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

AND IN THE MATTER IN THE APPEAL OF

DONALD SALZSAULER AND 984428 ONTARIO LIMITED

REASONS FOR DECISION

Overview

1. Licensees Donald Salzsauler and 984428 Ontario Limited requested a hearing with respect to a notice of proposed order 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 December 19, 2006 before a Panel of the Commission.

The Grounds relied upon by the Director for his decision to revoke the licenses Mr. Salzsauler and 984428 Ontario Limited were stated as follows:

“The Director proposes to order that the licenses of Donald Salzsauler and 984428 Ontario limited be revoked for the reason that the Licensees are not entitled to a license under Section 19 of the Act because:

a. There are reasonable grounds to believe that, while the licensees carry out activities for which a license is required, that the licensees 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 applicants; and

b. The licensees are carrying on activities that are or will be in contravention of the Act, the rules or terms of the licenses.

The particulars of the grounds on which the Director relied for the immediate suspension of Donald Salzsauler and 984428 Ontario Limited as an owner and as a licensee respectively on November 14, 2006 were set out in the notice as follows:

“The Director has ordered the licenses of Donald Salzsauler and 984428 Ontario Limited 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 licensees carry out the activities for which a license is required, the licensees will not act in accordance with the law, honesty, or in the public interest, having regard to the past conduct of the applicants;

b. The licensees conduct has placed the integrity of the horse racing industry in Ontario in question, and in particular, it is alleged as follows:

i. On September 14^th, 2006 a letter was sent from the Q.R. O.O.I. to the Ontario Racing Commission requesting an investigation into the eligibility of quarter horse “I’m Quick Say Bye Bye” to compete in a restricted race at Ajax Downs. The race in question is the Alex Picov Memorial Futurity and the conditions of the race require entrants to be Canadian bred or foaled.

ii. The writers of this letter are of the opinion that this horse was not foaled in Ontario as stated in the certificate of registration from the American Quarter Horse Association but foaled in the State of Texas under the embryo transfer program. The current owners of this horse are Ivy Lane Racing and 984428 Ontario Limited. A document from the American Quarter Horse Association outlining the date and location of the artificial insemination to the foaling date and location accompanied this letter; and

c. The public interest requires that the license be suspended immediately.”

Background

2. Administration counsel, Ms. Luisa Ritacca informed the Panel that the Administration was opposing the request from the appellant for an immediate stay pending a full hearing.

3. Ms. Ritacca proposed to enter as Exhibit #1 for the administration an 11-tab binder, which she said, “was for narrative purposes”.

4. Counsel for the appellant Ms. Laura Young objected claiming she had only seen the material immediately prior to the hearing and it prejudiced her position as she could not argue the merits to it and was not able to cross examine the investigators.

5. The Administration argued that ORC rules allow for hearsay evidence and cited 9.2 of the ORC Rules of Procedure.

6. The Panel took a brief adjournment to consider the merits.

7. On returning it ruled not to allow the administration to enter the 11-tab binder as Exhibit #1 stating that it is the policy of the Commission for full disclosure, that the binder should have been provided to opposing counsel in advance.

8. Ms. Young entered as Exhibit # 1 for the appellant the Motions of Record, an order staying the immediate suspension of the licenses of the Moving Parties with the consent of the administration counsel.

9. Ms. Young suggested that the Panel has the authority under Section 23 of the Racing Commission Act to overrule the Director and grant an immediate stay.

10. We were told that the appellant agrees that the horse “I’m Quick Say Bye Bye” did race in the Alex Picov Memorial Futurity on September 17, 2006 and that the race is restricted to horses foaled or bred in Canada.

11. Furthermore, we were informed that the horse was foaled via a surrogate mare on June 15, 2004 via an embryo transfer program.

12. The appellant, Ms. Young said, claims that the horse in question was foaled on his farm in Georgetown, Ontario, that the claim the horse was foaled in Texas thus making it ineligible for the September 14, 2006 race is incorrect.

13. The appellant’s counsel stated that he wants to prove this fact at a full hearing.

14. Ms. Young claimed that the order is very prejudicial to the appellant who is a full-time breeder and horse person with about 300 horses and that in addition to his ranch in Texas, he is looking to expand the Ontario operation (embryo transplant) but has had to delay those plans pending the outcome of this issue.

15. We were told by Ms. Young that with the suspension in place, the appellant’s ability to be licensed in other jurisdictions is at risk and with it the ability to register foals in the respective restricted racing jurisdictions, not to mention his reputation.

16. Appellant’s counsel recognized the extraordinary powers granted to the Director under Section 23 of the Act. That right can deprive a person from earning a living we were told, in the name of the public interest and that calls into question the standard for such determination.

17. Four cases were referenced to the Panel by Ms. Young that have come before the Commission re Section 23. They are as follows:

a. Lane issue of racing 3-year-olds as 2-year-olds (no stay

requested)

b. Kennedy/Flanagan accumulation of $2m prize money (stay requested/denied)

c. Barkley no stay requested (constitutional challenge)

d. Evans Woodbine exec affair with steward

(stay requested granted with consent)

18. Ms. Young referenced information in Exhibit #1, specifically tabs 6 and 7 which referred to Supreme Court of Canada decisions re. the request for stays and the test used by the Court. They are as follows:

a.is it serious?

b.is there irreparable harm?

c. the balance of convenience (need to balance the interest of the public & the appellant).

