IN THE MATTER OF THE RACING COMMISSION ACT, S.O. 2000, c.20;

AND IN THE MATTER OF WOODSTOCK RACEWAY

AND IN THE MATTER OF RULING NUMBER GEN 8/2004

AND IN THE MATTER OF THE BUSINESS PLAN OF WINRAC

DEVELOPMENT INC., OPERATING AS WOODSTOCK RACEWAY

A Panel of the Commission consisting of Vice-Chair Todd, Commissioners Brennan and Kelly convened on October 13, 2004 regarding a Notice of Hearing issued to Winrac Development Inc. (“Winrac”) about the planned completion by August 3, 2004 of a new paddock at Woodstock Raceway.

Winrac made a commitment as part of the business plan submitted in support of the 2004 live and simulcast race dates application for Woodstock Raceway to complete a new paddock for the 2004 race season. In a hearing held May 20, 2004, Winrac made application to the Commission to extend the completion date committed to by Winrac to August 3, 2004. In Ruling GEN 8/2004, the Commission granted this extension, indicating in its reasons for decision that Winrac was required to meet its revised commitment, failing which the matter would be referred to a panel of the Commission.

In the hearing before the Commission Panel on October 13, 2004, Christopher Kruba represented Winrac and Tim Snell represented the Administration.

Upon reading the exhibits filed on behalf of the Administration and on behalf of Winrac, upon hearing the testimony of Mr. John Millson on behalf of Winrac and upon hearing the submissions on behalf of the Parties, the Ontario Racing Commission decided as follows:

Winrac did not have the new paddock completed before the commencement of racing in 2004;

After the Commission agreed to an extension in Ruling GEN 8/2004, there was further default and the paddock was not completed by the amended commitment date of August 3, 2004;

Therefore, there was non-compliance with “a requirement” of the Commission within the meaning of the Racing Commission Act, 2000 and Winrac should be fined $20,000.00 which sum shall be payable within thirty days from the date of the issuance of the Commission’s reasons for decision.

Winrac Development Inc. is hereby fined $20,000.00, payable on or before February 10, 2005.

DATED at Toronto, this 17^th day of January, 2005.

BY ORDER OF THE COMMISSION

John L. Blakney

Executive Director

REASONS FOR DECISION

A Panel of this Commission, consisting of Vice-Chair Todd, Commissioner Brennan and Commissioner Kelly, convened on October 13, 2004 with respect to a Notice of Hearing dated September 7, 2004 issued to Winrac Development Inc. in regard to their failure to comply with an amended business plan and in particular the completion on or before August 3, 2004 of the construction of a new twelve-race paddock at Woodstock Raceway.

The matter had its immediate origin in a hearing held on May 20, 2004 in front of the entire Panel of Commissioners. Winrac Development Inc. at that point in May 2004 had made application to the Ontario Racing Commission to inter alia ”clarify and amend” the 2004 backstretch improvement plan for Woodstock Raceway and specifically the commitment with respect to a new twelve-race paddock and the demolition of the old paddock.

At this October 13, 2004 hearing, Chris Kruba appeared on behalf of Woodstock Raceway and the Association that Woodstock operates under, namely Winrac Development Inc. The Administration was represented by Tim Snell.

Counsel for the Administration provided his opening followed by Mr. Kruba with his opening. The Association then called John Millson, the President of Winrac Development Inc. Mr. Millson’s was the only viva voce evidence heard.

We were provided with the several volumes of documents which were filed as exhibits on consent of all the parties giving the history of the issue. We received two books of documents from the Administration, respectively Exhibits 1 and 4. Additionally, we received a “Respondent’s Application Record” consisting of an affidavit with numerous exhibits sworn by John A. Millson. We additionally had the benefit of Exhibit 2 which was a transcript of the May 20, 2004 hearing before the entire Panel of Commissioners held on May 20, 2004.

It is common ground that a new twelve-race paddock to facilitate live harness racing at Woodstock Raceway was completed on or about October 12, 2004. Coincidentally, this was the last race date for Woodstock Raceway for calendar 2004.

