COURT FILE NO.: 512/07

DATE: 20080418

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

SWINTON, LOW AND ECHLIN JJ.

B E T W E E N:

AUBREY FRIEDMAN

Applicant

• and -

ONTARIO RACING COMMISSION AND WOODBINE ENTERTAINMENT GROUP

Respondents

• and –

ONTARIO HARNESS HORSE ASSOCIATION AND WESTERN FAIR RACEWAY

Intervenors

Warren S. Rapoport and Ronald B. Moldaver, Q.C., for the Applicant

Luisa Ritacca and Brennagh Smith, for the Ontario Racing Commission

David P. McCutcheon and Angela Casey, for Woodbine Entertainment Group

HEARD at Toronto: April 11, 2008

SWINTON J.:

1Aubrey Friedman (the “applicant”) brought an application for judicial review of a decision of the Ontario Racing Commission (the “Commission”) dated September 19, 2007. The Commission dismissed his application for an order requiring the respondent Woodbine Entertainment Group (“WEG”) to continue to accept horses owned by him in races at its Woodbine and Mohawk racetracks.

Background

2The applicant is a professional engineer by profession. He is also the owner and co-owner of a number of standardbred and thoroughbred horses and holds a licence in good standing from the Commission.

3In April 2006, the Commission issued a notice to the industry warning of severe penalties for the administration of Erythropoetin (“EPO”), a non-therapeutic drug for horses that is normally used to treat persons diagnosed with HIV. The drug is being used illegally on race horses, as it increases the red blood cell count, thereby increasing the oxygen in the blood. This is thought to enhance the horse’s performance. However, it can have serious consequences for the health of the horse and is a tool of cheating.

4On May 19, 2006, the Commission issued a General Directive requiring all owners and trainers to make their horses available for blood samples at any time or place and without notice, for the purpose of determining the existence of any substance or drug with no therapeutic value to the horse. The Commission advised that the medication control program would focus on significant changes in performance of horses. Formerly, the tracking of blood and urine samples from horses had been race-related, taken before and after races.

5The applicant employed Todd Gray as a trainer for 17 of his horses. On June 12, 2006, Commission investigators found that three of these horses tested positive for EPO. As a result, Mr. Gray was immediately suspended as a trainer by the Commission in August 2006. In August 2007, following a Commission hearing, he was suspended for 10 years and fined $40,000.00.

6According to the evidence of Jamie Martin, Senior Vice-President of Racing at WEG, this was the first positive test for EPO in a racehorse in North America. On August 8, 2006, WEG suspended the racing privileges of the applicant and of a co-owner of some of his horses, Brian Nixon, at WEG’s racing facilities at Woodbine and Mohawk for an indefinite period.

7This suspension was confirmed in a letter dated September 1, 2006, which stated:

There is no place in horse racing for the use of prohibited drugs or substances with no therapeutic value to the horse. Those industry participants who use, condone, or support the use of these types of substances and/or drugs will not be permitted to participate in racing at WEG racetracks.

8Mr. Martin gave evidence before the Commission that the key factors in the decision were the “serious implications of the positive EPO test and [the applicant’s] long association with trainers who have received positive tests”.

9The effect of the suspension for the applicant was very serious. He is the owner of a substantial number of horses. In 2006, he and his partner were the second in wins and sixth in money on the WEG circuit. In 197 starts, they had 32 first place results and total purse money of $800,600.00.

10The applicant brought an application before the Commission asking it to assume jurisdiction and to hold a hearing to review the WEG suspension.

The Jurisdiction of the Commission

11WEG’s decision to suspend the applicant was made based on its private property and contract law rights and its right to do business with whom it chooses. Historically, the Commission had refused jurisdiction over matters involving the private law rights of racetracks. However, the Ontario Court of Appeal held in Ontario Harness Horse Association v. Ontario Racing Commission (2002), 2002 41981 (ON CA), 62 O.R. (3d) 44 (“Sudbury Downs”) that the Commission has the power and jurisdiction to interfere with private property rights of racetracks when its power to “govern” and “regulate” horse racing is engaged (at paras. 51 and 55).