19. Appellant’s counsel asserted that with the exception of the Kennedy/Flanagan case the Commission has used the tests as referenced above. With respect to that case the Panel was told the decision was wrong, as it relates to the test and it should be ignored.

20. Further, we were told that if the tests are applied to her client, the criteria will be met just as they were in the Docks case as set out in Tab 7, as the Court found it was serious, there was irreparable harm and the balance of convenience (inconvenience) was present.

21. The Panel was told that for her client it is serious, it impairs his ability to breed, register foals and race in Ontario and that there is no public interest at play in that the racing season in Ontario was over before the suspension was issued.

22. Counsel for the appellant stressed to the Panel that she was arguing on her client’s behalf solely on the merits of the public interest and there was no suggestion that the Director was acting in bad faith.

23. The Administration started its response with a clarification for the Panel. Ms. Ritacca stated that opposing counsel had the benefit of full disclosure. What was to be Exhibit #1 for the administration and rejected, she said, was the material provided beforehand but assembled into a binder with tabs.

24. Ms. Ritacca informed the Panel on behalf of the Administration that requests for stays are received and granted.

25. There was some discussion between opposing counsel as to the numbers but in the end there seemed to be agreement with the statement.

26. The issue for the Panel, it was told, is as to the order of the process. Reference was made to the Racing Act, 2000 # 12.6 as it deals with stays. It reads, “An order of the panel takes effect immediately unless the order provides otherwise”.

27. The assertion, we were told, was that the common law test applies after a hearing as it was in the Docks case with the tribunal ruling being made beforehand.

28. The Administration stated that the Director ordered the suspension on November 14, 2006 for the reasons outlined in Tab 2, 2 b of Exhibit #1 for the appellant. They are as follows:

a. there are reasonable grounds to believe that, while the Licensee carries out the activities from which a license 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.

29. The allegation, we are told, is that the licensees misrepresented the place of foaling of the horse, “I’m Quick Say Bye Bye”, that the horse was foaled in Texas versus Ontario thus making it ineligible to race in the Alex Picov Memorial Maturity which is restricted to Canadian bred or foaled horses and that based on a subsequent investigation and the report provided to the Director the suspension was ordered as per Section 23 of the Act citing the need to protect the “public confidence in the integrity of information pertaining to horse racing must not be harmed”.

30. The Administration agreed that the power granted to the Director under Section 23 is exceptional and noted that only the Director, not the Commission has this authority.

31. The Commission, it was argued by the Administration, is limited to what is set out in the Act and can only act after a hearing to set aside as outlined in Sections 22.5, 22.6, 23.3 and 23.4.

32. The usual practice, we were informed, operating under Section 22 of the Act is that if the Director believes there is reason to believe that a person will not act with integrity and honesty the Director will issue an Notice of Proposed Order. That person has 15 days to request a hearing. Only after the hearing is a penalty imposed unless the person does not request that hearing. However, the Director may use the Section 23 authority and order an immediate suspension, as was the case for Salzsauler.

33. The Administration maintained that the request for this stay does not follow the process set out in the Act. Further, that there would be no purpose to move forward on the request utilizing the test referenced by opposing counsel and overturn the Director’s suspension. Ms. Ritacca suggested the Panel does not have to apply the Court’s common law test.

34. The Administration referenced two cases that were previously before the Commission as they relate to stays, the Kennedy/Flanagan case and the Evans case where both requested stays of an Order for immediate suspension before a full hearing.

35. In the Kennedy/Flanagan case the request was made on the first day into a multi-day hearing. The Commission turned down the request for the stay. It said “In these circumstances before us, we are a at very early stage in the hearing, and we agree with counsel for the Administration that it is very difficult for this Panel, given the stage of the evidence and given the evidence we have before us at this stage, to, in essence, contradict the Director’s order….. Now it may well be in proper circumstances that we might; that the Administration is wrong; that we can make other orders in the course of a hearing which starts as an immediate suspension order, but in this case we’re not prepared to grant the stay.” Kennedy and Flanagan (Ruling on Stay), transcript p 182-3.

36. In the Evans case, as a Woodbine executive Mr. Evans was alleged to harass a steward. There the Administration agreed to a stay based that he would comply with conditions on his license subject to a full hearing, that the legal system had already started its process and that in doing so the Director agreed that the public interest was being looked after.

37. Counsel for the Administration, in summary argued:

• that the Director has express statutory jurisdiction to decide whether the public interest requires an Order of Immediate Suspension,

• that the Act gives the Commission the general power to confirm, or overturn, that determination after a hearing has been held,

• that while circumstances would justify a stay of the Director’s determination, these circumstances would involve a clear showing that the Director or his delegates were improperly motivated, or that there was simply no public interest issue arising from the circumstances.

38. Ms. Ritacca said for that reason the order is valid, that restricted races are held to promote a thriving Ontario breeding industry and the information related to them needs to be accurate in the public interest.

