IN THE MATTER OF THE RACING COMMISSION ACT, 2000, S.O. 2000, c. 20; AND IN THE MATTER OF STANDARDBRED LICENSEES RUSSELL MOULTON, DARRYL FARR AND KATHRYN KNAPP

Russell Moulton, Darryl Farr and Kathryn Knapp appealed Judges’ Rulings SB 29282, SB 29281 and SB 29283 respectively, each issued May 30, 2004. In Ruling SB 29282, Russell Moulton was found in violation of Rules 3.02, 6.27, 6.21 and 6.20(a) and (b) of the Rules of Standardbred Racing and was fined $12,500 and suspended for six months. In Ruling SB 29281, Darryl Farr was found in violation of Rules 26.06, 6.21, and 6.20(a) and (b) of the Rules of Standardbred Racing and was fined $4,500 and suspended for six months, and his trainer’s license suspended for an additional five months. In Ruling SB 29283, Kathryn Knapp was found in violation of Rules 6.27, 6.21 and 6.20(a) and (b) of the Rules of Standardbred Racing and was suspended six months and fined $12,500.

The ORC Panel hearing the matter consisted of the Chair, Lynda Tanaka, and Commissioners Jane Garthson and Dave Gorman. The Panel convened on September 10, 2004 to hear the matter. Tim Snell represented the Administration, and Gerry White represented the Appellants.

On hearing the evidence of Investigator Beirnes, Judge Webb, Russell Moulton, Kathryn Knapp, Darryl Farr, on reading the exhibits filed and on hearing the submissions of the parties, the ORC Panel granted the appeal of Darryl Farr and found no violation of Rules 6.20(a) and (b), 6.21 and 26.06 of the Rules of Standardbred Racing by Darryl Farr; and the ORC Panel granted the appeal of Kathryn Knapp and Russell Moulton and found no violation of Rules 6.21 and 3.02 of the Rules of Standardbred Racing.

The ORC Panel found that Russell Moulton and Kathryn Knapp had violated Rules 6.20(a) and (b) and 6.27, and that Darryl Farr had violated Rule 26.09 of the Rules of Standardbred Racing.

The ORC Panel ordered a fine of $750 against Kathryn Knapp for the violation of Rule 6.27; and a fine of $250 against Kathryn Knapp for the violation of Rule 6.20(a) and (b).

The ORC Panel ordered a fine of $750 against Russell Moulton for the violation of Rule 6.27; and a fine of $500 against Russell Moulton for the violation of Rule 6.20(a) and (b).

The ORC Panel ordered a fine of $750 against Darryl Farr for the violation of Rule 26.09.

The ORC Panel further ordered that the licenses of Kathryn Knapp, Russell Moulton and Darryl Farr are hereby suspended, commencing five days from the date of publication of the decision, and are to remain suspended until such time as the fines ordered are paid.

The panel’s reasons for decision are appended to this Ruling.

Dated this 21^st day of March, 2005.

BY ORDER OF THE COMMISSION

John L. Blakney

Executive Director

REASONS FOR DECISION

The Judges’ Rulings SB29282, SB29281 and 29283 issued May 30, 2004 were appealed by Russell Moulton, Darryl Farr and Kathryn Knapp respectively. In Ruling SB 29282 Russell Moulton was found by the Judges to be in violation of Rules 3.02, 6.27, 6.21 and 6.20(a) and (b) and was fined $12,500 and suspended for six months. In Ruling SB 29281 Darryl Farr was found in violation of Rules 26.06, 6.21, and 6.20(a) and (b), and 26.09, and was fined $4,500 and suspended for six months. His trainer’s licence was suspended for an additional five months. In Ruling SB29283 Kathryn Knapp was found in violation of Rules 6.27, 6.21, and 6.20(a) and (b) and was suspended six months and fined $12,500.

Rule 3.02 provides that no one shall participate as a trainer or owner or groom unless that person has applied for and been issued a licence classified in the appropriate category.

