Ontario Harness Horse Association v. Central Ontario Standardbred Association, 2017 CanLII 36081

RULING NUMBER COM SB 012/2016

COMMISSION HEARING TORONTO, ONTARIO – November 1, 2 and 3, 2016

ONTARIO RACING COMMISSION

NOTICE OF DECISION

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

AND IN THE MATTER OF THE DECISION BY THE DIRECTOR OF THE ONTARIO RACING COMMISSION DATED JANUARY 7, 2016;

AND IN THE MATTER OF THE APPEAL AND REQUEST FOR HEARING BY THE ONTARIO HARNESS HORSE ASSOCIATION AND WITH THE CENTRAL ONTARIO STANDARDBRED ASSOCIATION AS AN ADDED PARTY

The Ontario Harness Horse Association appealed against the Decision by the Director of the Ontario Racing Commission, dated January 7, 2016, to allocate the Standardbred Revenue Allocation marketing funds, being held in trust by the Woodbine Entertainment Group and as of November 21, 2015, to both the Ontario Harness Horse Association and the Central Ontario Standardbred Association, upon conditions.

Date of Hearing at Toronto: November 1 and 2, 2016

Ontario Racing Commission

Panel Members: S. Grace Kerr, Commissioner

John W. Macdonald, Commissioner

Anthony Williams, Vice Chair

Counsel for the Administration, Ontario Racing Commission (now Alcohol and Gaming Commission of Ontario): Aviva R. Harari

Counsel for the Ontario Harness Horse Association: Frank L. Roth

Counsel for the Central Ontario Standardbred Association: James Evans

Counsel for the Woodbine Entertainment Group (not a party to the Hearing): Deepshikha Dutt

I. DECISION

1. The majority of the panel denied the appeal.

2. The Standardbred Revenue Allocation (“SRA”) marketing funds (the SRA funds), being held in trust by the Woodbine Entertainment Group and being in the amount of $2,125,827.00 as of November 21, 2015, are to be allocated to two horsepersons’ associations, namely, the Ontario Harness Horse Association (“OHHA”) and the Central Ontario Standardbred Association (“COSA”).

3. The allocation of the SRA funds will be as follows:

(i) to OHHA, a total of $515,172.41. This money consists of:

• all of the funds accumulated up to October 31, 2010 (or, $479,475.41), plus,

• the portion of the funds generated from non-Woodbine Entertainment Group (non-WEG) Alliance tracks from April, 2014 to November 21, 2015 (or, $35,697.00); and,

(ii) to COSA, a total of $1,610,654.59. This money consists of:

• the portion of the funds generated from Woodbine and Mohawk racetracks from November 1, 2010 to March 31, 2014 (or, $767,847.59), plus,

• the portion of the funds from Woodbine and Mohawk racetracks from April 1, 2014 to November 21, 2015 (or, $842,807.00).

4. These SRA funds are to be allocated to OHHA and to COSA (collectively described as “The Associations”) upon three conditions:

(i) The Associations must use the SRA funds only for “an industry marketing program, to market and promote standardbred racing in this province”, in accordance with the “Business Plan to Support the Reduction in Pari-Mutuel Taxes,” Section A, 4.2.2, dated June 10, 1996, as amended September 15, 1996. And, further, the SRA funds shall not be used for any local association branding, or marketing outside of the Province of Ontario;

(ii) The Associations must “provide evidence, on an annual basis, through written documentation” to the Registrar of the Alcohol and Gaming Commission of Ontario, that the SRA funds have been spent for the purposes described in Section A, 4.2 of the Business Plan, in accordance with the Memorandum of Understanding, dated September 30, 1996.

(iii) The Associations must provide, upon request, by the Registrar of the Alcohol and Gaming Commission of Ontario, timely access to all financial records in relation to the SRA funds.

5. No orders are made as to costs.

DATED at Toronto this 8th day of June, 2017.

Original signed

Jean Major

Registrar, Alcohol and Gaming Commission of Ontario

(as well as (formerly) Executive Director, Ontario Racing Commission)

II. INTRODUCTION

1. Broadly speaking, this matter involves a long-standing dispute regarding the allocation of a considerable sum of provincial pari-mutuel tax monies, totalling $2,125,827, known and described in this decision as the Standardbred Revenue allocation marketing funds (the SRA funds).

2. The SRA funds in dispute were collected and held by the Woodbine Entertainment Group (WEG) after December 31, 2008 and until November 21, 2015.

3. The dispute is largely between two horsepersons’ Associations, namely, the Ontario Harness Horse Association (OHHA) and the Central Ontario Standardbred Association (COSA), both being parties to this appeal.

4. The monies were amassed pursuant to the terms of a Memorandum of Understanding (MOU), effective September 30, 1996, made between the Minister of Consumer and Commercial Relations (MCCR), the Ontario Racing Commission (ORC) and the Ontario Horse Racing Industry Association (OHRIA).

5. A Business Plan (BP), dated June 10, 1996 (as amended September 15, 1996), which forms Appendix B to the MOU, details the Revenue Allocation Strategy in relation to the funds realized by the reduction in pari-mutuel taxes contemplated in the MOU.

6. On January 7, 2016, the Executive Director of the (then) ORC released a decision allocating the SRA funds (the Director’s decision).

7. According to the Director’s decision OHHA was to receive a total of $515,172.41 of the SRA funds, while COSA was to receive a total of $1,610,654.59 of those funds.

8. The Director’s decision also provided that the SRA funds were being released to OHHA and COSA on certain conditions, essentially as follows:

i. the SRA marketing funds were to be used only for “an industry marketing program, to market and promote standardbred racing in this province”, in accordance with the “Business Plan to Support the Reduction in Pari-Mutuel Taxes,” Section A, 4.2.2, dated June 10, 1996, as amended September 15, 1996, and, further, that the SRA funds were not to be used for any local association branding, or marketing outside of the province;

ii. OHHA and COSA were to “provide evidence, on an annual basis, through written documentation” to the Registrar of the Alcohol and Gaming Commission of Ontario, that the SRA marketing funds have been spent for the purposes described in Section A, 4.2 of the Business Plan, in accordance with the Memorandum of Understanding, dated September 30, 1996.

iii. OHHA and COSA were to provide, upon request, by the Registrar of the Alcohol and Gaming Commission of Ontario, timely access to all financial records in relation to the SRA marketing funds.

9. OHHA appealed the Director’s decision to a panel of the ORC. The Administration of the ORC defended the Director’s decision. COSA sought and was granted an order to be made a party. WEG did not seek to be made a party, but made submissions to the panel addressing allegations made by OHHA against WEG, specifically in paragraphs 25 and 26 as well as the relief sought by OHHA in its Factum dated October 26, 2016.

10. After having heard and considered all of the evidence before the panel, including the comprehensive submissions made by the parties, the majority of the panel has decided to deny the appeal.

11. Specifically, the majority of the panel has decided that:

i. It has the jurisdiction to change, or add to, the designated “horsepersons’ associations” entitled to receive the marketing funds from the original revenue allocation strategy of the MOU/BP;

ii. It is not required to assess either the correctness or the reasonableness of the Director’s decision, but rather, must consider the appeal on a new, or de novo, basis and in the best interests of racing, and having done so, it concludes that the SRA funds will be distributed:

a. to OHHA, the sum of $515,172.41; and,

b. to COSA, the sum of $1,610,654.59; and,

c. the distribution of these sums shall be subject to three conditions, namely:

(A.) OHHA and COSA (collectively “The Associations”) must use the SRA marketing funds only for “an industry marketing program, to market and promote standardbred racing in this province”, in accordance with the “Business Plan to Support the Reduction in Pari-Mutuel Taxes,” Section A, 4.2.2, dated June 10, 1996, as amended September 15, 1996. And, further, the SRA marketing funds shall not be used for any local association branding, or marketing outside of the Province of Ontario;

(B.) The Associations must “provide evidence, on an annual basis, through written documentation” to the Registrar of the Alcohol and Gaming Commission of Ontario, that the SRA marketing funds have been spent for the purposes described in Section A, 4.2 of the Business Plan, in accordance with the Memorandum of Understanding, dated September 30, 1996.