39. Administration counsel said that Mr. Salzsauler was provided an opportunity to clear up the issue as to foaling location of the horse “I’m Quick Say Bye Bye”.

40. We were told by Ms. Ritacca that the impacts on the business hold for all suspensions. The Director takes this into account but must balance the public interest versus that of the financial burdens on the licensee.

41. The suspension, it was noted by the Administration, does not prohibit the ongoing breeding operations of the licensee.

42. Counsel for the Administration suggested that the Panel was being asked to overturn the Director’s decision at this early stage without the benefit of a full hearing and that given the public interest issue that would be inappropriate as per Section 23 of the Act where the public interest is the over-ride.

43. The Panel was reminded by the Administration that in both the Docks and Metro cases cited by opposing counsel the stays were granted but imposed conditions on the applicants, similar to the Evans case. The assertion being, in both instances, the public interest was protected.

44. Administration counsel referenced the Megens case, Tab 9 in Exhibit #1 where a stay was dealt with under Section 22 of the Act not Section 23. Paragraph 17 summarized says that the Commission can review but will not be lightly interfered with a ruling and only after a review of the evidence.

45. Appellant’s counsel in her response stated that the investigator’s report is not proven and that the main issue is in the interpretation of it.

46. We heard that the Panel does have the authority to overrule the Director, that the Commission sits above the Director, that the Act as written does not mean that under Section 23 the Commission cannot review and if it so decides, to overrule.

47. In support of her case, Ms. Young referenced Sections 5, 6, 7k and n of the Racing Commission Act, 2000. Section 5 deals with the Objects. It reads, “The Objects of the Commission are to govern, direct, control and regulate horse racing in Ontario in any and all of its forms”. Section 6 reads, “The Commission shall exercise its powers and perform its duties in the public interest in accordance with the principles of honesty, integrity and social responsibility.” Section 7k which deals with the Commission powers reads, “to hold hearings relating to the carrying out of its objects and powers, to establish the procedure for hearings and to require, by a summons signed by the Chair or another member of the Commission, a person to give evidence on oath and to produce the documents and things that the Commission considers requisite in a hearing”. Section 7n reads, “ to do those things relating to horse racing in any or all its forms, or to the operation of race tracks at which horse racing is carried on, that are authorized or directed by the Lieutenant Governor in Council”.

48. Appellant’s counsel reiterated that under Section 23 of the Act that the Director may suspend if it is deemed in the public interest but that under clause 4 “If the licensee requests a hearing, the order expires on the same day the order of the panel takes effect” and that under Section 12.3 of the Act “the panel has the jurisdiction to determine all questions of fact or law that arise in a hearing before it”.

49. Counsel for the appellant stated that the request is to review and issue an overrule on the basis the Panel is not required to issue a stay only after a full hearing noting that the Evans stay was issued on consent by both parties.

50. We were told that the Panel should not be constrained by the Administration, that the request for the stay is not requiring it to determine the validity of the Director’s actions adding that the Court will decide if the Supreme Court’s test is satisfied.

51. With respect to the Kennedy/Flanagan decision Ms. Young said that there is no reference to the Supreme Court’s test and that the Panel should ignore it and that with the Evans case it was an integrity issue for the ORC and that with the criminal aspect in play the public interest aspect was being dealt with via the conditions.

52. In that regard, it was suggested to the Panel by the appellant’s counsel that conditions could address the issue such as prohibiting the horse from competing until a full hearing was held and that in discussions with opposing counsel there was agreement that hearing could occur by late March of 2007.

Issue

53. The issue for the Panel is as follows:

• When can the Commission interfere and overrule the Director’s decision made under Section 23 of the Act.

Analysis

54. The Panel takes very seriously the Objects of the Commission as set out in Section 5 of the Act, that is “to govern, control and regulate horse racing in Ontario”.

55. The Panel understands its role in preserving and protecting the public confidence in the records and information related to both racing and breeding of horses in the Province of Ontario.

56. The Panel also understands its authority granted to it under Section 22 of the Act.

57. The Panel also recognizes the rationale for granting the Director the authority to act under Section 23 of the Act.

Conclusion

58. The Panel, after careful consideration of the facts, agreed to grant the stay with conditions as set out in the ruling.

59. The Panel believes that the public’s interest is protected by the conditions and that with both the Administration and the appellant in apparent agreement that a full hearing on the matter will take place before the end of March, 2007 the question of the horse “I’m Quick Say Bye Bye“ is moot as the 2007 racing season will not be underway and the issue of foaling location for registering new foals for Ontario restricted races is covered by the required certification of a licensed Ontario veterinarian.

60. The Panel, in reaching this decision, continues to support the comments made in the previously referenced Megens decision, specifically # 17. It reads as follows:

“We are of the view that the Commission should not lightly interfere with the decision of the Director or his delegates. Nevertheless, the statute as above, provides the necessary jurisdiction and mandate to do so if a panel of the Commission is of the view, after reviewing all the evidence, that the proposed Order of the Director should not have been made.”

DATED this 9^th day of January 2007.

Rod Seiling

Chair