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Wednesday's Lawsuit Hearing Recap

Published: September 12, 2018 9:11 am ET

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Trot Insider compiled this comprehensive report from Day 3 of the proceedings in regard to the civil lawsuit that a group of Ontario Standardbred breeders have filed against the Province of Ontario and the Ontario Lottery and Gaming Corporation over the cancellation of the former Slots at Racetracks Program.

Monday (Sept. 10) marked the first day of court hearings in the civil suit (‘Seelster Farms Inc. v Her Majesty The Queen In Right Of Ontario’) which is taking place at the A. Grenville and William Davis Courthouse, located at 7755 Hurontario St. in Brampton, Ont.

One of the Plaintiffs’ lawyers, Jonathan C. Lisus, of Lax O’Sullivan Lisus Gottlieb LLP, has been presenting the Plaintiffs’ Factum as part of their Motion for Summary Judgment since Monday.

To view the recap of Trot Insider’s Tuesday coverage, click here.

The court case reconvened on Wednesday (Sept. 12) at 10:00 a.m. with Jonathan Lisus returning to discuss the review that the OLG was undergoing in 2011. Here, the OLG was characterizing SARP revenue in these internal documents as a "special interest payment" for horse racing and not a commission of services rendered as initially stated in the letter of intent government signed with the industry. Thus, according to Lisus, the OLG was fundamentally rewriting the nature of its obligations while simultaneously encouraging breeding and continuing positive messaging.

Lisus pointed out what he termed as "crystal clear evidence of foreseeability of harm" in further OLG documents in June 2011 that note a change in SARP will cause harm to the racing industry.

The evidence then shifted to Don Drummond, the author of the commissioned Drummond Report. Admitting he didn't evaluate the harm of removing SARP, Drummond maintained that was neither his recommendation nor mandate. He merely suggested an evaluation, while Finance (Shortill and Duncan) changed 'evaluated' to 'eliminated' in messaging from government.

Lisus cited examination of Elizabeth Yeigh that confirmed OLG had full control to deal with concerns of its agreement with the horse racing industry, yet did not deal with the issues.

The main crux of the morning dealt with policy. The assertion from the defendants state that this was a policy decision. Through emails and cross-examination of a number of individuals – including Dalton McGuinty, Kathleen Wynne, Shortill, Rod Phillips and Ted McMeekin – Lisus reinforced his assertion that the decision was made to go from a three-year transition to 'zero for horse racing' without any new studies or consultation. Shortill himself stated he had "general knowledge" of racing and made his recommendations to align, in his words, with government priorities.

After a short recess, Lisus continued his evidence by trying to show how government made the decision they did regarding horse racing, and with what information.

Shortill admitted to Lisus that the recommendations he made regarding the horse racing industry didn't involve him reviewing the siteholder agreements. Further, he wasn't aware of the Letter of Intent he was effectively cancelling – not even prior to his examination for this case. He did say that he was aware of SARP in 2012, and aware of a "negative impact" this would have on the racing industry. However, Shortill said that no degree of impact regarding the decision was provided to him. It was also his self-informed opinion that horse racing received what he termed a subsidy from government.

It wasn't clear if these views and information were factors in the final decisions. Shortill did state that in his role that it would be expected that the Minister of Finance would take and follow his advice in this matter as well as others.

Lisus then presented evidence from Dwight Duncan, the former Minister of Finance. In this discussion, Duncan made reference to the government's consolidated revenue fund as though racing received funding from this public money, which Lisus was quick to point out is not accurate as the nature of the funds were an operating expense and determined by public records and laws.

In cross examination of Dalton McGuinty, the former Premier stated there was a sense going into the February 3 cabinet meeting that there would be a three-year phase down for the industry and that advice would have been provided by staff. At this point, the OLG proposal and the Drummond Report would have been presented to him. McGuinty said that he would have been told that support for racing was more than other jurisdictions. Here, again, Lisus pointed out the incorrect information provided to the decision makers, as this was never a support program for racing. McGuinty also stated that Finance would have come to him with the recommendations, and that the process frequently follows a pattern of head staff from a department (like Finance) making recommendations to his own chief of staff. He confirmed that his understanding based on the information provided to him was that racing was getting public funds, and in the recent cross-examination admitted that the consultation and study that went into this decision before it was presented to him was less than he assumed.

