Executive summary: key legal and evidentiary issues

• Alberta's rejection of the 2021 Judicial Compensation Commission's recommended 16.95% cumulative salary increase in favor of a 9.29% increase failed the three-stage Bodner review for rationality

• Four of Alberta's five reasons for departing from the commission's recommendations were found to lack legitimacy or a reasonable factual foundation under the first two stages of the Bodner test

• The government's Response mischaracterized the commission's reasoning, impermissibly reiterated arguments already addressed by the commission, and raised new arguments not presented during hearings

• Alberta's substituted salaries closely mirrored general public sector wage settlements, suggesting a failure to recognize the distinctive nature of the judicial office as constitutionally required

• A historical pattern emerged in which the Alberta government has never successfully defended a rejection of commission recommendations on judicial review

• The Court set aside the government's Order in Council and referred the matter back for reconsideration within 120 days, declining to order direct implementation of the commission's recommendations

Background and establishment of the 2021 judicial compensation commission

In 2021, the Province of Alberta convened a judicial compensation commission (the 2021 JCC) to determine appropriate salaries for provincially appointed Justices and Applications Judges for the period of April 1, 2021, to March 31, 2025. The commission was established under the Provincial Court Judges and Applications Judges 2021 Compensation Commission Regulation, pursuant to the Judicature Act. Its guiding principles included the need for an independent, objective and effective process, recommendations dictated by the public interest, and the constitutional guarantee of judicial independence.

The commission's salary recommendations and Alberta's rejection

The 2021 JCC submitted its report on July 5, 2023, recommending cumulative salary increases of 16.95% over four years, escalating from $328,500 in 2021 to $372,500 in 2024. However, on October 26, 2023, the Lieutenant Governor in Council passed Order in Council 182/2023, rejecting these recommendations and implementing a lower cumulative increase of 9.29%, ranging from $321,685 in 2021 to $348,102 in 2024. Alberta's Response provided five reasons for its departure, centering on public sector fiscal restraint, cost of living analysis, the impact of economic change on Albertans' average income, the pandemic and recovery years, and perceived flaws in the Average Weekly Earnings (AWE) indexing used for federal judicial salaries.

The governing legal framework: the Bodner test

The application was governed by the Bodner test, a unique form of judicial review rooted in the constitutional guarantee of judicial independence. This test, established by the Supreme Court of Canada, requires a three-stage analysis: first, whether the government articulated legitimate reasons for departing from the commission's recommendations; second, whether those reasons rely on a reasonable factual foundation; and third, viewed globally, whether the commission process was respected and its purposes of preserving judicial independence and depoliticizing judicial remuneration were achieved. Justice Lee adopted the rationality standard as articulated in an earlier Alberta decision, the Ross Decision, describing it as "both deferential and robust."

Analysis of Alberta's five reasons for departure

The Court found that Reason A, concerning public sector compensation, did not pass the first two stages of the Bodner test. Alberta had changed its position from what it advanced before the commission and raised new historical comparison arguments for the first time in its Response. The 2021 JCC had in fact recognized a government policy of significant fiscal restraint and accounted for it by concluding that this criterion did not support a salary increase.

Reason B, addressing cost of living, also failed the test. Alberta adopted a prior year CPI indexing approach that it had not advocated during the commission hearings and effectively treated CPI increases as a judicial salary cap, placing determinative weight on one criterion and ignoring the obligation to consider all legislated factors. The Court noted that the recommended salaries only exceeded cumulative CPI by roughly 1%.

Reason C, regarding the impact of economic change on Albertans' average income, similarly failed. Alberta focused narrowly on the Fixed Weighted Index of average hourly earnings (FWI), mischaracterizing the commission's broader reliance on multiple economic indicators including wage and salary growth and household disposable income. The commission had not adopted FWI as the sole price of labour metric, and Alberta's Response did not meaningfully engage with the extensive economic analysis in the commission's report.

Reason D, concerning pandemic and recovery years, was found to have both legitimate and illegitimate aspects. The Court accepted that Alberta was justified in placing heavier emphasis on the economic consequences of the pandemic for 2021 and 2022. However, Reason D's assertion that the commission's analysis was exclusively forward-looking mischaracterized its reasoning, and its selective reliance on only two of six legislated economic indicators did not constitute a reasonable factual foundation.

Reason E, challenging AWE indexing and the federal-provincial salary comparison, failed the test entirely. It impermissibly reiterated arguments that the commission had already addressed, and it failed to meaningfully engage with the commission's additional reasons for maintaining a closer gap between federal and provincial salaries, including the significant overlap in judicial roles and the need to attract qualified candidates.

The global view analysis and systemic concerns

Under the third stage of the Bodner test, the Court conducted a global assessment and found that Alberta's Response demonstrated disrespect for the commission process. The Response consistently compared judicial salaries to those of average Albertans and public sector employees without recognizing the distinctive constitutional nature of the judicial office. Strikingly, the implemented judicial salary percentage increases were almost identical to the weighted average annual change in Alberta wage settlements, raising the concern that the substituted salaries were predetermined by what other Albertans received rather than by meaningful engagement with the commission's analysis.

The Court also found it significant that every prior rejection of commission recommendations by the Alberta government had been overturned on judicial review. However, the Court concluded that Alberta had not engaged in impermissible delay, as the legislated timelines were met, and its public interest framework was not inherently improper, as fiscal considerations are a legitimate component of the broadly understood public interest.

The ruling and remedy

Justice Donald Lee concluded that Alberta's Response failed all three stages of the Bodner review. Order in Council 182/2023 was set aside, and the 2021 JCC Report was referred back to the Lieutenant Governor in Council for reconsideration within 120 days, pursuant to section 5.9 of the 2021 JCC Regulation. The Court declined to order direct implementation of the commission's salary recommendations, finding no evidence of bad faith or impermissible delay sufficient to warrant such an exceptional remedy. The Court also declined to rule on the constitutional validity of section 5.9, which restricts the Court from ordering implementation, determining that the issue could be resolved on non-constitutional grounds. The successful party was the Alberta Provincial Justices' Association, though no specific monetary amount was awarded, as the matter was referred back for reconsideration rather than implementation of a defined salary figure.