THE HIGH COURT
			1999 No. 466 SP
 BETWEEN 
FRANCIS GRIFFIN 
			PLAINTIFF
AND
THE MINISTER FOR SOCIAL COMMUNITY AND FAMILY AFFAIRS
			DEFENDANT

			1999 No. 467 SP
BETWEEN 
WILLIAM DEASY 
			PLAINTIFF
AND 
THE MINISTER FOR SOCIAL COMMUNITY AND FAMILY AFFAIRS 
			DEFENDANT
JUDGMENT of Ms. Justice  Carroll delivered the 2nd day of  October  2001.
	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 
	“Any person who is dissatisfied with 
(a)	The decision of an Appeals Officer or
(b)	The revised decision of the Chief Appeals Officer on any question ........ may appeal that decision or the revised decision as the case may be to the High Court on any point of law.” 
	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.  
	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.
	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).
	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 
1994/95 and 70 in 1995/96).  The boat owners were not liable for contributions for the crew and liability rested with each worker.  One of the advantages in being treated as coming within PRSI class A contributors as distinct from self employed contributors, was that they would be entitled, during periods when they were not working, to unemployment assistance.
	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.
	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.  
	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 
of Mr. Coakley varied from nil to £1,875.00.  If a particular crew member was unable to make a voyage he is expected to send a substitute.  The other crew and the skipper would have a right of veto over the substitute with the skipper having the final say.  If a substitute makes a trip it is the substitute who gets the share.  In the fishing industry the skipper is the person who has control over the crew and ultimate control over the operation.  All the share
fishermen are treated by the Revenue Commissioners as self employed persons and entitled to deduct from their income, expenses such as knives, oilskins, travelling expenses to and from the boat.  The size of the vessel dictates how many crew can be on board and members of the crew cannot employ someone to assist them in their task.  
	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.  
	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,
rent of navigational aids, gas, water) were deducted from the gross proceeds.  Where there were four crew members and the Defendant acting as skipper, the net proceeds were divided into eleven parts, 5½ shares were allocated to the boat (to cover mortgage repayments, general maintenance, BIM insurance policy).  The division of the crew’s share was determined by the crew in consultation with the Defendant.  If there was an inexperienced young boy or a crew member sick they might get a half or a quarter share.  If there was no profit the crew received no share.  Members of the crew were not required to contribute to any loss that might be sustained on any voyage.  
	The learned trial judge said at page 358	
	“There are of course a considerable number of judicial authorities both in this country and in England where the distinction between a contract of service and a contract for services is made and over the years a number of principles or tests have been established for the purpose of defining the two different contractual relationships.  But these authorities are concerned with analysing contracts of employment and focus on such aspects of the parties agreement as the degree of control which the employer exercises on the alleged “employee” or the role of the alleged “employee” in the employer’s organisation.  They do not assist greatly, when as here, the point for determination is whether the relationship between the parties is one of employment or one of partnership”.  

	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

one of the issues raised was whether the crew of the ship were employees of the ship owner 
or coadventurers with him.  It was held that a partnership relationship existed.  In both of these cases if a loss were sustained, the loss was carried forward or the members of the crew had to contribute their share.  
	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
	“It is true that the Defendant exercised a large measure of control over the manner in which each member of the crew performed his work but the right to do so arose as much from the nature of the operation being carried on as from the contractual relationship which existed and is a factor which is consistent both with the existence of a contract of service and an agreement of partnership.  It is also true that the Defendant engaged the other members of the crew for each voyage but again this is consistent both with an employer/employee relationship and an agreement in the nature of a partnership, that is one in which the Defendant agreed to provide the vessel and its equipment for the voyage whilst each crew member agreed to provide his labour and skills”.

	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
partly by custom (50% of net profits to the boat) and partly by agreement between the crew in consultation with the Defendant.  Accordingly he found that the skipper and his crew were partners in the joint adventure undertaken each Monday morning.
	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.
	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.
	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
	“Where conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a Tribunal such conclusion must be corrected.”

	The facts and conclusions which emerge from the Griffiths decision are as follows:-
Re Control
1.	(Fact) As a safety measure on board someone has to be in charge.
2.	(Conclusion)  The issue of control and direction is wider than that.
3.	(Fact)  The Appeals Officer did not accept Mr. Griffin’s rebuttal to replies of Mr. Coakley to question 19 on INS 1 Form where Mr. Coakley said (a) he must perform the work himself (b) cannot hire a person to assist him and (c) that he cannot send a substitute.  The rebuttal on behalf of Mr. Griffin was to agree with (a), to agree with (b) and explain that the size of the boat did not permit this and (c) to disagree saying Mr. Coakley could send a substitute.
4.	(Fact)  That Mr. Coakley was appointed to skipper the vessel on occasions.
5.	(Conclusion)  That this was indicative of overall control of the operation.  
6.	(Fact)  That none of the other crew members had input into this decision.
7.	(Fact)  That Mr. Coakley could send a substitute if temporarily incapacitated (this contradicts the finding of fact that he did not accept Mr. Griffin’s rebuttal of Mr. Coakley’s answer that he could not send a substitute (See 3 above).
8.	(Fact)  That the substitute is subject to Mr. Griffin’s veto.
9.	(Fact)  That Mr. Coakley has to perform the work in the boat on a regular basis or his place may be given to someone else without his permission.
10.	(Fact)  That Mr. Griffin said he could dismiss Mr. Coakley.
11.	(Fact)  That Mr. Coakley was engaged for his particular work expertise.
12.	(Fact)  That he could not nominate anyone to take his position on a permanent basis.
	
