“Scorched Earth Attack” Backfires for Casino Rama’s Host Nation: Chippewas v Chiefs of Ontario

If there’s anything that can come close to being a guaranteed money-maker these days, it’s probably a casino. Any disagreement about who gets to share in the spoils of owning a casino is almost sure to go before a judge. So when Ontario’s First Nations got into a dispute about who was getting what of the more than $1.2-billion in profits that Casino Rama has racked up since opening in mid-1996, it was no surprise that it ended up in court, and eventually before the Ontario Court of Appeal (“ONCA”).

Background

Casino Rama is located on the Chippewas of Mnjikaning First Nation (MFN), now referred to as the Chippewas of Rama First Nation. (However, since the Court refers to the nation as MFN throughout its reasons, I will do the same in this post.) The casino was set up as a pilot project, with the intention that the revenues generated from its operation be shared among all First Nations in Ontario. To decide where the casino would be located, the Ontario Government, in consultation with the 135 First Nations in the province, set up a Site Selection Process (SSP).

The SSP took the form of an independent Selection Panel applying a set of criteria to decide which First Nation would host the casino. MFN was eventually selected to host the casino, and through a series of meetings, it reached an agreement with the other Chiefs of Ontario that it would receive 35% of the casino’s net revenues for a five-year period, through to 2002. In 2001, MFN asked for a new agreement that would renew its entitlement to a 35% share. The other Chiefs disagreed, and instead passed a resolution stating that all net revenues would be shared equally among all First Nations in the province.

MFN responded to the resolution by arguing that as part of the selection process, they had been guaranteed 35% of the net profits, in perpetuity. Shockingly, the 133 other First Nations disagreed with that assessment, which resulted in the present lawsuit.

After a 47-day trial in the early part of 2008, MFN’s arguments were completely rejected. The trial judge made four key findings: first, there was no agreement between the province and First Nations that the selection panel would decide on how revenue should be shared; second, there was an agreement that revenue sharing between the host First Nation and the other 133 would be negotiated separately, after the site selection; third, MFN and Ontario had never entered into a contract entitling MFN to a 35% revenue share; and finally, that MFN’s representatives lacked either an objective or a subjective belief that any of the foregoing three findings were not the case.

MFN appealed all aspects of the trial decision: the judge’s findings of fact, the way he conducted the trial, the sufficiency of his reasons, and his legal conclusions. The ONCA released their decision in Chippewas of Mnjikaning First Nation v Chiefs of Ontario, 2010 ONCA 47, on January 22.

When judges describe your appeal as an “all-out onslaught” and characterizes it as a “scorched earth attack,” it does not generally bode well for your chances. Indeed, the ONCA rejected all of MFN’s grounds of appeal in a judgment that was at times tersely worded.

Findings of Fact

O’Connor A.C.J.O and Blair J.A., in a jointly written judgment, found that the trial judge’s findings were “amply confirm[ed]” by the record. Citing the Court of Appeal’s decision in Waxman v Waxman (2004), 44 BLR (3d) 165, deference to a trial judge’s findings of fact is especially important in “lengthy and factually complex cases.”

One of MFN’s more interesting arguments concerned the judge’s treatment of a series of agreed facts and admissions. Before the trial, the parties had filed an agreed statement of facts and agreements as to the authenticity of documents. Many of these documents were minutes of meetings that had taken place. In addition to agreeing to their authenticity, the parties also agreed that the documents could be used as proof that the statements recorded in them had actually been made.

However, in his reasons the trial judge treated the minutes as “of assistance, but not dispositive” in coming to his determination on a particular issue. His reasons included the fact that the minutes at issue had a caveat stating that they were not intended to be a verbatim record of what was said at the meeting, and the fact that the people who took the minutes did not testify, meaning he was not able to determine whether the notes were meant to capture the actual words and phrases used, or the “sense of the discussions”. The Court of Appeal found that the judge had clearly taken the minutes into account and, based on the other evidence and proof available to him, he was entitled to treat the minutes as he did.

