Questions remain about OLG’s conduct

A number of unanswered questions remain about the conduct of the Ontario Lottery and Gaming Corp. and its lawyers in the long legal battle with Bob Edmonds, despite the notoriety of the case and the recent report by the provincial ombudsman.

“It was never made clear,” said Alan Rachlin, who acted for Edmonds, why the Crown agency continued to defend the civil action despite internal findings before the lawsuit was even filed, that the retired Coboconk, Ont. resident had likely been defrauded out of a $250,000 lottery prize.

Rachlin, of Rachlin & Wolfson LLP in Toronto, added that he would like to know why certain information in the possession of the lottery corporation was never disclosed to him or the court during the litigation.

Edmonds, who died on April 2 at the age of 83, sued the lottery corporation in the spring of 2002, several months after he first contacted it about a $250,000 jackpot. The retired draftsman suspected he had been defrauded by Phyllis LaPlante, a clerk at a local variety store who claimed the prize.

The lottery corporation eventually settled with Edmonds in March 2005 near the end of a trial in Superior Court and just as the case was about to go to the jury.
Prior to the trial, Edmonds settled out of court with LaPlante and her husband for $150,000 and their criminal charges were stayed.

As a result of the settlement with the lottery corporation, Edmonds had a net total of $202,000 after legal expenses.
His legal bill for the three-year litigation was $146,000, compared to the more than $420,000 that Cassels Brock & Blackwell LLP billed the lottery corporation, according to data released after a freedom of information request.

The lottery corporation finally agreed to pay the $72,000 in legal fees not covered by the settlement, in a letter sent to Rachlin on March 30, three days before Edmonds died.
This gesture by the lottery corporation came after a number of major revelations about the Edmonds case and disproportionate numbers of major lottery wins by ticket sellers by the CBC program the fifth estate and in a report issued by André Marin, the provincial ombudsman, on March 26.

The findings by the fifth estate revealed that the lottery corporation suspected Edmonds was telling the truth as early as January 2002. It also failed to disclose an unreported July 2001 Superior Court judgment, Rutherford v. Ontario Lottery Corp., which spelled out some of its legal duties if a ticket seller defrauds the rightful owner of a ticket.

A Jan. 14, 2002 e-mail sent by a senior official in the lottery corporation’s prize office to five senior colleagues, including three in-house counsel, said, “the facts in Edmonds’ claim are accurate, which leads us to believe that the ticket LaPlante presented may have belonged to Bob Edmonds.”

The e-mail was marked “prevelege [sic] & confidential,” and also revealed that in September 2001, the lottery corporation was contacted by the OPP and informed that Edmonds claimed his ticket had been stolen by LaPlante.

The fifth estate obtained a copy of this e-mail during its investigation. The e-mail was never disclosed to Rachlin in the civil proceeding.
A statement of defence was filed on April 17, 2002, with Philip Spencer at Cassels Brock listed as counsel for the lottery corporation (his colleague, Jacqueline Wall, later became the lead counsel).

The statement of defence acknowledged that Edmonds contacted the corporation in September 2001, but said the information was not sufficient to act on; no mention was made of the OPP contact. Then the statement said: “at no time prior to January 2002 was the Corporation put on notice that there was any irregularity regarding Ms. LaPlante’s claim to the July 13th Encore prize,” which appears to be contrary to information in the January 2002 internal e-mail.

Just two months before the draw that resulted in the fraud against Edmonds, Ontario Superior Court Justice James C. Kent described the lottery corporation as “unreasonable and careless” in another case of fraud by a lottery ticket seller.

Kent found that the lottery corporation was negligent and breached its duty to act as a “reasonably prudent payor” when it failed to take any steps after it was informed by Paul Rutherford that he believed he was defrauded by a ticket seller out of his share of a $430,000 jackpot. The judge awarded Rutherford $172,000 in damages and costs.

In the Edmonds case, the trial judge was asked to determine if the lottery corporation owed a duty of care based on the actions of one of its ticket sellers (Justice Harriet Sachs ruled that it did).
The Rutherford decision was not in any legal database. The lottery corporation was again represented by Cassels Brock (lead counsel was Julie Thorburn, who was appointed to the Superior Court last year).

Rachlin said it was only after the ombudsman’s report was released that he learned of the ruling.
“You can’t withhold relevant jurisprudence,” he said. “You have an obligation as an officer of the court to disclose.”
Peter Quinlan, who represented Rutherford, said his client also faced a frustrating experience in dealing with the lottery corporation.

They were required to file a freedom of information request and an appeal, to be able to look at the disputed lottery ticket. During the litigation, Quinlan said he was surprised to learn the lottery corporation had an indemnity agreement and the right to go back and reclaim money that had been wrongly paid out.
“They were not forthcoming with their documents. They were not really taking us seriously,” said Quinlan, a partner at the Brantford firm Waterous Holden Amey Hitchon.

Law Times attempted to get a response to questions about the lottery corporation’s conduct and its decision to defend the Edmonds litigation (OLG spent another $160,000 in legal fees after the settlement, related to the fifth estate probe).

Jacqueline Wall declined to comment on the basis that solicitor-client privilege prevented her from answering Law Times’ questions. Geoff Cowie, a senior legal counsel at the Crown agency, a lottery corporation spokesman, and Philip Spencer at Cassels Brock did not return calls seeking comment.

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