[1] This is an application for judicial review of a decision of the Pension Appeals Board dated December 8, 2003 that upheld the decision of the Review Tribunal, and the prior decision of the Minister, that Mr. Gorgiev is not entitled to a disability pension under the Canada Pension Plan, R.S.C. 1985, c. C-8.

[2] Mr. Gorgiev has been diagnosed with fibromyalgia, degenerative disc disease and bilateral carpal tunnel syndrome. He also had heart surgery in 2003. He claims he has been unable to work since January of 1999 because of very severe pain. He says he was forced to close his business, a transmission repair shop. He applied for disability benefits on November 17, 2000. He began receiving retirement benefits in November of 2002, when he turned 60 years of age.

[3] The medical evidence submitted in support of his claim confirmed that Mr. Gorgiev has the medical conditions he claimed to have. The main issue before the Board was whether these conditions resulted in a disability that met the statutory test for severity in paragraph 42(2)(a)(i) of the Canada Pension Plan, which reads as follows:

42(2) For the purposes of this Act,

42(2) Pour l'application de la présente loi:

(a) a person shall be considered to be disabled only if he is determined in prescribed manner to have a severe and prolonged mental or physical disability, and for the purposes of this paragraph,

(a) une personne n'est considérée comme invalide que si elle est déclarée, de la manière prescrite, atteinte d'une invalidité physique ou mentale grave et prolongée, et pour l'application du présent alinéa:

(i) a disability is severe only if by reason thereof the person in respect of whom the determination is made is incapable regularly of pursuing any substantially gainful occupation [...]

(i) une invalidité n'est grave que si elle rend la personne à laquelle se rapporte la déclaration régulièrement incapable de détenir une occupation véritablement rémunératrice,

[4] As the Board correctly stated, at paragraph 15 of their reasons, the severity of a disability refers to the capacity of the claimant to work. A finding of severity is not based on medical diagnosis alone, nor is it based solely on the subjective evidence of the claimant as to the degree of pain suffered when attempting to perform the claimant's usual or customary occupation. Such evidence must always be considered, of course, but it is relevant only to determine whether the claimant is able to perform any substantially gainful employment.

[5] The Board's reasons are based on a thorough and careful review of the evidence. The Board found that the evidence fell short of establishing that Mr. Gorgiev's condition was "severe" according to the statutory test. In my view, that is a conclusion that was open to the Board on the evidence. My review of the record discloses no error of law or any other error that would warrant the intervention of this Court.

[6] I think it important to note that in the written argument submitted to this Court on behalf of the Minister, counsel for the Minister defended the decision of the Board primarily on the basis of the medical evidence, but also argued that Mr. Gorgiev "did not disclose that he retained the ownership of a building and was still receiving rental income at the time of the hearing before the Board." Counsel for the Minister conceded at the hearing, correctly in my view, that this argument is not relevant. A claim for disability benefits cannot be denied because the claimant owns valuable property or receives rental income.

[7] Mr. Gorgiev argued at the hearing that he was unfairly prejudiced before the Board because the material presented to the Board by counsel for the Minister included information about an offer of settlement that had been proposed by the Minister and refused by Mr. Gorgiev. Although this issue was mentioned in Mr. Gorgiev's written argument, it was not clearly raised as a ground for challenging the decision of the Board and so it was not answered by the Minister. As the issue appeared to be substantial, the panel requested further written submissions. Those submissions have now been received and reviewed.

[8] The facts relating to the disclosure of the settlement offer are as follows. In the hearing before the Board, counsel for the Minister presented a medical submission summary that had been prepared by Dr. R. Simard, a medical expert witness for the Minister. That summary included a statement that, in March of 2003, the Minister had communicated an offer to settle Mr. Gorgiev's claim on the basis of a date of disability in October, 2002, and that Mr. Gorgiev had rejected the offer.

[9] Counsel for the Minister indicated that it is not the usual practice to inform the Board of settlement offers. I hope, and I am prepared to assume, that this case represents an anomaly.

[10] As I understand it, if Mr. Gorgiev had accepted the Minister's offer, he would have received monthly disability benefits commencing in February of 2003 which would have been an increase from the monthly retirement benefits he had been receiving since November of 2002. It is not clear whether the higher payments would have continued after Mr. Gorgiev attained the age of 65 in October of 2007.

[11] According to the affidavit of Margaret Jarmoc, counsel for the Minister before the Board (but not in this Court), the Board explained to Mr. Gorgiev at the outset of the hearing that the Board could either confirm or vary the decision of the Review Tribunal, and that in doing so, the Board could disregard the position of the Minister, as reflected in the settlement offer, that Mr. Gorgiev was disabled in October, 2002. The Board then adjourned for thirty minutes to allow Mr. Gorgiev to discuss the settlement offer with his son, who had attended the hearing with him. After the adjournment, Mr. Gorgiev indicated that he wished to proceed with the hearing.

[12] One of the submissions by Mr. Gorgiev seems to be that the Board erred in failing to interpret the settlement offer as an admission by the Minister that Mr. Gorgiev was sufficiently disabled in October of 2002 to qualify for a disability pension at that time. I am unable to accept this submission. It is based on the incorrect assumption that when the Board decided that Mr. Gorgiev did not have a disability that met the statutory test, the Board was rejecting an admission by the Minister. In the circumstances of this case, the only course open to the Board was to disregard the settlement offer, and decide the case on the basis of the other material presented to it, which is what the Board did. However, it remains to consider whether the mere disclosure of the settlement offer and its rejection was fatal to the proceedings before the Board.

