Hugessen,
J.A.:
—We
are
all
of
the
view
that
this
appeal
must
fail
and
that
the
appellant
was
properly
assessed
under
sections
212
and
215
of
the
Income
Tax
Act
to
pay
withholding
tax
on
interest
paid
by
it
to
its
wholly-owned
Delaware
subsidiary,
ASCO.
We
adopt
and
approve
the
reasons
given
by
the
learned
trial
judge,
Madame
Justice
Reed,
and
would
add
only
two
brief
comments
of
our
own.
First,
in
addition
to
the
reasons
given
by
the
trial
judge
for
rejecting
the
appellant's
agency
argument,
we
would
say
that
ASCO
could
not
have
been
the
agent
of
the
appellant
since
there
can
be
no
doubt
that
the
various
contracts
entered
into
created
rights
and
obligations
that
were
personal
to
ASCO
vis-a-vis
the
third
parties.
It
is
of
the
essence
of
agency
that
the
agent,
acting
within
the
scope
of
his
mandate
and
with
the
knowledge
of
the
parties
with
whom
he
contracts,
binds
his
principal
only;
if
he
binds
himself
as
well
he
is
to
that
extent
not
an
agent
but
a
principal.
Second,
the
trial
judge
did
not
deal
with
the
appellant’s
argument
based
on
section
805
of
the
Income
Tax
Regulations
since
she
was
of
the
view
that
"counsel
for
the
plaintiff
concedes
that
ASCO
does
not
carry
on
business
in
Canada”.
Before
us
counsel
argued
that
the
trial
judge
had
misunderstood
him.
Assuming
that
to
be
the
case,
the
argument
still
fails.
ASCO's
sole
raison
d'être
as
a
Delaware
corporation
was
to
permit
the
negotiation
of
a
loan
to
it
from
U.S.
lenders
on
more
favourable
terms
than
could
have
been
obtained
by
the
appellant.
It
was
in
fact
prohibited
by
the
loan
documents
from
having
any
business
activity
of
any
kind
other
than
in
relation
to
that
loan.
If
it
could
properly
be
said
that
ASCO's
activity
amounted
to
the
carrying
on
of
a
busi-
ness,
which
we
doubt,
that
business
was
necessarily
carried
on
in
the
United
States,
not
in
Canada.
The
appeal
will
be
dismissed
with
costs.
Appeal
dismissed.
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