12The Court of Appeal based this decision on a number of provisions of the Racing Commission Act, 2000, S.O. 2000, c. 20 (the “Act”). Section 5 provides that the objects of the Commission are “to govern, direct, control and regulate horse racing in Ontario in any or all of its forms”. Section 6 requires the Commission to exercise its powers and perform its duties “in the public interest and in accordance with the principles of honesty and integrity, and social responsibility”. More specifically, in s. 7(b), it has the power to govern, control and regulate the operation of racetracks.

13In Sudbury Downs, the Court of Appeal held that the Commission’s power to hold hearings found in s. 7(k) conferred a discretion whether to hold a hearing to decide whether the private legal rights of racetracks should be modified in the best interests of horse racing or the public interest (at para. 56).

The Decision of the Commission

14In this case, the Commission decided to assume jurisdiction and to hold a hearing to review WEG’s decision. It subsequently upheld WEG’s decision, stating that the “public interest is overwhelmingly on the side of the track having the right to take preventative measures in self-defense to protect its racing integrity” (Reasons, para. 91).

15In the course of its reasons, the Commission examined the applicant’s association with trainers who had had positive tests, the gravity of the EPO violations, two prior positive tests on his horses and his failure to take steps to protect against positive tests, including his lack of candour with respect to another positive test in the summer of 2006. It concluded (Reasons, at para. 93):

There is evidence of Mr. Friedman’s racing conduct clear, cogent and compelling that leads to the inescapable conclusion that WEG’s action was justified. The starting and the ending point is that by long-standing time-honoured private property right, WEG has the right to exclude Mr. Friedman racing nominations and entries [sic]. No basis exists upon which the ORC should modify those rights. Public interest considerations along with the Commission’s obligation of honesty, integrity and social responsibility, require that the ORC should not intervene on Mr. Friedman’s behalf. Forcing WEG to accept Mr. Friedman’s race entries would be a gross violation of the public interest.

The Standard of Review

16In this case, the Commission was exercising its discretion whether to interfere with WEG’s private property and contractual rights. Its decision is subject to review on a standard of reasonableness, given its expertise in racing matters and the nature of the decision, which required it to apply its own statute and to balance various interests in the racing industry and the broader public interest (Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] S.C.J. No. 9).

Analysis

17The applicant submits that the Commission erred in reaching its decision because he was not in breach of any rule of racing promulgated by the Commission or WEG. Neither the Commission’s rules nor those of WEG impose a responsibility on the owner solely because the trainer he employs has been found guilty of a drug infraction.

18Moreover, the ruling is said to be arbitrary, capricious and unfair. He argues that the Commission was unreasonable in holding him to a higher standard than WEG with respect to trainers, as WEG permits trainers who have been disciplined for positive test infractions to have access to its facilities after they have served their suspensions. Moreover, he argues, WEG and the Commission have unfairly found him guilty by association.

19Finally, the applicant submits that the Commission has abdicated its regulatory mandate to govern racing by upholding WEG’s property rights as the primary basis for its decision to permit the indefinite suspension

20In order to assess the applicant’s arguments, it is necessary to first consider the scope of the property and contractual rights upon which WEG relies. Any applicant for access rights to WEG’s premises must sign an application form, which includes the following two paragraphs near the top of the first page of the document:

I undertake and agree to use the access rights, if granted, for the limited purpose of such activities on WEG premises as may be permitted by WEG and, in the case of equine and related activities, to abide by the Rules and Regulations of WEG as amended from time to time.

I acknowledge and agree that WEG reserves the right to revoke the access rights, if granted, at any time in its sole and absolute discretion and without notice, reason or compensation.

21WEG has its own Standardbred Rule Book, as well as a number of policies. Rule 1.1 (a) and (b) is significant for purposes of this application. It reads:

(a) It is a privilege, not a right, to use the Premises and Race at the Racetracks. Any conduct determined by WEG, in its sole and absolute discretion, to be injurious to the sport of horse racing or not to be in the best interests of the sport of horse racing, may result in the imposition of a penalty in accordance with Section 7.1 of these Rules and Regulations.

