COURT OF APPEAL FOR ONTARIO

CITATION: Ontario First Nations (2008) Limited Partnership v.
    Ontario Lottery and Gaming Corporation, 2021 ONCA 592

DATE: 20210901

DOCKET: C68701 & C68702

Fairburn A.C.J.O., Lauwers and Jamal JJ.A.

BETWEEN

Ontario First Nations (2008) Limited Partnership

Claimant

(Respondent)

and

Ontario Lottery and Gaming
    Corporation and

Her Majesty the Queen in right
    of Ontario,

as represented by the Minister of Aboriginal
    Affairs

Respondents

(Appellants)

R. Paul Steep, Bryn E. Gray and Stephanie Sugar, for the
    appellant, Ontario Lottery and Gaming Corporation

D. Brent McPherson, Edmund S. Huang, Manizeh Fancy and
    Insiyah Kanjee, for the appellant, Her Majesty the Queen in right of Ontario

Sheila Block, David Outerbridge, Leora Jackson, Nic Wall
    and Hannah Allen, for the respondent, Ontario First Nations (2008) Limited
    Partnership

Heard: June 9 and 10, 2021 by video conference

On appeal from the order of Justice Glenn A. Hainey of
    the Superior Court of Justice, dated March 31, 2020, with reasons reported at
    2020 ONSC 1516.

Jamal J.A.:

OVERVIEW

[1]

In 2008, Ontario and OLG entered into a Gaming Revenue Sharing and
    Financial Agreement with First Nations Partnership, a limited partnership of
    Ontario First Nations. Under the Agreement, Ontario and OLG agreed to share with
    First Nations three types of revenue associated with gaming in Ontario.
[1]

[2]

A few years later, however, OLG decided to outsource its non-gaming amenities
    to private operators, effectively giving them responsibility for two of the
    three types of revenue under the Agreement. Private sector operators assumed
    the risk and responsibility for non-gaming amenities, in exchange for keeping
    100% of the associated non-gaming revenue. OLG described this arrangement as
    modernization. Although OLG anticipated much greater revenue under modernization,
    it did not disclose its outsourcing plans to the First Nations Partnership or
    seek to amend the Agreement to be relieved of the obligation to pay the First
    Nations Partnership all three types of revenue.

[3]

When OLG implemented modernization, it stopped paying the First Nations
    Partnership two of the three types of revenue under the Agreement. When the
    First Nations Partnership discovered this, it initiated an arbitration under
    the Agreement.

[4]

The arbitration panel held that Ontario and OLG breached the Agreement.
    The majority ruled that Ontario and OLG breached express contractual terms when
    they stopped paying two of three agreed-upon types of revenue. The dissenting
    member found that Ontario and OLGs unilateral changes to the operation of the
    Agreement breached an implied contractual term, describing their conduct as breathtaking
    in the age of reconciliation.

[5]

The appeal judge dismissed Ontario and OLGs appeals.

[6]

Ontario and OLG now appeal to this court. They argue that the appeal
    judge made three errors: he applied the wrong standard of review,
    misinterpreted the Agreement, and erred in concluding that they breached the
    honour of the Crown.

[7]

For the reasons that follow, I would dismiss the appeals. I would uphold
    the majority decision of the arbitration panel on any standard of review. I see
    no error in the appeal judges interpretation of the Agreement and I would find
    it unnecessary to address the honour of the Crown.

BACKGROUND

[8]

OLG is a Crown corporation that conducts and manages lottery schemes in
    Ontario on behalf of the provincial government. It operates under an exemption
    to the prohibition against gaming and betting in Canada under the
Criminal
    Code
, R.S.C. 1985, c. C-46. OLGs profits are paid to Ontario and are the provinces
    largest source of non-tax revenue.

[9]

The First Nations Partnership is a limited partnership of 132 Ontario First
    Nations established to receive and distribute revenue under the Agreement to promote
    education, health, economic, cultural, and community development in First
    Nations communities.

(a)

Prior gaming-revenue litigation

[10]

The Agreement
    was reached after about a decade of disputes between Ontario and First Nations
    involving gaming revenues. Foremost among these was litigation over an earlier revenue
    sharing agreement, the Casino Rama Revenue Agreement, which entitled the First
    Nations Partnerships predecessor to a share of revenue from Casino Rama
 a casino complex located on the reserve lands of The
    Chippewas of Rama First Nation. First Nations sued Ontario and OLG for more
    than $2 billion in damages after a new Ontario government imposed a 20% win
    tax on Casino Ramas gross revenues to be paid to Ontario in priority to First
    Nations entitlement. Through the Agreement, the parties agreed to settle the win
    tax and other litigation.

(b)

Agreement on the definition of Gross Revenue to be shared

[11]

In 2004,
    when the win tax litigation was underway, OLG proposed that the parties enter
    into a new revenue sharing agreement to address First Nations concerns about
    the unpredictable and reduced revenue flows under the prior arrangements. The first
    phase of negotiations was between former Ontario Premier David Peterson, as
    Ontarios representative, and First Nations. The Order‑in-Council
    appointing Mr. Peterson stated Ontarios desire to establish a new Ontario
    First Nations Gaming Revenue Sharing Agreement that provides more stable
    funding and strengthens the financial position of the Ontario First Nations.
    Mr. Petersons terms of reference contained a similar instruction.

[12]

During
    the first phase of negotiations, a draft agreement was reached, but was not
    ratified by First Nations Chiefs in June 2007. The parties did, however, agree
    on a key item, Gross Revenue, that would eventually become part of the Agreement
     the base of provincial gaming revenue to be shared with First Nations would
    include three sources: (1) gaming revenue from lotteries, slots, and table
    games from operations conducted and managed by OLG (gaming revenue); (2)
    revenues from non-gaming activities ancillary to those operations (non-gaming
    revenue); and (3) the retail value of accommodation, food and beverage
    services, and other services provided to gaming patrons on a complimentary
    basis to encourage them to visit and stay at the gaming sites (Comps). These
    three types of revenue comprised Gross Revenue. Even though Comps were an
    expense to OLG and not revenue, they were deemed to be revenue for revenue sharing
    purposes. OLG gave First Nations negotiators financial projections of the anticipated
    future revenue based on all three components of Gross Revenue, with a breakdown
    of each. The draft agreement provided that the First Nations Partnership would
    receive 1.6% of Gross Revenue, which included all three revenue sources.

[13]

Before
    the draft agreement was presented to First Nations Chiefs, the First Nations sought
    confirmation that in the future Ontario would not turn current revenues that
    are received to the final account of the Province into revenues that are not.
    In response, Mr. Peterson provided Ontarios unequivocal commitment to share
    gross gaming revenue. He assured First Nations that Ontario would not conduct
    itself in any way to undermine the agreement by allowing revenues from such gaming
    [to] go to third parties. He also noted that the First Nations Partnership
    would have a full and equal member on the board of directors of OLG to protect
    and advance the interests of First Nations in Ontario. The government
    separately assured the First Nations Partnership that the primary objective of
    the proposed draft agreements is to replace an uncertain source of revenues
    with stable, predictable long term funds for First Nations communities.
    Despite these assurances, the First Nations Chiefs did not approve the proposed
    agreement.

(c)

Reaching the Agreement

[14]

A second
    phase of the negotiations began in late 2007 on a government-to-government
    basis between First Nations Chiefs and the Minister of Aboriginal Affairs,
    Michael Bryant, based on the same agreed-upon definition of Gross Revenue. The negotiations
    were solemn and based on First Nations traditions, including smudge ceremonies
    and the presence of sacred objects. The terms of the Agreement were ultimately reached
    in 2008. The Agreement now provided that the First Nations Partnership would
    receive 1.7% of Gross Revenue, again based on all three revenue sources.

[15]

Before
    the Agreement was approved by First Nations Chiefs, Minister Bryant assured
    the Chiefs that the agreement provides stability of revenue for 25 years grounded
    in a new relationship based upon respect and autonomy. After hearing Minister
    Bryant, the First Nations Chiefs approved the Agreement.

(d)

Key terms of the Agreement

[16]

The
    key terms of the Agreement are set out in the Appendix to these reasons.

(e)

Events leadings to this litigation

[17]

In
    2010, less than two years after the Agreement was signed, OLG began a strategic
    business review of its operations to address declining provincial gaming
    revenues. Based on that review, OLG decided to outsource its non-gaming
    amenities to the private sector  a process it called modernization. Under modernization,
    private sector operators would assume the risk and responsibility for
    non-gaming amenities in exchange for keeping 100% of the associated non‑gaming
    revenue. OLG believed this was necessary to attract world-class private
    operators to invest in OLGs non-gaming amenities. OLG anticipated much greater
    revenue after modernization, projecting a $1.3 billion increase in net profits annually
    once implemented.

[18]

When
    the Agreement was signed in 2008, neither OLG nor the First Nations Partnership
    believed that it was legally possible for OLG to outsource its non‑gaming
    operations. OLG only changed its position in 2011, based on its strategic
    business review of the benefits of modernization. As the appeal judge noted, modernization
    represented a wholesale reinterpretation by Ontario and OLG of OLGs mandate
    relating to non-gaming amenities under its enabling legislation. It was
    completely different from what the parties mutually understood to be legally
    possible during the negotiation of the [Agreement].

