Yes this can occur, but supringly rarely. What always amazes me is how rarely the reviewers ever agree on anything. Getting published is just a matter of sending out your work until you get two or three reviewers who say accept.
I have had the situation where all three reviewers said publish and the editor rejected the paper - of course this paper has gone on to get over 600 citations so it was not the best decision that editor has ever made.
I have had the situation where all three reviewers said publish and the editor rejected the paper - of course this paper has gone on to get over 600 citations so it was not the best decision that editor has ever made.