Agency

On December 31, 1993, the taxpayer and 21 other signatories to a joint venture acquired rights to exploit seismic data. Under the terms of the joint venture agreement, no nominees were permitted, but in fact various of the purchasers were acquiring their rights on behalf of others (totalling 30) who also claimed Canadian exploration expense deductions for "their" share of the seismic expenditures. Favreau J stated (at para. 80) that this:

is not an indication of a sham. It is rather an indication that some persons were not legally members of the Joint Venture and were not entitled to the deductions. The Minister should have simply denied those person the tax deductions… .

The appellant operated a small grey market business to buy iPhone 4 units from Apple's Canadian retail channels and resell them in Hong Kong, where they were not yet available. Friends and family members (the "buyers") would purchase one or two phones each, for which the appellant fully reimbursed them. The Minister denied the appellant's input tax credit claim for the HST incurred by the buyers on the basis that they were not its agents (and also on the basis of inadequate documentation).

Bocock J found that the buyers were not the appellant's agents as they did not have the authority to bind it. Apple's terms of sale prohibited buying phones for resale - that is, Apple would never have entered into the sales contracts directly with the appellant. Bocock J stated (at para. 17):

[A] principal cannot appoint an agent to engage in a contractual entreaty [sic] into which the principal has no legal capacity or authority to enter: 1524994 Ontario Ltd. v. Canada, 2007 FCA 74 at paragraph 18.

The appellant ("Med"), which marketed hotel accommodation in the Mediterranean and the Caribbean through a website, required a customer to pay the whole of the agreed sum before arriving at the hotel, and Med only paid the hotel a lower sum for the holiday after it had ended pursuant to an accommodation agreement in which it was styled as agent. Med was required to charge U.K VAT on the sums collected by it unless it acted solely as an "intermediary," which the court found to be essentially the same as an agent.

Before concluding that Med was not required to collect VAT, Lord Neuberger found that Med was providing accommodation as an agent for the hotels, notwithstanding that Med:

• failed to account to the hoteliers for cancellation charges and interest on the amounts deposited (which Lord Neuberger stated, at para. 44, might represent a breach of the agency agreement or reflect Med's relative bargaining position)
• dealt with matters of complaint and compensation in its own name and without reference to the hotelier (but with any compensation ultimately recovered from the hotelier)
• treated the deposits as its own money
• reserved rooms in advance of sales (although the related payments were recoverable against the next season's revenues if the current season's bookings were insufficient)

iArchambault J found that s. 160(1) did not apply to the transfer of funds to the taxpayer by a friend of its shareholder as they had a mandator-mandatary relationship.

Although it was unnecessary to decide whether the parties were at arm's length, Archambault J suggested that they were. The friendship was likely not enough to constitute a non-arm's length relationship given the mandatary relationship. Archambault J stated ( at para. 83):

Under such circumstances, there is no reason to be concerned with the concept of non-arm's length relationship because, by definition, a mandatary must always follow his mandator's instructions and because, for income tax purposes, no transfer has been made between the mandator and the mandatary.

The taxpayers' former counsel had reached a settlement agreement with the Minister under s. 169(3), which provides that the Minister may reassess a taxpayer with the taxpayer's written consent. After dismissing the taxpayers' argument that they had not authorized counsel to reach a settlement, D'Auray J. dismissed the taxpayer's alternative argument that, because s. 169(3) requires written consent from the taxpayer, and the Minister only received written consent from counsel, the settlement could not be enforced under s. 169(3). D'Auray J. stated (at para. 76):

In my view, the consent in writing can be given by the counsel of record.

The taxpayer paid royalties under a sub-licensing agreement with an affiliated Netherlands corporation ("VHBV") which, in turn, had been licensed the intellectual property by the holder, which was VHBV's Netherlands parent ("VIBV"). Under the licensing agreement, VHBV paid 90% of the royalty fees earned by it from the taxpayer to VIBV.

