COURT FILES NO.: CV-08-352327
CV-08-356748
DATE: 20120430
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Joaquim Moreira, Moshe Braunstein and Remo Gigliotti / Plaintiffs
AND:
Ontario Lottery and Gaming Corporation, Falls Management Company and Falls Management Group LP, John Doe #1, John Doe #2, John Doe #3, and the Alcohol and Gaming Commission of Ontario / Defendants
AND RE: Tebaldo Barbuscio / Plaintiff
AND:
Ontario Lottery and Gaming Corporation, Falls Management Company and Falls Management Group LP, John Doe #1, John Doe #2, John Doe #3, and the Alcohol and Gaming Commission of Ontario / Defendants
AND RE: Ontario Lottery and Gaming Corporation, carrying on business as Casino Niagara and Niagara Fallsview Casino Resort / Plaintiffs by counter-claim
AND:
Moshe Braunstein / Defendant by counter-claim
AND RE: Ontario Lottery and Gaming Corporation, carrying on business as Casino Niagara and Niagara Fallsview Casino Resort / Plaintiffs by counter-claim
AND:
Tebaldo Barbuscia / Defendant by counter-claim
BEFORE: Justice E. P. Belobaba
COUNSEL:
Derek Ricci for Ontario Lottery and Gaming Corporation, Falls Management Company and Falls Management Group LP / Defendants and Moving Parties
John Kelly and Tom Schreiter for the Alcohol and Gaming Commission of Ontario / Defendant and Moving Party
Xavier Navarrete, Glen Perinot and Todd White for the Plaintiffs / Responding Parties
HEARD: April 16 and 17, 2012
Summary judgment motion
[1] Jack, Moshe, Tony and Theo were avid gamblers. They spent hundreds of hours and more than $2 million dollars playing high-limit roulette at the Fallsview Casino in Niagara Falls, betting an average of $1000 per spin. They played at the Casino from June, 2004 when the facility opened, to at the end of 2007 or early 2008.
[2] Over the course of the three and a half years of play, one particular manoeuvre of the dealer drew frequent comments and complaints. Whenever the dealer spotted a “floating ball” [1] he or she would reach into the spinning roulette wheel and remove the ball before it dropped into a numbered slot. The players understood that the dealer could call a “no spin” and stop the game if the ball failed to complete four revolutions before leaving the track or if a foreign object fell into the wheel. But not to remove a “floating ball.” The four players believed this was contrary to the rules of play.
[3] In the spring of 2008, the players sued the Casino and related defendants for $7.5 million alleging that the Casino was running an illegal roulette game. [2] They claimed damages in tort and in contract and for misrepresentation under the Consumer Protection Act, [3] and, as a minimum, asked for the return of the $2.1 million they lost playing roulette, on the basis of unjust enrichment. Jack, Moshe and Tony brought one action; [4] Theo brought another. [5]
[4] The Casino in turn sued Moshe and Theo for the $98,700 in gambling loans that had not been repaid - $34,700 owing by Moshe and $64,000 owing by Theo. [6]
[5] The two damages actions brought by the four players were ordered to be heard together and the Casino’s two collection actions were deemed to be counter-claims in the damages actions. [7]
The motions for summary judgment
[6] In these motions for summary judgment, the defendants ask that the two damages actions be dismissed. They say that the plaintiffs’ claims of illegality are baseless, the roulette game was completely legal and, in any event, the plaintiffs have no cause of action and no genuine issues requiring a trial. The Casino defendants also ask for summary judgment in the two collection actions.
[7] The plaintiffs argued an array of issues in their pleadings and written material [8] and added some new ones during oral argument. [9] However, as the hearing went on, it became clear that there were only two issues before the court: one, the legality of the roulette game and in particular whether the so-called ‘floating ball rule’ was a “rule of play” that should have been approved by the defendant Gaming Commission (“the AGCO”); and two, if it was not an approved rule of play, whether the plaintiffs had a viable damages claim on the facts herein.
[8] The defendants made a number of submissions why the claims in tort, contract and misrepresentation cannot succeed. For my part, I can dispense with these claims more directly by noting that no damages evidence was filed by any of the plaintiffs. Therefore all that remains is the claim for unjust enrichment and the argument that if the roulette games were illegal (because all of the rules of play had not been approved) the Casino is obliged to return the $2.1 million that the plaintiffs lost playing roulette over the three and a half years.
Decision
[9] The motions for summary judgment are granted and the plaintiffs’ actions are dismissed. I agree with the defendants that there are no genuine issues requiring a trial.
[10] Even if the ‘floating ball rule’ was a rule of play (it probably was) and even if it was not approved by the AGCO as statutorily required (it probably wasn’t) the plaintiffs’ claim in restitution to recover the monies they bet on these illegal roulette games has no chance of success because every time the spin was stopped to remove a floating ball, the dealer returned the players’ bets before a new game was played. None of the wagers from the impugned spin were retained by the Casino. There was no enrichment; there was no deprivation. The claim for unjust enrichment cannot possibly succeed.
[11] I will explain each of these points in turn.
Analysis
(1) The “floating ball” issue and the allegation of illegality
[12] In order for provincial gambling venues to be legal under s. 207 of the Criminal Code, they must comply with the applicable laws as enacted by the province. In this province, the Alcohol and Gaming Commission of Ontario is the regulatory authority responsible under the Gaming Control Act [10] for regulating the gaming sector including the defendant Casino. One of the responsibilities of the board of the AGCO is the review and approval of the rules of play for the games of chance that are offered at the province’s casino.
