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

AND IN THE MATTER IN THE APPEAL OF

STANDARDBRED LICENSEE DR. BLAINE KENNEDY

On September 20, 2005, the Executive Director ordered an Immediate Suspension and issued a Notice of Proposed Order to revoke the licenses of Dr. Blaine Kennedy and to issue a lifetime suspension of the licenses of Dr. Blaine Kennedy, pursuant to sections 21 and 23 of the Racing Commission Act, 2000. On September 23, 2005, Dr. Blaine Kennedy requested a hearing pursuant to section 22 of the Racing Commission Act, 2000.

A Commission Panel consisting of Chair Lynda Tanaka and Commissioners Jane Garthson and Brenda Walker convened for the hearing on November 7, December 16, 2005, and on January 10 and 13, and February 1, 2 and 3, 2006. Brendan Van Niejenhuis and Patricia Latimer acted as counsel to the Administration. Gerald Sternberg acted as counsel to Dr. Blaine Kennedy.

On hearing the evidence of Investigator Doug Griffis, Detective-Sergeant Steve Schandlen, Detective-Constable Cory Stewart, Investigator Jeremy Locke, Martin Fischer, Dr. Bruce Duncan, and Dr. Blaine Kennedy, and on hearing the submissions of counsel, the Commission upheld the Director's finding that Dr. Blaine Kennedy would not act in accordance with law, integrity or the public interest, having regard to his past conduct, set aside the Director's Order, and imposed an Order:

1. Revoking the licenses of Dr. Blaine Kennedy

2. Suspending such licenses for a period of seven (7) years

3. Imposing a fine in the amount of $25,000

The Commission issued written reasons for decision, which are attached to this Ruling.

DATED at Toronto this 1st day of May 2006.

BY ORDER OF THE COMMISSION

John L. Blakney

Executive Director

REASONS FOR DECISION

Dr. Blaine Kennedy requested a hearing with respect to a notice of proposed order and order of immediate suspension issued by the Director pursuant to Sections 21 and 23 of the Racing Commission Act, 2000. The hearing with respect to the matter commenced on November 7, 2005 before a panel of the Commission that was also responsible for hearing the matter related to Dr. James Flanigan.

The Grounds relied on by the Director for his decision to revoke the licenses of Dr. Kennedy were stated in the Order as follows:

"The Director proposes to order that the licenses of Dr. Blaine Kennedy be revoked for the reason that the Licensee is not entitled to a licence under Section 19 of the Act because:

a) there are reasonable grounds to believe that, while the Licensee carries out the activities for which a licence is required, that the Licensee will 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 licensee is carrying on activities that are or will be in contravention of the Act, the rules or the terms of the licence."

The particulars of the grounds on which the Director relied for the immediate suspension of Dr. Kennedy's licences as a veterinarian/owner on September 22, 2005 were set out in the notice as follows:

"The Director has ordered the licences of Dr. Blaine Kennedy to be suspended immediately for the reason that it is necessary in the public interest, because:

a) there are reasonable grounds to believe that, while the Licensee carries out the activities for which a licence is required, the Licensee will 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;

b) the licensee's conduct has placed the integrity of the horse racing industry in Ontario in question, and in particular, the quality and integrity of veterinary care of horses; and

c) the public interest requires that the license be suspended immediately."

PRELIMINARY MATTERS AND DISCLOSURE ISSUES

As noted in the reasons issued separately concerning Dr. Flanigan, counsel for the Administration requested consolidation of the two matters. The consolidation was ordered for reasons recorded in the day's proceedings. Other preliminary issues regarding the conduct of the hearing were dealt with and one witness gave evidence that day. In addition, documents were entered into evidence as Exhibits 1 to 5.

On the second day of the hearing, over a month later, counsel for the Administration brought to our attention the provision of Section 9.1of the Statutory Powers Procedures Act R.S.O. 1990, c. S.22 as amended, requiring consent of all parties to a consolidation, an argument not made on the first day of the hearing. The panel ordered that the hearing against Dr. Flanigan would proceed first and that the evidence already given with respect to Dr. Kennedy would be struck from the record of the proceedings concerning Dr. Flanigan. The panel ordered that the hearing with respect to Dr. Kennedy would proceed after the conclusion of the evidence and argument in Dr. Flanigan's hearing, and similarly that none of the evidence and argument related solely to Dr. Flanigan would form part of the record or of our deliberations concerning Dr. Kennedy.

