Sudden Valley Inc. v. The Queen, 76 DTC 6178, [1976] CTC 775 (FCTD), aff'd 76 DTC 6448, [1976] CTC 775 (FCA)

The taxpayer, which was a U.S. corporation engaged in selling lots in a recreational home development in Sudden Valley in the State of Washington advertised in Vancouver and contacted people there with a view to inducing them to visit the Sun Valley project. No representative in Canada had any authority to bind the taxpayer and the advertising did not state that there was land for sale. Contracts were signed, and payments made, in Sudden Valley.

Addy, J. stated: "At common law, it seems very clear that the Appellant was not carrying on business in Canada, for, to exercise trade in a jurisdiction, it is not sufficient to obtain orders within that jurisdiction if the sale is eventually made outside the jurisdiction...In the absence of any other evidence that a person was carrying on business in a particular jurisdiction, the place where the contracts are made is decisive."

The finding of the trial judge that the only activity of the taxpayer carried on in Canada was attempting by advertising to induce Canadians to cross the border into Washington State to view the plaintiff's building lots, in the hope that some might become interested in buying property there, by itself established that the taxpayer was not deemed by s. 253(b) to be carrying on business in Canada. The finding of the trial judge that "no offer was obtained and no attempt was made to obtain any in Canada and ... that nothing was offered for sale in Canada either through an agent or otherwise" further supported this conclusion.

The trial judge also stated (76 DTC 6178, at 6180) that "soliciting orders means that orders must be sought and attempts made to obtain them within the jurisdiction and the word 'offer' ... must be given its ordinary meaning in contract law, that is, a binding offer which, if accepted, would create a contract ...".