Arbitration and Requests for Adjournments - Treating Parties Fairly and Equally, and the Importance of Weighing Prejudice

Lockman v Rancourt, 2017 ONSC 2274

This case stands for the principle that arbitrators must weigh and compare the issue of prejudice to both parties when granting or refusing an adjournment.

Background

In this Application for Judicial Review the Respondent successfully sought to have an Arbitration Award (and the subsequent costs award) set aside.

When the parties initially signed their Minutes of Settlement in 2011, they agreed to refer any further disputes regarding child support to an experienced arbitrator.

In January 2015, a disagreement about the Respondent's obligations to pay retroactive and prospective child support arose, and the parties signed an Arbitration Agreement and agreed to the arbitration dates in February 2015. Within the next month, the Respondent sought an adjournment of the arbitration on the basis that he was going to be out of the country, and on the basis that he may be retaining an expert. The arbitration was adjourned peremptory to the Respondent to June 2015. In a pre-arbitration conference in May 2015, the arbitrator adjourned the hearing to November 2015, again making the dates peremptory to the Respondent.

Eight days before the new hearing date, the Respondent dismissed his lawyer, stating that he had lost confidence in his lawyer and needed a new one. The Respondent immediately notified the arbitrator and requested that the upcoming arbitration session be cancelled until he receives legal advice from a new lawyer. The arbitrator found that the Respondent had ample notice of the dates of the hearing, and held that absent a satisfactory explanation, the arbitration hearing would proceed as scheduled.

At the hearing, the arbitrator decided in favour of the Applicant.

Now, the Respondent argues that he was treated unfairly pursuant to section 19 of the Arbitration Act.

Analysis

As per the decision in Webster v. Wendt, a breach of the decision maker's obligation to treat parties fairly and equally constitutes a breach of natural justice, and further gives courts the authority to intervene. Accordingly, decision makers are required to weigh many relevant factors and principles when exercising their judicial discretion to grant or refuse an adjournment.

Based on the transcript of the arbitration hearing before the court, Justice Engelking noted that there was no discussion or analysis of the factors that needed to be considered. Justice Engelking specifically found that the fact of the hearing date being peremptory did not outweigh the other factors that ought to have been considered.

Simply, the court found fault with the arbitrator for not considering and weighing the potential prejudice to the Respondent of not granting an adjournment versus the potential prejudice to the Applicant of granting it. Justice Engelking noted that there was no evidence to suggest that the Applicant would have been severely prejudiced by the granting of the adjournment.

In terms of deference to the discretionary decision of the arbitrator, the court noted that the exercise of any such deference must be shown to have been done judicially. Where a trial judge or arbitrator fails to account for relevant considerations or factors the court noted that such a decision maker exercises their discretion unreasonably.

Based on its findings, the court concluded that the arbitrator failed to treat the Respondent equally and fairly, thereby constituting a breach of natural justice. Specifically, the court found that the arbitrator did not balance the interests of the Applicant to get on with the hearing with the interests of the Respondent to exercise his right to counsel, or with the interests of the administration of justice. As such, the court set aside the arbitration award and the costs award, and replaced the arbitrator.

It may well be that most judges would have refused the Respondent's request for a third adjournment, however the arbitrator's failure to compare the issue of prejudice to both parties was critical to the Ontario Superior Court of Justice's decision in this case.

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