Re Enterprise Test
13.	(Fact)  That while it was argued that Mr. Coakley invested  his labour in the fishing venture, Mr. Coakley was not an investor in the enterprise; he did not risk any capital; he had no investment in the boat; he was engaged to man or crew the vessel.
14.	(Fact)  That he worked for no one else since 1980.
15.	(Conclusion)  That the provision of oilskins and knives could not be regarded as an investment in the context of a venture which required very substantial capital (in excess of £10 million).
16.	(Fact)  While it was contended that Mr. Coakely was liable to contribute to losses on a fishing trip there was no evidence of examples or frequency.  
17.	(Conclusion)  Even if it did arise, it could not be equated with the loss sustained by the boat owner if the boat was tied up for a long period due to damage or bad weather.
18.	(Conclusion)  It did not constitute loss of any funds invested in the enterprise.
19.	(Conclusion)  The setting off of losses against the next trip is more part of “the intrinsic nature of the terms on which crew are engaged rather than a commercial risk”.
20.	(Conclusion)  The provision of personal labour services does not provide conclusive evidence of investment in a business partnership or joint venture.  
21.	(Fact)   The labour services provided by Mr. Coakley although necessary along with other crew were dwarfed by Mr. Griffin’s investment.
22.	(Fact)  These labour services could be replaced with relative ease.  
23.	(Conclusion)  The old tradition in a port of one person providing a boat and other persons labour is radically different in this case in scale and concept.  

Integration Test
24.	(Fact)  Mr. Coakley and his colleagues were engaged for their labour without which the boat could not operate.  (Conclusion)  Like skilled machinists in a clothing factory or qualified mechanics in a garage.
25.	(Conclusion)  Mr. Coakley was employed as part of the business part of the workforce without which the business could not operate therefore he is an employee “as a matter of economic reality”.  
26.	(Conclusion)  Mr. Coakley is not an accessory to the business.
Re Remuneration
27.	(General Statement)  Self employed persons have a degree of influence over the manner in which remuneration is determined. (Conclusion) which is not the case here.
28.	(Fact)  Mr. Coakley was offered  a berth with a predetermined share at the discretion of Mr. Griffin with no flexibility to negotiate.
29.	(Fact)  The share remuneration system is effectively determined solely by boat owners.
30.	(Conclusion)  There is not an equal coming together of partners or any debate about the size of the share.  
31.	(Conclusion)  Crew men either accept the terms or go elsewhere.
32.	(Conclusion)  The manner of calculating remuneration is grounded on the variability of income in fishing and the desire to limit liability on the part of boat owners.  
	
	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.

	The Appeals Officer quoted Denning LJ in Stephenson Jordan and Harrison Limited -v- McDonald and Evans 1952 I.T.R. 191
	“Under a contract of service an employee’s work is an integral part of the business while under a contract for services an individual’s work while done for the business does not form an integral part of it”.

	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
	“The word “employee” we said, was not there used as a word of art and its content in its context was a federal problem to be construed “in the light of the mischief to be corrected and the end to be attained”, we concluded that since that end was the elimination of labour disputes and industrial strife “employees” included workers who were such as a matter of economic reality”.

	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.
	While he referred to the judgment of Denning L J which deals with contracts of service and contracts for service, he did not appear to appreciate the difference between contracts for service, where a person is paid an agreed amount (whether weekly, monthly or yearly) whether there is a profit or not and a joint venture where the partners share in profits and losses in agreed shares.  This was adverted to by Costello J in DPP -v- McLoughlin where he said that focusing on the degree of control or the role of the employee in the employers organisation did not assist in determining if a partnership existed.  
	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.
	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. 
 
	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.  
	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.  
	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.  
	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).
	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.  
	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.  
	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.  
	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.
	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.  
	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.  
	In the Deasy case the Appeals Officer in his decision of the 24th June determined that Mr. Trevor Byrne was employed by Mr. William Deasy and insurable at PRSI class A from the 1st of June, 1993 provided his earnings were a certain amount otherwise at class J.  He dealt with the matter under the same headings as the Griffin case and to a large measure the content is identical.  
	The difference in the Deasy case is that Mr. Deasy, the boat owner, did not  skipper the boat.  Trevor Byrne was the skipper.
	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.  
	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.
	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.