Scott v. Ontario Racing Commission 2009 ODC mini 178

DIVISIONAL COURT FILE NO.: 07-DV-001344

DATE: 20090702

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CUNNINGHAM A.C.J.S.C.J., McCARTNEY R.S.J. and HAMBLY J.

B E T W E E N:

BRIAN SCOTT

William R. Hunter, for the Applicant

Applicant

• and -

ONTARIO RACING COMMISSION

Brendan Van Niejenhuis, Owen Rees for the Respondent

Respondent

HEARD: Thursday, October 9, 2008 at Ottawa

CUNNINGHAM A.C.J.S.CJ.

NATURE OF PROCEEDING

1The applicant seeks judicial review of the decision of the Ontario Racing Commission (“ORC” or “Commission”) dated August 1, 2007, upholding a proposal by the Director of the Commission to suspend his racing licences for ten years, effective December 11, 2006, and imposing a fine of $20,000.

2The Director’s proposal had arisen out of allegations that the applicant violated the ORC Rules of Standardbred Racing (“the Rules”) by distributing drugs for which he did not have a license and by acquiring, being in possession of, and administering a performance-enhancing drug, Aranesp (“EPO”) to a horse.

3A three-member panel of the ORC found that:

(a) reasonable grounds existed that, while the applicant carried out his licensed activities, he would not act in accordance with the law, or with integrity, honesty, or in the public interest, having regard to the past conduct of the applicant and,

(b) the applicant was carrying on activities that were or would be in contravention of the Act, and the rules or terms of the license;

(c) his conduct had impugned the integrity of the horse racing industry in Ontario; and

(d) the public interest required that his license be suspended.

4The applicant seeks:

(a) an order dismissing the charges against him;

(b) in the alternative,

(i) an order setting aside the ORC’s decision that his statement was admissible;

(ii) an order excluding the statement from evidence;

(iii) an order setting aside the ORC’s decision and requiring a new hearing with a new panel; and

(c) in the alternative,

(i) an order setting aside the ORC’s decision respecting sentencing; and

(ii) an order reducing his suspension to one year from the date of suspension with two year’s probation and a reduced fine of $2,000.

BACKGROUND

5The applicant has been a Standardbred owner, trainer, and driver for over ten years, and is licensed by the ORC.

6The applicant’s uncle underwent a kidney transplant in October 2005. Prior to receiving a transplant, his uncle received Erythropoietin, or Aranesp as part of his dialysis treatments. The evidence of the applicant, his father, and his uncle before the Commission was that the applicant arranged to have EPO provided to his uncle, at his request, after his transplant, as it had apparently benefited him prior to the operation. The applicant purchased EPO from an on-line supplier he had used previously to purchase supplements for his horses, Sandy DiFlorio. Seven shipments of EPO were made between November 2005 and March 2006. The applicant and his father testified before the Commission that the applicant was never in possession of the drug, as all deliveries were made to his father’s address.

7On April 18, 2006, a search warrant was executed at DiFlorio’s residence. Computer systems and documents were seized. On April 19, 2006, the Executive Director of the ORC issued a Notice to the Industry advising all licensees that severe penalties would be imposed on anyone found to have acquired, possessed, or administered EPO to a horse. On May 19, 2006, the Director of Racing issued a Notice to the Industry announcing a new directive requiring all owners and trainers to make their horses available for blood testing at any time without prior notice. The Notice indicated that the testing program would target horses exhibiting a significant change in performance.

8A Change of Performance Report was issued on July 14, 2006 for a horse owned and trained by the applicant, based on unusual inconsistency in its performance between races, suggesting the possibility of performance-enhancing drugs. As a result, two investigators, Investigator Moffat and Investigator Coleiro, attended at the applicant’s farm and took blood samples from three of the applicant’s horses. All of the resultant tests were negative.

9Investigator Moffat took a voluntary statement from the applicant, who admitted to having acquired EPO from DiFlorio for his uncle. He denied ever giving it to his horses.

10Investigator Coleiro asked the applicant if he would speak to a detective, the investigator’s ORC Supervisor, because the applicant’s name had come up in the ORC’s investigation of his supplier, DiFlorio. The applicant attended at the Kemptville OPP detachment office on August 22, 2008 to speak with the Supervisor, Det. Sgt. Schandlen.

