RULING NUMBER COM SB 022/2014
COMMISSION HEARING TORONTO, ONTARIO – JUNE 24, 2014
NOTICE OF DECISION
IN THE MATTER OF THE RACING COMMISSION ACT, S.O. 2000, c.20;
AND IN THE MATTER OF THE APPEALS OF IGOR VRABLIC AND THERESE VRABLIC
Igor Vrablic, licence # W52164 and Therese Vrablic, licence # W92772, appealed against Rulings made by the Deputy Director of the Ontario Racing Commission, on April 9, 2014, which suspended their standardbred licences, following their bankruptcies on March 20, 2014, for violation of Rule 3.09 of the Rules of Standardbred Racing.
Date of Hearing: June 24, 2014
ORC Panel: Anthony Williams, Vice Chair
Counsel for the Appellants: James Evans
Counsel for the Administration: Jennifer Friedman
Decision: The appeals were allowed in part:
(i) The suspensions were justified by the multiple violations of the Rule;
(ii) The reinstatement of the original licences is not appropriate;
(iii) The licence of Igor Vrablic as a Trainer remains suspended while he is an undischarged bankrupt;
(iv) The licence of Therese Vrablic as an Authorized Agent, Owner and Trainer remains suspended while she is an undischarged bankrupt;
(v) The Director may license Igor Vrablic and Therese Vrablic as Grooms, to work for wages for another licensed participant;
(vi) The bankrupt licensees may not carry on his/her trade or calling as an independent business or operate as a public stable without permission of the trustee in bankruptcy and the Director; and
(vii) The Director may impose further reasonable conditions upon their licences while they remain undischarged bankrupts.
The Panel’s Reasons for Decision is attached to this Notice.
DATED at Toronto this day 13th day of August 2014.
Steven Lehman
Executive Director
REASONS FOR DECISION
OVERVIEW
Igor Vrablic was licensed by the Ontario Racing Commission (“ORC”) as a Trainer of standardbred racehorses, licence # W52164.
Therese Vrablic was licensed by the ORC as an Authorized Agent, Owner and Trainer of standardbred racehorses, licence # W92772.
Igor Vrablic and Therese Vrablic (“the Appellants”) are married to one another.
On March 8, 1995, Igor Vrablic made a declaration of bankruptcy, #35-054670, as follows:
Liabilities: $233,050
Assets: $ 3,000
Discharge Date: September 23, 1997
Ex. 5, Tab 3
- On March 8, 1995, Therese Vrablic made a declaration of bankruptcy, #35-054671, as follows:
Liabilities: $111,050
Assets: $ 3,000
Discharge Date: September 23, 1997
Ex. 5, Tab 2
- On March 13, 2014, The Superior Court of Justice issued an Enforcement Record/Order. In The Matter of the SHAMROCK TRAINING CENTRE V. IGOR VRABRIC AND THERESE VRABLIC Court File No. SC-13-00001215-0000, which awarded Judgment in favour of the Plaintiff.
Ex. 5, Tab 4
- On March 20, 2014, Igor Vrablic filed an Assignment in Bankruptcy, #35-1849969:
Liabilities: $612,650
Assets: $ 6,000
Discharge Date: March 21, 2016
Ex. 3, Tab 1, at p. 1; Tab 2, at pp. 3-6, and Tab 3 at pp. 7-8
- On March 20, 2014, Therese Vrablic filed an Assignment in Bankruptcy:
Liabilities: $319,650
Assets: $ 6,000
Discharge Date: March 21, 2016
Ex. 4, Tab 1, at pp. 1-5
- On April 9, 2014, the Deputy Director of the ORC issued Ruling Number SB 16/2014 against Igor Vrablic and issued Ruling Number SB 17/2014 against Therese Vrablic which stated that each licensee “had declared bankruptcy and thereby has displayed financial irresponsibility (sic) on the sport of standardbred racing contrary to Rules of Standardbred Racing;
TAKE NOTICE that the licensees are hereby suspended until such time as they appear before the Deputy Director.”
Ex. 3, Tab 4, at p. 11 and
Ex. 4, Tab 4, at p. 10
- On April 11, 2014, the Appellants wrote to the Director to request a Hearing.
.Ex. 3, Tab 7, at p. 13, and Ex. 4, Tab 5, at p. 11
- On April 17, 2014, the Appellants wrote again to request “an early opportunity to appear before the Deputy Director.”
Ex. 5, Tab 6
- On April 18, 2014, the Appellants filed a Notice of Appeal against the Rulings.
Ex. 3, Tab 8, at p. 14 and Ex. 4, Tab 6, at p. 12
- On May 6, 2014, the Appellants wrote a letter to the attention of both the Director and the Deputy Director, requesting:
“to meet with the Deputy Director following procedure as was stated in your correspondence dated April 9, 2014, which stated:
‘That Therese and Igor Vrablic are suspended until such time as they both appear before the Deputy Director.’
