Case J63

Judges: MB Hogan Ch
N Dempsey M

P Gerber M

Court:
No. 3 Board of Review

Judgment date: 25 October 1977.

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Dr. P. Gerber (Member): The issue in this Reference is whether a V.W. Delivery van, Model No. 214, purchased in March, 1976, qualifies for the investment allowance and double depreciation as provided for by sec. 82AB and 57AD of the Act.

2. The Commissioner's reasons for disallowing the taxpayer's claim are set out in the reg. 35(1) statement as follows: -

``Section 57AD(1) operates to exclude this vehicle for purposes of section 57AD. No part of an amount of $2000 claimed... is an allowable deduction under section 82AB because paragraph (a) of sub-section (2) of section 82AF provides that the sub-division of the Act does not apply to a motor vehicle of this kind.''

3. The Act excludes from deduction, inter alia , ``road vehicles designed to carry loads of less than one tonne .'' The outcome of this Reference therefore depends on whether this vehicle was designed to carry a ``load'' of less than one tonne.

4. We were inundated at the hearing with brochures, pamphlets, Design Rules, a weighbridge ticket, a rubbing of a ``Compliance Plate'', and a whole host of figures which were either meaningless or irrelevant or both. For good measure, taxpayer made certain design modifications to the vehicle after he purchased it, which increased the weight of the vehicle, thereby reducing its potential payload. However, in my view it is irrelevant what a taxpayer does with a vehicle after he has purchased it if - as here - the discrimen is the design weight for which the vehicle was built. A pamphlet, issued by the maker's local distributors, set out the following figures, said to be applicable to this vehicle.

      G.V.W.

      (Gross          Unladen               Payload

      Vehicle         Weight

      Weight)

      2300 kg.        1150 kg.              1150 kg.
      

These figures are prefaced with the note: ``Since producing this brochure, the weight details which appear on Specifications page, have changed to comply with new Government regulations.''

5. These figures show three things:

(i) the vehicle purports to be designed to carry a payload of 1150 kg.;

(ii) the manufacturer appears to have arrived at this figure by deducting the unladen weight of the vehicle from the gross vehicle mass;

(iii) ``weight'' appears to be a concept capable of arbitrary adjustment rather than an absolute measurement of quantity. This is borne out by exhibits ``E'' - a telex message between the manufacturer and the local distributor, and ``F'' - an amended sales information pamphlet. Exhibit ``E'' states:

``Volkswagenwerk AG confirm regarding Delivery Vans an increase of the gross vehicle weight and of the payload of 50 kg. The max. permissible axle loads have been increased by 25 kg. for each axle.''

Exhibit ``F'' is even more explicit:

``SUBJECT: VW COMMERCIAL VEHICLE WEIGHT CAPACITIES

You may or may not be aware of the considerable drama that has surrounded our commercial vehicles over the past

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months as to their eligibility to comply with the Government's announced policy on investment allowance.

Due to the Taxation Commissioner's method of calculating tare weight our vehicles have been precluded from this allowance although in fact they are 1 Tonne carrying capacity vehicles.

Under these circumstances it has been necessary to approach Volkswagenwerk and as of this date we have had factory advice that the gross vehicle weight on a delivery van has been increased by 50 KG to 2350 KG.

      i.e.  Front axle +  25 KG

            Rear axle  +  25 KG
          

This now allows these two vehicles to meet the investment allowance standards.

The Commissioner's requirements for tare weight are, the weight of the unladen vehicle + full tank of fuel + spare wheel + tools and an additional weight for driver and the passengers (dependent on the number of passenger seats) calculated at 68 KG per person.

We will be producing inserts to cover, brochures, owners manual and salesman's handbook advising of the new weights which are now,

Model                   Tare or Unladen Weight

Delivery Van                  1180 KG



Gross Vehicle                  Payload

Weight

  2350 KG                      1170 KG
          

The tare weight calculated under this table is inclusive of vehicle unladen weight, full tank of fuel, spare wheel and tools.

In applying the driver and passenger weight, the following vehicle then complies for the investment allowance.

Model                        Tare weight

Delivery van                   1316 KG



G.V.W.                         Payload

2350 KG                        1034 KG
          

This important information will also be conveyed to our dealer sales organisation by a sales information bulletin, but to be doubly sure, we would ask that all representatives are aware of the change and bring it to notice when contacting dealer personnel.''

Taxpayer deposed this did not involve any design modifications. The reason for these ``mail order adjustments'' stemmed from the Commissioner's attitude in disallowing claims for this vehicle and similar types for reasons which were outlined by Mr. Shepherdson of learned counsel for the Commissioner:

``One really starts off in this case with the compliance plate. Now the compliance plate shows 2300 kg. and that is the gross vehicle mass. This is the formula which the Commissioner adopts. One starts off with the gross vehicle mass of 2300 kg. and deducts from that the basic kerb weight which, according to the certificate, is 1195 kg. Then the Commissioner makes an allowance for driver and passenger, bearing in mind that the compliance plate in this case shows that it has a seating capacity for two persons, and the amount deducted there is 136 kg. - that is the 68 kg. that is referred to frequently in the design regulations and design rules.

That makes a total deduction - that is 1195 plus 136 equals 1331. When that is taken away from the 2300 kg. one reaches the designed load carrying capacity of 969 kg. and it is on this basis that the Commissioner says the designed load carrying capacity of this vehicle is less than 1 tonne.''

The Commissioner thus submitted that for the purposes of the investment allowance the designed load carrying capacity of a vehicle is considered to be the excess of its gross vehicle weight as specified by the manufacturer, over the weight of the vehicle with a full capacity of oil, coolant and fuel together with spare wheel, tools, installed options plus an additional loading for a driver and one passenger. In this regard, a loading of 68 kg. for each person is considered reasonable. The loading for a passenger is, of course, subject to seating being provided for a passenger. However, in the case of a double-cab pick-up the additional loading factor is to be calculated on the basis of 68 kg. for each seating position.

