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Federal Commissioner of Taxation v. Tourapark Pty. Ltd.

Judges:
Woodward J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 21 May 1980.

Woodward J.

This matter arises by reason of a request made by counsel for the plaintiff to a Board of Review in terms of sec. 196(2) of the Income Tax Assessment Act, 1936, that certain questions of law be referred by the Board of Review to this Court. The questions of law relate to a claim by the defendant for an investment allowance based upon certain expenditure claimed in accordance with the provisions of Subdiv. B of Div. 3 of Pt. III of the Act. The claim for an investment allowance relates to expenditure upon a number of caravans acquired by the defendant for the purposes of its business.

During the relevant year of income (year ending 30 June 1977), the defendant carried on business in the Australian Capital Territory as proprietor of the Canberra Motor Village upon land leased to it by the Commonwealth of Australia for use for the purposes of a tourist caravan and camping park. In its return of income for the relevant year, the taxpayer made a claim for ``investment allowance on new plant'' and specified the caravans in an attached schedule. This claim was disallowed in the taxpayer's assessment for that year, to which assessment the taxpayer objected, claiming that the relevant items, as to acquisition and intended use, satisfied all relevant requirements of Subdiv. B.

At the request of the plaintiff, further information was supplied by the defendant and, after being considered by the plaintiff, an amended notice of assessment was issued allowing a small claim but, in the main, disallowing the objection. In the first instance the taxpayer requested that the matter be referred to a Board of Review.

The case was heard by the Board on 12, 20 and 22 March 1979. In due course, counsel for the Commissioner requested that the Board refer to this Court questions of law in relation solely to the claim for an investment allowance relating to expenditure in the acquisition of the said caravans.

During the relevant year of income, accommodation was provided by the taxpayer at the Park in its caravans and in motel units. General facilities such as toilets, laundry and swimming pool were available. There were at the Park a number of sites upon which stood caravans owned by the taxpayer. Concrete blocks were placed under the axles of those caravans the subject matter of these proceedings, to prevent movement upon their springs when an occupant walked inside the caravan. The wheels were not removed. Each caravan was connected by way of a three-point plug to an electricity supply and by a hose to a water supply. A routine inspection of the caravans took place about every six weeks and endeavours were made to avoid entering the caravan whilst it was occupied. If it were necessary to make an inspection of an occupied caravan, permission was sought from the occupant. Upon removal of the concrete blocks and disconnecting the electricity and water supply, the caravan could be moved to another site if so desired.

The motel units of the village were available to customers only on a serviced basis, i.e. the taxpayer undertook all cleaning, changing of linen, towels, replacement of soap, etc., but no such services were provided in relation to the relevant caravans.

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When a person arrived at the Motor Village and required accommodation, that person reported to the Motor Village office and was asked the type of accommodation sought. If the request were for a caravan, information was sought as to the number of berths required, the number of people to be accommodated and the length of time for which it was required. If a caravan was available, a receptionist completed a ``Guest Account'' form consisting of an original and two copies. This recorded, inter alia, the person's name and address, car registration number, type of accommodation, number of nights for which it was required, arrival date, departure date, number of persons and the amount due in respect of the accommodation. The customer was then required to pay the amount due, for which he was given the original as a receipt and a document indicating by mark upon it the location of the allotted caravan in relation to the village, a key to the caravan and information as to the whereabouts of the various facilities and amenities.

At the foot of the original there appeared the words ``This licence subject to conditions noted on back hereof'' and on the back of the original (but not on the two copies) was set out the following:

``By accepting this receipt, I hereby agree that the money this day paid to you confer upon me a licence to occupy the caravan, caravan site, motel unit or mobile home referred to on the face hereof or any other nominated by you in lieu thereof for the period stated thereon and subject to the conditions printed below.

  • 1. Animals are not permitted within the park grounds.
  • 2. Visitors' cars must be left outside the park grounds.
  • 3. Speed limit 5 m.p.h.
  • 4. Tent camping not permitted.
  • 5. Open fires not permitted.
  • 6. The occupier of each site shall ensure that the site is at all times kept clean and tidy and no surplus gear left on the ground or under caravans.
  • 7. The caravan site, caravan, motel unit or mobile home is to be vacated by 10 a.m. on the day of departure otherwise further charges may be incurred.
  • 8. Guests are reminded that all roads are one way excepting for the main entrance and exit roads.
  • 9. All caravan waste outlets must be connected to the drainage system.
  • 10. Cars or trailer must not be washed on the site. A semi automatic car wash is available.
  • 11. Noise must be kept to a minimum at all times particularly after 9 p.m.
  • 12. Laundry must not be hung out to dry except on the rotary clothes hoists provided (located near automatic laundry).
  • 13. All food scraps, paper and other wastes are to be placed in the garbage receptacles.
  • 14. Parents are responsible for their children's behaviour within the park and amenities provided. Young children must be accompanied by an adult to the conveniences.
  • 15. The management shall have full and complete control of the area and all persons occupying same must immediately comply with such directions as may be issued from time to time.
  • 16. The management reserves the right to direct any person to vacate the area at any time without the necessity of stipulating the reason for such action and any person so directed shall vacate the area.

