Alberta – court dismisses second attempt to challenge award for breach of natural justice – #088

Madam Justice Kim D. Nixon in Driscoll v. Hautz, 2018 ABQB 426 refused leave to an arbitral party seeking to challenge a final award for alleged bias.  Having lost a first application for leave to appeal a final award under under Alberta’s Arbitration Act, RSA 2000, c A-43, the party sought to raise new facts regarding bias to challenge the award.  On the second application, the party claimed that those facts were still timely because they fell within an earlier allegation of breach of natural justice.  Nixon J. dismissed the second attempt as being out of time, barred by the doctrine of res judicata and not evidence of a reasonable apprehension of bias.

Following the termination of their common law relationship, Mr. Robert Dean Driscoll (“Applicant”) and Ms. Amie Rebecca Hautz (“Respondent”) agreed to have an arbitrator determine property division and support issues.

In the application before Nixon J., Applicant applied to set aside the award on the basis that there was a reasonable apprehension of bias.  The application was, in fact, a re-application. Applicant had already sought leave to appeal the arbitrator’s award under the Arbitration Act.  In that initial application, Applicant alleged errors of law and a breach of natural justice.  Madam Justice Jolaine A. Antonio in Driscoll v. Hautz, 2017 ABQB 168 dismissed the application as failing to meet the criteria established for appeals under sections 44(2) and 44(2.1) of the Arbitration Act.

Applicant’s second application alleged that bias arose as a result of a letter sent by Respondent’s counsel to the arbitrator.  The letter, sent between the end of hearing and before the release of the award on April 19, 2016, issued in response to a lengthy e-mail sent by Applicant to numerous individuals.  In the e-mail, among other statements, Applicant made comments about Respondent’s evidence at the hearing.  Respondent’s counsel’s letter was a ‘cease and desist’ letter and contained strong comments about the consequences the letter writer asserted should follow from Applicant circulating the e-mail. The letter asked the arbitrator to issue a forceful direction against Applicant on the basis that Applicant’s e-mail breached an earlier direction by the arbitrator to both parties not to make disparaging comments about each other to family members or business associates.

Applicant was aware of Respondent’s counsel’s letter before the award was released but submits that the bias was only made apparent to him once the arbitrator released the costs award.  In that award, the arbitrator mentioned Applicant’s e-mail.  Applicant asserts that the bias appears in the arbitrator’s findings of fact in which the arbitrator preferred Respondent’s evidence over his despite what Applicant claimed were inconsistencies in Respondent’s evidence.  Applicant argued that those preferences, along with other aspects of the arbitrator’s award, demonstrated that the arbitrator was influenced against his credibility.

The award was released on April 19, 2016.  Applicant filed his first application for leave to appeal on May 20, 2016, within the thirty (30) day delay set by the Arbitration Act.  On August 24, 2016, the court set the application for leave to appeal for hearing on February 9, 2017, with September 12, 2017 reserved to argue the appeal if leave was granted.  Antonio J. heard the application and released her decision on March 9, 2017.  (Note: her decision dates her reasons as of March 9 but the decision was posted March 10).

Nixon J. noted that the issue of a breach of natural justice was not raised until Applicant filed a June 21, 2017 affidavit opposing Respondent’s motion for security for costs.

[12] At the application for leave, all bases upon which the Applicant challenged the Award were argued; that is, whether there were errors of law or a breach of the rules of natural justice. There was no mention of a reasonable apprehension of bias even though the Costs Award had been released by this time.

 [13] Three days after Justice Antonio released her decision, Mr. Driscoll’s counsel informed Ms. Hautz’s counsel that since there was an argument that Mr. Driscoll had been denied natural justice arising from the alleged failure to consider evidence, he was entitled apply to set aside the arbitrator’s award without leave and he intended to proceed with a further application to set aside the Award. Again, Mr. Driscoll’s counsel made no mention of a reasonable apprehension of bias.

Nixon J. identified three (3) issues for her to decide:

(i) Is the application out of time?

(ii) Is the matter res judicata?

(iii) Was there a reasonable apprehension of bias?

For the first issue – whether the application was out of time – Applicant submitted that his application was timely because he had raised the breach of natural justice in his May 20, 2016 application and that breach includes a reasonable apprehension of bias.  He also argued that Korogonas v Andrew (1992), 1992 CanLII 6102 (AB QB), 1 Alta LR (3d) 316 (QB) (reversed on other grounds (1993), 1993 ABCA 309 (CanLII), 14 Alta LR (3d) 153 (CA)) allowed for the court to exercise discretion to permit relief not expressly mentioned in a notice of application.