[19]

For several
    years, OLG did not disclose its planned outsourcing to either the First Nations
    Partnership or the provincial government, including the provincial Ministry of
    Indigenous Relations and Reconciliation. By early 2013, OLG had decided that once
    it outsourced its non-gaming operations, it would stop sharing non-gaming
    revenue and Comps with the First Nations Partnership. Internal OLG emails in
    October 2015 show that OLG knew this would be a hot button issue for First
    Nations. OLG also knew that turning off two of the three revenue taps could
    lead to decreasing payments under the Agreement. One internal OLG email noted
    that payments to the First Nations Partnership could decrease simply based on
    the fact that they will not be entitled to the 1.7% of non-gaming revenue as
    this will remain with the [private] service provider. Even so, OLG did not
    disclose its plans to the First Nations Partnership or to First Nations. OLG
    disclosed its plans to Ontarios Ministry of Finance for the first time during
    a conference call in or around December 2015. Even then, OLG still did not tell
    the Ministry of Indigenous Relations and Reconciliation, which had government
    responsibility for First Nations peoples.

[20]

In January
    2016, OLG implemented modernization: it began the process of outsourcing its
    non-gaming operations to private operators and ceasing to share non-gaming
    revenue and Comps with the First Nations Partnership. The First Nations
    Partnership learned this in June 2016, through a note to the 2016 audited
    financial statements required under the Agreement. The Ministry of Indigenous
    Relations and Reconciliation learned this in the summer of 2016, when the First
    Nations Partnership began the arbitration process.

[21]

One
    reason the First Nations Partnership did not learn of OLGs plans for so long was
    because Ontario and OLG failed to seat a representative of the First Nations
    Partnership on OLGs board from 2008 until 2015, even though doing so was a
    contractual obligation under the Agreement. When the First Nations Partnership pursued
    arbitration under the Agreement to secure its promised board member, a panel
    composed of three retired judges of the Ontario Superior Court of Justice
    unanimously held that Ontario had breached the Agreement in bad faith and in a
    manner that was egregious and exhibited an odour of moral failure. The
    panel also noted that the First Nations Partnership had not been consulted or
    invited to take part in OLGs strategic business review at a time when it had
    no board member.

[22]

The
    arbitration that is the subject of the present appeals was formally commenced against
    Ontario and OLG in late February 2017. The First Nations Partnership claimed Ontario
    and OLG breached the Agreement when they stopped sharing non-gaming revenue and
    Comps, two of the three types of revenue they had agreed to share under the Agreement.

DECISIONS BELOW

(a)

The arbitration decision

[23]

The
    arbitration involved a ten-day hearing held in September and October 2018
    before a three-member panel chaired by Hon. Mr. Stephen T. Goudge, Q.C., and
    including Mr. Stan G. Fisher, Q.C. and Mr. John Campion. The panel received
    affidavit evidence and expert reports and heard seven days of
viva voce
evidence from ten witnesses, including several who were directly involved in
    the process leading to the Agreement, such as Mr. Bryant. The panel released a
    comprehensive, 385-paragraph arbitration award.

[24]

The
    panel majority, Mr. Goudge and Mr. Fisher, ruled that the Agreement required the
    appellants to share 1.7% of the three revenue sources existing when the Agreement
    was signed in 2008, namely, gaming revenue, non-gaming revenue, and Comps. The majority
    ruled the appellants breached the Agreement when they stopped paying non-gaming
    revenue and Comps as a result of modernization, because modernization did not relieve
    them of their payment obligation under the Agreement. The majority ordered OLG
    to provide an accounting and to pay the respondent 1.7% of the non-gaming
    revenue and Comps from January 2016, when the first outsourced site began
    operating, to the end of the term of the Agreement.

[25]

The
    majority took the view that the honour of the Crown doctrine was engaged by the
    Agreement and was relevant to its interpretation. Although the majority ultimately
    interpreted the Agreement without relying on the honour of the Crown, they
    noted the doctrine provided clear moral support for their interpretation.

[26]

The
    dissenting member, Mr. Campion, found that the arbitration turned on
    reasonable differences in the interpretation of the Agreement. In his view, Ontario
    and OLG had not breached any obligation under the Agreement to pay the First
    Nations Partnership 1.7% of the three revenue sources after modernization,
    because the First Nations Partnership had no right to share in revenues that
    OLG did not receive. In his opinion, the majoritys interpretation of the Agreement
    relied on inadmissible evidence of the parties negotiations leading to the Agreement.
    Finally, he noted that even if Ontario and OLG had breached the Agreement by
    not paying 1.7% of all three revenue sources, the First Nations Partnership had
    not suffered any damages.

[27]

However,
    the dissenting member concluded that Ontario and OLG breached an implied term of
    the Agreement to disclose and consult with the First Nation Partnership before
    it made any fundamental changes to the revenue structures under the Agreement. He
    found OLG fail[ed] to meet these minimum standards of notice and
    consultation. In his view, Ontario and OLG failed in their government-to-government
    commitment with [the First Nations Partnership] in not giving them notice and
    consulting with them before they changed the Agreement by outsourcing two of
    the three revenue sources. He stated that [t]he contrast between the words of
    hope, promise, respect, trust and self-government and the unilateral action of
    OLG and Ontario in changing the [Agreement] without notice and consultation is
    breathtaking in the age of reconciliation. Even so, he concluded the First
    Nations Partnership suffered no damages for breach of the implied term. In his
    view, the honour of the Crown doctrine did not apply to the Agreement.

(b)

The appeal decision

[28]

The
    appeal judge dismissed Ontario and OLGs appeals. He noted he had no
    jurisdiction to review the panels many findings of fact because s. 9.2 of the Agreement
    limited any appeal of an arbitration award to questions of law, or questions
    of mixed fact and law.

[29]

The
    appeal judge ruled that the reasonableness standard of review applied to the
    majoritys contractual interpretation of the Agreement and the damages award.
    He based his conclusion on the Supreme Court of Canadas decisions in
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, and
Teal Cedar Products Ltd. v. British Columbia
, 2017 SCC 32, [2017] 1
    S.C.R. 688, which in his view were unaffected by
Canada (Minister of
    Citizenship and Immigration) v. Vavilov
, 2019 SCC 65, 441 D.L.R. (4th) 1. The
    appeal judge found the majoritys interpretation of the Agreement was both reasonable
    and correct.

[30]

The
    appeal judge determined that the majority had not allowed the factual matrix to
    overwhelm the words of the contract and rejected OLGs submission that the
    majority ignored provisions of the Agreement to reach a commercially absurd
    interpretation. He also held the majority did not err in deciding that the Agreement
    engaged the honour of the Crown, but in any event, noted that the majoritys reference
    to the doctrine was
obiter
.

[31]

Finally,
    the appeal judge held that the damages awarded by the majority were both reasonable
    and correct.

ISSUES

[32]

Ontario
    and OLG raise three issues:

1.

Did the appeal
    judge err as to the standard of review?

2.

Did the appeal
    judge err in interpreting the contract?

3.

Did the appeal
    judge err in applying the honour of the Crown?

DISCUSSION

Issue #1: Did the appeal judge err as to the standard of
    review?

[33]

Ontario
    and OLG assert that the appeal judge erred in concluding that the standard of
    review of the majoritys interpretation of the Agreement and its damages award is
    reasonableness. They say the appropriate standard of review, in the wake of
Vavilov
,
    is the appellate standard: correctness for questions of law and palpable and
    overriding error for questions of mixed fact and law.
[2]

[34]

Ontario
    and OLG acknowledge that the Supreme Court in
Sattva
, at para. 75,
    ruled that the standard of review in an appeal from a commercial arbitration
    conducted under the former
Arbitration Act
, R.S.B.C. 1996, c. 55, which
    was limited to a question of law arising out of the award, is almost always
    reasonableness; see also
Teal Cedar
, at para. 74.
[3]
They contend, however, that the reasonableness standard of review for questions
    of law prescribed by
Sattva
and
Teal Cedar
has been overtaken
    by
Vavilov
, where the majority ruled that an administrative decision subject
    to a statutory right of appeal should be reviewed under the appellate standard:
    correctness for questions of law, and palpable and overriding error for
    questions of fact and questions of mixed fact and law where the legal principle
    is not readily extricable: at paras. 36-38, 44. They say
Vavilov
applies whenever the legislature has provided for a statutory appeal, such as under
    Ontarios
Arbitration Act, 1991
, S.O. 1991, c. 17. They also claim
    that even if the reasonableness standard of review applies, the appeal judge
    erred in concluding that the majoritys decision was reasonable.

[35]

The First
    Nations Partnership disputes the claim that
Vavilov
effectively
    overruled
Sattva
and
Teal Cedar
on the standard of review of a
    commercial arbitration decision on questions of law. It submits that
Vavilov
governs the standard of review in administrative law but does not apply to
    commercial arbitration decisions, which should continue to be reviewed under a
    deferential standard on questions of law.

[36]

The First
    Nations Partnerships more fundamental point, however, is that the standard of
    review does not affect the outcome of these appeals. It says that whether or
    not
Vavilov
applies to the review of a commercial arbitration
    decision, Ontario and OLG have largely raised questions of mixed fact and law
    questions about the interpretation and application of the Agreement that do not
    involve extricable legal errors. It submits that a deferential standard of
    review applies to these questions.

[37]

In
    my view, it is unnecessary in these appeals to address whether
Vavilov
changed the standard of review analysis in
Sattva
and
Teal Cedar
in an appeal from a commercial arbitration decision, for two reasons.

[38]

First,
    as I will address below, whether the standard of review on questions of law is
    reasonableness or correctness, the appeal judge did not err in upholding the
    majoritys decision. Because a court should generally refrain from deciding
    issues of law that are unnecessary to the resolution of an appeal (
Phillips
    v. Nova Scotia (Commission of Inquiry into the Westray Mine Tragedy)
,
    [1995] 2 S.C.R. 97, at para. 6), I would not address the standard of review
    issue.
[4]

[39]

The
    Supreme Court took the same approach in
Wastech Services Ltd. v. Greater
    Sewerage and Drainage District
, 2021 SCC 7, 454 D.L.R. (4th) 1, at para. 46,
    where the majority,
per
Kasirer J., declined to consider the effect,
    if any, of
Vavilov
on the standard of review principles articulated in
Sattva
and
Teal Cedar
, partly because the outcome of the case did
    not depend on the standard of review.

