Billard Fisheries Limited v. Her Majesty the Queen, [1995] 2 CTC 2505, 96 DTC 1577

Margeson J.T.C.C.:-The appellant filed a notice of appeal from reassessments for the years 1990 and 1991, notices of which were dated October 14, 1992. These assessments related to deductions allegedly required to have been made and remitted to Revenue Canada on behalf of fishermen and plant workers of the appellant, which deductions were unremitted in the amount of $446,170.83. This appeal is relative only to the amounts that relate to the fishermen.

Facts

The evidence presented to the Court disclosed the facts set out hereunder.

Lloyd Billard was the fish plant manager of the appellant. He gave a short history of the company which showed that it was started in 1954 by his father. This witness started out with the company in 1964 as a labourer, cutting fish, unloading fish and operating a forklift. He advanced to the position of foreman and became manager in 1991. At that time he had signing authority for the appellant.

He testified that there are no company books available for the company for the year 1991. There is no cheque register. There were many unpaid bills. He checked in the accountant’s office in May 1991 but the books were not there.

This witness indicated that officers from Revenue Canada audited the appellant in June 1991. Mr. Ralph LaFosse was the bookkeeper for the company at the time but after the RCMP investigation commenced, according to this witness, Mr. LaFosse quit his job. National Sea Products commenced to take over the operation sometime after that.

Mr. Jim Boggs was employed for two weeks to assist Lloyd Billard in running the plant and was subsequently hired full-time. There was no money in the bank and no bills had been paid.

An investigation was commenced to determine where the money went. The witness said that he had signed cheques for all the bills and they were supposed to have been mailed out.

The company was not satisfied with the work of its accountants and rejected their account for $16,049.62. Legal action resulted but ultimately the matter was settled and the amount was written off the accounts of the appellant.

This witness confirmed that an RCMP investigation into the business of the appellant determined that there was insufficient evidence to support the laying of any criminal charges.

In cross-examination, the witness confirmed that no civil action was commenced by the appellant against the bookkeeper. He further indicated that their accountants were not keeping the company informed about its business. His position was that the fishing business had deteriorated badly since 1991 to the extent that there is no fishing presently going on.

The respondent called Wallace Meade, a fisherman who sold to the appellant during the period in question. He was a shipmaster and had 30 years experience. In the years in question, he was fishing off the "Wally & Sisters" with a crew of five to six including himself. In the years 1990 and 1991, the appellant was his main buyer. This witness indicated that deductions were made for his crew by the appellant during the period in question for Canada pension, unemployment insurance and income tax.

The settlement arrangement with the appellant was very casual and simply amounted to having the fish weighed out at the dock, recording the totals on a slip of paper, taking the slip of paper to Ralph LaFosse, (the office manager) or Elaine Ingram, (their secretary) and picking up the settlement sheet the next day.

This witness identified various forms used by the appellant including an invoice which purported to record deductions for unemployment insurance and income tax made by the company on behalf of the ship’s crew. The signature of Ralph LaFosse was also identified. This witness said that the company only knew how much to deduct for income tax and unemployment insurance purposes based upon what he told them. This same procedure had been used prior to the years 1990 and 1991.

In cross-examination, the witness said that he had never signed a TD3F form from Revenue Canada which was entitled "Fisherman’s Election for Tax Deductions at Source". This document was admitted as Exhibit R-1 by agreement. The witness further said that he normally instructed the company to deduct 30 per cent on behalf of each crew member but if a crew member decided that he wanted to keep more of his wages he might instruct that as little as 20 per cent, 10 per cent or nil be deducted.

John Warren was also a shipmaster. His boat was the "Lori Madonna”. He had been a master for 25 years. In 1990 and 1991, his ship had a crew of four persons, including himself. He also fished mostly for the appellant but not exclusively.

He said that the crew told him how much to deduct for unemployment insurance, Canada pension and income tax, be it 25 per cent, 20 per cent or nil. He then told the office what percentage to deduct. He identified settlement sheets from the appellant and said that deductions should have been made based upon what he told the office. These sheets showed deductions purportedly made by the appellant on behalf of the ship’s crew. The same procedure was used for other companies and was used in other years. The settlement sheets were signed on behalf of the company up until 1992.

