) 11(3) Constitutional Forum 74; Bruce Ryder et al., ‘‘What’s Law Good For? An Empirical Overview of Charter Equality Rights Decisions’’ (2004) 24 Supreme Court Law Review 103; and Sheila McIntyre and Sanda Rogers, eds., Diminishing Returns: Inequality and the Canadian Charter of Rights and Freedoms (Markham, ON: LexisNexis, 2006)).

60. Commentators have also expressed concerns that the Law framework distorts or under-analyzes the role of dignity in equality rights analysis by separating dignity from the concrete harms and underlying values that mark substantive discrimination (see Martin, supra; Sophia R. Moreau, ‘‘The Wrongs of Unequal Treatment’’ (2004) 54 University of Toronto Law Journal 291; and Denise Reaume, ‘‘Discrimination and Dignity,’’ in Making Equality Rights Real, supra, 123). These concrete harms have been identified by the Supreme Court as the harms that flow from devaluation, stigmatization, political, and social prejudice, stereotyping, lacking political power, exclusion, marginalization, historical disadvantage, social, political, and legal disadvantage, vulnerability, oppression, and powerlessness (Law, at paras. 29, 34, 39, 42, 43, 44, 46, 47, 53, 63, and 64, as cited in NAPE SCC, LEAF factum, at para. 17).

61. In our view, dignity can be relevant to a substantive equality analysis as a social value that is undermined by the concrete, material harms of discrimination. It is the latter, however, that should be the focus of section 15. These material harms are seen in the social, political, legal, and economic inequalities that are produced by practices of subordination, devaluation, disenfranchisement, and disempowerment. These inequalities include the denial of equal inclusion and participation in society, the denial of equal recognition as citizens, the denial of equal enjoyment of social and economic resources, and the denial of equal autonomy as human beings (NAPE SCC, LEAF factum, at para. 23; Martin, supra; and Colleen Sheppard, ‘‘Inclusive Equality and New Forms of Social Governance’’ (2004) 24 Supreme Court Law Review 45 at 71-3).

62. By following the Law approach to conclude that section 9 of the PSRA infringed section 15, the Supreme Court of Canada’s analysis is characterized by a detachment and a mechanistic application of the contextual factors that demonstrate how the disaggregation of the factors can de-emphasize the harms of discrimination. This approach risks effacing the equality violation. In this case, the cursory and disconnected nature of the Supreme Court’s section 15 analysis failed to provide the Court with a properly contextualized examination of the harm to the women workers to incorporate within its section 1 analysis.

63. In applying the four factors, the Court held that: (1) there was preexisting disadvantage because there was a long and chronic history of women’s jobs being underpaid and that section 9 reinforced this disadvantage by taking away remedial benefits negotiated to address the under-valuation of women’s work; (2) delaying payment of the pay equity adjustments not only failed to correspond to the actual needs of the claimants but in fact undermined their needs; (3) section 9 did not have an ameliorative purpose in relation to the workforce but, indeed, had the opposite purpose; and (4) the interest affected was of great importance because of the importance of work in peoples’ lives (NAPE SCC, at paras. 41-51).

64. In principle, the purpose of the four contextual factors is to determine whether or not the differential treatment imposes substantive discrimination. By dividing the analysis into four distinct questions, however, the Supreme Court seems to be distracted from providing an answer to the central question. The answers to the four contextual factors do not appear to add up to a single answer to the question of substantive discrimination; they remain four discrete and disconnected answers. This disaggregated approach masks the seriousness of the harms of discrimination.

65. To conclude, section 9 of the PSRA produced substantive discrimination by perpetuating the material and symbolic devaluation of women’s work. It did so by imposing on women a disproportionate share of the government’s fiscal reduction measures. The effect of this action is to perpetuate stereotypes of women’s work as marginal and second class, to continue women’s economic and social disadvantage, and to deny women workers equal recognition and equal treatment. It is these concrete harms for which the government must account.

(3) International Law Principles

66. As noted earlier, international law also supports the conclusion that section 9 of the PSRA infringes section 15 of the Charter. International pay equity norms are binding, as the relevant treaties have been ratified by Canada, and it is presumed that Canadian legislators intend to act consistently with their international obligations. As such, international pay equity norms must be applied when considering whether section 9 of the PSRA violates section 15 of the Charter, unless these norms are inconsistent with Canadian law (see Gibran van Ert, Using International Law in Canadian Courts (The Hague: Kluwer Law International, 2002) at 271-2). In the context of this case, the question is whether international pay equity norms are consistent with substantive equality as protected under Canadian law. Given our conclusion that pay equity is consistent with women’s substantive equality and, indeed, remedies systemic wage inequality for women workers, this is an appropriate case in which to apply international norms to the interpretation of section 15 of the Charter in the context of the PSRA.

67. Several sources of international law provide for a right to pay equity for women. The International Covenant on Economic, Social and Cultural Rights provides in Article 7(a)(i) for ‘‘the right of everyone to the enjoyment of just and favourable conditions of work,’’ including ‘‘[f]air wages and equal remuneration for work of equal value without distinction of any kind, in particular women [are] guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work.’’

68. Article 11(1)(d) of the Convention on the Elimination of All Forms of Discrimination against Women, supra, guarantees women ‘‘the right to equal remuneration, including benefits, and to equal treatment in respect of work of equal value, as well as equality of treatment in the evaluation of the quality of work.’’

69. Similarly, Article 167(a) of the Beijing Declaration and Platform for Action, supra, requires that governments ‘‘enact and enforce legislation to guarantee the rights of women and men to equal pay for equal work or work of equal value’’ (see also Articles 168(1), 180(a), 180(h), 180(1), and 180(o)). The International Labour Organization has also recognized the principle of pay equity in the Equal Remuneration Convention, supra, and in its Declaration of Fundamental Principles and Rights at Work, 86th Sess. (June 1998).

70. International law also provides a right of equal pay for workers of colour and workers with disabilities. Article 5(e)(i) of the International Convention on the Elimination of All Forms of Racial Discrimination, 660 U.N.T.S. 195, 4 January 1969, requires states parties ‘‘to prohibit and to eliminate racial discrimination in all its forms’’ and to guarantee the right of racial equality in the enjoyment of economic, social, and cultural rights, including ‘‘the rights to work, to free choice of employment, to just and favourable conditions of work, to protection against unemployment, to equal pay for equal work, [and] to just and favourable remuneration.’’ Canada ratified the International Convention on the Elimination of All Forms of Racial Discrimination on 15 November 1970. Article 27 of the draft Convention on the Rights of Persons with Disabilities, UN Doc. A/AC.265/2006/L.6 (2006), provides for ‘‘the rights of persons with disabilities, on an equal basis with others, to just and favourable conditions of work, including equal opportunities and equal remuneration for work of equal value.’’

71. Section 9 of the PSRA, which extinguished the government’s pay equity obligations in relation to workers covered by the pay equity agreement, must be viewed as contrary to these international pay equity norms. The effect of section 9 is that women’s right to be paid equally for work of equal value was erased, with material and symbolic harms for women. International law thus confirms that section 9 of the PSRA is contrary to the guarantee of substantive sex equality in section 15 of the Charter. To put this another way, an interpretation of section 15 that found otherwise would be inconsistent with international law.

(4) The Government’s Actions Must Be Demonstrably Justified

72. For all of these reasons, we conclude that the government infringed the substantive equality rights of its women workers by enacting section 9 of the PSRA, and is required to demonstrate that this infringement is a reasonable limit in a free and democratic society.

B. Section 1 of the Charter

(1) General Principles

73. In addressing the section 1 inquiry, it is critical to begin with the language of the provision itself: ‘‘The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.’’ Although criteria have been developed to assist courts in conducting this inquiry, as we will discuss later in this decision, the Supreme Court of Canada confirmed in RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199, that the applicable test for section 1 is dictated by the language of the section itself (at para. 62 (per Justice Gerard La Forest, dissenting on other grounds) and at para.126 (per Justice Beverley McLachlin (as she then was)).

74. While the courts have come to treat section 1 as a ‘‘defence’’ for government infringements of Charter rights and freedoms, we must remember that section 1 is designed to protect such rights and freedoms by permitting only those violations that can be demonstrably justified as reasonable limits in a free and democratic society. As noted by Chief Justice Brian Dickson in R. v. Oakes, [1986] 1 S.C.R. 103 at 135-6:

It is important to observe at the outset that s. 1 has two functions: first, it constitutionally guarantees the rights and freedoms set out in the provisions which follow; and, second, it states explicitly the exclusive justificatory criteria (outside of s. 33 of the Constitution Act, 1982) against which limitations on those rights and freedoms must be measured. Accordingly, any s. 1 inquiry must be premised on an understanding that the impugned limit violates constitutional rights and freedoms—rights and freedoms which are part of the supreme law of Canada.  As Wilson J. stated in Singh v. Minister of Employment and Immigration, [1985] 1 S.C.R. 177 at p. 218: ‘‘. . . it is important to remember that the courts are conducting this inquiry in light of a commitment to uphold the rights and freedoms set out in the other sections of the Charter.’’

75. This section of the judgment will outline the general principles that govern inquiries under section 1 of the Charter. These principles include substantive democracy, government burden, and context, each of which will be considered in turn. Following the discussion of general principles, we will outline the framework and factors to be used for the section 1 analysis and apply these criteria to the facts of this case.

(a) Substantive Democracy

76. ‘‘Substantive democracy’’ is a term coined by LEAF in its intervenor factum before the Supreme Court of Canada in NAPE (at para. 43), but it must be recognized that the term describes ideas that have long been supported in constitutional jurisprudence. As noted by the Supreme Court of Canada in Reference re: Secession of Quebec, [1998] 2 S.C.R. 217, ‘‘[d]emocracy is commonly understood as being a political system of majority rule’’ (at para. 63). However, the Court cautioned that ‘‘[i]t is essential to be clear what this means’’ (ibid.) The Court observed that there has been an evolutionary process of moving towards universal suffrage and that this goal is not yet fully achieved. In this sense, ‘‘democracy is fundamentally connected to substantive goals’’ (at para. 64).

77. Just as section 15 of the Charter guarantees substantive equality, section 1 guarantees a substantive approach to the interpretation of ‘‘a free and democratic society.’’ Substantive democracy recognizes that the rights and freedoms guaranteed by the Charter both reflect and inform the values and goals of Canadian society and, thus, must inform the meaning of ‘‘free and democratic’’ in section 1. This was clearly stated by Dickson C.J. in Oakes, supra, at 136:

A second contextual element of interpretation of s. 1 is provided by the words ‘‘free and democratic society.’’ Inclusion of these words as the final standard of justification for limits on rights and freedoms refers the Court to the very purpose for which the Charter was originally entrenched in the Constitution: Canadian society is to be free and democratic. The Court must be guided by the values and principles essential to a free and democratic society which I believe embody, to name but a few, respect for the inherent dignity of the human person, commitment to social justice and equality, accommodation of a wide variety of beliefs, respect for cultural and group identity, and faith in social and political institutions which enhance the participation of individuals and groups in society. The underlying values and principles of a free and democratic society are the genesis of the rights and freedoms guaranteed by the Charter and the ultimate standard against which a limit on a right or freedom must be shown, despite its effect, to be reasonable and demonstrably justified [emphasis added].