11During the interview, the applicant admitted to purchasing EPO from DiFlorio and using it on one of his horses, “Arts Scooter”. His admission was taken down as a written statement. The parties have divergent views about the circumstances under which this statement was given. The applicant alleges he was coerced into a false confession to administering EPO to a horse by way of a threat by Det. Sgt. Schandlen that the applicant would be charged criminally for trafficking of EPO unless he admitted to administering it to a horse rather than to his uncle. The applicant maintains that he has never given EPO to a horse. The respondent maintains that Sgt. Schandlen merely cautioned the applicant that in admitting to giving EPO to a person, he was admitting to trafficking, which was a criminal offence (although it should be noted that distributing EPO to a person is not a criminal offence, but an offence under the Food and Drugs Act). The respondent argues that the warning was not a threat or inducement.

12On December 11, 2006 the Director of the ORC issued an order for immediate suspension of the applicant’s licenses and a proposed order to suspend them for a period of ten years pursuant to ss. 19, 21 and 22 of the Ontario Racing Commission Act, 2000, S.O. 2000, c. 20 (“the Act”), and notified the applicant of his intention to impose a fine of $100,000 dollars.

13A hearing was held before a panel of the ORC on June 11 and 12, 2007 at the applicant’s request. The panel concluded, on a voir dire to determine the admissibility of the applicant’s statement to Det. Sgt. Schandlen, that the statement was voluntary and not in violation of the applicant’s s. 7 Charter rights, and admitted it into evidence. The Commission found that there was no compulsion, either objective or subjective when the applicant gave his statement to the Detective. It found the applicant’s evidence in this regard to be neither credible nor reliable.

14The Commission found as a fact that the applicant purchased, received, and possessed EPO on several occasions between November 2005 and March 2006, and that on at least one occasion between November 16 and 22, 2005, he administered EPO to a race horse.

15The panel upheld the proposed order respecting the ten year suspension of the applicant’s license, but reduced the proposed fine of $100,000 to $20,000.

RELEVANT LEGISLATION

16Racing Commission Act, 2000, S.O. 2000, Chapter 20

5. The objects of the Commission are to govern, direct, control and regulate horse racing in Ontario in any or all of its forms. 2000, c. 20, s. 5.

6. (4) The Director may require information or material from any person who is the subject of the inquiries or investigations and may request information or material from any person who the Director has reason to believe can provide information or material relevant to the inquiries or investigations.

7. The Director shall refuse to issue a licence to an applicant or to renew the licence of an applicant if,

(a) there are reasonable grounds to believe that, while the applicant carries out activities for which the licence is required, the applicant will not act in accordance with law, or with integrity, honesty, or in the public interest, having regard to the past conduct of the applicant; or

(b) the applicant is carrying on activities that are, or will be, if the applicant is licensed, in contravention of this Act, the regulations, the rules or the terms of the licence.

17Statutory Powers Procedure Act, R.S.O. 1990, Chapter S.22

15.(1) Subject to subsections (2) and (3), a tribunal may admit as evidence at a hearing, whether or not given or proven under oath or affirmation or admissible as evidence in a court,

(a) any oral testimony; and

(b) any document or other thing,

relevant to the subject-matter of the proceeding and may act on such evidence, but the tribunal may exclude anything unduly repetitious.

(2) Nothing is admissible in evidence at a hearing,

(a) that would be inadmissible in a court by reason of any privilege under the law of evidence; or

(b) that is inadmissible by the statute under which the proceeding arises or any other statute.

(3) Nothing in subsection (1) overrides the provisions of any Act expressly limiting the extent to or purposes for which any oral testimony, documents or things may be admitted or used in evidence in any proceeding.

ISSUES

18The following are the key issues raised in this application:

(1) What is the appropriate standard of review for the ORC panel?

(2) Was it reasonable for the Commission to conclude that the statement was voluntary?

(3) Was the applicant’s statement to Det. Sgt. Schandlen properly admissible?

(4) Was the sentencing decision of the ORC panel appropriate?