Rule 6.27 provides

“In any investigation or case, whether or not an oath is administered, if the participant knowingly withholds information or misleads the investigators or the Judges, it shall constitute a violation.”

Rule 6.21 provides:

“Providing inaccurate information about a horse, or attempting to have misleading information given in a program is prohibited and violators may be fined, suspended or expelled.”

Rules 6.20(a) and (b) provide as follows:

“A participant shall be guilty of a violation of the rules:

(a) for any misconduct which is injurious to racing although not specified in these rules;

(b) for any misconduct prejudicial to the best interests of racing;…”

Rule 26.06 provides as follows:

“A person shall not represent himself or herself to be the trainer of a horse unless he/she is actually training that horse.”

Rule 26.09 provides as follows:

“Applicants for groom licences must be bona fide grooms and must have their status confirmed by the trainer actively utilizing their services. A person under 10 years of age will not be issued a groom licence.”

Reference was also made in the course of the case to Rule 26.15 and Rule 26.16. These Rules provide as follows:

“26.15 The trainer of record of a horse shall be a licensed trainer who has the day-to-day care and or custody and or control of the horse and is responsible for the training, allocation or direction of training duties at the stable.

26.16 In determining the identity of the actual trainer of a horse the Judges shall consider the following:

(a) the identity of the person who is responsible for the business decisions of the training or racing stable including, but not limited to, business arrangements with and any payments to or from owners or other trainers, licensed or otherwise, veterinarians, feed companies, hiring and firing of employees, obtaining worker’s compensation or proof of adequate insurance coverage, payroll and horsemen’s bookkeeper;

(b) the identity of the person responsible for communicating with the racing secretary’s office, the stall manager, the Racing Association and the owners regarding racing schedules;

(c) the identity of the person responsible for the conditioning of a horse or horses;

(d) the identity of the person responsible for race day preparation including but not limited to accompanying the horses to the paddock, selection of equipment, authority to warm up horses before the public, and discussion of driving strategy;

(e) the total number of horses in the control of the training or racing stable;

(f) the number of active licensed trainers on the payroll of the training stable;

(g) the number of different stabling locations; and

(h) any other relevant matters.”

The appeals were grounded primarily on allegations concerning the procedure in the Judges’ hearing. For instance, one of the grounds was the failure to hear testimony from investigator Beirnes who took written statements from the appellants in the course of the investigation.

A prehearing conference was held by the Vice Chair on August 25, 2004 and the report of that conference indicates that the matter to be determined is who trained the subject horses. There is no indication that there was an admission of the other rule violations, including misleading the Judges and investigator.

These appeals were heard as a hearing de novo and therefore the procedural failures, whatever they may have been at the Judges’ hearing, are not described in the issues list in the prehearing report. Investigator Beirnes testified as to the taking of the written statements, including all the circumstances associated with that, and was cross-examined extensively on that.

In the course of the submissions we were referred to two cases in which the Commission adjudicated on the issue of whether or not someone was a trainer of record in fact and provided guidance on the interpretation of the above rules.

In the Matter of Arthur Balson, Ruling Number Com SB 8/2002 the Commission dealt with allegations of breaches of Rules 26.06, 26.15, 6.20(b), 6.27 and 6.21. The Commission found on the evidence before it that the trainer Arthur Balson performed several of the tasks and discharged several of the responsibilities outlined in Rule 26.15 but that he delegated or ceded several other important tasks and responsibilities to a suspended trainer, Dinelle, with respect to four specific horses. The testimony of Balson was that he lived a considerable distance from the training center where the horses were stabled but that he went to the training center 2 or 3 times per week, mostly in the late morning or late afternoon. He communicated with some of his grooms including William Abraham (three of whom were also licensed trainers) if he were present on those visits. Balson testified he was also at the racetrack on all occasions except two when his horses were in to race and he would warm up his horses and attend to them in the paddock. Balson provided directions to his grooms whom he employed through written notes and he arranged for his veterinarian to regularly care for the horses. He paid his grooms cash and produced receipts for those payments.

