COURT FILE NO.: 223/07
DATE: 20081219
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
kent, lederman AND swinton JJ.
B E T W E E N:
ONTARIO RACING COMMISSION
Applicant
- and -
PATRICK HUDON
Respondent
Brendan Van Niejenhuis, for the Applicant
J. Thomas Curry and Christopher E. Burkett, for the Respondent
HEARD at Toronto: November 25, 2008
SWINTON J.:
Overview
[1] The Director under the Racing Commission Act, 2000, S.O. 2000, c. 20 (the “Act”) brings this application for judicial review of a decision of a panel of the Ontario Racing Commission (the “Panel”) dated March 21, 2007, in which it found a statement made by the respondent Patrick Hudon inadmissible in a proceeding against him. Mr. Hudon is licensed by the Commission as an owner/driver/trainer/agent.
Statutory Framework
[2] The Ontario Racing Commission has a statutory mandate “to govern, direct, control and regulate horse racing in Ontario in any or all its forms” (Act, s. 5). It has a broad array of powers set out in s. 7 of the Act, and in exercising those powers and performing its duties, it must act in the public interest and “in accordance with the principles of honesty and integrity, and social responsibility” (s. 6).
[3] Section 9 of the Act creates the office of the Director, who heads the Administration of the Commission. He is granted the duty and power by statute to make licensing determinations, subject to a hearing before the Commission, on request.
Factual Background
[4] As part of an investigation into illegal drug use and distribution in the racing industry, members of the Ontario Provincial Police (“OPP”) and of the Commission’s Investigations Unit executed two search warrants at the residence and business address of Sandy DiFlorio, a person alleged to be distributing illegal drugs in the horse racing industry. The search and seizure resulted in criminal charges against Mr. DiFlorio, including allegations concerning the sale of Erythropeietin (“EPO”) and one of its brand name variants, Aranesp. EPO is a performance-enhancing drug prohibited from use in horse racing.
[5] During the searches of Mr. DiFlorio’s property, investigators seized several personal computers. Data retrieved by the OPP included text fragments reflecting the name “Pat Hudon” and made reference to numerous drugs, including Aranesp.
[6] As a result of this information, Detective-Sergeant Steve Schandlen asked to interview Mr. Hudon, when Mr. Hudon arrived for a race at Georgian Downs race track on November 14, 2006. Sergeant Schandlen is an OPP officer who is seconded to the Commission. He conducts both criminal investigations on behalf of the OPP and regulatory investigations as a Commission investigator.
[7] Although it was a race night, Mr. Hudon agreed to meet with Sergeant Schandlen. In the course of an interview, Mr. Hudon admitted he had purchased Aranesp from Mr. DiFlorio and used it on some of his racehorses. Sergeant Schandlen made notes of the interview on a statement form, which he read to Mr. Hudon. The latter agreed with the written statement, and he signed and initialled each page. Sergeant Schandlen provided a written report of his investigation, including the statement, to the Administration.
[8] On January 25, 2007, the Director exercised his powers pursuant to ss. 22 and 23 of the Act, ordering the immediate suspension of Mr. Hudon and issuing a Notice of Proposed Order to suspend Mr. Hudon’s licence for ten years and impose a penalty of $100,000.00.
[9] Mr. Hudon requested a hearing before a panel of the Commission. A hearing on the merits commenced on March 9, 2007. The Administration intended to rely on the written statement of Mr. Hudon, leading his counsel to object to its admissibility on the grounds that it was involuntary. On consent, a voir dire was conducted to determine the admissibility of the statement.
[10] Evidence on the voir dire was given by Sergeant Schandlen and Mr. Hudon. At the end of the evidence, the Panel asked for written submissions, asking counsel to address three issues not raised by them in oral submissions: the obligation to advise a licensee at the time of an interview of the potential peril he faces, the obligation to advise a licensee of his right to counsel, and the impact, if any, in the event that the licensee is misled on either the peril he faces or his right to counsel.
The Panel’s Ruling
[11] On March 21, 2007, the Panel rendered its oral decision, unanimously excluding the statement. The majority reasons make a number of findings of fact. The majority (the Vice Chair and one Commissioner) concluded that Mr. Hudon had been misled, given his cooperative conduct with Sergeant Schandlen (Reasons, pp. 6-7). The majority found that Mr. Hudon was unaware that he was under investigation, that he was in an adversarial position, or that he had any personal stake in the investigation. Acting on a misconception, he gave an incriminating statement.