PARTIES’ POSITIONS

Admissibility of the applicant’s statement

19The applicant submits that the Commission applied the incorrect standard of proof to the issue of the statement’s admissibility, and that, had the Commission applied the correct standard – the criminal standard of beyond a reasonable doubt – it would not have admitted the statement.

20The applicant maintains that the Commission should not have admitted his statement to Det. Sgt. Schandlen into evidence as it was involuntary and therefore in violation of the common law confession rule and his s. 7 Charter rights. The applicant argues that the following factors support a finding of involuntariness:

• the applicant was threatened with criminal charges if he did not change his story and promised immunity from prosecution if he changed his story;

• an adversarial relationship existed between the applicant and the investigators during the interview;

• the applicant was unaware he was being investigated because of misleading information that he was being interviewed only to aid investigation of his supplier, DiFlorio; and

• the applicant was not cautioned regarding his Charter or common law rights.

21The respondent submits that the statement was admissible before the Commission, as:

• section 15 of the SPPA permits the Commission to admit as evidence in a hearing any relevant testimony or documents, and displaces any common law rules of evidence;

• the common law confession rule only applies to criminal or quasi-criminal proceedings and therefore does not apply to Commission proceedings;

• the applicant was required to give a statement by s. 18(4) of the Act, and statements made under compulsion of statute are generally admissible, even in criminal proceedings;

• the statement was voluntary, as there was no inducement, oppressive conduct, or misleading misrepresentations; and

• the applicant’s s. 7 Charter rights are not implicated in the circumstances, and in any case the applicant did not raise a s. 7 breach before the Commission, and is therefore precluded from raising it on judicial review.

Reasonableness of the Sentencing Decision

22The applicant submits that the ORC exceeded its jurisdiction by failing to follow its own penalty guidelines, the ORC Guidelines for Penalties for Equine Drug and TCO2 Offences, which would have imposed a penalty of a one to five year suspension and a $5,000 fine in the applicant’s case. The ORC instead chose to impose a greater penalty in the interests of the health and well-being of the horse, the integrity of the industry and public confidence. Moreover, the penalty imposed is excessively harsh compared to penalties imposed in similar cases.

23The applicant further submits that the panel was incorrect in applying the severe penalties outlined in the Notice to the Industry of April 19, 2006 retroactively to the applicant’s case, and in relying on the applicant’s assertion of innocence as an aggravating factor in determining penalty.

24The respondent submits that the Commission is entitled to deference in applying its expertise in regulating the horse racing industry to arrive at an appropriate penalty. It was only after its analysis of the widespread problem of performance-enhancing drugs that the Commission decided that a new benchmark for drug-related penalties was needed and thus settled on a severe penalty. The Commission appropriately considered both aggravating and mitigating factors in assessing the penalty, but subordinated them to the overwhelming need to protect the industry from the rise of drug use. Moreover, it compared similar cases in reaching its conclusion as to penalty.

25The respondent further submits that the Notice to the Industry of April 19, 2006 is not relevant to deciding the sanction, since it did not set an upper limit on penalties to be imposed and because the Commission in any case had the pre-existing power to impose sanctions of its own choosing.

ANALYSIS

(1) What is the appropriate standard of review?

26The most recent authority for standard of review analysis is Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] S.C.J. No. 9, in which the Court collapsed the “two variants of reasonableness review” into two standards – correctness and reasonableness. The Dunsmuir analysis involves consideration of

(1) the presence or absence of a privative clause;

(2) the purpose of the tribunal as determined by the enabling legislation;

(3) the nature of the question at issue; and

(4) the expertise of the tribunal.

27In the case at bar, there is no privative clause in the Act. There is also no statutory right of appeal. Accordingly, this factor is neutral.

28The ORC is an expert tribunal and the decisions it makes within its jurisdiction are entitled to significant deference. Indeed, prior to Dunsmuir, the Commission’s decisions were subject to the most deferential standard, patent unreasonableness. Since the ORC is expert in all matters relating to horse racing, it should be given a high level of deference with respect to factual decisions relating to the horse racing industry. The standard of review of the Commission’s factual findings, including in relation to whether the applicant’s statement was “voluntary” and whether, based on the available evidence, the applicant contravened the Rules, is reasonableness.