The suspended trainer Dinelle was responsible for the feed and bedding for the horses in order to work off a debt he owed Balson. Dinelle also provided a truck and trailer to take the horses to the track. The evidence was accepted by the Commission that Dinelle was jogging the four horses and doing training miles with them. Further Dinelle was providing instructions to the veterinarian and met with the owners to discuss how the horses were performing. The evidence of one of the grooms was that Dinelle was giving him instructions as to what to do with the horses including how they were to be trained. The Commission was satisfied that Balson knew that Dinelle was working with his horses despite the fact that Dinelle was suspended. The Commission pointed out that Balson could have avoided responsibility if he had established that he exercised due diligence in the circumstances but found that he was in breach of the Rules and that he displayed a total lack of due diligence in the case. The Commission found that Dinelle had actual day-to-day care, custody and control of the said horses.

In the Matter of Wilbert Abraham, [2003] O.R.C.D. No. 1, Series No. COM SB 001/2003, the Commission dealt with allegations of Rule violations by one of the grooms whom Arthur Balson had employed and who had taken over from Arthur Balson with respect to some of the horses he had been training. The Commission found that Dinelle, the suspended trainer remained involved in the decision-making process and in the control and direction of the horses in question, as he had done when Balson was trainer, even though he ceased to jog or train the horses in the public view. The Commission found that Dinelle was the conduit between Abraham and most of the owners with respect to the control and direction of the horses. In that case, the Commission held that Abraham had violated Rules 26.15, 6.21, 6.20(b) and 6.27.

The facts of this appeal deal with events in 2003. Russell Moulton held a groom’s licence. Kathryn Knapp, his spouse, held an owner’s and groom’s licence. Darryl Farr held a trainer’s and owner’s licence. The only change since then is that Russell Moulton has since acquired his trainer’s licence.

In 2003, horses owned in whole or in part by Kathryn Knapp earned just under $100,000. Darryl Farr, who was the trainer of record for those horses, earned just under $5,000 from the 5% of the purses won.

Mr. Moulton was in the horse racing business 40 years ago and testified that in 2003 he felt he did not have either the health or the knowledge to be a trainer. He said he got the application form from Standardbred Canada to become a trainer but because of his bone marrow treatments he was unable to get the health certificate signed by his doctor that was required as part of the licensing. Instead he got a groom’s licence. At some point he became eligible to have the health certificate signed and also to feel more comfortable with his knowledge, so that in 2004 he applied for and obtained his trainer’s licence.

The only trainer of record noted in the programs for races in which the Knapp Moulton horses raced was Darryl Farr. He is a roofer as well as a race horse trainer. He trained his own horses, when he had his own, and the Knapp Moulton horses, and he has been licensed for 15 years.

Because of our findings below it is important to set out exactly what the Judges found that forms the basis for the rulings that are appealed to us. Kathryn Knapp was found to have knowingly withheld information and provided false and misleading information to an investigator and the Judges in her statements relevant to the actual trainer throughout 2003 of horses owned by herself and in partnership. Further she provided inaccurate information by declaring Darryl Farr as her trainer in 2003. The Judges found her guilty of misconduct prejudicial and injurious to the best interests of racing by naming someone other than the actual trainer on her horses throughout the year 2003, thereby misleading the horse racing industry and damaging the integrity of harness racing.

The Judges’ ruling concerning Russell Moulton is that he violated rules 3.02 and 26.01 by participating as a trainer of horses owned in whole or in partnership with others by Kathryn Knapp throughout 2003 without having first applied for and been issued a trainer’s licence by the Commission for the current year. The Judges found that he did knowingly withhold information and provide false and misleading information to investigators and the Judges concerning the actual trainer of horses owned in whole or in partnership with others by Kathryn Knapp throughout 2003 and did provide inaccurate and misleading program information by falsely declaring someone other than the actual trainer throughout 2003. The Judges found him guilty of misconduct under Rules 6.20(a) and (b) with respect to the misrepresentation of the trainer, thereby misleading the horseracing industry, and the public and damaging the overall integrity of harness racing. The Judges found that he had provided false and inaccurate information on his licence application that he was bona fide employed by a trainer.