We respectfully request this meeting in order to answer any questions that you may have so that our suspensions can be lifted and our licenses can be reinstated as soon as possible.”
- On May 7, 2014, an Amended Notice of Hearing set May 22, 2014 as the date for the hearing of the Appeals.
Ex. 3, Tab 9, at pp. 15-16 and Ex. 4, Tab 7, at pp. 13-14
- On May 9, 2014, Counsel for the Administration sent a letter to the Appellants:
“… on April 11, 2014, you wrote to the Director of the ORC to request a Hearing.
Further to receipt of your request, a Hearing was scheduled and a Notice of Hearing and an Amended Notice of Hearing were issued.
A Panel of the ORC is now engaged in connection with your appeal. When the Panel of the ORC convenes for the Hearing on May 22, 2014, it will hear your submissions and evidence, along with those of the Administration of the ORC.
In the circumstances, the Deputy Director cannot meet with you prior to the Hearing.”
Ex. 8
The May 22, 2014 Hearing was adjourned at the request of the Appellants.
On June 24, 2014, a Panel of the ORC heard the appeals.
The Decision of the Panel was reserved.
THE HEARING
This was a Hearing “de novo” or a fresh hearing.
The proceedings were combined on the consent of the parties, pursuant to Rule 10.1 of the Rules of Procedure of the ORC.
Ten exhibits were introduced into evidence:
(i) Factum of the Administration;
(ii) Factum and Book of Authorities of the Appellants;
(iii) Book of Documents of the Administration for Igor Vrablic;
(iv) Book of Documents of the Administration for Therese Vrablic;
(v) Supplementary Book of Documents of the Administration for both Appellants;
(vi) Trainer Racelines from Standardbred Canada for Igor Vrablic;
(vii) Trainer Racelines from Standardbred Canada for Therese Vrablic;
(viii) Letter from the Administration to the Appellants dated May 9, 2014;
(ix) Licensing History of Therese Vrablic; and
(x) Highlights of Submissions, made on behalf of the Appellants by their counsel.
- Counsel for the Administration called one witness:
(i) Robert Samuel McKinney, Deputy Director, ORC
- Counsel for the Appellants called four witnesses:
(i) Steven Alan Vrablic, son of the Appellants;
(ii) Natasha Elizabeth Vrablic, daughter of the Appellants;
(iii) Igor Alan Vrablic, Trainer of standardbred racehorses, Appellant; and
(iv) Therese Lynne Vrablic, Authorized Agent, Owner and Trainer of standardbred racehorses, Appellant.
THE RULES OF ENGAGEMENT
I The Racing Commission Act
Commission
(i) “Objects
- “The objects of the Commission are to govern, direct, control and regulate horse racing in Ontario in any or all of its forms.”
(ii) Powers and Duties
- “The Commission shall exercise its powers and perform its duties in the public interest and in accordance with the principles of honesty and integrity, and social responsibility.”
Powers
- “The Commission has power,
(a) to govern, direct, control and regulate horse racing in Ontario in any or all of its forms;
(d) to license owners, trainers, grooms, … and to impose those terms on a licence that the Commission considers expedient;
(e) to prescribe the form of licences and the conditions under which they may be issued, continued or renewed; …”
(iii) Director of the Commission
- “(1) The Commission shall appoint one of its employees to be the Director of the Commission.”
Powers and Duties
“(2) The Director shall,
(a) on behalf of the Commission, exercise the powers of the Commission described in clause 7 ... (d) … “
(iv) Deputy Directors
- “(3) The Director may appoint one or more Deputy Directors and may delegate the Director’s powers or duties to them, subject to the conditions that may be set out in the delegation.”
(v) Further Applications
Suspended Licence
26 “(2) No person whose licence is suspended may apply to the Director for a licence during the suspension.”
II The Rules of Standardbred Racing (the “Rules”)
Chapter 3
(i) Licences
3.09 “The Director may suspend the licence of any licensee who has accumulated unpaid obligations relating to racing, become bankrupt, or otherwise displayed financial irresponsibility reflecting on the sport. No such action shall be taken unless and until the Director is presented with a judgement or judgements from a court or courts having competent jurisdiction over the matter and the Director is satisfied that the participant is indebted and has been adjudged a debtor in a matter relating to Standardbred Racing in any of its forms.
In the case of a licensee who has become bankrupt, the Director may license such participant to work for wages for another licensed participant. However, the bankrupt licensee may not carry on his/her trade or calling as an independent business or operate as a public stable without the permission of the trustee in bankruptcy and the Director.”
