CASE Z25

Members:
P Gerber DP

Tribunal:
Administrative Appeals Tribunal

Decision date: Decision handed down 19 June 1992

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Dr P Gerber (Deputy President)

The facts of this case are not in dispute. The applicant is engaged in the business of hiring luxury motor vehicles. It provides a vehicle and driver and charges a fee to transport passengers from one place to another. A number of vehicles used by it in the business are referred to as ``stretched limousines'', known colloquially as ``stretch limos''. These vehicles are not purchased by the applicant in the form in which they are used, but are acquired as ordinary sedans and are ``stretched'' by private contractors. This process of ``stretching'' apparently involves cutting the vehicle in half and adding a section to the middle before rejoining the two ends. Further, strengthening of the chassis is required, the steering apparatus, brake lines, etc have to be modified due to the additional length of the vehicle, and new springs and bigger tyres must be fitted because the vehicle has become heavier and is able to carry more passengers. These stretched limousines are then able to be specially licensed to carry a driver and seven passengers instead of only four passengers, which is the norm for the sedan types on which this ``stretching'' process is performed.

2. The issue in dispute is whether sec 57AF of the Income Tax Assessment Act 1936-1989 (``the Act'') applies to these stretched limousines such that a limit is placed on the cost price of each such vehicle for the purposes of calculating depreciation allowable to the applicant in the year of income ended 30 June 1989, with a flow on effect when calculating the balancing charge upon the sale of these vehicles; cf subsec 59(6).

3. Sub-section 57AF(1) provides (with my emphasis):

``This section applies in relation to a unit of property (other than an excluded unit of property) being-

• (a) a unit of property in respect of which depreciation is allowable under this Act; and
• (b) a motor vehicle (including a vehicle known as a four wheel drive vehicle) that is a motor car or station wagon.''

4. In short compass: is a stretched limousine ``caught'' by para (b) above? The matter has come before the Tribunal because ``motor vehicle'', ``motor car'' and ``station wagon'' are not defined. According to the respondent's representative, the point is without authority.

5. It was submitted on behalf of the applicant, correctly in my view, that the wording ``a motor vehicle... that is a motor car or station wagon'' suggests that Parliament intended to convey the idea that ``motor car'' and ``station wagon'' are to be regarded as different species of the genus ``motor vehicle''. Reference was made to secs 57AG and 82AF where other sub- species of ``motor vehicle'', such as panel vans, utility trucks and motor cycles had been identified in a similar manner.

6. Further, the applicant's representative, again rightly in my view, pointed to the fact that sec 160A excludes ``a motor vehicle of a kind mentioned in paragraph 82AF(2)(a)'' from the definition of ``asset'' for the purposes of Part IIIA of the Act, thus reinforcing the conclusion that the various sections of the Act mentioned

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above have identified different species or classes of the genus ``motor vehicle''.

7. The applicant concedes that the stretched limousines in question would come within one of the species of ``motor vehicle'' set out in subsecs 57AG(1) and 82AF(2), i.e.:

``(a) a motor car, station wagon, panel van, utility truck or similar vehicle;

(b) a motor cycle or similar vehicle; or

(c) any other road vehicle designed to carry a load of less than 1 tonne or fewer than 9 passengers.''

8. Motor cars have been a problem ever since the discovery of internal combustion. Thus, in
Falkiner v Whitton [1917] AC 106, the Privy Council, when referring to the words ``chassis of motor cars, lorries and waggons'' as used in the Customs Tariff Act 1911 (UK), stated (at p 110):

``It also appears clear from an examination of these enactments that [those words] are not treated as terms of art, and are not used in them in any technical sense or with any special meaning. They must therefore be interpreted according to their common and ordinary meaning, namely, that which they bear in ordinary colloquial speech.''