Since the evidence on the first day (November 7, 2005) was led by the Administration on the basis that it would be evidence with respect to both licensees, counsel were charged with the responsibility of coming to agreement on the issue of what evidence from the first day could be considered as part of the case with respect to Dr. Kennedy. The testimony of the witness who took the stand that day was agreed to be relevant and therefore part of the proceedings concerning Dr. Kennedy. Despite initial disagreements concerning the admissibility of documents, proof as to the documents set out in the tabs in the document briefs prepared by the Administration was provided or agreed to and we accept the documents in Exhibit 1K and Exhibit 12K as being properly proven in evidence before us. Further, the exhibits that were led have been identified with respect to whether they are part of the case concerning Dr. Flanigan by the suffix "F" or part of the case concerning Dr. Kennedy by the suffix "K".

As noted in the reasons separately issued with respect to Dr. Flanigan, preliminary motions concerning the panel's jurisdiction, disclosure of documents and exclusion of witnesses were brought by counsel for the two licensees and dealt with by the panel orally. Also, counsel for the licensees brought a motion for a stay of the proceedings and this was rejected for reasons given orally.

We note that while an order excluding witnesses was made when the two matters were consolidated, the order continued to apply in the Kennedy matter as it had in the Flanigan matter. Dr. Kennedy was present and sat at the counsel table throughout the hearing concerning Dr. Flanigan, as it was not intended that he would testify in the Flanigan hearing.

THE ADMINISTRATION CASE

The grounds set out above on which the Administration relies deal with the relationship between Dr. Kennedy and one Fred Rogers, ("Rogers") and specifically with respect to the purchase by Dr. Kennedy of substances from Rogers that were intended to be used in his race horse veterinary practice. Rogers was not licensed to sell products under the Food and Drugs Act or under the Controlled Drugs and Substances Act. Acting on information from an informant, the Illegal Gambling Unit of the OPP secured search warrants for Rogers' business premises in London, Ontario on two occasions, one in July 2004 and one in October 2004, and executed those warrants. The search of the premises in October 2004 resulted in the seizure of business records including a Rolodex, business cards, and other documents as well as of unlabelled bottles and vials (empty and full), and caps, and labelled bottles and vials with substances whose distribution and availability is controlled under the two federal statutes referred to above.

Rogers was charged with illegal possession of testosterone and of marijuana contrary to the Controlled Drugs and Substances Act, but he died prior to the trial.

The evidence as to the obtaining of the search warrants and the execution of them was given by Detective Sergeant Steve Schandlen and Detective Constable Corey Stewart of the OPP. The Administration also called ORC investigator Doug Griffis, Investigator Jeremy Locke, Dr. Bruce Duncan who is the ORC Supervisor of Standardbred Veterinarians, and Mr. Martin Fischer an investigator for the College of Veterinarians of Ontario.

The two OPP officers and Investigator Griffis testified as to the procedure followed with respect to the search of the Rogers' premises and the handling of the documents and things seized there. Lists of the drugs seized were made by Investigator Griffis and Detective Constable Stewart. These were provided at Tabs 17 and 18 in Exhibit 1K in these proceedings.

Investigator Griffins testified that included in the substances that were found on the Rogers' premises and in his inventory of supplies were substances for which Rogers had no licence to sell. Also, Investigator Griffis testified as to documents found among the Rogers business records that identified sales to Dr. Kennedy. The investigator had reviewed all the business records to identify Rogers' customers from the records. Among those was Dr. Kennedy's business card at Alberton Veterinary Services. He organized the documents, including invoices of Rogers Stables Ltd., that contained the initials "BK" and allegedly contained references to sales to Dr. Kennedy. These invoices were marked as Exhibit 1K, Tab 7, along with a copy of some business cards including Dr. Kennedy's. There was only one individual whose name appeared in the business records with the initials "BK", and that is Dr. Kennedy.

In addition both OPP officers and investigator Griffis attended at Dr. Kennedy's clinic on April 7, 2005 with Mr. Martin Fischer of the College of Veterinarians of Ontario. Investigator Griffis served a Notice to Produce Records on Dr. Kennedy and Mr. Fischer conducted his own search under his powers, pursuant to the College's regulatory authorization, with respect to the veterinarian's records, and drugs and medications in his clinic, and his mobile unit.

