




CITATION:
Whelan v. Ontario
      Racing Commission, 2011 ONCA 299





DATE:
          20110418



DOCKET: C52816



COURT OF APPEAL FOR ONTARIO



Goudge
,
Juriansz
and MacFarland JJ.A.



BETWEEN



James Whelan



Applicant (Respondent)



and



Ontario Racing Commission and
Woodbine Entertainment
          Group



Respondents (Appellant)



P. David McCutcheon and
Reena

Goyal
, for the appellant



Arlen Sternberg, for the respondent



Brendan Van
Niejenhuis
, for the
          Ontario Racing Commission



Heard: February 16, 2011



On appeal from the judgment of the Divisional Court (Molloy, Swinton
          and
Cullity
JJ.) dated June 30, 2010, with reasons
          by Molloy J. and reported at (2010) 265 O.A.C. 85.



Goudge J.A.:



[1]

The appellant Woodbine Entertainment Group (WEG) is the
    owner and operator of the Woodbine and Mohawk racetracks. In April 2009, WEG
    refused to permit the respondent, Mr. Whelan, to race his horses at its tracks
    unless he signed its Access Agreement, which provided the terms of entry onto
    its premises. He refused to do so and sought a declaration from the Ontario
    Racing Commission (ORC) that he could not be required to sign WEGs Access
    Agreement in order to be allowed to enter his horses to race on its tracks.

[2]

The ORC dismissed his application in September 2009. Mr.
    Whelan then sought judicial review of the ORC decision. The majority of the Divisional
    Court found the decision to be unreasonable and ordered that WEG be prohibited
    from excluding Mr. Whelans horses solely on the basis that he had not signed
    the Access Agreement.

[3]

WEG appeals the Divisional Courts decision. For the
    reasons that follow, I conclude that the majority of the Divisional Court erred
    in finding that the ORC decision was unreasonable. I would therefore allow the
    appeal.

THE BACKGROUND

[4]

WEG
    is a private property owner running a business on its two racetracks. As a
    property owner, it has considerable authority to act autonomously, for example,
    to exclude individuals from its premises. However, in two respects it is a
    highly regulated business.

[5]

First,
    horse racing at WEGs racetracks is regulated by the ORC, as it is in all
    racetracks in Ontario. The
Racing
    Commission Act 2000
, S.O. 2000, c. 20 gives the ORC a broad mandate to
    regulate horse racing in Ontario. This mandate gives the ORC the power, in the
    public interest, to take action which may incidentally affect the property
    rights of racetrack owners such as WEG: see
Ontario
    Harness Horse Association v. Ontario Racing Commission
(2002), 62 O.R. (3d)
    44 ( C.A.), known as the
Sudbury Downs
case. For example, when a racetrack owner excludes a licensed horse owner from
    its premises and therefore from racing there, this action comes within the
    regulatory jurisdiction of the ORC, even though it affects the owners property
    rights. As this court said in
Sudbury
    Downs
at
para
. 47, It is much more a horse
    racing issue than a property issue.

[6]

A
    second area in which WEG is subject to regulation is wagering. The viability of
    its business depends upon revenue from wagering. This requires that its
    racetracks be licensed by a federal agency, the
Canadian
Pari
-
Mutuel
Agency (CPMA). To obtain a license, WEG is required
    by the CPMA to have an agreement with horsemen setting out how wagering
    revenues are shared.

[7]

Until
    December 2008, WEG had a contract with the Ontario Harness Horse Association
    about how wagering revenues were to be shared. This contract satisfied the CPMA
    requirement, but it expired at the end of 2008. Starting in January 2009, to
    satisfy the CPMA, WEG entered into individual Access Agreements with each horseperson
    using its racetracks. In addition to setting out the terms for the right to
    enter WEGs premises, the Access Agreements provided a formula for sharing
    wagering revenue. Based on that aspect of the Access Agreements, the CPMA
    issued WEG a wagering license for 2009.

[8]

Mr.
    Whelan took issue with a number of aspects of the Access Agreement. He objected
    to the provision that required him to abide by WEGs rules particularly the
    provision that reserved to WEG the right to revoke access to its premises at
    any time in its sole and absolute discretion and without notice, reason or
    compensation. He therefore refused to sign the Access Agreement. As a
    consequence, WEG refused him entry, which meant that his horses were not eligible
    to race at WEG racetracks. The sole basis for this refusal was that Mr. Whelan
    had not signed an Access Agreement.

[9]

Ultimately,
    after being told by the onsite ORC judge that he had to sign to be allowed to
    race, Mr. Whelan appealed to a three-person panel of the ORC. He sought a
    declaration that he is not required to execute WEGs Access Agreement in order
    to enter his horses to race on its racetracks.