[12] The majority went on to find that Mr. Hudon was deliberately misled or deceived. They found that Sergeant Schandlen deliberately gave no advance notice of the interview, and he did nothing to alert Mr. Hudon to the fact that he was in personal jeopardy (pp. 8-9). They observed,
He shaped the interview to induce the misconception that any jeopardy was exclusively DiFlorio’s and Hudon’s participation was solely as a provider of information to that investigation. (p. 9)
[13] Again, on p. 10, the majority stated,
Sergeant Schandlen did not expressly state that Mr. Hudon was not in trouble but he went to pains to induce that state of mind. He may as well have stated those words because the same result was achieved by the manner in which he framed the setting and conducted the interview. A significant feature supporting a finding of wilful deception and its effectiveness is the fact that Sergeant Schandlen introduced the reason for his attendance as relating to a criminal investigation of Sandy DiFlorio.
[14] Again on p. 11, the majority stated that Mr. Hudon’s misconception was induced:
To “deceive” is to deliberately mislead or to create a mistaken impression. Mr. Hudon was deceived. The error was neither failure to disclose investigative information nor failure to draw attention to any necessity for a lawyer. The issue was simply willful [sic] deceit.
[15] The majority then went on to speak of the Commission’s responsibility to act in the public interest and in accordance with principles of honesty, integrity and social responsibility. They concluded that there could be no place for deceit in the Commission’s operations (p. 15).
[16] The majority also stated that there would be a breach of the rules of natural justice if the statement were admitted, given the prominence of the undisclosed adversarial context and the significance of the unperceived consequence (at p. 20).
[17] Despite the earlier finding of wilful deceit, the majority went on to say that the record should disclose that there was no finding, nor suggestion, of knowing and wilful wrongdoing by Sergeant Schandlen.
[18] A third Commissioner gave minority reasons, in which she concluded that there had been no wilful attempt to deceive Mr. Hudon. In her view, a reasonable trainer would have realized that he could get into trouble as a result of a statement to an investigator inquiring about the use of illegal drugs. However, given that Mr. Hudon has difficulties communicating and given that he was facing the pressures of a race night, accommodation should have been given to him. Given the lack of accommodation, the statement should be excluded.
[19] As a result of the exclusion of the statement, the Administration decided to tender no further evidence. As a result, on the application of Mr. Hudon, unopposed by the Administration, the Panel set aside his suspension and the Proposed Order.
The Issue
[20] The issue in this application is whether the Panel’s decision to exclude the statement was unreasonable.
The Standard of Review
[21] The Court of Appeal has held that the applicable standard of review of Commission decisions is patent unreasonableness (McNamara v. Ontario (Racing Commission) (1998), 1998 7144 (ON CA), 164 D.L.R. (4th) 99 (Ont. C.A.) at para. 33). Given that Dunsmuir v. New Brunswick (2008), 2008 SCC 9, 291 D.L.R. (4th) 577 (S.C.C.) has collapsed the reasonableness and patent unreasonableness standards, the standard of review to be applied to the Commission’s decisions is now reasonableness.
Analysis
[22] The Director submits that s. 15(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (the “SPPA”) authorizes the reception of hearsay and other evidence, regardless of admissibility at common law, and the Panel erred, therefore, in rejecting the statement.
[23] The wording of s. 15(1) is permissive. It grants a tribunal the discretion to accept or reject evidence that is not admissible in a court. Depending on the circumstances, a tribunal may reasonably decide that evidence inadmissible at common law should not be admitted before it.
[24] In this case, the Panel did not exclude the statement on the basis of rules of evidence, such as the involuntariness of the statement. Rather, the majority exercised their discretion to exclude the statement on the basis that it had been obtained improperly. To admit it would undermine the Commission’s duty to act with integrity and breach the rules of natural justice.
[25] The majority reasons are not easy to follow. They clearly found the statement of Mr. Hudon to have been induced by wilful deceit, and that finding is key to their decision to exclude the statement. However, their overall reasoning process is not clear, as they also say that they are making no finding that Sergeant Schandlen knowingly and wilfully misled Mr. Hudon. Sergeant Schandlen was the only representative of the Commission to speak with Mr. Hudon and the only one who could have been responsible for any misleading conduct.