Investigator Griffis re-attended at Dr. Kennedy's clinic on the day listed in the Notice to Produce Records, April 21, 2005, with ORC Investigator Jeremy Locke but only a staff member was there to meet them. She handed over a small bundle of documents she said had been compiled by Dr. Kennedy and indicated that Dr. Kennedy would be providing further records. When the investigator insisted that the day the documents were due to be produced had arrived, the staff person contacted Dr. Kennedy who authorized her to give to the investigator a box of records in addition to what he had already provided to the staff member to give to the ORC. The box of records was described as the remaining documents that Dr. Kennedy had not had time to review to determine if any of them were required under the Notice to Produce Records.

Included in the records produced by Dr. Kennedy pursuant to the Notice to Produce Records were accounting records. The records are reproduced at Tab 15 Exhibit 1K and provided details of expenses and payments to several parties including Rogers.

The Administration called Jeremy Locke, an investigator with the ORC who attended with investigator Griffis on April 21 to collect the documents that had been required to be produced under the Notice to Produce Records served on April 7. He testified that the receptionist Candace Morrell gave a small stack of records to them with an explanation that Dr. Kennedy, who was not there at the clinic, needed more time to sort the records. He testified that she subsequently gave them a large green tote of records and that later when he and investigator Griffis met with Dr. Kennedy he gave them more documents. Tabs 14 and 15 of Exhibit 1K are the documents that Mr. Locke retrieved from those given to him. He testified that the documents were not in any particular order. There were no accounting records provided for 2002, nor for any portion of 2003 or 2004.

Mr. Fischer of the College testified that Dr. Kennedy was suspended from July 1, 2003 to September 30, 2004 as a result of his writing a prescription for narcotics for horses outside Ontario. He testified with respect to documents from the College's files including compliance reports, documents concerning the lease of Dr. Kennedy's practice during the period of his suspension, and also correspondence in his file at the College, including Tab 9 being an exchange concerning the drug supply in his practice. Mr. Fischer also attended on April 7 and conducted a search of the files in Dr. Kennedy's office and identified two empty file folders labelled "Rogers, Fred" and "Rogers Stables", photographs of which are at Tab 12, Exhibit 1K. He also searched the mobile unit and the clinic's drug inventory. In the drug and medication inventory, he photographed certain drugs and seized bottles of substances that were not properly labelled and were mixed in with the containers of other drugs and medications. The photographs are at Tab 13, Exhibit 1K.

Dr. Kennedy gave Mr. Fischer access to his computer in his office and accounting records he kept on it. The accounting records were in a different program than that which generated the records that had notations of purchases from and payments to Rogers, produced at Tab 15, Exhibit 1K. The computerized records that Mr. Fischer reviewed showed no purchases from or payments to Rogers. These electronic records were not reproduced in hard copy for the hearing.

Mr. Fischer noted in the letter at Tab 9, Exhibit 1K dated October 22, 2004 from Dr. Kennedy in the listing of substances that were in his inventory, drugs such as P Block, No Bleed and Kentucky Red, names also used by Rogers in his inventory, i.e. these were substances known to be distributed by Rogers. As at April 7, the search by Mr. Fischer, Dr. Kennedy said the records concerning purchases from Rogers were not at the clinic. Candace Morrell told Mr. Fischer that there were no computer records concerning Fred Rogers' purchases. Mr. Fischer asked Dr. Kennedy to produce the records of the purchases and the only records produced, following a series of telephone calls exchanged between Mr. Fischer and Dr. Kennedy, were those at Tab 19 Exhibit 1K attached to a June 8, 2005 letter from Dr. Kennedy. These records consist of two invoices from Rogers Stables Ltd. to Dr. Kennedy.

Mr. Fischer testified that there were products in the inventory, which were not labelled in accordance with the College's requirements. Mr. Fischer found in the mobile vet unit and also in the office drugs unlabelled or poorly labelled in that the labels were partly torn off or badly worn. Some of the labels were handwritten, some were ripped, and there was at least one drug that Dr. Kennedy could not say where he got it. Other drugs were found in the inventory, that Dr. Kennedy told him were to go into the garbage, but were with the regular inventory instead of being separated.

