CITATION: Toscani and Holland v. AGCO, 2024 ONSC 1718
DIVISIONAL COURT FILE NO.: 283/23 DATE: 20240325
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
L. Leitch, FL Myers, Leiper JJ.
BETWEEN:
GINO TOSCANI and HERBERT HOLLAND
S. Bilato and A. Buchanan, for the Applicants
Applicants
– and –
HORSE RACING APPEAL PANEL and REGISTRAR, ALCOHOL AND GAMING COMMISSION OF ONTARIO
J. Im and Y. Murad, for the Respondent, Registrar, AGCO M.J. Dougherty and K. Ivory, for the HRAP
Respondents
HEARD at Toronto: March 4, 2024
AMENDED REASONS FOR JUDGMENT
Leiper, J.
Introduction
[1] The Applicants, Gino Toscani and Herbert Holland, seek judicial review of the decision of the Horse Racing Appeal Panel (“HRAP”) which dismissed their appeal from rulings by the Registrar, Alcohol and Gaming Commission of Ontario (“Registrar”) that they had violated the Rules of Standardbred Racing (“RSR”) established under the Horse Racing Licence Act, 2015, c. S.O. 2015, c.38, Sched. 9.
[2] Mr. Toscani is the owner of “Greek Freak” or “GF”, the first-place horse in a race held at Mohawk Park on August 7, 2021. Mr. Holland is the trainer of GF.
[3] In accordance with Rule 22.38 of the RSR, the Registrar required that blood samples be taken from GF and tested for total carbon dioxide, or “TCO2” to determine whether they were within the permissible thresholds set by the Registrar.
[4] The test results showed that GF’s blood levels of TCO2 were above the permitted threshold. This is generally a sign that the horse has been administered an alkalizing substance, which can enhance race day performance. There are other reasons why a horse may have high TCO2 levels. If an owner wants to claim that his or her horse has high TCO2 levels for reasons other than the administration of alkalizing substances, pursuant to Rule 22.38.07, the owner may have the horse quarantined and re-tested over a few days. If a quarantined horse’s TCO2 levels stay high after the effects of any alkalizing substances should have subsided, then the RSR precludes a finding that the owner and/or the trainer of the horse violated the rules.
[5] The Applicants did not request that GF be held in quarantine nor did they re-test GF following the TCO2 testing done at the time of the August 7, 2021 race.
[6] The Registrar imposed penalties for the violation of Rule 22.38 as follows:
a. Mr. Toscani as Horse Owner – GF was ineligible from racing for 30 days;
b. Mr. Holland as Trainer – Suspension of Mr. Holland for 90 days, a monetary penalty of $5,000, designation of “unplaced” for GF in the race, redistribution of the purse money and two-year probationary terms on Mr. Holland’s license, until February 15, 2024.
[7] The Applicants appealed to the HRAP and participated in a six-day hearing in October 2022.
The Issues on this Application
[8] The Applicants assert the following:
a. That they were denied procedural fairness at the hearing;
b. That the HRAP decision was unreasonable and should be set aside;
c. That Rule 22.38 of the RSR is arbitrary, unfair, unreasonable, invalid and inoperative, and the Registrar should be directed to exercise its statutory powers to revise Rule 22.38.
Standard of Review
[9] On the issue of procedural fairness, the parties agree that the standard is as described in the decision of the Supreme Court of Canada in Baker v. Minister of Citizenship and Immigration, 1999 699 (SCC), [1999] 2 S.C.R. 817.
[10] The presumptive standard of review of the decision on its merits is reasonableness as described in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 15, [2019] 4 S.C.R. 653 at paras. 83, 100 and 120. On review, the court must look at whether the administrative decision maker has provided a rationale for its decision that is “transparent, intelligible and justified”: Vavilov at para. 15.
Analysis of the Issues on Judicial Review
1. Did the HRAP Deny the Applicants Procedural Fairness on the Appeal?
[11] The parties agreed that to determine whether the HRAP provided a procedurally fair hearing process to the applicants, the court will assess and weigh the well-known Baker factors. These include: the nature of the decision to be made, the process followed, the nature of the issues and statutory scheme, the importance of the decision to those affected, the legitimate expectations of those challenging the decision and the choice of process, among others: See Baker at paras. 21-28.
