Date: 19980818
Docket: 97-1300-UI
BETWEEN:
DENISE LABRECQUE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Tardif, J.T.C.C.
[1] This appeal was heard at Percé, Quebec, on August 6, 1998.
[2] It is from a determination dated May 2, 1997, according to which the appellant’s employment with boat owner Ludger Després during the period from April 28 to July 20, 1996, was excepted from insurable employment because she was not dealing with him at arm’s length.
[3] The appellant and Ludger Després, in his capacity as payer, testified in support of the appeal. At the commencement of the hearing, a number of the allegations made in support of the determination were admitted, those in the following subparagraphs in particular:
[TRANSLATION]
(a) the payer had been a lobster fisherman since 1990;
(b) he had only one customer, Crustacés de Malbaie Inc.;
(c) the payer caught 14,000 pounds of lobster in 1996;
(d) the payer’s gross fishing income and net fishing income in 1996 were $55,620 and $241, respectively;
(e) the payer is the appellant’s husband;
(f) in addition to taking part in the fishing himself, he required the services of the appellant and a fisherman’s helper;
(g) the appellant’s alleged duties included going out to sea seven days a week, putting rubber bands around the lobsters’ claws, transporting the catch to the customer’s premises, getting bait, going to get gasoline and washing the boat's windows;
. . .
(i) during the period at issue, the payer was accompanied by his fisherman’s helper when he went out to sea;
. . .
(k) the fisherman’s helper was paid $650;
(l) the fisherman’s helper began receiving that amount regularly as soon as the season began;
(m) during the period at issue, the appellant received advances of $300 a week on her wages;
(n) at the end of the period at issue, the appellant’s wages were adjusted to $700 a week;
(o) at the end of the period at issue, the appellant was given a cheque for $4,349.03 as a pay adjustment;
(p) the cheque was deposited in the payer’s savings account;
(q) the appellant allegedly worked 70 hours a week;
(r) the appellant and the payer are not dealing with each other at arm’s length within the meaning of the Income Tax Act . . . .
[4] Only subparagraphs 13(h), (j) and (s) were denied. They read as follows:
[TRANSLATION]
(h) in practice, this type of fishing is normally done by two people;
. . .
(j) in previous years, the payer was accompanied by only one person when he went out to sea;
. . .
(s) if the appellant had been dealing with the payer at arm’s length, she would not have been hired to do work such as this.
[5] The evidence, which consisted of the testimony of the appellant and the payer, showed that the fishing process and method changed considerably starting in 1996. The payer had been using the “loose” fishing method, but in 1996 he began using the “line” or “sling” process. The witnesses explained that instead of having individual lobster traps that had to be hauled up one by one and each of which required a buoy, the “line” process made use of a rope to attach seven or eight traps together with a single line, and one buoy was placed at each end to mark the location of the row of lobster traps.
[6] According to the captain, when the traps were hauled up, at least two employees were needed on deck to take the lobsters out of the traps and check whether bait had to be put in the traps or repositioned.
[7] He also explained that this method was by far the most common, since only one fisherman out of 17 or 18 in the Percé area used the “loose” fishing process involving isolated, individual traps.
[8] Ludger Després further explained that the new process was more productive because the traps were more stable on the sea floor. With the “line” process, the entire line grouping together several lobster traps was heavier and therefore less likely to move as a result of winds or currents. He also explained and, above all, fully justified the difference between the $700 paid to the appellant and the $650 paid to the fisherman’s helper. His explanation was that the fisherman’s helper finished his work as soon as they got back to the wharf, whereas the appellant was responsible for delivering the lobster catch to the plant, getting herring to be used as bait for the next day's lobster fishing and buying gasoline; she also washed the boat on arriving with the bait and gasoline for the next day’s fishing.
[9] Mr. Després also explained that his spouse had agreed to be paid by means of advances with an adjustment at the end based on the quantity and market price of the lobster delivered during the fishing season. According to the boat owner, this payment method was popular with and very common among fishermen’s helpers.
[10] He said that the appellant’s wages were within the norm and also took account of the quality of the work done by the appellant, whom he described as a very productive employee.
