Ontario Superior Court of Justice

COURT FILE NO.: CV-07-085289-00
DATE: 20120110

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

TADEUSZ KALKOWSKI Plaintiff

Jonathan Miller, for the Plaintiff

• and -

SOMPHET RATSAMY, BOUNLONG RATSAMY, individually and carrying on business as HUNTER’S POINT CONVENIENCE and ONTARIO LOTTERY & GAMING CORPORATION Defendants

Sarah Weingarten, for the Defendant Ontario Lottery & Gaming Corporation

HEARD: December 19, 2011

REASONS FOR DECISION

LAUWERS j.

[ 1 ] The plaintiff Tadeusz Kalkowski sues the defendant Ontario Lottery & Gaming Corporation (“OLG”) for failing to pay him the proceeds of a $1 million lottery that he claims to have won. OLG moves to dismiss the plaintiff’s action under rule 20.01 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194, on two bases: the first is that “there is no genuine issue requiring a trial” with respect to the claim; and the second is that the action is out of time.

[ 2 ] Mr. Kalkowski says that he played the Ontario Instant Million Millenium game (the “OIM Millenium Game”) on December 29, 1999. In the Statement of Claim, he claimed that he was “unsuspectingly cheated” out of a winning lottery ticket for and the winnings from that ticket by an employee of the Hunter’s Point Convenience store, which was owned and operated by the personal defendants. He further claims that the OLG is vicariously liable. The action was started on July 30, 2007.

[ 3 ] Before me, Mr. Miller for the plaintiff varied the theory of the case. The plaintiff’s claim against OLG now sounds in breach of contract. The plaintiff wishes to discontinue the action against the other defendants.

The Facts

[ 4 ] Mr. Kalkowski makes the following factual assertions:

5. On December 29, 1999, I attended at a convenience store registered in the name of the named Defendant Somphet Tarsamy (“the Store”), and I purchased 3 tickets for the lottery game called “Millenium millions” (“the Lottery”).

6. I had been a frequent customer of the Store and I had purchased lottery tickets before. However, I had never purchased tickets for the Lottery before and so I was unfamiliar with the rules of the Lottery.

7. The Lottery was a “scratch and win”, “instant win” type of lottery;

8. I purchased 3 tickets and scratched them all in the Store;

9. Two of the tickets which I purchased were not ultimate winners. On the other ticket, I ultimately won the $1 million dollar prize;

10. I showed the winning ticket to the clerk who said that I had not won because he said that I needed 3 matching symbols altogether.

11. This information was wrong. It was admitted on the examination for discovery of the Ontario Lottery & Gaming Corporation (“the OLG”) that only 2 matching symbols altogether was required. …

12. I left my ticket with the clerk who said he would re-check it but I did not wait for him to do so. The clerk did not scan the ticket in the lottery terminal while I was present;

13. Before leaving the Store, I purchased 14 more tickets for the Lottery and I took them home;

14. I did not read the rules on the ticket which were in fine print when I was at the Store because I did not have my glasses which I used for reading and which I had only obtained and started to use about 1 week before;

15. However, on the next morning, I “played” the other 14 tickets at home and I read the rules because I had my glasses with me;

16. On reading the rules, I saw that I needed only 2 matching symbols altogether.

[ 5 ] Mr. Kalkowski knew of his potential claim by December 30, 1999, and first called OLG’s customer service department on that day to express his complaint that he had been cheated out of the winning ticket. He admits that he sought legal advice concerning the claim in January of 2000.

[ 6 ] OLG conducted two investigations of Mr. Kalkowski’s complaint. The first was from December 1999 to October 2001, and the second was from July 2006 to December 2006. OLG submits that these investigations show that Mr. Kalkowski could not possibly have been cheated out of a $1 million prize winning ticket.

[ 7 ] OLG does not have a centralized system for tracking winning tickets. It relies on equipment operated by ticket vendors, which records claims for prizes, in-store validation results, and ticket sales. OLG has generated and produced an “Index Transaction Master Inquiry Report” (the “ITMIR Report”), that shows the times when prize claims were made at the store, the amounts paid out on valid claims, and the in-store validation results for each claim (that is, whether or not the claim was determined to be valid when the ticket was run through the in-store computerized validation system).

