Québec – No bias where arbitrator rejected most objections by a party, had little interest in some evidence, questioned witnesses, and showed irritation at party – #511

In Consortium MR Canada ltée v Morissette, 2021 QCCS 2847, Justice Philippe Bélanger heard an appeal of an arbitral award pursuant to which MR was required to carry out remedial work on buildings built by it, as general contractor, which had longstanding water problems and to pay extra-judicial fees because of its abusive behaviour in failing to remedy the problems. MR appealed the award on a number of grounds, including that that the “attitude and remarks” made by the arbitrator during the hearing were a breach of his duty of impartiality. It filed affidavits from witnesses and MR representatives, who said that the arbitrator “seemed disinterested” and “seemed to favour the [building owners]”. Justice Bélanger found that while the arbitrator clearly demonstrated irritation with respect to MR’s delays in completing its remedial work, a reasonable person would not think that this rose to the level of bias.

The parties’ dispute related to construction and design defects affecting a residential development project carried out by MR. In 2011, the owners of the residences affected by these defects sought relief under the guarantee plan to which MR subscribed to demand that MR remedy water problems. Regulation Respecting theGuarantee Plan for New Residential Buildings, CQLR, Chapter B-1.1. r. 8, provides a warranty to the owners to protect them against construction defects and poor workmanship. MR commenced an arbitration seeking to limit the coverage under the guarantee plan, but the parties later reached a settlement agreement in 2014 on what work would be done by MR to fix the problems. Unfortunately that work proved ineffective. A Provisional Administrator was appointed in late 2014 as manager under the guarantee plan, who ordered MR to complete the additional corrective work by May 2016, which deadline MR failed to meet. In 2017, the Provisional Administrator ousted MR and hired another contractor, Enterprises Léonard Inc., to complete the work. Still the water problems continued. Thereafter, the Provisional Administrator concluded that the latest water issues came from a new cause – the patio doors of the residences. In 2018, he concluded that these defects were not part of the guarantee plan and that he would not correct them. The owners then brought an arbitration, using the mechanism provided for under the guarantee plan, against MR and the Provisional Administrator.

In 2020, the arbitrator issued his award, finding for the owners and ordering the Provisional Administrator and MR to carry out the corrective work. Further, the arbitrator found that both the Provisional Administrator and MR behaved in an abusive and unreasonable manner and ordered them to pay extra-judicial fees in the amount of $35,506.

In support of its appeal of the award, MR relied upon several grounds in which it alleged that:the arbitrator had made unreasonable errors:

a) the arbitrator erred in interpreting the scope of MR’s obligations under the 2014 settlement agreement to include the water problems identified in 2018;

i. the arbitrator committed a jurisdictional error in deciding that he did not have the jurisdiction to rule on the Provisional Administrator’s decision to change contractors (a dispute between the Provisional Administrator and MR, not involving the owners) and that his jurisdiction was limited to the performance of MR and the Provisional Administrator under the guarantee plan;

ii. the arbitrator erred in refusing to consider the work carried out by Léonard in 2017 and 2018 at the request of the Provisional Administrator, which MR argued was the real cause of the new water problems identified in 2018, because the allocation of potential responsibility as between MR and Léonard (a third party to the arbitration) was outside the submission to arbitration; and

iii. the arbitrator erred in ordering them to pay extra-judicial costs for having abused their powers on the basis that he had no authority to do so; and

b) the arbitrator showed bias.

Justice Bélanger commented upon the nature and purpose of the arbitration process provided for in the Rules – to ensure the expeditious processing of claims related to poor workmanship or construction defects affecting new residential buildings.

As to the first ground of appeal, all parties and Justice Bélanger agreed that the standard of review of the arbitrator’s award was reasonableness, applying Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. He held that the arbitrator’s award with respect to grounds (i) to (iv) was reasonable, but that with respect to ground (v), the costs award against MR was set aside because MR was not involved in any remediation efforts after it was replaced by Léonard in 2018.

As to the second ground of appeal, Justice Bélanger dismissed the complaint that the arbitrator was biased:

[ 127 ]      MR does not discharge his burden of demonstrating that a reasonable and sensible person would conclude that the Arbitrator was biased on reading the Award and in the light of the behavior reproached by MR against the Arbitrator.

Ruffo v. Conseil de la Magistrature, [1995] 4 SCR 267, the Supreme Court recalls the test applicable to the proof of bias of a decision-maker:

[…] The apprehension of bias must be reasonable and the act of a sane and reasonable person asking himself the question and obtaining the necessary information about it. In the words of the Court of Appeal, this test is to ask “what conclusion would come to a knowledgeable person who studied the matter in depth, realistically and practically.” […]

[ 129 ]      MR cannot maintain that the Arbitrator is showing partiality by refusing to consider the proof of the work carried out by Léonard: as we have seen, this decision does not appear unreasonable and cannot serve as a basis for a conclusion of partiality. .

[ 130 ]      The fact that the Arbitrator rejected the vast majority of the objections raised by counsel for MR and the Provisional Administrator, that he appeared to have little interest in certain testimonies or that he questioned the witnesses, can also constitute evidence of bias on the part of the Arbitrator.

[ 131 ]      Reading the Award reveals that the Arbitrator is irritated by the excessive delays that have been incurred in carrying out the corrective work required. That said, a reasonable and sensible person cannot conclude by reading the Award or by considering the behavior alleged against the Arbitrator that the latter was biased.

Editor’s notes:

For other Case Notes that demonstrate the conduct necessary to satisfy the test of reasonable apprehension of bias see Québec – arbitrator appointment process gives rise to reasonable apprehension of bias – #108 and B.C. – ex parte communications on procedural matters create reasonable apprehension of bias and grant judicial review of award – #063.