The issue of a new twelve-race paddock for Woodstock Raceway has been before the Ontario Racing Commission for several years. As noted by the Chair in Race Date Reasons for Decision dated December 18, 2003:

“On one final note, with respect to Woodstock, the application indicates that some of the items of backstretch improvement plans filed for the 2003 application are not yet complete. Those works need to receive priority and the construction of the new paddock facility should be expedited.” (See Exhibit 5)

Exhibit 4 before us, and in particular Tab 1, references the commitment of Winrac Development Inc. as part of their 2004 live and simulcast race date application and business plan to complete a “new twelve-race paddock including test area, washroom facilities, etc.” for 2004. The Executive Director in his license for Woodstock Raceway for 2004 (see Exhibit 4, Tab 2) directed that there be compliance “with the backstretch improvement plan filed with the Director under the Act and accepted by the Commission…”.

The Executive Director on April 1, 2004 wrote Mr. Millson of Winrac Development Inc. confirming inter alia that: “The Commission expects that these commitments be fulfilled and a new paddock be installed before the beginning of the racing season for 2004.” (See Exhibit 4, Tab 3)

The subject Association through Mr. Millson responded under letter dated April 28, 2004 (Exhibit 4, Tab 4) indicating for the first time that: “We have run into a major time constraint that requires discussion.” The Commission was further advised in this same communication that construction of the new paddock would not begin until “after the Wood Show in the fall”.

The then acting Executive Director promptly on April 29, 2004 advised the Association in writing (Exhibit 4, Tab 5) of his immediate concern and stated that he was “not therefore satisfied with the proposed delay in the construction of the appropriate facilities for Woodstock”.

The Association in follow up communications dated May 10, 2004 then attempted to justify the delay in the construction of the new paddock at Woodstock Raceway “until the end of the 2004 racing season” based on Winrac being in “difficult financial circumstances”. There was further reference to a change in control in the corporate Association and reference to prior officers of the corporation having made commitments for the construction of a new paddock while “conspiring to petition Windsor Raceway Inc. and Winrac into receivership”.

As a consequence of the aforesaid chain of events commencing in December 2003 through and inclusive of May 10, 2004, a hearing was held in front of a full panel of the Commission on May 20, 2004 as referenced above. At that point, the Association, through Mr. Millson, proffered an amended business plan which was approved after hearing evidence and submissions from the Association, the Administration and the Ontario Harness Horse Association. This approval was contained in Ruling Number Gen 8/2004 which ruling specifically referenced the following:

“With respect to penalty, failure by the company to comply with the amended business plan will result in severe and substantial penalties. Imposition of a penalty in the event of failure to comply with this order will be referred to a panel to be established by the Chair.”

The amended business plan contained the commitment that the “new twelve-race paddock will be completed on or before August 3, 2004.” This business plan was signed by Mr. Millson as Chairman and President of the applicant and is found at Exhibit 3, Tab 2(a).

The aforesaid business plan indicated on its face at page 13 that the demolition of the old paddock at Woodstock and the construction of the new twelve-race paddock would require “discussions with the Woodstock Agricultural Society as they have a significant interest in the paddock as it is used for the Fair”. The plan further indicated that discussions with the Woodstock Agricultural Society were initiated in September of 2003 and that the applicant was “continuing to review the options of building the new paddock in 2004”.

Mr. Millson’s evidence and his affidavit contained in Exhibit 3, Tab 2, provided this Panel with a detailed history of Winrac’s construction delays and difficulties in having the twelve-race paddock completed by the August 3, 2004 date to which it had committed itself. We heard lengthy evidence and were presented with a significant compendium of correspondence centering on the Association’s landlord, the Woodstock Agricultural Society, being the causation for the failure to meet the August 3, 2004 completion date.

Additionally, we were advised that the Association was now controlled by Tandem Entertainment Corp. We were further urged that as a regulator, we should not impose any significant penalty on Winrac given that its controlling shareholder had just acquired control and had made “such a substantial commitment and investment in racing…”.

We were also urged to consider the imposition of sanctions and/or penalties against the Woodstock Agricultural Society. It was common ground that this agricultural society is not a licensee and does not conduct horse racing in any respect in the province of Ontario. Accordingly, this submission is without merit as there is clearly no jurisdiction with this Panel to deal with any purported or alleged acts of misfeasance, omission or commission by the Woodstock Agricultural Society.

