Date: 20011220
Docket: 2001-2129-EI
BETWEEN:
BERTRAND HUET,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Docket: 2001-2130(EI)
JACQUES HUET,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Savoie, D.J.T.C.C.
[1] These appeals were heard on November 13, 2001, at Percé, Quebec.
[2] The appeals concern the insurability of the work performed by the appellant Jacques Huet during the periods from April 1 to September 18, 1998, from April 26 to September 21, 1999, and from April 2 to September 30, 2000, when he was employed with La Crevette du Nord Atlantique Inc., the payer, and by the appellant Bertrand Huet during the periods from April 7 to September 18, 1998, and from April 2 to September 30, 2000, with the same company.
[3] The appeals were heard on common evidence.
[4] The facts on which the Minister of National Revenue (the "Minister") relied in making his decisions are set out in paragraph 5 of the Reply to the Notice of Appeal in each case as follows:
2001-2129(EI)
[TRANSLATION]
(a) the appellant is a crew member on the N.B.J.A.;
(b) this vessel is the property of 9000-9580 Québec Inc.;
(c) the N.B.J.A. is a vessel equipped for commercial shrimp fishing;
(d) the shareholders of 9000-9580 Québec Inc. are the appellant and Jacques Huet, holding respectively 49% and 51% of the voting shares;
(e) the appellant is Jacques Huet's brother;
(f) Jacques Huet personally owned the shrimp fishing licence;
(g) the expenses related to the issuance and renewal of the fishing licences and permits were the responsibility of 9000-9580 Québec Inc.;
(h) the appellant engaged in fishing with his brother, Jacques Huet, the captain of the vessel, and Yvan Pruneau;
(i) as captain, Jacques Huet directed, controlled and supervised all the activities of the crew of the N.B.J.A.;
(j) the catches were delivered to the payer;
(k) under an agreement between the payer and 9000-9580 Québec Inc., the payer paid an amount representing a percentage of the catches directly to the appellant;
(l) 9000-9580 Québec Inc. paid all of the fishing-related expenses and bore all the financial risks of the business.
2001-2130(EI)
[TRANSLATION]
(a) the appellant is the captain of the N.B.J.A;
(b) this vessel is the property of 9000-9580 Québec Inc.;
(c) the N.B.J.A. is a vessel equipped for commercial shrimp fishing;
(d) the shareholders of 9000-9580 Québec Inc. are the appellant and Bertrand Huet, holding respectively 51% and 49% of the voting shares;
(e) the appellant is Bertrand Huet's brother;
(f) the appellant personally owned the shrimp fishing licence;
(g) the expenses related to the issuance and renewal of the fishing licences and permits were the responsibility of 9000-9580 Québec Inc.;
(h) the appellant engaged in fishing with his brother, Bertrand Huet, and Yvan Pruneau;
(i) as captain, the appellant directed, controlled and supervised all the activities of the crew of the N.B.J.A.;
(j) the catches were delivered to the payer;
(k) under an agreement between the payer and 9000-9580 Québec Inc. the payer paid an amount representing a percentage of the catches directly to the appellant;
(l) 9000-9580 Québec Inc. paid all of the fishing-related expenses and
bore all the financial risks of the business.
[5] All of the facts alleged in subparagraphs (a) to (f) and (h) to (j) of paragraph 5 of each Reply to the Notice of Appeal are admitted to be true. Subparagraphs (g) and (l) are denied. In his testimony, the appellant Jacques Huet made a point of explaining that each fisherman contributed to the payment of certain fishing-related expenses, the object being to cover the cost of purchasing the licence and fishing quotas as well as ice, food and fuel.
[6] In giving evidence, the appellant Jacques Huet argued that the disposition of the case should take into account his contribution in 1998, 1999 and 2000 to sharing expenses and thus recognize that, by his conduct, he met the criteria relating to the concept of "fisher" as defined in subsection 1(1) of the Employment Insurance (Fishing) Regulations.
[7] At the beginning of the process that led him to his decisions, the Minister posed the problem in the following manner:
[TRANSLATION]
(III) NATURE OF THE QUESTION
It must be determined whether Jacques Huet held insurable employment as a fisher with La Crevette du Nord Atlantique Inc. during the periods from April 7 to September 18, 1998, from April 26 to September 21, 1999, and from April 2 to September 30, 2000.