I acknowledge having read the above rules and regulations for the conduct and management of the Motor Village and I agree at all times during the period of this licence that all members of my party will observe and be bound by the said rules and regulations and every part thereof and I agree to pay to you the cost of making good or restoring any damage caused by any member of my party or any person visiting the park at my invitation.

The licence is a personal licence and shall extend only to the number of persons listed on the face hereof.

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I agree that I shall occupy the site, caravan, motel unit or mobile home allotted to me at the said park and use the parking facilities at my own risk in all things and I hereby absolve the proprietors for the time being of the said park and their servants and agents from liability to any damage or loss caused to me, the members of my party, my guest and invitees or to any of my or their equipment and chattels, property and effects whilst at the said park and I indemnify and agree to keep the said proprietors, their servants and agents indemnified accordingly.

This licence does not in any way constitute a tenancy.''

The conditions set out on the back of the original document were not drawn to the attention of a prospective occupant prior to his money being taken, nor after the money had been taken, unless subsequent behaviour of the occupant required that this be done. A prospective occupant did not sign that or any other document. Apart from an inventory of crockery and cutlery, no notices were displayed in the caravans or in the motel units. A notice was displayed in the grounds indicating that dogs were not allowed therein.

The caravans in issue were of a type specially made for use in caravan parks as a stationary caravan as distinct from one made for use by a private individual in the ordinary way. The subject caravans are plainer than the ordinary ones and had a more solid interior finish.

The questions referred by the Board of Review to this Court in respect of the said caravans may be considered in two groups; the first group comprising those numbered (i) and (ii), and the second group comprising those numbered (iii) and (iv), and are as follows:

  • (i) Are the aforesaid caravans plant or articles within the meaning of sec. 54(1) of the Income Tax Assessment Act, 1936, as amended by Acts passed to 30 June 1977?
  • (ii) Are the aforesaid caravans eligible property within the meaning of sec. 82AQ(1) of the said Act?
  • (iii) Were the aforesaid caravans units of property acquired by the taxpayer for use wholly and exclusively by the taxpayer for the purpose of providing assessable income otherwise than by -
    • (a) the leasing of such units; or
    • (b) the granting to other persons of rights to use such units

    within the meaning of sec. 82AA(a)(ii)(A) and (C) respectively of the said Act?

  • (iv) Did the taxpayer lease the aforesaid caravans or otherwise grant a right to another person to use the caravans within the year of income after the caravans were first used by the taxpayer within the meaning of sec. 82AG(1)(b) of the said Act?

Subdivision B of Div. 3 of Pt. III of the Income Tax Assessment Act, 1936, was inserted by Act No. 50 of 1976, sec. 10, and provided for an allowance to a taxpayer by way of deduction from otherwise taxable income of a percentage of the cost of a unit of ``eligible property'' acquired by the taxpayer and satisfying certain requirements. This is called an investment allowance.

Not only must the property be ``eligible'' but it must be acquired for use by the taxpayer wholly and exclusively in Australia and for the purpose of producing assessable income otherwise than by the leasing of the eligible property or the granting to other persons of rights to use such property (sec. 82AA). Other provisions of the section are not relevant to the present matter.

It is necessary to determine whether the caravans in question are eligible property within the meaning of sec. 82AA and whether the purpose for which they have been acquired is outside either of the relevant exclusions referred to in the section.

Section 82AB provides for the manner in which the amount of the relevant deduction is to be determined.

``Eligible property'' is defined by sec. 82AQ to mean plant or articles within the meaning of sec. 54 of the Act. Section 54(1) allows a deduction for depreciation during the year of income of any property ``being plant or articles...''.

Certain property is excluded from the application of the Subdivision by sec. 82AF and 82AG but the provisions of those

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sections are not relevant to the present problem.

Are, therefore, the subject caravans plant or articles within the meaning of sec. 54(1) of the Act?