Nixon J. acknowledged that Korogonas v. Andrew did allow for adequate notice of relief to be given by alternative means but held that Applicant failed to give adequate notice, either in his notice of application or otherwise.

[20] I do not find that Mr. Driscoll gave adequate notice here. While in his May 20, 2016 notice Mr. Driscoll alleged a breach of the rules of natural justice respecting the failure to consider evidence, it was not until his June 21, 2017 affidavit, more than a year after the Award was released (well outside the 30 day limit in the Act to apply to set aside an award) that he made any mention of a reasonable apprehension of bias.

For the second issue – whether the doctrine of res judicata prevented Respondent from applying – Nixon J. looked to the Alberta Court of Appeal’s reasons in Hill v Hill, 2016 ABCA 49 and reproduced the Court’s explanation of the purpose behind the doctrine at paras 27-28.  Nixon J. had to consider this doctrine if Applicant was correct and the ground had been raised before.  The doctrine would apply because, if the ground had been raised, then Antonio J. had already dealt with.

The doctrine applies when there has been a final determination of a matter between the parties, adding that the doctrine “is not limited to matters that were expressly raised and adjudicated by the court but also to matters that ought properly to have been raised.

[23] Mr. Driscoll expressly raised breach of the rules of natural justice in his May 20, 2016 notice and in the hearing before Justice Antonio. As that matter was ruled upon, Mr. Driscoll could not seek to set aside the Award on the basis of the failure to consider evidence. Likewise, he cannot now seek to set aside the Award on the basis that a different breach of the rules of natural justice occurred. As stated in Hill, parties must bring their entire and best case once.

Nixon J. dismissed Applicant’s claim that the fact he relied on was ‘new’ or special circumstances existed to challenge the award on a new basis over a year after it was released.  She held that Respondent was aware of the key or ‘new’ facts soon after he filed his appeal and well before the hearing before Antonio J.  He could have adjusted his representations, oral or written, accordingly.

For the third issue – reasonable apprehension of bias – Nixon J. referred to two (2) phrasings of the test, both issuing from the Supreme Court of Canada.

(a) R. v. S. (R.D.), [1997] 3 SCR 484, 1997 CanLII 324 at para. 36:

36 The presence or absence of an apprehension of bias is evaluated through the eyes of the reasonable, informed, practical and realistic person who considers the matter in some detail (Committee for Justice and Liberty, supra.)  [Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 SCR 369, 1976 CanLII 2] The person postulated is not a “very sensitive or scrupulous” person, but rather a right-minded person familiar with the circumstances of the case.

(b) Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 SCR 369, 1976 CanLII 2, which held that apprehension of bias:

“…must be a reasonable one, held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information…. [The] test is “what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude.

Nixon J. disagreed with Applicant that the arbitrator had no reason to mention Applicant’s e-mail in the costs award.   Doing so was not bias but, Nixon J. observed, an expected response by the arbitrator to Respondent’s assertion that the e-mail warranted elevated costs against Applicant.  The arbitrator could not be faulted for referring to argument made by a party.

[28] The Arbitrator’s actions upon receipt of the letter from Ms. Hautz’s counsel demonstrate that she was fully aware of her obligation to treat the parties fairly and that she would make up her own mind about the email if it was put into evidence. There is no reasonable basis to conclude that she was negatively influenced against Mr. Driscoll by Ms. Hautz’s counsel’s characterization of the email. The Arbitrator took care not to consider the evidence, as it had not formed part of the hearing. She informed the parties that she would not review the impugned email from Mr. Driscoll without hearing from the parties.

Nixon J. described the arbitrator’s mention of Respondent’s e-mail as “factual and stated in neutral terms”.  Both Applicant and Respondent had an opportunity to address the e-mail before the costs award and, in any event, the arbitrator limited mention of the e-mail to a single mention in the factual background to the costs award.

Applicant also considered that the arbitrator demonstrated bias by declining to remit the exhibits until the appeal period expired.  Nixon J. found nothing “unusual or untoward” in the arbitrator imposing the conditions pending the appeal.

Nixon J. dismissed the application, with costs.