High Court of Ireland Decisions

1. This matter concerns two appeals to the High Court on a question of law under Section 271 of the Social Welfare Consolidation Act 1993 against the determination of the Chief Appeals Officer dated 1st September 1999 in the Griffin case and 2nd September 1999 in the Deasy case. Section 271 provides

2. The Chief Appeals Officer refused to revise the decisions of an Appeals Officer both dated the 24th June 1999 in these cases. The Appeals Officer in turn had disallowed appeals from the deciding officer dated the 18th February, 1998 ( Griffin) and 12th June, 1998 (Deasy). The deciding Officer, in circumstances where each of the Plaintiffs owned a fishing boat, decided that a named share fisherman in each boat was insurable at PRSI class A when their share earnings were over a certain level per week. But it is the decisions of the Appeals Officer which were confirmed by the Chief Appeals Officer which fall to be analysed.

3. The net issue in each case is whether the share fisherman is employed on a contract of service or whether he is engaged in a joint venture with the boat owner.

4. The way in which the share fishing system operates is that the expenses of the voyage are deducted from the gross value of the catch. The net value is divided in agreed shares between the owner of the boat and the crew. Up to 1952 share fishermen were considered by the Department of Social Welfare to come within PRSI class A (i.e. employees). Following the decision of the High Court in DPP -v- Griffiths ([1992] ILRM 667) the Revenue Commissioners took the view that share fishermen were self employed and they changed over to PRSI class 3 (self employed).

5. Under Part III of the Social Welfare (No 2) Act, 1993 a special scheme was introduced with effect from 23rd February, 1994 for share fishermen to join an optional social insurance contribution scheme if earning more than £2,500 per annum. They were required to contribute as self employed persons (class S) 5% of reckonable earnings. They could opt to contribute up to 10%. The number joining the optional scheme was minimal (113 in

6. In Mr. Griffin’s case, he was the owner of MFV Naoimh Oileabhair from 1978 to 1999 and he was also normally the skipper. On any occasion when he was not the skipper Declan Coakley was the skipper. Declan Coakley is the named fisherman seeking to be considered as an employee of Mr. Griffin.

7. In his grounding Affidavit Mr. Griffin stated the expenses of each trip are deducted from the gross profit. These included food, ice, diesel, oil, transport, insurance for the crew (but not as named members) etc. The net profit is divided into thirteen shares. The boat gets six shares (to cover repayments of loan, fishing gear, necessary repairs and insurance for the boat). The skipper gets two shares and each of the five crew one share.

8. In the event that the expenses of the trip exceed the value of the catch the losses are carried forward to the next trip. Mr. Griffin said he specifically said to the Appeals Officer that in the last few years at one stage there were five weeks consecutively without catching any fish. A share fisherman contributes to the value of the catch by the standard of gutting and packing the fish properly. The boat is at sea 35 - 40 weeks in the year. For the remaining weeks the share fishermen receive no remuneration. They receive no sick pay, no holiday pay and no contribution to a pension scheme. The weekly remuneration in the case

9. Mr. Coakley applied 8th January 1998 to be treated as an employee of Mr. Griffin. He completed two Social Welfare forms, one on the 8th January, 1998 and one specifically related to share fishermen on 16th January, 1998. Mr. Griffin completed neither. Following the decision of the deciding Officer (18th February, 1998) that Mr. Coakley was an employee, an oral hearing was held by the Appeals Officer on the 26th March, 1999 at which Mr. Griffin gave evidence. According to the notes taken by his solicitor the evidence he gave is substantially the same as in his Affidavit. The Appeals Officer gave his decision on the 24th June, 1999 in which he held that Mr. Coakley was employed by Mr. Griffin from 14th February, 1992 and was insurable at PRSI class A if earnings were over a certain amount otherwise at class J.

10. At the time this matter was considered by the Appeals Officer (and the Chief Appeals Officer) the leading Irish case on share fishermen was DPP -v- McLoughlin ([1986] 1 IR 355) where Costello J considered whether share fishermen were employed on a contract of service or on a contract for services. In that case the Defendant engaged the crew before setting out on each fishing expedition. Crew members tended to turn up regularly but there was no contract to engage them again at the end of each fishing expedition. Generally crew members were consulted before a new crew member was taken on. The vessel went to sea on Monday at 11 a.m. and came back to Howth on Wednesday at 5 a.m. The catch was sent to the Dublin market. The cheque was sent to the Defendant for distribution of proceeds. There was no agreement for wages. Remuneration was based on a sharing agreement and the size of the catch. The division was based upon custom and agreement. Expenses (oil, ice, food,

11. The learned trial judge said at page 358

12. He was referred (inter alia) to the Scottish case of Parker -v- Walker and Others 1961 S.L.T. 251 where the share fisherman's legal relationship with the boat owner was held to be that of joint adventure. He was also referred to the Canadian case of Mark Fishing Company -v- United Fishermen and Allied Workers Union 24 D.L.R. 585 where