In cross-examination he said that he had never seen Exhibit R-1 and certainly had never signed such a form. He did not know if Revenue Canada had authorized the settlement forms.

In redirect, he said that the deductions would average 20 per cent to 25 per cent to 30 per cent.

In reply to a question put to the witness by the Court, counsel for the appellant asked the witness if he had ever attended a meeting with Revenue Canada which discussed the giving of authorization to the appellant, by the crew, to make deductions. He said that he could not recall.

In response to a question by counsel for the respondent, he said that no more than 30 per cent was ever deducted.

Mr. Ralph LaFosse was hired by Gabriel Billard as office manager of the appellant. He worked there for 19 years. His duties included paying bills and completing the settlement sheets. The cheques were not signed by him. Elaine Ingram came to work in the office and was supervised by him. Mr. LaFosse reported to Gabriel Billard until 1985, 1986 and after that to Lloyd and Richard Billard. Two signatures were required if other than Gabriel Billard signed the cheques.

This witness said that they kept the settlement sheets, cheques and payroll records in the office at the plant and then sent the information to their accountants in Stephenville which were D.R. Powell & Company. The cheque register was kept at Stephenville and it was on the computer before 1990.

This witness said that the company had no money in the bank and it should not have been a surprise to Lloyd Billard. He was in communication with Mr. Billard who even put some of his own money into the company. This witness said that if Mr. Billard signed a cheque for a bill, the cheque was sent out.

Mr. LaFosse denied the allegations in the amended notice of appeal that the fishermen verbally requested him to make deductions. He said that the deductions would be reflected in the settlement sheets and the amounts varied. The average deduction was in the area of 25 per cent. He said that money was forwarded to Revenue Canada up to a point, until there was no more money to send. It was being used by the company for other purposes.

This witness said that Exhibit A-2 confirmed that he did not leave the plant with the company’s money. He had never seen a TD3F form before and did not know why these forms were never completed by the fishermen. He identified his signature on Exhibit R-4.

In cross-examination, the witness said that remittances to Revenue Canada were made once a month at the beginning and then twice a month. The fishermen presumed that Mr. LaFosse would make the remittances to Revenue Canada.

This witness could not remember the first time that the company missed a remittance to Revenue Canada. He told no one about the first missing remittance. He could not remember the first time that he told anyone else about the company’s inability to make a remittance to Revenue Canada but he said that it was a large amount that was not sent in.

This witness met with Revenue Canada’s agents. He said that he informed Lloyd Billard and Mrs. Ingram that the company was not paying Revenue Canada and asked what they were to do about it. Lloyd Billard said: "If Richard (Billard) is going to spend money, I will too". This was in March 1991. Mr. LaFosse put $15,000 of his own money into the company during that month and Richard Billard put in $20,000 to $25,000.

In redirect examination the witness said that he had received his money back after commencing legal action. The company was operating on a shoestring at that time. When the money came in, someone else was there to spend it.

John Pierce was a business auditor for Revenue Canada. He had years of experience as a payroll auditor. In 1990 and 1991, his job was to handle objections assigned to him by the chief of appeals to determine if the assessment should be confirmed or varied. He was involved with the present case when objections were filed in 1991. The assessments were confirmed, negotiations took place and then the appellant filed an appeal. His involvement stopped on September 8, 1992.

This witness identified Exhibit R-2 as being a summary by the company of the number of T4F slips filed and of the deductions for 1990 for each fishermen. It was a letter from the appellant which was received with the T4F slips for each fisherman. Exhibit R-3 was a T4F Summary for the 1991 period. The witness’s position was that this letter indicated to the department that the company had acknowledged the deductions and that they should have been remitted. The T4F is for fishermen only and does not relate to plant workers. As a result of receiving Exhibit R-2, the department accepted the information on the T4Fs as being correct and that deductions had been made. It was known that TD3Fs were not filed although the company had made remittances for plant workers and fishermen in 1990. This witness was aware that the company was seeking financial assistance at that time. He offered to cancel penalties for fishermen but the company wanted all penalties and interest cancelled. This was not accepted by the department and the matter was sent to head office. Before a reply was received, an appeal was filed by the appellant.

