Is someone “notified” of something when an e-mail is sent to them? Or when the e-mail is received? That question is at the heart of the case that is holding up the roll-out of more cannabis retail stores in Ontario.
On Wednesday, the Ontario Divisional Court heard from lawyers representing 11 retail lottery winners who were disqualified after failing to provide letters of credit within five business days of the draw’s winners being announced.
The lawyers argued that their clients did not, in fact, miss the deadline. The lottery rules say that winners need to provide a letter of credit for $50,000, “within five business days of the [Alcohol and Gaming Commission of Ontario’s] registrar notifying the applicant.” The lawyers for the disqualified parties said that the AGCO failed to notify their clients until several days after the draw, pushing back the five-business day deadline.
Lawyers for the AGCO argued that the commission had taken reasonable steps to notify the 11 applicants, sending e-mails to the email addresses provided on the applications, making phone calls to the phone numbers listed on the applications, posting the full list of winners online and tweeting the list out. The problem, the AGCO lawyers argued, was that the e-mail addresses and phone numbers provided did not in fact work.
Here are some takeaways from the hearing on Wednesday.
Decision due on Monday
The panel of three judges will issue a decision by 5 p.m. on Monday, Sept 30. The entire lottery process – which Ontario Superior Court Justice David Corbett paused on Sept. 12, to give the court time to hear the case – will remain frozen until after the decision is delivered on Monday.
Judie Im, a lawyer for the AGCO, asked that the commission be allowed to recommence working with the 29 original lottery winners who are not part of the case immediately. The request was rejected by Justice Corbett, who said he had been unable, despite previous requests, to get guidance from the AGCO on how to craft a less impactful stay of proceedings.
“Stink in the room”
Underlying the case is a set of circumstances that Justice Corbett called “very peculiar” and that even the lawyer for the applicants acknowledged was creating a “stink in the room.”
All 11 of the disqualified winners submitted e-mail addresses on their lottery applications, and marked down email as their preferred method of contact. However, when the AGCO tried to e-mail the winners to notify them of their success, none of 11 e-mail addresses were working, sending the AGCO bounce-back e-mails suggesting the accounts had been disabled.
The AGCO then tried calling the phone numbers listed on the applications.
“Initially none of these calls were successful. For most of the applicants, the telephone number forwarded the caller to an automated recording in French that directed the caller to another number which was out of service. For the remaining applicants, an unknown person answered the call and said the applicant was not available," said Ms. Im.
Since the results of the lottery were announced in late August, there have been questions about whether applicants were working together to increase their odds of winning. Six of the 11 winning addresses that were disqualified, had been listed on the website of a company called High Life Cannabis Co. ahead of the lottery, under the heading “More locations coming soon.”
Zero sum game
No matter which way the court rules on Monday, people will be unhappy. After the 11 winners were disqualified at the end of August, the 11 people at the top of the waitlist were sent letters from the AGCO saying they had been bumped up the list and were now winners.
According to lawyers representing eight of the 11 people bumped up the list, a number of the new winners made significant financial decisions in the first week-and-a-half of September, before they heard that the disqualified parties had submitted a request for judicial review.
If disqualified, one woman faces a $52,000 penalty for breaching her lease agreement, according to the lawyer representing the eight new winners. Another man put down a $110,000 non-refundable deposit to secure a location.
If the court rules in favour of the disqualified parties, the 11 people who had been bumped up the list, could lose out entirely. Moreover, the lottery’s enabling legislation specifies that aggrieved parties are not allowed to sue the AGCO for damages.
Government could have avoided the problem
The AGCO could have avoided this situation if they had left the wording in the lottery regulations the same as it was for the previous cannabis retail lottery. The rules from the earlier lottery specified that winners needed to submit their letters of credit within five business days of the results of the lottery being posted online.
The rules for the second lottery changed the wording to say winners needed to submit a letter of credit “within five business days of the registrar notifying the applicant of their selection.”
As Justice Corbett put it to the AGCO legal team: “there were ways to achieve this apparent goal of your client [of having the same deadlines for all lottery winners]; but your client chose a rule that does contain some level of uncertainty about when these things will be received."
Mark Rendell