78. Substantive democracy supports governance and decision making that fosters the collective good and, as argued by LEAF, ‘‘aspires to norms that value and promote diversity, inclusion, and belonging’’ (NAPE SCC, LEAF factum, at para. 44). This conceptualization of democracy finds support in Supreme Court of Canada case law. In Vriend v. Alberta, [1998] 1 S.C.R. 493 at paras. 140-2, Justice Frank Iacobucci stated as follows:

Although a court’s invalidation of legislation usually involves negating the will of the majority, we must remember that the concept of democracy is broader than the notion of majority rule, fundamental as that may be . . .

[W]hen a court interprets legislation alleged to be a reasonable limitation in a free and democratic society as stated in s. 1 of the Charter, the court must inevitably delineate some of the attributes of a democratic society. Although it is not necessary to articulate the complete list of democratic attributes in these remarks, Dickson C.J.’s comments [in Oakes] remain instructive . . .

Democratic values and principles under the Charter demand that legislators and the executive take these into account; and if they fail to do so, courts should stand ready to intervene to protect these democratic values as appropriate. As others have so forcefully stated, judges are not acting undemocratically by intervening when there are indications that a legislative or executive decision was not reached in accordance with the democratic principles mandated by the Charter.

79. Similarly, in R. v. Mills, [1999] 3 S.C.R. 668 at para. 58, Justices McLachlin and Iacobucci noted that ‘‘constitutionalism can facilitate democracy rather than undermine it, and . . . one way in which it does this is by ensuring that fundamental human rights and individual freedoms are given due regard and protection.’’ In Sauve v. Canada (Chief Electoral Officer), [2002] 3 S.C.R. 519, McLachlin C.J. stated that ‘‘Charter rights are not a matter of privilege or merit, but a function of membership in the Canadian polity that cannot lightly be set aside’’ (at para. 14).

80. In our view, the relationship between rights and democracy should not be viewed as conflictual. In ‘‘Reconceiving Rights as Relationship’’ (1993) 1 Review of Constitutional Studies 1, Jennifer Nedelsky points out that the rights and freedoms we protect in a constitution represent fundamental values of our society: ‘‘When we choose to constitutionalize a value, to treat it as a constitutional right, we are in effect saying both that there is a deeply shared consensus about the importance of that value and that we think that value is at risk’’ (at 20). According to Nedelsky, we must abandon the ‘‘rights vs. democracy’’ debate and recognize that

[r]ights are as much collective choices as laws passed by the legislature. And if rights no longer look so distinct from democratic outcomes, democracy also blurs into rights, for of course, democracy is not merely a matter of collective choice, but the expression of ‘‘rights’’ to an equal voice in the determination of those collective choices (at 5).

Looked at from this perspective, rights are not only individual entitlements but are also in keeping with collective goals. Rights are one of the vehicles through which individuals, minorities, and majorities collectively shape democratic processes and goals (see also Martha Jackman, ‘‘Protecting Rights and Promoting Democracy: Judicial Review under Section 1 of the Charter’’ (1997) 34 Osgoode Hall Law Journal 661).

81. A substantive approach to democracy thus recognizes that there are complex relationships between majorities, minorities, and individuals. Further, as the Supreme Court of Canada observed in Reference re: Secession of Quebec, supra, at paras. 59 and 66, it is not always simple or straightforward to identify who the majority is. For example, the shared view of a minority group can be regarded as the majority view in relation to this particular group. A substantive approach to democracy seeks to integrate majoritarian wishes, minority interests, and individual aspirations. It balances collective and individual rights and freedoms and considers them in relation to one another.

82. On the one hand, then, democracy under the Canadian Constitution is broader than a ‘‘majority rules’’ approach. At the same time, this does not mean that individual goals will always trump collective ones.  The notion of a conflict between individual rights and democracy is particularly inappropriate in this case. The women represented by NAPE are seeking to be paid equally for the work they perform in delivering health care and social services, contributing to the public good. It is contrary to a substantive understanding of democracy to characterize their entitlement to equal pay for this work as contrary to social goals. As we discuss later in this decision, however, this is the effect of the Supreme Court of Canada’s decision in this case.

84. This case, like Gosselin v. Quebec (Attorney General), [2002] 4 S.C.R. 429, provides the Women’s Court of Canada with an opportunity to consider the relationship between substantive democracy and the distribution of resources in society [Gosselin v. Quebec, [2007] 1 W.C.R. 193]. Access to resources affects how citizens participate in society and how citizens are included in society. In our view, substantive democracy requires that government-spending decisions that have discriminatory impact be subject to scrutiny under the Charter. Subjecting spending decisions to Charter scrutiny does not mean that the courts are usurping the government’s role and directing how resources will be allocated. Rather, it means that governments must be required to demonstrate that discriminatory spending decisions are necessary to accomplish their goals.

(b) Government Burden

85. The burden upon governments to justify limitations upon Charter rights has been discussed by the Supreme Court of Canada in a number of cases. Beginning with Oakes, supra, at 136, the Court noted that section 1 imposes ‘‘a stringent standard of justification, especially when understood in terms of the two contextual considerations named above, namely, the violation of a constitutionally guaranteed right or freedom and the fundamental principles of a free and democratic society.’’ While the standard of proof is the balance of probabilities, this standard is to be applied ‘‘rigorously’’ (Oakes, at 137; see also Sauve, supra, at para. 7 (per McLachlin C.J., for the majority)). As noted by McLachlin, J., writing for a majority of the Supreme Court of Canada in RJR-MacDonald, supra, at paras. 128-9:

[T]he state must show that the violative law is ‘‘demonstrably justified.’’ The choice of the word ‘‘demonstrably’’ is critical. The process is not one of mere intuition, nor is it one of deference to Parliament’s choice. It is a process of demonstration. This reinforces the notion inherent in the word ‘‘reasonable’’ of rational inference from evidence or established truths.

The bottom line is this. While remaining sensitive to the social and political context of the impugned law and Vol. 18 2006 353 allowing for difficulties of proof inherent in that context, the courts must nevertheless insist that before the state can override constitutional rights, there be a reasoned demonstration of the good which the law may achieve in relation to the seriousness of the infringement. It is the task of the courts to maintain this bottom line if the rights conferred by our constitution are to have force and meaning. The task is not easily discharged, and may require the courts to confront the tide of popular public opinion. But that has always been the price of maintaining constitutional rights. No matter how important Parliament’s goal may seem, if the state has not demonstrated that the means by which it seeks to achieve its goal are reasonable and proportionate to the infringement of rights, then the law must perforce fail [emphasis in original].

86. Similar to section 7 of the Charter, the government’s burden of proof is especially onerous in the context of a section 15 infringement. This is because section 15, like section 7, includes an internal qualification on the scope of the right. As we discuss earlier, not all cases of differential treatment will be found to violate the equality guarantee—there must be discrimination in the sense that substantive equality principles have been infringed. We must take care not to let the internal qualification in section 15 reduce the right to ashes, as noted by Sheila McIntyre in ‘‘Deference and Dominance: Equality without Substance,’’ in Diminishing Returns, supra, at 95. However, the fact that the right is internally tailored must mean that once an infringement of section 15 is found, the government’s room to justify it under section 1 is more limited, as with section 7 violations (see Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486 at para. 85). Differences in detail in the operation and interpretation of the two sections will have to be dealt with as the case law develops, but the similarity in structure between the two rights is clear. We have taken the trouble earlier to lay out the importance of pay equity and to spell out the discriminatory assumptions underlying the PSRA in order to make plain that we have here no mere technical rights violation.

87. The Supreme Court of Canada has acknowledged that equality rights violations will rarely survive section 1 scrutiny. As stated by McLachlin C.J. and Justice Claire L’Heureux-Dube in Lavoie v. Canada, [2002] 1 S.C.R. 769 at para. 6 (in dissent but not on this point):

In conducting the s. 1 analysis, ‘‘it must be remembered that it is the right to substantive equality and the accompanying violation of human dignity that has been infringed when a violation of s. 15(1) has been found’’ (Corbiere v. Canada (Minister of Indian and Northern Affairs), [1999] 2 S.C.R. 203 at para. 98 (per L’Heureux- Dube´ J.) [emphasis deleted]). Indeed, ‘‘cases will be rare where it is found reasonable in a free and democratic society to discriminate’’ (see Adler v. Ontario, [1996] 3 S.C.R. 609 at para. 95 (per L’Heureux-Dube´ J.) (citing Andrews, supra, at 154 (per Wilson J.)).

(See also Sheilah Martin, ‘‘Balancing Individual Rights to Equality and Social Goals,’’ supra, at 352-68; and NAPE SCC, LEAF factum, at para. 49.)

88. We agree with these principles. Returning to the values underlying a free and democratic society, it is difficult to see how ‘‘the inherent dignity of the human person’’ and a ‘‘commitment to social justice and equality’’ can be promoted by violations of the substantive equality guarantee.

89. A related issue is the question of deference to decisions of legislatures. The Supreme Court of Canada has held that courts should show deference to governments in situations where the government is acting to protect the interests of vulnerable groups or is ‘‘mediating’’ between claims of competing rights rather than acting as a ‘‘singular antagonist’’ towards an individual or group (Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927 at 993-4). A ‘‘competing rights’’ scenario has typically arisen in cases involving a limit on fundamental freedoms. In these cases, the limit is imposed because the exercise of the freedoms has a negative impact on the protected interests of other members of society. In the case of freedom of expression, for example, infringements have been justified where it is found that unlimited expression would have harmful effects that implicate other Charter rights and values, such as equality (see, for example, R. v. Butler, [1992] 1 S.C.R. 452; R. v. Keegstra, [1995] 2 S.C.R. 381; and R. v. Sharpe, [2001] 1 S.C.R. 45).

90. We prefer to approach the question of deference in a substantive, rather than a categorical, way by examining the substance of the justification advanced by a government for its decision to violate a Charter right. At some level, all government decisions involve mediating among competing claims. Where a government’s justification is linked to protecting the interests of vulnerable groups, this is a consideration that should receive careful attention by the court. However, as we discuss further later in this decision, governments must do more than simply assert that an infringing measure is justified in order to protect the interests of a vulnerable group—they must demonstrate that this is so.

91. It could be argued that, particularly in relation to spending decisions, governments must balance the claims of competing groups and should be shown deference on this basis. The courts have taken such an approach in this case to date. There are two responses to this argument. First, courts must be careful to distinguish between the constitutionally protected claims of equality-seeking groups to government resources and the claims of relatively privileged individuals and groups that are not based upon constitutional rights. In the scenario before us in this case, as we will elaborate upon later in this decision, there is no competition between ‘‘rights,’’ and thus there should be no deference to government choices that infringe equality. However, there may be cases where the government is truly seeking to balance the claims of different equality-seeking groups. Our second point is that too much emphasis on a ‘‘competing rights’’ paradigm in this context may create or perpetuate a hierarchy between disadvantaged groups. In our view, courts should be extremely hesitant to allow governments to seek to justify an infringement of section 15 by pitting equality claimants against each other.

92. In any event, we agree with McLachlin J. in RJR-MacDonald, supra, at para. 136, that

care must be taken not to extend the notion of deference too far. Deference must not be carried to the point of relieving the government of the burden which the Charter places upon it of demonstrating that the limits it has imposed on guaranteed rights are reasonable and justifiable.