In
Quarries Ltd. v. F.C. of T. (1961) 106 C.L.R. 310, Taylor J. said (at p. 315):

``The question of what is comprehended by the expression `plant' has been the subject of discussion on many occasions and I was referred to a number of wellknown authorities such as
Yarmouth v. France [(1887) 19 Q.B.D. 647];
Margrett (H.M. Inspector of Taxes) v. The Lowestoft Water & Gas Co. [(1935) 19 Tax Cas. 481];
J. Lyons & Co. Ltd. v. Attorney-General [(1944) Ch. 281];
Commissioners of Inland Revenue v. Reid [(1950) 31 Tax Cas. 402]; and
Hinton (H.M. Inspector of Taxes) v. Maden & Ireland Ltd. [(1959) 38 Tax Cas. 391]. But valuable as such cases may be as a general guide when considering the question of what may and what may not be regarded as plant in any particular case they demonstrate the impossibility of formulating any precise rule by the application of which the problem may always be readily solved. One of the best known statements concerning the meaning of the expression is that of Lindley L.J. in Yarmouth v. France [(1887) 19 Q.B.D. 647]: `in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business, - not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business' [(1887) 19 Q.B.D. 647 at p. 658]. This test led Lindley, L.J., in common with the other members of the Court, to hold that a cart-horse belonging to the defendant was `plant' within the meaning of s.1 of the Employers' Liability Act, 1880. But in
London and Eastern Counties Loan and Discount Co. v. Creasey [(1897) 1 Q.B. 442] cab-horses were held not to be `plant' within the meaning of s.6 of the Bills of Sale Act, 1882. The reason was, of course, that in the latter statute the word `plant' was found in a context which required the conclusion that it should be read in a restricted sense. The statement of Lindley, L.J. has been adopted on many occasions and comparatively recently by Uthwatt, J. in J. Lyons & Co. Ltd. v. Attorney-General [(1944) Ch. 281] and by Lord Reid in Hinton's Case [(1959) 38 Tax Cas. 391].''

(And see
F.C. of T. v. Faichney 72 ATC 4245; (1972) 129 C.L.R. 38 per Mason J. at ATC pp. 4250-51; C.L.R. pp. 45-46.)

In
Benson v. Yardarm Club Ltd. (1979) 1 W.L.R. 347, the facts were that the taxpayer company purchased and converted a vessel which was moored at a permanent site on the Thames where, together with a barge, she was used as a floating restaurant. Expenditure was incurred by the taxpayer company in respect of the cost of the vessel, hull alterations, equipment and fixtures. Upon an appeal by the taxpayer against relevant assessments, the General Commissioners held that the vessel was ``plant'' used in the taxpayer's trade and the relevant expenditure therefore qualified for the allowance claimed. The Court of Appeal held that a structure might fall within the definition of ``plant'' if it was something by means of which the business activities of a company were carried on, but it would not do so if it played no part in the carrying on of those activities but was merely the place within which they were carried on and the vessel, albeit a chattel, was the structure within which the taxpayer's business was carried on and, accordingly, was not plant for the purposes of qualifying for the allowances claimed.

In my view, the subject caravans are plant or articles within the meaning of the provisions of sec. 54(1) of the Act and are therefore eligible property within the meaning of sec. 82AQ(1). I therefore answer questions 1 and 2 as posed in para. 17 of the reference in the affirmative.

The answer to the next two questions depends upon whether or not the caravans were acquired by the taxpayer for use by it for the purpose of providing assessable income either by the leasing of such units or the granting to other persons of a right to use such units within the meaning of sec. 82AA(a)(ii)(A) and (C) of the Act. The purpose of the acquisition of the caravans by the taxpayer must in this case be determined

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by the use to which the caravans were put. They were used not for various purposes but for one purpose only and that was to provide assessable income to the taxpayer by making such units available to members of the public who sought to use them for the purposes of accommodation. That, however, may not be the test. The test is whether the assessable income is provided by the leasing of the units or the granting to other persons of rights to use such units within the meaning of sec. 82AA. It was contended by the Commissioner that the effect of the actions of the taxpayer in relation to the acquisition of income from the use of the caravans constituted a lease by it of them to the persons who use them. Also that the alternative purpose, namely of granting to other persons the right to use such units, clearly is intended to cover a situation where the arrangements made between the taxpayer and the persons using such units constitute something other than a leasing but amounts to such a grant. The Commissioner therefore has submitted that it is unnecessary to determine whether in the circumstances there was a leasing of such units provided that the circumstances gave rise to the granting of a right to use, which of necessity would flow from a lease. If I find that what was intended to be done constituted the granting to other persons of rights to use the caravans, within the meaning of the section, it is, in the circumstances in my view, unnecessary to make a finding upon whether or not the agreement made in relation to each caravan amounted to a leasing of it.