Dr. Bruce Duncan is a senior veterinarian who is Supervisor of Veterinarians for the ORC. His statement of qualifications is given at Tab 4, Exhibit 12K. He testified that he participated in the execution of the search warrant in October 2004 of the Rogers' premises for the purpose of assisting the police and investigators with respect to the nature of the substances that were found on the property and also whether someone with a Livestock Medicines Act licence would be expected to have such medications in their inventory for sale. He also testified as to the risks that were inherent in the purchase by veterinarians of substances from suppliers such as Rogers that were not properly labelled and which might be used on horses without a veterinarian's supervision.

Dr. Kennedy provided a statement to OPP officers Stewart and Schandlen when they attended at his clinic on April 7, 2005. The statement is reproduced at Tab 3, Exhibit 12K. Each page of the statement and a correction to it is initialled by Dr. Kennedy. The statement was produced as a result of questions put to Dr. Kennedy and his answers that were recorded.

DR. KENNEDY'S TESTIMONY

Dr. Kennedy testified in response to the Administration case. He has been a practicing veterinarian since 1991 and he specializes in racehorses.

The first time Dr. Kennedy dealt with Rogers was when Rogers' staff brought a horse to his clinic for a Coggins test. His clinic is located close to Flamboro racetrack. He acknowledged purchasing some substances from Rogers but not substances that Rogers was not licensed to sell.

In the spring of 2003 his license was suspended by the College of Veterinarians of Ontario ("the College") until the fall of 2004. A Dr. Armstrong rented the practice pursuant to an agreement executed in July 2003 filed with the College to rent the clinic premises and purchase Dr. Kennedy's supplies. He took over use of the premises during that period (Tab 9, Exhibit 1K). Dr. Kennedy said that when he returned to the clinic when his suspension was over, the premises were not in good condition and his records had been moved from the filing cabinets to boxes on the third floor of the house in which his clinic is located. Dr. Kennedy said that he did not understand why Dr. Armstrong could not have simply left his files and records where they were in the cabinets.

We were provided with copies of correspondence by Dr. Kennedy to the College, complaining about the status of the controlled substances ledger that a veterinarian is supposed to keep, as well as complaining about moneys owing to him for the lease of the practice. Dr. Armstrong was obliged under the terms of the agreement to pay rent and pay for the supplies and to leave a current inventory of equal value or pay any balance between the value of the inventory at the start of the term and that at the end. The documents provided to us include Dr. Armstrong's lists of drugs and the difference between the two inventories and Dr. Kennedy's correspondence and lists with complaints about the inventory.

The accounting records that were provided and produced to us at Tab 15, Exhibit 1K clearly show purchases from Fred Rogers in the 2000-2001 period. Dr. Kennedy explained the notations of payments to and purchases from Rogers were as a result of purchases by a staff person without his knowledge. He testified that he and one other staff person could sign cheques for his practice. He said that this individual and one other person ordered the products for his inventory, that he would go over the inventory with them and they would order the product in or return product to the supplier. He has seven or eight suppliers that he approved them to use and they had general authority to acquire those products. For controlled substances he would have to sign for the order.

Dr. Kennedy recounted his going to the police concerning those activities, all intended to cast doubt on the reliability of the accounting records and to portray himself as being an unwitting victim of unsupervised activity of his staff. None of the versions of the events were convincing as being truthful. He first testified that he figured out there was a problem with his accounting records and the staff ordering product and stealing it in later 2004 and he discussed it with two local constables of the Hamilton Wentworth police who told him the case would be difficult to prosecute. He subsequently testified that he went to the police in early 2004. The individual he held responsible left his practice in mid-2002.

Dr. Kennedy also said that the accounting notations for "Fred Rogers" were in fact for a car dealership called "Frid & Nagy" and that there was confusion in those entries. No one from Frid & Nagy was called to testify to support the purchases from that entity that might have matched those from "Fred Rogers" and no invoices were produced.

We do not find the explanations of the accounting records provided by Dr. Kennedy to be credible. No evidence of the registering of the complaints with the police was provided to us either by document or the calling of other witnesses, such as the police officer or officers to whom the complaint was made. At least two different time frames were given for his registering the complaints, all of which were intended to exculpate himself from having any connection to the accounting records showing dealings with Rogers, except for the purchase of product that Rogers was licensed to sell.

Further no reason has been put forward for the staff, who are assumed to be operating under Dr. Kennedy's direction, making false entries for accounting records four and five years prior to the investigation in question. The allegation is that the staff were acquiring the drugs for their own use and then charging them to Dr. Kennedy's account. There is no evidence that Dr. Kennedy, whose care and attention to such details is clear in his dealings with Dr. Armstrong, would have missed the padding of his expenses with such fraudulent activity. Further no evidence was led of any investigation either before or after these records came to the attention of the Commission investigators.

