British Columbia – Court sets aside arbitrator’s decision for breach of procedural fairness – #615

In Bedwell Bay Construction v. Ball, 2022 BCSC 559, Justice Giaschi granted a judicial review application to set aside an interim decision of an arbitrator (the “Arbitrator”) of the Residential Tenancy Branch (the “RTB”) and to remit the matter back to the RTB for redetermination de novo before a different arbitrator. In doing so, the Court accepted the petitioner’s argument that the arbitrator did not act fairly when it required the petitioner to present its case first (even though it did not have the burden of proof), and denied it the right to cross-examine and to provide reply evidence and submissions. The Court held that this amounted to breaches of the rules of natural justice and procedural fairness. These findings have relevance to commercial arbitrations.

The petitioner was an operator of a campground and RV park located in Surrey, British Columbia (the “Park”). The respondent had been a renter of the Park since October 2015. The petitioner sent the respondent a notice to vacate following a failure to pay amounts it claims were owing. The respondent filed a notice of dispute resolution with the RTB.

The petitioner argued that the RTB lacked jurisdiction to hear the dispute because the relationship between the petitioner and the respondent was one of licensor and licensee, not landlord and tenant. On the other hand, the respondent claimed that the Park was her permanent residence. The parties disputed whether her stay had been continuous.

Ultimately, the RTB arbitrator rejected the petitioner’s argument that the relationship was one of licensor/licensee and found that the Manufactured Home Park Tenancy Act, SBC 2002, c 77 (the “MHPTA“) applied and that the RTB had jurisdiction (the “Interim Decision”). 

Prior to a hearing on the merits, the petitioner applied for a judicial review of the Interim Decision based on alleged breaches of procedural fairness that took place during the hearing, which took place by telephone:

(1) The petitioner contended that it was denied a full opportunity to present its case because the hearing was limited to one hour, of which 20 minutes was taken up with preliminary matters. Justice Giaschi held that the limitation on the length of the hearing alone was not procedurally unfair, especially since having a brief oral hearing was consistent with the objectives of the RTB process (see for example, Sunjic v Uthayakumar, 2022 BCSC 481).

(2) The petitioner argued that the arbitrator acted unfairly in requiring it to present its case first when the respondent had the onus of proof on the jurisdiction issue. Justice Giaschi accepted this argument. The RTB Policy Guidelines are clear that the party making an application must establish that the tenancy agreement exists. As such, the respondent should have been required to present her case first. While the arbitrator had the discretion to order otherwise, she failed to explain why she exercised it in this case. This was problematic because it made it impossible for the Court to review her decision.

(3) The petitioner argued that it was denied the right to give full submissions when the arbitrator interrupted the petitioner after 15 to 20 minutes of giving evidence and submissions, before it was finished. Justice Giaschi accepted that the petitioner was not given a full and fair opportunity to present its case.

(4) The petitioner submitted that it was denied the right to provide reply evidence and submissions. In particular, after the respondent’s submissions, the petitioner asked for a few minutes to respond to the allegedly false statements made in those submissions and to take the arbitrator to documents contradicting those statements; however, the arbitrator replied that there was not enough time and that she had sufficient information to make a decision. Justice Giaschi found this was an “egregious denial of natural justice and procedural fairness” (at para. 79).

(5) The petitioner argued that it was denied the right to cross-examine the respondent after she presented unexpected evidence. Justice Giaschi found that a denial of cross-examination was not generally unfair in the context of a RTB hearing, where there is no absolute right to cross-examine under the RTB Rules. However, in these circumstances, where the petitioner was directed to present its case first (despite the respondent’s burden of proof) and denied the right to present reply evidence, the denial of cross-examination took on an overwhelming importance.

In sum, Justice Giaschi held that the combination of requiring the petitioner to present its case first, the denial of an opportunity to cross-examine, and the denial of a right of reply had wholly deprived it of the opportunity to fully and fairly present its case. Accordingly, he found that the petitioner had established a breach of natural justice and procedural fairness. He set aside the Interim Decision and remitted the matter back to the RTB for reconsideration before a different arbitrator.

Contributor’s Note:

First, this is another example of where “efficiencies” or time constraints may compromise a party’s ability to fully present its case and thereby lead to the resulting decision being set aside for a breach of procedural fairness.

Second, for a similar case see: Cyrenne v YWCA Metro Vancouver, 2021 BCSC 2406 (summarized in case note: BC – Arbitrator’s decision set aside for lack of procedural fairness – #575). As in that case, it is likely that if the Arbitration Act, SBC 2020, c. 2 had applied to this case a Court could have (and likely would have) set aside the decision pursuant to section 58(1)(h) of the Act. Similarly, if this case were being considered for enforcement under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, a Court could (and likely would) refuse enforcement under Article V.