This witness was the appeal’s officer for this particular case and did not recommend any further assessments or reassessments of the company or the fishermen. He said that if Revenue Canada allowed the deductions to the fishermen and then found that the remittances were not made, they would still allow the deductions to the fishermen and then proceed against the company. He admitted that if the company does not deduct for the fishermen, they receive a T4F showing their earnings and they would have to pay taxes based upon those amounts. He admitted that the fishermen are primarily responsible but in this case the department had a letter from the appellant saying that the deductions were being made and they relied upon that letter. The witness identified Exhibit R-3 as a departmental form, T4F Summary of Remuneration Paid, in use in 1991 and up to February 18, 1992. This form was made available to the appellant. The witness concluded that in 1991 the appellant had made deductions for the fishermen to the extent of $190,200.62. He referred to Exhibit R-2 as indicating that income tax had been deducted for the fishermen amounting to $181,665.

The witness was asked what he would have done if the department had not received this document. He said that they would have recommended that the returns of the fishermen be examined and would have reversed their credits.

He said that as a result of having received Exhibits R-2 and R-3 he accepted them as factual and he concluded that deductions had been made. If he had not received these documents, he would have turned the matter over to another department to check each fisherman’s file to see if they had received credit and that possibly each fisherman would be reassessed.

In cross-examination he admitted that the real issue was not only interest and penalties but liability to deduct and remit. He said he did not know that he had to go back to the fisherman. He took the position that the deductions had been made even though the elections had not been filed. He felt that the forwarding of Exhibits R-2 and R-3 overcame the failure to file the elections.

He did not think that there was any magic in the term "prescribed form". He said that fishermen do not like forms and that a verbal agreement was just as good as a form prescribed by the department.

Mr. Dudley Marsh was a team leader and supervisor from Revenue Canada, tax collections. He said tax collectibility is a difficult matter and that the amounts would be hard to collect if the fishermen had felt that they had paid them. The practice was to pursue the company until the assessments were invalidated and then to pursue the fishermen.

In cross-examination he said that Revenue Canada has pursued third persons before.

Cpl. Peter Stevens indicated that Billard Fisheries was investigated in 1991 for a defalcation of $500,000 to $750,000 over four years. He said that the missing money went out to the Billards. He concluded that there was insufficient evidence to lay any criminal charges against Mr. LaFosse.

In cross-examination he admitted that the records were not intact.

Lloyd Billard was called in rebuttal. He denied that Mr. LaFosse mentioned anything about missing money until the company was contacted by Revenue Canada. He denied making any statement to Mr. LaFosse about taking money out. He denied taking a great deal of money out of the company.

Argument of the appellant

Counsel for the appellant argued that the nub of the case was the fact that the Minister had assessed the appellant pursuant to a section of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") that required the filing of an election and no such election has been filed. There are many cases, he argued, where the taxpayer has objected to assessments without filing prescribed forms and the Minister argued that the objection could not be sustained.

The term "prescribed form" is set out in the Act. It is authorized by the Minister. To be able to assess the taxpayer under these sections, the prerequisite is that the appropriate required form be executed and filed.

Counsel argued that the facts were simple. Mr. Lafosse did not do his work as a bookkeeper for the appellant company. It does not matter whether there was a defalcation or not. If Revenue Canada turns a blind eye to requirements of the statutes, they do so at their peril.

They have disregarded paragraph 153(l)(n) of the Act and Regulation 105.1(2).

Counsel referred to the case of Wichartz v. Canada, [1994] 2 C.T.C. 2345, 94 D.T.C. 1703 (T.C.C.) in support of the proposition that where there is a prescribed form, it must be used until it is changed or eliminated as in that case. It was also counsel’s submission that Canada v. Adelman, H., [1993] 2 C.T.C. 207, 93 D.T.C. 5376 (F.C.T.D.) supported the proposition that the word "shall", appearing in the statute and in the implementing regulation, must be construed to be imperative.

’'Shall’' is used in Regulation 105.1(2) referable to paragraph 153(l)(n) of the Act.

In the absence of the signed forms, the Minister cannot assess the appellant as the appellant had no duty to deduct and remit. It is no answer to say that the fishermen do not like forms. The fishermen in this case never saw these forms.

