Background

The Wauzhushk Onigum Nation (WON) ran a charitable gaming hall on its reserve under a provincial licence issued in the 1990’s, and had long been interested in expanding the hall, Golden Eagle, into a full casino. Golden Eagle experienced financial and legal troubles, and audits identified integrity and compliance issues. WON engaged in discussions with the province for approximately eight years about expansion, which discussions were deferred while the province developed the new gaming policies described below.

The Ontario Cabinet decided in 2012 to modernize gaming in the province, and issued a directive to Ontario Lottery and Gaming Corporation (OLG) to increase net profits and shift operation of gaming sites to private operators through a competitive procurement process. It also directed OLG to ensure the participation of, and economic benefits to, First Nations.

OLG issued a Request for Information (RFI) to allow interested parties, including WON, to give feedback on the proposed business model, geographic areas for gaming zones, and whether bidders could bid, though “gaming bundling”, on more than one zone. One proposed zone included part of WON’s reserve.

OLG met with those who responded to the RFI, including WON, then issued a Request for Pre-Qualification (RFPQ), which included gaming zones and gaming bundles. OLG selected two prequalified bidders for the Request for Proposal (RFP), including Leaf Entertainment, which had entered into a Memorandum of Understanding with WON about profit sharing of a casino’s proceeds.

OLG selected a competitor to Leaf Entertainment for the region where WON was located, and entered into asset and operating agreements with the successful proponent, Gateway.

WON sought judicial review of Cabinet’s and OLG’s decisions to issue a public tender, to bundle the gaming zones, and to enter into the asset and operating agreements. Essentially, WON argued that it expected OLG to accept WON’s proposal to convert Golden Eagle into a casino, and that damages flowed from the non-fulfilment of that expectation. Its main arguments were breach of procedural fairness and the duty to consult First Nations.

An interesting note is that WON did not directly challenge the selection of Gateway or the fairness of the tendering process.

Court Decision

Following well-established case law, in Wauzhushk Onigum First Nation v. Minister of Finance (Ontario), 2019 ONSC 3491, the court ruled that it had no authority to review a Cabinet decision – absent abuse of power or bad faith. This general principle derives from the courts’ reluctance to adjudicate purely political decisions. The decision to bundle the gaming – allowing bidders to bid in more than one geographic zone – was also immune from court review as OLG made this decision due to a Cabinet directive, rather than a statute or regulation.

The court also reiterated the principle that a public tender process is not subject to public law remedies such as those sought by WON. During all stages – RFI, RFPQ and RFP – OLG consulted with WON as one of many stakeholders, which was sufficient to satisfy the low threshold of procedural fairness owed.

In Haida Nation v. British Columbia, 2004 SCC 73, the Supreme Court of Canada ruled that the Crown has a duty to consult with First Nations when the Crown is considering actions or decisions that may affect aboriginal rights. WON argued that it had asserted its right to gaming in the early 1990’s when its charitable gaming licence was issued, and that the gaming modernization programme infringed that right.

Following two Supreme Court of Canada decisions rendered in the period between the early 1990’s and Ontario’s gaming modernization, the court found that, as commercial gaming was a twentieth century phenomenon that did not exist among Aboriginal peoples, it was not an aboriginal right. Further, Cabinet’s and OLG’s actions in modernizing gaming did not exacerbate any impacts on WON. Therefore, the duty to consult was not triggered in this case. The strength of WON’s arguments was also weakened significantly by its six year delay in launching this challenge.

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.