[40]

Second,
    I agree with the First Nations Partnership that, putting aside the extricable
    errors of law alleged, Ontario and OLG largely advance questions of contractual
    interpretation, which since
Sattva
it has been accepted are questions
    of mixed fact and law attracting a deferential standard of review. There has
    been no suggestion that
Vavilov
changed the law on this point, which is
    distinct from the issue of whether an arbitrators decision on a question of
    law is reviewable under a standard of reasonableness or under the appellate
    standard.

[41]

In
Corner
    Brook (City) v. Bailey
, 2021 SCC 29, 17 B.L.R. (6th) 1,
per
Rowe J.,
    the Supreme Court affirmed the direction from
Sattva
that a
    deferential standard of review applies to questions of mixed fact and law
    involving the interpretation of a contract. The court in
Corner Brook
underscored
    that contractual interpretation is a fact specific exercise, and should be
    treated as a mixed question of fact and law for the purpose of appellate review,
    unless there is an extricable question of law: at para. 44. As the court
    explained, [e]xtricable questions of law in the context of contractual
    interpretation include the application of an incorrect principle, the failure
    to consider a required element of a legal test, or the failure to consider a
    relevant factor: at para. 44 (citations omitted). The court also cautioned
    that [t]he circumstances in which a question of law can be extracted will be
    uncommon. Whether something was or should have been within the common knowledge
    of the parties at the time the contract was entered into is a question of
    fact: at para. 44 (citations omitted); see, to the same effect,
Sattva
,
    at paras. 50, 55;
Teal Cedar
, at paras. 47, 57.

[42]

Here,
    the parties agree on the applicable principles of contractual interpretation. Where
    they disagree is how those principles should be applied to the contractual facts,
    consisting of the Agreement itself and the factual matrix or surrounding
    circumstances. Absent an extricable error of law, such an exercise of
    contractual interpretation by a first-instance decision maker  whether a court
    or an arbitrator  attracts appellate deference.

[43]

I
    now turn to whether the appeal judge erred in interpreting the Agreement.

Issue #2: Did the appeal judge err in interpreting the Agreement?

(a)

Introduction

[44]

Ontario
    and OLG submit that the appeal judge erred in law in interpreting the Agreement
    in four respects. First, they say he ignored their limited payment obligation
    under the Agreement. Second, they say his decision conflicts with the Agreement
    read as a whole. Third, they claim he failed to apply the entire agreement
    clause in the Agreement and to correct the majoritys decision to admit extrinsic
    evidence that overwhelmed the words of the Agreement. Fourth, in the
    alternative, OLG argues the appeal judge erred in affirming the majoritys
    damages award.

[45]

I
    will first summarize the applicable principles of contractual interpretation
    and then address these four arguments. As I will elaborate, Ontario and OLG largely
    repeat arguments that the appeal judge rejected. I see no basis to reach a
    different conclusion.

(b)

Applicable principles of contractual interpretation

[46]

The parties
    agree that the appeal judge correctly stated the applicable principles of
    contractual interpretation. Those principles were discussed in the Supreme Courts
    unanimous decisions in
Sattva
,
per
Rothstein J., and more recently
    in
Corner Brook
,
per
Rowe J. They may be summarized as
    follows:

1.

Courts should take
    a practical, common-sense approach not dominated by technical rules of
    construction. The overriding concern is to determine the intent of the parties
    and the scope of their understanding:
Sattva
, at para. 47 (citations
    omitted).

2.

Courts must
    read the contract as a whole, giving the words used their ordinary grammatical
    meaning, consistent with the surrounding circumstances known to the parties at
    the time of formation of the contract:
Sattva
, at para. 47;
Corner
    Brook
, at para. 20.

3.

The surrounding
    circumstances should be considered in contractual interpretation. [A]scertaining
    contractual intention can be difficult when looking at words on their own,
    because words do not have an immutable or absolute meaning:
Sattva
,
    at para. 47. The meaning of words in a contract often derives from contextual
    factors, such as the purpose of the agreement and the nature of the
    relationship it creates:
Sattva
, at para. 48. A contract is not made
    in a vacuum and must be placed in its proper setting. Interpreting a commercial
    contract requires knowledge of the commercial purpose of the contract, based on
    the genesis of the transaction, the background, the context, the market in
    which the parties are operating:
Sattva
, at para. 47, citing
Reardon
    Smith Line Ltd. v. Hansen-Tangen
;
Hansen-Tangen v. Sanko Steamship
    Co.
, [1976] 3 All E.R. 570 (U.K. H.L.), at p. 574,
per
Lord
    Wilberforce.

4.

The nature of
    the evidence that may be considered as part of the surrounding circumstances will
    vary from case to case, but should include only objective evidence of the
    background facts at the time of the execution of the contract, that is,
    knowledge that was or reasonably ought to have been within the knowledge of
    both parties at or before the date of contracting. That determination is
    inherently fact specific:
Sattva
, at paras. 55, 58 (citation omitted);
Corner Brook
, at para. 20.

5.

The surrounding
    circumstances should never be allowed to overwhelm the words of the agreement.
    The surrounding circumstances are considered in order to deepen a
    decision-makers understanding of the mutual and objective intentions of the
    parties as expressed in the words of the contract. The interpretation of a
    written contractual provision must always be grounded in the text and read in
    light of the entire contract. Courts cannot use the surrounding circumstances
    to deviate from the text of the contract to the point that the court
    effectively creates a new agreement:
Sattva
, at para. 57;
Corner
    Brook
, at para. 20.

[47]

I
    will now apply these principles to Ontario and OLGs four contractual
    interpretation arguments.

(c)

Ontario and OLGs contractual interpretation arguments

(i)

Did the appeal judge ignore Ontario and OLGs limited payment obligation
    under the Agreement?

[48]

First,
    Ontario and OLG assert that both the appeal judge and the majority ignored their
    limited payment obligation under the Agreement. They say several provisions of
    the Agreement confirm that they only have to pay the First Nations Partnership
    1.7% of gaming revenue, non-gaming revenue, and Comps received by OLG, so they do
    not have to pay any of the non-gaming revenue or Comps for the non-gaming
    amenities outsourced to private operators. They rely on:

·

s. 2.2(a), which requires them to pay 1.7% of the aggregate Gross
    Revenues for all Agents of the Province in the applicable Preceding Fiscal
    Year;

·

s. 1.1(f), the definition of Agent of the Province, which
    includes OLG but excludes any operator that OLG may hire to operate any
    gaming facility or to operate the conduct and [management] of such lottery
    schemes for or on behalf of the Province, OLG or such other agency of the
    Province; and

·

Schedule 1.1(nn), which provides that Gross Revenues means, in
    respect of an Agent of the Province, revenue reported on the audited
    Consolidated Financial Statements of that Agent of the Province but does not
    include revenues received  [but] not retained to the final account of the
    Province, OLG or any such other Agent of the Province.

[49]

This
    argument was carefully considered and, in my view, correctly rejected by the appeal
    judge and the majority of the arbitration panel. Both highlighted that Schedule
    1.1(nn) expressly lists the three components of Gross Revenues as consisting
    of the revenues of an Agent of the Province generated from gaming revenue, non-gaming
    revenue, and Comps, even though Comps are not revenues received by OLG but are expenses.
    In other words, under the Agreement, revenue need not be received by OLG to be
    included as Gross Revenues for revenue sharing purposes. As the majority
    stated, and the appeal judge affirmed:

Schedule 1.1(nn) provides that for the purposes of the [Agreement],
    Gross Revenues of OLG are made up of the [gaming revenue] as well as ancillary [non-gaming
    revenue] and Comps
generated by the gaming conducted and managed by OLG as
    Agent of Ontario in 2008
. These three components are the base on which the [First
    Nations Partnership] share of 1.7% annually is calculated for the term of the [Agreement].
    Comps are included in the base, although they are not revenues received by OLG.
    That was the shared understanding of the parties in 2008. [Emphasis added.]

[50]

The use
    of the year 2008 to determine the revenue and deemed revenue included as Gross
    Revenues arises from s. 2.4(c) of the Agreement, which requires OLG to
    calculate Gross Revenues in accordance with the accounting practices and
    principles applied by OLG at the Effective Date, the date of the Agreement
    February 19, 2008. The parties agree that, on February 19, 2008, OLG included
    both non-gaming revenue and Comps as part of Gross Revenues, even though
    Comps were not received or retained by OLG. This date provided a benchmark for,
    or snapshot of, what was included as part of Gross Revenues. As the majority of
    the arbitration panel explained:

The reference in Schedule 1.1(nn) to what is reported in the
    Segmented Information notes in the notes to, or as otherwise reported in, the
    audited Consolidated Financial Statements of that Agent of the Province is a
    statement about the snapshot at the time the [Agreement] was made. That
    snapshot simply describes the components on which the payments owed to [the First
    Nations Partnership] are to be based. The words reflect the shared
    understanding of the parties in 2008, when the [Agreement] was made, of the
    sources of revenue to be shared with the First Nations.

There is no language in Schedule 1.1(nn) nor any evidence of a
    shared intention of the parties in 2008, that this reference referred to what
    might appear in the audited Consolidated Financial Statements as they might be
    from time to time in future years.

[51]

The
    appeal judge found this interpretation to be commercially reasonable  and Ontario
    and OLGs interpretation commercially unreasonable  because [i]t would not be
    commercially reasonable to interpret the [Agreement] in a manner that allows
    OLG to turn off two of three revenue taps because it can make a better deal
    in the private sector. I agree.