If the part of the Employment Insurance Act entitled "Employment Insurance (Fishing) Regulations" applies to Jacques Huet, it will have to be determined what the length of his employment was and what the earnings from that employment were.
If the "fishing" part of the Employment Insurance Act does not apply to Jacques Huet, his real employer during the periods at issue will have to be determined.
If it turns out that the appellant was employed by 9000-9850 Québec Inc., we will have to determine whether his employment was insurable under a contract of service. But first, we will have to consider whether he controlled more than 40% of the voting shares of that corporation and, consequently, whether his employment was excluded under paragraph 5(2)(b) of the Employment Insurance Act. . . .
[8] All these questions were the subject of an in-depth analysis conducted on behalf of the Minister by appeals officer Yvon Comtois, who testified at the hearing of these cases. He stated that he obtained his information from the following persons:
1. Suzanne Dufresne, secretary of La Crevette du Nord Atlantique Inc.;
2. Jacques Huet, the appellant;
3. Bertrand Huet, the appellant in a related case;
4. Richard Chrétien, the accountant of the appellant Jacques Huet.
[9] Mr. Comtois said that in arriving at his recommendations for the Minister, he had consulted the following documents, which are part of Exhibit I-3:
1. the tax returns of the appellants, Jacques and Bertrand Huet, and of Yvan Pruneau;
2. the 1997, 1998, 1999 and 2000 tax returns of 9000-9580 Québec Inc.
3. the income and expenditure statements of La Crevette du Nord Atlantique Inc., including the report on the fishermen's pay for the years at issue.
[10] Mr. Comtois explained his report, which was filed as Exhibit I-3, to the Court. Having analyzed that report and considered the testimony of its author and all of the evidence, the Court must conclude that the appellants were not employees of La Crevette du Nord Atlantique Inc., since the work they did meets none of the four tests by which the conditions of employment are evaluated, namely: control, ownership of the tools, chance of profit or risk of loss and integration.
[11] Moreover, the evidence of the Minister established that the appellants did not meet the definition of "fisher" in the Employment Insurance (Fishing) Regulations. Subsection 1(1) of these Regulations defines the term "fisher" as follows:
"fisher" means a self-employed person engaged in fishing and includes a person engaged, other than under a contract of service . . . .
[12] Communiqué CE-97-02R (Exhibit I-5) issued by Revenue Canada provides clarification regarding the status of self-employed fishers. Thus, according to this communiqué, a person will be considered a self-employed fisher:
a) if he/sheparticipates in making a catch,
b) if he/she is not fishing for his/her own or another person's sport, and
c) if he/she meets at least one of the following conditions:
i) has ownership or leases the boat used to make the catch, or
ii) has ownership or leases specialized fishing gear (not including hand tools or clothing) used to make the catch, or
iii) is the holder of a Species License issued by the Department of Fisheries and Oceans, necessary to make the catch, or
iv) has a right of ownership to all or part of the proceeds from the sale of the catch and has a financial responsibility for all or part of the expenses incurred in making the catch.
[13] Jacques Huet was the captain of the company's vessel and participated in making the catches. However, he does not meet the other conditions stated.
[14] 9000-9580 Québec Inc. was the owner of the fishing vessel and the fishing gear and equipment. This property constituted a large part of the company's assets.
[15] The appellant Jacques Huet was the holder of the fishing licences issued by Fisheries and Oceans Canada, but 9000-9580 Québec Inc. paid all of the expenses related to the issuance or renewal of the fishing licences and permits and claimed those costs in its general operating expenses. In addition, that company had ownership of all of the proceeds from the sale of its catches and it had financial responsibility for all of the expenses related to the vessel that were incurred in making the catches, which expenses included, inter alia, the mortgage on the vessel, depreciation of the vessel, fishing gear and equipment costs, fuel expenses for the vessel, bait, maintenance and repair of the vessel, and crewmen's salaries.
[16] The possibility of making a profit or incurring a loss existed solely for 9000-9580 Québec Inc., since the appellant Jacques Huet had surrendered to that corporation his ownership right to the catch.
[17] Since the "fishers" are self-employed workers who benefit from special provisions in relation to employment insurance, the regulations must be strictly applied.
[18] Judge Watson of this Court said in Boucher v. Canada (Minister of National Revenue - M.N.R.), [1992] T.C.J. No. 114:
. . . Through his counsel, the appellant submitted that he was in compliance with the spirit of Part V, the Fishermen's Regulations, and that the Court should give a broad interpretation enabling him to be insurable in the case of the fish delivered to Les Fruits de mer Impérial Inc. for the period from May 1 to September 28, 1990.