[ 8 ] OLG has reviewed the validation record for the Hunter’s Point store on December 29, 1999. The ITMIR Report shows that no prizes of $1 million (or any amount greater than $10) were redeemed at the store on that date. It records that three lottery tickets were purchased at the store, were run through the in-store validation system, and were determined to be “not a winner.” The times match Mr. Kalkowski’s evidence as to when he bought and played the three tickets.

[ 9 ] OLG’s investigation concluded that Mr. Kalkowski’s claim could not be considered for a prize, based on the following facts:

(b) The claim period for the OIM Millenium Game expired on September 30, 2001;

(c) There were ten winning tickets for the OIM Millenium Game, nine of which were claimed;

(d) None of the nine winning tickets claimed were purchased at Hunter’s Point;

(e) Each of the nine claimed winning tickets was traced by OLG and was determined to have been both purchased and validated at another location;

(f) The tenth winning ticket was never redeemed for a prize, has expired (in September 2001) and could not have given rise to any winnings to take;

(g) Therefore, no one could have “cheated” Mr. Kalkowski by taking or converting any winnings arising from the tenth (unclaimed) ticket for the OIM Millenium Game – no such winnings ever existed or could ever have been taken by anyone, at any time, at any place;

(h) Hunter’s Point did not validate any $1 million OIM Millenium Game prizes on December 29, 1999;

(i) Hunter’s Point has never received a commission for selling a $1 million prize ticket for an OIM Millenium Game (as would have occurred if a winning ticket had been sold there); and

(j) OLG’s records show that [Mr. Kalkowski’s] ticket was “not a winner.”

[ 10 ] Mr. Kalkowski submits that the investigation was inadequate because OLG failed to contact the store in a timely manner. Had OLG done so, it would have been able to access the video surveillance camera showing the events in question and would have verified Mr. Kalkowski’s version of the events.

[ 11 ] Mr. Kalkowski points out that OLG has no information whatsoever concerning the tenth winning ticket, including whether it was even sold. Mr. Miller argues that “OLG’s records show that the tenth prize is still unclaimed and that no one other than Mr. Kalkowski has ever made a claim to this price.” In short, Mr. Kalkowski says that the tenth ticket was the one that he gave to the store clerk on December 29, 1999.

Discussion

[ 12 ] Mr. Kalkowski takes the position that his statements about the ticket are true and that he is therefore the rightful winner of the lottery prize for the tenth ticket. OLG’s failure to pay him is a breach of contract. Mr. Miller submits that the issue is one of credibility and therefore requires the “forensic machinery” of a trial, so that a trial judge can get a “full appreciation” of the facts before reaching a decision; accordingly summary judgment should not be granted: Combined Air Mechanical Services Inc. v. Flesch , 2011 ONCA 764 , [2011] O.J. No. 5431 at paras. 50-51 ; Healey v. Lakeridge Health Corp ., 2010 ONSC 725 , [2010] O.J. No. 417 at para. 28 per Perell J., aff’d 2011 ONCA 55 , 103 O.R. (3d) 401, [2011] O.J. No. 231.

[ 13 ] OLG takes the position that, first, Mr. Kalkowski cannot possibly be the winner of the tenth ticket, and in any event, he cannot prove that he is; second, Mr. Kalkowski cannot possibly comply with the “Rules of the Game” that are part of his contract with OLG; and third, Mr. Kalkowski’s action is time-barred. I deal with the second and third of OLG’s positions in turn.

