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NATURAL JUSTICE - Reasonable apprehension of bias

Thursday, May 31, 2018 @ 8:40 AM  

Lexis Advance® Quicklaw®
Appeal by the owners of a strata unit from the dismissal of their application for judicial review of an arbitration award on the basis of a reasonable apprehension of bias. The appellants were concerned about the installation of a HVAC system on the balcony next door as they thought this would disturb their enjoyment of their suite. The appellants initiated arbitration proceedings. Three arbitrators were appointed although the appellants had preferred a single arbitrator to minimize costs. The appellants nominated M, a lawyer, to act as arbitrator. The Strata Corporation did not accept this choice of arbitrator and nominated B. B, after receiving submissions not disclosed to the appellants about the Strata Corporation’s preference for three arbitrators, nominated a third arbitrator. The arbitrators ruled against the appellants. The appellants then discovered that the Strata Corporation’s lawyer had four private communications with the arbitrators during the course of the arbitration proceeding that had never previously been disclosed to the appellants, who were self-represented throughout the arbitration proceedings. The ex parte conversations had to do with the decision to be made by two of the arbitrators as to the number of arbitrators, the prospects of mediation, including what the Strata Corporation’s mediation proposal would be, and the implication that the rest of the owners supported the costs of arbitration. The appellants sought to quash the entire arbitration proceeding on the basis of procedural unfairness, including a reasonable apprehension of bias on the part of the arbitrators due to the ex parte communications. The chambers judge accepted the Strata Corporation’s argument that the appellants were not prejudiced by the ex parte communications. The chambers judge made no finding on the question of whether the four ex parte communications gave rise to a reasonable apprehension of bias.

HELD: Appeal allowed. The chambers judge erred in failing to find that the four ex parte communications between the Strata Corporation’s lawyer and the arbitrators, viewed practically and reflected upon, would lead an informed person to conclude that the arbitrators would likely not decide the matter fairly. These communications created a reasonable apprehension of bias. By allowing ex parte communications about the arbitration proceeding to take place with the lawyer, the arbitrators placed themselves in an impossible position and undermined their appearance of neutrality. Ex parte communications that touched on procedural matters were not exempt from the principles of procedural fairness that required the maintenance of the appearance of absolute impartiality on the part of the decision-maker. The Strata Corporation’s assumption that B, as the Strata’s nominee, could engage in private communications with its lawyer was contrary to the expected impartiality of arbitrators. The Strata Corporation’s private lobbying and expectation that B as nominee would be influenced by the Strata Corporation’s desired outcome destroyed any appearance of adjudicative neutrality. Their off-the-record relationship was ongoing, which suggested that there continued to be something special about B being the Strata Corporation’s nominee.

Hunt v. Strata Plan LMS 2556, [2018] B.C.J. No. 745, British Columbia Court of Appeal, R. Goepel, G.J. Fitch JJ.A. and S.A. Griffin J. (ad hoc), April 26, 2018. Digest No. TLD-May282018008