(C.) The Associations must provide, upon request, by the Registrar of the Alcohol and Gaming Commission of Ontario, timely access to all financial records in relation to the SRA marketing funds; and,

d. There shall be no orders as to costs.

12. Reasons for the panel’s decision follow.

III. BACKGROUND

13. The May 1996 Budget Speech for the Province of Ontario announced a plan to reduce the pari-mutuel tax rate from an average of 7.4% to 0.5% on all wagers, upon receipt from the horse racing industry of a “business plan to share the additional resources fairly and to secure the future of Ontario’s horse racing industry.”

14. The Ontario Provincial Government’s proposal to reduce the pari-mutuel tax rate was intended to help the Ontario horse racing industry, which was struggling at the time.

15. On June 10, 1996, the Ontario Horse Racing Industry Association (“OHRIA”), submitted its “Business Plan to support the Reduction in Pari-Mutuel Taxes” (“BP”). The BP was amended September 15, 1996.

16. A Memorandum of Understanding (“MOU”), between the (then) Minister of Consumer and Commercial Relations, the (then) ORC, and the (then) OHRIA became “effective” on September 30, 1996 and “(was to) remain in effect, until (the) document (the MOU) (was) amended or replaced.”

17. The “Revenue Allocation Strategy” of the BP directed that the 6.9% reduction of the tax rate be distributed as follows:

• 1.5% Customer Benefits and Regulatory Funding

• 2.4% Horsemen’s Improvement Program

• 1% Industry Revitalization Program

• 1% Racetracks

• 1% Horsepeople

18. The “Allocation and Accountability Mechanism” of the BP required that “the racetracks (were to) remit the horsepersons’ portion of the revenues to the provincially recognized horsepersons’ associations, namely the Ontario Harness Horse Association (OHHA), the Horsemen’s Benevolent and Protective Association (HBPA).”

19. The BP required that “the horseperson’s 1% of wagering (would) be shared between the Thoroughbred, Standardbred and Quarter Horse horsepeople. Each (would) benefit based on their respective racetrack affiliations and wagering levels.”

20. The 1% to Horsepeople was known in the Standardbred horse racing industry as Standardbred Revenue Allocation marketing funds, that is, the SRA funds.

21. The original Guidelines for the SRA funds allocated to Standardbred horsepeople was to be further allocated as follows:

a) 20% to an industry marketing program, to market and promote standardbred racing in the Province of Ontario.

b) 35% to the existing Ontario Sires Stakes program for breed improvement and incentives.

c) 35% to increase the existing overnight purse supplements.

d) 10% for the development of an Employee Pension Fund for trainers, drivers and grooms.

22. OHHA was the only “provincially recognized horsepersons’ association” for standardbred horse racing in Ontario when the MOU and the BP were created.

OHHA was also the bargaining agent for standardbred horsepeople racing at the Woodbine Entertainment Group (“WEG”) racetracks, Woodbine and Mohawk, at that time.

23. WEG remitted the horsepersons’ portion of the SRA funds to OHHA in accordance with the BP formula from September 30, 1996 to December 31, 2008.

24. On December 31, 2008, the (final) contract between WEG and OHHA expired.

25. Thereafter, attempts by WEG and OHHA to negotiate a new contract were unsuccessful.

26. No horsepersons’ contract was in place at the WEG racetracks from December 31, 2008 to July 30, 2009.

27. On July 30, 2009 WEG entered into a contract with COSA (“the July 30th contract”), which represented the horsepeople racing at both the Woodbine and Mohawk racetracks. This contract provided in part:

“During the term of this agreement, WEG recognizes COSA as the exclusive representative of those owners, trainers, drivers, and other participants in standardbred racing in Ontario who race and stable at both Mohawk and Woodbine racetracks.”

28. The July 30th contract was renewed. The expiry date of the existing contract is March 31, 2019.

29. Upon the expiration of the (final) contract between WEG and OHHA, WEG stopped remitting the SRA funds to OHHA.

30. WEG continued to remit the appropriate payments directly to supplement the overnight purse accounts and to support the Ontario Sires Stakes program. WEG also paid for the development of an Employee Pension Fund for trainers, drivers and grooms as required by the BP.

31. WEG held onto the SRA funds, which had accumulated after December 31, 2008, and has not distributed them since December 31, 2008. As of November 21, 2015, the SRA funds totalled $2,125,827.00. (Pursuant to an interim order of the panel, the SRA funds are currently being held in an interest-bearing trust account by WEG.)

32. It is the allocation of the SRA funds, pursuant to the MOU/BP, that is the subject of the hearing before the panel.

33. A few efforts were undertaken between December 31, 2008 and the dates of the hearing to resolve the allocation issue, but none of them were successful.

34. The panel notes that, at the time of the hearing, none of the three parties to the MOU and BP continued to exist: the Minister of the Attorney General (MAG) was the successor to the Minister of Consumer and Commercial Relations; the ORC had merged with the Alcohol and Gaming Commission of Ontario (the AGCO); and, the Association, Ontario Racing (OR), was in the process of becoming the successor to OHRIA.

35. The panel also notes that, while MAG as well as OR were asked if they wished to become parties to this appeal, both declined the opportunity. Specifically, OR advised that it agreed with the Director’s decision (Exhibit 9, Tab 1).

36. Neither the MOU nor the BP has been revised in the approximately 20 years since they came into effect in 1996. However, the horse racing industry, generally, and the standardbred horse industry, more specifically, has changed significantly in that time period.

IV. THE HEARING

37. A panel of the ORC heard this matter on November 1 and 2, 2016.

(1) The Witnesses

38. The Administration called three witnesses:

(i) Hugh Mitchell, President and Chief Executive Officer, Western Fair Raceway at London Ontario;

(ii) Ryan Dupuis, Chartered Professional Accountant, Manager Financial Programs at ORC, now seconded from AGCO to Ontario Racing;

(iii) William O’Donnell, President, COSA.

39. OHHA called two witnesses:

(i) Steven Lehman, former Director and Chief Administrative Officer of the ORC;

(ii) Brian Tropea, General Manager, OHHA.

(2) The Exhibits

40. Seven exhibits were entered into evidence at the hearing. (Note: Exhibits 1-4 were entered into evidence at pre-hearing motions before the panel.)

(i) Ex. 5 Book of Documents, (OHHA), Tabs 1-22;

(ii) Ex. 6 Factum, (OHHA);

(iii) Ex. 7 Supplemental Factum, (OHHA);

(iv) Ex. 8 Factum and Witness list, (COSA);

(v) Ex. 9 Book of Documents, (Administration), Tabs 1-7;

(vi) Ex. 10 Factum, (Administration);

(vii) Ex. 11 Letter from OHHA to ORC, dated February 18, 2009, (Administration).

V. REASONS

(I) Jurisdiction Issue

41. The panel must first decide if it is a duly constituted administrative tribunal with authority to hear the appeal before it and to order a distribution of the SRA funds further to the provisions of the MOU/BP.

42. The panel concludes that it has the jurisdiction to hear and rule on this matter, for several reasons, which follow.

(i) Deemed Continuation of Terms of Office

43. The panel became seized of this matter on March 18, 2016, that is, on the first return date. Then, and somewhat unusually, the terms of office of the panel expired on March 31, 2016, when by legislative mandate the ORC ceased to exist and its regulatory functions became merged into the AGCO. The merger, which was effective April 1, 2016, took place before the matter was fully heard and a decision was released.

44. Nevertheless, according to the Statutory Powers Procedure Act (RSO 1990, Chapter 22, S. 4.3), the terms of office in this situation are “deemed to continue, but only for the purpose of determining the decision and for no other purpose.”

45. As such, the panel concludes that it remains a duly constituted administrative tribunal, with full authority to determine the matter before it.