Where exactly this decision was made remains unclear, as Lisus has been continuously blocked from getting more details on the cabinet meeting and who was involved. These questions, according to Lisus, were refused in cross examination of Dwight Duncan, Kathleen Wynne and Ted McMeekin. Both Wynne and McMeekin found out about the decision to "go to zero" for horse racing after the cabinet meeting, but when asked if they were present for the meeting, those questions were denied by the defense citing privileged information.

Not knowing what was discussed in that cabinet meeting, Lisus pointed out that according to an agenda with five items that horse racing was the fifth and final item to be discussed in a truncated meeting – 2.5 hours instead of the usual three. Speaking points prepared for ministers in advance of the meeting misrepresented the government's agreement with horse racing in a number of ways:

  • the agreement was compared to "other economic development programs" involving government

  • it was characterized as a "subsidy" for horse racing

  • the decision was said to have the full support of the OLG board, but they were informed of it days later

  • it stated that the yet-to-be released Drummond Report recommended eliminating SARP

Were these speaking points discussed at cabinet? Lisus was refused the details of the cabinet meeting.

Lisus said, given that he's been blocked on the specifics for that decision, the defense has to rest on this record.

The presiding judge asked Lisus what it would mean if he determined the decision to terminate the agreement with horse racing was made in cabinet with the bad information he's presented. Lisus quickly replied with compensation, paraphrasing a quote that John Snobelen provided to him that government pays for the privilege of being able to do what they want and that it's important for public authorities to be liable for their negligent conduct.

The third Wednesday session continued the discussion of Lisus being denied information on the cabinet meetings, with the defense claiming that was privileged information. He maintained his assertion that the cabinet minute regarding horse racing has "zero evidentiary value."

In multiple emails, Ted McMeekin stated that the decision was made by Finance and that he found out about it just days before it went public. Those statements, according to Lisus, again reinforce that the decision could not have been a well thought-out policy decision if this was the case. He also noted that McMeekin stated he was led to believe that the OLG Board supported the slashing of SARP and confirmed that would be a factor in any decisions as he was aware that OLG was undergoing a review.

The issue of assurances was raised, and how the breeders continued with their business given the assurances of a viable industry from government. The consultations with the OLG and ORC gave the impression of a stable environment. Further, statements from both Rod Seiling and Yeigh confirm that breeders were intended beneficiaries of SARP.

Lisus then referred to the speech that Dwight Duncan gave on February 13, in which he said that "the government had been subsidizing horse racing for too long."

And then, the attack ads hit the radio.

No one from government could say where the attack ads came from, although an email blast shared by Minister of Education Laurel Broten touted the ads and more money for education. When Broten was asked a question in legislature about the ad, she referred the question to Duncan and he replied, "I'm pleased to take the question for which I have responsibility."

The fourth session concluded motions for Wednesday, with Lisus continuing to present evidence. Emails regarding the preparation of Duncan's speech were presented, with Ministry of Finance staffers discussing the tone and strength of the messaging regarding horse racing in that speech. Part of the email thread stated that the OLG was not "operationally ready" to discuss the impact of the decision. This statement, according to Lisus, showed just how disjointed and divorced the decision was from the process.

It also sent shockwaves through the party, according to Lisus. Internally, McMeekin was looking for an impact analysis on this decision but one couldn't be produced. Lisus also stated that McMeekin fought for the transition panel, and that Finance resisted such a move.

These actions evolved into a "turf war" of sorts within government, most notably between OMAFRA and Finance. As Kathleen Wynne became Premier, she fired Paul Godfrey from the OLG and the entire board resigned. Wynne was asked under cross-examination why she axed Godfrey; she stated that it was because of the decision to cut off horse racing.

As the industry received some news regarding funding structures in late 2013 and into 2014, the lack of an agreement with Standardbred breeders was notable. A letter to Premier Wynne from John Snobelen confirmed increased funding to thoroughbred and Quarter-Horse sectors. Lisus noted that Snobelen told Trot Insider the next day that the litigation filed by the province's Standardbred breeders was a factor.

To reinforce his point, Lisus referenced a meeting between Elmer Buchanan and the Standardbred breeders where Buchanan stated that the Breeders would get funding if the lawsuit was dropped.

Lisus concluded the session by highlighting the number of decisions made by government along the way over the course of this process where it seemed they had a chance to step back and reconsider their course of actions, but did not.

The case returns to Brampton court on Thursday at 10:00 am.


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