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Update on Ont. Breeders lawsuit re: SARP

September 12, 2018

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Standardbred Canada's Trot Inside is at Ontario Superior Court Wednesday in Brampton covering 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. Lisus is expected to finish Wednesday afternoon.

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

The court case reconvened on Wednesday at 10 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. (SC)

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