(ii) General Authority to Decide the Appeal

46. Next, the panel must decide if it has the power, generally, to decide the within appeal.

47. The Racing Commission Act (R.S.O. 2000, C. 20) (the RCA) provides that a person who feels aggrieved by a decision of the ORC is entitled to a hearing by the Commission (ss 11(7)).

48. The panel concludes, therefore, that OHHA, which disputes the Director’s decision, is entitled to appeal that decision to a panel of the Commission, based on that provision in the RCA.

(iii) Hearing de Novo

49. The parties agree that the nature of this appeal is a “hearing de novo, or a fresh consideration” of the matter. The panel concurs.

50. In coming to this conclusion, it relies upon the Ontario Court of Appeal’s ruling in McNamara v. the Ontario Racing Commission, 1998 CanLII 7144 (ON CA).

51. At paragraph 28, Abella, J.A., speaking for the majority of the Ontario Court of Appeal in that decision, describes a hearing de novo as a fresh consideration of the events.

52. Furthermore, the panel was warned against looking at the Director’s decision applying a test of reasonableness to evaluate it. Again, the whole panel agrees.

53. In that regard, it relies upon the Divisional Court in Polifroni v. the Ontario Racing Commission, 2011 ONSC 6602. This case stands for the proposition that, in a trial de novo, neither the correctness nor the reasonableness of the decision being appealed is considered. Rather,

“In a trial de novo, the panel need not have considered anything other than whether the charges against the appellant had been proven to their satisfaction on a balance of probabilities. The earlier proceeding before the judges was totally irrelevant to that determination.” (at paras. 4 and 10)

54. The panel thus finds that it is to make its decision completely unfettered by and without regard to the Director’s decision. Rather, it must decide the matter afresh, fairly, justly and equitably, based on the evidence before it.

(iv) Burden of Proof

55. The panel agrees with the parties that the burden of proof in this appeal is upon the Administration of the ORC.

(v) Standard of Proof

56. The panel concludes that the standard of proof in this matter is “proof on a balance of probabilities” (F.H. v. McDougall, 2008 SCC 53, [2008] 3 SCR 41, at para. 40). Put differently, the panel must decide whether the position advanced by the Administration is “more likely than not” (supra, at para. 44).

57. Finally, the evidence must be “sufficiently clear, convincing and cogent to satisfy the balance of probabilities test” (supra, at para. 46).

(II) How to Interpret the MOU and BP?

A) The Parties’ positions

58. The parties’ positions, which are illustrative of this important question, are summarized, as follows:

a) The Administration

59. Counsel on behalf of the Administration argues that the intention of the MOU/BP remains in effect.

60. Further, the Administration posits that the “intention” was both to share the additional resources (resulting from the pari-mutuel tax reduction) fairly and to secure the future of Ontario’s horse racing industry.

61. In the Administration’s view, while it is impossible to operationalize the dispute resolution mechanism presently, as the parties to the MOU no longer exist, the panel, however, has the power to order the distribution of the SRA funds and that such a distribution would be “in the best interests of racing”.

62. The Administration also argues that the 1996 MOU no longer accurately reflects the state of horseracing industry (that is, at the time of the hearing) and that other standardbred horsepersons’ associations have been established since 1996.

63. Additionally, the Administration urges the panel that the distribution of funds to OHHA and COSA should be based on the funds generated by wagering at the various tracks throughout the province and as well should be proportionally allocated.

b) COSA

64. COSA submits that the ORC has the power to amend the MOU/BP as “the last party standing” to the original agreement.

65. It further urges that allocations of the SRA funds to COSA, which should be based upon COSA’s membership’s affiliation to WEG tracks, WEG’s territory and WEG’s wagering levels, would be consistent with the intent of the parties to the MOU.

66. Finally, COSA submits that the ORC has the power, derived from its role to govern and regulate in the best interests of racing, to unilaterally amend the BP.

c) OHHA

67. Counsel on behalf of OHHA argues that the MOU and BP remain in place, unamended, and are binding upon and require the compliance of all of the parties to those agreements.

68. Also, OHHA submits that by not transferring the SRA funds according to the terms of the MOU/BP, WEG is not in compliance with the agreements, but should be.

69. OHHA urges that the panel has only the power to order WEG’s compliance with the MOU/BP, and nothing more.

70. Furthermore, in OHHA’s view, simply being an association (i.e. COSA) contracted with WEG does not in any way provide rationale for COSA being entitled to a share of the SRA marketing funds. Put differently, the July 30th (COSA-WEG) contract, or for that matter, any contract between a horsepersons’ association and a racetrack, is irrelevant to any consideration of what is in the best interests of racing, in OHHA’s submission.

71. OHHA argues, additionally, that the SRA funds in question, which arise out of the MOU/BP, have nothing to do with horse racing. Rather, in OHHA’s submission, the funds represent the payment of monies out of Provincial tax dollars to the provincially recognized horsepersons’ associations for the purpose of marketing.

72. OHHA notes that other racetracks, such as the Northern Ontario Horsemans’ Association and the National Capital Region Harness Horse Association, were ordered by the ORC to remit their SRA funds to OHHA, despite wanting to retain their SRA funds and despite being formed before COSA.

73. As well, OHHA submits that the ORC has not acquired the right to unilaterally amend the MOU/BP, even though it is the only remaining party to those agreements.

74. More specifically, OHHA argues that the ORC does not have the right to interfere in contractual matters unless it is a racing matter that is under consideration, it is in the public interest, and it has only an incidental effect upon an existing contract.

75. Finally, OHHA proposes that it is beyond the jurisdiction of the ORC to order a distribution of the SRA funds in a manner that amends the contractually designated recipient. To do so would be to fundamentally and substantially affect an existing and binding contract.

B) The Law

76. In the panel’s view, the objects and powers of the ORC, as set out in the RCA, are broad-based and afford considerable power and discretion to the agency – and by extension, to a panel of that agency – to deal with matters related to horse racing in Ontario.

77. Particularly, the provisions relevant to this hearing are set out in Sections 5, 6, 7 (a), (b), (k), and (n) of the RCA, which, specifically, provide as follows:

Section 5 The objects of the Commission are to govern, direct, control and regulate horse racing in Ontario in any or all of its forms.

Section 6 The Commission shall exercise its powers and perform duties in the public interest and in accordance with the principles of honesty and integrity, and social responsibility. (emphasis added)

Section 7 The Commission has power,

(a) to govern, direct, control and regulate horse racing in Ontario in any or all of its forms;

(b) to govern, control and regulate the operation of race tracks in Ontario at which any form of horse racing is carried on;…

(k) to hold hearings relating to the carrying out of its objects and powers…

(n) to do those things relating to horse racing in any of all of its forms, or to the operation of racetracks at which horse racing is carried on, that are authorized or directed by the Lieutenant Governor in Council.

78. Additionally, the Rules of Standardbred Racing (2012) (the Rules) support the panel’s interpretation that the Commission’s powers are broad.

79. According to the Rule 1.09 of the Rules, “(i)f any case occurs which is not…provided for by the rules, it shall be determined by the …Commission…in such manner as they think is in the best interests of racing.” (emphasis added).

80. The Ontario Court of Appeal’s ruling in the Ontario Harness Horse Association v. Ontario Racing Commission, OCA [2002] O.J. (3d) 44 also supports the panel’s conclusion that its powers are wide-ranging. At paragraph 37, Morden, J., on behalf of the Court, states:

“… in Re: Morrissey Armstrong and Ontario Racing Commission (1958), 1958 CanLII 349 (ON CA), 12 D.L.R. (2d) 772, affirmed 1959 CanLII 23 (SCC), [1960] S.C.R. 104, this court affirmed at p.773 “the wide scope of administrative powers presented to the Commission…

the present Act…contains additional provisions that emphasize the duty of the Commission to exercise its powers in the public interest”.

81. Furthermore, expanding upon the meaning of the term, the “public interest”, Mr. Justice Morden says, at paragraph 48:

“…the public interest”…must mean not only the interest of Sudbury Downs must be taken into account but also the interests of other participants in the industry – horse owners, drivers, etc. and race track patrons - in short, the good of horse racing generally.”