III The Bankruptcy and Insolvency Act
R.S.C., 1985, c. B-3, S.S. 168 and 199
(i) Automatic Discharge
s. 168
The bankrupt will be given an automatic discharge, in the case of an individual who has been a bankrupt one time before on the expiration of 24 months after the date of the bankruptcy, unless the Superintendent of Bankruptcy, the trustee of the estate of the bankrupt or a creditor of the bankrupt gives notice of intended opposition to the discharge of the bankrupt before that date.
(ii) Failure to Disclose Fact of Being Undischarged
s. 199
“An undischarged bankrupt who
(a) engages in any trade or business without disclosing to all persons with whom the undischarged bankrupt enters into any business transaction that the undischarged bankrupt is an undischarged bankrupt, or
(b) obtains credit to a total of $1,000.00 or more from any person or persons without informing them that the undischarged bankrupt is an undischarged bankrupt,
Is guilty of an offence punishable on summary conviction and is liable to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding one year, or to both.”
(iii) The Purpose of the Bankruptcy and Insolvency Act
There are two fundamental purposes of the Act.
“The first such purpose is to ensure the equitable distribution of the bankrupt’s assets among the estate’s creditors, while the second is to provide for the financial rehabilitation of insolvent persons.”
Royal Bank of Canada v. North American Life Assurance Company 1996 CanLII 219 (SCC), [1996] 1 S.C.R 325, at para 15
(iv) General Principles
(i) Licence a Privilege
A licence is a privilege, not a right
Re: Manneke, Gerald [2009] O.R.DC.D. No. 29, at para. 26, RULING NUMBER COM SB 020/2009
(ii) Public Interest
The ORC, as a regulator, must perform its duties
(a) in the public interest: the fundamental interest is to protect the industry.
The public interest centres on the overall well-being of racing. The indispensable component is integrity.
Re: Chiaravalle, Antonio and Woodbine Entertainment Group [2008] O.R.C.D. No. 18, RULING NUMBER COM SB 027/2008
(b) “Integrity is the fuel upon which horse racing rides. No integrity, no future for racing and the thousands of hardworking licensees who depend on it for their livelihood.
The Director serves as the gatekeeper in protecting both the industry and the horse …”
Re: Czupa, 2012, CanLii 92269 (ONRC); COM SB 010/2012, SB 44628, Ex. 3, Tab 5, at paras 26 and 28
(iii) Standards of Conduct
(a) Participants in the industry must fulfil rigorous standards of conduct.
Re: Martino, Nick [2000] O.R.C.D. no. 20, at para 30, Series No. SB 178, 2000.
(b) Vigilance
Protecting the public interest in lawful regulated gaming requires constant vigilance and the exclusion of those who might reasonably be expected to seek improper gain or in any way stray from the highest standards of honesty and integrity and thereby bring the industry into disrepute.
Re: Schickedanz, Bruno [2001] O.R.C.D. No. 25, at para. 38, Series No. COM TB 9/2001
… “… the public has a legitimate expectation that the commission will discharge the regulatory duties entrusted to it, by effectively investigating those activities from which the … [trading] public require protection, and by exercising its regulatory powers so as to ensure that the purpose of the legislation, namely, the protection of the public, is achieved. On the other hand, the individual who is the object of such an investigation has from the outset known that he or she is participating in a highly regulated and controlled activity, … To apply to be licensed, which is a prerequisite to such participation, is to accept the expectation of constant and vigilant supervision.” “… in a highly regulated industry … the individual is aware, and accepts, justifiable state intrusions.”
British Columbia Securities Commission v. Branch 1995 CanLII 142 (SCC), [1995] 2 S.C.R. 3, Factum of the Administration, Ex. 3, Tab C, at pp 24-14, para 25 and at p 24, para 64.
(iv) The Burden of Proof
The burden of proof is upon the Administration.
(v) The Standard of Proof
The standard of proof is on a balance of probabilities.
(vi) The Quality of Evidence
“…evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities.”
F.H. v. McDougall
2008 SCC 53, [2008] 3 S.C.R. 41
at p. 44, para. 46
THE ISSUES
ISSUE I VIOLATION OF RULE 3.09
Q Did the Appellants violate Rule 3.09?
(i) Did the Appellants
“accumulate unpaid obligations relating to racing?”
(ii) Did the Appellants
“become bankrupt?”
(iii) Did the Appellants
“otherwise display financial irresponsibility reflecting on the sport?”
ISSUE II PENALTY
Q If an answer to a question in ISSUE I is yes, what is the appropriate penalty?
(i) Did the violation of the Rule justify the suspension of licence?
(ii) Is a reinstatement of the original licences appropriate?
(iii) Is a future application for reinstatement of the original licences appropriate while the Appellants remain undischarged bankrupts, based upon either substantial new evidence
or upon
a material change in circumstances
(iv) (a) Is a “work for wages” alternative appropriate?
(b) If yes, upon what conditions?
THE EVIDENCE
The Family Enterprise
The Vrablic family began their involvement with the racing industry “nearly two decades ago.”