(c) Contextual Inquiry

93. The importance of context to the section 1 inquiry has also been discussed by the Supreme Court of Canada in a number of cases (see, for example, Thomson Newspapers Co. v. Canada (Attorney General), [1998] 1 S.C.R. 877; and Sharpe, supra). We agree that just as it is critical to the determination of rights violations, context matters under section 1. The seriousness of the violation, the nature of the activity infringed, and the social location of the group(s) the government may have been seeking to protect are relevant contextual factors in the circumstances of this case, and we will discuss the importance of these factors. At the same time, we are mindful of the caution expressed by McLachlin J. in RJR-MacDonald, at para. 134, where she said:

[N]othing in the jurisprudence suggests that the contextual approach reduces the obligation on the state to meet the burden of demonstrating that the limitation on rights imposed by the law is reasonable and justified. Context is essential in determining legislative objective and proportionality, but it cannot be carried to the extreme of treating the challenged law as a unique socio-economic phenomenon, of which Parliament is deemed the best judge. This would be to undercut the obligation on Parliament to justify limitations which it places on Charter rights and would be to substitute ad hoc judicial discretion for the reasoned demonstration contemplated by the Charter.

(d) Oakes Factors

94. The Oakes case, supra, established the factors that courts should review in determining whether the government has met its justificatory burden under section 1 of the Charter, supra. While subsequent cases have shown that there is some danger that these factors will be applied mechanically and without regard to the ‘‘bottom line’’ noted by McLachlin J. in RJR-MacDonald, at para. 129, we believe that the factors remain a useful basis for analyzing government claims of justification under section 1.

95. As first stated in Oakes, the government must establish two things to meet its burden under section 1: the objective of the law must be ‘‘pressing and substantial’’ and ‘‘of sufficient importance to warrant overriding a constitutionally protected right or freedom’’ (R. v. Big M. Drug Mart Ltd., [1985] 1 S.C.R. 295 at 352, cited in Oakes, supra, at 138) and the means chosen to implement the objective must be reasonable and demonstrably justified in the sense that (1) the means are rationally connected to the objective; (2) the means impair the right or freedom in question as little as reasonably possible; and (3) there is proportionality between the means and the objective and between the deleterious and salutary effects of the means (see also Dagenais v. C.B.C., [1994] 3 S.C.R. 835). The government is required to provide cogent and persuasive evidence at each stage of the inquiry. We will now turn to an application of these factors to the circumstances of this case, keeping in mind the overarching principles of substantive democracy, government burden, and context.

(2) Application of Principles to the PSRA

96. Applying the Oakes factors to the circumstances of this case, we find that the government has failed to meet its burden in numerous ways: there is no pressing and substantial objective; the means of achieving the government’s objective does not impair the equality rights of women workers as little as reasonably possible; and there is no proportionality between the means and the objective nor between the salutary and deleterious effects of the measures. We will elaborate on each point in turn and elucidate how the Supreme Court of Canada erred in reaching the conclusions that it did on these matters.

97. It bears repeating at the outset of this discussion that the measure the government is required to justify is a measure that took away all pay equity adjustments owed for a three-year period. We reject the argument put forward by the government and accepted by the Supreme Court of Canada that the government did not completely eliminate pay equity but only reduced or delayed the scope of its obligation. As noted, the fatal flaw in this logic is that the government did completely eradicate its obligation as it applied to the April 1988 to April 1991 period. Indeed, the government publicly acknowledges that this is what it did when it says that it ‘‘erased’’ its pay equity obligation for that period. This was a serious violation of women’s equality rights with detrimental effects that were both material and symbolic. This is the context that grounds our analysis of whether the government has met its section 1 burden.

(a) Pressing and Substantial Objective: Financial Considerations, Fiscal ‘‘Emergency,’’ and the Government’s Evidentiary Burden

98. In this case, the government relied on the fact that it was facing a fiscal crisis as the objective behind the PSRA, including the Act’s erasure of three years of pay equity obligations to the women workers represented by NAPE. The president of the Treasury Board, who is designated the government’s chief collective agreement negotiator by the Public Service Collective Bargaining Act, R.S.N.L. 1990, c. P-42, introduced the bill in the legislature. He told the legislature that the government was facing a deficit of $120 million for 1991 and projected a deficit of $200 million for 1992. He said that cost reduction measures were necessary because the government had reached the maximum limits on its borrowing and taxing capacities.

99. Through its spokesperson, the government told the legislature that the only cost-reduction alternative to erasing its pay equity obligation would have been to lay off another 900 employees in addition to the 1,300 full-time employees who had already been laid off. The decisions facing the government were described as ‘‘difficult’’ or ‘‘hard’’ choices:

So what we have done is we have made a decision and the choice was very clear to us: pay the $24 million retroactively or lay off another 900 people. And that is the way we look at it. 900 to 1,000 people would take up the $24 million. And the choice—it is that kind of a choice. Both are hard choices, obviously. And as Government we had to make a choice and we have made the choice (NAPE SCC, Exhibit DC-8, House of Assembly Proceedings, 19 March 1991, Appellant’s Record, vol. IV, at 645).

100. Does this amount to a pressing and substantial objective? In our view, this question must be answered in the negative for two reasons. First, fiscal considerations should never suffice as a pressing and substantial basis for overriding equality rights. Second, the government did not meet its evidentiary burden in proving that a fiscal crisis existed in any event.

(i) Financial considerations as a pressing and substantial objective

101. Previous case law of the Supreme Court of Canada has established the principle that financial considerations alone can never amount to an objective ‘‘of sufficient importance to warrant overriding a constitutionally protected right or freedom.’’ Stated another way, ‘‘a measure whose sole purpose is financial, and which infringes Charter rights, can never be justified under s. 1’’ (Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, [1997] 3 S.C.R. 3 at para. 284, citing Singh v. Minister of Employment and Immigration, [1985] 1 S.C.R. 177; and Schacter v. Canada, [1992] 2 S.C.R. 679; see also Gosselin, supra, at para 391 (per Arbour J. in dissent) and para. 283 (per Justice Michel Bastarache in dissent); and Nova Scotia (Workers’ Compensation Board) v. Martin, [2003] 2 S.C.R. 504 at para. 109).

102. The Women’s Court of Canada agrees that government objectives based upon purely financial considerations cannot amount to a pressing and substantial reason for violating Charter rights. Saving money alone cannot be a pressing and substantial objective for Charter purposes, as governments do not save money for the sake of saving money. If a government seeks to avoid certain expenditures, this must be because there are other expenditures that the government considers it more important to make. In our view, it would be dangerous to allow governments to invoke vague notions of ‘‘cost savings’’ without requiring them to articulate the underlying reason for avoiding an expenditure and to prove the importance of this reason in light of Charter principles. To do otherwise would be to negate the burden upon the government and do an injustice to protected Charter rights.

103. We find that the Supreme Court of Canada erred in this case by failing to adhere to the principle that cost-savings cannot amount to a pressing and substantial objective. The government’s stated objective—reducing its deficit— is the kind of vague cost-saving rationale that begs the question of what other expenditures the government believed it was more important to make (or what other cuts it thought it was more important to avoid). While the Court attempted to distinguish its previous cases on the basis that this principle only applies where the government is facing ‘‘normal’’ financial circumstances, we do not find this reasoning persuasive. As we will demonstrate later in this decision, the government’s public accounts show that deficits, including very high deficits, are very much the norm in its economy.

104. We appreciate that governments are called upon to deal with financial pressures and that financial circumstances can change. We also acknowledge that the Supreme Court of Canada tried to create a narrow exception for circumstances in which budgetary considerations can be a substantial and pressing concern by drawing the line at financial ‘‘emergencies.’’ In our view, however, this line-drawing exercise must be subjected to closer scrutiny. ‘‘Emergency’’ is normally a label we reserve for unexpected and uncontrollable events such as natural disasters or outbreaks of contagious diseases. Such events may give rise to unexpected government expenditures and a resulting fiscal crisis, but it is inappropriate to label every fiscal shortfall as an ‘‘emergency.’’ Short of an actual disaster of the type noted earlier, financial shortfalls are, as described by LEAF, situations ‘‘produced by governments, through complex webs of decisions about how to raise money and how to spend money’’ (NAPE SCC, LEAF factum, at para. 62).

105. We also accept LEAF’s argument that ‘‘[a] substantive approach to democracy challenges the very norms and assumptions informing government decisions about how to raise and spend revenues,’’ and how to deal with deficits (NAPE SCC, LEAF factum, at para. 62). Further, substantive democracy mitigates against creating a new category of cases where the courts must show deference to government-spending decisions. To return to the RJR-MacDonald case, supra, at para. 136, ‘‘[t]o carry judicial deference to the point of accepting Parliament’s view simply on the basis that the problem is serious and the solution difficult, would be to diminish the role of the courts in the constitutional process and to weaken the structure of rights upon which our constitution and nation is founded.’’ See also Sheila McIntyre, supra at note 48, who argues that the Supreme Court of Canada’s decision in NAPE may have ‘‘opened the door to deference whenever government cost-cutting reallocates social benefits among disadvantaged groups or ‘important stakeholders.’’’

106. We must also keep in mind the need to undertake section 1 analysis in context. The difficulties of accepting a cost-reduction objective in the context of an equality rights violation were noted by Justice Rosalie Abella, writing for the Ontario Court of Appeal in Rosenberg v. Canada (Attorney General) (1998), 38 O.R. (3d) 577 (C.A.) at para. 42:

Cost/benefit analyses are not readily applicable to equality violations because of the inherent incomparability of the monetary impacts involved. Remedying discrimination will always appear to be more fiscally burdensome than beneficial on a balance sheet. On one side of the budgetary ledger will be the calculable cost required to rectify the discriminatory measure; on the other side, it will likely be found that the cost to the public of discriminating is not as concretely measurable. The considerable but incalculable benefits of eliminating discrimination are therefore not visible in the equation, making the analysis an unreliable source of policy decision-making.

107. As the instant case illustrates, governments engaged in a deficit reduction calculus often ignore the fact that equality promoting measures such as pay equity result in benefits to the social good as well as costs. This highlights the danger in accepting cost reduction objectives as pressing and substantial bases for overriding equality rights. In addition to being discriminatory and inconsistent with substantive democracy, the overall cost-saving potential of such objectives, if any, is simply impossible to verify.

(ii) Government’s evidentiary burden

108. Second, even if fiscal considerations might in emergency situations provide pressing and substantial grounds for overriding equality rights, the government did not demonstrate that a fiscal crisis existed in this case. As noted by McLachlin J. in RJR-MacDonald, at para. 128, demonstration requires ‘‘rational inference from evidence or established truths’’ rather than intuition or deference. While common sense and inferential reasoning may be deployed, these techniques are to supplement rather than replace the evidence. Further, ‘‘one must be wary of stereotypes cloaked as common sense, and of substituting deference for the reasoned demonstration required by s. 1’’ (Sauve, supra, at para. 18 (per McLachlin J.)).

109. The only evidence produced by the government of the objective behind section 9 of the PSRA was ‘‘an extract from Hansard and some budget documents’’ (NAPE SCC, at para. 55). The Supreme Court of Canada described this evidence as ‘‘casually introduced,’’ and agreed with the Arbitration Board that the government should have called witnesses better placed to explain these records. While the Court noted that this would ‘‘ordinarily . . . be a matter of serious concern’’ it went on to accept this evidence as sufficient because ‘‘the essential subject matter of the s. 1 justification in this case consists of the public accounts of the Province that are filed with the House of Assembly, and comments by the Minister of Finance and the President of the Treasury Board as to what they thought the accounts disclosed and what they proposed to do about it, which are reported in Hansard’’ (at para. 56). The Supreme Court of Canada found that it could take judicial notice of this material.