82. Thus, the Rules as well as the case law confirm, and the panel finds, that this tribunal’s powers are broad and must be exercised in the public interest.

83. However, the panel must also consider whether this authority allows it to interfere with matters of private contract, which in this case extends to a review and interpretation of the MOU/BP. The panel concludes that it has that authority.

84. In coming to its conclusion, the panel relies upon the decision in the Ontario Harness Horse Association decision, supra, where at paragraph 47 the Honourable Justice Morden, again, speaking on behalf of the Ontario Court of Appeal, states:

“…While it is true that taking some action which may allow members of OHHA to race at Sudbury Downs necessarily involves some interference with its property rights, the essence of the dispute is not over property rights but over the exclusion of certain licensed persons from the sport of horse racing. It is much more a horse racing issue than a property issue. Its bearing on Sudbury Downs’ property rights is more incidental than direct.”

85. The panel’s determination, that is, that it may incidentally affect contractual rights between private parties in exercising its broad authority in the public interest, is further supported by the Divisional Court’s decision in the Ontario Harness Horse Racing Assn. v. Ontario (Racing Commission), Ontario Superior Court of Justice, Divisional Court [2012] O.J. No. 1557 (the OHHA case).

86. Specifically, Lauwer, J., writing for the Court in the OHHA case, states at paragraph 82:

“Sudbury Downs expressly stands for the proposition that the Commission’s powers to govern and regulate may necessarily involve some modification of existing legal rights. In my view there is no reason to find property rights to be subject to modification by the Commission but not contractual rights. To repeat the words of Morden J.A. in Sudbury Downs, regulating powers “necessarily involve the power to alter the existing legal landscape in some ways – providing for some modification of legal rights, including property rights.” He plainly did not intend to limit his observation to property rights to the exclusion of other legal rights including contractual rights. (emphasis added)

87. Further, Mr. Justice Lauwer specifically rejects a narrow and constrictive interpretation of the horse racing regulator’s authority, in the panel’s opinion. At paragraphs 84 and 85 of the Divisional Court’s decision in the OHHA case, he states:

“To paraphrase Morden J. A. in Sudbury Downs, the enforceability of the Framework is much more a horse racing issue than an issue of contract law.”

“I therefore reject the implicit submission of OHHA that in the exercise of its regulatory authority the Commission is straitjacketed by existing contractual relationships. Such straitjacketing would be quite inconsistent with the normal sequence of regulation where the regulator acts and the regulated comply by adjusting contractual arrangements as may be necessary to comply with valid regulation.”

88. Finally, Lauwer, J. concludes at paragraph 92, as follows:

“To summarize, I have found that the Ontario Racing Commission has the authority under the Racing Commission Act, 2000, to create and implement the Framework…I have found that the Commission’s regulatory powers under the Act permit it to take the steps that it has taken to implement the Framework despite the incidental effects on existing contracts. I find that the Commission’s affirmation to the Executive Director’s decision is both correct, assuming that correctness is the standard of review, and reasonable, and therefore dismiss the application for judicial review.” (emphasis added)

89. This review of the Rules and case law makes it abundantly clear, in the panel’s assessment, that it has the authority to decide this matter in public interest as well as the best interests of racing, even though in so doing its decision may have an incidental effect on the contract at issue in this matter, that is, the MOU/BP.

(C) Allocation of SRA Funds – Decision of the Majority of the Panel

90. Given the panel’s overarching finding that it has the jurisdiction to deal with this matter, the majority of the panel now turns its mind to how to allocate the SRA funds at issue. In coming to its decision, the majority has borne in mind its obligation to consider the public interest together with the best interests of racing.

91. Generally stated, the majority of the panel agrees with the Administration’s submission that the MOU/BP “contemplated the fair sharing of resources, a proportionate distribution and foresaw competitive dynamics” in the industry.

92. More specifically, in deciding the majority of the panel addresses the MOU/BP’s expressed purposes and goals. It also looks at the competitive dynamics within and changes to the Standardbred horseracing industry. Lastly, it interprets and applies the MOU/BP within the law, regulations and rules of horseracing and in the best interests of racing and in the public interest. Each of these three aspects of the majority’s reasoning will be discussed in turn.

(i) Expressed Purposes and Goals of the MOU/BP

93. The MOU/BP at issue in this matter were designed to “share the additional resources (arising from the pari-mutuel tax monies) fairly and to secure the future of Ontario’s horse racing industry”.

94. Further, the strategic objectives of the MOU/BP included making racetracks a preferred destination point for gaming/sport/entertainment.

95. The ORC, as one of the three parties to the MOU/BP, was given primary responsibility for many of the new initiatives, including those that impacted standardbred horsepeople.

96. The SRA marketing funds provisions, one of the several new initiatives, were an integral part of the plan to secure Ontario’s horse racing industry in the future. These funds were to be dedicated “to an industry marketing program, to market and promote standardbred racing”.

97. Specifically, the BP, at Section 4.2.2, requires that:

“the Standardbred horsepeople” will… allocate” 20% [of their 1% of wagering] to an industry marketing program, to market and promote standardbred racing in this province”.

98. The majority of the panel finds that the above-described spirit and purpose of the MOU/BP remains in effect. In keeping with this finding, the majority believes it must take into account changing dynamics and transformations within the Standardbred horseracing industry in coming to its decision regarding the allocation of the SRA funds.

99. One change in the Standardbred horseracing industry since the MOU/BP were entered into, which is significant and relevant to the majority of the panel’s decision, is that other Standardbred horseperson associations have been established. The impact of this development is discussed next.

(ii) Competitive Dynamics and Changes within the Standardbred Horseracing Industry

100. First, by way of background, Section B of the BP directs that “the racetrack will remit the horsepersons’ portion of the revenues (that is, the SRA marketing funds) to the provincially recognized horsepersons’ associations, namely…OHHA”.

101. No other horsepersons’ associations are named in the BP.

102. The phrase “provincially recognized horsepersons’ associations” is not defined in the MOU/BP.

103. No one disputes that OHHA remains a provincially recognized horsepersons’ association.

104. Also, no one alleges that OHHA failed in its duty to allocate the appropriate portion of the revenues to an industry-marketing program, at any time between 1996 and the end of 2008.

105. Then, and has been noted earlier, at the end of 2008 the racetrack contract between OHHA and WEG expired and a new contract between WEG and COSA was entered into in July 2009. (The WEG/COSA contract was subsequently renewed, and now expires on March 31, 2019.)

106. This development represented a substantial restructuring in the Standardbred horseracing industry.

107. As a result of its newly created status, since 2009 COSA has sought a proportionate distribution of the SRA funds in its favour pursuant to the provisions of the MOU/BP. OHHA opposes such a distribution.

108. This major industry change, leading to the dispute between OHHA and COSA, lies at the heart of the Director’s decision and ultimately brought the matter before the panel.

109. For clarity, the majority of the panel notes that the issue before it involves the distribution of the SRA funds. The use to which the SRA funds are to be put is clearly articulated in the MOU/BP and is not disputed by the parties to the appeal. Nor, it must also be stated, was there any evidence to show that COSA would misuse its allocation of these monies, if so ordered.

110. Simply put, the issue the majority must ultimately address is whether COSA entitled to receive or, be allocated, a portion of the SRA funds collected? Or, put a different way, what is the appropriate interpretation of the MOU/BP and distribution of the SRA funds, given the expressed intentions and goals of those documents as well as the prevailing circumstances at the time of the Director’s decision?

(iii) Interpretation and application of the MOU/BP within the law, regulations and rules of horseracing and in the best interests of racing and in the public interest

111. Section A, 4.2, of the BP states that:

“the horsepersons’ 1% of wagering will be shared between the Thoroughbred, Standardbred and Quarter Horse horsepeople. Each will benefit based on their respective racetrack affiliations and wagering levels”.