13. Costello J held that the proper inference to be drawn from all the relevant factors was that a partnership relationship rather than an employer/employee one existed. He said

14. The learned trial judge went on to find that the fact that the Defendant dispersed the proceeds of sale making “subs” in some cases (i.e., advances where no profit was made) and that the crew bore no losses were out-weighed by the facts that each weekly voyage was a separate venture, that no crew member had a contract entitling him to take part in any subsequent voyage, that no wages were paid, only a share in the profits (if any) and that the Defendant did not himself determine the rate of remuneration. This was determined

15. In another case the Minister for Social Welfare -v- John Griffiths [1992] ILRM 667 the question for determination was whether the accused John Griffiths the owner of a fishing vessel was the employer of one Eugene Pepper. It was conceded that a partnership existed between them and that each voyage was a separate venture and a new partnership but it was argued that nevertheless Mr. Griffiths was an “employer” within the meaning of that term under the Social Welfare (Collection of Employment Contributions for Special Contributors) Regulations 1989. It was held by Blayney J that Eugene Pepper was not employed in any one of the particular employments specified in Part 1 of the first Schedule to the Social Welfare (Consolidation) Act, 1981. He was not employed by the accused or by anyone else. It was also held that the Minister for Social Welfare had no unlimited power entitling him to make regulations enabling any person to be treated as an employee for the purpose of the act. There must be an employer/employee relationship.

16. The legal position therefore was that share fishermen in the same or similar position to share fishermen in the McLoughlin case were legally partners on a joint venture with their respective boat owners. High Court decisions are binding on both the Appeals Officer and the Chief Appeal Officer. The two cases were followed by the Employment Appeals Tribunal in Duncan -v- O’Driscoll 1997 Employment Law Reports 38.

17. It is not disputed that in a case such as this, where there is an appeal on a question of law, the Court does not go into the merits of the decision. But as Hamilton CJ said in Henry Denning and Sons Ireland Limited -v- Minister for Social Welfare [1998] 1 IR 34

18. The facts and conclusions which emerge from the Griffiths decision are as follows:-

19. The decision is expressed to be based on the evidence in the file, evidence at the oral hearing, written submissions, having regard to criteria emanating from various legal judgments on the nature of the employment relationship and in particular looking at the totality of the relationship.

20. The Appeals Officer quoted Denning LJ in Stephenson Jordan and Harrison Limited -v- McDonald and Evans 1952 I.T.R. 191

21. He also referred to U.S. -v- Silk 331 U.S. 704 whether an individual is a employee as a matter of economic reality. In that case unloaders of coal who provided their own tools worked only when they wished and were paid an agreed price per ton to unload coal from railroad cars, were held to be employees within the meaning of the Social Security Act, 1935. The reference to employees of economic reality appears in the judgment of Mr. Justice Reid at page 713

22. The first observation is that nowhere did the Appeals Officer attempt to apply the McLoughlin case which together with the Griffith case represented Irish Law applicable to share fishermen in a similar situation. He applied American Law (U.S. -v- Silk) which appears to say that workers who are obliged to work as a matter of economic reality were to be regarded as “employees”. This is not in accordance with Irish Law which requires the relationship of employer/employee to exist.

23. The Appeal Officer’s conclusion (paragraph 23) that the old tradition of one person providing a boat and the others labour was radically different in concept to this case is not based on any evidence and there is no justification for it. The scale may be different from olden days but the concept is the same. Also the circumstances in the McLoughlin case which was heard in 1986 would not have been radically different in either scale or concept.

24. It was a mistake of law not to take the McLoughlin case for a starting point and determine whether there were factors in this case which distinguished it from that case. If he had applied the reasoning in the McLoughlin case he would not have concentrated on control. In any event his finding that Mr. Coakley was in overall control of the operation (para. 5) cannot refer to control exercised by the skipper as a safety measure (para. 1). It can only mean that he decided who should skipper his boat. This is consistent with a joint venture i.e., he supplies the boat and either skippers the boat himself or names the skipper. The joint venture is between himself as owner/skipper and the crew or between him as owner and his replacement skipper and crew. The finding that he did not find Mr. Griffin’s rebuttal to question 19 convincing (see para. 3) is contradicted by the finding at para. 7 that Mr. Coakley could send a substitute.

25. The finding at para. 12 that Mr. Coakley could not nominate anyone to take his position on a permanent basis is not based on any evidence. There was no evidence that he had a permanent place.