After finding that VHBV was, under Article 12 of the Canada-Netherlands Convention, the "beneficial owner" of the royalties paid to it, Rossiter A.C.J. rejected the Minister's further argument that VHBV collected the royalty fees as an agent of VIBV. Evidence showed that, legally and practically, VHBV had considerable discretion in how to spend its share of the royalties and when to send VIBV's share. Moreover, there was no evidence that VHBV had the power to alter VIBV's legal position in any respect.

Seeking to protect herself from being sued by her brother, the taxpayer transferred title to all her real properties for no consideration to corporations under her majority control. She reported rental and business income and expenses from these properties while her accountant did the same in the corporations' returns. The Minister's reassessment included in the taxpayer's income a taxable capital gain from her transfers to the corporations, and gross negligence penalties.

Hogan J. found that the taxpayer had retained beneficial ownership of the properties, and that the corporations held the properties under an implied agency agreement. Following the transfer, the taxpayer continued to operate the business properties in a personal capacity. All invoices for repairs and renovations, and all rent cheques were addressed to her personally, and all income and expenses went into or came from her personal bank accounts. She also held the mortgage obligations in 2003 and 2004. She transferred the mortgages to one of the corporations in 2005 but became a guarantor. The corporations held themselves out as owning the property in limited instances, but in totality the taxpayer's and corporations' conduct supported finding an agency relationship.

The appellant, which provided bulk mail processing services, was found to have purchased postage and mailed materials with its clients' authority, so that it did so on their behalf. Accordingly, the postage paid by it was 0-rated consideration.

Woods, J. accepted that an agreement pursuant to which the appellant ("YSI") agreed to contract with suppliers in connection with refurbishing a yacht and to charge the other party to the contract ("Platinum") a 5% mark-up on some of the purchases, did not establish an agency relationship between YSI and Platinum. Woods, J. noted (at para. 35) that whether YSI acquired goods and services on its own behalf on depended on the parties' mutual intention and that, accordingly, the essential question was whether Platinum agreed to be bound by YSI's agreements with suppliers.

The taxpayer was unsuccessful in establishing that its vice president did not have authority to sign a waiver on its behalf. He had the ostensible authority to do so given that the taxpayer had allowed him to represent himself as the person in charge of tax-related matters, and he also had the implied authority to sign given that he was one of the two people who ran the business and was the one who had chief responsibility for corporate administrative and tax matters.

Before going on to find that dancers engaged by the Royal Winnipeg Ballet should be viewed as self-employed rather than employees given that it was the understanding of the parties that the dancers were independent contractors, Sharlow J.A. referred to Montreal v. Montreal Locomotive Works Ltd., [1947] 1 DLR 161 (PC) as a case in which a determination as to whether a manufacturer was agent for the Crown was determined by a search for the common intention of the parties.

The taxpayer unsuccessfully contended that there was a secret verbal contract between it and a related individual to whom it sold shares that he would hold such shares as nominee for it, so that a gain on a subsequent sale of those shares was realized by it rather than him. The fact that he received and included in his taxable income a dividend paid on the shares immediately before the sale to the third parties, and a representation contained in the notice of objection of the taxpayer, were inconsistent with this contention.

The registrant was a wholesaler of products to independent retail pharmacies operating under the "I.D.A." name, and also provided franchisor-like services to them. One such service was to negotiate favourable terms with various banks for credit and debit card services. When a customer made a purchase from an IDA member, the bank would deposit the amount (which it debited to the customer's account) into the registrant's bank account, and the registrant would transfer the full amount of the funds to the member's bank account. However, as the bank charged its "discount fees" to the registrant's account, the registrant in turn debited the members for these amounts - which Bowie J found represented a reimbursement for such fees which it had incurred as the members' agent.

Bowie, J. found (at para. 12) that in paying such charges and so debiting the members, the registrant "acted as the agent of the members for the purpose of making the payments on their behalf to the banks."