110. More significantly, the Supreme Court expressed the view that the government’s failure to call evidence in the context of the subject matter of this case was not ‘‘fatal’’ because ‘‘[t]here are serious limits to how far the courts can penetrate Cabinet privilege in order to require information about the deliberations of the Executive Council’’ (NAPE SCC, at para. 58).

111. In our view, the government’s section 1 record was fatal to its position. We believe the government is required to do more than introduce statements made in the legislature and public accounts to demonstrate that there was a fiscal crisis. As noted earlier, emergencies are typically unexpected and uncontrollable events, and the applicability of this label should be proven by evidence rather than asserted. Any other approach amounts to a disguised form of deference.

112. Even if we accept the Supreme Court of Canada’s conclusion that judicial notice can be taken of public accounts, the accounts themselves belie the government’s argument that there was a fiscal emergency and contradict the Court’s statement that this was an ‘‘exceedingly rare case’’ of a ‘‘severe fiscal crisis’’ (NAPE SCC, at para. 52; see also para. 85). The government’s own figures, to which our attention was drawn on this application for re-consideration, show that there was not a fiscal emergency facing Newfoundland and Labrador in 1991. Rather, this was a period in which the deficit was relatively ‘‘normal.’’ The federal government publishes budget information for all of the provinces. According to the public accounts of Newfoundland and Labrador (for the 2003-4 budget, Table 17, <http://www.fin.gc.ca/frt/2004/frt_e.pdf> accessed 2 July 2007), Newfoundland and Labrador’s deficit or surplus positions for the years 1982–3 to 2003–4 were as follows:

1982–3  -$191 million       1993–4  -$341 million

1983–4  -$326 million      1994–5  -$374 million

1984–5  -$252 million      1995–6  -$190 million

1985–6  -$253 million      1996–7  -$107 million

1986–7  -$231 million      1997–8  +$133 million

1987–8  -$197 million      1998–9  -$187 million

1988–9  -$226 million      1999–2000  -$269 million

1989–90  -$175 million   2000–1   -$350 million

1990–1  -$347 million      2001–2  -$468 million

1991–2  -$276 million      2002–3  -$691 million

1992–3  -$261 million      2003–4 -$959 million

These figures show that while the deficit for the restraint period at issue in this case was actually higher than predicted by the government, Newfoundland and Labrador has regularly faced substantial deficits over this twenty-year period.

113. One of the principles underlying the substantive commitment to a free and democratic society is ‘‘faith in social and political institutions which enhance the participation of individuals and groups in society’’ (Oakes, supra, at 136). The faith of citizens in the institutions of government is not a given and should not be taken for granted. Governments must be prepared to subject their conduct to scrutiny to ensure that the faith of its citizens is deserved. In our view, requiring governments to expose their factual claims to scrutiny, as required by section 1, can strengthen substantive democracy. Conversely, to defer too greatly to an unproven claim of fiscal emergency would undermine government accountability and weaken democracy in a substantive sense. To return to the Supreme Court of Canada’s words in Vriend, supra, at para. 142, the Charter requires that legislators and the executive incorporate the values in a free and democratic society into their decision making, ‘‘and if they fail to do so, courts should stand ready to intervene to protect these democratic values as appropriate.’’

114. Overall, we conclude that the government failed to meet its justificatory burden with respect to the objective behind the erasure of women’s pay equity entitlements in this case. The government did not prove the existence of a fiscal crisis, so the evidentiary basis of its argument was lacking. Further, even if the government’s deficit was out of the ordinary, it is inappropriate to term this an ‘‘emergency’’ that was somehow out of the government’s control. The purported objective—cost savings—is overly vague and did not promote the values essential to a free and democratic society, namely equality, dignity, and social inclusion. Indeed, such an objective cannot, without more, justify a violation of equality rights in a free and democratic society.

115. We have considered whether the government can be said to have put forward a more specific cost-related objective for violating its pay equity obligations and women’s equality rights. The only evidence that might support such an argument was that of avoiding the layoffs of 900 government workers. Before the Supreme Court of Canada, the government suggested that its ability to provide ‘‘appropriate education, health care, [and] social programmes’’ was challenged by its deficit (see NAPE SCC, respondent’s factum, at para. 56). However, there was no evidence to support this as the objective behind section 9 of the PSRA, and we decline to attribute this objective to the government. It is crucial, in our view, to avoid undertaking section 1 analysis that is inadequately grounded in evidence. The Supreme Court of Canada itself has cautioned against abstract Charter analysis in several cases (see, for example, Schacter,  (per Justice Gerard La Forest concurring); and Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342).

116. As for the avoidance of lay-offs, the government did not frame this as the objective of section 9 of the PSRA. Rather, lay-offs were seen as an alternative way of achieving the objective of reducing the government’s deficit (an alternative to be avoided). While this may seem like a matter of semantics, we decline to re-frame the government’s argument about alternatives as the objective behind its decision to erase women’s pay equity entitlements. Again, this is an issue of government accountability, and it is not for the courts to make the government’s submissions for it.

117. The lack of a pressing and substantial objective is sufficient to dispose of this case in favour of NAPE. Nevertheless, we believe it is important to respond to the submissions of the parties and to the findings of the Supreme Court of Canada on the proportionality stage of the Oakes analysis. We will do so in the next section of our judgment, assuming for the sake of argument that the government’s deficit reduction objective is a pressing and substantial basis for overriding women’s equality rights.

(b) Proportionality between Means and Objective

118. Even if the government’s deficit reduction objective was demonstrated to be pressing and substantial, it must still prove that its means of pursuing this objective—that is, its erasure of its pay equity obligations—was proportionate to the importance of the objective. There was no dispute that the erasure of women’s pay equity was rationally connected to the government’s cost reduction objective. However, we find that the government did not meet its burden of proving that the means used to achieve its objective impaired women’s equality rights as little as reasonably possible, nor did it prove that any salutary effects of the PSRA outweighed its deleterious impact. Further, international norms support the conclusion that the PSRA cannot be supported under section 1 of the Charter.

(i) Minimal impairment

119. The minimal impairment factor requires that the government provide evidence as to the alternatives it considered and the reasons why it rejected those alternatives. As stated by McLachlin J. in RJR-MacDonald, supra at para. 160, the law must fall within a range of reasonable alternatives, and the government must show that the law was ‘‘carefully tailored’’ to impair Charter rights no more than necessary. However, ‘‘if the government fails to explain why a significantly less intrusive and equally effective measure was not chosen, the law may fail.’’

120. We cannot support the Supreme Court of Canada’s conclusion (NAPE SCC, at para. 90) that the Hansard record provides persuasive evidence that the government was required to balance competing disadvantages and that it considered alternative measures, namely hiring freezes, tax increases, and program cuts. As we discussed earlier, it is not sufficient for the government to rely on bald assertions made in the legislature as evidence that reasonable alternatives were considered. There must be evidence that demonstrates the level of consideration given to different alternatives and why the alternatives were rejected in favour of measures erasing pay equity for women workers.

121. In particular, we must emphasize that there is no evidence to support the government’s argument that it weighed its pay equity obligations against its need to provide services such as health care, education, and social assistance. According to the testimony of the president of the Treasury Board, lay-offs were the only concrete option the government weighed against its pay equity obligations. Even with respect to this alternative, the Arbitration Board found that ‘‘it [was] not really clear that government seriously considered layoffs as an option,’’ rather lay-offs were mentioned as an ‘‘example [of] what would have been the equivalent cost of the pay equity adjustments involved in terms of jobs’’ (NAPE SCC, Appellant’s Record, vol. I at 102).

122. We find that the government did not meet its section 1 burden of demonstrably justifying its choice to erase women’s pay equity as a necessary means of reducing the deficit. The government asserted, rather than proved, the reasonableness of its decision to erase pay equity by invoking the spectre of layoffs. Further, the government’s consideration of, at best, only one alternative means of cutting costs falls far short of its obligation to demonstrate that the law falls within a range of reasonable alternatives. As noted by McLachlin J. in RJR-MacDonald, supra, at para. 129, ‘‘if the state has not demonstrated that the means by which it seeks to achieve its goal are reasonable and proportionate to the infringement of rights, then the law must perforce fail.’’

123. There are other significantly less intrusive yet reasonable measures that were not addressed by the government. For example, the government could have implemented across-the-board wage cuts, using the pay equityadjusted wage levels for the affected workers as the benchmark against which cuts were made. This option would have affirmed that pay equity is not a wage increase but rather a remedy for wage discrimination that simply brings women up to the pay level that equality principles require (but which may have to be cut equally with men’s wages once brought to this level). Moreover, this alternative would have affected men’s wages as well as women’s and would have made more proportionate the burden of the government’s deficit reduction. Instead, the government chose means that were discriminatory and that required women workers to subsidize the deficit reduction in a disproportionate way.

124. Even if an immediate crisis precluded payment of the pay equity adjustments on time, which was not proven, there was no need to infringe equality rights so drastically by extinguishing part of the obligation. Patricia Hughes has pointed out that the government could have paid off the full pay equity debt over a longer period of time or postponed payment until its finances were in a stronger position (see ‘‘Newfoundland (Treasury Board) v. N.A.P.E.: Women as Sacrificial Lambs’’ (2005) 11 Canadian Labour and Employment Law Journal 383 at 395). These sorts of measures were in fact implemented in relation to the government’s remaining pay equity obligations, which were renegotiated with NAPE.

125. According to the Supreme Court of Canada decision in this case, governments must have a ‘‘margin of appreciation’’ to make decisions about the allocation of their resources (NAPE SCC, at para. 84). The Court found that several factors weighed in favour of giving a large measure of deference to the government, including the scope of the government’s financial challenge, the cost of remedying the discrimination, the government’s affirmation of its pay equity obligations, and the government’s mediation of competing claims for its resources. The validity of each of these factors will be considered in turn.

126. We have already noted that the financial challenge that led to the PSRA must be assessed in the context of the government’s deficits before and after 1991. In this light, the challenge was not ‘‘drastic,’’ as the Supreme Court of Canada found (NAPE SCC, at para. 86), but a relatively normal financial situation for Newfoundland and Labrador.

127. Further, and as acknowledged by the Supreme Court of Canada, the cost of implementing women’s pay equity is actually a measure of the scale of discrimination against the women workers in this case. It would be inconsistent with the values underlying a free and democratic society to rely on the size of the discrimination as a justification for the failure to remedy it and the failure to consider alternative ways of reducing the deficit. The fact that the PSRA affirmed the government’s commitment to pay equity and allocated $3.5 million to this obligation in 1991 is small comfort in these circumstances.

128. The Supreme Court of Canada’s focus on the government’s mediation between competing claims is also problematic, in our view. In the Court’s words, ‘‘[t]he women hospital workers were a disadvantaged group, but so in reality were the medical patients who lost access to 360 hospital beds, students of school boards whose transfers were frozen, and those who relied on other government programs that were reduced or eliminated (although it is true that in their case Charter rights were not implicated)’’ (NAPE SCC, at para. 93).

129. As noted earlier, there was no evidence that the government considered further cuts to health care, education, and other programs to reduce its deficit—there was simply an assertion that these programs were at risk. Even if the government had proved that it considered these alternatives, substantive democracy principles require caution when the government’s justification essentially pits one disadvantaged group against another. Government policy making may sometimes be faced with such an unhappy choice, and, when that is the true state of affairs, the dilemma must be faced. However, we must not be too quick to assume that all policy making is directed to addressing social disadvantages. Government norms, standards, and decisions function in a myriad of ways to create, reinforce, and support groups already advantaged in society as well as to address disadvantage. If upholding equality rights requires reallocation of resources, it should not be automatically assumed that resources will have to be taken away from other equally or more vulnerable groups.