[13] It is arguable that the mere disclosure of the rejected settlement offer was a breach of the privilege that attaches to settlement discussions. The purpose for the existence of the privilege is explained as follows by Oliver L.J. in Cutts v. Head, [1984] Ch. 290, 306:

That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co. v. Drayton Paper Works Ltd. (1927), 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table. [...] The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.

[14] This passage was quoted with approval by this Court in Canadian Broadcasting Corporation v. Paul (2001), 198 D.L.R. (4th) 633, (2001) 274 N.R. 47, at paragraph 26, and in Bertram v. Canada (C.A.), [1996] 1 F.C. 756 at 766, as were the following words of Lord Griffiths in Rush & Tompkins Ltd. v. Greater London Council, [1989] A.C. 1280 (H.L.) at 1300:

Nearly all the cases in which the scope of the "without prejudice" rule has been considered concern the admissibility of evidence at trial after negotiations have failed. In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations. These cases show that the rule is not absolute and resort may be had to the "without prejudice" material for a variety of reasons when the justice of the case requires it. It is unnecessary to make any deep examination of these authorities to resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement.

[15] The rejection by Mr. Gorgiev of the Minister's settlement offer is not capable of being construed as an admission by Mr. Gorgiev. For that reason, I am prepared to assume, without deciding, that the disclosure of the rejected settlement offer is not a breach of privilege that would justify setting aside the Board's decision.

[16] However, that does not completely dispose of the argument made by Mr. Gorgiev in this Court. Mr. Gorgiev said that he felt that the Board believed the Minister's settlement offer to be a reasonable one, that the Board was disappointed or angry that Mr. Gorgiev had rejected it, and that the Board thought Mr. Gorgiev had acted unreasonably in rejecting it. On the basis of that perception, Mr. Gorgiev concluded that the Board was against him, and for that reason failed to consider his evidence fairly. This appears to me to be an allegation of actual bias or a reasonable apprehension of bias.

[17] Having reviewed the record and the Board's reasons in light of Mr. Gorgiev's argument, I am unable to conclude that the disclosure by counsel for the Minister of the rejected settlement offer resulted in any failure on the part of the Board to conduct a fair and objective review of the evidence. In other words, I can find no indication of actual bias on the part of the Board.

[18] The test for a reasonable apprehension of bias is stated in the reasons of de Grandpré J. in Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369, at p. 394:

[...] the apprehension of bias must be a reasonable one, held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information. [...] that test is "what would an informed person, viewing the matter realistically and practically -- and having thought the matter through -- conclude. Would he think that it is more likely than not that [the decision maker], whether consciously or unconsciously, would not decide fairly.

[19] In this case, the Board was faced with disclosure of the existence of a settlement offer that had been made by the Minister and rejected by Mr. Gorgiev. Counsel for the Minister now concedes, properly in my view, that the settlement offer and its rejection should not have been disclosed. However, it appears that Mr. Gorgiev did not object to the disclosure at the time.

[20] The Board could have acted on its own motion to have the disclosure struck from the record, simply on the basis that it was not relevant. Indeed, that might have been the wiser course. Instead, the Board gave Mr. Gorgiev time to reconsider the offer. However, I see no basis for concluding that the Board had formed a view as to the merits of the settlement offer, or for concluding that the Board believed the offer to be a reasonable one, or that the Board believed that Mr. Gorgiev would be unreasonable if he rejected it. The members of the Board, all of whom are judges or retired judges, must be taken to know that the reasonableness of a settlement cannot be assessed properly except by the parties themselves, because only the parties have all of the relevant information. The only information available to the Board at the time of the disclosure of the rejected settlement offer was the material in the appeal record. The members of the Board must also be taken to know that it was quite proper for Mr. Gorgiev to choose to have the matter heard and decided by the Board. There is no basis for concluding that the Board had any reason to disapprove or resent Mr. Gorviev's decision to continue with the hearing.

[21] It is also relevant that the disclosure was more likely to reflect negatively on the position of the Minister than the position of Mr. Gorgiev. The settlement offer represented a compromise of the Minister's original position. Its rejection by Mr. Gorgiev indicated that Mr. Gorgiev considered his position to be the only correct one. The fact that the Board decided that the Minister's original position was correct suggests that the Board gave no weight at all to the existence of the settlement offer. If that is so, then it is not reasonable to conclude that the Board was influenced by its rejection.

[22] I conclude that disclosure of the rejected settlement offer in this case is not a basis for finding a reasonable apprehension of bias.

[23] For these reasons, I would dismiss this application for judicial review. Counsel for the Minister indicated at the hearing that no costs were being sought against Mr. Gorgiev.

(s) "K. Sharlow"

J.A.

"I agree.

Gilles Létourneau"

"I agree.

J. Edgar Sexton"

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-219-04

STYLE OF CAUSE: DIMITAR GORGIEV and MINISTER OF

HUMAN RESOURCES DEVELOPMENT

PLACE OF HEARING: Toronto, Ontario

DATE OF HEARING: December 15, 2004

REASONS FOR JUDGMENT BY: Sharlow J.A.

CONCURRED IN BY: Létourneau J.A.

Sexton J.A.

DATED: February 17, 2005

APPEARANCES:

Mr. Dimitar Gorgiev On his own behalf

Ms. Nathalie Archambault For the Respondent

Mr. Marcus Davies

SOLICITORS OF RECORD:

Dimitar Gorgiev On his own behalf

Toronto, Ontario

Morris Rosenberg For the Respondent

Deputy Attorney General of Canada

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