112. Like the phrase “provincially recognized horseperson’s association”, the phrase “respective racetrack affiliations” is not defined in the MOU/BP. A reasonable interpretation, in the context in which it is used, is that it means the racetracks at which horse races are conducted for each of the three breeds of horses.

113. The majority of the panel therefore concludes that the MOU/BP intends that the “horsepeople” for each of the three breeds should “benefit” based upon two factors: (i) the racetrack where the separate breeds race; (ii) the amount of money bet by the customers.

114. The matter could be complicated by the fact that the relevant legislation requires a track to have a contract with a recognized horsepersons’ association. Specifically, Rule 3.02.02 of the Rules of Standardbred Racing, requires that:

“Each association [racetrack] shall ensure that it has an agreement with either of the following for the purposes of Section 3(1) (c) (iii) of the Pari-Mutuel Betting Supervision Regulations:

(a) a horsepeople’s organization licensed pursuant to Rule 3.02.01; or

(b) individuals licensed in good standing by the commission and racing at that Association….”.

115. However, there is no requirement in the MOU/BP that the horsepeople’s associations have a contract with a racetrack as a condition precedent to the receipt of SRA marketing funds.

116. And, the majority agrees with the Administration’s submission that it would be inappropriate interference by the ORC (as it then was) or, for that matter, by this panel to require a track to contract with a particular association.

117. As such, the panel’s majority finds that the COSA/WEG contract, in and of itself, is not germane to this matter. Neither has the majority taken it into account in deciding that COSA should be allocated a share of the SRA funds.

118. The majority of the panel looked at whether the provisions in the MOU/BP themselves provided guidance in resolving this matter.

119. The evidence confirms, and the parties agree, that the MOU/BP have not been amended, nor replaced. It is also clear from the evidence that the dispute resolution or settlement mechanisms found in the BP have not been utilized to resolve the matter.

120. More particularly, Section 3.0 of the MOU provides that it is to remain in effect until “amended or replaced”; the BP contains a “Revision Mechanism” (RM) in Section D, but it has not been activated since the dispute over the SRA funds arose in early 2009.

121. Also, while there are no “non-binding” conciliation or “alternative dispute resolution” provisions in the BP, it contains a two-step “Dispute Settlement Mechanism” (DSM), in Section C. The evidence showed that the DSM was never triggered by anyone involved in this matter.

122. Indeed, currently the DSM provisions may no longer be available to use and/or may be impossible to put them into effect for, as noted earlier in this decision, only one of the original parties to the MOU/BP continued to exist at the time the matter came before the panel.

123. The majority acknowledges that there were some informal discussions between OHRIA and the ORC over the course of some months in early-to-mid 2009 to amend the MOU/BP, attempting to delete the reference to OHHA in the BP and to broaden the reference to read “standardbred horsepeoples’ representative organization under contract with a racetrack licensed by the ORC” (Exhibit 5, Tab 6). However, nothing came to fruition.

124. Also, on one occasion, that is, on September 29, 2015, OHHA requested the ORC to direct WEG to comply with the MOU/BP and remit the outstanding SRA funds to it.

125. Further, in June 2009, OHRIA received a legal opinion (found in Exhibit 5, Tab 22) as to what could, or should, be done to resolve the matter. However, the evidence showed that this advice was never acted upon.

126. In any event, in coming to a decision in this matter the majority of the panel believes that the specifics of this legal opinion should not be taken into consideration by the panel or given any weight by it at all, for several reasons.

127. First, the legal opinion was not tendered at the hearing in accordance with the procedural rules that govern expert opinions. Furthermore, the person who rendered the opinion was not made available for cross-examination at the hearing. Accordingly, the majority finds that this evidence is wholly hearsay and should be disregarded as part of the record.

128. As the original MOU/BP remains in effect, unaltered, unrevised and not replaced since it was originally signed in 1996, despite the profound changes within the horseracing industry since then, it is very challenging for the majority of the panel to apply the MOU/BP to the facts of this case.

129. Essentially, as the “last person standing”, the panel must determine a proper allocation of the SRA funds, which according to the MOU/BP are necessary for, and are to be made available to assure horseracing into the future.

130. The majority of the panel is of the view that the continued freeze of the funds is counter-productive to the purpose and objectives of the MOU/BP.

131. And, the majority of the panel agrees with the Administration’s statement, in its Reply at paragraph 21, that: “It is in the best interests of all standardbred horsepeople to have the SRA funds used productively rather than to idly sit in a bank account.”

132. Furthermore, the retention of the funds in trust hampers the standardbred horsepeople in the performance of their mandatory role in the implementation of the MOU/BP, in the majority view.

133. Thus, despite the difficulties and challenges the facts of this case present, a decision must be made. And, in so doing, the majority agrees with the Administration’s submission that the MOU/BP “must be read within the context of all laws, regulations and rules applicable to the horseracing industry”, and not in a vacuum.

134. The majority of the panel believes its responsibility is to try to fairly and reasonably interpret and apply the provisions of the MOU/BP in “the best interests of racing” and in “the public interest”, as comprehensively discussed in Section B, above.

135. The majority also concludes that it should interpret the MOU/BP broadly, rather than narrowly, again as detailed in Section B, above, in order to take into account the significant alterations to and competitive dynamics in the industry over time.

136. The majority of the panel has applied these important, foregoing conclusions to the following discussion that concludes that COSA should be found to be a “provincially recognized horsepersons’ association, within the meaning of the MOU/BP, and as such, that it should be entitled to a share of the SRA funds.

137. Section 7 of the RCA gives the ORC the power:

(a) to govern, direct, control and regulate horseracing in Ontario in any or all of its forms;

(b) to govern, control and regulate the operation of race tracks in Ontario at which any form of horse racing is carried on;…

(k) to hold hearings relating to the carrying out of its objects and powers.”

138. The courts have affirmed “the wide scope of administrative powers presented to the Commission.” (In Re: Morrissey, Armstrong and Ontario Racing Commission, 1958, supra.)

139. In the majority’s view, the foregoing authority gives it the right to consider whether other “provincially recognized horsepersons’ associations” are entitled to receive a “portion” of the SRA funds, but only if such change is necessary, to avoid frustrating the stated purpose and intention of the MOU/BP “to secure the future of Ontario’s horseracing industry”.

140. Importantly, then, is COSA a “provincially recognized horsepersons’ association”, or should it be deemed as such? In order to answer this question, the meaning of each word in that phrase will be briefly considered and, in turn, will be assessed against the COSA organization.

141. The adjective “provincially” generally means that something is of or connected with a province. In the case of COSA, its name identifies it as representing horsepersons from the central region of the province of Ontario.

142. But is it a recognized group? When something to be “recognized”, it is formally acknowledged, known, identified and accepted as valid. The following facts support the panel’s conclusion that COSA is a “recognized” group, within the meaning ascribed to this word.

143. Since forming in the spring of 2009, COSA has grown to represent approximately 1800 members, who are all harness (or standardbred) horsepersons. Also, as a legal entity entitled to contract on behalf of its members, COSA provides a united say for those who have joined it and race at Woodbine and Mohawk Racetracks. As well, through COSA its members receive various types of insurance coverage and are entitled to contribute to the Ontario Standardbred Horsepersons’ RRSP program.

144. There is no dispute that COSA represents standardbred horsepersons.

145. Finally, is it an “association”, which generally refers to an official group of people who have the same job, aim, or interest? COSA uses the term “Association” in its title properly as COSA’s aims and interests apply to all of the Standardbred horsepersons who belong to it. Additionally, the panel heard evidence that its members train and race at WEG tracks and come from all parts of the province.

146. Based on this review of the plain meaning of the words making up the phrase, “provincially recognized horsepersons’ association”, it is reasonable to conclude that COSA is a provincially recognized horsepersons’ association as contemplated by the MOU/BP.

147. However, the phrase “the racetracks will remit the horsepersons’ portion of the revenues…to OHHA” (page 8 of part B. of the BP) seems unambiguous on its face. Therefore, it is important to also consider whether it is appropriate for the majority of the panel to, in effect, alter or amend that portion of the prevailing contracts to require that the words, “and to COSA” be added to, or included in, that phrase.