130. The government’s argument presupposes that norms, practices, standards, and systems that operate to the benefit of advantaged groups in society can easily trump Charter rights. In our view, substantive democracy requires governments to consider different approaches to distribution and redistribution, to explain what different approaches they have considered, and to explain why they have rejected them. It is this demonstrative process that is subject to judicial and public scrutiny. And, it is this process that must be assessed in terms of its concordance with the values underlying a free and democratic society under section 1 of the Charter.

131. The government has taken the position throughout that this case involved hard choices. In our view, however, it is critical to review government choices through the lens of equality. Despite the rhetoric of ‘‘hard choices,’’ we suspect that the choice to erase its pay equity obligations was not a ‘‘hard’’ one for the government. Quite the contrary, it was a politically easy and expedient choice because it traded on women’s second-class status. It is always easier for a government to target the relatively disadvantaged since they are already marginalized in the political arena. Indeed, what could better illustrate this point than the government’s own words—its pay equity obligation, and the women to whom this obligation was owed, were simply erasable and thus ‘‘erased.’’

132. The Supreme Court of Canada’s judgment trades on gender stereotypes when it characterizes the women’s claim to pay equity as throwing ‘‘other claims and priorities to the winds’’ (NAPE SCC, at para. 95), implicitly chastising women for selfishness in taking hospital beds and school desks away from others. The women workers in this case had been disadvantaged by pay inequity for years, and the government was finally fulfilling its legal obligation to rectify this inequity. To deny women their pay equity entitlements in this case is akin to imposing an extra tax on the billings of male doctors for the sake of reducing the deficit. It is difficult to imagine that the courts would find legislated taxation of male doctors’ salaries to be a minimally impairing alternative under the Charter, even though doctors are relatively privileged as compared with the women workers in this case.

133. As noted, there was no evidence that the government considered alternatives to the erasure of pay equity other than lay-offs in this case. We are therefore reluctant to discuss the hypothetical situation where a government is choosing between measures, each of which adversely impacts upon disadvantaged groups in some way. We will say, however, that governments should never be in this position until they have considered all reasonable alternatives that do not have negative and discriminatory implications for equality-seeking groups. Unless governments operate with this principle in mind, equalityseeking groups will continue to bear a disproportionate burden of reducing government deficits and will fail to receive their proper entitlements of government spending. As noted by LEAF, while it is not the role of the courts to ‘‘micro-manage’’ governments’ budgets, it is the judiciary’s obligation to ensure that governments’ financial decisions are consistent with substantive equality and substantive democracy under the Charter (NAPE SCC, LEAF factum, at para. 72).

134. In short, even if the government’s argument that fulfilling its pay equity obligations jeopardized its health, education, and other social programs had been proved, there was still no evidence that erasing women’s pay equity entitlements was the means required to meet this objective rather than some non-discriminatory alternative such as those we discussed earlier.

(ii) Balance between salutary and deleterious effects

135. The third stage of the proportionality inquiry involves a balancing between the means and objective of the legislation and between its salutary and deleterious effects. We have already found that the government did not prove the existence of a pressing and substantial objective for erasing its pay equity obligations under the PSRA, so there is no objective to outweigh the discriminatory means employed. However, assuming again that deficit reduction in a time of fiscal crisis was the proven objective and that this objective was sufficiently important, is there proportionality between the salutary and deleterious effects of the legislation?

136. We disagree with the Supreme Court of Canada’s conclusion that the salutary effects of ‘‘preserving the fiscal health of a provincial government through a temporary but serious financial crisis’’ outweighed the deleterious effects of ‘‘delaying’’ the pay equity adjustments (NAPE SCC, at para. 98). As we have noted throughout this judgment, the deleterious effect of the delay imposed by section 9 of the PSRA was to erase three years of pay equity obligations. This had serious effects on all workers hit by this erasure, as we have discussed, and it bears repeating that this was in addition to a wage freeze imposed on all public sector workers. Furthermore, the erasure of pay equity had particularly negative effects on some of the women workers represented by NAPE—those who retired during this period and those who went on disability leave. The benefits of these workers will be ‘‘permanently tied’’ to the discriminatory wages they were receiving before the government implemented its pay equity obligations (NAPE SCC, LEAF factum, at para. 37). The Supreme Court of Canada misunderstood this point when it said that ‘‘to make a special provision for these people would have required drawing distinctions within the class of female hospital workers who were employed in the 1988-91 period, favouring some and not others’’ (at para. 96). The point is that the erasure of pay equity obligations for the three-year period in question had an additional adverse impact on some women workers beyond the negative and discriminatory effect that it had on all of the workers entitled to pay equity.

137. Seen in this light, it is impossible to conclude that any salutary effects of section 9 of the PSRA in reducing the deficit outweighed its deleterious effects. As the government did not demonstrate a worse harm to be avoided in reducing the deficit, there is no evidence of a concrete salutary benefit, much less one that advances protected Charter interests. In contrast, and as all courts hearing this matter have agreed, the erasure of women’s pay equity does violate rights under section 15 of the Charter in a serious way. Accordingly, the deleterious effects of the legislation clearly outweigh any abstract salutary effects it might have had.

(iii) International law principles

138. International law also supports the conclusion that the PSRA cannot be justified under section 1 of the Charter. Section 1 analysis permits a consideration of ‘‘reasonable limits’’ in other free and democratic societies and under international law (Oakes, supra, at 140-1). As noted by Dickson C.J., writing for a majority of the Supreme Court of Canada in Slaight Communications, supra, at 1056,

Canada’s international human rights obligations should inform not only the interpretation of the content of the rights guaranteed by the Charter but also the interpretation of what can constitute pressing and substantial s. 1 objectives which may justify restrictions upon those rights . . . [T]he fact that a value has the status of an international human right, either in customary international law or under a treaty to which Canada is a state party, should generally be indicative of a high degree of importance attached to that objective.

International norms relating to pay equity and its reasonable limits are thus relevant in considering the government’s deficit reduction justification in this case.

139. Article 11(1)(d) of the Convention on the Elimination of All Forms of Discrimination against Women, supra, requires that state parties ‘‘take all appropriate measures to eliminate discrimination against women in the field of employment,’’ including in the area of pay equity. The Report of the United Nations Committee on the Elimination of All Forms of Discrimination against Women, Doc. CEDAW/C/2002/I/CRP.3/Add.5/Rev.1 (31 January 2003) at paras. 51-2, expressed concern over the failure to implement pay equity in Canada. The Beijing Declaration, supra, at Article 180(k), also requires that governments ‘‘increase efforts to close the gap between women’s and men’s pay, [and] take steps to implement the principle of equal remuneration for equal work of equal value by strengthening legislation, including compliance with international labour laws and standards.’’ More generally, Article 177(b) of the Beijing Declaration provides that governments must ‘‘integrate a gender perspective into all economic restructuring and structural adjustment policies.’’

140. These sources of international law reflect the norm that governments have a positive obligation to take all appropriate steps to implement pay equity for women. Further, they evidence the international norm that care must be taken that women not bear a disproportionate burden of government ‘‘restructuring’’—that is, cutbacks. Yet this is exactly what the PSRA required of women workers in Newfoundland and Labrador. As we have noted, women workers were subjected to a general wage freeze affecting all public sector employees in addition to the erasure of their pay equity entitlements.

141. In view of these international norms, the government’s stated objective in this case, to reduce its deficit, is not a sufficiently important basis for overriding women’s right to pay equity, nor were its means of doing so reasonable and demonstrably justified in a free and democratic society. An interpretation of section 1 of the Charter that came to any other conclusion would be inconsistent with Canada’s international obligations.

142. Overall, the government has not met its justificatory burden under section 1 of the Charter. The context of this case—the erasure of women’s pay equity entitlements to reduce the government’s deficit—must be assessed in light of the principles of substantive democracy. It is contrary to the values underlying a free and democratic society, particularly equality and social inclusion, that women should be forced to bear a disproportionate burden of deficit reduction. Thus, the violation of the equality rights of women workers cannot be justified by the government.

VI. Remedy

143. Section 52 of the Constitution Act, 1982, supra, provides that any law that is inconsistent with the Charter is of no force or effect to the extent of the inconsistency. The courts have interpreted section 52 to permit a range of remedies. While governments’ financial considerations cannot be a pressing and substantial objective under section 1 of the Charter, these may be relevant considerations when choosing the appropriate remedy in a given case. In the context of remedies, ‘‘the question is not whether courts can make decisions that impact on budgetary policy; it is to what degree they can appropriately do so’’ (Schachter, supra, at 709 [emphasis added]).

144. We suspect that it was the implications of the remedy in this case that drove the courts below to take an overly deferential approach to the government under section 1 of the Charter. However, we agree with the Supreme Court of Canada’s reasoning in Schachter that rather than dilute the section 1 inquiry, the appropriate place to consider the financial impact of a Charter claim is with respect to remedy—both what it should be and how it should be implemented.

145. The starting point is to determine the extent of the law’s inconsistency with the Charter. Here, the inconsistency flows from the discriminatory content of section 9 of the PSRA. The most appropriate remedy in these circumstances is a declaration that section 9 is of no force or effect. This is the remedy originally granted by the Arbitration Board in this case.

146. The effect of this remedy is that the government must comply with the Pay Equity Agreement incorporated in its collective agreement with NAPE so as to put the women workers in the position they would have been in if section 9 of the PSRA had not been enacted. In consideration of the budgetary impact of this decision, we will not dictate how the government should do so. However, we note that the courts retain jurisdiction to ensure that the implementation of Charter remedies complies with the government’s constitutional obligations (see Doucet-Boudreau v. Nova Scotia (Minister of Education), [2003] 3 S.C.R. 3).

VII. Disposition

147. Accordingly, we declare section 9 of the PSRA to be of no force or effect.

The gravity of this appeal is attested to by the extensive coverage it has received at TheCourt.ca: see the commentaries of Kevin Tilley upon release of the Court of Appeal’s decision and of Julian Ho upon granting of leave to appeal by the Supreme Court. Mine is then an addition to this series, which ultimately awaits the full analysis to come upon release of the Supreme Court’s final decision.

With the details of this case aptly described within the above two links, what follows is a point-form recap of the relevant legal history and context:

• A majority of the Supreme Court of Canada holds in Reference Re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313, as part of its “labour trilogy”, that there are no constitutionally protected rights under s. 2(d) to collectively bargain and to strike. McIntyre J. finds that the freedom of association strictly consists of the freedom to associate for the purposes of activities which are lawful when performed alone.

• The Court in Dunmore v. Ontario (Attorney General), [2001] 3 S.C.R. 1016 (“Dunmore“), finds that excluding agricultural workers from a statutory labour relations regime, without expressly or intentionally prohibiting association, infringes s. 2(d).

• The Agricultural Employees Protection Act, 2002, S.O. 2002, c. 16 (“AEPA“), is enacted, facilitating worker organization in a manner consistent with Dunmore and its order. The legislation, however, does not provide for collective bargaining. A Charter challenge is made.

• The application judge ([2006] O.J. No. 45) dismisses the challenge, holding that the legislation meets the minimum constitutional requirements set out in Dunmore, which did not include protections for collective bargaining.

