Canada – Challenge to Arbitrator’s Integrity to be Determined Using Bias Test

Nov 2021

This article first appeared on the Arbitration Matters blog, here.

In Farmer v Farmer, 2021 ONSC 5913, the appellant wife appealed three arbitral awards arising out of a five-day family arbitration pursuant to s. 45(6)(a) of the Ontario Arbitration Act, 1991, SO 1991, c. 17. The wife’s grounds for appeal included that the arbitrator’s reasons were deficient and that the arbitrator’s “Clarification/Explanation Award” rendered after the parties complained that he had omitted certain issues in his first award, was an “after-the-fact” justification for the first award. The arbitrator admitted that he had had difficulty with his dictaphone when he had drafted the first award so that certain portions of it were inadvertently omitted, but said in the “Clarification/Explanation Award” that all issues had been considered. Justice Finlayson found that the “presumption of integrity” which applies to judges also applies to arbitrators and that the wife had to meet a test “similar to” the “reasonable apprehension of bias test” to rebut that presumption. She did not do so and this ground of appeal was dismissed. Justice Finlayson also concluded that the arbitrator’s reasons were insufficient, and substituted his own decision on one issue.

The arbitrator released the first award, the main decision, on February 12, 2019.  The second decision dated March 3, 2019, was entitled “Clarification/Explanation Award”, which the arbitrator released after both parties wrote to him to advise that he had omitted to deal with two issues in the first award.  The arbitrator declined to make any of the changes requested by the parties.  He found that the issue raised by the wife was covered in the first award and the issue raised by the husband was never raised during the arbitration and constituted a post-hearing request for new relief. The third award, dated July 28, 2019, dealt with the costs of the arbitration.

In the “Clarification/Explanation Award”, the arbitrator asserted that his intention was to deal with all claims in his first award, but that he had encountered technical difficulties with the dictation equipment while drafting the first award. As a result, certain portions of his dictation were missing, which he did not realize when he issued the first award.

The wife’s grounds for appeal were broad and included that:

(a) The arbitrator’s reasons were insufficient; and

(b) The arbitrator’s second “Clarification/Explanation Award” was not a “reasoned decision”, but an “after-the-fact” justification of the initial result to defend against the fact that he forgot to deal with one of the wife’s claims in the first award.

In addressing the first appeal ground, Justice Finlayson reviewed the applicable legal principles and found that the arbitrator’s reasons were insufficient.  They failed to explain why he had come to certain conclusions and what he meant by having taken a “liberal” view of the applicable law. Further they did not address the wife’s oral evidence, the documentary evidence, and the circumstantial evidence in any detail and explain, “why it should not have resulted in the drawing of any inferences to fill gaps, if any.”   Justice Finlayson also found that the arbitrator had mischaracterized the wife’s evidence saying that it consisted merely of a “bold statement”.  The arbitrator then failed to explain, with reference to the evidence, why he took a specific approach to the relevant law, “apart from making the general, conclusory statements that the evidence was too confusing, unclear, and lacked particulars”, and what evidence he relied upon to support certain conclusions.  In the alternative, Justice Finlayson found that the arbitrator had misapprehended the evidence.

In addressing the second appeal ground that the arbitrator’s “Clarification/Explanation Award” was not a “reasoned decision”, but an “after-the-fact” justification of the initial result to defend against the fact that he forgot to deal with one of the wife’s claims in the first award, Justice Finlayson viewed this as a challenge to the integrity of the arbitrator.  He found that the arbitrator had quite properly issued the second award as he was asked to do so pursuant to sections 40 and 44 of the  Arbitration Act, 1991. The real issue was whether the arbitrator, having been made aware of an error in the first award, allowed that error to drive the contents of the second “Clarification/Explanation Award” in an inappropriate attempt to save the first award.   

Justice Finlayson referred to the principle that a trial judge is entitled to a presumption of integrity. While there was no law before him as to whether this presumption applies to arbitrators, he was prepared to assume that it does. He relied upon R. v. Arnaout, 2015 ONCA 655 (at paras. 18 and 19) for the proposition that the test to displace the presumption of integrity is “similar to” the test for reasonable apprehension of bias.  The wife must present, “cogent evidence showing that, in all the circumstances, an informed and reasonable observer would think that the reasons are an after-the-fact justification for the decision rather than an articulation of the reasoning that led to the decision”.