148. The majority concludes that it is proper, necessary and in the best interests of racing for it to do so, for the following reasons.

149. First, it relies upon and adopts the Divisional Court’s reasoning that (the panel) “may adjust contractual arrangements as may be necessary to comply with valid regulation” (the OHHA case, supra, at para. 85).

150. Also, the phrase “provincially recognized horsepersons’ associations” is a general description, not defined in the MOU/BP. This fact gives the majority reason to believe that it is open to it to consider and then for it to reasonably conclude that an association, such as COSA, comes within the meaning of that phrase, entitling it to share in the additional resources resulting from the pari-mutuel tax reduction.

151. Additionally, the majority of the panel relies upon and adopts that Court’s reasoning it should not be “straitjacketed by existing contractual relationships” (the OHHA case, supra, at paragraphs 84 and 85).

152. And, as has been said before, the majority rejects a narrow interpretation of the MOU/BP. Accordingly, it is within the ambit of the panel’s broad discretion and wide-ranging regulatory authority to take reasonable steps to expand the concept of a “provincially recognized horsepersons’ associations” to include COSA, as it does in this case.

153. The majority of the panel recognizes that by including COSA in the definition of “provincially recognized horsepersons’ associations” has an “incidental effects on existing contracts” (the OHHA case, supra, at para. 92). However, it concludes that the Court’s reasoning in the OHHA case gives it the right to do so.

154. And, it is necessary and appropriate to include, add, or read in COSA as a “provincially recognized horsepersons’ association, in order to conform to the spirit and intent of the MOU/BP and to recognize and address the considerable changes to the industry in the past 20 years as well as the current state of horseracing in Ontario.

155. Furthermore, even if its decision has a substantial and fundamental, rather than incidental, effect upon the existing MOU/BP, the majority believes it is an acceptable outcome. Ordering an allocation of the SRA funds to COSA gives effect to the intention of the MOU/BP, that is, to share the additional resources resulting from the pari-mutuel tax reduction and secure the future of horseracing.

156. The panel’s majority notes that no evidence was presented as to why, in the past, the Northern Ontario Horsemen’s Association and the National Capital Region Harness Horse Association were ordered to remit SRA funds collected to OHHA. As a result, this information was irrelevant to the majority of the panel’s decision.

157. Finally, the majority believes that it is inappropriate for it to consider the bona fides – or lack thereof – of either the parties to the MOU/BP or the other interested organizations (OHHA, COSA and WEG) in this matter. This is because no one had exploited the MOU/BP’s DSM to attempt to resolve this matter before, ultimately, coming before the panel in response to the Director’s decision.

158. For all of these reasons, the majority of the panel strongly believes that it is in the public interest and the best interests of racing, as well as within its range of authority, to order that the accumulated SRA funds should be distributed in the manner as set out in this decision.

159. Specifically, the majority of the panel concludes that, in addition to OHHA, COSA is entitled to an allocation of SRA funds accumulated since December 31, 2008. And exactly how these funds should be allocated is discussed next.

(D) Allocated Amounts – Decision of the Majority of the Panel

160. Next, the majority of the panel looks at the evidence at the hearing in support of what, specifically, the allocation of SRA funds should be. Ryan Dupuis testified to this point.

161. Mr. Dupuis is a Chartered Professional Accountant, and at all material times was the Manager Financial Programs at ORC, although he is now seconded from AGCO to Ontario Racing.

162. Mr. Dupuis stated that he was confident in the financial information provided by WEG, and more specifically, that the total amount of SRA funds, held in trust by WEG as of November 21, 2015, totalled $2,125,827 (as set out in the Book of Documents (Administration), Exhibit 9, Tab 4).

163. Further, he confirmed that all of the SRA funds from the tracks, received by WEG during the time period at issue, reconciled with a high level of materiality.

164. Additionally, based upon two factors identified above, that is, the racetrack where the separate breeds race and the amount of money bet by the customers, Mr. Dupuis testified that the SRA funds would properly be allocated as follows:

(i) to the Ontario Harness Horse Association (“OHHA”),

a total of $515,172.41, this money consisting of:

• all of the funds accumulated up to October 31, 2010 ($479,475.41)

• the portion of the funds generated from non-WEG

Alliance tracks from April 1, 2014 to November 21,

2015 ($ 35,697.00)

and,

(ii) to the Central Ontario Standardbred Association (“COSA”),

a total of $1,610,654.59, this money consisting of:

• the portion of the funds generated from Woodbine and Mohawk racetracks from November 1, 2010 to March 31, 2014 ($767,847.59)

• the portion of the funds from Woodbine and Mohawk

racetracks from April 1, 2014 to November 21, 2015 ($842,807.00)

165. The majority accepts and relies upon Mr. Dupuis’ clear, cogent and convincing evidence in coming to its decision.

166. Further, and more specifically, the majority of the panel agrees with and finds on a balance of probabilities that the proper and correct allocation of SRA funds is as particularized in paragraph 164 above, and that this allocation accurately reflects the wagering levels at the various tracks.

DATED at Toronto, Ontario, this 9th day of June, 2017, and on behalf of the majority of the Panel.

Original signed Original signed

S. Grace Kerr John W. Macdonald

Commissioner Commissioner

(III) Costs – Unanimous Decision of the Panel

167. The panel must also address the matter of costs. Specifically, the appellant, OHHA, sought an order of costs against WEG: conversely, WEG seeks an order of costs against OHHA.

168. The panel declines to make either order, for the following reasons.

169. The panel’s authority to award costs following a hearing is restricted to two circumstances:

(i) under section 11(8) of the RCA against “the person requesting the hearing” if “the Commission is of the opinion that the request for the hearing was frivolous;” and pursuant to the associated Ontario Regulation, the amount of a penalty prescribed for the purposes of subsection 11 (8) of the Act is limited to $1500; and,

(ii) further to Policy Directive No. 3, 2010, changes to the Rules of Procedure, June 7, 2010 against “an appellant seeking to withdraw a Notice of Appeal/Request for Hearing.”

170. As the Appellant was not seeking to withdraw the Notice of Appeal/Request for Hearing, paragraph 169(ii) above does not apply in this case.

171. It must consider, though, whether the request for the hearing was “frivolous” in any way according to paragraph 169(i), above. Something that is frivolous has no serious purpose or value, which obviously does not describe this matter.

172. Rather, a substantial amount of SRA funds were at issue. These funds had not been distributed for over 6 years (as of the date of the Director’s decision). The decision as to how those funds would be allocated has significant business as well as financial implications to the recipient associations/parties, OHHA and COSA.

173. However, notwithstanding the seriousness of this decision to the parties, the RCA clearly directs the panel to consider the request for the appeal, which in this case was made by OHHA, and not WEG.

174. As such, OHHA’s request for an order of costs against WEG must fail.

175. Furthermore, the panel does not have the legislative authority to award costs in favour of WEG, a non-party to this matter. As such, WEG’s request for an order of costs against OHHA must fail.

176. Accordingly, the panel dismisses both OHHA’s request for an order of costs against WEG and WEG’s request for an order of costs against OHHA.

DATED at Toronto, Ontario, this 9th day of June, 2017.

Original signed Original signed Original sign

S. Grace Kerr John W. Macdonald Anthony Williams

Commissioner Commissioner Vice-Chair

(V) Decision of Minority

Anthony Williams, dissenting:

177. “If there is a dissent, the written decision…shall indicate which member dissents.”

Rules of Procedure, Ontario Racing Commission, 2008, Rule 11.1(6)

178. I have had the benefit of reading the reasons of the majority and respectfully am unable to agree with them.

179. In my opinion, the SRA marketing funds should be allocated to OHHA alone, pursuant to the MOU/BP.

(i) Overview

180. The MOU/BP were founded upon “a business plan” submitted by the horse racing industry “to share the additional resources fairly and to secure the future of Ontario’s horse racing industry.”

