In Dufferin v Morrison Hershfield, 2022 ONSC 3485, Justice Woodley dismissed an application made pursuant to sections 13(6) and 15(1) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, for an order removing an arbitrator on the basis that, “circumstances exist which give rise to justifiable doubts about the Arbitrator’s independence and impartiality, which are alleged to give rise to a reasonable apprehension of bias”. Essentially, the allegations were that the arbitrator had “entered the fray” because of the many questions he asked the witnesses, pre-judged the issues, and become an advocate for the Respondent. Justice Woodley found that the arbitrator was interventionist, but that she could find no bias or a reasonable apprehension of bias; “instead, [she] found a deeply invested, engaged Arbitrator that worked tirelessly for the parties in furtherance of his mandate, which was to determine the truth of the issues before him”. The Applicants were not out of time to bring their application because the alleged conduct complained of was “cumulative”. In any event, it would be “nonsensical” to allow a partial arbitrator to continue, even if the Respondent had not objected in time.
The Applicants entered into a $260.5 million Design Build Agreement (“DBA”) in May, 2014, for the design and construction of a portion of the Bus Rapid Transit Network being constructed by Metrolinx and the Regional Municipality of York (“the Owner”). The Applicants entered into a $22.1 million Design Service Agreement (“DSA”) with the Respondent engineering firm, which acted as sub-contractor with respect to the design-related requirements of the DBA.
The mediation – As part of the payment process, the Applicants were required to pursue on the Respondent’s behalf, in Change Request Notices (“CRNs”), additional claims for compensation arising from Owner-driven changes to the scope of the design work. The Owner rejected many of the CRNs, as a result of which the Applicants proceeded to mediation and sought about $33 million from the Owner in respect of the Respondent’s CRN’s (in addition to other claims totalling $149 million). The Respondent was not permitted to participate in the mediation, but was asked to prepare a mediation brief with respect to its largest claims. On May 24, 2019, the dispute was settled for $63 million, and the Applicants released the Owner from and assumed liability for all the Respondent’s claims. Thereafter, the Applicants advised the Respondent that it had no entitlement to any further payments sought in the CRNs.
The arbitration – On August 15, 2019, the Respondent filed a Request for Arbitration, seeking payment of $33 million. The Applicants counterclaimed for alleged delays and damages suffered as result of the Respondent’s alleged breaches of contract and negligence. On September 23, 2019, the parties agreed upon a sole arbitrator. The arbitration was conducted under the ADRIC Rules.
The arbitration hearing commenced on November 24, 2020, using the chess clock method of time allocation. The application for an order removing the arbitrator occurred 14 days into the arbitration, after the arbitrator had reviewed a significant volume of material before the hearing commenced – 2,658 pages of written direct evidence, including thousands of exhibits of contemporaneous project records, emails, correspondence, meeting minutes, monthly reports, design specifications and drawings, and, in the week before the hearing, lengthy pre-hearing submissions. At the end of the 14th day, when they had used all their allotted time, the Applicants advised that they would be seeking to remove the arbitrator for bias.
On December 24, 2020, the arbitrator released his reasons dismissing the bias application.
On January 5, 2021, the Applicants brought the court application seeking removal of the arbitrator for alleged bias.
During this period of time, on consent, the hearing continued until April, 2021, and the Applicants were allotted additional chess clock time. The arbitrator advised that he would not release his award until the court had ruled on the bias application.
The bias application – Essentially, the Applicants alleged that the arbitrator had “entered the fray” because of the many questions he asked the witnesses, pre-judged the issues, and became an advocate for the Respondent. The Respondent opposed the application on its merits and also asserted that it was brought out of time and for tactical purposes only.
Justice Woodley first addressed three threshold issues: (1) whether the court had jurisdiction under ADRIC Rule 3.6 to hear the application following the arbitrator’s decision on the challenge; (2) whether the arbitrator was correct when he found that the parties had given him a “mandate to engage in a somewhat more inquisitorial process”; and (3) whether the Applicants were required to object before seeking removal of the arbitrator under ADRIC Rule 3.6:
(1) Justice Woodley found that she had jurisdiction to determine the issue on a “de novo” basis. Section 13(6) of the Act expressly grants the court the jurisdiction to “decide the issue” after the tribunal has made its decision. It was not varied or excluded by agreement or by the ADRIC Rules. ADRIC Rule 1.3.4 states that the Rules apply except insofar as they are in conflict with the Act. The jurisdiction granted to the court under s. 13(6) was not varied or excluded by the ADRIC Rules or by agreement because even though Rule 3.6 sets out a different challenge procedure, it “does not apply to the procedure to seek judicial review” (paras. 67 to 80).
