On July 27, 2023, the B.C. Supreme Court released a decision that sets limits on Residential Tenancy Branch (RTB) arbitrators’ abilities to pressure tenants to accept settlements during arbitration hearings.

The decision in Shaikh v. Brar, 2023 BCSC 1285 will help ensure that tenants are not pressured to accept settlements by the threat of an order of possession effective on two days’ notice, and that arbitrators do not make decisions severing claims without first hearing submissions, and having coherent reasons as to why the claims are unrelated.

During the mediation-arbitration session that led to the decision under review, the parties first tentatively chose a move-out date to settle the landlord’s eviction issue. They next moved to discussion of a settlement of the tenants’ compensation claims. At this point, the Arbitrator decided to sever and dismiss the tenants’ claims for compensation on the basis that these were unrelated claims, even though these claims and the eviction issue were based on the same underlying facts about conflict between the tenants and their neighbour.

After the landlord made a low offer to settle the compensation issues, the tenants attempted to end the mediation-arbitration session and proceed with a hearing. The Arbitrator asked the tenants “are you now revoking the settlement that you’ve already agreed to under oath?”. In response to the tenants’ requests to proceed with a hearing, the Arbitrator repeatedly asked the tenants “Are you prepared to move out in two days?”. The tenants ultimately agreed to a move-out date to settle the eviction issue.

In setting aside the decision, the Court held:

  1. The Arbitrator’s decision to sever and dismiss the tenants’ claims was procedurally unfair because she “clearly came to firm views as to the question of severance and dismissal either prior to, or at a very early stage of the hearing, and simply refused to allow the parties to be heard on that question”: para. 80.
  2. The Arbitrator’s decision to sever and dismiss the tenants’ claims was also patently unreasonable. The decision to sever “was made not only without submissions, but also without any consideration of whether the issues were actually unrelated.” The Arbitrator appears to have assumed that the issues underlying the tenants’ claims were unrelated to the issues underlying the One Month Notice, just because the relief sought was different. Both sets of claims actually related to the same alleged breaches of quiet enjoyment: paras. 93-97.
  3. Arbitrators who affirm participants at the outset of hearings should appreciate that “the affirmation is intended to, and should only, be applied to the evidence given by the parties qua witness”. “The spectre of breach of the affirmation (and, implicitly, the moral consequence of breach of an oath and the possibility of criminal charges for perjury) should not be brought to bear upon the party who disputes whether a full settlement has been reached”: paras. 101-105.
  4. The mediation-arbitration process was fundamentally flawed because the Arbitrator used her decision-making power to sever the tenants’ claims in the midst of negotiations. “The decision to sever was made for purposes of, and was used by the Arbitrator as, leverage in pressing the parties to commit to a partial settlement notwithstanding their expressed reluctance to do so”: paras. 110, 115.
  5. “The Arbitrator’s frequent use of the spectre of a two-day order for possession is also of concern… The spectre of suddenly being unhoused would be of concern to anyone participating in such a hearing.” The Court concluded that “The Arbitrator used the spectre of an adverse decision in the arbitration phase in a manner that went beyond the scope of appropriate exhortation within the med-arb context. The pressure put on the Tenants to proceed with the partial settlement was intense”. Justice Veenstra wrote that he would have concluded that the Arbitrator’s decision to record the settlement was patently unreasonable, had he been required to make that finding to dispose of the case: paras. 111-112, 115.

This decision is the first successful judicial review of a settlement agreement reached in an administrative mediation-arbitration proceeding that CLAS is aware of. It demonstrates the importance of having hearings before the RTB recorded, and having those recordings made accessible to litigants – a victory that CLAS and other advocates worked hard to achieve.

CLAS looks forward to seeing the guidance provided by this decision implemented by the RTB in future severance decisions and mediation-arbitration proceedings.