Breeders' Lawsuit Motions Adjourned

Published: September 14, 2018 09:45 am EDT

Trot Insider has compiled this comprehensive report from Day 5 of the proceedings in regard to the civil lawsuit that a group of Ontario Standardbred breeders has 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, concluded presenting the Plaintiffs’ Factum as part of their Motion for Summary Judgment on Thursday. The province began its side of the defense on Thursday afternoon.

To view the recaps of Trot Insider’s ongoing coverage, please utilize the corresponding links which appear below.

Tuesday, September 11

Wednesday, September 12
Thursday, September 13

Friday’s proceedings got underway at 10:00 a.m. Trot Insider's recap of the Day 5 proceedings appears below.

The defense continued to maintain its assertion that the slots-at-racetracks program was in fact a government support program that involved public funds.

Referring back to the Sadinsky Report, the defense cited Sadinsky's reference to SARP as "public funds" with both the defense for the province and OLG stating that this is also evident in legislation. Further, terminology used by Sadinsky calls the SARP program a "subsidy" and notes that the siteholder agreements had a 12-month clause for unilateral termination. This evidence would go against the plaintiff's claims of foreseeability.

The defense then referenced lobbying efforts noted in SBOA meeting minutes that would appear to indicate the plaintiffs' understanding that there was no guaranteed percentage of revenue from SARP and thus could not be a contractual entitlement. Further meeting minutes indicate a rollover of siteholder agreements, referring to government policies. Again, the defense stated the evidence points to a lack of entitlement with respect to the plaintiffs.

The references to the MOU between government and the Ontario Racing Commission raised by the plaintiffs was termed a "red herring" by the defense as the ORC's role was as a regulator of racing, not gaming, and notes that the ORC was neither signatory to the letter of intent nor the siteholder agreements. Further, the defense stated that SARP was not ORC policy, but OLG policy.

Discussion then shifted to internal government documents from 1998 before the launch of the slots-at-racetracks program. The defense claimed that the reduction of pari-mutuel tax at the time was, economically, a subsidy. This program, enacted by the government prior, would indicate that SARP was a government support program from its inception. A script from a speech to be delivered by Tim Hudak at the opening of the slots at Georgian Downs also refer to SARP as a "government program" to further illustrate how it has always been considered as policy and support...and government support programs can and do change.

After a short recess, the defense continued its presentation of evidence to support its claim that SARP was a government program.

The defense referenced a Q & A document prepared for Dwight Duncan ahead of a meeting with the standing committee on estimates. The document here stated that government provides financial support through SARP and that was consistent with other government documents. These Q & A meetings were part of procedure, according to the defense, and deal with information in the public domain that indicates government policy, not a contract.

Defense then shifted to refute claims of proximity raised by the plaintiffs. The plaintiffs claimed proximity created by assurances by the government regulator, the ORC. Again, the defense noted that the ORC was not the body responsible for SARP and that any "Breed, Buy, Race in Ontario" program messaging is not an indicator of proximity.

The evidence then referenced a meeting between Jim Bullock and Dwight Duncan, shortly after the horse racing file was under his purview. According to the defense, Bullock claimed under cross-examination that he discussed the merits of and expressed concerns pertaining to SARP. Duncan, according to Bullock, said he understood the problem and would "take a look at it." Months later, Bullock had a brief discussion with Duncan at a fundraiser, where the Minister said that matters were in hand and Bullock would hear from him shortly. The defense claims this brief encounter at a fundraiser doesn't constitute proximity.

Next, the defense referenced the OLG's strategic business review as directed by the province in November 2010. This review that, according to the defense led to the end of SARP, is clearly high-level policy and not business as claimed by the plaintiffs as the OLG was tasked to assist in establishing policy. Further, part of the policy is to generate revenue to the province.

The evidence then focused back on the Drummond Report, mandated to get rid of the province's deficit. The province highlighted the need to generate revenue, given the deficit and the threat of credit downgrades. Direct language from the Drummond Report was cited with references to horse racing receiving subsidies and support. The defense pointed out that Drummond stated under cross-examination that the report was penned by four commissioners and nothing is included in the report that the collective of commissioners didn't approve of.

An email exchange between two civil servants was presented, an exchange in which the two staffers appear to have some sort of personal vendetta against horse racing and SARP. The defense stated that this exchange shouldn't colour the record with malice, writing it off to someone venting while in the midst of a bad day.

The third session of Friday's submissions from the defense presented evidence to rationalize the government's decision to cancel the slots-at-racetracks program given the deficit and government priorities.

Evidence first revolved around the need for government to keep those discussions confidential, responding to the claims of the plaintiffs for the lack of industry consultation. There was a need for budget secrecy given the austerity of the budget, argued the defense.

Justice Emery then asked, in dealing with the absence of evidence in these meetings, where cabinet secrecy and privilege is being cited and what the judge is to do with this vacuum of evidence when the defense is to put its best foot forward. The defense replied by affirming its belief that the cabinet minute is all that's needed because its position is that it's a policy decision.

Further evidence was presented from a cross-examination with Kathleen Wynne. The defense presented evidence where Wynne referred to SARP as policy and that it was her understanding that "net support flowed from government to industry." Her record also states her assertion that the decision to cancel SARP would have been a cabinet decision.

The defense then referenced cross-examination material from Dalton McGuinty and his role as premier in the creation of a budget. His statement noted that his role was that of guidance and reaffirmed the prioritization of Healthcare and Education when SARP was terminated.

The session ended with the defense citing Ted McMeekin's cross-examination and his statement that he believed Dwight Duncan was acting in good faith while composing the 2012 budget.

After a brief recess, counsel for all parties agreed to keep this fourth session brief with respect to the time of day and giving consideration to the court.

Defense presented records from the transcript of Dwight Duncan, who stated, based on the advice given to him by OLG and officials in December 2011, that SARP "wasn't working" and there was a sense that too much of the money was in fact leaving the province. While he didn't have an amount of money or a percentage of that money documented, a sense of that amount was provided to him before the 2012 budget.

With that, motions were adjourned. Court will continue to hear motions again in December 2018.

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