The ruling of the Judges concerning Darryl Farr relates to the issue of the misrepresentation as to who was the trainer and also in his falsely confirming the employment status of a groom on an ORC licence application.

WHO IS THE TRAINER?

Judge Patty Webb testified that the Judges concluded that Mr. Farr was not the trainer of record of the Knapp Moulton horses because of many factors, bearing in mind the provisions of Rules 26.15 and 26.16. These factors included the division of labour between Mr. Farr and others, his fulltime roofing job, the physical location of the Knapp Moulton farm far from Mr. Farr’s home, his lack of involvement in the daily jogging, care and training of the horses, the lack of records kept by Mr. Farr, and his lack of knowledge of the veterinary work done on the horses or the condition of the horses.

The Administration’s position was that so many of the headings of Rule 26.16 were responsibilities carried out by Mr. Moulton and so few by Mr. Farr, that Mr. Moulton (and/or Ms. Knapp) should have been identified as trainer of record.

In the evidence before us it was established that:

a) The horses were stabled at the Moulton Knapp Farm and Mr. Farr was not in attendance at the farm every day or even on a consistent regular basis.

b) Mr. Farr lived about an hour and a half’s drive away (one way) from the farm.

c) Mr. Moulton and Ms. Knapp, with the assistance of others hired by them on an irregular basis in return for board and lodging or other non-monetary compensation, looked after the horses on a daily basis. Mr. Moulton jogged them, fed them and bandaged them. Ms. Knapp looked after the stalls, ordered the feed, dealt with other partners in the ownership of the horses, and paid the bills.

d) Mr. Farr was seldom at the farm when the horses were jogged in the morning

e) Mr. Farr was usually not in attendance when the vet came to check on the horses

f) Mr. Moulton and Ms. Knapp (or one of them) always trucked the horses to the track for training, qualifying and racing, and Mr. Farr was not always there for the racing. While Mr. Farr would warm up the horses usually on race night, Mr. Moulton arranged for a driver to warm up the horse prior to the race when Mr. Farr was not there.

g) Mr. Moulton called in the race entries, not Mr. Farr.

h) Mr. Farr had no documents relating to the ownership, feeding, veterinary services, etc. of the horses. He did not even have documents relating to his own payment or income stream related to the horses. Only Ms. Knapp had any such records and these were incomplete.

i) Mr. Moulton or Ms. Knapp usually signed the Lasix form and Mr. Farr did only rarely.

j) Ms. Knapp chose the races to enter the horses, in consultation with Mr. Farr.

Mr. Moulton and Ms. Knapp respond to the allegation that Darryl Farr was not the trainer and that Mr. Moulton was, by saying that they were the owners and caretakers, but not the trainer.

Ms. Knapp and Mr. Moulton were frank in their evidence that what was hers was his and vice versa. The reason everything is in her name is apparently that Mr. Moulton was diagnosed with cancer twelve years ago and was given one and a half to two years to live. He has undergone extensive treatments including bone marrow treatments.

The context in which we must consider these issues is the context of the small horse racing operation where funds are extremely limited and where the owner(s) of the horses takes on jobs that would normally be done by a trainer or his staff, such as in the case of full time trainers with public stables offering their services to more than one owner. The Commission is charged under the Racing Commission Act, 2000 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.

Under Rule 24.01, an appeal is a request to review any decisions or rulings of the Judges or delegated officials. Under Rules 24.03 and 24.11 at the conclusion of an appeal to the Commission, the Commission may uphold, rescind, modify, or increase the penalty imposed by the Board of Appeal, the Judges or delegated official.

We must also consider the facts of this case in light of the Commission’s policy and efforts over the past several years, including requirement of better record keeping, to increase the integrity of the industry and to improve the public perception of the industry by requiring a more professional attitude towards record keeping and business practices by all participants, and most particularly by owners and trainers.