[10]

The
    ORC dismissed Mr. Whelans request for a declaration. It held that nothing in
    WEGs rules or its Access Agreement usurped the ORCs statutory function as
    regulator, including giving Mr. Whelan the right to be heard on his appeal from
    the WEG decision. It repeated a number of times that nothing in WEGs rules or
    the Access Agreement diminished Mr. Whelans access to due process before the
    ORC. In the circumstances, the ORC concluded that the public interest
    overwhelmingly supported the requirement that Mr. Whelan sign the Access
    Agreement to be allowed to race his horses at WEGs racetracks.

[11]

Mr.
    Whelan sought judicial review of this decision. The Divisional Court
    unanimously rejected his argument that only the ORCs rules  as distinct from
    WEGs rules  can regulate racing, and since the ORCs rules do not oblige him
    to sign the Access Agreement in order to race, WEG could not require him to do
    so. It also rejected his argument that the ORC exceeded its jurisdiction by
    requiring Mr. Whelan to agree to certain wagering revenue sharing as a
    condition of his eligibility to race, given that the CPMA has jurisdiction over
    issues of revenue sharing.

[12]

However,
    Mr. Whelan succeeded in persuading the majority of the Divisional Court that
    the ORC decision was unreasonable and should be set aside. The majority held
    that the ORC decision permitted WEG to arbitrarily exclude Mr. Whelan from
    racing his horses at its tracks and to do so without giving him a hearing. They
    concluded that, in the circumstances, this decision fell outside the range of
    possible acceptable outcomes and was therefore unreasonable. At
paras
. 75-81 of their decision, the majority framed their
    conclusion as follows:

WEG
    cannot set itself up as a second tier regulator entitled to arbitrarily exclude
    individuals from racing at its tracks, in its own discretion, without any fault
    and without an opportunity to be heard.



I
    also cannot understand why the ORC would think it reasonable that Mr. Whelan be
    barred from racing at WEG for refusing to agree to provisions in an agreement
    that ORC itself says is contrary to the public interest and unenforceable.



In
    my view, the ORCs conclusion that WEG is entitled to do so in the public
    interest cannot be said to be reasonable or to fall within that range of
    possible outcomes that can reasonably be justified.



[T]he
    ORC acted unreasonably by permitting WEG to insist on a signed Access Agreement
    containing provisions that purport to give WEG absolute unfettered power to
    exclude licensed ORC horse racing participants who have committed no fault.

[13]

In
    her dissent, Swinton J. underlined that the ORC recognized that the Access
    Agreement did not interfere with Mr. Whelans right to procedural fairness. She
    noted that the ORC decision carefully reviewed the public interest considerations
    that
favoured
not interfering with WEGs requirement
    to sign the Access Agreement, and found that they outweighed the impact of that
    requirement on Mr. Whelan. She concluded that the ORC decision neither
    subjected Mr. Whelan to arbitrary exclusion from racing nor denied him due
    process, but was a reasonable decision deserving of deference. She would have
    dismissed the application for judicial review.

[14]

In
    this court, WEG argued that the ORC decision is entirely reasonable and that
    the majority of the Divisional Court erred in finding otherwise. Mr. Whelan
    takes the contrary view, for the reasons of the majority, but also seeks to
    support the order appealed from on the basis of the two arguments rejected by
    all three judges below. The ORC takes no position on the merits.

ANALYSIS

[15]

All
    parties agree that the issue on which the Divisional Court divided is not a
    question of the ORCs jurisdiction. Rather, it requires a review of the ORC
    decision against the standard of reasonableness. It is also not contested that
    reasonableness is concerned with justification, transparency and
    intelligibility in the process of decision making, and with whether the result
    falls within a range of possible, acceptable and defensible outcomes: see
Dunsmuir v. New Brunswick
, [2008] 1
    S.C.R. 190 at
para
. 47. I have concluded that the
    majority of the Divisional Court erred in this analysis and that the ORC
    decision satisfies the standard of reasonableness in both respects.

[16]

In
    my view, the majority erred in two ways. First, the ORC decision did not
    require Mr. Whelan to sign an Access Agreement that denied him an opportunity
    to be heard. Nor does the Agreement give WEG absolute unfettered power to
    arbitrarily exclude him. The Access Agreement does neither, as the ORC
    correctly found. The majority of the Divisional Court erred in finding
    otherwise.

[17]

Mr.
    Whelan does not claim a right to be heard by WEG before it makes a decision to
    exclude him. Nor does he have such a right. In excluding an individual, WEG is
    exercising its property rights, not performing a statutory duty that affords
    the individual the right to a hearing before it does so. Mr. Whelan and WEG
    both agree that his right to be heard arises on an appeal to the ORC from a
    decision by WEG to exclude him. The ORC correctly found that nothing in the
    Access Agreement purports to take away the right to due process before the ORC.

[18]

Nor
    does that Access Agreement give WEG absolute unfettered power to arbitrarily
    exclude Mr. Whelan. Any WEG decision to exclude him can be appealed to the ORC.
    If it finds the decision to be arbitrary, it can set the decision aside. The
    Access Agreement does not and cannot remove this right of appeal. Any attempt to
    do so can be overridden by the ORC.