The registrant served retail travel agencies by booking and purchasing airline tickets for the agencies' customers, which resulted in the receipt by it of commissions from the airlines. Where the retail agencies had no agreement with the issuer of the customer's credit card, the registrant would act as the "merchant" insofar as the credit card issuer was concerned, so that the voucher amount for the ticket was advanced to it, with that amount being used by the registrant towards the cost of the ticket. In those situations, the registrant charged $15 per ticket to the retail agency to cover the charge of 2% to 3% by which the credit card issuer discounted the amounts which it paid to the registrant.

Before finding that this $15 charge was consideration for a financial service, Archambault J rejected (at para. 22) a submission of the registrant that it claimed payment from the credit card issuers as mandatary of the retail agencies:

It was not established that Skylink had agreed with the retail agencies that it would act as their mandatary by requesting payment from the issuers. Nor is there any evidence that Skylink informed the issuers that it was acting as the retail agencies' mandatary.

The taxpayer's subsidiary ("CBL") transferred leasing assets to a partnership between CBL and two subsidiaries of a third party that was interested in acquiring those assets ("CCM" and "693396") in consideration for a partnership interest, an election was filed under s. 97(2), the taxpayer acquired the partnership interest of CBL on a winding-up of CBL pursuant to s. 88(1) and the taxpayer sold the partnership interest to 693396 and an affiliate of 693396.

In rejecting a Crown submission that the taxpayer was an agent of CBL for the purpose of transferring the leasing assets to the third party of its subsidiaries, Bowman TCJ. stated (at p. 1869):

"Generally speaking, it requires extremely compelling evidence for one company - even a subsidiary - to be regarded as an agent of another ... . It is even more difficult to regard a parent as its subsidiary's agent."

A dealer was found to acquire musical equipment from members of the public for resale as their agent in accordance with the description of the arrangement as an agency one in the relevant agreement notwithstanding that the dealer had the power to effect all necessary repairs to the equipment before sale.

The taxpayer, who received and exercised stock options as a "nominee" for a partnership, was held to be their agent rather than a trustee.

"I find it extraordinary that the respondent Minister would contend, through counsel, that Eaton's, as a statutory agent, would have a higher obligation to its principal than as an agent under the usual principal and agent agreement. Eaton's, as a vendor, is obligated by statute to collect and remit the sales tax but, after exhausting all reasonable means to recompense itself, I can see no reason why it, as the agent, should bear the loss rather than its principal, the respondent Minister."

A commercial gallery successfully argued that it was selling pottery as agent for some potters, rather than as principal. Anything which the potters were paid by the gallery prior to a sale was successfully characterized in the agreement as "remittances prior to sale", i.e., pre-payment deposits, rather than as sale proceeds. Deficiencies of an administrative character in the agreement were not crucial.

A contract entered into by a corporation which held lands as "bare nominee and trustee" for six "beneficiaries" gave rise to liability for those beneficiaries.

Although "a trustee, who is acting as a trustee...cannot subject the beneficiaries to liability" (p. 75), here, as the corporation was acting under a duty of obedience to the beneficiaries, it was a bare trustee, so that the principles of agency rather than of trust predominated respecting the question of the liability of the beneficiaries. Morden JA quoted (at pp. 73-74) with approval a statement in Scott, The Law of Trusts, 4th ed., at 95 (1987):

A person may be both agent of and trustee for another. If he undertakes to act on behalf of the other and [be] subject to his control he is an agent; but if he is vested with the title to property that he holds for his principal, he is also a trustee. In such a case, however, it is the agency relation that predominates, and the principles of agency, rather than the principles of trust, are applicable....

In finding that employees of a parent corporation whose services were provided to a subsidiary had not been retained by the parent as agent for the subsidiary, Slade L.J. noted that only the parent was entitled to enforce the relevant service contracts because the employees had never agreed to serve the subsidiary.