[12] Parties are entitled to a very high level of procedural fairness in legal proceedings which affect their livelihoods or their ability to pursue a profession: See Filippova v. Whyte 2024, ONSC 497 at para. 73.
[13] The Applicants submit that the HRAP denied them procedural fairness by denying part of their pre-hearing disclosure motion, allowing the motion to quash their summonses in part and permitting the Registrar’s witnesses to testify to facts beyond the scope of their expert reports in circumstances where the HRAP had previously denied the Applicants’ disclosure request for information relevant to those facts.
[14] The background to the disclosure motion is important and can be described as follows:
[15] In May 2022, the Applicants wrote to the Registrar seeking disclosure of items relating to the testing, the methodology and the instrument used to test the blood taken from GF. The Registrar advised that these items were in the care and control of Racing Forensics Inc. or “RFI”, the lab that tested the blood samples taken from GF. The Registrar forwarded the Applicants’ request to the lab.
[16] The Registrar produced the requested items that were within the Registrar’s control. On June 20, 2022 and June 24, 2022, RFI produced some, but not all of the items requested. RFI refused to produce several items sought by the Applicants on the basis that these were not available, not applicable, “proprietary” or unnecessary because RFI was an accredited lab and subject to independent audit. Rules 22.38.01 – 22.38.03 describe the laboratory approval process. RFI also raised a concern that disclosure of some proprietary information could be used by unscrupulous industry participants to devise ways to cheat the tests. This, they asserted, was contrary to the public interest and the best interests of horse racing in Ontario.
[17] The hearing before the HRAP was scheduled to begin on Monday, October 17, 2022. On October 14, 2022, the Friday before the hearing was to commence, the Applicants brought a disclosure motion seeking material that was in the possession of RFI about its testing procedures.
[18] On October 10, 2024, RFI disclosed the certificate of analysis for the “ASE Certified Reference Material lot #E 22d.” This disclosed the make-up of one of the substances used by the lab as a control to provide a known baseline against which to measure GF’s blood sample. RFI advised counsel that all its TCO2 results for GF are traceable to this control.
[19] In addition to serving the motion for disclosure, the Applicants served summonses on employees of RFI requiring them to bring the documents sought in the disclosure motion to the hearing.
[20] Prior to the motion hearing, counsel engaged in some discussion which yielded disclosure of the serial number of the Beckman instrument used to analyze the blood sample. RFI and the Registrar believed this could enable the Applicants to obtain the operating manual for the equipment. As an attempt to narrow the disclosure issues, RFI invited counsel to attend its facility to view (without taking copies) the remaining items that the Applicants sought to have disclosed. Counsel declined that invitation.
[21] The HRAP heard the disclosure motion. During submissions, the Registrar indicated it would call evidence concerning the methods and operation of the Beckman instrument, RFI’s accreditation and audit oversight as well as evidence from Dr. Robert McKenzie as to RFI’s standard operating procedures, maintenance records and control charts. The Applicants requested this material for review in advance. Counsel for the Applicants advised that they would not require an adjournment of the hearing, but could review the material during the case for the Registrar, who was to proceed first.
[22] The HRAP granted the motion in part, giving a brief oral ruling, which it later supplemented with written reasons after the hearing was complete. The HRAP ordered RFI to disclose the Beckman instrument maintenance records for a full year, that is, from August 1, 2020, to September 31, 2021. It also confirmed the consent disclosure of the serial number for the Beckman instrument. The balance of the disclosure request was dismissed.
[23] The hearing proceeded. The Registrar, bearing the burden of justifying its findings, called evidence first. The Registrar called four witnesses, including expert evidence on the TCO2 testing processes and the Beckman instrument.