In the two cases to which we were referred, the Commission addressed the issue of the hidden trainer in circumstances where the hidden trainer was under suspension but continued to carry out trainer’s duties. In the cases referred to, the Commission had to address the issue of the division of labour as between a trainer whose name was printed on a program and a suspended trainer. In the circumstances of this case, we have one person who is licensed as a trainer and two people carrying out trainer’s responsibilities, both of whom acknowledge being owners of the horses, though one is not disclosed to the public on the race program.

In this case the issue is squarely raised as to the extent that an owner can assume the duties of a trainer, that a trainer is normally responsible for and for which he or she is supposed to have specialized knowledge.

One of the key issues from the regulatory perspective is whether or not the public knows whose skill is being used to bring the horse to the track, racing fit, and the likelihood that that skill will result in a winning horse on which the public can confidently wager. The program includes the name of the trainer of record and of the owner who hires the trainer. The public should be able to rely on the publication of the name of the trainer of record. There is a public interest in the transparency of the process so that those who are responsible for the day-to-day control and management of the horse are known to the public.

There is also a public interest in ensuring that the names of the owners who retain the largest share of the purses are known to the public and that the person who wishes to own race horses has been subjected to the appropriate level of due diligence prior to being licensed.

In this case it is clear that the owners, trying to save money on training fees, retained some of the jobs that trainers normally do. The day-to-day care of the horses clearly was discharged by Mr. Moulton and Ms. Knapp together with others whom they hired on a casual basis.

In terms of assessing the knowledge available to the wagering public as to who was training the horse to race, the public clearly were on notice that Ms. Knapp as owner would have a say, should she choose, as to the management of the horse because her ownership was disclosed. Mr. Farr’s contribution was also known. Mr. Moulton’s ownership was not disclosed. Further his role in the day-to-day management of the horses, to which he has testified here, was not disclosed. By the same token, the names of grooms who care for horses under direction of a trainer are not disclosed on a race program either. The difference between Mr. Moulton who is the owner and therefore has with Ms. Knapp the final say on how the horse is to be handled and by whom, and the unidentified groom, is that the groom works under the direction of the trainer whose identity is disclosed.

The testimony of Mr. Moulton was that there were several reasons why they needed a trainer. His health was not consistently strong such that he could always be able to jog the horses, and training them on the fast mile as well as working in the barn exposed his immune system to risks that it was ill-equipped to tolerate. He did not feel he had the knowledge to train, because of the fact that it had been many, many years since he had been licensed as a trainer and active in the industry. At some point however, he reached the stage where his health was sufficient that he could assume the full responsibilities and in fact he did in 2004.

Mr. Moulton and Ms. Knapp relied on Mr. Farr for the fast mile training, which was done, not on the Knapp Moulton farm, but at the racetrack where Mr. Farr would meet them. Mr. Farr was at the track on the nights that the horses raced 90 to 95% of the time. They also relied on him to harness the horses. Ms. Knapp relied on him to review the condition sheet with her to determine what races to enter, and which horse to enter, and to discuss those issues with her in making her selection. Mr. Farr would also provide comments on the physical condition of the horse with respect to shoeing and for the purpose of asking the vet for specific treatment, though he would not usually be on site when the veterinarian came to the farm to look after the horse.

The issue for us is whether or not at some point in 2003 there had been a transfer of the responsibilities for the training such that Mr. Moulton should have applied for his trainer’s licence and been shown as the trainer of record on the program page. Since one of the issues was Mr. Moulton’s health, which apparently improved as time passed, and his knowledge base which also improved over time, the likely point when he began assuming more and more responsibilities would be the last half of the year. In fact, in September, Mr. Moulton’s mother became very ill and Mr. Moulton indicated that Mr. Farr’s attendance at the farm and involvement with the horses apparently increased rather than decreased, though none of the appellants appears to have a clear recollection, depending on which statement one is referring to. Indeed, in December 2003 Mr. Farr indicated he had only been at the farm three or four times in the previous month in his statement to the investigator.