The Board of Review dealt with the problem as if it were to be determined by a conclusion that the relationship between the taxpayer and the persons who did, or might, occupy the caravans, on the facts relating to the situation existing between them, created an estate as if in realty (such as a lease) or a right by virtue of a grant made by the taxpayer to a third party, akin to a right in rem. The problem was dealt with by determining the rights which were created between the tourist and the taxpayer without due reference to the words of the section.

According to the headnote to Case K72,
78 ATC 678, it was a relevant factor in the decision of the Board of Review that ``the document of account merely granted to others the right to occupy the caravan and did not deprive the taxpayer of the right to use the caravan. Therefore the taxpayer did not grant to other persons the right to use the eligible property within the meaning of sec. 82AA(a)(ii)(C), and the investment allowance would otherwise have been available''. If the document granted to others the right to occupy the caravan, did it not thereby grant a right to use it? Was the benefit of the section lost merely by depriving the taxpayer of the right to use the property or should that deprivation be coupled with or established by the granting to some other person of such a right? It would seem that a distinction is sought to be made between a ``right to occupy'' and a ``right to use'', so that the grant by the taxpayer to others of a right to occupy did not constitute the grant of a right to use. This is difficult to understand unless a right to occupy did not constitute the grant of a right to use within the meaning of cl. (C).

Much attention was given to deciding whether an occupant was a lessee or a licensee, or ``whether a contract of bailment for reward existed and whether, assuming the various possibilities, the provisions of sec. 82AA(a)(ii)(A) and/or (C) were satisfied''. Thus counsel for the taxpayer submitted an occupant was a licensee only (not a lessee) and could not, in any sense, be regarded as a bailee whilst counsel for the Commissioner contended there did exist a contract of bailment for reward (he also submitted that, if not a bailment, there was a contractual licence). Reference was made to a number of authorities which have explained the distinction between a lease and a licence of real estate and enumerated a number of principles by reference to which the distinction can be determined. It was claimed that the reference to leasing implied the passing of some interest in the property to the lessee and to the granting of rights to use must also imply the grantee obtaining some interest in the property concerned.

A member of the Board (C.F. Fairleigh Q.C.) considered it relevant that the document of account (above referred to), established the existence of a licence to occupy and expressly negatived a lease or a tenancy. It was his view that the permission given to occupy for a limited time the fixed site caravan did not deprive the taxpayer of ``the right to use'' it. He concluded that as

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the taxpayer had not been deprived ``by the document'' of the right to use the caravan there had not been a granting to other persons of such a right within the meaning of sec. 82AA(a)(ii)(C). This assumes that the relevant portion of the section requires:
  • (a) that the taxpayer must be deprived of the right to use the property,
  • (b) so that there has been granted to other persons the right to use it.

If this were so a taxpayer could not acquire eligible property for use by him wholly and exclusively for the purpose of producing assessable income by leasing it or granting to others rights to use it. This obviously is neither the effect nor the intention of the section.

Property may be acquired by a person (the taxpayer) for use by him wholly and exclusively in Australia for the purpose of producing assessable income in the following (inter alia) ways:

  • (1) in the business of farming as a farmer usually does;
  • (2) in the course of business as a cleaning contractor, excavator, dam sinker, subdivider, road maker, earth mover, builder, and the like;
  • (3) as a sub-contractor to any of the above;
  • (4) by letting at an agreed rate with or without an operator for an agreed period or job;
  • (5) by leasing under a contract of finance;
  • (6) by letting on hire under a hire purchase agreement; or
  • (7) by giving other persons rights to use it.

If it acquired for some of these purposes, e.g. a tractor by a farmer for use for the purpose of producing farm produce, providing it meets with the requirements of the Act in other respects, the taxpayer prima facie qualifies for an ``investment allowance''.

If, on the other hand, it is acquired for letting on hire under a hire purchase agreement, the taxpayer does not so qualify.

I do not understand the statement of Board Member J.R. Harrowell when he says ``the definition of `lease' provides little help in this instance. We are not dealing with an interest in land. The term lease here relates to a chattel''. By reference to the decision in
Radaich v. Smith (1959) 101 C.L.R. 209 at p. 223, he opines that the term lease when applied to a chattel should also denote exclusive possession.

