Ontario taxpayers are paying $4.3 million to settle legal fees in a salary cap case

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Ontario taxpayers have spent more than $4.3 million in legal fees after the province lost two court cases defending a salary cap law that was found unconstitutional, The Canadian Press has learned.

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Premier Doug Ford's government passed a law in 2019 known as Bill 124, which limits pay increases for broader public sector workers to one percent per year for three years. The provincial government claimed at the time that this was done to help eliminate the budget deficit.

The law sparked outrage among the 800,000 workers affected by the bill. Dozens of nurses, teachers and government officials took their grievances to the province's doorstep, sparking loud protests at Queen's Park.

Medical officials said the new law contributed to nursing shortages during the pandemic, when hospitals were overwhelmed. Education officials say the law also contributed to teacher shortages.

Trade unions representing workers affected by the bill took the province to court, calling it unconstitutional. The provincial government argued that the bill did not violate constitutional rights, saying the Canadian Charter of Rights and Freedoms only protected the negotiation process, not their outcome.

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In 2022, the Ontario Superior Court agreed with the workers and struck down the law. The voivodeship appealed against the verdict.

Although Ontario used in-house lawyers in the initial case, it hired an outside firm, Lenczner Slaght, to hear the appeal.

In a 2-1 decision earlier this year, the Court of Appeal struck down the law, saying it violated workers' rights under the Workers' Charter. The province accepted defeat and repealed the law in its entirety shortly thereafter. The court left it to the parties to pay the legal costs.

In June, The Canadian Press asked the Ministry of the Attorney General for a cost breakdown. A few months later, he shared this information.

The province settled with the 10 unions that sued them and agreed to pay them $3.45 million in legal fees, said ministry spokeswoman Keesha Seaton. The province also paid Lenczner Slaght $856,482 for legal services related to the appeal.

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The office of Internal Revenue Service President Caroline Mulroney defended the law and the subsequent legal battle.

“Act 124 was designed to take a fair, consistent and time-bound approach that would enable the government to protect jobs and frontline workers for years to come,” said Liz Tuomi, spokeswoman for Mulroney.

“The government continues to be open, transparent and accountable to Ontarians for every tax dollar spent, as evidenced by our seventh consecutive clean audit opinion issued by the auditor general in this year's public accounts.”

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Last month, Finance Minister Peter Bethlenfalvy, who introduced the bill while chairman of the Treasury House, said the bill was “absolutely not” a bad idea.

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“We ran again in 2022 and won a larger majority, so I'm very pleased that Ontarians have given us a vote of confidence in the way we run the economy and manage the fiscal path to sustainability,” he said.

So far, the province has paid $6.7 billion in retroactive pay increases to workers in the broader public sector after the repeal of the law.

Either way, taxpayers would be burdened with the cost of these increases, but additional legal costs are a waste of money, opposition party leaders say.

“It's outrageous and also wasteful. “I would say people deserve a government they can trust to spend their money on what's important to them,” said Marit Stiles, leader of the New Democrats' official opposition.

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“Doug Ford and his politicians treat government money like it's their money – it isn't, it belongs to the people.”

The government rightly warned the bill would be deemed unconstitutional, said Ontario Green Party Leader Mike Schreiner.

“I think it's a slap in the face to the people of this province that we have to foot the legal bill for the government's failure to recognize that wage caps are unconstitutional,” he said.

“I think it just shows how out of touch this government is with the needs of ordinary people that they would waste money on legal fees to support unconstitutional legislation.”

Ontario Liberal Party leader Bonnie Crombie agreed.

“It is unacceptable that Doug Ford spent millions of tax dollars to prevent teachers and nurses from receiving fair wages,” she said.

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