[24] The Applicants then called evidence which challenged the Beckman as a reliable instrument. They also sought to establish that the calculation used by RFI to determine GF’s TCO2 levels should have used a wider measure of uncertainty. Allowing for more uncertainty in the numbers would have brought GF’s calculated TCO2 levels below the threshold. They also led evidence to make the point that various factors can affect the alkalinity of the blood of racehorses. Because of this, they submitted to the HRAP that TCO2 levels are not a fair, valid or reliable proxy to prove the administration of performance enhancing substances to horses. They submitted that TCO2 levels should not be used to make adverse findings and to impose penalties. Rather, Rule 22.38 of the RSR should be revised.
[25] In its written reasons relating to the Applicant’s disclosure motion, released at the same time as its reasons dismissing the Applicants’ appeal, the HRAP referred to Rule 7 which permits orders for disclosure of documents that are “necessary”. It described its decision as being “fact-driven”. It went on to state that it had considered and balanced the prejudice to the Registrar and the hearing process by ordering “thousands of pages” of disclosure one business day before the hearing was to begin.
[26] The HRAP found that the motion should have been brought earlier, and that the Applicants ought to have attended at RFI when invited to do so. The HRAP also acknowledged subsequent events and orders made as the evidence unfolded. For example, they noted the potential prejudice to the Applicants because the Registrar had called witnesses to testify on matters related to information the Applicants were denied access to. The HRAP described the steps it took at the hearing to remedy any such prejudice. This included varying its order excluding witnesses so that the Applicants’ expert witnesses would have access to the evidence given by Dr. McKenzie regarding RFI’s operations and permitting the Applicants to discuss that evidence with their witnesses prior to tendering their own expert evidence.
[27] The HRAP noted in its reasons relating to the disclosure motion that it had invited the Applicants to request adjournments, if needed, or to file supplementary expert reports. The Applicants were content to proceed after hearing the testimony to which they had objected. They did not seek an adjournment and they did not deliver any further expert reports despite both options being made available to them by the HRAP.
[28] In addition, the HRAP noted the context in which the Applicants’ expert witnesses, Dr. Fenger and Dr. Lindinger, had testified as follows:
The expert evidence of Dr. Lindinger and Dr. Fenger did not change with the viva voce testimony of Dr. McKenzie. Neither Dr. Fenger nor Dr. Lindinger are strangers to the AGCO or to RFI as aforementioned. The issues respecting the Beckman instrument and RFI have been raised in other matters which have come before the HRAP and its predecessor. Dr. Fenger in particular has testified on some of those cases.
[29] The HRAP was critical of RFI’s response to the disclosure requests. In concluding its written reasons on the motion, the HRAP noted the “intransigence” of RFI and cautioned that “where the disclosure is relevant, the testing laboratory must be transparent in its operation and testing procedures given the impact of a positive test on a licensee. There is of course certain information that could not be properly disclosed in the interests of racing.”[^1]
[30] The Applicants submit that the disclosure decision and reasons denied them procedural fairness because:
a. The HRAP’s oral reasons did not provide a rationale for declining to make full disclosure;
b. The HRAP refused to order disclosure on matters that were relevant and the subject of expert evidence from witnesses for the Registrar;
c. The HRAP criticized RFI yet did not order it to make full disclosure;
d. The HRAP’s written reasons for disclosure did not demonstrate that it had weighed the question of relevance or considered whether the evidence was relevant to the issues at the hearing;
e. The HRAP’s decision on the motion to quash.
[31] I consider each of these arguments in turn.
A. Sufficiency of the oral reasons for disclosure
[32] The Applicants submit that they were denied procedural fairness because the HRAP did not explain its rationale for denying in part the disclosure motion.
[33] I would not give effect to this submission for the following reasons. The timing of the motion, which was within the Applicants’ control was brought one business day prior to the scheduled hearing. The HRAP was required to make swift rulings, particularly since no party was seeking to adjourn the start of the hearing. In such a context, it is important not to apply a standard of perfection, and the context in which the decision is made is relevant: Vavilov at paras. 91 and 94.
[34] Further, the panel delivered reasons for its decision, including reference to the procedural steps which followed the oral ruling. In doing so, the HRAP explained to the parties how it arrived at its decisions and its thinking around the procedural orders it made to mitigate the potential prejudice to the Applicants.