No accounting records for 2002 were produced, despite the obligation on veterinarians to keep their records for more than the three years that passed between mid 2002 and April 7, 2005 when the Notice to Produce Records was served. Given the lapse of time, any issues that would have arisen concerning his purchases of drugs should have been revealed in his end of year accounting or at least one annual audit of his drug supplies prior to his being suspended by the CVO in 2003. He clearly had a detailed idea of his supplies bearing in mind his allegations concerning Dr. Armstrong who leased his practice from mid 2003 to mid 2004. When confronted with the accounting records that show the purchases from Fred Rogers that came from the documents he produced he testified that he had not seen these before.

Dr. Kennedy's evidence in which he tried to distance himself from the accounting records was not credible. He had enough knowledge of his accounting software to be able to direct Martin Fischer to the records that he wanted Mr. Fischer to review on the computer screen. He also, under questioning in the hearing, indicated an understanding of the different accounting software packages. One is left with the question as to why there were two different accounting software packages in the office.

Turning from the evidence of the accounting records that support his having done business with Rogers, there is the evidence that his inventory included substances that either he acknowledged purchasing from Rogers or were of the same name or type that Rogers sold. Dr. Kennedy blamed Dr. Armstrong, the veterinarian who had leased his practice, for the presence of at least some of the substances in his inventory, such as the substances known as "Coag" and "No Bleed" and also for the file folders within his active practice files referring to Rogers and Rogers Stables. Given the letters that Dr. Kennedy wrote to the College concerning the moneys owing, the state of the drug inventory, the evidence of the accounting records and the invoices, it is not credible that these drugs only came from Dr. Armstrong.

In addition, the evidence as to the location of the information concerning purchases from Rogers indicates a lack of openness by Dr. Kennedy. He told Mr. Fischer that the invoices concerning the purchases from Rogers were not at the clinic on April 7. It was not until two months later that copies of two invoices showed up. The computer records produced showed purchases from Rogers but the receptionist told Mr. Fischer that there were no computer records of the purchases from Rogers.

With respect to the evidence as to the invoices of purchases from Rogers, Dr. Kennedy is very specific that the "Jap Acid" was only used orally and only on his own horse Gal Hunter, a racehorse. Proof of the use of the Jap Acid in this way was submitted in the form of a computer print out as to the history of medication for the horse, dated in 2006. It documented treatment several years ago in 2000. It was not produced in 2005 though it fell within the description of documents that should have been produced to the investigators. Jap Acid, it is argued, is Hyaluronic Acid which is only a scheduled drug if it is given via intra-articular injection. It is Dr. Kennedy's evidence that Jap Acid is for sale in Ontario as shown in Exhibit 20K, a copy of an Internet page, which does not deal with "Jap Acid" but rather with Hyaluronic Acid and its use in humans. Dr. Duncan was clear in his testimony that he knew of Hyaluronic acid being used in equine care and of Jap Acid, but in the Jap Acid form he was only aware of it as an injectible, thereby bringing the federal regulations into effect. No evidence from clients was brought forward to support Dr. Kennedy's testimony that he only used it orally on horses and not as an injectible.

CONCLUSION

Counsel for the Administration characterized this case as depending on the credibility of Dr. Kennedy. He pointed to the invoices that had been identified as being part of Rogers business records and indicating purchases by Dr. Kennedy for a much longer list of substances than Dr. Kennedy was prepared to acknowledge and including unlabelled substances such as White Top and Red Top and Coag, Formidium, Jap Acid as well as vitamin complexes. With respect to the use of Jap Acid on only one horse, the quantities on the invoices are in excess of that amount. He questioned the validity of the documents produced by Dr. Kennedy, including the proof of the treatment of the horse Gal Hunter through documents that were not produced when requested in April 2005 and indeed did not find their way to be produced to the Administration until the evidence was in fact being led. Gal Hunter was, according to the ownership records, transferred as a racehorse shortly after the treatment with Jap Acid that had occurred over 45 days. The evidence on Dr. Kennedy's use of this substance and on the quantities that appear on the invoices is inconsistent.