26. The Appeals Officer took the view that Mr. Coakley was not an investor in the enterprise because he did not risk any capital, that he had no investment in the boat (para.13) that the provision of oilskins and knives was not an investment (para. 15) and that the provision of personal labour was not an investment (para. 20). It is a mistake of law to conclude that there cannot be a joint enterprise/partnership unless there is a capital investment. It is also a mistake of law to conclude that the provision of labour in a joint enterprise is not sufficient to sustain that relationship. There are many examples where one partner may provide premises and labour is provided by other partners (eg., firms of solicitors, accountants etc.,). In the McLoughlin case there was no question of the crew having been required to have a capital investment in the boat before they could be considered as part of a joint venture.

27. In relation to losses the finding at para. 16 that there was no evidence of actual examples or frequency is unsubstantiated and is contrary to the evidence given. Mr. Griffin gave evidence at the oral hearing of five weeks in a row when no fish were caught.

28. Where the crew must contribute to losses sustained on a fishing trip, it is immaterial to compare their loss to the loss sustained by the owner if the boat is tied up due to damage or bad weather (para. 17) and it was immaterial that for the crew it did not constitute the loss of funds invested (para. 18).

29. It is a mistake of law to conclude that an agreement to set off losses against the next fishing trip is not a commercial risk (para. 19). Every share fisherman must weigh the consequences of agreeing to carry forward losses incurred as against the possibility of sharing in a profitable catch.

30. There was no evidence to base the finding of fact (para. 22) that the labour services (of the crew) could be replaced with relative ease.

31. The Appeals Officer did not advert to the observation of Costello J in McLoughlins case that the role of the employee in the employer’s business did not assist in determining if a partnership existed. So his findings in para’s 24, 25 and 26 that the business could not operate without the crew is equally consistent with the joint enterprise. There is no basis in law for finding that Mr. Coakley is an employee “as a matter of economic reality” (para. 25). This concept does not exist in Irish Law.

32. The general statement that self employed persons have a degree of influence over the manner in which remuneration is determined only applies if their services are in demand. If the market determines that their services have only a certain value, they are no different to share fishermen and either accept the terms or try elsewhere.

33. It is a mistake of law to hold that there must be an equal coming together of partners in order to be self employed (para. 30). There is nothing to prevent a joint venture being agreed where the partners are not equal as in share fishing. The boat owner is at risk of having his boat damaged or not earning enough to pay the mortgage. The share fishermen are at risk of working for no recompense if there are no profits.

34. For all the above reasons, mistakes of law and findings of unsustainable facts, the decision of the Appeals Officer and the decision of the Chief Appeals Officer which confirmed it, must be set aside.

35. The difference in the Deasy case is that Mr. Deasy, the boat owner, did not skipper the boat. Trevor Byrne was the skipper.

36. According to the note of evidence at the oral hearing Mr. Deasy said that Mr. Byrne decided when, where and how often the boat would fish. He found the crew were remunerated on a share basis. Expenses of the voyage came off the top. He decided how many shares each fisherman would get. Losses were rolled over to the next trip or until it made money. The division of shares depended on the number of crew. Mr. Byrne decided where the catch would be sold. He lodged the money in Drogheda to a joint account in both names and paid the crew out of the account. He sent the remainder to Mr. Deasy’s bank in Skibereen. The bills for diesel, ice, food, fish boxes etc., were sent for payment to Mr. Deasy who was registered for VAT but the amount of these items were taken into account in calculating the share of the crew. Mr. Byrne could purchase a net (costing £3,000 to £4,000) without reference to Mr. Deasy. Mr. Byrne operated the boat from June 1993 to October 1997. On one occasion Mr. Byrne supplied a replacement skipper and informed Mr. Deasy. This was for insurance purposes.

37. There were some differences between the two cases in findings. The Appeals Officer found (Re: Control) that Mr. Byrne had a large degree of authority in day to day running of the boat but it was delegated authority and not uncircumscribed. His freedom to determine when the boat should put to sea was true only in a narrow sense and Mr. Deasy could dismiss Mr. Byrne. He concluded that the receipt of financial accounts, ordering of supplies in Mr. Deasy’s name, sending of bills to the accountant for payment, registration for VAT, suggested Mr. Deasy was in ultimate control of affairs and Mr. Byrne was only in charge on a day to day basis and had to account for his performance. The section on the enterprise test is almost identical with the Griffin decision, except that the Appeals Officer found that Mr. Byrne was essentially a manager who was employed to run a branch of Mr. Deasy’s business. The sections on the integration test and remuneration are substantially the same as in the Griffin decision but shorter.

38. In dealing with the Deasy case, the Appeals Officer made the same mistake of law as in the Griffin case, in that he did not attempt to apply the McLoughlin case which represents the law on share fishermen in the same or similar condition. He applied control and enterprise tests without reference to Costello J’s observation that they are not helpful when the issue is whether a partnership or joint venture exists. My observations on the detailed finding of facts and conclusion in the Griffin decision where they are repeated in the Deasy decision also apply here. For the same reasons the decision of the Appeals Officer and the decision of the Chief Appeals Officer which confirmed it, must be set aside.