There is a difference between using eligible property wholly and exclusively in Australia for the purpose of producing assessable income and having a right (or rights) to use that property. The ``rent-a-car'' procedure illustrates this.

In recent years there has evolved a method of acquiring property in industry by means of a leasing arrangement for a number of years, the agreement providing, inter alia, the original value of the article, the period of the lease, the amount of the rental and a value, called the residual value, for which the article may before the termination of the lease be purchased by the lessee. In this fashion the rent constituted a deduction from taxable income but on the face of it was calculated with a view to providing compensation for the lessor taking into consideration his capital expenditure for the article, costs of maintenance over the period of the lease and the sum for which the lessee might be prepared to purchase it at the expiration of the term. This provided a procedure as attractive to the financier as a hire purchase agreement but more attractive to the lessee because of the tax benefits derived from deducting the rent payments from his taxable income.

Without special appropriate provision, an investment allowance might be available to a leasing company (as the owner of the property) but not to the lessee. This could defeat the purpose of the introduction of the investment allowance provisions. Undoubtedly, sec. 82AA was introduced to ensure that the deduction of an investment allowance was, under a leasing agreement, denied to the financier but made available to the lessee. While the provisions of sec. 82AA must be interpreted and construed in accordance with the usual principles, the purpose of its introduction is not without interest. Clearly the section denies to a finance company the benefit of an investment allowance where any eligible property acquired by it is acquired (and it generally is) for the purpose of leasing,

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letting on hire under a hire purchase agreement or ``granting to other persons of rights to use'' the property. The provisions of sec. 82AA(b) tend to support the view that after 1976 the section was intended to have the effect suggested.

Section 82AQ provides a number of interpretations for use within the Subdivision. ``Eligible property'' means plant and articles within the meaning of sec. 54 and includes earth tanks constructed for the purposes of conserving water for use in carrying on a business of primary production. ``Hire purchase agreement'' means an agreement for letting property on hire under which the person taking the property on hire has a right (either absolutely or subject to conditions) to purchase the property...

``Lease in relation to property'' means grant a lease of the property or let the property on hire otherwise than under a hire purchase agreement, and cognate expressions have corresponding meanings.

``Leasing company'' means a corporation that carries on in Australia as its sole or principal business:

  • (a) the business of banking, or
  • (b) the business of borrowing money and providing finance.

The section further provides that the reference in the definition of ``leasing company'' to providing finance is a reference to:

  • (a) lending money, with or without security;
  • (b) letting property on hire under a hire purchase agreement; or
  • (c) leasing property.

I have already referred to the use in sec. 54 of the expression ``any property being plant or articles''. Plant is stated in the section to include animals, machinery, implements, utensils and rolling stock; fences, dams and other structural improvements of land used for specified purposes, certain structural improvements used for the purposes of pearling operations; plumbing fixtures and fittings including wall and floor tiling installed and provided principally for the use for personal purposes of persons employed by a taxpayer or for the care of children of those persons.

It seems clear that within Subdiv. B relevant property is not intended to include real property unless otherwise indicated as in the case of specific references made in sec. 54. Even in that case, the value of the finished product is not material. Any deduction is based upon the cost of construction and any costs (including materials) incidental thereto. In construing the provisions of sec. 82AA and the exclusions in para. (a)(ii) regard must be had to the definition contained in sec. 82AQ. Clause (A) in referring to ``leasing of the eligible property'' must refer to granting a lease of property (not confined by any means to realty) or letting the property on hire otherwise than under a hire purchase agreement. Similarly cl. (B), although not relevant to the present matter, must refer to similar property capable of being the subject of a hire purchase agreement. Clause (C) is not dependent upon sec. 82AQ for its construction although the word ``grant'' in relation to ``rights to use'' appears in a phrase similar to that used in the definition of ``lease'' in sec. 82AQ.