I think that the regulations are clear and that they must be applied strictly, since they are an exception to the general rule on insurability. In Gaston Desmarais c. M.R.N., N.R. 218 at p. 2, Marceau J. said:
[OFFICIAL ENGLISH TRANSLATION]
It is clearly the Fishermen's Regulations, s. 191 et seq of the Unemployment Insurance Regulations, that are involved. These are very special regulations adopted in order to extend the benefits of the Unemployment Insurance Act to fishermen even under conditions that would normally exclude an ordinary claimant from any benefit. For this reason I think that these regulations should be applied strictly, and that the claimant should show that he clearly satisfied the conditions provided. In my view, appellant has not shown that this was the case.
[19] The appellant in Boucher, supra, thus did not meet the definition of "fisher" set out in section 1 of the Employment Insurance (Fishing) Regulations. He therefore could not be considered as an "insured person" within the meaning of section 2 of those Regulations.
[20] It has been established that 9000-9580 Québec Inc. was the owner of all the proceeds from the sale of its catches and was financially responsible for all expenses related to the vessel and incurred in making the catches.
[21] Communiqué CE-98-18 deals with the status of a person who engages in fishing and who is at the same time an employee of a corporation.
[22] Thus, a fisher who holds a commercial fishing licence may enter into a contract of employment with a corporation, of which he may be a shareholder, or with another individual. The fisher will be considered to be an employee of the corporation if the following conditions are met:
a) he must hold a species licence:
- he surrenders the ownership of the catch to the corporate employer, and
- the right of control over the fishing activities rests with the corporation;
b) he is not responsible for any expenses related to the fishing activity;
c) he does not participate in the corporation's profits other than by way of dividends as a shareholder;
d) he is not liable for any business or capital losses; and
e) he provides his services to the corporation in exchange for a pre-determined salary that may be either fixed or paid in the form of an invariable percentage.
[23] Analysis of the facts in these cases shows that all these criteria have been met; they apply to the appellants' status and that makes them employees of 9000-9580 Québec Inc.
[24] The final question that now arises is whether the appellants held insurable employment with 9000-9580 Québec Inc. The answer to that question is found in paragraph 5(2)(b) of the Employment Insurance Act. According to that provision of the Act, the answer is no, since the appellants control more than 40% of the voting shares of the company. During the periods at issue, the appellants, Jacques Huet and Bertrand Huet, controlled 51% and 49% respectively of the voting shares of 9000-9580 Québec Inc. Therefore, they held with that company employment that was excluded from insurable employment.
[25] Having regard to all of the foregoing, this Court has no choice but to find that the appellants did not hold insurable employment as fishers since their employment did not meet the conditions governing the status of "fisher". This Court also finds that, during the periods at issue, 9000-9580 Québec Inc. was the appellants' employer but the appellants did not hold insurable employment with that corporation since they controlled more than 40% of its voting shares.
[26] For all these reasons, the appeals are dismissed and the Minister's decisions are confirmed.
Signed at Grand-Barachois, New Brunswick, this 20th day of December 2001.
|
" S.J. Savoie " |
D.J.T.C.C.
Translation certified true
on this 29th day of January 2002.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2001-2129(EI)
BETWEEN:
BERTRAND HUET,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Jacques Huet (2001-2130(EI)) on November 13, 2001, at Percé, Quebec, by
the Honourable Deputy Judge S.J. Savoie
Appearances
Counsel for the Appellant: Gilbert Nadon
Counsel for the Respondent: Claude Lamoureux
JUDGMENT
The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.
Signed at Grand-Barachois, New Brunswick, this 20th day of December 2001.
|
"S.J. Savoie" |
D.J.T.C.C.
Translation certified true
on this 29th day of January 2002.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2001-2130(EI)
BETWEEN:
JACQUES HUET,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Bertrand Huet (2001-2129(EI)) on November 13, 2001, at Percé, Quebec, by
the Honourable Deputy Judge S.J. Savoie
Appearances
Counsel for the Appellant: Gilbert Nadon
Counsel for the Respondent: Claude Lamoureux
JUDGMENT
The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.
Signed at Grand-Barachois, New Brunswick, this 20th day of December 2001.
|
"S.J. Savoie" |
D.J.T.C.C.
Translation certified true
on this 29th day of January 2002.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]