[35] At the time of the oral ruling, the HRAP signaled to the parties that further argument could be made on necessary disclosure. It offered to the Applicants an opportunity to seek an adjournment or to file supplemental reports.
[36] I conclude that the Applicants had a full opportunity to know the case they had to meet and to present evidence and submissions. In this case, when evidence was adduced that re-opened the subject matter in issue at the disclosure motion, the HRAP showed that it was alive to those concerns and offered procedural options to the Applicants in response to those concerns.
[37] In light of HRAP’s awareness of the context and its efforts to ameliorate any potential unfairness, and the Applicants choice to proceed with the hearing, I cannot conclude that there was any breach of procedural fairness in the brief oral reasons that accompanied the ruling.
B. The HRAP refused to order disclosure on relevant matters and the subject of expert evidence from witnesses for called by the Registrar
[38] Dr. Fenger was the source of the disclosure requests to RFI. In particular, Dr. Fenger requested the standard operating procedures, RFI’s testing methods and its determination of the measurement of uncertainty. This information would assist in substantiating her evidence of a potentially lower TCO2 based on a broader measure of uncertainty, or standard deviation. Dr. Fenger reserved the right to file a supplementary report once RFI produced the requested disclosure.
[39] Dr. McKenzie testified about all these issues, which had been raised by Dr. Fenger in the pre-hearing phase. When the Applicants objected to evidence tendered by the Registrar from Dr. McKenzie on these issues, the HRAP permitted Dr. Fenger hear that evidence before giving her evidence. As noted, although invited to seek an adjournment, if necessary, the Applicants did not do so nor did they ultimately file any supplementary reports.
[40] This was not a breach of procedural fairness.
[41] Ultimately, the Applicants were able to prepare their witnesses, call their evidence on the live issues and make submissions. Their remedy if they felt prejudiced by late disclosure or unexpected oral evidence, would have been to seek an adjournment.
[42] I would not give effect to this argument.
C. The HRAP criticized RFI but did not order the disclosure sought by the Applicants
[43] In its written reasons on the disclosure motion and in the final reasons dismissing the appeal, the HRAP criticized RFI for its resistance to producing relevant documents. It noted the serious consequences to owners and trainers on test findings such as those from GF. The HRAP’s observations are consistent with the issues and the motions brought before it.
[44] These comments demonstrated that the HRAP appreciated what was at stake, and how both the Applicants’ and RFI’s choices had contributed to the procedural rulings required during the hearing.
[45] The criticism was aimed at RFI’s reluctance to disclose relevant, producible documents. There was no inconsistency between the HRAP’s disclosure orders and its criticism of RFI.
[46] I would not give effect to this argument.
D. The HRAP’s written reasons on the disclosure motion did not demonstrate that it had weighed the question of relevance or considered whether the evidence was relevant to the issues at the hearing
[47] While generally, insufficient reasons are considered within a reasonableness review, here the Applicants made submissions that faults the HRAP’s reasons for disclosure as part of their submission that they were denied procedural fairness.
[48] I do not agree with the submission that the reasons on the disclosure motion denied the Applicants procedural fairness. The reasons adequately explained the HRAP’s approach to the disclosure requests, as outlined above. The HRAP considered timing, relevance, arguments about the disclosure of “proprietary” information that would be contrary to the interests of racing and prejudice to the parties and the process.
[49] The panel described in its reasons what it had done. It was guided by relevance, practicality and fairness. It adjusted as the issues crystallized and the evidence was called.
[50] I conclude that the reasons do not support a finding that the Applicants were denied procedural fairness at the hearing.
E. The HRAP’s reasons on the motion to quash the summonses
[51] The Applicants served summonses on RFI witnesses which required them to produce the documents which were the subject of the disclosure motion on October 14, 2022. The HRAP ruled on October 17, 2022, consistent with the findings on the disclosure motion, that it would not order the RFI witnesses to produce those records already refused on the motion. However, it confirmed the summonses and required those witnesses to attend. Ultimately, the Registrar called one of the witnesses who the Applicants sought to hear from. They were able to cross-examine the Registrar’s expert witnesses and prepare their own expert witnesses to respond to that evidence. Counsel for the Applicants then released the other two witnesses on whom they had served summonses.