MOU, 2.0

181. The BP stated: “The industry unanimously agrees that the viability of the industry (is) very much dependent on the success of each and every industry segment.”

A “cooperative spirit” was expected to prevail.

The BP presented “the industry an opportunity to manage its own affairs in a financially favourable climate that will be conducive to growth and prosperity in the future.”

BP, Preamble

182. The “AGREEMENT” in the MOU stated: “We hereby agree to the terms of this Memorandum of Understanding regarding the roles and responsibilities of the Commission [ORC] and OHRIA with respect to the implementation of the Business Plan.”

MOU, 6.0

183. This agreement was signed by the Minister of MCCR, the Chair of the ORC and the eight representatives of the OHRIA Board of Directors, including the Presidents of both the Ontario Jockey Club (now WEG as of 2001) and OHHA.

184. The MOU became “effective on September 30, 1996.”

MOU, 3.0

185. The following quotation appears appropriate:

“The best-laid schemes o’mice an’ men

Gang aft a-gley [go oft awry],

An’ lea’ us nought but grief an’ pain,

For promised joy.”

Robert Burns, On Turning Her Up In Her Nest with the Plow, November, 1795

186. The MOU (was to) “remain in place…until amended or replaced.”

MOU, 3.0

187. The MOU has not been amended.

188. The MOU has not been replaced.

189. The MOU remains in effect.

190. The BP contained a two-part “Dispute Settlement Mechanism”:

“ non-binding conciliation”;

and

“ alternative dispute resolution”.

BP, C

191. There has been no non-binding conciliation.

192. There has been no alternative dispute resolution.

193. The BP contained a “Revision Mechanism”

“No changes [could] be made to the revenue allocation without the prior approval of the Ontario Racing Commission.”

BP, D

194. No final approval was given by ORC to any proposed change.

195. The MOU/BP remain in effect.

(ii) Allocations

196. The monies received from the 6.9% reduction in the pari-mutuel tax rate on wagering were allocated to the racetracks and the horsepersons’ associations, in part, as follows:

197. WEG was to receive 1% for facilities et al: “to implement the Industry Revitalization Program…to upgrade facilities at each race track to improve product quality and customer amenities, in addition to other essential facility improvement and repairs.”

The objective was to make “race tracks a preferred destination point for gaming /sport/entertainment.”

BP, A.3

198. WEG was to receive a further 1% for marketing [for “local branding”], for “increasing marketing initiatives to draw customers back to the racetrack and promote horseracing; media relations and promotion; the development of customer related programs…; improve/maintain customer service levels in areas such as food choices, security, pari-mutuel and control systems and generally improve quality of racing products for all customers.”

BP, A., 4.1

199. WEG was required to provide evidence of compliance to ORC “that its respective (1%) of revenues has been spent for the purposes outlined in Section A., 4.1 of the (BP).”

MOU, 5.2.5

200. WEG was also required to “…remit the horsepersons’ portion of revenues [the SRA funds] to the provincially recognized horsepersons’ association(s), namely the Ontario Harness Horse Association (OHHA)…”. (underlining added)

BP. B

201. OHHA was to receive 1% from WEG as the “horsepersons’ portion of the revenues.”

202. OHHA was required to allocate “20% [of the 1% share] to an industry marketing program to market and promote standardbred racing…” in Ontario. (underlining added)

BP, A., 4.2.2

203. OHHA was required to provide evidence of compliance to ORC “…that (its) respective (1%) of revenues [20% of 1% for marketing] has been spent for the purposes described in Section A, 4.2 of the (BP).”

MOU, 5.2.6

204. The BP remains clear and unambiguous.

(iii) Breach

205. WEG made a unilateral decision to stop further payment of the SRA funds to OHHA upon the expiration of their last contract on December 31, 2008.

206. No consent or approval for this decision was obtained by WEG from MCCR, ORC, or OHRIA, nor was this freeze of funds sanctioned by the MOU/BP.

207. On February 18, 2009, OHHA requested that ORC direct WEG to comply with the MOU/BP and remit the outstanding “horsepersons’ portion of the revenues” to OHHA as required by the BP, B.

Ex. 11

208. There was no evidence of any response from ORC.

209. On June 19, 2009, OHRIA received a legal opinion on the MOU/BP:

• “The MOU is an enforceable agreement.”;

• “OHRIA has the discretion to agree to amend the Business Plan and to authorize Woodbine’s proposed change to the distribution of the standardbred horsepersons’ portion of the Revenue Allocation Strategy funds to OHHA (‘SRA funding’).

In so doing, however, OHRIA must act in a manner consistent with the MOU and with OHRIA’s role and obligations to the industry.”;

• “Until OHRIA and (ORC) approve any change to the (BP), Woodbine is not entitled to refuse to remit the SRA funds to OHHA.” (underlining added)

Ex. 5, Tab 22

210. I agree with this opinion.

211. There was no evidence that OHRIA ever sought to enforce this opinion, as against WEG.

212. (i) The majority expressed concern in relation to the admissibility of Ex. 5, Tab 22.

(ii) The majority “finds that this ‘expert evidence’ is wholly hearsay and should be disregarded as part of the record.”

Majority Decision, para. 119

(iii) It is correct that no attempt was made to qualify any witness as a proposed expert re: the impugned exhibit.

(iv) In any event, it is unlikely that the opinion would be admissible as expert evidence, in that it does not meet one of the criteria for the admissibility of this type of evidence, that it be necessary to assist the trier of fact.

R v. Mohan, [1994] S.C.R. 9

(v) It is hearsay evidence.

(vi) “HEARSAY EVIDENCE

9.2 At a hearing a Commission may admit any evidence, including hearsay, relevant to the subject matter of the proceeding.”

Rules of Procedure, Ontario Racing Commission, February 25, 1999

(vii) In my opinion the evidence is “relevant to the subject matter of the proceeding.” It is part of the narrative history. On January 1, 2009 WEG made a unilateral decision to breach the MOU/BP. OHRIA was a party to the original MOU/BP. OHRIA had obligations to the industry. OHRIA sought a legal opinion as to its “role and responsibilities” under the MOU/BP. In the sixth month of the continuing breach by WEG, OHRIA received a clear and unambiguous response to its request.

(viii) Even if Ex. 5, Tab 22, were to be retroactively excised from consideration by this panel, a plain reading of the MOU/BP necessarily results in the same conclusions:

• The MOU is an enforceable agreement.

MOU 3.0

• OHRIA has the discretion to agree to amend the BP to authorize a change to the distribution of the SRA funding.

BP, D, Revision Mechanism, para. 3

• Until OHRIA and ORC approve any change to the BP, Woodbine is not entitled to refuse to remit the SRA funds to OHHA.

BP, B; BP, D, para 3

(ix) There is no other reasonable inference to be drawn from the evidence.

(x) There remains no evidence that OHRIA ever sought to enforce this opinion as against WEG.

213. On May 4, 2010, the Board of Directors of OHRIA submitted a Motion to ORC requesting that the relevant sections of the MOU/BP be amended to delete any reference to OHHA and to insert: “in the place thereof the words ‘the standardbred horsepeople’s representative organization under contract with a racetrack licensed by the Ontario Racing Commission.’ ”

Ex. 5, Tab 6

214. This motion was supported by COSA, NHA and NCRHHA.

215. On June10, 2010, ORC gave conditional approval to this proposal.

Ex. 5, Tab 8

216. No final approval was ever granted.

217. There was no evidence of any subsequent attempt to activate the revision mechanism to resolve the issue of the stranded funds.

218. WEG remained in breach of the MOU/BP.

219. On May 22, 2014, OHRIA reported to ORC that “the OHRIA Board was advised by OHR that the issue of the SRA funds that are held in trust, is being dealt with during the mediation process to determine one standardbred horsemens group.”