Counsel pointed out that Dr. Kennedy raised justifications for his actions, which involved witnesses that had previously been called but to whom questions concerning the issue had not been addressed. For instance, Dr. Kennedy explained the presence of some of the substances in his truck at the time of the search on April 7, 2005 on the basis that Martin Fischer at some point had told him to keep those substances in the truck. When Mr. Fischer was in the stand, no questions were put to him about that conversation alleged by Dr. Kennedy to have occurred. This omission to put a factual matter related to an explanation of activity which is otherwise improper to the very Administration witness when he was in the stand is serious and undermines the credibility of Dr. Kennedy's evidence.

Counsel for the Administration acknowledged that while there was an absence of proof that Dr. Kennedy had purchased controlled substances from Rogers there was evidence that Dr. Kennedy was not willing to acknowledge a relationship with Rogers that involved purchases of a range of substances, including scheduled drugs. Further there were serious gaps in the record keeping and serious credibility issues in terms of Dr. Kennedy's response to the allegations against him.

Based on the race lines of Gal Hunter as a specific example, counsel for the Administration asked us to find that there is reasonable inference that Rogers' medications and substances found their way into the treatment of race horses via Dr. Kennedy and that those horses, including Gal Hunter, found their way through the usual channels into the ownership of other race participants.

Counsel for Dr. Kennedy pointed out that the onus of proof is on the Administration to prove its case by clear and convincing evidence. His position is that the Administration has failed to do so. He submitted that the Director erred in the reasons for the proposed order. He submitted that there are no substances that have been introduced that were sold by Rogers to Dr. Kennedy, that there is no evidence that Dr. Kennedy purchased White Top or Red Top, though he agrees that there is evidence that Dr. Kennedy purchased "Jap Acid" from Mr. Rogers, in a form that is not required to be sold with a prescription.

Counsel for Dr. Kennedy argued that the accounting records that noted at least twelve purchases from Rogers were not true and accurate. The argument is that there was a gap from June 2003 until October 2004 when Dr. Kennedy did not have control of his premises. He also referred to Dr. Kennedy's evidence that documents were moved or removed or missing due to the absence. He relied on the fact that Dr. Kennedy opened an accounting program and let Martin Fischer review the material on that program all of which related to the year 2001 and following. Dr. Kennedy's testimony was that he had not seen the accounting records that were produced to the administration in printed form and he had no knowledge of the entries that indicated payments to Fred Rogers.

In addressing the reliability of the accounting records that were produced, it is important to note the chronology. Dr. Kennedy was suspended by the College in the spring of 2003 and could not enter his clinic after May 2003. The search warrant under which the documents from Rogers business premises in Exhibit 1K were obtained was executed in October 2004, after Dr. Armstrong had left the clinic and Dr. Kennedy had taken over the practice and the building again. Rogers died shortly thereafter. The Notice to Produce Records was issued in April 2005. Counsel for Dr. Kennedy alleged that in the period between Rogers' death and April 2005 Dr. Kennedy's staff made the entries in question. The fallacy in this argument is that the records in question are for transactions in 2000 and 2001. The individual responsible for those records left his employ in mid-2002. The practice was leased in 2003 to Dr. Armstrong. Dr. Armstrong apparently bundled up the documents related to Dr. Kennedy's practice, noted the drugs in the inventory, and carried on as a veterinarian in the clinic building until the summer of 2004. There is no evidence that Dr. Armstrong had access to the accounting records of Dr. Kennedy at any point and it appears that he did what he could to separate Dr. Kennedy's files from his own records. Dr. Kennedy is apparently relying on his own failure to properly provide for his records in a professional manner in leaving them open to use or abuse by others.

Counsel for Dr. Kennedy also argued that there was no evidence that there was any danger to any horses treated by Dr. Kennedy. He argued that the Administration had an onus to bring forward that evidence. There is no requirement that actual danger to horses be shown. Dr. Duncan's evidence showed the risk to which horses may be exposed if those involved in medicating or treating them do not abide by regulatory systems designed to protect the horses and the public interest. The issue is Dr. Kennedy's compliance or lack of compliance with the regulatory structure that applies to those who would sell medications and to veterinarians engaged in the practice of equine medicine for racehorses and the likelihood of his complying in the future.