Counsel referred to Exhibit A-l which was a letter directed to Billiard Fisheries Limited, dated November 1, 1985, referable to the desirability of some fishermen to have deductions made at source and referring to TD3F forms. The letter indicated that these forms are required to be completed and signed by the fisherman authorizing the company to make these deductions.

In the case at bar, the evidence was that the fishermen dictated how much was to be sent in. Some time no amount was directed to be deducted. There was no relationship between the amount deducted and the 20 per cent set out in the prescribed form.

Counsel concluded that the Tax Court of Canada is not a court of equity. There may be a remedy available to the respondent but it is not through the assessment made against the appellant in this case.

Respondent's argument

Counsel for the respondent submitted that the assessment should be upheld. He said that the real issue is whether or not the appellant was required to deduct and remit irregardless of the fact that no prescribed forms were signed and filed. He opined that there could be a different result where amounts were deducted and not remitted from where amounts were deducted and remitted. Both of these situations occur here according to the evidence.

Counsel argued that there was no indication of any fraud by Mr. LaFosse. No civil action had been started against him but there was some action started against the company’s accountants and this was settled.

There was evidence as to the procedure in place between the appellant company and the fishermen as to deductions. The vessel skipper reported to the appellant’s company and indicated what percentage was to be deducted. Such amounts were reflected on the settlement sheets.

According to the evidence of Mr. LaFosse he tried to warn the appellant company that the remittances were not being made even though this was denied by the company. Cpl. Stevens gave evidence that the allegations against Mr. LaFosse were not substantiated and that large amounts of money were withdrawn from the company by the Billards.

There was no attempt to argue that the moneys were not deducted, the company had the money in its possession and did not remit it. Counsel asks: "Does the Income Tax Act permit the appellant to successfully contest the assessments under these circumstances? Does the Income Tax Act prevent the Minister from assessing this company on a technical argument?"

Counsel for the respondent argued that there are two different ways of interpreting and applying the appropriate sections and regulations. The old approach was to a large extent a strict rule which mechanically applied the relevant wording without any attention to context. The new interpretive approach is to consider the spirit of the rule rather than its form. What is the purpose of the legislation? This approach is suggested in Quebec (Communauté Urbaine) v. Notre-Dame de Bon-Secours Corp., [1994] 3 S.C.R. 3, [1995] 1 C.T.C. 241, 95 D.T.C. 5017, at pages 20 (C.T.C. 252, D.T.C. 5023):

Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute,

and there should be "an attempt to ascertain the true commercial and practical nature of the taxpayer’s transactions" in accordance with The Queen v. Johns-Manville Canada Inc., [1985] 25 S.C.R. 46, [1985] 2 C.T.C. Ill, 85 D.T.C. 5373, The Queen v. Imperial General Properties Ltd., [1985] 2 S.C.R. 288, [1985] 2 C.T.C. 299, 85 D.T.C. 5500, and Bronfman Trust v. The Queen, [1987] 1 S.C.R. 32, [1987] 1 C.T.C. 117, 87 D.T.C. 5059. Counsel referred the Court to the rules of judicial interpretation as set out in Corp. Notre-Dame de Bon-Secours, supra, and he argued that if one applies these rules to the present factual situation, it is clear that the purpose of the relevant statutory provisions was to facilitate individuals having deductions made at source. Fishermen are not mentioned specifically but it was suggested that they were in mind when the section was drafted.

Counsel took the position that the only significant portion of the TD3F form was the area enclosed in the box which was the election itself and the remainder of the form was surplusage. Counsel asked why should it be necessary to file the election with the Minister? The Minister has received T4Fs for the fishermen and a summary from the appellant. Perhaps the filing of the forms were necessary in the days of strict statutory interpretation but not now. The purpose of the legislation was to facilitate the fishermen in paying their taxes. The fishermen felt that it was advantageous to them and Exhibit A-l showed that the fishermen were receptive.