(2) Justice Woodley found that she did not have to consider whether the arbitrator reached the correct conclusion about his mandate because the application was not an appeal of the arbitrator’s decision. The question before her was whether the conduct of the arbitrator gave rise to a reasonable apprehension of bias (paras. 81 to 83).
(3) Finally, Justice Woodley referred to ADRIC Rule 2.4.2, which states that if a party does not raise an objection promptly, it waives its right to object unless the tribunal orders otherwise. Justice Woodley found that this does not apply to a challenge under Rule 3.6, so an objection is not a prerequisite to commencing a challenge. It would be “nonsensical” to interpret the Rules to mean that a failure to object would permit a partial or biased arbitrator to remain seized where “circumstances” give rise to “justifiable doubts” (paras. 84 to 91).
Justice Woodley then turned her mind to the merits issues.
She found that even if the Applicants were too late (months, according to the Respondent) under the Act to bring their Application, she would allow it. ADRIC Rule 3.6.2 provides a 7-day period after a party becomes aware of “any grounds” for a challenge to the arbitrator’s impartiality or independence. (This is different from the 15-day period in s. 13(3) of the Act, which she found did not apply). She accepted the Applicants’ argument that their challenge to the arbitrator was timely because they relied upon a series of cumulative events for the entire 14-day period of the hearing, not a single allegation of misconduct. In any event, ADRIC Rule 2.4.1 provides that a “failure to comply with the Rules is an irregularity, and does not nullify an arbitration or a step, Document, award, ruling, order, or decision in the arbitration”. Finally, it would be unjust to deny the Applicants the ability to challenge the arbitrator for bias, when the arbitrator’s impartiality is required for procedural fairness and “the internal integrity of the arbitration process” (paras. 93 to 107).
Justice Woodley also found in favour of the Respondent on the main issue. She found that the arbitrator’s conduct did not constitute circumstances giving rise to a reasonable apprehension of bias. She applied the objective test established by the Supreme Court of Canada in Committee for Justice & Liberty v Canada (National Energy Board),  1 SCR 369: (a) the informed right-minded person considering the alleged bias must be reasonable; and (b) the apprehension of bias itself must be reasonable in the circumstances. It is not necessary to establish that the arbitrator is actually biased; the appearance of bias is sufficient. (See Yukon Francophone School Board, Education Area No. 23 v. Yukon Territory (Attorney General), 2015 SCC 25 at paras 20 & 22.)
She listed the relevant principles as follows (at para. 112):
2. the presumption of impartiality is high (Wewaykum Indian Band v. Canada, 2003 SCC 45 (CanLII),  2 S.C.R. 259, at para 59);
3. the inquiry is objective requiring a realistic and practical review of all the circumstances from the perspective of a reasonable person. (Committee for Justice and Liberty v. Canada (National Energy Board), 1976 CanLII 2 (SCC),  1 S.C.R. 369);
4. a challenge based on reasonable apprehension of bias will be unsuccessful without evidence to support the allegation beyond a mere suspicion that the hearing officer would not bring an impartial mind to bear. Mere suspicion is not enough (G.W.L. Properties Ltd. V. W.R. Grace & Co. of Canada Ltd., 1992 CanLII 834 at para 13 (B.C. Ct. App.)); and
5. when considering bias, whether actual or the appearance of bias, context matters (Telesat Canada v. Boeing Satellite Systems International, Inc., 2010 ONSC 4023).”
“39. The Applicants submit that the following conduct evidences a pattern of objectively biased conduct by the Arbitrator against the Applicants, its witnesses, and their evidence:
(a) making repeated statements of position (rather than questions) and examining the Applicants’ witnesses in a manner that indicated a pre-judgment of issues and credibility;
(b) advocating positions favourable to the Respondent, seeking admissions adverse to the Applicants, and engaging in cross-examination of the Applicants’ lay witnesses; and
(c) failing to demonstrate a balanced/proportionate approach with witnesses of both parties”.