Counsel for Dr. Kennedy also acknowledged that the case against Dr. Kennedy is found in the documents. He argued that those documents were not reliable, as the records seized from Rogers' business premises included 2005 invoices. The documents in Tab 7 of Exhibit 1K included eight invoices with the initials "BK" and Dr. Kennedy's business card. Investigator Griffis' evidence was that no one else referred to in the Rogers' documents had those initials except Dr. Kennedy. Counsel also attacked the reliability of those records from the Rogers' premises on the basis that no invoices had been located among Dr. Kennedy's records to match those in Rogers' documents and the evidence of payments to Rogers in the Kennedy records did not correspond to those documents.

Counsel for Dr. Kennedy was permitted to review the Rogers' business records. He also could find no evidence that someone other than Blaine Kennedy with the initials BK was doing business with Rogers. A print off of all the licensees on the Standardbred Canada database with similar initials was produced as well as details of veterinarians of the same initials listed on the College website. No evidence was led from any other source that any of those veterinarians or licensees were customers of Rogers as identified in the business records.

While we accept that Rogers' business practices may well have included sloppy record keeping, there is an admission that Dr. Kennedy knew that Rogers was acting outside the scope of proper regulation and also that he did business with him. The business records of Dr. Kennedy, if accepted as true and correct, substantiate a not inconsiderable business arrangement. They are at odds with his testimony but his evidence in which he tries to explain the inconsistency is inadequate as noted above.

Counsel for Dr. Kennedy also referred to a letter that Dr. Kennedy had written in 1996 to the College of Veterinarians indicating that they should investigate Fred Rogers with respect to the sale of substances for which he had no licence. The argument is that when the College did not respond, Dr. Kennedy was entitled to assume that he had been wrong and that it was somehow acceptable to purchase pharmaceuticals from Rogers that he was not licensed to sell. There is no evidence from Dr. Kennedy that he was somehow mislead into believing the Rogers was properly licensed. His evidence is clearly that he did not purchase anything from Rogers that Rogers was not licensed to sell. Further, if an argument was to be made with respect to the 1996 letter to the College and the College's action on that letter, then those questions should have been put to Mr. Fischer who has been with the College for a number of years. They were not.

Counsel for Dr. Kennedy submitted that in assessing the credibility of Dr. Kennedy we should look at the person, look at the way he answers, whether or not his answers are straightforward. He points out that no reply evidence was led in response to Dr. Kennedy's evidence. Dr. Kennedy came across in the stand as a very intelligent but petty man. His complaints that his patient and other records were removed from his filing cabinets by another veterinarian when the practice was rented under the agreement with the College seem unreasonable. The other veterinarian was expected to run a practice from the office, so the packing up of Dr. Kennedy's records so that the two sets of records did not become mixed up seems eminently sensible.

Similarly the letters filed with the College, the records of the compliance inspections and the records of the inventory do not support his position that his records were complete and true.

As noted above we do not accept his explanation of his accounting records. Even if the dealings with Rogers shown on the one accounting system were through his authorization of his staff using Rogers as a supplier, rather than his own actions in the actual purchases, he is responsible for their actions as part of his veterinarian's practice. We do not accept his evidence that he has not seen those accounting records. It is his practice for which he is responsible and if he had not seen them, he wilfully closed his eyes to the records and the issues they raise. We are entitled to assume the staff acted on his instructions unless evidence is led to support the contrary, from someone other than Dr. Kennedy. Just as he alleged that there was ample opportunity for one of his staff to tamper with his records in the period 2004 till April 2005, the same opportunity existed for Dr. Kennedy. Absent some other evidence to support his position, we do not accept Dr. Kennedy's explanation.

Also his reaction to the request for documents from the Commission was one of impatience and condescension. The evidence he gave was that while he reviewed and separated out some documents, in the end he just handed over to the investigators the last box of records so that they could spend their hours reviewing a pile of what might well have been largely irrelevant records rather than doing the job himself.

As noted elsewhere in these reasons, Dr. Kennedy has not convinced us that any of his responses to the allegations are truthful. He has not convinced us that he did not purchase from Rogers the substances listed on the invoices identified by the investigators in Rogers' business records. More importantly he has not convinced us that he is mindful of and careful of his obligations as a licensee of this Commission and likely to abide by them in the future.