There is no question that the lack of records has caused a considerable ambiguity in the perception of the relationships. Mr. Farr’s record keeping is non-existent and he has only himself to blame for the perception by the Judges that he is not the trainer with day-to-day control, management and care of the horses because his conduct falls so far short of what is expected of a trainer with horses winning purses even at $100,000 per year.

Similarly Ms. Knapp and Mr. Moulton fall short of the standards of what is expected of owners in the documenting of the relationships of those on whom they purport to rely in their horse racing business. The lack of documentation and records is consistent with an effort to avoid a clear auditable business and with the creation of an income situation that minimizes the income received by any of the parties. What records Ms. Knapp had were solely sufficient for the purpose of establishing some expenses for deductions for income tax purposes.

Having considered all the evidence and observing the witnesses in the stand we have concluded that the three witnesses have established to our satisfaction that Mr. Farr was responsible for and did conduct sufficient of the trainer’s responsibilities that he was properly identified as the trainer of record, in all the circumstances of this case. We accept the evidence of Ms. Knapp and Mr. Moulton that Mr. Farr was present at the vast majority of the races, and warmed up the horses, and that Mr. Farr’s judgement was determinative in choosing the races, in obtaining vet care, shoeing the horses, in doing the fast miles, in decisions on the harness, the Lasix dosages, etc. We therefore grant Mr. Farr’s appeal from the Judges’ rulings as to the allegations as to the hidden trainer, being violations of Rules 6.20(a) & (b), 6.21 and 26.06, and the appeals of Ms. Knapp and Mr. Moulton with respect to Rules 6.21 and 3.02 with respect to the hidden trainer allegations.

REPRESENTATIONS TO THE COMMISSION AND TO THE INVESTIGATOR

On the basis of the evidence led before us in this hearing, clearly Mr. Moulton should have been disclosed as an owner on the program. He was not. All of the appellants were aware that Mr. Moulton had an interest in the horses.

Mr. Moulton denied to the investigator that he owned any horses but in the hearing before the Commission he and Ms. Knapp were clear as to the joint ownership. He also admitted that he had previously been an owner of an interest in a race horse and had failed to be properly licensed because he was focused on just staying alive at the time.

In Ms. Knapp’s statements to the investigators in her statement dated December 18, 2003 Exhibit 9 she told the investigators that she made no additional payment to Mr. Farr beyond the 5% of the purse paid automatically to the trainer. This was not the evidence she gave before this panel. She testified before this panel in an effort to buttress her defence that Mr. Farr was the trainer, that in fact she paid him an additional $150 to 200 per week cash.

We find that both Ms. Knapp and Mr. Moulton failed to provide truthful information to the investigator on the issue of the trainer. Indeed neither of them appears to appreciate the public interest in being truthful to the regulator.

Based on our findings above, the appeals of Ms. Knapp and Mr. Moulton with respect to Rule 6.27 of misleading the investigator are dismissed.

Darryl Farr refused to sign the written statements that were taken when he was interviewed by the investigator. Under the Rule 6.27 Mr. Farr is obliged to provide truthful information to an ORC investigator. Mr. Farr testified as to the reasons he did not sign the statement. He testified with respect to the first statement, Exhibit 8, that there were things that were wrong in it but he did not want to spend any time correcting them. With respect to the second statement, Exhibit 11 that he also refused to sign, he said that he could not remember giving it and that he sometimes gets nervous. He testified that he was wrong in the statement when he gave the number of times he went to the farm to carry out his responsibilities, that he remembers the time period better now. He now says he attended more often that he indicated to the investigator.

Exhibits 3 to 7 inclusive are application forms for licences and renewals of licences completed by Russell Moulton and Kathryn Knapp. On Ms. Knapp’s applications she indicates that she is self-employed off track. Mr. Moulton indicated in his applications that he was retired or alternatively did not complete the box to indicate any employment off track.