29The penalty imposed by the Commission is also subject to review on a reasonableness standard, as determination of appropriate penalties in the context of regulating the horse racing industry is firmly within the mandate and expertise of the ORC: Gray v. Ontario Racing Commission, [2008] O.J. No. 1235 at para. 3 (Div. Ct.).

30However, it is only factual findings and decisions within the Commission’s specific jurisdiction to regulate horse racing in Ontario that attract a standard of review of reasonableness. Where the ORC exceeds its jurisdiction, the applicable standard of review is correctness. A correctness standard applies to questions of law for which the Court has expertise exceeding that of the ORC, including questions involving the Charter and other general questions of law. Accordingly, correctness is the standard of review applicable to the Commission’s decisions in relation to the application of the common law voluntariness rule and the Charter to Commission proceedings, and to the standard of proof applicable in establishing voluntariness.

(2) Was it reasonable for the Commission to conclude that the statement was voluntary?

31In my view, the Commission acted reasonably in concluding that the applicant’s statement was voluntary, even though its consideration of the voluntariness issue was not legally necessary. Even if the administration had to prove that the applicant’s statement was voluntary, it would be obliged to do so on the standard of a balance of probabilities, not proof beyond a reasonable doubt, which standard would apply only in criminal proceedings.

32Having reviewed the evidence carefully, the Commission concluded there was no inducement in this case. During the interview, the applicant told ORC Investigator Coleiro and Det. Sgt. Schandlen that he had purchased EPO for his uncle who was on dialysis. It should be mentioned that the person from whom the applicant purchased the EPO, Sandy DiFlorio, was well known to the ORC, having recently been charged criminally in relation to the distribution of illegal equine medication. When the applicant identified his distributor to Coleiro and Schandlen, in my view it was quite appropriate for Schandlen to respond: “Do you understand that passing Aranesp to another person could be a criminal offence?” Schandlen also advised the applicant that if a criminal offence was involved, Schandlen would have to give him a formal caution before the statement could continue.

33The applicant urges that this warning by Det. Sgt. Schandlen was an improper inducement rendering his subsequent statement involuntary. I disagree. Det. Sgt. Schandlen was simply doing his duty in warning the applicant of the implications of his admission that he had obtained EPO for his uncle. There was no fear of punishment or hope of advantage that negated the voluntariness of the appellant’s statement. With the evidence before him, Det. Sgt. Schandlen simply did not believe the applicant when he said he purchased the drug for this purpose. In my view, it was reasonable for the Commission to conclude that Schandlen’s warning did not constitute an improper inducement rendering the statement involuntary.

34Nor was there any oppressive conduct on the part of the investigators that would render the statement involuntary. The meeting was consensual and it was arranged at a time convenient to the applicant and mutually agreed upon. The Kemptville OPP Detachment Office was chosen because it was closest to the applicant’s farm. The applicant arrived unescorted. At no time did the applicant ask to stop the interview or attempt to leave. The Commission accepted the evidence of Investigator Coleiro and Sgt. Schandlen that when interviewed at the Kemptville Detachment, the applicant commented that he had spoken to a lawyer.

35Finally, there were no dirty tricks used by the investigators in order to obtain a statement from the applicant. Without question, the investigators were forthright and clearly determined to fulfill their various statutory obligations. At no time was the applicant tricked or deceived or made unaware of the purpose of the interview. The applicant knew that Investigator Coleiro was an ORC investigator, that he was taking notes throughout the interview, and that therefore the ORC would know what he was saying to Det. Sgt. Schandlen. This was an investigation that in my view was carried out appropriately, and it was reasonable for the ORC to conclude that no dirty tricks were used in order to have the applicant give a statement. The ORC heard the applicant’s evidence, along with the two investigators, evaluated their credibility and found that the applicant must have known he was being investigated.

(3) Was the applicant’s statement to Det. Sgt. Schandlen properly admissible?

36The ORC submits there is no basis to set aside the decision to admit the applicant’s statement for the stated reasons. First, s. 15 of the Statutory Powers Procedure Act (SPPA) renders statements made by a party outside of the hearing admissible. Second, even in the absence of the SPPA, the common law confession rule does not apply to civil proceedings such as proceedings before the ORC. Third, the applicant was required to give a statement under the compulsion of s. 18(4) of the Act and the Rules. Statements under statutory compulsion are admissible. Fourth, the statement was in any event voluntary. And finally, s. 7 of the Charter was not engaged by these proceedings. I will deal with each of these submissions in order, with the exception of the submission as to voluntariness, which I have addressed above.