Counsel referred to the Interpretation Act, R.S.C., 1985, c. 1-21, s. 32 in support of his position that where a form is prescribed, deviations from that form do not invalidate the form, if the substance is not affected or the variation is not calculated to mislead. In the case at bar the statement sheets were substantial, they indicated that the fishermen were told by the company that the deductions were being made, the company knew what that meant and no one was misled by the statement sheets or the information contained on the T4Fs. They were substantially the same in form. The signature on the prescribed form would only be an indication that the fishermen agreed with the deduction and we already have that in evidence before the Court in this case. The crew may authorize the masters to make representations to the company to deduct. This achieves the purpose of the legislation. Counsel said that the courts have applied this concept in Solberg v. The Queen, [1992] 2 C.T.C. 208, 92 D.T.C. 6448 at pages 213-214 (D.T.C. 6452) where a technical defect was held not to affect the substance of a waiver.

Counsel also referred to Consumers Co-operative Refineries Ltd. v. The Queen, [1987] 2 C.T.C. 204, 87 D.T.C. 5409 (F.C.A.) in support of his contention that to require the necessary form would not be in harmony with the purpose of the enactment.

In Andrew Paving & Engineering Ltd. et al. v. M.N.R., [1984] C.T.C. 2164, 84 D.T.C. 1157 (T.C.C.), it was held that where statutory provisions are open to two interpretations, the one to adopt is that which is just and reasonable rather than that which is neither.

What is just and reasonable in the case at bar, according to counsel for the respondent is that the company should be liable for moneys it has taken and has indicated should be passed on to Revenue Canada. It should not be able to say that it is untouchable because a form was not filed.

The same result is obtained when you apply the provisions of section 12 of the Interpretation Act which states that:

12. Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.

See also Brodeur v. M.N.R., [1985] C.T.C. 2201, 85 D.T.C. 514.

Counsel argued that the case of Swantje v. The Queen, [1994] 2 C.T.C. 382, 94 D.T.C. 6633 (F.C.A.), leave to appeal to S.C.C. granted (March 30,1995), Doc. 24439 stands for the proposition that words of a Statute should be read in the larger context, the scheme must be considered as a whole taking into account the intent of the legislation, its objects and what it actually accomplishes. Considering that in the case at bar, counsel suggested that the spirit of the Act has been met even though the requisite form was not filed. It matters not that the 20 per cent as recognized by the legislation was not deducted. The essence of the Act is to allow the orderly payment of taxes. There can be end of year changes in amounts deducted in any event.

Counsel referred to Cyanamid Canada Inc. v. Canada (1992), 148 N.R. 147, 9 Admin. L.R. (2d) 161 (F.C.A.) which held that the word "shall" as used in the provisions of the relevant statute was "directory" and the limitations were not mandatory where five conditions were met. This is particularly important in the present case because all the participants knew each other.

Counsel argued that the fishermen can make declarations under the Regulations orally regarding catches and are treated differently under the Unemployment Insurance Act, 1970-71-72, c. 48.

Counsel said that the case of Cal Investments Ltd. v. Canada, [1990] 2 C.T.C. 418, 90 D.T.C. 6556 (F.C.T.D.) held that the failure to affix the corporate seal of a company to the waiver in "prescribed form" did not invalidate the waiver. Likewise, in this case the Minister was entitled to waive the filing of the requisite form and he did.

Counsel distinguished the case of The Queen v. Adelman, supra, from the case at bar. There, the Tax Court interpreted the word "shall" appearing in the Act and the Regulations as directory only. This case was overturned on appeal. The Federal Court-Trial Division, adopted the ruling of the Supreme Court of Canada in Re Manitoba Language Rights, [1985] 1 S.C.R. 721, 4 W.W.R. 385, which concluded that the word "shall" as used in its normal, grammatical sense, is presumptively imperative. The only exception to this rule is in the situation where such an interpretation would render the legislative enactment in question irrational or meaningless.

Counsel argued that in the case at bar we have only a technical defect as in Solberg v. The Queen, supra, and distinguished the case at bar from Muzich Family Trust v. M.N.R., [1993] 1 C.T.C. 2330, 93 D.T.C. 314 (T.C.C.) where the "nature of the election" and the "manner of filing the election" was not simplistic as the election required the provision of much information and the manner of filing was contained in the statutory language. In the case at bar all that was required were the words "I elect" and the signature of the fisherman.