The Rules of the Game

[ 14 ] OLG relies on the rules of the game. These were in force from October 27, 1998 until September 13, 2007. OLG cites in particular the following sections of the rules:

4.1 The Corporation [OLG] will not award a prize for tickets which are void, unless the Corporation, in its discretion deems it appropriate to do so…Tickets are void if lost, stolen, unissued, illegible, mutilated, damaged, altered, counterfeited or forged, miscut, misregistered, defective, misprinted, cancelled by the retailer, produced in error, incomplete, not paid for, destroyed, or issued, acquired or presented in, or upon, violation of the Act, the Regulations or these Rules…

5.3 A winner of a prize worth a value of $50,000 or more must claim the prize by completing his/her ticket as indicated in paragraph 5.1 above and presenting it in person at

Ontario Lottery Corporation

Main Office

33 Bloor Street East

Toronto, Ontario

5.8 All prizes must be claimed within 12 months of announced date at the end of the Game of or issue unless otherwise specified by the Corporation. Thereafter, any unclaimed prizes will be forfeited and shall not be awarded.

The claim period for the OIM Millennium Game ended on September 30, 2001.

[ 15 ] OLG submits that in order to win and claim the prize, Mr. Kalkowski was obliged by the rules of the game to present the winning ticket, which he manifestly cannot do; the rules of the game provide that a lost or stolen ticket is void. OLG can award a prize even if a ticket is void on a discretionary basis. As is shown by the vigorous defence of this action, OLG has decided not to exercise its discretion in Mr. Kalkowski’s favour.

[ 16 ] A claim on a lottery ticket is based on contract law: McCorkell v. Ontario Lottery Corporation, 1992 7444 (ON SC) , [1992] O.J. No. 767, 8 O.R. (3d) 1 (S.C. (Div. Ct.)) per Robins J.A. at paras. 12-13. This was a case where the player was responsible for selecting his own numbers. The court held that the terms and conditions of the contract are found in the rules of the game, and that it is up to the player to bring himself into the rules of the game and satisfy OLG that he is a winner.

[ 17 ] Robins J.A. stated at para. 20:

The requirement that players "ensure that the numbers on your tickets are the ones you have chosen" is fundamental to the operation of this computerized "select your own number" lottery game. This requirement is forcefully brought home to participants, and in my opinion, given the nature of this kind of wagering transaction, and the obvious potential for abuse if it were otherwise, players are not relieved of the responsibility by the words of conduct of Lotto 6/49 sales agents or operators. Their acts cannot, in my opinion, reasonably be relied upon to affect the express instructions to participants or override the basic structure of the game. The players must, in short, bear the responsibility of ensuring that their tickets conform with the selection slip.

[ 18 ] In Soron v. Southland Canada Inc ., 1996 7161 (SK KB) , [1996] S.J. No. 18, [1996] 4 W.W.R. 80 (Sask. Q.B.) Gerein J. stated at para. 9 that: “A failure to comply with the rules precludes a player from winning…If a prize is lost because of a failure to do so, then the loss is attributable only to the player.” In my view these words apply by analogy to Mr. Kalkowski.

[ 19 ] The rules of the game give discretion in OLG to accept a ticket that is otherwise void. This is intended to provide some avenue for relief when the strict application of the rules would be unfair in particular circumstances. Does the existence of this discretion impose any duty on OLG? In my view, it does; OLG owes its customers a duty to investigate a claim: Paul v. Western Canada Lottery Foundation , 1978 1828 (SK KB) , [1978] S.J. No. 414, 92 D.L.R. (3d) 347 (Sask. Q.B.) per MacDonald J. at paras. 10-11, affirmed, 1981 2185 (SK CA) , [1981] S.J. No. 1278, 127 D.L.R. (3d) 502 (Sask. C.A.)[ Paul ]. If OLG, for example, pays the wrong person, it may still be liable to the right person: Paul, supra .

[ 20 ] In Mavromihelakis v. Ontario Lottery Corporation , 1978 1443 (ON SC) , [1978] O.J. No. 3696, 23 O.R. (2d) 497 (H.C.J.), Saunders J. at para. 16:

…I am certain that the Court ought not to consider interfering [with the exercise of OLG’s discretion] unless it forms the opinion that the corporation has been acting in an unreasonable or arbitrary manner. Such, in my opinion, is not the case here. The corporation in the absence of the production of a ticket understandably requires a very high degree of proof.

[ 21 ] I would go slightly further and find that OLG must exercise its discretion reasonably and not arbitrarily in the particular circumstances: Paul , per Hall J.A. at paras. 16-17, 19 .