[13] Section 30(1) of O. Reg. 385/99 requires the operator of a gaming premise to submit “a complete description” of each game that it intends to offer for play to the AGCO’s board for approval. The description must include the rules of the game and the method of play. [11] Section 30(4) provides that the operator “shall ensure that the games of chance that are offered for play are approved by the board and are played in accordance with the rules approved by the board.”
[14] The rules of play for roulette that had been approved by the board and that applied over the time-period herein said nothing about “floating balls” or the dealer’s right to remove them and stop the game. In March of 1999, the board approved only two rules of play that related specifically to this aspect of the game: that the ball must complete at least four revolutions around the track to be a valid spin; and that while the ball was still rolling around the wheel, the dealer must say “no more bets.”
[15] In February, 2008 a rule of play was added allowing the dealer to call a “no spin” if the ball physically left the confines of the roulette wheel. Again, nothing about “floating balls.” It was only in March, 2011 that a further rule was added allowing the dealer to call a “no spin” and remove the ball from the roulette wheel “if the ball is floating for 3 or more rotations of the wheel.” [12]
[16] If these motions for summary judgment turned only on the “floating ball” issue and whether it was a board-approved rule of play during the time in question, the motions would have been dismissed. I would have been inclined to find in favour of the plaintiffs and conclude that the stoppage of games to remove a “floating ball” was contrary to provincial gaming law.
[17] I say this because, in my view, any rule that allows a dealer (or a referee or indeed any official in any game) to stop the game for non-obvious reasons [13] is a rule of play. This is simply common sense. By not including this rule of play when it applied for board approval, the Casino-operator breached ss. 30(1) and (4) of O. Reg. 385/99 because it did not submit “a complete description” of the roulette game and did not ensure that the game over the years in question was being played “in accordance with the rules approved by the board.” It was only in 2011 that the “floating ball” rule was approved and added as a rule of play.
[18] I acknowledge that the defendants’ submissions on this point were more extensive and more nuanced. However, given that the motions do not turn on the ‘illegality’ issue, I need not spend any more time discussing floating balls. I agree with the defendants that even if the games that were stopped by the dealer to remove a “floating ball” were arguably illegal, the motion for summary judgment must still be granted because of the next point.
(2) No basis for the unjust enrichment claim
[19] Even if the “floating ball” roulette games were illegal because this particular rule of play had not been approved by the provincial regulatory authority, the plaintiffs have no cause of action. The claim for unjust enrichment cannot succeed because there was no enrichment - the bets were always returned to the players whenever the game was stopped because of a “floating ball.” [14] And there was thus no deprivation.
[20] The plaintiffs rely on the Supreme Court of Canada’s decision in Garland v. Consumers’ Gas . [15] The Court allowed a customers’ class action to recover late penalty payments that charged a criminal rate of interest. The over-riding public policy consideration, said the Court, was the fact that the LPP’s were collected by the gas company in contravention of the Criminal Code . [16] The Court put it this way: “As a matter of public policy, a criminal should not be permitted to keep the proceeds of crime.” [17] All three elements for a claim of unjust enrichment were established: the gas company’s enrichment; the customer’s deprivation; and the absence of any juristic or good reason for the enrichment. The gas company was required to return the LPPs.
[21] Here no money or benefits were ever retained by the Casino. After every “floating ball” no-spin call, the players’ wagers were returned. No “proceeds of crime” were kept by the Casino. As already noted, there was no enrichment and no deprivation. There is simply no basis for the plaintiffs’ unjust enrichment claim.
[22] The plaintiffs argue that the absence of a “floating ball” rule and the resulting illegality tainted not only the “floating ball” games but all of the roulette games played over the entire three and a half year period. I know of no legal authority that supports such a broad-sweeping proposition. Recall that in Garland v Consumers’ Gas , the only “proceeds of crime” that were arguably recoverable were the late penalty payments that had been illegally collected by the gas company. No one seriously suggested that just because the (criminal) interest rate charge of 5% per month was printed on every monthly gas bill, that every gas bill was illegal and customers were therefore entitled to recover all the money they paid for gas deliveries.
[23] Just because some of the roulette games were stopped to remove a “floating ball,” arguably in contravention of provincial gaming law, does not mean that all of the other roulette games that did not involve a “floating ball” were tainted as well.
[24] The defendant AGCO added two more reasons why the actions as against the Gaming Commission should be dismissed. The AGCO argued that its oversight of gaming casinos is pursuant to a statutorily-imposed public duty and it does not owe a private duty of care to individual members of the public, including the plaintiffs. The AGCO referred to a long line of cases, including the recent decision of the Ontario Court of Appeal in Wellington v Ontario , [18] in support of the general proposition that where a statutory regulator owes a duty to the public at large, no private law duty of care may be imposed.
[25] The AGCO also argued that the plaintiffs’ claims are time-barred by the two-year limitation period. [19] The plaintiffs’ actions were commenced in April and June, 2008. The argument here is that the plaintiffs knew or should have known about the illegality of the “floating ball” rule as early as 2004 when they first began playing at the Casino. The 2008 actions are thus out of time.
[26] In my view, there is considerable merit to both submissions. However, given my conclusion that the action for unjust enrichment has no basis and there are thus no genuine issues requiring a trial, there is no need to consider these two additional reasons provided by the AGCO.
Disposition
[27] The defendants’ motions for summary judgment are granted. The plaintiffs’ actions are dismissed with costs.
[28] Counsel for the plaintiffs agreed that if their actions are dismissed, the defendants should succeed on the collection claims. The amounts owing are not in dispute. I therefore grant the motions for summary judgment on the two collection claims as well.
[29] At the close of the hearing last day, counsel for the Casino defendants and the AGCO handed up their costs submission. I would ask the plaintiffs to forward their responding submission within ten days.
Justice E. P. Belobaba
Released: April 30, 2012