In the case of Bhagwandin v. Wright (1988), 51 D.L.R. (4th) 589, 65 O.R. (2d) 204, the Ontario Court of Appeal held that although the form of a notice was in the Landlord and Tenant Act, R.S.O. 1980, c. 232 and required that the landlord be identified, the notice was not a nullity simply because it failed to identify the co-owner who required possession and no prejudice resulted. Wichartz v. The Queen, supra, dealt with the sufficiency of a notice of objection and Sobier J.T.C.C., found that a letter, although not addressed to the chief of appeals as required by subsection 165(2) of the Act, was not a nullity where it conveyed to the Minister the fact that the taxpayer was disputing the assessment, interest and penalty.

Counsel finally argued that estoppel might apply but he did not make the argument with any degree of conviction nor was he convinced that the prerequisites of estoppel were present in this case.

Counsel said that this appeal should be dismissed with costs and the amounts remitted should remain with the Minister.

Rebuttal

In rebuttal counsel for the appellant said that any matter of rebate was not before this Court. The amounts of the assessment are not in issue. The assessments are nul and void under section 153 of the Act as the Minister had no authority to make the assessments since there was no election by the fishermen. There may be some remedy to the Minister but it is not by making an assessment under the Act.

With reference to Cyanamid Canada Inc., supra, counsel argued that this case does not apply because there is a penalty in the case at bar and the word "shall” would not be treated as directory even under that interpretation.

Both parties were allowed time to make further submissions after the hearing and both did so by way of letters which were exchanged between the parties. These submissions have also been considered by the Court.

Analysis and decision

The Court agrees with counsel that the heart of this case is whether or not the Minister was entitled to assess the appellant company for unremitted deductions made for fishermen in the absence of the execution and filing by the fishermen of a requisite form.

The evidence touched upon the issue of fraud by one of the appellant’s employees but that issue is not before this Court. Neither is the issue as to whether or not some other remedy is available to the Minister in the event that the assessment is held to be invalid. This Court is concerned with the validity of the assessment only.

Likewise, the Court must decide this case irregardless of the attitude of fishermen towards the completion and filing of forms. Neither can the Court use as the ratio decidendi of this case the resulting disadvantage to the Minister of National Revenue or what might be conceived as a financial windfall to the appellant company. Likewise, if the Minister chose to accept as sufficient, a form or forms which turn out to be insufficient, for the purposes of its assessment, he can hardly argue that he would have acted differently had he known or that he would have pursued other avenues of collection.

The most appropriate way of analyzing this case is to consider the following questions:

1. In order for the Minister to assess the appellant, were the fishermen who wished to have their tax deductions made at source, obliged to sign and file an election in prescribed form with Revenue Canada? (TD3F)

2. If the answer to question 1 is no, was there any documentation required to be filed with the Department of National Revenue before the assessment could be made and of what must it have consisted?

3. If the answer to question 2 is yes, was there filed with the Department of National Revenue any documentation that would stand in place of the prescribed form?

4. What role do the rules of judicial interpretation play in the determination of these questions?

The relevant statutory provisions are paragraph 153(1)(n) of the Income Tax Act and subsection 105.1(2) of the Regulations.

153(1) Every person paying at any time in a taxation year

(n) one or more amounts to an individual who has elected for the year in prescribed form in respect of all such amounts,

shall deduct or withhold therefrom such amount as is determined in accordance with prescribed rules and shall, at such time as is prescribed, remit that amount to the Receiver General on account of the payee’s tax for the year under this Part or Part XI.3, as the case may be.

Subsection 105.1(2) of the Regulations states as follows:

105.1(2) Every person paying at any time in a taxation year an amount of remuneration to a fisherman who, pursuant to paragraph 153(l)(n) of the Act, has elected for the year in prescribed form in respect of all such amounts shall deduct or withhold 20 per cent of each such amount paid to the fisherman while the election is in force.

The term "prescribed" is defined in subsection 248(1) of the Income

Tax Act:

248(1) "prescribed" (a) in the case of a form or the information to be given on a form, prescribed by order of the Minister, and

The Living Webster's Encyclopedic Dictionary defines "prescribed"-to lay down a rule; direct or dictate; to lay down in writing or otherwise, as a rule or a course to be followed.

The argument of the appellant is that the Minister has designated the appropriate form to be executed and filed and this action is a prerequisite to the Minister’s ability to assess the appellant under the circumstances here.