At the bottom of each of these exhibits there is a box to be completed, headed “EMPLOYERS OF GROOMS, OCCUPATIONALS OR PARI MUTUELS”. This portion of the form includes the statement:

“If the applicant is not self-employed at the racetrack the following certificate must be signed by the employer. Failure to comply could result in action against the employer.”

Darryl Farr signed the box representing himself to be the employer of Russell Moulton and Kathryn Knapp on each of their applications, though in the 2002 application by Russell Moulton, (Exhibit 6) Kathryn Knapp is listed as his employer. On the basis of these documents and the evidence given before us, those applications were in fact false.

In the course of the interview with investigator Beirnes, questions were put to Mr. Farr as to whether or not he employed Ms. Knapp and Mr. Moulton.

We accept the evidence of Ms. Knapp, Mr. Moulton and Mr. Farr that Ms. Knapp and Mr. Moulton were not at any time employed by Mr. Farr. The applications have therefore been filled out inaccurately. Further Mr. Farr’s statements to the investigator that Ms. Knapp and Mr. Moulton were his employees were in conflict with his evidence before us.

We have considered Mr. Farr’s testimony, his demeanor in the stand and the evidence of the investigator. We do not find the reasons Mr. Farr gave for not signing the statements to be bona fide. The Judges did not, however, find Mr. Farr to be in violation of Rule 6.27 for his failure to be misleading to the investigators or to the Judges. He was, however, found to be in violation of Rule 26.09 with respect to the misrepresentations on the licence applications and his appeal from this finding of the Judges is dismissed.

With respect to the misrepresentations on the licence applications, we find that Ms. Knapp and Mr. Moulton have filed false documents with the Commission and that this conduct is injurious to racing and prejudicial to the best interests of racing. Their appeals with respect to Rules 6.20(a) and (b) are dismissed.

Before leaving this issue we would point out the application form for grooms seems to be clear that the portion on the bottom of the form is to be filled out by the trainer employing grooms The Rule 26.09 is not clear as to what the intention is in the case of self employed grooms in that the Rule requires that all grooms must have their status confirmed by the trainer actively using their services but there is no place on the form to confirm that the groom is self employed. Given our findings above, the ambiguity in the form is not relevant as to whether or not there was a rule violation. We have, however, been mindful of this ambiguity in assessing penalty, in conjunction with the other facts of this case.

DEFENCE OF HIDDEN OWNERSHIP

We note that on the evidence of Ms. Knapp and Mr. Moulton, Mr. Moulton should have been disclosed as an owner of the horses. That ownership was put forward as the reason Mr. Moulton was so involved in the day-to-day management of the horses. By failing to disclose his ownership interest he and Ms. Knapp deliberately shielded, from the public, information which is regarded as important enough to be a requirement in the racing program.

Counsel for the appellants put forward the proposition that because the appellants were married, the regulator should have assumed that whatever horse was in Kathryn Knapp’s name as owner was also owned by Russell Moulton. In fact, other licensees who are married would be very concerned about that assumption and conclusion given the repercussions when a horse owned by one spouse is suspended. See Rules 2.53, 17.12.1, 6.13 and 6.14. Further, whatever the regulator might assume, the issue is notification to the public of those who have an ownership interest in the horse racing and on which the public are to wager.

The Judges were quite specific that the basis of the Rules violations related solely to the naming of the trainer, the false applications indicating employment by Mr. Farr, and the provision of inaccurate information to the investigator in that regard. This is a hearing de novo and there is no transcript of the Judges’ proceedings so no determination can be made as to whether or not the Judges were clearly faced with the same defence by Mr. Moulton and Ms. Knapp as this panel has had to deal with.

Investigator Beirnes indicated that initially the investigation of Mr. Moulton, Mr. Farr and Ms. Knapp came from an allegation of hidden ownership as well as hidden trainer. Mr. Moulton says that such an investigation as to hidden ownership was previously undertaken some years ago and did not result in any ruling against him. In this case, he has used his undisclosed ownership as his shield on the hidden trainer allegations.