[52]

The appeal
    judge also found the majoritys interpretation was purposive, and Ontario and
    OLGs interpretation to be non-purposive and technical, because the majority considered
    the historical and relationship factors that underpinned the Agreement  to
    provide First Nations in Ontario with resources derived from lottery schemes in
    Ontario conducted and managed by Ontario, directly or indirectly, to advance
    their economic growth and development. Again, I agree.

[53]

I
    would add that it is inconceivable that the shared understanding of the parties
    when they entered the Agreement was that OLG, by outsourcing to private parties
    two of the three revenue sources in the definition of Gross Revenues, could pay
    First Nations nothing on account of these sources. I say this for two reasons.
    First, First Nations had agreed to settle a $2 billion claim in exchange for
    the Agreement to obtain stable funding for their communities. Part of that
    stability arose from having three carefully defined and locked-in revenue sources.
    Second, when the parties agreed to the Agreement they did not contemplate that it
    was legally possible for OLG to outsource responsibility for its non-gaming
    amenities to private operators. The scenario of paying nothing for outsourced non-gaming
    amenities thus could not have been within the reasonable contemplation of the
    parties. As the appeal judge found:

In 2008 when the [Agreement] was entered into, OLG did not
    contemplate that it could transfer responsibility for non-gaming amenities
    exclusively to private operators. It was only in 2011, as OLG conducted its
    strategic business review, that it concluded that OLG was permitted to fully
    outsource the provision of non-gaming amenities. This shift in OLGs
    operational model was presented to and approved by the provincial Cabinet.

[54]

It
    follows that I would reject Ontario and OLGs argument that the definition of
    Agent of the Province makes clear that the revenue of private third-party
    service providers to whom non-gaming amenities were outsourced after 2008 are
    excluded from Gross Revenues. As already noted, the parties did not
    contemplate the outsourcing of non-gaming amenities to be legally possible in
    2008. Moreover, s. 10.10(b) of the Agreement confirms Ontario and OLGs ongoing
    revenue-sharing obligations if the Province reorganizes how it conducts and
    manages gaming. Lastly, evidence in the record suggests that the reference to
    private third-party operators in the definition of Agent of the Province was
    directed at excluding the revenue of four private resort casinos that OLG
    operated through private operators at the time the Agreement was agreed to.

[55]

I
    therefore see no error in how the appeal judge or the majority interpreted Ontario
    and OLGs payment obligation under the Agreement.

(ii)

Did the appeal judge fail to read the Agreement as a whole?

[56]

Second,
    Ontario and OLG assert that the appeal judge and the majority ignored other
    important terms of the Agreement  the non-derogation and final account clauses
     and thus erred in law by failing to read the Agreement as a whole.

[57]

Non-derogation
    clause (s. 10.1)
. Ontario and OLG contend that the majority and appeal
    judge erred by ignoring the non-derogation clause. This provision preserves for
    Ontario and OLG full discretion and control over the conduct and management of
    OLGs business, without guaranteeing a minimum level of revenue, any obligation
    on Ontario or OLG to continue to operate any particular business, or any
    obligation to make additional payments to the First Nations Partnership for a
    reduction in revenue because of a business change (s. 10.1(b)(i)). Nor
    does the First Nations Partnership have any interest in any lottery scheme or
    any assets of Ontario or OLG (s. 10.1(b)(ii)). Ontario and OLG contend that
    nothing in the Agreement gives the First Nations Partnership a separate and
    ongoing right to receive a share of the revenue or value of Comps from
    non-gaming activities that OLG was operating in 2008, if OLG stops operating
    those businesses, receiving that revenue, or providing those Comps.

[58]

I do
    not accept this submission. The majority expressly considered the non‑derogation
    clause, concluding it contemplated that there may be internal reorganizations
    of OLG but, notwithstanding that, the contractual rights of [the First Nations
    Partnership] remain intact. The majority noted that no one contests OLGs
    right to modernize, but that does not give it the right to shed its obligations
    to [the First Nations Partnership] [M]odernization does not displace [the]
    payment obligation. It coexists with it. By ceasing to pay amounts equal to
    1.7% annually of [non-gaming revenue] and Comps, OLG and Ontario have breached
    the [Agreement]. For his part, the appeal judge noted that Ontario and OLG repeated
    submissions made before the arbitration panel that were considered and
    rejected by the majority who provided reasonable reasons for rejecting them. I see
    no basis to impugn these conclusions or for this court to intervene.

[59]

Final
    account clause (s. 1(f) of Schedule 1.1(nn))
. The final account clause,
    which forms part of the definition of Gross Revenues, provides that Gross
    Revenues shall not include any revenues received by the Province, OLG or any
    other Agent of the Province  to the extent that, such revenues so received are
    not retained to the final account of the Province, OLG or any such other Agent
    of the Province. Ontario and OLG say the majority wrongly determined that this
    provision was of no assistance, and thus disregarded it. They say this
    provision helps in interpreting the scope of Gross Revenues, which must be
    revenues received by OLG and Ontario. They claim OLG has never recognized, let
    alone retained, third-party revenues generated at outsourced sites, which are
    expressly excluded by s. 1(f) of Schedule 1.1(nn).

[60]

I do
    not agree with this submission. At first instance, all parties agreed the final
    account clause did not apply here and both Ontario and OLG stated in argument that
    they did not rely on the clause. Ontarios counsel stated that the final
    account clause was not an issue in this case because we are not relying on
    this received but not retained clause to try to exclude revenue. We are not
    carving out or diverting using that provision. The majority accepted this
    view, noting the parties agree [this clause] is of no assistance here, because
    it addresses revenues received by OLG but not retained. That is not this case.
    I agree. This case does not involve revenue being received by Ontario or OLG and
    then being diverted to third parties to avoid a payment obligation to the First
    Nations Partnership. There was thus no need for the arbitrators or the appeal
    judge to consider this clause any further.

(iii)

Did the appeal judge ignore the entire agreement clause and allow the
    extrinsic evidence to overwhelm the words of the Agreement?

[61]

Third,
    Ontario and OLG assert that the appeal judge and majority erred in law by
    admitting the pre-contractual negotiations into evidence  especially evidence
    of Ontarios negotiator, former Minister Bryant, to the effect that Ontario and
    OLGs diversion of the non-gaming revenue stream and the termination of the
    payment of an amount equal to Comps, two of the three revenue streams referred
    to in the Agreement, conflicted with the parties shared understanding. Ontario
    and OLG also argue that an entire agreement clause, s. 1.10, precludes reliance
    on any pre-contractual warranty, representation, opinion, advice, or assertion of
    fact.

[62]

I do
    not agree with this submission. An entire agreement clause alone does not
    prevent a court from considering admissible evidence of the surrounding
    circumstances at the time of contract formation. As already noted, the surrounding
    circumstances are relevant in interpreting a contract exactly because words
    alone do not have an immutable or absolute meaning:
Sattva
, at para.
    47. Relevant background and context are often essential to understand contractual
    language. I therefore agree with the following observations of Fraser C.J.
    for a majority of the Court of Appeal of Alberta in
IFP Technologies
    (Canada) v. EnCana Midstream and Marketing
, 2017 ABCA 157, 53 Alta. L.R.
    (6th) 96, at para. 124, leave to appeal refused, [2017] S.C.C.A. No. 303:

The mere existence of an entire agreement provision does not
    mean that the words chosen beyond that entire agreement provision admit of one
    interpretation only. The purpose of considering the surrounding circumstances
    is not to add to, contradict or vary the terms of the agreement but rather use
    them as an interpretive aid to determine the meaning of the words in dispute.
    Where parties have concluded an agreement and a court is left to sort out the
    parties objective intentions, it cannot be prevented from considering the
    surrounding circumstances by a provision that is itself based on the assumption
    that the agreement is clear  when it is not.

[63]

The relevant
    question, then, is whether the evidence considered by the majority was properly
    part of the surrounding circumstances. I again agree with Fraser C.J., that
    [d]etermining what constitute properly surrounding circumstances is a question
    of fact:
IFP Technologies
, at para. 83; see also
Sattva
, at
    paras. 49-55, 58;
Corner Brook
, at para. 44; and
Kilitzoglou v.
    Curé
, 2018 ONCA 891, 143 O.R. (3d) 385, at para. 37. Such a question of
    fact is outside this courts jurisdiction, because the parties agreed to limit
    any appeals to questions of law or mixed fact and law: Agreement, s. 9.2.

[64]

Even
    assuming, without deciding, that this is one of the rare or uncommon circumstances
    where a question of law can be extricated from the interpretation process (
Sattva
,
    at para. 55;
Corner Brook
, at para. 44), I see no error in how the surrounding
    circumstances were considered. These circumstances helped to place the Agreement
    in its proper setting and understand the genesis of the transaction, the
    background, and the context. They included the parties history of litigation
    over revenue sharing; their shared objective of locking‑in three
    identified revenue streams to ensure stable, predictable, long-term funds for
    First Nations communities; and Ontarios commitment not to convert revenues
    received to the final account of the Province into revenues that were not. Such
    evidence was admissible to show the parties objective mutual intention and the
    background facts leading to the Agreement. In my view, the surrounding
    circumstances were not used to overwhelm the words of the agreement or to
    deviate from the text to create a new agreement: see
Sattva
, at para.
    57.

[65]

I therefore
    agree with the appeal judge, that [w]hile the majority considered the
    surrounding circumstances, its interpretation of the [Agreement] was firmly
    rooted in the actual wording of the agreement. The surrounding circumstances or
    matrix of facts were not determinative in interpreting the Agreement one way or
    the other: see
Corner Brook
, at para. 57.

[66]

To
    conclude, I see force in the submission of the First Nations Partnership that Ontario
    and OLG have presented a matrix-free case  one that ignores the
    circumstances leading to the Agreement and the parties common objectives in
    entering this new long-term agreement to advance the growth and capacity of
    First Nations communities. I am not inclined to adopt such a matrix-free
    approach.