Counsel for the respondent implied that the failure of the fisherman to execute and file the required form was insignificant or technical and only the part of the "prescribed form" enclosed in the box, the words "I elect" were significant.

The Court is satisfied that the correct position is somewhere in between these two extremes. By applying a liberal interpretation to the relevant statutory provisions referred to above and taking into account the Interpretation Act.

Where a form is prescribed, deviations from that form, not affecting the substance or calculated to mislead, do not invalidate the form used.

The Court is satisfied that it was not necessary for the prescribed form to be filed if the same result that the form was intended to bring about was achieved by the filing of another form or forms.

Such a finding is not inconsistent with the decision in Wharton v. The Queen, [1993] 1 C.T.C. 10, 92 D.T.C. 6582 (F.C.T.D.); Muzich v. M.N.R., supra, and is consistent with the decision reached in Wichartz, M. v. The Queen, supra.

With respect to the meaning to be given to the word "shall" the Court adopts the ruling of the Supreme Court of Canada in Re Manitoba Language Rights, which concluded that the word "shall" used in its normal grammatical sense is presumptively imperative unless such an interpretation would render the legislative enactment in question here irrational or meaningless. Such a finding here does not lead to an irrational or meaningless interpretation of any of the relevant statutory provisions.

The Court finds that the word "shall" applies to the duty of the appellant here to deduct the appropriate amount from the remuneration paid to the fishermen once they have elected. The election may be in the prescribed form or in some other form or forms provided that the filing of such form or forms achieved the same result as would have been achieved by filing the "prescribed form". The answer to question 1 is "no".

In light of the reasoning applied in question 1 it follows that there is a requirement to have filed with the Department of Revenue a document or documents capable of accomplishing the same objectives as would have been achieved if the "prescribed" form had been filed. It is apparent to the Court that the reasonable objective of the "prescribed" form was to have the fishermen elect to have the deductions made, in accordance with the statutory provisions of the Act, to inform the appellant the company of the election and its subsequent responsibility, to inform the Minister that the fishermen had so elected so that the Department of Revenue could then rely upon the appellant to make the appropriate deductions and could look to it for payment instead of the fishermen.

In the case at bar, as in Munich Family Trust v. M.N.R., supra, the "nature of the election" is not so simplistic as counsel for the respondent suggested. The words "I elect" or some similar words indicating the desires of the fishermen and signifying their consent to the deductions are important. In the Muzich Family Trust v. M.N.R., case, supra, the Court considered the missing signatures as important.

It is also noteworthy that the preamble to the election in the TD3F filed as an exhibit indicates that once the election is completed the employer must comply with the withholding remitting and reporting requirements.

On the election portion of the form there is also a place for designating the beginning and end of the period and the deduction rate is set at 20 per cent of the remuneration as determined in accordance with the information contained on the back of the form. There is also a place for the signature of the employer, obviously to indicate that the employer is aware of the fishermen’s intentions. The answer to question 2 is "yes".

The evidence adduced before the Court made it clear that no TD3F form was ever executed by the fishermen or filed with the Department of Revenue. Indeed, the witness Wallace Meade said that he never signed such a form and the witness John Warren not only never signed one but never saw one and did not know if the department had authorized the forms.

The only documents that were filed with the department that would have provided any of the requisite information intended to have been supplied by the filing of the prescribed form TD3F included Exhibit R-2 which was a letter written to the Department of Revenue on Billard Fisheries Ltd. letterhead dated February 22, 1991. It was referred to as a T4F Summary 1990 and showed the total number of T4F slips filed, the total income, the deductions and the remittances for 1990. It was signed by Elaine Ingram on behalf of the company.

Exhibit R-3 was a T4F Summary of Remuneration form showing the number of T4Fs filed, the gross earnings of the fishermen, the insurable earnings, the unemployment insurance premiums for the employer and the fishermen and the income tax deducted. It was signed by Elaine Ingram on behalf of the company.

Exhibits R-4 to R-9 were information slips filed with Fisheries and Ocean with respect to certain of the fishermen showing the appellant as buyer and also these exhibits contained settlement sheets between certain fishermen and the appellant.