• In the meanwhile, reversing in part the labour trilogy and thus altering the legal landscape, the Supreme Court in Health Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia, [2007] 2 S.C.R. 391 (“BC Health Services“), holds that s. 2(d) does indeed include the right to collectively bargain.

• In light of the Supreme Court’s landmark ruling in BC Health Services, and its combined effect with Dunmore, the Ontario Court of Appeal allows the appeal in this Charter challenge, finding unconstitutional the AEPA‘s underinclusivity with regard to collective bargaining.

At its heart, the appeal in Fraser engages a positive rights question. While the fundamental freedoms in s. 2 of the Charter may have traditionally been understood as negative freedoms, the Court in Dunmore recognized that positive state obligations may flow from s. 2(d). As I understand it, the general argument is that, in the context of labour relations, a solely negative protection of the freedom of association, and thus any strict distinction between it and a positive state obligation, are essentially hollow. While in the cases of  ss. 2(a) & (b) the state will not at all need to facilitatively fold the hands of its citizens in prayer or open their mouths to speak, the state in the case of s. 2(d) may need to enact facilitative legislation in order to make meaningful the freedom of association, as, in the context of labour relations, the real-world exercise of the freedom may be nigh impossible because it requires the cooperation of an essentially antagonistic party, the employer (unlike the comparatively individualistic exercises of expression and religion). In the words of Bastarache J., writing for the majority in Dunmore,

[I]n order to make the freedom to organize meaningful, s. 2(d) of the Charter imposes a positive obligation on the state to extend protective legislation to unprotected groups. … [T]he distinction between positive and negative state obligations ought to be nuanced in the context of labour relations, in the sense that excluding agricultural workers from a protective regime substantially contributes to the violation of protected freedoms.

It is worth noting that this ruling ran contrary to Delisle v. Canada (Deputy Attorney General), [1999] 2 S.C.R. 989 (“Delisle“). Decided just two years earlier on considerably similar facts (the exclusion of federally employed Mounties from a statutory labour relations regime), and with the majority opinion also written by Bastarache J., Delisle had affirmed the conception of s. 2 of the Charter as bearing only negative rights. Now, however, s. 2(d) may impose a positive obligation on legislatures to enact legislation facilitating associational activities, such as the right of farm workers to organize. Assuming a broader perspective, the Court in Dunmore held that a legislature may be obliged to oblige a private actor to allow for the exercise of a s. 2 fundamental freedom, namely, the s. 2(d) freedom of association.

The landmark ruling in BC Health Services (analyzed at TheCourt.ca by Professor Judy Fudge) expanded s. 2(d) to include the right to collectively bargain, beyond the right to organize, as in Dunmore. BC Health Services itself was but a negative rights situation involving active interference/prohibition: the government voided collective agreement provisions. Thus, what Fraser et al. argued and Chief Justice Winkler accepted was that combining Dunmore and BC Health Services would naturally see a corresponding positive right to collective bargaining as well.

The three Dunmore factors prerequisite to a finding of a positive s. 2(d) duty, which Chief Justice Winkler found to be satisfied in this instance, are outlined in Fraser as follows:

[1]. Are the claims grounded in a fundamental freedom protected by s. 2(d), rather than in access to a particular statutory regime?
[2]. Have the appellants demonstrated that exclusion from a statutory regime has the purpose or effect of substantially interfering with the freedom to organize or the right to bargain collectively?
[3]. Is the government responsible for the inability to exercise the fundamental freedom?

At paragraph 80, Chief Justice Winkler concluded that,

[i]f legislation is to provide for meaningful collective bargaining, it must go further than simply stating the principle and must include provisions that ensure that the right can be realized. At a minimum, the following statutory protections are required to enable agricultural workers to exercise their right to bargain collectively in a meaningful way: (1) a statutory duty to bargain in good faith; (2) statutory recognition of the principles of exclusivity and majoritarianism; and (3) a statutory mechanism for resolving bargaining impasses and disputes regarding the interpretation or administration of collective agreements.

If, as Ontario (A.G.) et al. argued, this three-part model is the “Wagner Act model” — the parts of which are “simply … feature[s] of certain statutory regimes, such as the [Labour Relations Act], and are not typically found in the labour legsialtion of most European countries” — then, contrary to Chief Justice Winkler’s holding, the first Dunmore step would not be met. To accept otherwise would result in the constitutionalization of a statutory regime, a constitutionally calamitous result that should be avoided at great cost. Through paragraphs 87-93 of his judgment, Chief Justice Winkler defends the feature of majoritarian exclusivity against this by making out its historical rootedness, its consistency with Charter values, its equitability, its essentialness, its effectiveness — all in all, its substantive “goodness”. With respect, I do not see how this dislodges the argument that it remains part of a particular statutory regime.

As for the third stage of the Dunmore test, I must admit that I cannot understand it, at least on its face. In a positive rights situation, who else but the employer, as well as what else but the nature of the work, would be responsible for an “inability to exercise the fundamental freedom?” The same, not the government, are responsible for the “vulnerability” of the farm workers, a ground upon which the Court in Dunmore distinguished Delisle and its federally employed and seemingly more organizationally capable Mounties. Dunmore, however, does answer this. In it was recognized a so-called “chilling effect”, incidental to underinclusive legislation, that serves to “discredit” and “delegitimize” organizing efforts; in this way, a government could be so held responsible.

In the end, the real point behind all of this is that, whatever may be said about Dunmore, from the coherency of its finer details, to the general idea of positive rights, to the roundabout constitutional compulsion on private employers to provide for employees’ freedom of association, it worked for the Supreme Court and so is settled law. The legal formula ultimately is as the Ontario Court of Appeal described it: Dunmore plus BC Health Services. As discussed, the Court may stop short of specifically constitutionally enshrining the full Wagner Act model of good faith bargaining, majoritarian exclusivity, and arbitrability. However, I do not see how the Court may potentially find that a positive right to collectively bargain does not exist other than by reconsidering and refining its own jurisprudence. After all, this right seems to be the natural result of what the Supreme Court decided in Dunmore and BC Health Services — although, we patiently await its final word on the issue.

Suberu concerns the right of an individual detained (but not arrested) by police and when that detention triggers the right to counsel under s.10(b) of the Charter. The section states that “on arrest or detention”, everyone has the right “to retain and instruct counsel without delay and to be informed of that right.”(emphasis added)

Mr. Suberu and an accomplice obtained a stolen credit card which they used to purchase LCBO gift certificates, then attempted to use the $100 gift certificate to buy a $3 bottle of beer. The LCBO employees became suspicious and called the police without the appellants’ knowledge. When the constable arrived, he briefly detained the appellants and asked them some questions. It quickly became obvious to the officer that the appellants were the individuals responsible for the use of LCBO certificates (among other items) paid for with a stolen credit card, and he arrested them for fraud.

The obvious question in determining Mr. Suberu’s guilt in this instance is whether or not his right to counsel under s.10(b) was triggered. Justice Doherty, in the Ontario Court of Appeal decision (which found against Mr. Suberu), compared the situation to R. v. Hall, [1998] O.J. No. 2607 (Ct. J.), where an individual was detained for a traffic violation and then admitted to possessing marijuana before being informed of right to counsel. In Hall, the court found that the suspect’s 10(b) rights were activated by the traffic detention. However, Justice Doherty used a passage from Hall to illustrate the cause for dismissing Suberu’s appeal:

[H]e [the police officer] was entitled to ask an exploratory question in order to ascertain whether an investigation of the cigarette was worth pursuing. Only after making the determination that it was would he be required to inform Mr. Hall of his right to counsel in relation to that investigation.

Justice Doherty here suggested that the “exploratory question” was akin to the constable’s brief interrogation of Mr. Suberu. However, nowhere in his decision did he account for another distinguishing fact: that the constable, rather than stopping someone for an unrelated violation of a different nature, was actually called to the scene expressly for the purpose of investigating whether Mr. Suberu was potentially guilty of a specific crime.

Does this mean Justice Doherty’s decision was incorrect and requires overturning? Possibly. This ties into another reason why the amount of time spent thus far by the SCC to decide this case is so startling: when the Supreme Court  first recognized the investigative detention power in R. v. Mann, [2004] 3 S.C.R. 59, they specifically noted that whether or not the right to counsel applies incidental to such detentions would be decided at a later date, with the benefit of deliberation by lower courts.

But now, the issue has been deliberated upon in the lower courts. And the SCC’s delay in handing down their decision in Suberu grows more puzzling every day.

Introduction
The Supreme Court of Canada is in the midst of a little spring cleaning in the law of defamation.

Cusson v Quan was a case concerning an Ontario provincial police officer who on his own initiative travelled to New York City following the events of September 11, 2001, to assist in rescue efforts. He was interviewed in the media and cast as a hero. The OPP was criticized for its reaction to Mr. Cusson’s absence without leave.

The Ottawa Citizen then published articles critical of Mr. Cusson, suggesting that his conduct was less than heroic. For one thing, he had reportedly worn an R.C.M.P. uniform at “ground zero” and misled New York State police into thinking that his pet dog, Ranger, had formal training in civilian search and rescue operations. For another, the newspaper averred (but failed to prove) that Mr. Cusson had deliberately misled the New York police by representing himself as a trained R.C.M.P. canine officer, and had compromised the rescue effort.

Mr. Cusson sued and the newspaper relied on the defence of qualified privilege – that it had a duty to publish the story and the general public had a corresponding interest in reading it. The trial court rejected that defence because a “compelling” public interest had not been demonstrated. The newspaper’s appeal was denied, but on the ground that the defence of qualified privilege had now been superseded by the “different jurisprudential creature” recognized by Lord Hoffman and Baroness Hale in the recent English case of Jameel.

Grant v Torstar Corp. involved a newspaper article headlined “Long-time Harris backer awaits Tory nod on plan”. Mr. Grant was seeking to expand his personal golf course, in Ontario’s cottage-country, by purchasing Crown land. The article included the statement that everyone thought the purchase was a “done deal” due to Mr. Grant’s influence and ties with the then-Premier.

Mr. Grant sued and the newspaper relied on both the traditional defence of qualified privilege and the new Jameel defence. The trial judge conflated the two defences and found in the plaintiff’s favour, because the subject-matter of the article was not of general public interest. The Ontario Court of Appeal found the judge had erred in that regard, and that the Jameel defence would apply – but before applying that defence, the jury first had to decide what was the precise meaning of the defamatory imputation.

The Cusson appeal was heard by the Supreme Court on February 17, 2009. The Grant appeal is set to be heard on April 23, 2009.

It was clear from questions from the bench in Cusson that a number of justices of the Supreme Court were uneasy with the Ontario Court of Appeal’s interpretation and/or application of the Jameel defence as it impacts reputation.

Having heard the court’s concerns, it is now possible to anticipate a made-in-Canada solution to the problems which have vexed past attempts to apply the venerable concept of qualified privilege in modern circumstances and with broader interests in mind.

This is the first of three postings whose unabashed purpose is to offer assistance to the court as it decides these two cases.

The first installment will deal with where the Canadian common law of qualified privilege has come from, and then consider the Hoffman/Hale formulation applied by the Ontario Court of Appeal in Cusson and Grant. The question will be whether that formulation provides adequate protection to reputation in modern Canadian society. The answer will be – No, it doesn’t.