They have worked “as a group.”
The evidence includes the following excerpts:
Igor Vrablic:
“Family business for a long time”
“Devastating if we couldn’t participate in the industry.”
“No other skill sets”
“We are not fly-by-nighters”
Therese Vrablic:
“What I know best is the horse racing industry”
“Heart wrenching and crippling to be denied that”
“I’m outdated” (for other employment)
The Statistics
- Standardbred Canada Trainer Racelines for Igor Vrablic from 2006 to 2012 recorded
364 starts;
1,147,133 money and a
0.240 UDRS.
Ex. 6
- Standardbred Canada Trainer Racelines for Therese Vrablic from 2006 to 2012 recorded
571 starts;
1,343,375 money and a
0.265 UDRS.
Ex. 7
The Letters
Four letters of reference were submitted on behalf of the Appellants, from two standardbred owners and two former employees.
The letters spoke of the strong family values of the Vrablics, their love of horses and their passion for the sport of horseracing.
Ex. 2, Part 3
Three Unsecured Creditors
- Igor Vrablic provided further information on three of the seventeen debts:
(i) his $340,000 debt to the Canada Revenue Agency;
(ii) their joint $20,000 debt to Shamrock Training Centre;
and
(iii) their joint $2,000 debt to Sharpe Farm Supplies Limited.
The Creditors and the Liabilities
There are 17 unsecured creditors for Igor Vrablic and Therese Vrablic.
There are $612,650 in liabilities for Igor Vrablic.
Ex. 3, Tab 2 at p.3
There are 17 unsecured creditors for Therese Vrablic.
There are $319,650 in liabilities for Therese Vrablic.
Ex. 4, Tab 1, at p. 2
Twelve of the seventeen unsecured creditors for both Igor and Therese Vrablic would appear to be for unsecured debts for which Igor and Therese were jointly and severally liable.
There would appear to be $251,000 in joint and several liabilities.
For Igor Vrablic alone, there are $361,650 in liabilities.
For Therese Vrablic alone, there are $67,964 in liabilities.
Plans for the Future
The Appellants stated that they will not own racehorses. The Appellants have stated that they will seek financial counselling.
There was limited evidence as to how they would change their lifestyles.
There was no realistic, considered plan to avoid another financial implosion.
THE DECISION
ISSUE I
Q Did the Appellants violate Rule 3.09?
A Yes.
Conclusion
- The Administration met the burden of proof, upon a balance of probabilities, by clear, cogent and compelling evidence that the Appellants:
(i) did “accumulate unpaid obligations relating to racing”;.
(ii) did “become bankrupt”;
and
(iii) did “otherwise display financial irresponsibility reflecting on the sport”, and did thereby violate Rule 3.09 of the Rules of Standardbred Racing.
ISSUE II What is the appropriate penalty?
Factors
- The Precedents
(i) The Appellants are participants in a highly regulated and controlled industry;
(ii) To apply to be licensed is to accept the expectation of constant and vigilant supervision;
(iii) Participants in the industry must fulfil rigorous standards of conduct;
(iv) The ORC, as a regulator, must perform its duties in the public interest, with the fundamental interest to protect the industry;
(v) The Director serves as the gatekeeper in the protection of the industry.
- Multiple Violations of the Rule
Each Appellant violated Rule 3.09 in all three ways.
- Second Bankruptcy
Each Appellant declared his/her second bankruptcy on March 20, 2014.
- Number of Creditors
Each Appellant had seventeen creditors.
- Value of Liabilities
Igor Vrablic had $612,650 in liabilities.
Therese Vrablic had $319,650 in liabilities.
- The Evidence
The Vrablic family enterprise, their experience with horses, their love of horses and their passion for horse racing were all evident in the testimony of June 24, 2014 and in the letters of reference.
- Time Already Served
Both Appellants have served full suspensions of their licenses for 124 days, from April 9. 2014 to August 12, 2014.
- No Realistic Future Plan
There was no evidence of a realistic, carefully considered plan of action to avoid future financial implosions.
Findings
(i) The suspensions were justified by the multiple violations of the Rule;
(ii) The reinstatement of the original licences is not appropriate;
(iii) The licence of Igor Vrablic as a Trainer remains suspended while he is an undischarged bankrupt;
(iv) The licence of Therese Vrablic as an Authorized Agent, Owner and Trainer remains suspended while she is an undischarged bankrupt;
(v) The Director may license Igor Vrablic and Therese Vrablic as Grooms, to work for wages for another licensed participant;
(vi) The bankrupt licensees may not carry on his/her trade or calling as an independent business or operate as a public stable without permission of the trustee in bankruptcy and the Director; and
(vii) The Director may impose further reasonable conditions upon their licences while they remain undischarged bankrupts.
DATED this 13th day of August 2014.
Anthony Williams
Vice Chair