[52] I do not find any procedural unfairness because of the HRAP’s decision on the motion to quash. Counsel for the Applicants conceded to the HRAP that the production of documents incorporated in the summonses was to obtain the documents which HRAP had not ordered to be disclosed. The HRAP’s procedural rulings applied to this decision, as with the motion for disclosure. This argument is without merit.
2. Was the HRAP’s Decision Reasonable?
[53] The Applicants submit that the HRAP’s decision dismissing their appeal was unreasonable. They submit that the HRAP criticized RFI’s response to the disclosure request, yet went on to accept the evidence from its expert. They submit this is illogical and undermines the HRAP’s findings.
[54] I disagree. Read as a whole, the HRAP’s reasons show that it considered RFI’s response to disclosure, made orders granting certain of the Applicants’ requests and with the benefit of the evidence and submissions from the parties, made adjustments to allow the Applicants to respond to RFI’s evidence with its own experts.
[55] The HRAP considered the content and the science presented by the competing expert evidence. It made findings based on that evidence, which as an expert tribunal it was entitled to make. Such findings include:
• the meaning of ‘measurement of uncertainty”;
• the Beckman instrument is no longer “state of the art”, but it functioned as it was intended to for this test;
• the test applied to the sample from GF was reliable;
• the maintenance logs for the Beckman instrument established that this was a reasonable means of keeping track of the instrument;
• it preferred the evidence of Dr. McKenzie to that of Dr. Fenger on the question of measurement of uncertainty;
• the Beckman instrument was calibrated to an expected “linearity”;
• the test results which showed that GF’s TCO2 levels were over threshold were reliable.
I reject the submission that because the HRAP criticized RFI for its approach to the Applicants’ disclosure requests, this meant that the panel was bound to accept the Applicants’ position on the merits. The HRAP found that the Registrar had established that GFs TCO2 levels exceeded the threshold and that the device used to test the samples was reliable and in working order. There was evidence before the HRAP upon which it could make these findings.
[56] The reasons, taken as a whole, are intelligible. They demonstrate a rational chain of analysis and are founded in the evidence tendered by the Registrar and tested in cross-examination by the Applicants.
3. Is Rule 22.38 ultra vires the Registrar’s powers under the Act?
[57] On the question of whether a rule or regulation is ultra vires its enabling legislation, this court has confirmed that the leading authority is from Katz Group Canada v. Ontario (Health and Long Term Care) 2013 SCC 64, [2013] 3 S.C.R. 810. As Sachs, J. wrote for this court in Friends of Simcoe Forest v. Minister of Municipal Affairs and Housing, 2021 ONSC 3813, at par. 27:
“In Hudson’s Bay at para. 37, the Divisional Court summarized the principles that apply when determining the vires of a regulation:
a. Judicial review of a regulation is usually restricted to two questions:
(1) Was a condition precedent not met before the regulation was enacted; (2) Is the regulation inconsistent with the purpose of the enabling statute? To this principle, in accordance with para. 24 of Katz, I would add the question: (3) Was the regulation inconsistent with the scope of the statutory mandate?
b. Regulations are presumed to be valid. This means that the burden falls on the party challenging the validity of the regulation and that the court is to favour an interpretation that “reconciles the regulation with its enabling statute so that, where possible, the regulation is construed in a manner which renders it intra vires” (Katz at para. 25).
c. Both the challenged regulation and the enabling statute should be interpreted using a broad and purposive approach.
d. “Courts are not to assess the policy merits of a regulation to decide whether it is ‘necessary, wise or effective in practice’” (Hudson’s Bay at para. 37, citing Katz at para. 27).
e. The motives for enacting a regulation are irrelevant.
f. “Under inclusiveness is not a valid ground for challenging a regulation as ultra vires” (Hudson’s Bay at para. 37, relying on Katz at para. 40).
Regulations must be “‘irrelevant’, ‘extraneous’ or completely inconsistent with the statutory purpose to be found ultra vires on the basis of inconsistency with the statutory purpose … it would take an egregious case to warrant such an action” (Katz at para. 28).