(iv)

Did the appeal judge err in awarding damages?

[67]

Finally,
    in the alternative, OLG submits that if the appeal judge was correct in holding
    that Ontario and OLG breached the Agreement, he failed to correct errors in the
    damages awarded. OLG says the majoritys order that Ontario and OLG pay 1.7% of
    non-gaming revenue and Comps at all gaming facilities in Ontario is not compensatory
    but instead gives the First Nations Partnership a windfall  it puts it in a
    better position than it would have been in had the Agreement been performed, because
    modernization is projected to generate more revenue and therefore greater
    payments to the First Nations Partnership. OLG says the proper measure of
    damages is to put the First Nations Partnership in the position it would have
    been in but for the breach, based on OLGs reasonable expectations of lower projected
    revenue before modernization. On OLGs approach, the First Nations Partnerships
    damages should be zero.

[68]

I do
    not accept this submission. In my view, the appeal judge appropriately affirmed
    the majoritys damages order. Under the expectation measure of damages for
    contractual breach, the First Nations Partnership had a right to be put in the
    position it would have been in had the Agreement been performed: see
Bank
    of America Canada v. Mutual Trust Co.
, 2002 SCC 43, [2002] 2 S.C.R. 601,
    at paras. 26-27;
Dasham Carriers Inc. v. Gerlach
, 2013 ONCA 707, 313
    O.A.C. 95, at paras. 17, 28-30. Ontario and OLG breached the Agreement by
    failing to pay the First Nations Partnership the agreed upon 1.7% of gaming
    revenue, non-gaming revenue, and Comps from gaming sites conducted and managed
    by OLG. The majoritys award, as affirmed by the appeal judge, requires Ontario
    and OLG to pay exactly that amount.

[69]

Such
    an award does not overcompensate the First Nations Partnership and gives it only
    what it bargained for under the Agreement. As the majority held, and the appeal
    judge affirmed: [The First Nations Partnership] bargained for a percentage of [gaming
    revenue, non-gaming revenue], and Comps. If the value of any one of those streams
    goes up or down, [the First Nations Partnership] is entitled to the increased
    benefit or required to suffer the loss that results. This is not a net benefit
    exercise. I see no error in that reasoning or conclusion.

[70]

I
    would also reject OLGs claim that any damages should be limited to the value
    of non-gaming revenue and Comps that the First Nations Partnership would have
    received had OLG not modernized. OLG did not breach the Agreement through modernization.
    It breached the Agreement when it stopped paying the First Nations Partnership two
    of the three agreed upon types of revenue. I see no basis to intervene with the
    appeal judges conclusion that the majoritys award compensates for that breach.

Issue #3: Did the appeal judge err in applying the honour of
    the Crown?

[71]

Finally,
    Ontario and OLG claim that the appeal judge erred in agreeing with the majority
    that the honour of the Crown was relevant to the interpretation of the Agreement.

[72]

The
    honour of the Crown is a foundational principle of Aboriginal law and governs
    the relationship between the Crown and Aboriginal peoples:
Mikisew Cree
    First Nation v. Canada (Governor General in Council)
, 2018 SCC 40, [2018]
    2 S.C.R. 765, at para. 21. It obliges servants of the Crown to conduct
    themselves with honour when acting on behalf of the sovereign with Aboriginal
    peoples:
Manitoba Métis Federation Inc. v. Canada (Attorney General)
,
    2013 SCC 14, [2013] 1 S.C.R. 623, at para. 65. The ultimate purpose of the
    honour of the Crown is the reconciliation of pre-existing Aboriginal societies
    with the assertion of Crown sovereignty:
Manitoba Métis Federation
,
    at para. 66;
R. v. Desautel
, 2021 SCC 17, 456 D.L.R. (4th) 1, at
    paras. 22, 30; and
Newfoundland and Labrador (Attorney General) v.
    Uashaunnuat (Innu of Uashat and of Mani-Utenam)
, 2020 SCC 4, 443 D.L.R.
    (4th) 1, at paras. 22-24.

[73]

Ontario
    and OLG claim the Agreement is a commercial agreement that does not engage the
    honour of the Crown. They note the Agreement expressly states it is not a
    treaty and does not create any treaty or fiduciary relationship between the Crown
    and Aboriginal peoples. They also contend the appeal judge erred by ruling that
    the Agreement represented the reconciliation of the constitutionally protected
    Aboriginal right of self-government, which includes jurisdiction over gaming,
    with the Crowns sovereignty over gaming under the
Criminal Code
. Ontario
    and OLG note that no such right has been recognized by a Canadian court or by
    the arbitration panel, nor was this issue meaningfully argued before the appeal
    judge.

[74]

For
    its part, the First Nations Partnership says that neither the arbitration panel
    nor the appeal judge relied on the honour of the Crown in reaching their
    decisions. It asserts that because their observations on this point were
    expressly identified as
obiter dicta
, this ground of appeal should
    fail. However, if the court is inclined to address this point, it submits that
    the Agreement does engage the honour of the Crown, which is always at stake in
    the Crowns dealings with Aboriginal peoples. It claims the Agreement is not
    merely a commercial agreement but a government-to-government agreement, forged
    in partnership and negotiated in solemn gatherings between the Crown and First
    Nations conducted in accordance with First Nations traditions. It submits that
    although First Nations have an inherent right to self-government, whether that right
    includes jurisdiction over gaming was not before the arbitration panel or
    appeal judge and is not in issue in this case. It says this important issue should
    not be decided without a full factual record and complete argument.

[75]

I
    would decline to address the honour of the Crown on the facts of this case, for
    two reasons. First, both the majority of the arbitration panel and the appeal
    judge expressly noted that their comments on the honour of the Crown were
obiter
and thus unnecessary for their rulings. A court should generally refrain from
    addressing a legal issue, and especially a constitutional issue, that is
    unnecessary to dispose of a case:
Phillips
, at paras. 6-9;
R. v.
    Drury
, 2020 ONCA 502, 391 C.C.C. (3d) 18, at para. 84. A policy of
    restraint is desirable because unnecessary constitutional pronouncements may
    prejudice future cases, the implications of which have not been foreseen:
Phillips
,
    at para. 9.

[76]

Second,
    as explained above, the appeal judge did not err in dismissing the appeals based
    on ordinary principles of contractual interpretation, without recourse to the
    honour of the Crown doctrine.

[77]

Thus,
    quite apart from the honour of the Crown, I conclude the appeal judge made no
    reviewable error in dismissing the appeals based on ordinary principles of
    contractual interpretation.

CONCLUSION

[78]

I
    would dismiss the appeals.

[79]

If
    the parties cannot agree on costs of the appeals, the First Nations Partnership
    may file written submissions of up to three pages and a bill of costs within seven
    days of this decision. Ontario and OLG may each do likewise within a further seven
    days.

Released: September 1, 2021 J.M.F.

M. Jamal J.A.

I agree. Fairburn
    A.C.J.O.

I agree. P. Lauwers
    J.A.

Appendix  Relevant Contractual Provisions

Gaming and
    Revenue Sharing and Financial Agreement (Agreement)

Preamble:

WHEREAS
the Province and First Nations in Ontario,
    acting through [the First Nations Partnership], have agreed to enter into this
    Gaming Revenue Sharing and Financial Agreement with the objective of advancing
    the growth and capacity of First Nations in Ontario in respect of community
    development, health, education, economic development and cultural development.

AND WHEREAS
in furtherance of this objective it is
    the intention of the Province and First Nations in Ontario to maintain an
    on-going relationship for so long as the Province is involved directly, or
    indirectly through an Agent of the Province, in conducting and managing Lottery
    Schemes in Ontario.

NOW THEREFORE
in consideration of the mutual
    covenants and agreements contained in this Agreement and other good and
    valuable consideration (the receipt and sufficiency of which are hereby acknowledged),
    the parties hereto agree, as follows:

1.1 Definitions

(f) Agent of the Province
means any agency of the
    Province, including OLG, that conducts and manages a lottery scheme under the
    authority of section 207(1)(a) of the
Criminal Code
, and includes the
    Province itself if the Province conducts or manages any such lottery scheme
    directly but, for greater certainty, does not include any operator that the
    Province, OLG or any other agency of the Province that conducts and manages
    such lottery schemes may hire to operate any gaming facility or to operate the
    conduct and manage of such lottery schemes for or on behalf of the Province,
    OLG or such other agency of the Province.

(nn) Gross Revenues
has the meaning attributed to
    that term in Schedule 1.1(nn).

(rr) Initial Term
has the meaning attributed to
    that term in section 8.1.

(bbb) Lottery Scheme
means a lottery scheme
    conducted and managed by the Province or any Agent of the Province, under the
    authority of section 207(1)(a) of the
Criminal Code
.

(ccc) Monthly Revenue Share Payment
or
MRSP
has the meaning attributed to that term in section 2.2(a).

(bbbb) Province
means Her Majesty the Queen in
    right of Ontario.

(dddd) Renewal Term
means the five year period commencing
    on the next date after the date of expiration of the Initial Term and ending on
    the date that is the 5th anniversary of the date of expiration of the Initial
    Term. .