Exhibit A-l was a letter directed to the appellant dated November 1, 1985 from the chief of collections which indicated that a representative from Revenue Canada had met with many fishermen during 1984 regarding the advantage of source deductions for fishermen. This letter indicated that a supply of TD3F forms were enclosed and it indicated to the appellant that the forms had to be completed and signed by the fishermen authorizing the appellant to make the deductions.

Although it was not particularly relevant, the evidence called by the respondent indicated that the fishermen were unaware of such a meeting and that they never signed such forms.

Counsel for the appellant argued that this was evidence of the importance that the department attached to the proper completion, execution and filing of the proper forms. The forms set out the amounts to be deducted at 20 per cent and the evidence indicated that varying instructions were given by the fishermen as to the amounts to be deducted depending upon the needs and desires of the individual fishermen at any given time.

Counsel for the respondent believed that there was a procedure in place between the company and the fishermen regarding deductions and when the skippers reported to the company’s agent how much was to be deducted, that was all the authorization that was needed. He pointed out that fishermen make declarations orally under the Unemployment Insurance Act and their instructions to the skipper and thus to the company was sufficient authorization to the company to make the deductions and sufficient indication to the department that the fishermen had elected and the company was thereafter bound to deduct, remit and file.

Counsel for the respondent argued that these amounts were reflected in the settlement sheets and nothing more was required.

The Court finds that the information provided in the various exhibits referred to do not meet the reasonable objectives of the prescribed form. There was no document produced which indicated that the fishermen had elected to have the deductions made at source and had authorized the company to make them. These requirements are not met by evidence being given after the fact that the fishermen had instructed the skippers to instruct the company to make the deductions. The production of the settlement sheets and the filing of the T4F Summaries do not accomplish that task and are not directed towards that requirement. They show at best that the fishermen may have believed that the company was making some deductions at source but they did not even authorize any particular amount to be deducted. The alleged authorization was nothing more than hearsay in spite of the fact that there might have been some form of custom in place between the fishermen, the skippers and the company.

These documents do nothing to inform the Minister that the fishermen had elected and indeed there is no reason to believe from the evidence that the Minister even believed that such authorization had been given. It certainly was unwise to believe that such authorization was given under the circumstances and no evidence indicated that the Minister relied upon any information contained in the documents filed. As pointed out already, the prescribed form refers to a 20 per cent deduction and it is obvious that this requirement was not fulfilled. There was no basis upon which the Minister could look to the appellant company for the payment.

The words "I elect" may not in themselves be necessary but the Court finds that some words, signifying the fishermen’s consent to the appropriate deductions in writing were required. The Court does not accept the argument that the remainder of the form apart from the words "I elect" were mere superfluage and if they were, the absence of such words or other words denoting consent and authorization are fatal.

It was significant also that the legislation in the prescribed form indicated that the authority to deduct and the requirement by the company to remit only applied to the period of time when the election was in force. There was no evidence as to how long any alleged authority given orally or by practice was to be enforced.

Counsel for the respondent argued that the purpose of the legislation was to facilitate the fishermen paying their taxes. The Court finds that the purpose was not only that but was also a facility to the department because it knew that 20 per cent of the appropriate portion of each fisherman’s share of the catch would be subject to deductions and if it were not remitted, the department could look to the company for payment. To permit such a system to exist as was alleged here would lead only to uncertainty for the department, the fishermen and the company and it would allow the fishermen to be the ones who were directing what percentage would be deducted contrary to the very legislation which was intended to put a measure of certainty into the process and aid the fishermen and the Department of Revenue.

The answer to question 3 is no.

The Court rejects the argument put forth by counsel for the respondent that the filing of forms might have been necessary in the days of strict statutory interpretation but not now. The requirement of the filing of forms has nothing to do with this concept. As indicated earlier, it is not necessary that the Department of Revenue, the company and the fishermen file the exact form as the prescribed form and to that extent, the rules of statutory interpretation are relevant but by no stretch of the imagination could it be said that such a principle vitiates the necessity of filing some form which provided to the parties the requisite information that the legislation and the prescribed form were intended to provide.

The Court rejects the argument that there was only a technical omission here and finds that the omission was significant. The information sought was substantial, the election was substantial and the manner of filing the election was contained in the legislation.

The appeals are allowed with costs to be taxed and the assessments with respect to the fishermen are vacated.

Appeals allowed with costs.