The arbitrator asserted that he was aware of the issue the wife claimed he had not considered in the first award because it was referred to in a document. However, Justice Finlayson found that this explanation was not dispositive of the issue; there was a fundamental difference between being aware of an issue and saying that it was also considered/analyzed as part of the reasoning.  However, he found that the arbitrator’s candor in admitting that portions of his reasons were omitted because of problems with his dictaphone, was an indication of honesty.  At paragraph 133, Justice Finlayson also said that one plausible explanation for what had occurred was, that the tracing evidence was tedious, the arbitrator was confused by it, the arbitrator then lost his dictation making matters worse, and as such he misapprehended the evidence in finalizing the award, that he was trying to dictate (but lost) in the first place.” He found that the wife had not displaced the presumption of integrity. 

However, because of the insufficiency of the reasons of the arbitrator, Justice Finlayson found that the arbitrator erred and that the record allowed him to substitute his own decision on one of the other issues raised in the wife’s appeal. He dismissed the remaining grounds of appeal.

Editor’s notes:

First, R. v. Arnaout, 2015 ONCA 655, which Justice Finlayson relied upon with respect to the presumption of integrity and the test to displace it, states as follows:

[18] In R. v. Teskey2007 SCC 25, [2007] 2 S.C.R. 267, at paras. 19-21, the Supreme Court held that judges benefit from a presumption of integrity. The presumption of integrity encompasses the expectation that judges will strive to overcome personal bias and partiality and will carry out the oath of their office to the best of their ability. An adjudicator is impartial when he or she is disinterested in the outcome and is open to persuasion by the evidence and the submissions. A judge must both weigh the case impartially in his or her own mind and ensure that the circumstances objectively demonstrate his or her impartiality to an informed and reasonable observer.

[19]The test to displace the presumption of integrity is similar to the test to show a reasonable apprehension of bias. Bias, partiality and lack of integrity are all similar concepts; the bar to establish any one of them is high because each calls into question both the integrity of the presiding judge and the administration of justice itself: Teskey, at para. 32. To rebut the presumption of integrity in cases featuring post-decision reasons, the appellant must present cogent evidence showing that, in all the circumstances, an informed and reasonable observer would think that the reasons are an after‑the-fact justification for the decision rather than an articulation of the reasoning that led to the decision: Teskey, at para. 21.

[20]In Teskey, the trial judge announced a decision with reasons to follow but did not provide reasons until 11 months later. In R. v. Cunningham, 2011 ONCA 543, 106 O.R (3d) 641, on which the appellant also relies, the trial judge delayed 25 months between her decision and her reasons. The question in those cases was whether an informed and reasonable observer would believe the reasons as a whole were an after-the-fact justification for a decision announced months or years earlier.

[21]This case fits only inexactly into that frame. Here, the trial judge gave lengthy reasons when he convicted the appellant. He added only a few words when he amended his reasons over 17 months later. Nevertheless, we can see no principled reason why the test set out in Teskey and Cunningham should not apply.  

[22]Whether dealing with reasons released in their entirety after a lengthy delay or an amendment to previously delivered reasons, an appellate court must determine whether the trial judge’s explanation for why he reached a particular conclusion constitutes an after-the-fact justification rather than an articulation of the reasoning that led to the decision.

[23] Therefore, if a judge amends his or her reasons, the test is whether the appellant has presented cogent evidence showing that, in all the circumstances, an informed and reasonable observer would think that the amendment was an after-the-fact justification for the verdict.

Second, this case sets out a helpful summary of the principles to be applied by a court considering the sufficiency of the arbitrator’s reasons:

“[110] An arbitrator’s responsibilities include the duty to deliver reasons.  Section 38(1) of the Arbitration Act, 1991requires this.  Where reasons are unclear or lacking, the parties may ask the arbitrator for an explanation.  The arbitrator may be compelled to give an explanation by the Court.  See sections 40(1) and (2).  I mention these provisions because, although the importance of reasons generally has been dealt with many times in the case law, these statutory provisions further underscore their importance in the arbitral context. 