It is difficult to contend that the exclusion in cl. (A) can refer to the leasing of property otherwise than in the course of providing finance. Because of the distinction expressed between para. (a) and (b) in sec. 82AA - the former relating to ``in the case of any taxpayer'' and the latter to ``in the case of a taxpayer being a leasing company'' - it would appear that the provision of finance need not be confined to the business of a ``leasing company''. I see no significance in confining the use of the expression ``providing finance'' to the definition of ``leasing company'' in sec. 82AQ. I can see no reason for construing the expression ``leasing property'' in sec. 82AQ(2) as having a meaning different from that in sec. 82AA(a)(ii)(A). If the expression ``leasing of the eligible property'' refers only to limited ``property'', and to such property which is leased in connection with the provision of finance, it would seem that such property is excluded from the benefits of Subdiv. B. This Subdivision applies in relation to plant or articles within the meaning of sec. 54 acquired by the taxpayer, which is for use by the taxpayer wholly and exclusively, i.e. solely, for the purpose of producing assessable income otherwise than:

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  • (A) by granting a lease of the property or letting the property on hire otherwise than under a hire purchase agreement;
  • (B) by letting the property on hire under a hire purchase agreement;
  • (C) by granting to other persons rights to use the property.

Leasing or letting the property must refer to the procedure similar to that whereby finance is provided by a corporation that carries on in Australia as its sole or principal business the business of borrowing money and providing finance. This does not mean that in construing sec. 82AA, the first clause operates only if the taxpayer is a leasing company. Indeed the provision applies in the case of any taxpayer.

In the facts of the instant case, if the defendant is not entitled to an investment allowance, no one is. For the purposes of the application of the section the defendant is a taxpayer who has acquired a unit of eligible property for use by him in Australia. Whether that use can be said to be his ``wholly and exclusively'' is a matter of construction. In the event of a leasing he may be said to have lost the exclusive use. The defendant certainly is entitled to direct the use to which the relevant property is to be put although he may have, for a time and a limited purpose, given to some other person a right in respect of that property which may be classed either as the leasing of it or the granting of a right to use it. Is the expression ``using'', as used in the section, confined to the procedure which is followed when a financer leases eligible property to a taxpayer or does it mean a letting in the generally accepted sense in relation to real or personal property? Is the difference between ``leasing'' and ``letting... on hire under a hire purchase agreement'' of eligible property significant? Is the ``granting... of rights to use the eligible property'' to be construed ejusdem generis with the aforesaid leasing or letting?

In law, as in ordinary language, ``use'' denotes the act of employing a thing; thus, to cultivate land, to read a book, to inhabit a house is to use those things. As a noun it means the right or privilege of using, to avail oneself of, put to one's own purposes. (The Dictionary of English Law, Jowitt, 1950, p. 1810. World Book Dictionary, 1975 ed. p. 2290; and see Webster's New International Dictionary.)

A taxpayer who acquires a unit of eligible property for the purpose of renting it to other persons may still use or employ it wholly or exclusively for the purpose of producing assessable income. The benefit of the Subdivision could be denied to such a person, if that were intended, by a statement to that effect. It would be unnecessary to employ the method used in sec. 82AA. Where, however, it is intended to deny to a ``finance'' company the benefit of the Subdivision, one method would be to permit the taxpayer to enjoy the benefit even where the eligible property is ``rented'' by him to other persons for the purpose of providing assessable income, provided it is not part of a ``financing'' arrangement. In this fashion the legislature achieves the purpose of not excluding from the benefit of the Subdivision a person who ``rents'' property to others unless it is done by ``leasing'', ``letting on hire under a hire purchase agreement'' or ``granting to other persons of rights to use'' the property.

If cl. (A) and (B) in sec. 82AA are to be construed as relating to some operation involving the provision of finance and cl. (C) is to be construed ejusdem generis with them, it must be intended to extend the clause to a situation where the granting by the taxpayer to other persons of rights to use the eligible property is a step in some operation for the provision of finance which is not a lease or a letting on hire under a hire purchase agreement within the meaning of the section. There is no evidence that if what was done by the taxpayer constituted a granting to other persons of rights to use the caravans it was done in association with the provision of finance. Indeed the situation is to the contrary. Because the transaction was not a leasing of the property or the letting of the property on hire under a hire purchase agreement and was not a granting to other persons of rights to use the property, in association with the provision of finance within the meaning of the Subdivision, the benefit of the Subdivision is available to the taxpayer.

If on the other hand cl. (C) is not to be read ejusdem generis with cl. (A) and (B), the problem is whether what was done in the circumstances amounted to the granting by

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the taxpayer to other persons of rights to use the caravans. I cannot interpret the clause as meaning other than that the benefit of the Subdivision is lost to a taxpayer if the property is to be used for the purpose of producing assessable income by giving to other persons rights to use it. This is what the taxpayer has done in the present case.

In my view the section should be construed so that cl. (C) has the former meaning ejusdem generis with cl. (A) and (B), and that the defendant is entitled to the allowance claimed. By consent, I order the plaintiff to pay the defendant's costs.


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