The second installment will explore how a Charter analysis can assist in reaching a better balance the twin values of freedom of expression and reputation. The question will be whether any of the existing formulations of common law media privilege can withstand Charter scrutiny? The answer again will be, for the most part, No.

The final installment will posit an entirely new approach to media privilege. That new approach retains all the elements of the existing common law tests but makes them subservient to one guiding principle – whether it is in the larger public interest to publish. That principle is also the embodiment of the test of proportionality as considered at the final stage of a Charter section 1 analysis (see Dagenais v. Canadian Broadcasting Corp.).

Impatient readers may skip ahead if they wish.

The oral submissions in Cusson
The Cusson appeal attracted numerous interveners in the Supreme Court. Almost all of them were there to speak in favour of greater freedom of expression. The respondent, to judge by his factum, did not place comparable emphasis on the competing importance of reputation. It therefore fell to the court to question counsel on whether and how the reputation interest could be protected. Even though the reputation interest may have been over-emphasized in the past, Justice Binnie memorably asked, should it now be viewed as “road kill” on the highway to media freedom?

A number of justices also seemed uncomfortable with abandoning traditional qualified privilege and instead recognizing a whole new defence based solely on the subject matter of the publication and due diligence by the media. Justice Abella observed that, even for serious journalism, it is necessary to connect who is doing it and why. Justice Binnie suggested that analysis of a reciprocal duty to publish and interest in receiving the published information, even involving the world at large, may create an avenue into considering media diligence.

After the rest of the parties had made their submissions, counsel for Peter Grant stood up. He argued that the common law of Canada should respect both expression and reputation interests. He urged a restated media duty test that would be appropriate to the breadth of publication and extent of potential harm; that would be flexible; that would reflect an incremental development of the common law; and that would protect against an overbroad conception of the public interest in receiving defamatory publications.

The court was evidently interested in hearing more along those lines. Leave in the Grant appeal was granted the very next day.

Traditional qualified privilege and the emergence of “responsible journalism”
As Justice Binnie observed, the common law of defamation has always been strongly weighted in favour of reputation. Once the facts constituting a defamatory publication are proven, the cause of action is complete. Falsity and harm are presumed.

As an exception, the common law recognizes there are occasions where common convenience and the welfare of society may justify defamatory communication about a person despite consequent harm to his or her reputation (see Adam v Ward, [1917] A.C. 309 (H.L.) and cases following). Those are traditionally occasions of communication on what might be termed ‘private’ matters. The parties have some sort of mutual involvement – e.g. former employer to prospective new employer. As Lord Nicholls noted in Reynolds at 195:

The essence of th[e] defence lies in the law’s recognition of the need, in the public interest, for a particular recipient to receive frank and uninhibited communication of particular information from a particular source.

By that means, the common law has sought to balance private reputation, which is prima facie paramount, with a competing public interest in free communication on certain occasions.

Difficulty translating the defence to communication on public matters
The elements which establish an occasion of traditional qualified privilege are the existence of a duty to communicate and the existence and extent of a corresponding interest in receiving the communication.

The duty-interest paradigm works reasonably well for communications from one person to another about a ‘private’ matter. It works increasingly less well as the duty and interest each becomes more generalized – e.g. in communications by a person through the media, or by the media itself, to the general public.

The courts have struggled to fit communication on ‘public’ matters within the duty-interest paradigm. One major difficulty has been the requirement of a corresponding interest in the audience, which ex facie precludes publication to the world (see Douglas v Tucker and other cases discussed by the Court of Appeal in Cusson). Various fictions have been devised to get around that requirement, including recognizing occasions where the media had a moral or social obligation to communicate a story, in the public interest (see Grenier v Southam Inc., [1997] O.J. 2193).

The “responsible journalism” test – Reynolds and Jameel
In Reynolds, the House of Lords attempted to get back to the heart of the matter, creating what has become known as the “responsible journalism” test.

The lead judgment in Reynolds was given by Lord Nicholls of Birkenhead. That judgment is best known for its non-exhaustive list of ten factors on the basis of which responsible journalism could be tested. They are too well-known to need repeating here.

But more fundamentally, Lord Nicholls said the question really came down to whether “the publication of particular material was privileged because of its value to the public.”

In cases following Reynolds, there have been mixed results, due to mechanical application by the courts of the ten factors as if they were ten hurdles for the media to get over, rather than reasoning from the first principles set out in Lord Nicholls’s judgment. Hence Jameel.

Two of the law lords in Jameel (Lords Bingham and Hope) saw the “responsible journalism” defence in Reynolds as preserving the duty-interest paradigm, albeit in a different form.

Lord Hoffman and Baroness Hale saw “responsible journalism” as a different jurisprudential creature altogether. For them, the primary question was not the existence of an occasion of privilege or reciprocal duty and interest but whether the subject matter of the article was a matter sufficiently in the public interest. Lord Hoffman wrote as follows at para. 48:

[The Reynolds defence] was developed from the traditional form of privilege by a generalization that in matters of public interest there can be said to be a professional duty on the part of journalists to impart the information and an interest in the public in receiving it. …[That] should be regarded as a proposition of law and not decided each time as a question of fact. If the publication is in the public interest, the duty and interest are taken to exist.

Parenthetically, the difference may be that Lord Hoffman and Baroness Hale apparently read Lord Nicholls’s statement of principle in Reynolds, quoted above, as referring to the value of the subject matter, while Lords Bingham and Hope considered it referred to the value of its publication.

Lord Scott was the fifth law lord on the panel in Jameel. His Lordship specifically did not accept that the Reynolds privilege was a “different jurisprudential creature”. He said several times in various ways that Reynolds was not supplanting the need for duty and interest, but “supplementing that touchstone in order to provide the protection of qualified privilege, where the circumstances warranted that protection, to statements published to the world at large”.

Yet, in his closing words, Lord Scott wrote the following:

Having had the advantage of reading the respective opinions of my noble and learned friends on the qualified privilege point I am unable to discern any real differences in principle. If, however, there are any, I want to express my full agreement with the reasons given by my noble and learned friend Lord Hoffman.

In light of the rest of Lord Scott’s reasoning, those closing words are quite baffling. Is there a requirement to establish an occasion of qualified privilege and reciprocal duty and interest, or not? Or is it really a distinction without a difference – as the Ontario Court of Appeal apparently found? (see Cusson at paras. 101 and 143; and Grant at para. 37).

The abolition of malice
One important difference is this. Proof of an occasion of privilege, and of a duty to publish and reciprocal interest to hear, properly still creates a context, in media cases, for considering the possibility of publication with malice.

Malice is the gist of the tort of defamation. A defamatory statement is presumed to be malicious. That presumption is rebutted by establishing an occasion of qualified privilege. However, under the traditional defence, it remains open to the plaintiff to prove in the end that malice was present after all.

Evidence proving “responsible journalism” may answer most of the potential incidents of malice – for example, whether there was knowing falsity or reckless disregard for truth (Lord Nicholls’s list, numbers 3, 4, 5, 7, 8), unduly violent or intemperate language (number 9), or whether an attack was impertinent and unnecessary to the occasion (numbers 2, 6 and 10).

Indeed, some commentators have considered that proof of “responsible journalism” does away altogether with the need to consider the factual and legal complications of malice (Loutchansky v Times Newspapers Ltd. (Nos. 2-5), [2002] 2 W.L.R. 640 (C.A.); see Brown, The Law of Defamation in Canada (2d) (Carswell Looseleaf) p. 16-15 and 16-68, footnote 296).

The abolition of the need and right to prove malice comes to fruition in the different jurisprudential creature formulated by Lord Hoffman.

However, in Lord Hoffman’s formulation, the ability to catch malice under the rubric of “responsible journalism” depends very much on how broadly or narrowly the various factors are drawn in any particular case, and how they are weighed against each other.

Further, as Lord Hope observed in Reynolds at 235-236, “… it does not follow that the circumstances which will be relevant at the [malice] stage of the inquiry will be the same as those which were relevant to the question whether the occasion was privileged. On the contrary, they are likely to be different, as the question which must be answered is a different question.”

Finally, and most important, there is at least one aspect of malice which is not covered at all by the “responsible journalism” factors – namely, whether the primary or predominant motive for publication was consistent with the reason why the law recognizes a privilege for publication (“improper purpose” malice) (see See Horrocks v Lowe, [1972] 1 W.L.R. 1625 (C.A.) aff’d. [1975] A.C. 135 (H.L.).

Improper-purpose malice asks a different question from those which comprise the “responsible journalism” defence – one which a plaintiff should be able to ask and have answered. Under the duty element of the defence of qualified privilege as applied in Reynolds, it is presumed that the media would not publish for a collateral motive – whether for commercial gain, political advantage (see Bennett v Stupich (1981), 30 B.C.L.R. 57 (S.C.), or as part of an ongoing public feud. But that presumption properly remains open to challenge by the plaintiff if the circumstances of the particular case warrant it.

If the duty element is assumed automatically, as in the Hoffman/Hale formulation of media privilege, the opportunity to test the presumption of no collateral motive is lost.

Conclusion
In abolishing the opportunity to prove malice after all, the Hoffman/Hale formulation fails to provide adequate protection for reputation in modern Canada, and that is why the Ontario Court of Appeal erred in accepting that formulation as the common law of Canada.

Recognizing privilege without considering (as Justice Abella said) who is publishing or why, is the fatal flaw in Lord Hoffman’s formulation of modern media privilege.

In Reynolds(at 205), Lord Nicholls referred to the media’s role as both watchdogs and bloodhounds. However, the law of media privilege is also appropriately concerned about a different kind of dog – bred and kept for bull- or bear-baiting, to appeal to the baser aspects of the audience’s nature. “Journalists” of that ilk, even if they do their homework, should not be immunized from liability if that was the predominant purpose for the story. The Canadian common law of defamation properly preserves the opportunity of plaintiffs to hold accountable any persons who publish for such reasons.

The number of cases filed increased in 2007 by over a hundred when compared with 2006. This is the greatest volume since 2001.

This jump was driven by far more applications for leave filed when compared to previous years. As the following chart illustrates, the number of applications for leave has been unpredictable over the past ten years.

Despite seeing an increase in the number of applications for leave, the SCC actually heard fewer cases in 2007 than any other year in the previous ten years. Hearings dropped sharply from 80 in 2006 to 53 in 2007 – no longer hovering around the one hundred mark which was typical in the late 1990s.

The stats also show that the SCC is taking longer to issue judgments. The average time lapse between hearing a case and issuing a judgment has steadily increased since 2004. The current time lapse of 6.6 months is far longer than the 2.8 months it took the court to issue a judgment in 1997 and 1998. What is perplexing is that the SCC also heard far more cases in 1997 (104) and 1998 (106), making for a far more busy court in the late nineties. However, when looked at in the context of the past ten years, the statistics for 1997 and 1998 are likely more of an anomaly than the present average time lapse between the hearing and the issuing of the judgment.

Perhaps the most interesting statistic revealed in 2007 is the increase in the percentage of split judgments issued by the SCC.

While the number of split judgments is not necessarily striking, when looked at as a percentage of the total number of judgments issued, the stats show that the SCC was far more divided in 2007 than previous years.

This is further illustrated by the following chart, which shows the deep drop in the percentage of unanimous judgments.

That being said, it may be too premature to conclude that the SCC is more divided. There are still about 30 appeals standing for judgment. The results of those judgments may continue to show a divided court, but they also have the potential bring the percentage of unanimous judgments more in line with those seen in previous years.