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6. I am unable to see any warrant for reaching such a conclusion. Whilst it is true that, for some purposes, ``load'' is deemed not to include the driver, or indeed any human cargo; cf.
Houghton v. Trafalgar Insurance Co. Ltd. (1954) 1 Q.B. 247 ;
Dickson v. Brown (1959) S.L.T. 207 (``when `load' is being spoken of, it is thought of not in human terms but in purely physical terms,'' at pp. 208-9). However, in the instant case, we are dealing with ``load'' as a legal abstraction. It is not only not defined, but, for good measure, it appears to be a synthetic derivative of a series of definitions contained in a set of rules, conceived by engineers, and delivered by draftsmen by Caesarian section. That a misalliance between a taxing statute and design rules, inter alia, for seat belts and hydraulic braking systems, should lead to utter confusion is not surprising. Their impact on this Reference is as follows: This vehicle, in addition to the specifications already enumerated, has attached to it, somewhere in its bowels, a thing called a ``compliance plate'', a rubbing of which was duly tendered (exh. ``B''). This plate asserts that the vehicle complies with Australian Design Rules Nos. 4C, 5B, 27, 28, 1, 2, 3, 6, 7, 8, 11, 12, 14, 15. These rules are themselves the emanation of the Advisory Committee of the Australian Transport Advisory Council, and issued by the Commonwealth Department of Transport. Some of the rules with which this delivery van purports to comply relate to motor cycles and hydraulic brakes, the others were not tendered by either party. In the result, Mr. Shepherdson sought to rely mainly on definitions Nos. 2, 5, 15, and design rule 31.1.8. I shall therefore set these out in full:

``2. `Gross-Vehicle Weight' means the maximum weight of a goods vehicle for which compliance with current and appropriate Australian Design Rules has been or can be established.''

``5. `Maximum Loaded Vehicle Weight' means

• (a) For a passenger vehicle, the weight of the unladen vehicle, together with the heaviest factory-installed options, if such individual options weigh 5 1b. or more, with a full capacity of lubricating oil, coolant and fuel plus additional loading equivalent to 150 1bs. for each seating position and 30 1bs. times the number of seating positions for luggage.
• (b) For a goods vehicle, the gross vehicle weight as defined.''

``31.1.8. `Maximum Loaded Test Mass' means the value specified by the vehicle manufacturer as the loaded mass of the vehicle, provided such mass is not less than the mass of unladen vehicle together with the heaviest factory installed options if the mass of such individual options exceeds 2.3 kg. with a full capacity of lubricating oil and coolant and at least 75 percent capacity of fuel plus additional mass, equivalent to 68 kg., located in each unoccupied seating position.''

7. It will be seen from the above that the definition of the maximum loaded vehicle weight - in the case of a goods vehicle - is the gross vehicle weight ``as defined'', which in turn is the maximum weight in compliance with the Design Rules. This does not advance the case much further. It is true that the definition of ``maximum loaded test mass'' (31.1.8.) refers to a ``mass equivalent to 68 kg. located in each unoccupied seating position''; it is to be noted however that the compliance plate does not incorporate this definition (which is not surprising since it was only issued in July, 1976 and did not come into operation until 1.1.1977). In any event, this rule appears in Design Rules relating to the hydraulic braking system.

8. I am satisfied that the confusion in this Reference is due to the difficulty in giving legal effect to words which defy precision for no better reason than that the definition uses the very word to be defined (e.g. ``Maximum Loaded Vehicle Weight'' means ``the gross Vehicle Weight as defined,'' which takes us back to the ``maximum weight of a goods vehicle for which compliance with current Design Rules can be established''). What must be borne in mind is that the Act, unlike the manufacturer's brochure, does not refer to ``payload'' which might have lent some weight to the Commissioner's submission that one must make some corporeal deduction for an incorporeal driver and his mate. Instead, the Act speaks of a ``design load'' which, given the rather clumsy and synthetic definitions, must be the difference between ``Gross Vehicle Weight'' and the ``Unladen Vehicle Weight'' (agreed to be 2300 kg. and 1195 kg. respectively). The Gross Vehicle Weight clearly is a design concept which, whatever else it may mean, is the weight of the beast on the

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hoof. It must therefore include an allowance for the notional weight of the driver. The ``unladen weight'' is defined, and calculated quite arbitrarily by weighing the vehicle in a certain condition; viz. by including a measured amount of lubricating oil, coolant and fuel, ``but without goods, occupants or options...''. The difference between these arbitrary weights is, it is said, the ``load'' for which the vehicle is designed. But, says the Commissioner, having included a driver and his mate in the Gross Vehicle Weight, to arrive at ``load'' we must add their weight to the ``unladen weight''. This is a load of nonsense, and Alice in Wonderland arithmetic. Unless compelled by definition to arrive at such a result, I refuse to do so.

9. Even if I am wrong in the above, the taxpayer is notwithstanding entitled to succeed since he still has, according to my calculations, some 37 kg. to play with. Whether the driver is or is not taken into account in arriving at ``load'', I am satisfied that there is no warrant for making a notional allowance for the passenger merely because the design provides for his accommodation. The owner has the option of filling the passenger space with parcels, or looking for an assistant weighing 68 kg. I cannot believe that the outcome of this appeal can turn on the question whether this vehicle is being operated by one or two people.

10. I adopt my colleague, Mr. Dempsey's calculations and hold that the objection should be allowed and the taxpayer's taxable income reduced by $2,139.

Claim allowed in part.