[58] The Applicants submit that the TCO2 testing regime provided for under Rule 22.38 of the RSR is arbitrary, unfair and unreasonable; asserting that TCO2 is an indirect measure of whether a horse has been administered an alkalizing substance to improve its race performance (a practice described as “milkshaking” “tubing” or “drenching’ a horse). They called evidence at the hearing describing other factors which can cause a high TCO2 value, including measures taken to rehydrate a horse.
[59] The Applicants rely on evidence from Dr. Lindinger who opined that TCO2 thresholds are based on imperfect statistical models, rest on imperfect assumptions and are inherently unreliable. They submitted to the Board that the test at issue is outdated and is not efficient in determining whether a horse has been given an excessive alkalizing substance.
[60] The HRAP properly found that it was bound to apply the RSR, including Rule 22.38, to the case before it, and that it did not have jurisdiction to declare the rule ultra vires the Registrar.
[61] The issue is brought to this court as one of originating jurisdiction rather than review of a decision of the HRAP. It is the Registrar, and not the HRAP who has broad powers to “govern, direct, control and regulate” standardbred horse racing in Ontario. The Registrar is appointed pursuant to the Alcohol and Gaming Commission of Ontario Act, 2019, S.O. 2019, Sched. 1. Under the Horse Racing Licence Act, 2015, SO 2015, c 38, Sch 9, s.5, the Commission, through the Registrar, is granted rule-making powers. Rule 22.38 is an exercise of those rule making powers.
[62] Ontario has been participating in the Canadian Pari-Mutuel Agency (“CPMA”) TCO2 threshold and testing program since 1999. Other jurisdictions apply TCO2 thresholds to horse racing. The Beckman instrument is approved by Rule 22.28.02 and the RFI is a Registrar-approved lab. In 2021, shortly before the race in question, the Registrar reconsidered Rule 22.38 and made it stricter by decreasing the allowable amount of TCO2 that can be found in a horse’s blood. The Registrar did so to align Ontario’s standards with international racing standards.
[63] The stated objectives of Rule 22.38 and TCO2 thresholds are consistent with the general purpose of the Act, which is to “uphold the integrity of horse racing.” Thus, it falls within the Registrar’s mandate to exercise its delegated rule making powers to act in the best interests of horse racing.
[64] Based on the HRAP’s findings on the expert evidence, and the plain wording of the Act and the Rule, there is no basis on which I would find that Rule 22.38 is ‘irrelevant’, ‘extraneous’ or inconsistent with the statutory purpose in the Act.
[65] It is not the court’s role to legislate. The evidence at the hearing revealed that neither the HRAP, the CPMA, other provincial regulators or the international racing regulators share the concerns raised by the Applicants regarding the testing for TCO2 and restrictions on those levels. The rule recognizes that there may be horses that naturally have higher concentrations of TCO2 than permitted by the threshold. It makes express provision for such horses by way of the quarantine provision.
[66] I find that Rule 22.38 is not ultra vires the Registrar’s powers under the Act.
Conclusion
[67] The application is dismissed. In accordance with the parties’ agreement, costs are ordered payable by the Applicants to the Respondent Registrar in the amount of $25,000. No costs are ordered payable by or to the HRAP.
___________________________ Leiper J.
I agree
Leitch J.
I agree
Myers J.
Date: March 25, 2024
CITATION: Toscani and Holland v. AGCO, 2024 ONSC 1718
DIVISIONAL COURT FILE NO.: 283/23 DATE: 20240325
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
L. Leitch, FL Myers, Leiper JJ.
BETWEEN:
GINO TOSCANI and HERBERT HOLLAND
Applicants
-and-
HORSE RACING APPEAL PANEL and REGISTRAR, ALCOHOL AND GAMING COMMISSION OF ONTARIO
Respondents
AMENDED REASONS FOR JUDGMENT
Leiper, J.
Date: March 25, 2024
[^1]: This is a reference to the “proprietary” information which the parties agree means certain information which might permit unscrupulous trainers/owners to find ways to defeat the testing methods for excessive alkalinity in racehorses.