Conclusion

The statistics show that the SCC dealt with far more applications for leave in 2007 than most previous years. They also show that, in 2007, the SCC heard fewer cases and took longer to decide them than any other year in the last decade. Perhaps more striking, the numbers also showed a court which is less unified than previous years – though, we will have to wait for the remainder of the 2007 data to be collected before coming to a final conclusion.

The following criminal cases were all appealed from unanimous panels at the provincial level, and therefore were all required to seek leave:

1. Michael Seifert v. Attorney General of Canada on behalf of the Republic of Italy, et al. (B.C.) (Criminal) (By Leave) (32155)
2. Saliendra Nayaran v. Attorney General of Canada on behalf of the United States of America (B.C.) (Criminal) (By Leave) (32251)
3. Ranjit Singh Cheema v. Attorney General of Canada on behalf of the United States of America (B.C.) (Criminal) (By Leave) (32131)
4. Lloyd Kirlew v. Her Majesty the Queen (Ont.) (Crim.) (By Leave) (32315)
5. Milos Peric v. Her Majesty the Queen (Ont.) (Crim.) (By Leave) (32124)
6. Guy Hovington c. Sa Majesté la Reine (Qc) (Crim.) (Autorisation) (32263)
7. Hugues Ré c. Sa Majesté la Reine (Qc) (Crim.) (Autorisation) (32264)
8. Denis Turgeon c. Sa Majesté la Reine (Qc) (Crim.) (Autorisation) (32265)
9. Pierre Bégin c. Sa Majesté la Reine (Qc) (Crim.) (Autorisation) (32266)
10. Stéphane Sirois c. Sa Majesté la Reine et autre (Qc) (Criminelle) (Autorisation) (32267)

The following sixteen civil appeals were also all dismissed, with costs:

1. City Sand and Gravel Limited, et al. v. Her Majesty the Queen in Right of Newfoundland, as represented by The Honourable Minister of Municipal and Provincial Affairs (N.L.) (Civil) (By Leave) (32302)
2. James Robert Harnum, et al. v. Charles Green (N.L.) (Civil) (By Leave) (32334)
3. Rick Garry v. Her Majesty the Queen in Right of Canada, et al. (Alta.) (Civil) (By Leave) (32344)
4. Anchor Pointe Energy Ltd. v. Her Majesty the Queen (F.C.) (Civil) (By Leave) (32157)
5. Henri Bédirian c. Procureur général du Canada (C.F.) (Civile) (Autorisation) (32170)
6. Connor Seatle, an infant, by his Guardian ad Litem Lisa Michelle Farley, et al. v. Allison Purvis (B.C.) (Civil) (By Leave) (32246)
7. Paraskovia V. Ravnyshyn v. Igor Drys, et al. (B.C.) (Civil) (By Leave) (32277)
8. Rémy Vincent c. Conseil de la Nation Huronne Wendake (Qc) (Civil) (By Leave) (32314)
9. Bruno Riendeau c. Ville de Québec (Qc) (Civile) (Autorisation) (32178)
10. Ameron International Corporation, et al. v. Sable Offshore Energy Inc., et al. (N.S.) (Civil) (By Leave) (32212)
11. Ranbaxy Laboratories Limited v. Pfizer Canada Inc., et al. (F.C.) (Civil) (By Leave) (32245)
12. Joseph Patrick Authorson, by his Litigation Administrator, Peter Mountney and by his Litigation Guardian, Lenore Majoros v. Attorney General of Canada (Ont.) (Civil) (By Leave) (32262)
13. Conceicao Farms Inc., et al. v. Zeneca Corp., c.o.b. Zeneca Agro, et al. (Ont.) (Civil) (By Leave) (32274)
14. Olive Hospitality Inc., et al. v. Tae Soo Woo (B.C.) (Civil) (By Leave) (32283)
15. Yin Hsing Wen Yang v. Mason Loh, et al. (B.C.) (Civil) (By Leave) (32289)
16. K. Walter Moore v. New Brunswick Real Estate Association (N.B.) (Civil) (By Leave) (32291)

During the open Q&A session following Justice Rothstein’s presentation at our faculty in September, I asked him where the Supreme Court of Canada needed to do better. He … pointed at the recent trend towards unanimity at the Supreme Court. The push for unanimity, he seemed to suggest, comes at the expense of debates that simply need to occur in some cases. Moreover, he also stated his concern that unanimity is achieved by trying to accommodate too many diverse opinions within a single pronouncement, making a clear, pithy statement of law more difficult to achieve.

It is unclear whether Justice Rothstein’s first point, that the desire for unanimity stands in the way of much-needed debate, refers to the public debate contained in multiple judgments or to backroom debates between the justices. If it is the latter, this information would come as a bit of a surprise to me. I would have thought that with nine, clearly strong-willed and opinionated individuals, there would be no lack of heated discussions in the private chambers of the SCC, regardless of any unified front presented to the public in a unanimous decision.

Justice Rothstein’s second point also provides interesting insights into the process by which the SCC reaches decisions. It appears unanimous or majority judgments are often the result of compromise between justices, an attempt to incorporate their differing views into a single document. There is much to be said for Justice Rothstein’s concerns. Instead of a clearly written and internally coherent statement of the law by a single author, there is the danger of a patchwork Frankenstein-like monstrosity. Such a judgment would fail to provide clear guidance to lower court judges and practitioners (or law students for that matter).

Further, I believe most people have no problems with having to read one or two strong dissenting or concurring judgments along with the majority judgment. However, when a SCC decision is divided into too many judgments, particularly where different ones offer the majority opinion on different issues, trying to piece together the “law” may prove to be an even greater challenge than a unanimous judgment that lacks coherence.

It will be interesting to see how the current SCC justices deal with these tensions in its ongoing work of providing clarity and guidance on the laws of this country.

R. v. Grover

In a brief three paragraph decision, the unanimous SCC reinstated Mr. Grover’s conviction for attempted obstruction of justice. Mr. Grover had tampered with fire inspection records after a property he owned and managed had a serious fire. Mr. Grover exercised his right to testify at trial. His explanations of the false records and his knowledge of their falsification were rejected by the trial judge. Mr. Grover also stated that he visited several tenants who suffered injuries during the fire, and did so for solely compassionate reasons. One of the tenants testified that, on the contrary, she was asked to sign a document indicating that all of the fire inspections had occurred. On this evidence, he was convicted.

On appeal, the Saskatchewan Court of Appeal overturned the conviction, arguing that Mr. Grover may not have known of the various fire inspection requirements, and wanted his tenant to sign the form merely to maintain perfect records for the inevitable inspection following the fire. On that basis, the Court of Appeal ruled (in heavy jargon) that a properly instructed jury, acting judiciously, could not reasonably have rendered a conviction.

The SCC ruled quite forcefully that, after having considered the theory advanced by the defence and the testimony of the accused (which flatly contradicted the theory advanced by the Court of Appeal), the finder of fact’s conclusions are to be respected. It is not open to an appellate court to substitute its own theory of events in place of those found by the trial judge. In this case the finder of fact properly considered all the relevant evidence, and therefore the conviction was restored.

ABB Inc. v. Domtar Inc.

At 121 paragraphs, this case is considerably more complicated than the other released today. However, the reader will have to bear with my somewhat incomplete summary of the case. Only the headnote is currently available in English; the judgment itself is so far only available in French.

The facts of the case are relatively straightforward: Domtar purchased a defective boiler from ABB Inc. for approximately $13 million dollars. After the boiler’s defects became apparent, Domtar sued ABB Inc. for $13 million, sued ABB Inc.’s insurer Chubb, and sued its own insurers, Lloyd’s and Arkwright. Before trial, Lloyd’s settled for $1.5 million.

At trial, the Quebec Superior Court rejected the latent defect claim, but found for Domtar on the duty to inform claim; the court ruled that ABB must pay the $13 million, but that Lloyd’s payment ought to be deducted from the sum as they had been subrogated to Domtar’s rights after the settlement. Chubb only insured ABB Inc. against latent defects, so the claim against it was dismissed.

The Court of Appeal and the SCC largely agreed, so I will only summarize the SCC’s ruling.

Under the Civil Code of Quebec, there is an onerous duty imposed on sellers to provide products free from latent defects. The manufacturer is presumed to be the consummate expert with respect to its own products. Therefore, products supplied with latent defects are not subject to the usual limitations on liability. In order for the buyer to prove that a product has a latent defect, he/she must prove four things:

1. it must be latent
2. it must be sufficiently serious
3. it must have existed at the time of the sale; and
4. it must have been unknown to the buyer

The SCC determined that all of these elements were made out by Domtar. The SCC defined the second element as follows: “A defect will be considered to be serious if it renders the good unfit for its intended use or so diminishes its usefulness that the buyer would not have bought it at the price paid.” The SCC further clarified that, though Domtar was a sophisticated buyer and was in fact aided by an expert, that does not excuse ABB Inc. from failing to make known a latent defect to the buyer. Things would have been different, of course, if Domtar had in fact been aware of the defect; it would not have been “latent” in such a case.

After establishing each of the above conditions, the SCC discussed the defences available to ABB Inc. ABB Inc. had argued that it had acted in the utmost good faith throughout the sale process, and that it was ignorant of the defect. The SCC rejected such a low threshold:

The manufacturer must show that it did not know about the defect and that its lack of knowledge was justified, that is, that it could not have discovered the defect even if it had taken every precaution that the buyer would be entitled to expect a reasonable seller to take in the same circumstances. To absolve a manufacturer from liability will be justified only if the manufacturer shows that it had full knowledge of the technology in its field at the time the good was designed and that the defect in question cannot be attributed to it.

Having established the much narrower claim of latent defect, the SCC did not go on to analyze the duty to inform claim. They said that, in any event, it was subsumed into the latent defect claim.

With respect to the army of insurers, the SCC changed the liability set out by the trial judge. Because Lloyd’s policy explicitly exempted latent defects, the SCC argued that the settlement could not have been in respect of latent defects. Therefore ABB Inc. was responsible for the full $13 million and Domtar received an apparent windfall of $1.5 million. Because Chubb insured ABB Inc. against latent defects, they were liable with ABB Inc. to pay Domtar its damages. Arkwright’s policy also exempted latent defects, so it was excluded from the web of payments altogether.

For those interested, the news release detailing the SCC’s rulings can be found here.

The Supreme Court’s brief summary of those cases can also be found here.

The SCC released 31 decisions by the end of June, putting it on pace to decide approximately 62 cases in 2007. This is slightly above the modest figure of 59 last year but still well below the average of 83 decisions per year in the past decade.

Of these decisions, four of them were styled “the Court”. One judgment was delivered orally by Chief Justice McLachlin. Justice Lebel was the most collaborative, co-writing five joint reasons for judgments. Justice Abella wrote the most judgments that did not have the support of the majority, writing three concurring reasons and three dissenting reasons. Neither Justice Charron nor Justice LeBel wrote a single dissenting judgment while Justice Fish was the only one who did not write a single majority judgment. Including concurring and dissenting judgments (with joint judgments counting as 0.5), Justices Bastarache and Abella wrote the most judgments with 7.5 each while Justice Fish was at the low end with 4.5.

In the first half of 2007, the SCC also granted leave to appeal in 44 cases while dismissing 260. This works out to a 14.5% conversion rate, which is slightly above the steady average of 13%. However, it is a vast increase over the 9% rate last year. It will be interesting to see if this increasing caseload results in a larger number of decisions in the future.

We will take another look at the figures at year’s end to see how they stack up.