The main question in dispute in the reference on judges' salaries (1997) concerned the financial security of judges of provincial courts. In this case the governments of Prince Edward Island, Manitoba and Alberta had reduced the salaries of their provincial court judges without prior consultation. Chief Justice Lamer held that "The principle of judicial independence is an unwritten norm recognized and affirmed by the preamble of the Constitution Act, 1867." The source of this principle is traceable to the Act of Settlement of 1701. According to Judge Lamer, who spoke for the majority, subsection 11(d) of the Canadian Charter of Rights and Freedoms affirmed the existence of the general principle of judicial independence. Article 92(14) of the Constitution Act, 1867, in addition, included an implicit limitation: the provinces could not undermine the principle of judicial independence.
The principle of judicial independence included the irremovability of judges, the financial security of judges and the administrative independence of judges, as provided in the Valente case. It is necessary to consider individual independence and the collective or institutional dimension of the financial security of judges. The Valente case did not settle the question of whether financial security included a collective dimension. That was the problem to be resolved in this case. According to the majority, provincial courts were entitled to institutional independence. The independence of the judges is a consequence of the separation of powers which in itself comprises an objective guarantee of such independence. Three principles follow from this proposition:
1). the salaries of judges can be reduced, raised or frozen, but not without resort to an independent, effective and objective commission;
2). negotiations on judges' salaries are prohibited between the judiciary on the one hand and the executive and legislature on the other;
3). judicial salaries cannot be lowered beyond a minimum threshold.
Mr. Justice La Forest dissented. He did not rely on the preamble to the Constitution and instead referred to Articles 96 to 100 of the Constitution and to subsection 11(d) of the Charter and to Article 52 of the Constitution Act, 1982, and to general principles of interpretation. He concluded that there was no violation of subsection 11(d) of the Charter.