Ex.5, Tab 13

220. On March 10, 2015, ORC issued a “Notice to the Industry”, which stated, in part: “ORC licensed racetracks are advised that the horse people’s allocation will be directed to the respective association [to OHHA, for standardbred horseracing], on a monthly basis and forwarded in accordance with the current MOU and Business Plan (or any future agreement that replaces the existing MOU).” (underlining added)

Ex. 5, Tab 18

221. The current MOU/BP requires WEG to remit the SRA funds to OHHA.

222. No future agreement has replaced the existing MOU.

223. WEG remained in breach of the MOU/BP

224. On September 29, 2015, OHHA again requested that ORC direct WEG to comply with the MOU/BP and remit the outstanding horsepersons’ revenues to OHHA as required.

Ex. 5, Tab 20

225. On January 7, 2016, the Director of the ORC allocated the frozen SRA funds to both OHHA and COSA – the decision now under appeal.

Ex. 9, Tab 1

(iv) Performance

226. There was no evidence of any concern or complaint as to the past performance of OHHA, for over twenty years, from September 30, 1996, the start date of MOU, and October 31, 2016, the last date before commencement of this hearing.

227. There was no evidence of any failure by OHHA to fully comply with all the requirements of the MOU/BP.

228. There was evidence as to the willingness of COSA “to market and promote standardbred racing”, if it were to be allocated SRA marketing funds.

229. There was no evidence as to the capacity of COSA “to market and promote standardbred racing” in a manner either equal to or superior to the past performance of OHHA.

230. On three prior occasions racetracks (other than WEG), “failed to remit” the “horsepersons’ portion of the revenues” to OHHA.

231. The past practice of both OHRIA and ORC was to direct the racetracks to remit the outstanding SRA funds to OHHA, the designated representative of the standardbred horsemen.

232. On March 15, 1999, OHRIA requested that Windsor Raceway comply with the MOU/BP and remit the outstanding horsepersons’ revenues to OHHA as required.

This request was copied to both ORC and OHHA.

Ex. 5, Tab 4

233. On June 25, 1999, ORC directed Sudbury Downs Raceway to comply with the MOU/BP and remit the outstanding horsepersons’ revenues to OHHA as required.

Ex. 5, Tab 5

234. On June 17, 2005, ORC directed Rideau Carleton Raceway to comply with the MOU/BP and remit the outstanding horsepersons’ revenue to OHHA as required.

Ex. 5, Tab 6

235. On September 29, 2015 OHHA again requested ORC direct WEG to comply with the MOU/BP and remit the outstanding horsepersons’ revenues to OHHA as required.

Ex 5, Tab 20

236. There was no evidence of any attempt by either ORC, or OHRIA, between January 1, 2009 and January 7, 2016 (seven years and seven days), to require WEG to comply with the MOU AGREEMENT and the BP.

(v) Impact of freeze

237. The freeze continues to have a negative impact upon the standardbred horse racing industry in Ontario.

238. On September 17, 2015, OHHA wrote to ORC to advise:

“Our account (is) virtually empty and (is) putting our marketing programs at risk;”

“…we are no longer able to financially support…the very popular WANNADRIVE program;”

“We have additional requests for marketing funding…which we can no longer help financially.”

Ex. 5, Tab 20

239. On September 19, 2015, OR wrote to ORC:

“The Ontario Racing Association does not believe that the Standardbred Revenue Allocation (SRA) funds are best serving the horse racing industry by being made unavailable through continuous tactical and litigious maneuvering by one or more parties.

These funds are significant and have been unavailable to assist the horse racing industry since 2010 – almost six years.”

Ex. 9, Tab 5

240. “[There are] many programs at risk.”

Excerpt of testimony of Brian Tropea, examination in chief by counsel for OHHA, November 2, 2016

241. The freeze hampers OHHA in the performance of its mandatory duties under the MOU/BP “to market and promote standardbred racing (in Ontario).”

BP A, 4.2.2

242. “The continued freeze of the funds is counter-productive to the purposes and objectives of the MOU/BP.”

Reasons of Majority, para. 117

243. I agree.

(vi) Reasons

244. “This matter cannot continue to languish.”

Decision of Director of ORC, January 7, 2016, Ex. 9, Tab 1

245. I agree.

246. “It is in the interest of all Standardbred horse people to have the SRA funds used productively rather than to idly sit in a bank account.”

Reply Submissions, Administration, December 6, 2016, para. 21

247. I agree.

248. The SRA marketing funds that are subject of this hearing have remained frozen for more than seven years.

249. The freeze resulted from a unilateral decision by WEG to stop further payment of SRA funds to OHHA upon the expiration of their last contract.

250. No consent or approval was obtained by WEG from the MCCR, ORC, or OHRIA, nor was this freeze of funds authorized by the MOU/BP.

251. A contract between a racetrack and a horsepersons’ association has never been a condition precedent to the receipt of the horsepersons’ portion of the revenues for any of the original seventeen racetracks over the past twenty years.

“There is no requirement that an association be under contract with a racetrack (to receive SRA funds).”

Excerpt of testimony of Steven Lehman, examination in chief by counsel for OHHA, November 2, 2016;

and,

Rule 3.02.02, Rules of Standardbred Racing, 2016

252. The freeze began when WEG was without a contract with any horsepersons’ association (January 1, 2009 to July 29, 2009).

253. The freeze is contrary to the MOU AGREEMENT entered into by the Ontario Jockey Club (now WEG).

MOU, 6.0

254. The freeze is a breach of the mandatory requirement imposed upon all standardbred racetracks to remit the SRA funds to OHHA.

BP, B

255. There was no evidence that the addition of COSA as a “recipient” was necessary to avoid frustration of the original intent and purpose of the MOU/BP.

256. ORC is required to “exercise its powers and to perform its duties in the public interest and in accordance with the principles of honesty, and integrity, and social responsibility…”

Section 6, Racing Commission Act, 2000

257. The failure by WEG to abide by the MOU AGREEMENT and its continued breach of the BP, to the detriment of the standardbred industry, for a period of seven years, is an inappropriate foundation upon which to retrospectively change the recipients of the SRA funds.

258. It is neither in “the best interests of racing”, nor “in the public interest”, to change the clear and unambiguous provisions of the MOU/BP in a fundamental manner on such a tenuous foundation.

259. A readily available resolution of the issue of the frozen funds has been available since 2009.

260. It is a resolution which does not require either a failure to abide by the MOU AGREEMENT or a breach of the BP.

261. It is a resolution which does not require the transformation of the words “provincially recognized horsepersons’ association”, a term of description of OHHA in the BP, B, to a condition precedent for the receipt, by other organizations, of the “horsepersons’ portion of the revenues.”

262. It is a resolution that does not require an unauthorized change to the original MOU/BP.

263. It is a direction to WEG to remit the SRA marketing funds to OHHA in accordance with the MOU/BP.

(vii) Result

264. For these reasons, I would allow the appeal.

265. I would make the following orders:

266. The Standardbred Revenue Allocation, the “SRA” marketing funds, held in trust by the Woodbine Entertainment Group, between January 1, 2009 and November 21, 2015, in the amount of two million one hundred and twenty-five thousand eight hundred twenty-seven dollars, in Canadian funds, ($2,125,827.00), are allocated to the Ontario Harness Horse Association (“OHHA”).

267. These SRA marketing funds are allocated to OHHA upon three conditions:

(i) OHHA must use the SRA marketing funds for “an industry marketing program, to market and promote standardbred racing” in the Province of Ontario in accordance with the “Business Plan to Support the Reduction in Pari-Mutuel Taxes”, Section A, 4.2.2, dated June 10 1996, as amended September 15, 1996;

(ii) OHHA “must provide evidence, on an annual basis, through written documentation”, to the Registrar of the Alcohol and Gaming Commission of Ontario, that the SRA marketing funds have been spent for the purposes described in Section A, 4.2 of the Business Plan, in accordance with the Memorandum of Understanding, dated September 30, 1996.

(iii) OHHA must provide timely access to all financial records in relation to the SRA marketing funds, to the Registrar of the Alcohol and Gaming Commission of Ontario, upon request.

Dated at Toronto, Ontario, this 9th day of June, 2017

Original signed

Anthony Williams

Vice Chair