Along the same lines, MFN argued that the judge should have been bound by some “findings” made by the Supreme Court in Lovelace v Ontario, [2000] 1 SCR 950 [Lovelace]. That case was also a dispute about how revenues from Casino Rama were to be divided, though the applicants were disputing the decision to allocate revenues only among First Nations communities registered as bands under the Indian Act. In the course of its decision, the Supreme Court found that

[m]eetings continued between Ontario and the band and, in 1993, this process resulted in the mutually agreed upon site selection criteria and the striking of an independent First Nations panel to review site proposals. [Emphasis added by the Court of Appeal]

MFN argued that the trial judge was bound by this finding and could not re-open the issue. The Court of Appeal found that the Supreme Court could not have expected that it would be resolving facts in a future case; in addition, the dispute was not over the fact that there was agreement on site selection criteria, but what the details of the revenue sharing component of the criteria were.

MFN’s reliance on Lovelace came back to bite them, however, as the respondents dug up the factum that the band had submitted when it intervened in that appeal in late 1999. The Chiefs of Ontario argued that the position that MFN was now taking was at odds with the position they had taken both in their factum supporting their motion to intervene and in their ultimate intervenor’s factum. In the motion factum, they stated:

It is clear on the evidence that Mnjikaning First Nation knew, when it committed its reserve lands to the Casino Rama Project, it would be required to share the profits of the project with other reserve-based First Nations on a negotiated basis.

Moreover, in their intervenor’s factum, they characterized the negotiations between the province, MFN, and the other chiefs as resulting in “a consensus” that MFN would receive 35% of net revenues, which the Court of Appeal found to be inconsistent with their argument that they were contractually entitled to that share.

The Court of Appeal acknowledged that MFN was able to identify “some isolated instances” where the trial judge did not refer to pieces of evidence supporting the testimony of the band’s witnesses, but held that the judge did not have to refer to “every stitch of evidence before him.” It was open to the judge to make the findings that he did.

Tendering Issues

MFN’s main theory of their case was that the site selection process was, in essence, a tendering process. Had this been accepted, the case would have likely wound up in the band’s favour, since MFN had included the 35% revenue sharing proposal in the documents submitted as part of their bid. The trial judge concluded that the site selection process did not fit within the legal paradigm of a tender, and there could be no binding contract. Given the circumstances under which the bid documents were prepared (described by the Chiefs as a “hurried number crunching exercise”), and the fact that MFN did not consider itself to be bound by any provisions of the sharing formula except the 35% number, the Court of Appeal agreed that this was not a tender, nor was it a Request for Proposal.

Conclusion

MFN also raised arguments about fiduciary duties that it was owed throughout the process, and suggested that various interventions in the trial by the judge led to a reasonable apprehension of bias. After reviewing the law on both of these issues, both arguments were rejected.

On the latter issue, the Court held that there are many reasons a trial judge may properly intervene in a trial, including the need to clarify evidence, to avoid repetitive evidence, and to “ensure the way a witness is answering or not answering questions does not unduly hamper the progress of the trial.” The Court also endorsed one of the Advocates’ Society’s Principles of Civility for Advocates, which suggests that “Advocates are entitled to expect judges to maintain firm control of court proceedings and ensure that they are conducted in an orderly, efficient and civil manner by counsel and others engaged in the process.”

At the end of the day, MFN’s scorched earth strategy paid it no dividends. While the Court did not make an award of costs at the time it released its judgment, based on the tone of its reasons at various points, it is not difficult to imagine that the judges will impose cost consequences on MFN for its kitchen sink approach. The Court of Appeal’s careful review of the evidence and reasoning of the trial judge will likely foreclose any possible appeal to the Supreme Court, and put this case to rest. The spoils of Casino Rama can now be shared by all First Nations bands in Ontario.