1.10 Entire Agreement

This agreement and the Closing Agreement constitute the
    entire agreement between the parties pertaining to the subject matters herein.
    There are no warranties, conditions, or representations (including any that may
    be implied by statute) and there are no agreements in connection with such
    subject matters except as specifically set forth or referred to in this Agreement
    and the Closing Agreement. No reliance is placed on any warranty,
    representation, opinion, advice or assertion of fact made either prior to,
    contemporaneous with, or after entering into this Agreement, or any amendment
    or supplement thereto, by any party to this Agreement or its partners,
    directors, officers, employees or agents, to any other party to this Agreement
    or its partners, directors, officers, employees or agents, except to the extent
    that the same has been reduced to writing and included as a term of this
    Agreement, and none of the parties to this Agreement has been induced to enter
    into this Agreement or any amendment or supplement by reason of any such
    warranty, representation, opinion, advice or assertion of fact. Accordingly, there
    shall be no liability, either in tort or in contract, assessed in relation to
    any such warranty, representation, opinion, advice or assertion of fact, except
    to the extent contemplated above.

2.2 Monthly Gaming Revenue Share Payments

(a)
Commencing with Fiscal Year 2012, and in each
    Fiscal Year thereafter during the Initial Term and the Renewal Term, the
    Province shall pay, or cause an Agent of the Province to pay, to [the First
    Nations Partnership], 12 monthly payments (the monthly payments payable each
    month by the Province, or any Agent of the Province, being hereinafter
    collectively referred to as a
Monthly Revenue Share Payment
or
MRSP
),
    each MRSP being in the aggregate equal to one-twelfth of 1.7% of the aggregate
    Gross Revenues for all Agents of the Province in the applicable Preceding
    Fiscal Year.

(d)
Upon delivery of the Unaudited Gross Revenues Statement
    in accordance with section 2.2(c)(i) and the Audited Gross Revenues Statement pursuant
    to section 2.2(c)(ii), OLG shall, and the Province shall cause each other Agent
    of the Province, to make, at the request of [the First Nations Partnership],
    the respective finance personnel of OLG or that Agent of the Province,
    including, in the case of the Audited Gross Revenues Statement, their
    respective independent auditors, as applicable, available to [the First Nations
    Partnership] and [the First Nations Partnerships] accounting advisors, within
    the 20 day period referred to in section 2.2(f), to discuss in good faith such
    statements of OLG or of that Agent of the Province, as the case maybe.

2.4 Changes in Accounting Procedures

(a)
In the event that during the course of any
    Fiscal Year there has been a change in any applicable accounting practice or
    principle of the Province, OLG or any other Agent of the Province, which change
    affects the determination of Gross Revenues, the Province, OLG or such other
    Agent of the Province shall deliver a written notice of such change to [the First
    Nations Partnership] in sufficient detail in order for [the First Nations
    Partnership] to understand such change. For the purposes of this section 2.4, a
change in any applicable accounting practice or principle
shall mean
    any change in any accounting practice or principle related to the recognition
    of Gross Revenues by the Province or OLG from those accounting practices or
    principles applied by the Province or OLG in respect of the recognition of
    Gross Revenues from the Lottery Schemes conducted and managed by OLG at the
    Effective Date, as reported in the Consolidated Financial Statements of OLG.
    For greater certainty, a change in any applicable accounting practice or
    principle does not include the determination of any accounting practice or
    principle that may be applied by the Province, OLG or any other Agent of the
    Province to any new Lottery Schemes that the Province, OLG or any other Agent
    of the Province may commence to conduct and manage from and after the Effective
    Date, which determination of accounting practices and principles applicable to
    such new Lottery Schemes commenced after the Effective Date shall be at the
    sole discretion of the Province, OLG or such other Agent of the Province, as
    the case may be.

2.5 Provincial Levies, including Taxes and WIN
    Contributions

(a)
Subject to sections 2.5(b) and 2.5(c), the
    Province affirms and agrees that the receipt by [the First Nations Partnership]
    or the [First Nations Partnership] Partners of all or any portion of the $201
    Million Payment or any Monthly Revenue Share Payments shall not be reduced by
    any Levy of the Province or any agency of the Province with the jurisdiction
    and power to impose such a charge acting under the authority of the Province,
    including the WIN Contribution. If it is determined that any Levy of the
    Province becomes payable by [the First Nations Partnership] or any [First
    Nations Partnership] Partner on the receipt by [the First Nations Partnership] or
    such [First Nations Partnership] Partner of all or any portion of the $201
    Million Payment or any Monthly Revenue Share Payments, and [the First Nations
    Partnership] and/or such [First Nations Partnership] Partners have complied
    with their obligation to pay such Levy and no remission is available to them,
    then the Province shall pay to [the First Nations Partnership] or such [First
    Nations Partnership] Partners an amount equivalent to the Levy of the Province
    so paid by each of [the First Nations Partnership] or such [First Nations
    Partnership] Partners respectively.

(b)
The Province and [the First Nations Partnership]
    acknowledge and agree that the affirmation and agreement of the Province set
    out in section 2.5(a) does not apply to any Levy of an Authority related
    directly or indirectly to any right, title or interest in and to, or any use,
    expenditure, investment or application of, the $201 Million Payment or the
    Monthly Revenue Share Payments after receipt thereof by [the First Nations
    Partnership] or the [First Nations Partnership] Partners or to any income,
    revenue or appreciation of value received or realized by [the First Nations
    Partnership] and/or [a First Nations Partnership] Partner directly or
    indirectly related to or derived from the use, expenditure, investment or
    application of the $201 Million Payment or the Monthly Revenue Share Payments
    after the receipt thereof by [the First Nations Partnership] or [a First
    Nations Partnership] Partner, including such Levies of any Authority imposed
    on, measured by or referred to as, income, land transfer, sales, goods and
    services, use, consumption, capital, value added, excise, stamp, withholding,
    business, wealth, estate, franchising, property, development, occupancy,
    employer benefit, payroll, workers compensation, health, social services,
    education or social securities taxes.

(c)
[The First Nations Partnership] acknowledges
    that the Federal Government of Canada, or any agent or Authority of the Federal
    Government of Canada, may be obliged to apply a Levy of the Province or any
    Levy created by an agency of the Province with the jurisdiction and power to
    impose such a charge acting under the authority of the Province to the receipt
    by [the First Nations Partnership] or [First Nations Partnership] Partners of
    all or any portion of the $201 Million Payment or any Monthly Revenue Share
    Payments. In such event, and provided that [the First Nations Partnership] or
    the [First Nations Partnership] Partners have complied with their obligation to
    pay such Levy and no remission is available to them, then the Province shall
    pay to [the First Nations Partnership] or such [First Nations Partnership] Partners
    an amount equivalent to such Levy of the Province paid by each of [the First
    Nations Partnership] or such [First Nations Partnership] Partners respectively.

2.6 OLG Board Membership

[The First Nations Partnership] shall have the right to
    have a representative of [the First Nations Partnership] appointed by the
    Province as a member of the board of directors of OLG in accordance with and pursuant
    to the procedures of the Province for making such appointments. Any nominee of [the
    First Nations Partnership] must comply with the criteria established for
    service as a member of the board of directors of OLG. [The First Nations
    Partnership] shall require any appointee that subsequently ceases to comply
    with such approved criteria to resign immediately, failing which the Province
    shall be entitled to terminate such appointee as a member of the board of
    directors of OLG.

8.1 Initial Term

The initial term (the Initial Term) of this Agreement shall
    commence upon the Effective Date and shall include all days up to but not
    including the date that is the 20th anniversary of the Effective Date, unless
    terminated earlier.

8.2 Renewal Term

Commencing on the date that is one year prior to the
    commencement date of the Renewal Term, [the First Nations Partnership] and the
    Province shall negotiate in good faith what amendments, if any, should be made
    to this Agreement (as may have been amended from time to time during the
    Initial Term) for the Renewal Term. If [the First Nations Partnership] and the
    Province cannot agree on what amendments, if any, should be made to this
    Agreement for the Renewal Term, then this Agreement shall continue in force and
    effect, unamended, during the Renewal Term, unless terminated earlier. .

9.2 Dispute Resolution

In the event that an acceptable resolution of the Dispute is
    not achieved pursuant to section 9.1 and the party giving notice wishes to
    resolve the matter, then the matter shall be referred for determination in
    accordance with Schedule 9.2, which sets out the sole and exclusive procedure
    for the resolution of such Disputes. The award of any arbitration shall be
    appealable by the parties to the appropriate Ontario court on questions of law,
    or questions of mixed fact and law, including, without limitation, matters of
    process and procedure. The Arbitrators, as part of their award, may award costs
    of the arbitration, in their discretion, having regard to the success achieved,
    the good faith of the parties, the encouragement of good faith discussions to
    resolve matters and other relevant factors.

10.1 Non-derogation

(a)
Nothing expressed or implied in this Agreement
    shall be construed so as

to

affect in any manner the jurisdiction of the Province to conduct
    and manage, and to control, licence, administer and regulate in the Province of
    Ontario, the conduct and management of activities pursuant to section 207 of
    the
Criminal Code.

(b)
Nothing expressed or implied in this Agreement
    shall:

(i)
oblige the Province or OLG or any other Agent
    of the Province to conduct and manage or to continue to conduct and manage or
    provide for the operation of any lottery scheme or any other activity or any
    facility, including any casinos;

(ii)
create any interest in favour of the First
    Nations in Ontario, [the First Nations Partnerships predecessor], [the First
    Nations Partnership], any [First Nations Partnerships predecessor] Partner,
    any [First Nations Partnership] Partner or the Chiefs of Ontario in or to any
    Lottery Schemes or in or to any assets of the Province or of OLG or any other Agent
    of the Province, including any casinos, casino assets or other lottery or
    gaming related assets; or

(iii)
limit the right of the Province or OLG or any
    other Agent of the Province to conduct and manage activities under section 207
    of the
Criminal Code
in their sole and absolute discretion in
    accordance with Applicable Laws.

(c)
Nothing in this Agreement shall abrogate or
    derogate from the application and

operation of Section 35 of the
Constitution Act, 1982
to
    or in respect of aboriginal or treaty rights.