[19]

The
    second way in which the majority erred is by focusing exclusively on the burden
    imposed on Mr. Whelan in having to sign the Access Agreement. Even if the
    majority was correct in describing this burden, they failed to consider that
    the ORC balanced it against the various public interest considerations
    supporting WEGs requirement that Mr. Whelan sign the Agreement. The
    reasonableness of the ORCs balancing is the true measure of whether its
    decision falls within a range of possible acceptable outcomes. The majority did
    not make this assessment.

[20]

I
    agree with Swinton J. that the ORCs decision satisfies both aspects of the
    concept of reasonableness described in
Dunsmuir
.
    The first aspect, the process by which the ORC reached its decision, is not put
    forward by Mr. Whelan as deficient. Nor could it be. The reasons of the ORC clearly
    show the path of reasoning it followed to reach its decision and this path has a
    defensible logic sufficient to satisfy the first aspect of the reasonableness
    requirement. As Swinton J. put it:

The
    reasons of the ORC show a careful consideration of the competing interests at
    play in this case and explain why the ORC chose not to intervene to prevent WEG
    from requiring individuals such as the applicant to sign the Access Agreement
    in order to race their horses at its facilities.

[21]

The
    decision held that the Access Agreement did not bar access to a hearing before
    the ORC and that it therefore did not impair Mr. Whelans due process rights.
    In the same way, the Access Agreement did not expose Mr. Whelan to arbitrary
    exclusion by WEG from its racetracks because any such exclusion could be set
    aside on appeal to the ORC. The ORC then balanced any remaining burden on Mr.
    Whelan from being required to sign against the significant public interest
    considerations
favouring
the imposition of that
    requirement by WEG. The ORC listed them as follows:

·

Changing
    widely accepted industry practice to accommodate one individual.

·

To
    undermine the efficacy of a system adopted by horse people on a 2500 to 1
    basis, a system with long-term high quality proven results.

·

Promoting
    compliance with rules and procedures proven to be workable and to industry
    advantage.

·

Temporarily
    avoiding
imperilling
WEGs wagering permits thereby promoting continuity of racing and the vast
    economy which it supports.

·

Compliance
    with CPMA contract requirements.

·

Compounding
    insurance litigation. The liability waiver affords protection against subrogated
    claims between insurers. Avoiding multiple lawsuits is in the public interest.

·

Continuing
    to provide racing entertainment for the segment of the public so inclined.

·

Avoiding
    micro-management of business affairs by the industry Regulator.

·

Avoiding
    a creeping and improper extension of the ORC mandate to regulate and govern.

·

Avoiding
    an unauthorized duplicate due process structure.

[22]

The
    ORC concluded that the public interest considerations significantly outweighed any
    burden on Mr. Whelan and that the balance of probability scale clearly and
    abundantly
favours
WEGs position. I agree with
    Swinton J. that this conclusion is within the range of possible, acceptable and
    defensible outcomes in the circumstances of this case. It was reasonable to
    decide that any limited burden on Mr. Whelan was significantly outweighed by
    the public interest considerations
favouring
WEGs
    requirement. That decision reflects the ORCs statutory obligation to govern
    horse racing in the public interest.

[23]

As
    he did before the Divisional Court, Mr. Whelan advances two additional reasons
    to reverse the ORC decision and conclude that WEG cannot impose a rule barring
    him from racing if he does not sign the Access Agreement. He argues that only
    the ORC can set rules that bar him from racing. The Divisional Court
    unanimously rejected this argument. It found that there is nothing in the
    existing ORC rules or the governing legislation preventing a racetrack owner
    like WEG from imposing rules, as it did in this case, that regulate entry to
    its premises and yet relate to racing. Racing is not only affected by the ORCs
    rules. If there is a conflict with the ORCs rules, the latter prevail. I would
    come to the same conclusion for the same reasons and would reject this
    argument.

[24]

Mr.
    Whelans second argument is that by requiring him to sign the Access Agreement,
    the ORC is requiring him to agree to the particular wagering revenue sharing
    formula contained in it and that only the CPMA has the jurisdiction to do that.
    The Divisional Court unanimously rejected this argument as well, holding that
    the ORC decision did not require Mr. Whelan to accept WEGs revenue sharing
    formula. The ORC simply declined to intervene when WEG required him to accept
    it. The ORC did not impose the revenue sharing formula; rather WEG did,
    pursuant to the regulatory authority of the CPMA. Here too, I would reject Mr. Whelans
    submissions for the same reasons as the Divisional Court.

[25]

In
    the result, I would allow the appeal, restore the ORCs decision and dismiss
    Mr. Whelans application for judicial review.

[26]

WEG
    is entitled to its costs of the application and the appeal, including the leave
    motion, to be paid by Mr. Whelan on a partial indemnity basis. I would fix them
    at $10,000 and $20,000 respectively, inclusive of disbursements and applicable
    taxes.

RELEASED:  APR 18 2011 (S.T.G.)

S. T. Goudge J.A.

I
    agree. R. G. Juriansz J.A.

I
    agree. J. MacFarland J.A.