After reading the entire hearing transcript, Justice Woodley addressed these complaints and dismissed the application to remove the arbitrator for the following reasons:
- Procedural Order #1 provided that the arbitrator could interject with questions of any witness at any time;
- By the opening of the hearing, the arbitrator had significant familiarity with the details and facts of the case and he advised that, in preparation for each hearing day, he had read the upcoming witness statements and made notes of his comments and queries. He asked “difficult” questions of the witnesses – and his approach was the same, regardless of whether they were witnesses called by the Applicants or the Respondent;
- While the arbitrator “vigorously” questioned many of the witnesses, he always ensured that counsel had the ability to ask any questions that arose from his own line of questions and had the obvious aim to “find the truth”;
- The arbitrator’s interventions were intended to ensure a “fair and independent process” and to enable the parties to provide their “full answer and defence”;
- The arbitrator noted that he did not ask the questions necessarily to have counsel answer them immediately, but that he wanted to inform counsel, “what the issues were that were of interest to the decision-maker” that would allow counsel to be better equipped to deal with the issues throughout the course of the hearing and advised that the questions he posed were to assist counsel to understand what the arbitrator thought were some of the “hot-button issues” that would have to be addressed in the arbitration;
- The arbitrator specifically noted that the Applicants had “a little bit of a credibility deficit” by taking two different positions (putting forward the Respondent’s claims to the Owner as “true and honest” in the mediation, and then characterizing them as “nonsense” and “exaggerated” in the arbitration), but said he would wait until all the evidence was in to see if it could be overcome and noted that this was not an issue the Applicants could not anticipate; and
- The arbitrator’s questions and comments were “incisive” and showed that he had a high level of knowledge and experience in the area being arbitrated and the subject matter expertise, which allowed him to “short-cut the issues to obtain answers to queries that were not otherwise forthcoming” and “get to the heart of the matter”.
Justice Woodley concluded that the Applicants’ allegations were not supported by the transcript; the arbitrator provided an opportunity for the Applicants to answer the case brought against them by the Respondent. In other words, the arbitrator succinctly stated the issues between the parties and allowed the Applicants the opportunity to provide a full answer and defence. Rather than the arbitrator’s interventions demonstrating a reasonable apprehension of bias, they show the arbitrator’s continuous efforts to maintain balance and fairness in the process in pursuit of the truth.
First, Justice Woodley cited Glaholt and Rotterdam (Arbitrator Questioning: Sphinx or Skeptic?, 2016 J. Can. C. Construction Law. 81) for the seven permissible areas of questioning by an arbitrator:
(1) ensuring that the arbitrator has understood what the witness is saying;
(2) clearing up points that have been left obscure;
(3) ensuring that the arbitrator has correctly understood technical detail;
(4) maintaining an orderly, professional approach by counsel;
(5) protecting witnesses from misleading or harassing questions;
(6) moving the arbitration along at an appropriate pace; and
(7) excluding patent irrelevancies and discouraging repetition.
Second, the language in ADRIC Rule is different from that in s. 13 of the Act. Pursuant to Rule 3.6, a party may challenge the arbitrator if, “circumstances give rise to justifiable doubts about the arbitrator’s independence or impartiality”, but s. 13(1) allows a challenge where, “circumstances exist that may give rise to a reasonable apprehension of bias”. The Applicants relied upon the language in both provisions. Almost identical language to that in the ADRIC Rules also appears in Art. 12(2) of the UNCITRAL Model Law. It may not make a difference, but in this case, Justice Woodley referred to the language of the test under the Act.
Third, Justice Woodley noted that the application before her was not an appeal of the arbitrator’s decision, but was a “judicial review” and hearing de novo. This arises out of the language in s. 13(6) of the Act that provides that following the tribunal’s decision on the challenge, a party may make application to the court to “decide the issue”. The meaning of that language and the appropriate procedure for the hearing in the context of s. 17(8) of the Act have been vexing. See, for example an earlier Case Note: Lisa’s 2021 Top Pick: Ontario – Russian Federation v Luxtona Limited (Part 1) – #564.