(b) WEG RESERVES THE RIGHT UNDER THE TRESPASS TO PROPERTY ACT (ONTARIO) AT ANY TIME TO DENY ADMISSION TO ANY PART OR PARTS OF THE PREMISES TO AN APPLICANT OR ANY OF HIS AGENTS, SERVANTS, EMPLOYEES, INVITEES OR ANY PERSONS UNDER HIS CONTROL, IN THE SOLE AND ABSOLUTE DISCRETION OF WEG, WITHOUT ANY REASON OR CAUSE EXISTING OR BEING STATED OR GIVEN. Nothing in these Rules and Regulations shall in any way limit any other rights which WEG may have, whether at common law or in statute, including without limitation under the Occupiers’ Liability Act (Ontario) or the Trespass to Property Act (Ontario). (Original in bold type)

Rule 7.1, referred to in paragraph (a), provides for penalties, including suspension of privileges, loss of fees and/or eviction from WEG’s premises.

22When WEG suspended the applicant from racing at its tracks, it acted by reason of its trespass rights at common law and under the Trespass to Property Act, its rules and its contractual rights. The task for this Court, in this application for judicial review, is to determine whether the Commission acted reasonably in refusing to exercise its discretion to interfere with WEG’s decision.

23The Commission appears to have erred in stating the test to be applied in a case such as this. It correctly stated that the applicant bore the onus of proof. However, it erred in stating that the burden is higher than on a balance of probability (Reasons, para. 78). As the Ontario Court of Appeal stated in Stetler v. Ontario Flue-Cured Tobacco Growers’ Marketing Board (2005), 2005 24217 (ON CA), 76 O.R. (3d) 321, there are only two standards of proof: balance of probabilities and beyond a reasonable doubt. The Court stated (at para. 79):

There are only two standards of proof used in legal proceedings. In civil and administrative matters, absent an express statutory provision to the contrary, the standard of proof is on a balance of probabilities, while in criminal matters it is proof beyond a reasonable doubt. The well-established standard articulated in Bernstein and numerous subsequent cases is an evidential standard that speaks to the quality of evidence required to prove allegations of misconduct or incompetence against a professional. Thus, within the administrative context, it is accepted that strong and unequivocal evidence within the civil standard of proof is required where either the issues, or the consequences for the individual, are very serious. See for example, Brown & Evans, Judicial Review of Administrative Action in Canada, vol. 3, supra, at 12:3200; Blake, Administrative Law in Canada, supra, at 66-67.

24The Commission went on to state that the applicant must prove that “WEG acted absent clear, compelling and cogent reasons” (Reasons, para. 79). It then said that WEG must act reasonably and fairly, upon substantial and demonstrable grounds, and in a manner compatible with the best interests of racing. WEG’s decision must also be able to withstand a due process review (Reasons, para. 80).

25Again, the Commission has misstated the test that the applicant must satisfy. His burden was to prove, through clear and convincing evidence, that the Commission should intervene in the public interest and override WEG’s actions. The test was well-articulated in the Commission’s earlier decision ensuing from the Court of Appeal’s decision in Sudbury Downs:

In sum, we have concluded that the onus of proof in this case rests with the Applicants and in order to upset the decision of Sudbury, they must satisfy us on clear and convincing or cogent evidence that they should be permitted to return to race at Sudbury, that they will not be disruptive to racing at Sudbury and that Sudbury was exercising an unreasonable business decision in all of the circumstances in continuing to exclude them at this time. (Lamoureux et al. v. Ontario Racing Commission, November 8, 2002, #COM SB/22/2002 at p. 7)

26Although the Commission misstated the proper test, the test that was articulated appears to place a greater restriction on WEG's rights and impose a greater obligation on WEG than the earlier case law had suggested. The Lamoureux case focussed on the existence of a legitimate business reasons by the racetrack owner, rather than a compelling case or procedural fairness. Nevertheless, the imposition of a more rigorous test on WEG in this case has resulted in no injustice to the applicant, because the Commission found that WEG's action was justified using this test.

27The applicant correctly points out that he has not been found to have breached the Commission’s Rules of Standardbred Racing nor any specific WEG rule relating to drug use. In order to find a breach of the Commission’s rules, he would have had to have been involved in the administration of the prohibited drug, or he would have had to influence or conspire with another person to administer the substance (Rule 9.09).

