While both are in the Arena and the Templar is defeated the Huntress' ranged attack kills the Templar thus getting notified of his death. I posted this bug in the bug report section of the Steam forums as well.
I had a case a few days ago when a beast killed a beastmaster at arena in the home realm right after I loaded it. No idea how it happened, or how the beastmaster even managed to get to the arena battle zone, as far as I know they stay outside of it.
Also, sometimes I've seen a worker or two inside the arena battle zone (they didn't fight though), so my guess is sometimes creatures fall to the arena and start fighting, while lacking the usual protection from death.
Thanks for the report.
This bug is knowen internally and happends randomly and to every creature, as far as I know.
If you have more information about replicating this bug, please let us know.
It is fixed internally = ) It will be available on the public build very soon