The taxpayer, a U.S.-resident life insurance corporation, was found not to have a permanent establishment in Canada for purposes of the Canada-U.S. Treaty notwithstanding that it provided life insurance to its Canadian members. The Canadian "general agents" (who oversaw the "field agents", i.e., the Canadian agents who solicited applications for sales of the taxpayer's insurance products) were found to be agents of an independent status; and the field agents, although perhaps dependent agents, did not conclude contracts in Canada given that applications were required to be approved in Connecticut (and such approvals were not routine as they entailed detailed medical enquiries, and 10% of applications ultimately were rejected). Although in the meantime, the field agents provided temporary insurance coverage to applicants, a temporary insurance agreement was part of one contract for permanent insurance and, even if the temporary insurance were separate, the field agents' role in the process surrounding the temporary insurance was minimal and, furthermore, the temporary insurance was provided solely as an incentive and the taxpayer was not in the business of selling temporary insurance.
With respect to the Crown's fall-back position that the taxpayer had fixed places of business in Canada, the general agents were not carrying on the taxpayer's business from their offices; and as for the home offices of the field agents, the taxpayer did not have any rights of disposition over those premises (as the field agents did not employ any staff of the taxpayer, had no signage of the taxpayer, the taxpayer made no operational decisions at the field agents' premises nor did any officers or employees of the taxpayer even visit the agents' home offices, let alone have any regular access). In any event, the activities of the field agents carried on at their homes were of an auxiliary agent as they consisted solely of storage, collection of information, supply of information and similar auxiliary or preparatory activities.