(a) Application of s. 15 of the SPPA

37In my view, section 15 of the SPPA provides a complete response to the question of the admissibility of the applicant’s statement. Section 15 reads as follows:

15(1) Subject to subsections (2) and (3) a tribunal may admit as evidence at a hearing, whether or not given or proven under oath or affirmation or admissible as evidence in a court,

(a) any oral testimony; and

(b) any document or other thing,

relevant to the subject-matter of the proceeding and may act on such evidence, but the tribunal may exclude anything unduly repetitious.

38Regardless, therefore, of whether the statement would have been admissible in criminal proceedings, it was properly admissible before the Commission under the SPPA. No further analysis should be necessary in order to deal with the question of voluntariness.

(b) Application of the common law confession rule

39In any event, administrative proceedings are civil, not criminal in nature. The common law confession rule applies only to criminal or quasi-criminal proceedings and not to civil or administrative proceedings. The confession rule applies to oral or written statements made by an accused person to a person in authority which are proffered by the Crown in criminal or quasi-criminal proceedings. The ORC is not empowered to impose true penal consequences, rather it is an agent of the Crown established in order to “govern, direct, control and regulate horse racing in Ontario in any or all of its forms” (see section 5 of the Act). These proceedings are neither criminal nor quasi-criminal. In R. v. Wigglesworth, 1987 41 (SCC), [1987] 2 S.C.R. 541 at para. 23, the Supreme Court of Canada many years ago considered the distinction, and concluded that penalties such as suspension and expulsion and fines imposed “for disciplinary matters which are regulatory, protective or corrective and which are primarily intended to maintain discipline, professional integrity and professional standards or to regulate conduct within a limited private sphere of activity” are not penal in the sense of criminal or quasi-criminal sanctions. Rather, they are matters of licensing.

40In civil and administrative proceedings, an out of court assertion made by a party to the proceeding is admissible at the instance of the opposing party as an exception to the hearsay rule. In these proceedings, such a statement is properly understood as an “admission” and not a “concession”.

41The proper approach to out-of-hearing statements made by a party to proceedings before the ORC is for the Commission to receive the statement as admissible evidence and make its determination at the hearing based on an assessment of its probative value in the context of all the other evidence. In the present case, the appellant was entitled, and chose not to testify in order to dispute the truth of his statement.

(c) Statutory compulsion

42The obligation to provide such a statement arises under s. 18 of the Act which provides,

18(1) The Director may make those inquiries and conduct those investigations into the character, financial history and competence of an applicant for a licence or the renewal of a licence that are necessary to determine whether the applicant meets the requirements of this Act and the regulations.

(4) The Director may require information or material from any person who is the subject of the inquiries or investigations and may request information or material from any person who the Director has reason to believe can provide information or material relevant to the inquiries or investigations.

(5) The Director may require that any information provided under subsection (4) be verified by statutory declaration.

43This obligation is set out in the Rules. It is clear to me that legislatures and statutory tribunals may require licensed persons to provide truthful information under compulsion. The Supreme Court of Canada in British Columbia Securities Commission v. Branch, 1995 142 (SCC), [1995] 2 S.C.R. 3, determined that the Charter requires that both “use immunity” and “derivative use” immunity attach to the use in criminal proceedings, of compulsory statements taken in the regulatory context. I agree with the respondent that what we ought to take from Branch is that such statements could obviously be relied upon and tendered in the regulatory proceedings themselves, otherwise there would be no purpose to the principle that compulsory powers to require information from licensees are permissible forms of legislation so long as they comply with the Charter. Charter compliance is achieved by granting derivative use immunity where the evidence would expose the person to criminal proceedings. In the present case, there is no Charter issue because the Commission cannot impose true penal consequences on this licensee: R. v. Fitzpatrick, 1995 44 (SCC), [1995] 4 S.C.R. 154.

