TORONTO (AP) _ Jim Egan and Jack Nesbit won a point Thursday when the Supreme Court ruled discrimination against gays is illegal. But they still lost their case with the court's refusal to award federal spousal pension benefits.

The court ruled that Canada's Charter of Rights prohibits discrimination against homosexuals. But it further ruled that gay couples are not eligible for the same pension benefits as married or common law couples.

``Yes, we lost the case,'' Egan said in a telephone interview from his home in Courtenay, British Columbia. ``But I would hardly describe it as a landslide victory for the opposition. The rejoicing in the camps of the philistines will be of short duration.''

Egan, 73, and Nesbit, 67, have been a couple since they met 1948, exchanging rings and living a life that in most ways mirrors traditional marriages. The pair went into business together, first in Toronto, then on the west coast.

When Egan retired and began to receive his pension in 1986 under Canada's Old Age Security Act, he applied for spousal benefits for Nesbit. He was refused on the grounds that the Act defines spouse as someone of the opposite sex.

Under the Act, spouses of Canadian pensioners can get up to $504 a month if they are aged 60-64 and the couple has an income below $15,170.

The Supreme Court ruled by a narrow 5-4 margin that the Charter of Rights prohibits discrimination based on sexual orientation even though it does not specifically say so.

Justice Peter Cory wrote, ``There can be no doubt that sexual orientation is indeed a ground of discrimination.''

But when it comes to pension benefits, the court ruled, also by a 5-4 margin, that limiting payments only to heterosexual couples is a justified infringement on homosexual rights to equality.

``The singling out of legally married and common law couples as the recipients of benefits necessarily excludes all sorts of other couples living together ...,'' wrote Justice Gerard La Forest. ``None of the couples excluded ... are capable of meeting the fundamental social objectives thereby sought to be promoted by Parliament.''

Giving hope to homosexual couples, however, was the court's determination that the definition of ``spouse'' in the Old Age Security Act does not mean ``Parliament has made this choice for all time.''

``History of the legislation shows an evolving expansion of the definition of the intended recipients of the benefits,'' La Forest said.

``There will be another case coming along ... and sooner or later we will win,'' said Egan. ``Our mistake was we apparently chose the wrong piece of legislation to challenge.''

Cynthia Petersen of Equality for Gays and Lesbians Everywhere, Canada's largest gay rights organization, acknowledged: ``We did ultimately lose the case.'' But she interpreted the ruling to mean ``that same sex couples are fairly novel and that the government should be provided the opportunity to incrementally change the laws.''

For Egan and Nesbit, the conclusion of the eight-year legal battle marks the end of a lifetime of gay activism. They'll be passing to torch to younger folks.

``I'm looking forward to getting back to the house, the garden and Jack and me together,'' he said.