Lamarre J. found that the taxpayer could not hold a vehicle operating permit as a mandatary for his corporation, because doing so would have violated Quebec law. (A mandatary in civil law is analogous in to an agent.) Therefore, even though the corporation received all revenue and paid all expenses connected with the taxpayer's use of the vehicle, the Minister was correct in including the revenue and expenses in the taxpayer's income instead.
The Quebec trucking industry was regulated through a system under which each holder of a trucking permit would list a "priority" vehicle, and not be allocated jobs for non-priority vehicles until the priority list for all holders was exhausted. By holding a permit for a second vehicle personally, the taxpayer was able to register a second "priority" vehicle for the same business.
Lamarre J. reasoned that because it would have been illegal for the corporation to hold the operating permits for two vehicles on the priority list, the taxpayer could not have held his permit as agent for the corporation - and therefore must have held it in his personal capacity instead. Lamarre J. stated (at para 11):
[A]n agent cannot have a legal capacity that exceeds that of the principal.