[111] Reasons serve three main functions:  they communicate to the affected parties why the decision was made, they provide accountability, and they permit effective appellate review.  They also focus the decision-maker, to help ensure fair and accurate decision-making.  See R. v. R.E.M.,2008 SCC 51 ¶ 11, 12; see also R. v. Sheppard2002 SCC 26 ¶ 15, 24. 

[112] At ¶35, 43, 44 of  R. v. R.E.M., the Supreme Court summarized three principles that guide appellate courts when considering what is required of a trier in terms of reasons.  First, appellate courts should take a functional, substantive approach to the sufficiency of reasons.  They are to read the reasons as a whole, in the context of the evidence and arguments at trial, and with an appreciation for the purposes or functions for which they are delivered.

[113] Second, the basis for the decision must be “intelligible”, meaning capable of being made out, and logically connected to its basis.  The trier need not set out his or her process in arriving at the decision in detail, nor must he or she necessarily provide detailed recitations of the evidence or the law.  Rather, the reasons must show, when read in context of the record and the submissions, that the trier has “seized the substance of the matter”.  The degree of detail in any particular case may vary with the circumstances.

[114] Third, to determine whether the logical connection exists, the appellate court should look to the evidence, the submissions and the history of the trial to determine the “live issues” as they emerged during the trial. 

[115] An appellate court must start from a stance of deference towards the trier’s perception of the facts.  It must ask itself whether the reasons in context explains (sic) the basis for the decision.  If the evidence is contradictory, it should ask itself whether the trier recognized and dealt with the contradictions.  It should do so similarly with difficult or novel questions of law.  The critical question to ask is whether the reasons, considered in the context of the evidentiary record, the live issues as they emerged at trial and the submissions of counsel, deprive the appellant of the right to meaningful appellate review?  If the appellate court concludes that the trier, on the record as a whole, did not deal with the substance of a critical issue, then it may conclude that the deficiency constitutes an error in law.  See R. v. R.E.M. ¶ 52-57.

[116] See also Canada (Minister of Citizenship and Immigration) v. Vavilov2019 SCC 65 ¶ 79-91”.

Paragraphs 81, 85, and 91 of the Vavilov decision (made in the administrative tribunal context), which Justice Finlayson relied upon, state:

“[81]   Reasons facilitate meaningful judicial review by shedding light on the rationale for a decision: Baker, at para. 39. In Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board)2011 SCC 62, [2011] 3 S.C.R. 708, the Court reaffirmed that “the purpose of reasons, when they are required, is to demonstrate ‘justification, transparency and intelligibility’”: para. 1, quoting Dunsmuir, at para. 47; see also Suresh v. Canada (Minister of Citizenship and Immigration)2002 SCC 1, [2002] 1 S.C.R. 3, at para. 126. The starting point for our analysis is therefore that where reasons are required, they are the primary mechanism by which administrative decision makers show that their decisions are reasonable — both to the affected parties and to the reviewing courts. It follows that the provision of reasons for an administrative decision may have implications for its legitimacy, including in terms both of whether it is procedurally fair and of whether it is substantively reasonable.”

“[86]    Attention to the decision maker’s reasons is part of how courts demonstrate respect for the decision-making process: see Dunsmuir, at paras. 47-49…”

“[91]     A reviewing court must bear in mind that the written reasons given by an administrative body must not be assessed against a standard of perfection. That the reasons given for a decision do “not include all the arguments, statutory provisions, jurisprudence or other details the reviewing judge would have preferred” is not on its own a basis to set the decision aside: Newfoundland Nurses, at para. 16.”

author

Lisa Munro

Lisa Munro is a partner at Lerners LLP, whose practice is limited to work as an arbitrator in domestic and international commercial arbitrations (both ad hoc and under institutional rules). She brings to this role more than 25 years of experience as counsel in commercial/business litigation and both international and…

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