(d)
Subject to the terms of section 6.2 of this
    Agreement and the Closing Agreement, nothing in this Agreement, including any
    of the payments required under this Agreement, shall adversely affect, diminish
    or derogate from any policy, program or statutory entitlement or benefit funded
    or provided by the Province to which any one or more [First Nations Partnerships
    predecessor] Partner, [First Nations Partnership] Partner, or any member of [a First
    Nations Partnerships predecessor] Partner or [a First Nations Partnership]
    Partner, was entitled at the Effective Date. For the purposes of this section
    10.1(d), a policy, program or statutory entitlement or benefit is not adversely
    affected where a negative effect or reduction of expenditure is based primarily
    on reasons other than the receipt of funds under this Agreement or the [First
    Nations Partnership Partnership] Agreement.

(e)
Nothing contained in this Agreement shall:

(i)
be deemed or construed or interpreted to
    constitute any form of business relationship or to constitute any party hereto
    a partner, joint venturer or any other form of business associate of the other;

(ii)
constitute any party hereto the agent or legal
    representative of any other party hereto;

(iii)
create any fiduciary or other similar
    relationship between any of the parties; or

(iv)
be deemed to constitute any kind of treaty or
    treaty relationship between the Province and First Nations in Ontario within
    the meaning of Section 35 of the
Constitution Act, 1982
.

10.10 Assignment

(b)
[The First Nations Partnership] acknowledges
    and agrees that the Province may cause an internal reorganization of the
    Government of Ontario or Agents of the Province that may affect OLG and other
    Agents of the Province and may result in the assignment by OLG of its rights
    and obligations under this Agreement to another Agent of the Province or to the
    Province. The Province acknowledges that, notwithstanding any such internal reorganization
    of the Government of Ontario or any Agent of the Province, including OLG, Her
    Majesty the Queen in Right of the Province of Ontario and any Agent of the
    Province that

replaces OLG, shall remain bound by the obligations and
    agreements and shall be entitled to the rights, remedies

and benefits of
    the Province or OLG, as the case may be, under this Agreement.

***

SCHEDULE 1.1(nn)

GROSS REVENUES

1. For purposes of this Agreement, Gross Revenues means,
    in respect of an Agent of the Province (including OLG), the revenues of that
    Agent of the Province, before the deduction of promotional allowances, as
    reported in the Segmented Information notes in the notes to, or as otherwise
    reported in, the audited Consolidated Financial Statements of that Agent of the
    Province and generated from the following:

(a) Lotteries, including on-line games, sports games, instant games and bingo
    gaming;

(b) Slot machines and table games at casinos and
    racetracks; and

(c) Non-gaming activities ancillary to the conduct and
    management of Lottery Schemes, including hotel, food, beverage and other
    services, including the retail value of accommodation, food and beverage
    services and other services provided to gaming patrons on a complimentary
    basis.

Notwithstanding the foregoing and for greater certainty:

(d) Gross Revenues generated from lotteries, slot machines
    and table games and non-gaming activities as set out above shall, for the
    purposes of this Agreement, be determined in accordance with the OLG revenue
    recognition accounting practices and principles set out in section 2 of this
    Schedule 1.1(nn) notwithstanding any changes from and after the date of this
    Agreement in such accounting practices or principles by OLG or any other Agent
    of the Province, provided that If any particular accounting practice or
    principle is not addressed in section 2 of this Schedule 1.1(nn), that
    accounting practice or principle applied by OLG as at March 15, 2006 shall be
    used.

(e) Gross Revenues shall include any revenues generated
    front the conduct and management of any Lottery Scheme in existence as of March
    15, 2006 and any Lottery Scheme which is a new product offering for the
    Province or any Agent of the Province (for the purposes of this Schedule
    1.1(nn), a New Lottery Scheme) that comes into existence from and after March
    15, 2006, which revenues generated from such New Lottery Scheme shall be
    determined in accordance with the accounting practices and principles applied
    to such New Lottery Scheme in the sole discretion of the Province, OLG or any
    other Agent of the Province, as the ease may be, at the time such New Lottery
    Scheme comes into existence.

(f) Gross Revenues shall not include any revenues received
    by the Province, OLG or any other Agent of the Province from the conduct and
    management of the Lottery Scheme, including such conduct and management at any
    gaming facility if, and to the extent that, such revenues so received are not
    retained to the final account of the Province, OLG or any such other Agent of
    the Province.

2. Revenue from lottery games, for which results are
    determined based on a draw, is recognized when the draw takes place. Revenue
    for future draws is deferred and recognized when the draw takes place. Revenue
    from instant games is recognized when the ticket is activated for play by the
    retailer. Revenue from sports wagering games and bingo gaming is recognized
    when the ticket is sold to the consumer. Tickets issued as a result of the
    redemption of free ticket prizes are not recorded as revenue.

Gaming revenue from slot and table game operations
    represents the net win from gaming activities, which is the difference between
    amounts earned through gaming wagers less the payouts from those wagers.

Non-gaming revenue includes revenue from hotel, food and
    beverage, entertainment centre and other services and is recognized at the time
    the services are rendered to patrons. This also includes the retail value of
    accommodations, food and beverage and other services provided to patrons on a
    complimentary basis.

***

SCHEDULE 9.2

DISPUTE RESOLUTION

DEFINITIONS

1. In this Schedule 9.2:

(a)
Arbitrators
means the panel of three
    arbitrators appointed pursuant to paragraphs 6 and 7;

(b)
Chair
means the chair appointed pursuant to
    paragraph 7;

(c)
Claimant
means a Party that commences a
    dispute resolution pursuant to paragraph 4;

(d)
Disputes
has the meaning attributed to such
    term in section 9.1 of the Agreement;

(e)
Party
means a party to a Dispute;

(f)
paragraph
means a paragraph of this Schedule
    9.2; and

(g)
Respondent
means a Party who is not the
    Claimant, and the term Respondents shall, where there is only one Respondent,
    refer to that Respondent.

GENERAL

2. All Disputes which are to be determined according to
    the terms of this Schedule 9.2 pursuant to section 9.2 of the Agreement shall
    be arbitrated in accordance with the provisions of the
Arbitration Act,
    1991
, S.O. 1991, c. 17 (the Arbitration Act) except to the extent that
    those provisions are expressly modified by the provisions of the Agreement and
    this Schedule 9.2.

3. No individual shall be appointed to arbitrate a Dispute
    pursuant to this Schedule 9.2 unless he or she agrees in writing to be bound by
    the provisions of this Schedule 9.2.

COMMENCEMENT OF DISPUTE RESOLUTION

4. A Party may commence a dispute resolution as Claimant
    by delivering a written notice of arbitration (the Notice of Arbitration) to
    each of the Respondents.

5. The Notice of Arbitration shall include in the text or
    in one or more attachments:

(a) the full names, descriptions and addresses of the
    Parties;

(b) a demand that the Dispute be referred to arbitration pursuant
    to this Schedule 9.2;

(c) a general description of the Dispute;

(d) the relief or remedy sought; and

(e) the name of the person the Claimant nominates as an
    arbitrator.

6. The arbitrator nominated by the Claimant shall be
    independent of each Party and shall not be or have been in the employ of or on
    contract with the Claimant at any time and shall be qualified by education and
    experience to determine the subject matter of the Dispute. Such qualified
    arbitrator nominated by the Claimant shall be one of the panel of Arbitrators who
    will resolve the Dispute. Within 20 days of the date of receipt by the
    Respondent of the Notice of the Arbitration, the Respondents shall by notice to
    the Claimant, jointly appoint a second arbitrator to serve on the panel of
    Arbitrators who will resolve the Dispute, and the arbitrator nominated by the
    Respondents shall also be independent of each Party and shall not be or have
    been in the employ of or on contract with any respondent at any time and shall
    be qualified by education and experience to determine the subject matter of the
    Dispute.

7. Within 10 days of the appointment of the second
    arbitrator by the Respondents, the appointees of the Claimant and Respondents shall,
    by notice to the Parties, appoint a third and final arbitrator to act as chair of
    the Arbitrators, failing which a chair shall be appointed by a judge of the
    Superior Court of Justice of Ontario on the application of any Party on notice
    to all the other Parties. Such chair shall be independent of each Party and shall
    riot be or have been in the employ of or on contract with any Party at any time
    and shall be qualified by education and experience to determine the subject
    matter of the Dispute.

8. Subject to the Arbitration Act, the Agreement and this
    Schedule 9.2, the Arbitrators may conduct the arbitration in such manner as the
    Arbitrators consider appropriate.