44In Fitzpatrick, the Supreme Court of Canada was mindful of the fact that statutory compulsions were essential in the regulatory context, otherwise it would be impossible to effectively regulate, in that case, the fishing industry, to the advantage of all participants. Similarly, it would be impossible to effectively regulate the horse racing industry in respect of drug possession and administration by participants without the ability to require licensees to provide this information. The administration cannot have its investigators posted at all places at all times, including on the private property of licensees who train horses. Illicit performance-enhancing drugs are, by their nature, small, easy to conceal and amenable to detection-avoidance methods. The applicant, like any other licensee, has voluntarily chosen to enter into a thoroughly regulated industry and in doing so has freely accepted the statutory and regulatory compulsions that exist in relation to that industry. He has, in that sense, already given his consent as a condition of entering the field. Accordingly, I conclude that there is no “voluntariness” requirement prior to admission of a confession made pursuant to a statutory compulsion to testify in a regulatory context.

(d) Section 7 of the Charter

45Although not raised before the ORC by the applicant, and not addressed in its reasons, the respondent has made submissions in response to the applicant’s argument regarding s. 7 of the Charter. In my view, the applicant’s rights to life, liberty and security of the person were not engaged at the time he made his statement. He was not detained, nor was he under arrest. His liberty was not infringed. The right to silence and the right to counsel only arise on detention; they do not extend to pre-detention investigation as the Supreme Court of Canada has held R. v. Hebert, 1990 118 (SCC), [1990] 2 S.C.R. 151 and affirmed in R. v. Singh, 2007 SCC 48. The applicant was fully cooperative and agreed to meet with Det. Sgt. Schandlen at Investigator Coleiro’s request. It was agreed upon by all that the nearby OPP Detachment Office at Kemptville would be the most appropriate location for this interview, and the appellant agreed. In my view, it was eminently reasonable for the Commission to conclude as they did that “there was no indication of compulsion, actual or perceived”, although later claimed.

46At the Commission hearing, in my view, the applicant’s right to life under s. 7 of the Charter was not in jeopardy. There was no possibility that he could be imprisoned under the statute. Accordingly, his liberty interest was not engaged. Evidently, no security of the person or life interest is engaged in the context of the loss of a right to practice a trade or profession, together with the imposition of a civil fine enforceable only through the ordinary civil means as as provided for in the SPPA (see SPPA, s. 19(1); Mussani v. College of Physicians and Surgeons of Ontario (2003), 2003 45308 (ON SCDC), 226 D.L.R. (4th) 511 at paras. 137-143 (Ont. Div. Ct.). The imposition of an administrative sanction under the Act does not impose the kind of state-induced psychological stress that could trigger the guarantee of security of the person under s. 7 of the Charter. The right to security of the person does not protect an individual from operating in the highly regulated context of horse racing for profit from the ordinary stress and anxieties that a reasonable person would suffer as a result of government regulation of that industry. The applicant was not charged with a true crime or a regulatory offence. He was simply subjected to discipline as a licensee under the Act, in a regulated industry that he voluntarily chose to enter. The possibility of revocation or suspension or of a significant fine is not sufficient to trigger the application of s. 7 of the Charter.

(4) Was the Commission’s decision as to penalty reasonable?

47The Commission is under a duty to exercise its power to impose a suspension and penalty under ss. 19-22 of the Act in a manner that is in the public interest and this calls for the Commission to apply its expertise in regulating the horse racing industry. As such, a review of the penalty decision calls for significant deference. Regulatory sanctions imposed in the public interest are preventative in nature and prospective in application. A public interest order properly may take into account general deterrence. As in the context of regulating security markets, general deterrence is an appropriate consideration in the regulation of the horse racing industry (see Cartaway Resources Corp. (Re), 2004 SCC 26, [2004] 1 S.C.R. 672. In my view, the ORC carefully considered what has become a scourge within the horse racing industry. Performance-enhancing drugs threaten the integrity of the entire industry. In my view, the ORC properly took into account that there was a significant need for general deterrence in a case such as this given the level of drug abuse in the industry.

CONCLUSION

48For the foregoing reasons, the application is dismissed. If the parties cannot agree on costs, we will hear further from counsel.

Cunningham A.C.J.S.C.J.

McCartney R.S.J.

Hambly J.