Finally counsel for Dr. Kennedy relied on an interpretation of the regulations under the Food and Drug Act under which he argued that the regulation did not prohibit Dr. Kennedy from buying substances for which Rogers had no licence because of the wording of the regulation. The evidence we have from Investigator Griffins as to the information he got from Health Canada and confirmed in the form of a letter at Tab 5 of Exhibit 1K is that Rogers was not licensed to sell drugs scheduled under the Food and Drugs Act or under the Controlled Substances Act. The argument being made by Dr. Kennedy's counsel is essentially that the contents of the letter are incorrect, that Rogers did not have to be licensed.

Counsel were granted the right to put this argument in writing supported by the proper documents including the regulations, the definitions section etc., so that the panel could review it. Counsel for the Administration was given time to respond to provide his interpretation of the regulation. The materials were received from counsel for Dr. Kennedy dated February 10, 2006 and included simply a letter restating the argument with out including the actual regulation. Counsel for the Administration provided written argument in reply on February 14, 2006.

The materials that have been provided to us by counsel for Dr. Kennedy do not substantiate his argument. The proposition he puts, that Dr. Kennedy could purchase scheduled drugs from any person, under the wording of the regulation, including Rogers who was not licensed, is inconsistent with his position that Rogers was not just "any person" because he was licensed under the Livestock Medicines Act. The proposition that the control of use of these substances is so loose that any person could sell them to Dr. Kennedy indicates a gigantic hole in the regulatory system designed to protect the public. We accept the submissions of counsel for the Administration on this issue as to interpretation of the regulations.

The Commission in this case is dealing with whether or not the Executive Director has reasonable grounds to believe that Dr. Kennedy will not abide by the principles of honesty, integrity and the public interest and will not abide by the Rules of Racing. It is a lesser test than proof on the balance of probabilities. Further the Administration does not have to prove a breach of the Rules on the balance of probabilities to support the Director's finding that a licensee will not act with honesty, integrity and in the public interest under the terms of the licence.

We noted Dr. Kennedy's appearance in the stand. While he spoke without hesitancy, the evidence he gave was inconsistent within itself and inconsistent with the way he presented himself as a careful practitioner who was aware of what was going on in his practice. He was therefore absolute in his denial of purchases from Rogers that extended back a number of years and for which the documentation indicated a level of dealings that he did not recall.

Dr. Kennedy explained the presence of the unlabelled substances as being given to him by others but they were not called to support his testimony. He indicated that some of the substances that drew Mr. Fischer's attention were to be destroyed but there is no indication that he had effectively managed his drug storage to prevent the use of such substances in his practice. Nor did he segregate those substances that he said he was given for testing from those he used in his practice. In short, his drug inventory indicated a lack of organization that should have reflected the strictures and requirement of regulated industry. While sloppiness in record keeping would not normally on its own attract penalty, Dr. Kennedy was quite prepared to argue over the inventory with Dr. Armstrong when it was to his advantage. Therefore we do not accept that the inclusion of the unlabelled and garbage substances was as a result of sloppiness on his part; rather he simply does not acknowledge the need to abide by the strictures of regulation.

Our finding is that the Director is correct in his assessment of Dr. Kennedy and the likelihood that he will comply with the regulatory structures restricting the sale of substances for use in a racehorse veterinary practice. Dr. Kennedy does have a record with the Commission as to drug violations. In addition he has already served a suspension issued by the College, also for a violation of regulatory controls with respect to substances for which a prescription is required. We do not however agree that a lifetime suspension is appropriate. We have before us Dr. Kennedy's record with this Commission. He was suspended and fined for his involvement with a positive test in 2002. He does not have the violation-free record of Dr. Flanigan.

We therefore impose a 7-year suspension together with a fine of $25,000, instead of the lifetime suspension. With respect to the fine, the last time he paid a fine was with respect to the positive drug test in 2002. The fine was $2,000. Dr. Kennedy has already been through a substantial period of suspension by the College of Veterinarians and had returned to his veterinary practice. His attitude towards the Commission and towards Mr. Fischer does not give us any confidence that he accepts the obligations of being licensed in a regulated industry with the same vigour as he accepts the privileges that go with his position. He is a young man who may well return to the equine practice for race horses after the 7 years are over, assuming he can satisfy the regulatory requirements of that time. The fine is intended as a specific deterrent to any potential for continued disregard of the need to abide by the strictures of regulation. In the event that he does return as a licensee in any capacity of the Commission our recommendation would be for a period of three years probation. This recommendation is not binding on the Director.

DATED this 1st day of May 2006.

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Lynda Tanaka

Chair