PLEADINGS

9. The following shall apply to the arbitration of any
    Dispute:

(a) within 10 days of the appointment of the three
    Arbitrators, the Claimant shall deliver to all the Respondents and the
    Arbitrators a written statement (the Statement) concerning the Dispute
    setting forth, with particularity, the Claimants position with respect to the
    Dispute and the material facts upon which the Claimant intends to rely;

(b) within 15 days after the delivery of the Statement,
    each Respondent shall deliver to the Claimant and the Arbitrators a written
    response (an Answer) to the Statement setting forth, with particularity, the
    Respondents position on the Dispute and the material facts upon which the
    Respondent intends to rely;

(c) if any Respondent fails to deliver an Answer within
    the time limit in paragraph 9 (b), that Respondent shall be deemed to have
    waived any right to provide an Answer to the Statement and the arbitration may
    continue without further notice to that Respondent;

(d) within 10 days after the earlier of: (i) the day all
    Answers have been delivered, and (ii) the 15th day referred to in paragraph
    9(b), the Claimant may deliver to all the Respondents and the Arbitrators a
    written reply (a Reply) to the Answer of each Respondent, setting forth, with
    particularity, the Claimants response, if any, to the Answer;

(e) within the time limit in paragraph 9(b), a Respondent
    may also deliver to the Claimant, each other Respondent and the Arbitrators a
    counter-statement (a Counter-Statement) setting forth, with particularity,
    any additional Dispute for the Arbitrators to decide. Within 15 days of the
    delivery of a Counter-Statement, the Claimant shall deliver to each Respondent
    and the Arbitrators an Answer to the Counter-Statement. If the Claimant fails
    to deliver an Answer to the Counter-Statement within such 15-day period, the
    Claimant shall be deemed to have waived any right to provide an Answer to the
    Counter-Statement. Within 10 days after the delivery of an Answer to the
    Counter-Statement, the Respondents may deliver to the Claimant and the
    Arbitrators a Reply to such Answer. Any Dispute submitted to arbitration in
    accordance with this paragraph 9(e) shall be governed by, and dealt with as if
    it were the subject of a Statement in accordance with, this Schedule 9.2,
    except that it shall be decided by the Arbitrators already appointed, and shall
    be determined by the Arbitrators accordingly; and

(f) the time limits referred to in paragraphs 9(a) to 9(f)
    may be extended by the Chair for such period not to exceed an aggregate of 30
    days for such reasons as the Arbitrators in the Arbitrators discretion may
    determine upon application in writing made to the Arbitrators by the Claimant
    or any Respondent on notice to each other Party to the arbitration, either
    before or within five days after the expiry of the relevant time limits and, in
    the event that the other Party or Parties wishes to oppose the application, the
    other Party or Parties shall be given an opportunity to make submissions on the
    application.

The Parties to the Agreement have set the time limits in
    this paragraph 9 after due consideration of the amount of time necessary to
    complete each step and it is their express desire that no extension of any time
    limit shall be granted except in extraordinary circumstances, the onus for the
    proof of the existence of which lies on the Party seeking an extension.

CASE CONFERENCES

10. Within 10 days of the appointment of the three
    Arbitrators, the Chair shall convene a case conference for the determination of
    any preliminary or interlocutory matter or to provide for planning and
    scheduling of the arbitration or to determine the timing or desirability of expert
    reports.

[1]
The formal name of OLG is Ontario Lottery and Gaming Corporation.
Ontario is known formally in these proceedings as
Her Majesty
    the Queen in right of Ontario. The First Nations Partnership is known formally
    as the Ontario First Nations (2008) Limited Partnership.

[2]
As noted above, u
nder s. 9.2. of the Agreement, there may be
    an appeal from any arbitration award only on questions of law or questions of
    mixed fact and law; there is no provision for an appeal on questions of fact.

[3]
The
Arbitration Act
, R.S.B.C. 1996,
    c. 55, was repealed and replaced in 2020 by the
Arbitration Act
, S.B.C. 2020. Section
    59(2) of the new Act likewise limits appeals to questions of law.

[4]

This court recently granted leave to appeal in another case
    involving an appeal from a commercial arbitration award that may consider
    whether
Vavilov
changed the standard of review principles in
Sattva
and
Teal Cedar
: see
Tall Ships Landing Devt. Inc. v. City of
    Brockville
, 2019 ONSC 6597 and
Tall Ships Devt. Inc. v. City of Brockville
, 2020 ONSC 5527, leave to appeal to Ont. C.A. granted, M51065 (July
    22, 2021).


WARNING

The President of the panel hearing this
    appeal directs that the following should be attached to the file:

An order restricting publication in this
    proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or (4) or 486.6(1) or (2)
    of the
Criminal Code
shall continue.  These sections of
the Criminal
    Code
provide:

486.4(1)       Subject to subsection
    (2), the presiding judge or justice may make an order directing that any
    information that could identify the victim or a witness shall not be published
    in any document or broadcast or transmitted in any way, in proceedings in
    respect of

(a)     any of the following offences;

(i)      an offence under section 151,
    152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1, 172, 172.1, 172.2,
    173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02, 279.03, 280, 281,
    286.1, 286.2, 286.3, 346 or 347, or

(ii)      any offence under this Act, as
    it read at any time before the day on which this subparagraph comes into force,
    if the conduct alleged involves a violation of the complainants sexual
    integrity and that conduct would be an offence referred to in subparagraph (i)
    if it occurred on or after that day; or

(iii)     REPEALED: S.C. 2014, c. 25,
    s. 22(2), effective December 6, 2014 (Act, s. 49).

(b)     two or more
    offences being dealt with in the same proceeding, at least one of which is an
    offence referred to in paragraph (a).

(2)     In proceedings in respect of the
    offences referred to in paragraph (1)(a) or (b), the presiding judge or justice
    shall

(a)     at the first reasonable
    opportunity, inform any witness under the age of eighteen years and the victim
    of the right to make an application for the order; and

(b)     on application made by the
    victim, the prosecutor or any such witness, make the order.

(2.1) Subject to subsection (2.2), in
    proceedings in respect of an offence other than an offence referred to in
    subsection (1), if the victim is under the age of 18 years, the presiding judge
    or justice may make an order directing that any information that could identify
    the victim shall not be published in any document or broadcast or transmitted
    in any way.

(2.2) In proceedings in respect of an
    offence other than an offence referred to in subsection (1), if the victim is
    under the age of 18 years, the presiding judge or justice shall

(a) as soon as feasible, inform the
    victim of their right to make an application for the order; and

(b) on application of the victim or the
    prosecutor, make the order.

(3)     In proceedings in respect of an
    offence under section 163.1, a judge or justice shall make an order directing
    that any information that could identify a witness who is under the age of
    eighteen years, or any person who is the subject of a representation, written
    material or a recording that constitutes child pornography within the meaning
    of that section, shall not be published in any document or broadcast or
    transmitted in any way.

(4)     An order made under this section
    does not apply in respect of the disclosure of information in the course of the
    administration of justice when it is not the purpose of the disclosure to make
    the information known in the community. 2005, c. 32, s. 15; 2005, c. 43, s. 8(3)(b);
    2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22, 48; 2015, c. 13, s.
    18.

486.6(1)       Every person who fails to
    comply with an order made under subsection 486.4(1), (2) or (3) or 486.5(1) or
    (2) is guilty of an offence punishable on summary conviction.

(2)     For greater certainty, an order
    referred to in subsection (1) applies to prohibit, in relation to proceedings
    taken against any person who fails to comply with the order, the publication in
    any document or the broadcasting or transmission in any way of information that
    could identify a victim, witness or justice system participant whose identity
    is protected by the order. 2005, c. 32, s. 15.

COURT OF APPEAL FOR ONTARIO

CITATION: R.
    v. T.C., 2021 ONCA 595

DATE: 20210901

DOCKET: C67307

Paciocco, Nordheimer and Coroza JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

T.C.

Appellant

William Gilmour, for the appellant

Katie Doherty, for the respondent

Heard: August 31, 2021 by videoconference

On appeal from the convictions entered on May 23, 2019 by
    Justice Gordon D. Lemon of the Superior Court of Justice sitting with a jury.

REASONS FOR DECISION

[1]

T.C. appeals his convictions for sexual exploitation, sexual assault,
    and sexual interference. At the conclusion of the hearing, we dismissed the
    appeal with reasons to follow. We now provide our reasons.

[2]

The appellant was accused of sexually abusing his stepdaughter over a
    period of three years from the time when the stepdaughter was 13 until she was
    16. It is alleged that the abuse occurred two to three times per week.

[3]

The appellant advances three grounds of appeal. First, he alleges that
    the trial judge erred in not allowing him to adduce evidence regarding a
    particular email that the stepdaughter had told her friends she had obtained
    from the appellants email account. The appellant wished to advance an argument
    that this email, along with some related messages, demonstrated the technical
    skill that the stepdaughter possessed that would have allowed her to fabricate certain
    earlier text messages that she had and that were placed into evidence.

[4]

The trial judge ruled that the emails were inadmissible. He noted that
    the emails were created some months after the appellants arrest and raised an
    issue that was collateral to the issues to be addressed in the trial. He also
    found that the emails were of little probative value. The trial judge
    consequently concluded that the emails were irrelevant and refused to allow them
    to be placed into evidence.

[5]

We do not see any error in the trial judges conclusion on this issue. We
    do not agree that the emails necessarily constituted a collateral matter since
    it is possible that the emails could have supported a suggestion of animus by
    the complainant. However, we would defer to the trial judges balancing of the
    probative value versus prejudicial effect of this evidence in respect of its
    admissibility. Lastly, we note that the refusal to admit these emails did not
    hamper the appellants ability to cross-examine the stepdaughter regarding the
    allegation that the much earlier text messages, that were put into evidence,
    had been fabricated by her.

[6]

The second ground of appeal is that the trial judge, in his instructions
    to the jury, improperly emphasized a particular piece of evidence, that is, a
    towel that was found by the police and that had the appellants DNA on it. We
    do not see any merit to this argument. The portion of the final instructions
    about which the appellant complains was part of the trial judges recitation of
    the Crowns position at trial. The trial judge simply repeated what the trial
    Crown had advanced as a submission regarding the relevance of the towel and
    what the jury should take from it. The trial judge did not advance this submission
    himself nor did he, in any way, suggest that he agreed with it. We also note
    that a draft of the final instructions, with this portion included, was
    provided to counsel and no objection was made to it.

[7]

The third ground of appeal is that the trial judge erred in his answer
    to a question that the jury asked regarding a test that the complainant said
    she had undergone that related to her allegations. The trial judge properly
    told the jury that there was no evidence regarding the results of this test and
    that they should not speculate regarding it. We also note that the trial
    judges response to the question was the same in content that defence counsel
    had asked for as a response to the question.

[8]

For these reasons, the appeal was dismissed.

David M. Paciocco
    J.A.

I.V.B. Nordheimer
    J.A.

S. Coroza J.A.