[ 22 ] The OLG investigation was not as timely as the investigation in Lajoie v. Ontario Lottery Corporation , [1999] O.J. No. 3237 , in that by the time of OLG’s investigation video records were no longer available to be reviewed. But I reach the same conclusion as Nordheimer J. reached in that case. There is no evidence that the store clerk stole the ticket apart from the assertion of Mr. Kalkowski. Further, as Nordheimer J. noted at para. 21: “Even if the plaintiff did, in fact, purchase a winning lottery ticket and had it stolen by someone, the Ontario Lottery Corporation is not liable to the plaintiff for that event.”

[ 23 ] Mr. Kalkowski is not able to prove his claim by the strict terms of the rules of the game because the ticket is lost or stolen. The facts that Mr. Kalkowski allege impose a duty on OLG to investigate his claim. OLG conducted two investigations and concluded at the end of them that his claim was not valid. It chose not to exercise its discretion under the rules of the game in Mr. Kalkowski’s favour. In doing so it did not breach its contract with Mr. Kalkowski.

Is Mr. Kalkowski’s Action Time-barred?

[ 24 ] OLG submits that Mr. Kalkowski’s action is time-barred under section 7 of the Public Authorities Protection Act , R.S.O. 1990, c. P.38, then in force (but since repealed), which required an action to be brought against a public authority like OLG within six months; OLG is described in section 2(3) of the Ontario Lottery and Gaming Corporation Act, 1999 , S.O. 1999, c. 12, Sch. L, as “an agent of Her Majesty.”

[ 25 ] Section 7 of the Public Authorities Protection Act provided:

7.--(1) No action , prosecution or other proceeding lies or shall be instituted against any person for an act done in pursuance or execution or intended execution of any statutory or other public duty or authority, or in respect of any alleged neglect or default in the execution of any such duty or authority, unless it is commenced within six months next after the cause of action arose , or, in case of continuance of injury or damage, within six months after the ceasing thereof. (Emphasis added.)

[ 26 ] Under section 24(3) of the Limitations Act, 2002 , S.O. 2002, c. 24, Sch. B, since the "former limitation period" in the Public Authorities Protection Act expired before January 1, 2004, no proceeding may be commenced in respect of the claim.

[ 27 ] If the Public Authorities Protection Act does not apply, then under section 24(5) of the Limitations Act, 2002 , the former limitation period of six years for breach of contract under section 45 of the Limitations Act , R.S.O. 1990, c. L.15 , would apply, since Mr. Kalkowski's claim was discovered before January 1, 2004. The claim would then have been statute-barred six years after it arose, in 2005.

[ 28 ] Mr. Kalkowski submits that his action was revived by OLG’s 2006 investigation, so that, as required by section 4 of the Limitations Act, 2002 , the action was validly started within two years of OLG’s last rejection of his claim. Mr. Miller was unable to point to a single authority or legal principle to support his argument that a cause of action in contract revives in these circumstances and re-starts the limitation period. I am not aware of any legal theory that would support such a result.

[ 29 ] I find that Mr. Kalkowski’s action is statute-barred.

Conclusion

[ 30 ] In recent years OLG has achieved a certain notoriety relating to suspicious claims by lottery ticket retailers, so it is perhaps not surprising that OLG is more vigilant than it has been in the past and may be more rigorous in its investigations. OLG’s investigation of Mr. Kalkowski’s claim demonstrates a high probability that the ticket that he left with the store clerk was not a winner. It does not, however, prove that the ticket was not a winner to a certainty because it is possible that the store clerk took the ticket, substituted another ticket for it and then decided later not to cash the stolen ticket. That seems highly improbable, but my ruling that the case must be dismissed does not depend on this improbability.

[ 31 ] The action is dismissed with costs, if demanded. I will accept written costs submissions, no longer than three pages in length apart from the Bill of Costs, on a ten day turnaround starting with OLG and concluding with OLG’s reply, if any. If nothing is received in ten days I will assume that costs have been resolved.

P.D. Lauwers J.

Released : January 10, 2012