28However, the Commission did not frame the issue before it in terms of whether a specific rule had been breached. Rather, it saw the issue before it as “his racing record and its consequences upon the public’s interest in a viable racing industry” (Reasons, para. 41). Thus, the Commission correctly held that its primary consideration must be the public interest and the best interests of the racing industry as a whole.

29The applicant also submits that the Commission erred in finding that WEG had authority to suspend the applicant’s access to its premises. I disagree. Pursuant to WEG’s Rule 1.1(a), it had a clear and absolute discretion to impose a penalty for conduct determined to be injurious to the sport of horse racing, while the access agreement gave it an absolute discretion to bar access to its premises. In addition, Rule 1.1(b) preserved its right to invoke the Trespass to Property Act.

30The Commission found that WEG had a legitimate business interest in controlling its racing product so as to protect the public perception of its racing integrity (Reasons, paras. 50 and 76). It noted that cheating and the perception of cheating can cause loss of confidence among the betting public (Reasons, paras. 47-48). Therefore, it concluded that WEG was entitled to take preventative measures to stop the use of non-therapeutic drugs, such as EPO (Reasons, para. 88, 90).

31The Commission also found that the suspension was a reasonable response in order to protect the reputation of WEG’s racing product (Reasons, para. 92). The Commission noted that there had been no explanation for the three positive tests for EPO on a single occasion, which they described as a “huge violation” (at para. 88) and a form of deliberate cheating (at para. 32). The trainer, Mr. Gray, did not testify, and his own disciplinary hearing proceeded on the basis of an agreed statement of facts.

32The Commission took note of the fact that WEG had met with Mr. Gray and the applicant in April 2005 to advise that all horses trained by Mr. Gray would have to run out of retention. This is a WEG policy requiring horses to be in a secure retention barn for a specified period prior to racing. The usual basis for implementing this policy is perception by WEG of inconsistent performance.

33The Commission also examined the evidence relating to the applicant’s past conduct in hiring trainers who had a history of positive tests. They pointed out, in particular, that two of his horses had had positive tests in the past. After trainer Jonathan Gangell served an 18 month suspension for a test administered to one of the applicant’s horses, the applicant rehired him. The Commission was concerned that the applicant gave no explanation acceptable to it for his history of hiring trainers with violations. It also expressed concern about the applicant’s lack of due diligence to protect against positive tests, as well as his efforts to distance himself from responsibility (Reasons, paras. 69 and 72).

34In reaching its decision, the Commission did not abdicate its regulatory mandate, as the applicant suggests. Indeed, in reaching its decision, the Commission considered the public interest, as it was required to do under s. 6 of the Act. It concluded that the property and business rights of WEG and the Commission’s obligation to protect the integrity of racing were on “all fours”, and that the “public interest is overwhelming on the side of the track having the right to take preventative measures in self-defense to protect its racing integrity” (Reasons, para. 91). That decision was a reasonable one, given the evidence before the Commission, and it is entitled to deference from this Court.

35The applicant submits that WEG’s decision to suspend him is arbitrary and capricious because WEG has permitted trainers to race again at its premises following the completion of their suspension. However, this submission ignores the fact that WEG has excluded some trainers and placed restrictions on other trainers based on their past record and lack of evidence of measures to prevent further violations (Robinson,COM SB 007/2004, p. 12; Elliott, COM SB 021/2005 at p. 9).

36The applicant also submits that the decision is unreasonable because the Commission failed to consider the indefinite duration of the suspension. However, the Commission did consider the issue of fairness to the applicant, which includes the indefinite suspension. It was clearly concerned about the applicant’s failure to show due diligence in selecting trainers in the past and by his efforts to distance himself from the wrongdoing of some of his trainers (see, for example, Reasons, paras. 69, 72 – 75). In the circumstances, it was open to the Commission to find that it should not intervene, despite the indefinite nature of the suspension, given the risk of further violations.

Conclusion

37The application for judicial review is dismissed. While WEG sought costs of $41,211.54, a fair and reasonable amount is $20,000.00 inclusive of disbursements and GST, given that this was not a particularly complex matter. Although the Commission sought costs of $14,000.00, the primary role in defending the decision was taken by WEG. Therefore, the costs of the Commission are fixed at $5,000.00 inclusive of disbursements and GST.

Swinton J.

Low J.

Echlin J.