[26] In my view, the finding of wilful deceit by the majority is unreasonable, as it is not supported by the evidence before the Panel. As a result, there is no factual basis for the majority’s conclusion that the Commission acted without integrity in the conduct of the investigation.
[27] The majority inferred that Sergeant Schandlen must have induced a misconception that any jeopardy was exclusively Mr. DiFlorio’s and that Mr. Hudon was being questioned only for the purpose of providing information for that investigation. This was characterized as wilful deceit.
[28] The majority’s reasoning to support its finding of wilful deceit was based on its assumptions about Mr. Hudon’s likely behaviour had he fully and completely understood his peril. For example, his friendly and cooperative manner suggested he did not appreciate that the information provided might be used against him. However, there is no evidentiary basis to support the conclusion that Sergeant Schandlen deceived Mr. Hudon about his regulatory peril, although Mr. Hudon may well have been mistaken about his peril.
[29] Sergeant Schandlen testified that he had told Mr. Hudon that there were two purposes for the interview: one was for the purpose of obtaining information from him as a witness in the DiFlorio criminal investigation, and the second was for regulatory purposes (Transcript, p. 11). He explained to Mr. Hudon the obligation under the Rules of Standardbred Racing for licensees to provide a truthful statement to the Commission. Rule 6.27 of the Rules of Standardbred Racing provides that it is a violation for any participant, during an investigation, to knowingly withhold information or mislead investigators. Sergeant Schandlen also indicated that any statement would be turned over to the Commission to decide if further action should be taken. He was of the view that Mr. Hudon understood the circumstances. This evidence was not shaken in cross-examination (Transcript, pp. 22 and 29).
[30] In his evidence, Mr. Hudon recalled that Sergeant Schandlen had said he was investigating for the Commission (pp. 37, 39 and 40). In cross-examination, he admitted that he was aware of his obligation under Rule 6.27 to speak to Commission investigators. He also admitted that as of April 2006, he was aware of the Commission directive of April 19, 2006 indicating that there would be severe penalties for use of Aranesp.
[31] Thus, the clear evidence before the Commission was that Mr. Hudon was told Sergeant Schandlen was acting both in a criminal investigation and as a Commission investigator. Accordingly, there was no factual basis for the finding that Mr. Hudon was wilfully misled about the purpose of the investigation, and it was unreasonable to reject the statement on that basis. Sergeant Schandlen’s failure to “connect the dots” for Mr. Hudon does not support a finding of wilful deceit.
[32] Indeed, the majority’s reasons are inconsistent with respect to the finding of wilful deception. While there are findings that Mr. Hudon was wilfully misled and deceived, the majority also states that it makes no finding that Sergeant Schandlen knowingly and wilfully misled Mr. Hudon. As Sergeant Schandlen was the only person who spoke to Mr. Hudon, he could be the only one who deceived Mr. Hudon.
[33] Given the lack of evidence of wilful deceit, it was unreasonable to exclude the statement on the basis that the Commission must act with integrity or on the basis of natural justice. Mr. Hudon knew that Sergeant Schandlen was investigating a criminal matter and acting for the Commission. Mr. Hudon had an obligation, pursuant to Rule 6.27, to provide information during the course of an investigation, and he did so. The Panel made no finding that the statement was given involuntarily. Therefore, the decision of the Panel to exclude the statement was unreasonable.
[34] Both the majority and the minority were concerned about the facts surrounding the taking of the statement – for example, the lack of an audio recording and Mr. Hudon’s cognitive difficulties, which may have affected his understanding of what was happening.
[35] Although the statement is admissible, it is open to a Panel in a new hearing to take these or other circumstances into account when they determine the reliability of the statement and the appropriate weight to be given to it.
Conclusion
[36] The Panel, in excluding the statement, reached an unreasonable decision, and therefore, its decision of March 21, 2007 is quashed. The matter is remitted to the Commission for determination on the merits. As agreed by the parties, costs to the Commission, as the successful party, are fixed at $3,500.00.
Swinton J.
Kent J.
Lederman J.
Released: December , 2008
COURT FILE NO.: 223/07
DATE: 20081219
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
KENT, LEDERMAN AND SWINTON JJ.
B E T W E E N:
ONTARIO RACING COMMISSION
Applicant
- and -
PATRICK HUDON
Respondent
REASONS FOR JUDGMENT
SWINTON J.
Released: December 19, 2008