Thursday's Lawsuit Session Concludes

Published: December 6, 2018 02:03 pm EST

Robert Ratcliffe, representing the Province of Ontario, took centre stage during the opening session at the Ontario Superior Court of Justice in Brampton on Thursday (Dec. 6) as the proceedings of a civil lawsuit by a group of Ontario Standard breeders against the Province and the Ontario Lottery and Gaming Corp. (OLG) regarding the cancellation of the former Slots at Racetracks Program (SARP) continued.

Ratcliffe referred to prior case law — particularly, a proceeding which involved Imperial Tobacco and the Government of Canada — while explaining the Province’s position that there was no ‘Proximity’, ‘Special Relationship’, ‘Duty of Care’ or ‘Negligent Representation’ by the Province surrounding the Province’s 2012 decision to cancel SARP.

Ratcliffe also explained that the decision was one of many austerity moves by the Government in light of the provincial (and global) economic downturn that had begun years earlier (in 2008).

Ratcliffe cited case law to highlight how: the Province of Ontario was not within a proximate relationship with the breeders in question; how it was not negligent in its handling of the SARP cancellation; how it did not make negligent misrepresentations; how it did not have a special relationship with the breeders; and how it did not have a duty of care for Ontario Standardbred breeders.

Ratcliffe explained that the Province had neither proximity nor a legal relationship with Ontario Standardbred breeders, and that general information was being provided by Government to the breeders, but that was it. Ratcliffe made it clear the Ontario did not have a contractual agreement with the breeders.

Ratcliffe explained that general statements had been made to the public and to breeders when it came to the encouragement of producing equine in the province for the purpose of sanctioned horse racing. He reiterated that those general statements were not communicated to the breeders within a legal, binding relationship with them, because it did not exist.

Ratcliffe explained that the Government has taken the position that public statements don’t necessarily constitute proximity, in a legal sense. He said that even though the two parties had dialogue and met for discussions, that does not mean that there is, in turn, proximity or a special relationship between the two parties. Ratcliffe said that those distinctions were held between the Government and the site holders (racetracks), but not the breeders.

Ratcliffe characterized the Standardbred breeders of getting their SARP-related updates via a trickle-down effect from those that were privy to, or were part of, the Letter of Intent which dealt with government slot machines being housed at Ontario racetracks. After explaining all of that, Ratcliffe again stated that there was no proximity, no special relationship and no negligence in terms of its actions, or lack thereof, with the breeders.

Ratcliffe went on to cite case law to explain that public policy decisions are not irrational or taken in bad faith just because they may lead to negative outcomes for some parties. He stated, referring to case law, that those important decisions can supersede duty of care.

Ratcliffe circled back to the Province’s overarching position in the matter, being that the SARP cancellation was a decision made at the highest level, in cabinet — a core policy decision. He explained that the decision to cancel SARP was one of many tough austerity decisions that the Government was forced to make at a time of financial stress.

Ratcliffe went on to say that the breeders should not have been surprised by changes to, or the cancellation of, the SARP program, seeing as though the public Sadinsky Report from years earlier had specifically mentioned that the program had its issues.

Later, lawyer Awanish Sinha, representing the OLG, clarified for the court that it was never the OLG’s plan to remove slot machines from racetracks, but the corporation was, in fact, looking into scaling up gaming at tracks, be it an increase of slot machines and/or the introduction of table gaming.

Sinha went on to say that the termination of the site holders' agreements and the SARP termination was more about lowering “subsidy-induced rent” to racetracks, which was part of the ‘modernization’ of gaming in the province and the introduction of gaming bundles so RFPs could be issued to the private-sector operators.

Sinha went on to explain that the OLG saved a quarter of a billion dollars by changing the rent structure for slots to remain at racetracks. He also stated that a marginal loss in savings was seen because the modernization process took longer than expected.

Later in the afternoon, Ratcliffe went on to reference the Horse Racing Transitional Panel report, which touched on how the SARP program had problems and was not good public policy. He also went on to cite case law in regard to how the SARP cancellation was a rational decision, and not an irrational action as claimed by the plaintiffs.

Ratcliffe also retorted the ‘bad faith’ allegations by the breeders in relation to the SARP cancellation. He stated that there was no basis for the claim. He also addressed the plaintiffs’ claims of the SARP cancellation being a political decision, stating, again, that the move was an austerity measure.

The Province’s legal team also challenged the plaintiffs’ claims of ‘knowledge of financial harm’ stemming from the cancellation, stating that just because the fallout had serious financial consequences for the breeders, the decision to cancel wasn’t made in bad faith, as claimed. Ratcliffe furthered that governments aren’t accountable just because financial harm is endured by parties.

Ratcliffe went on to state that the Province did not conduct negligent misrepresentation. He keyed in on the fact that breeders were never told that SARP wouldn’t change in the future. He said the plaintiffs knew that they didn’t have a contract with the Government and that the decision to stop the funding could come at any time.

Ratcliffe then rhetorically asked if the Government legally owed the breeders a ‘duty to warn’ about SARP cancellation? The answer, he explained, was ‘no.’

Early in the afternoon, Eunice Machado, a member of the Province’s legal team, discussed a pair of case-law items pertaining to secrecy within cabinet. The cases cited were used to explain how documents can legally be deemed privileged and that cabinet confidentiality can be is both legal and necessary at times. Justice Emery took the opportunity to note that cabinet confidentiality, as a principle, is not absolute.

Court resumed after 2:00 p.m., at which point Awanish Sinha held the floor for the OLG. In trying to be succinct as possible, Sinha outlined the OLG’s position, breaking down things down via a handful of points.

Sinha started out by saying that there was no genuine issue for the OLG to be targeted in the civil lawsuit. He stated that neither the Crown nor the OLG breached the Letter of Intent, furthered that both parties fulfilled it. He went on to say that the decision of Dalton McGuinty’s government to cancel SARP was a policy decision and that it was a rational decision that was made in good faith.

Sinha stated that there is policy immunity in the decision and that there was no legal relationship between the plaintiffs and the Province/OLG. He also went on to state that there was no misrepresentations about the cancellation of the Slots at Racetracks Program.

He went on to characterize SARP as a “racing industry support program via the siteholder agreements.” He asserted that SARP was a trickle-down economic stimulus program.

The characterization of SARP as a subsidy from the government visibly irked both the plaintiffs and their representation all through the day’s proceedings, although they respectfully stewed and found the ability to refrain from audible and demonstrative reactions throughout.

Sinha said that when the SARP deal was struck in 1998, subsequently reupped, and then ultimately cancelled, each of those actions came via policy decisions.

He went on to say that cancellation was a cabinet decision and that the move was a prudent redirection of public funds. Sinha further that after being directed by cabinet, the OLG terminated the siteholder agreements properly, as per the conditions of the contract.

Sinha spent the majority of the late afternoon hours explaining how the plaintiffs were not contractually or legally part of the LOI in any way, shape or form. He also spent a decent amount of time going through testimony transcripts that highlighted the fact that many Ontario Standardbred breeders did not know that the LOI existed.

For a recap of Tuesday's session, click here.

For further information on the lawsuit, click here.

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