TORONTO - A long-running judicial inquiry sparked by allegations of a pedophile ring in eastern Ontario was stunned to learn the provincial government had decided to pull the plug on the hearings, which have cost taxpayers close to $40 million, sources say.

The commission had planned to report sometime in the fall of 2009 but in a decree issued Sept. 24, cabinet ordered the commission to report by June 1.

"That was not a doable task as far as this commission was concerned," said Peter Engelmann, lead lawyer for the inquiry.

A source, speaking on condition of anonymity, said the government's patience was wearing thin.

"We're careful to respect the independence of the inquiry process (but) it's time to move forward," the government source said.

"They've had a great deal of time."

The cabinet order blindsided inquiry officials, who suddenly found themselves scrambling but without any real power to change the decision.

"Sometimes ultimatums are done deals," a source said.

"You can have a dialogue and you might get changes but it's more than an ultimatum."

The order also specified the hearings wrap up by Dec. 31 -- effectively Dec. 19 because of the holiday season.

That deadline would have wiped out testimony from the Ministry of the Attorney General slated for January, possibly creating the perception of government meddling, another source said.

The government relented somewhat after almost two weeks of discussions.

A new cabinet order, issued last week, now demands the hearings wrap up by Jan. 31 with the final report be delivered July 31.

The Liberal government set up the commission under Ontario Superior Court Justice Normand Glaude in April 2005 to probe how public institutions responded to longstanding allegations of sexual abuse in Cornwall, Ont.

It did not specify an end date.

Among them more sensational allegations made was that a pedophile ring had operated in the area, but a provincial police investigation found no evidence of a ring.

The cost of the inquiry is fast approaching $40 million -- more than $21 million spent directly by the commission itself -- more than four times the cost of the tainted-water inquiry in Walkerton, Ont., or the recent probe of child forensic pathology.

It's also substantially higher than the Ipperwash inquiry into to the death of aboriginal Dudley George, which cost about $26 million.

"It has been a long process. The costs will speak for themselves," said Attorney General Chris Bentley.

"You ask for inquiries for a purpose. So I am anxious to get (the report) and to get on with it."

Engelmann defended both the cost and time the inquiry has taken, pointing out its sensitive and complex subject matter.

"This has been a contentious hearing," Engelmann said.

"We have a hugely and highly fractured community here. We've got conspiracy issues we're dealing with from both ends."

So far, the commission has heard from some 140 witnesses, sorted through 100,000 documents and looked at the seven-year police investigation into the allegations.

In addition, the hearings have run into 10 court challenges and faced a messy legal fight that ended up with former police officer Perry Dunlop -- a key witness -- jailed for seven months for refusing to testify.

Engelmann said one problem is that the inquiry's mandate was too fuzzy, although he did concede the commission should have focused more at the outset.

"Maybe there are people who think we've done too much but there are a lot of people who think we haven't done enough."