[11] There is absolutely nothing in the evidence that might justify my rejecting all or any part of the testimony given by the two witnesses. They both testified well and I consider both of them credible. The appellant never tried to avoid questions and answered openly and spontaneously.
[12] Although it may seem unacceptable or implausible that someone would deposit his or her pay in his or her spouse’s account, this is still a very common practice and one that, in my view, is not determinative; what is determinative is whether or not fair wages are paid for the work done. The way in which wages are used or disposed of may be relevant or may be a factor in completing evidence, but it is certainly not determinative in itself, since all individuals are perfectly free to dispose of the money they earn through their work.
[13] The evidence also showed that this Court has previously considered the appellant’s work in a judgment rendered by the Honourable Deputy Judge Cuddihy on August 23, 1996 (file No. 96-184(UI)).
[14] At the time of that judgment, Ludger Després was using the “loose” lobster fishing process, that is, with individual traps. The evidence clearly showed that the change in the process used occurred during the 1996 season.
[15] On the strength of that judgment affirming his determination, the respondent clearly dealt with this case in a very perfunctory manner, according no credibility to the interested parties as regards their presentation of new facts. Assuming that lobster fishing involved the work of two people, the respondent quickly concluded that the facts were either inaccurate or fabricated and that the need for workers had been exaggerated.
[16] I believe that this was a serious error with regard to a fundamental aspect of the case; what is more, the issue involved was entirely determinative, since the number of fisherman’s helpers had a crucial impact on the assessment of the nature of the work done. Since the respondent started from the premise that lobster fishing can be done by two people, everything else became distorted, especially since the respondent was already biased against the appellant because of this Court's earlier decision, on which he placed great emphasis. Moreover, the respondent clearly assessed the appellant’s work based on facts that were inconsistent with reality. As a result, his analysis became vitiated and distorted and necessarily led to a conclusion that was totally inappropriate and unreasonable.
[17] Thus, not only do I consider the issue of the number of fisherman’s helpers determinative, but it also appears that all of the other information in the case was misinterpreted or shaped by a clear bias against the appellant. The appellant was entitled to have the respondent exercise his discretion neutrally and objectively, confining himself to all the facts in the single period at issue that was concerned in the assessment.
[18] The discretion was exercised in a tendentious, biased way, and this Court accordingly claims the right to assess the evidence from the standpoint of a trial de novo.
[19] The respondent chose not to call any witnesses, which means that the only material to be considered is the evidence consisting of the testimony of the appellant and her spouse, who, as I said, are entirely credible. The respondent admitted the content of a number of paragraphs in the notice of appeal, some of which I view as very relevant in determining whether there was a genuine contract of service between the appellant and the payer. I am referring, inter alia, to the following paragraphs:
[TRANSLATION]
3. Ludger Després, hereinafter referred to as “the payer”, is the appellant’s husband;
4. The payer is a professional lobster fisherman who sells his catch to Crustacés de Malbaie Inc.;
5. The appellant has been working for the payer for many years;
7. During the period at issue, the appellant was paid $700 a week;
11. The lobster purchaser, Crustacés de Malbaie, advanced part of the appellant’s wages during the season, as is a common practice in the fishing industry;
[20] In the circumstances, all the elements required for a genuine contract of service to exist are present; moreover, the evidence as a whole makes it possible to conclude that the criteria set out in paragraph 3(2)(c), namely the remuneration paid, the terms and conditions, the duration and the nature and importance of the work performed, fully support the existence of a genuine contract of service. The parties would have entered into a substantially similar contract of employment if they had been dealing with each other at arm’s length.
[21] Accordingly, there was a genuine contract of service. For all these reasons, the appeal is allowed and the respondent’s determination is reversed, since the appellant’s employment during the period from April 28 to July 20, 1996, constituted a contract of service within the meaning of the Unemployment Insurance Act.
Signed at Ottawa, Canada, this 18th day of August 1998.
“Alain Tardif”
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 2nd day of March 1999.
Stephen Balogh, Revisor