It should likewise be noted that the Society was not a party to any of the proceedings before us. Winrac, through its counsel, Mr. Kruba, de facto recognized the within reality when he wrote to the Woodstock Agricultural Society under date of September 28, 2004 (Exhibit 3, Tab 2(j)) advising the Society, inter alia, as follows:

“Winrac immediately and throughout advised the Woodstock Agricultural Society that it would be held responsible for any and all fines levied by the O.R.C. as a result of the delay occasioned by the illegal acts of the Woodstock Agricultural Society and its directors. This is to confirm that Winrac still intends to seek full indemnity against the Woodstock Agricultural Society for any fines imposed upon Winrac by the O.R.C.”

In the Chair’s Reasons given on May 20, 2004 for the approval of the amended business plan and the August 3, 2004 paddock completion date as suggested by the applicant, she noted the then submission of the Administration seeking per diem penalties for failure to complete the paddock before the commencement of the racing season in 2004. The Chair further noted:

“The Commission believes that the company (Winrac) has had a reasonable time to accomplish the rectification of what has been an ongoing problem, and something that it recognized in the text of the business plan. However, we’re not prepared at this time to pre-set the penalty. We are prepared, however, to indicate that if the company fails to comply with the amended business plan, that the Commission will impose severe and substantial penalties on the company.”

This Panel’s enabling legislation, the Racing Commission Act 2000, provides in section 7(l) that there is power “to fix, impose and collect fines and other penalties for a contravention of this Act, the regulations, the rules or a requirement of the Commission made under this Act…”

The Association initially did not have the new paddock completed before the commencement of racing in 2004. Additionally and after this Commission agreed to an extension, as requested by the Association, there was further default and the paddock was not completed by the amended commitment date of August 3, 2004. We therefore find that there has been non-compliance with “a requirement” of this Commission with regard to the construction of the paddock by the Association.

The Administration urged upon us a monetary penalty of something in the range of $10,000 to $20,000. Conversely, Mr. Kruba asked for a suspended penalty given what he delineated was duly diligent efforts by the Association that were hampered and subverted by the Woodstock Agricultural Society and other factors.

We cannot and do not accept this submission on behalf of the Association.

The default by the Association here relates to a specific condition on an Association’s license as a racetrack. These conditions require strict compliance.

The evidence clearly indicates that the Association knew since 2003 that its landlord, the Woodstock Agricultural Society, had specific and particular interests in the details of the new paddock. It was incumbent on the Association to deal with its landlord and resolve their queries and concerns. We heard much evidence of dealings between the Association and their landlord after the May 20, 2004 hearing. However, it concerns us that there was very little detailed or precise evidence of meetings and dealings between the landlord and the Association prior to this Commission granting an extension on May 20, 2004. In short, we find that the Associations efforts throughout 2003 and 2004 up to the point of receiving the Executive Director’s letter on April 1, 2004 were deficient and wanting. As referenced by Mr. Millson himself at Exhibit 4, Tab 6, the real reason for the lack of attention to the plans for and construction of the new paddock appears to be the change in ownership of the Association and infusion of new management throughout late 2003 and 2004. Had the issues referenced in Exhibit 3 and Mr. Millson’s evidence have been dealt with in a timely fashion in late 2003 or the first three or four months of 2004, the requirements of due diligence might well have been satisfied. However, we find as a fact on the evidence before us that the appropriate clearances, concurrences and agreements required by or from the landlord were not sought or requested on a timely basis by the Association.

Accordingly, we do not accept Mr. Kruba’s submission of appropriate due diligence by the Association in its efforts to comply with either the original business plan or the amended business plan.

The directives of this Commission, their rulings, and the conditions put on the licenses of race tracks are serious issues and commitments of this type must be satisfied. The Association herein was warned in May that non-compliance with the business plan would result in “severe and substantial penalties”.

For the reasons above and in the present context, we have concluded that the Association should be fined $20,000.00 which sum shall be payable within thirty days from the date of the issuance of these Reasons.

We specifically conclude that the public interest and the best interests of racing dictate and require a significant penalty such as this when the directives of this Commission as the regulator of horse racing are not followed.

The above are the unanimous Reasons for Decision of this Panel.

DATED at Toronto, this 17^th day of January, 2005.

Larry Todd

Vice Chair