In the argument, neither party dealt with the issue of whether or not this panel could or should make a finding as to a violation of Rule 6.21, the hidden ownership rule, and Rule 3.02, which imposes the obligation to apply for a licence in the correct category. Further there was no argument as to whether or not we could impose a penalty for the Rule violations admitted before us as part of the defence to the violations that were alleged. It was open for the Administration to make that request so that the issue could be fully argued.

There is a serious issue as to whether or not this panel can conclude that the licensees have violated Rules other than those referred to in the Judges’ Ruling, or in the case of Mr. Moulton, a violation of Rule 3.02 which related not to his being in fact the trainer but rather being the owner of an interest in the horses. We are mindful of the public interest, and we must deal with this matter in a manner that is consistent with the principles of honesty and integrity and social responsibility. There is, however, a countervailing interest that an individual licensee is entitled to know the jeopardy that is faced in regulatory proceedings. We note that the prehearing report indicates that the issue to be determined is related solely to who is the trainer of the horse and that the Judges’ rulings do not deal with the hidden ownership issue.

The issue stated in the prehearing report is narrow. The licensees were not given the opportunity to make submissions on the basis that the Commission might make a finding that Mr. Moulton was a hidden owner and therefore was in violation of the Rule 6.21 and Rule 3.02. The Administration at the conclusion of the evidence did not ask us to make the finding related to Rule 6.21 or 3.02 or address the issue of the Commission’s power to act on the defence as presented. The allegation that a licensee is a hidden owner is a serious one, and, while the evidence led by the licensees was clear on the point, our decision is that in all these circumstances, it would be unfair to impose a penalty in these proceedings, as opposed to proceedings that might separately be brought, for the licensees failing to disclose the hidden ownership on the race program.

PENALTY

Judge Webb testified that the reasoning behind the imposition of the penalties. The purpose of the fines imposed was to remove the benefit from Mr. Farr for the use of his trainer’s licence by Mr. Moulton and Ms. Knapp. With respect to Mr. Moulton and Ms. Knapp, the fine was set so that each of them bore what the Judges estimated would be a fair trainer’s fee for the daily training of the horses that were trained by Mr. Farr. No separate fine or suspension was assessed under each of the rule violations. Each also had their licences suspended for a period.

In the Balson and Abraham cases we have a further indication of the appropriate level of the fine and suspension in hidden trainer cases and also, in the case of Mr. Abraham, on the failure to respond to a summons.

We have been advised that, net of the expenses to race the horses, Mr. Moulton and Ms. Knapp received less than $10,000 in 2003. In our view, the appellants have been successful in the appeal concerning the Rule violation that has historically attracted the most severe penalties and which was the basis of the setting of the fines, that of the hidden trainer. Nonetheless, the Commission does not condone the unprofessional and cavalier attitude to the licensing requirements of the Commission exhibited by the three appellants, nor the failure of the appellants to respect the requirements of Rule 6.27.

In most cases of lack of truthfulness to the investigators, the fine is normally under $1,000. We therefore assess against each of Mr. Moulton and Ms. Knapp a fine of $750 each for the violation of Rule 6.27. With respect to the violations of Rules 6.20 (a) and (b) we assess against Ms. Knapp a fine of $250 and against Mr. Moulton a fine of $500.

We assess against Mr. Farr a penalty of $750 for his signing false applications for grooms’ licences contrary to Rule 26.09.

The licences of all three appellants are suspended, commencing five days after the publication of this decision, and will remain suspended until such time as the fines are paid.

We are not of a view to include a further suspension of the licences since no previous record of Rule violations relating to the same issues was brought to our attention, but we do anticipate that any further violations of this nature by any of the three appellants should attract a licence suspension.

Finally we note that this Commission cannot and will not condone the conduct of licensees who fail to maintain adequate records and who display the very casual approach to the regulatory responsibilities exhibited by these appellants.

This is the unanimous decision of the panel.

DATED this 14^th day of March, 2005.

Lynda Tanaka

Chair