I, too, am satisfied that the various terms involved here are not used in any technical sense. For this reason I am satisfied that the definitions of various terms relating to motor vehicles contained in various state Acts, much relied on by the respondent, are of little or no relevance. The respondent also tendered various definitions from the Australian Design Rules and sought to establish into which category a stretched limousine fell. Some comfort for the respondent's position was said to be derived from the similarity between the category description thus chosen and the term ``motor car''. Thus the respondent submitted that support for the adoption of such an approach was to be found in a passage of the decision in Case J63,
77 ATC 537, where Mr Hogan stated (in an aside in relation to subsec 82AF(2)):

``Quite properly, in my opinion, it was not argued (though it was discussed in the course of the hearing) that the delivery van in question was excluded as being a `motor car, station wagon, panel van, utility truck or similar vehicle'. Each of these classes of vehicle appears to fall under the genus of vehicles defined either as `Passenger Car' or `Passenger Car Derivative' in the Australian Design Rules.''

(at p 538)

9. However, Mr Hogan in that case was dealing with the application of the phrase ``other road vehicles designed to carry loads of less than 1 tonne''. It was therefore clearly evident, as the Board indeed found, that the question before it was to be decided in light of the design rules applying in Australia at that time. However, as already stated, I consider that the words involved here are not used in any technical sense. For this reason I consider that the various definitions from the design rules tendered by the respondent have no relevance.

10. Next, the applicant's representative referred me to the different species of ``motor vehicles'' identified (non-exhaustively in my view) in subsec 82AF(2) and submitted that the inclusion of such terms as ``station wagon'', ``panel van'', ``utility truck'', as separate species of ``motor vehicles'' when, it was submitted, those terms would ordinarily fall into the generally accepted meaning of ``motor car'', suggests that the term ``motor car'', as used in subsec 57AF(1), is to be given a more restrictive meaning than its ordinary meaning. I consider that the following definitions given of those terms support that argument.

11. The Shorter Oxford English Dictionary gives the meaning of ``motor car'' as ``a carriage propelled by a motor, for use on ordinary roads''. While The Macquarie Dictionary gives that term's meaning as ``a vehicle, especially one for passengers, carrying its own power-generating and propelling mechanism, usually an internal-combustion engine, for travel on ordinary roads''. The Shorter Oxford does not give meanings for the terms ``station wagon'', ``panel van'', or ``utility truck''. Whereas The Macquarie gives the following meanings for each:

``station wagon - a car with an extended interior, allowing extra space behind the rear seat, and a door or tailgate at the back.

panel van - a two-door van, similar in size and shape to a station wagon, used for the carriage of goods and sometimes fitted with sleeping accommodation.

utility truck - a small truck with an enclosed cabin and a rectangular tray which has sides and is sometimes covered by a tarpaulin.''

12. Applying the abovementioned dictionary meanings of ``motor car'' precisely, motor

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cycles would be ``motor cars''. Clearly however, today the expression ``car'' denotes a closed or semi-closed space for the driver and passenger(s). Thus, motor cycles are not included or become ``motor cars'' merely because, on one view, they can be made to fit into a broad dictionary definition. Indeed, the express mention of ``motor cycles or similar vehicles'' in subsecs 57AG(1) and 82AF(2) as a separate class of motor vehicle supports such a conclusion.

13. The inclusion of ``station wagon'', ``panel van'' and ``utility truck'' in the abovementioned subsections, together with the dictionary meanings of the term ``motor car'' and the concept embodied in the expression ``car'', leads me to the conclusion that the term ``motor car'', as used in subsecs 57AF(1), 57AG(1) and 82AF(2), is to be restricted to a closed or semi-closed vehicle primarily for the carriage of passengers, and only for the incidental carriage of goods.

14. It was submitted on behalf of the applicant that if such a meaning was given to the term, it would be sufficiently wide to encompass an omnibus. This was the basis for the applicant's submission that the meaning of ``motor car'', as used in the abovementioned sections, should be further limited to vehicles having a ``normal'' passenger capacity of four. However, I am of the view that common usage today indicates that the terms ``motor car'' and ``bus'' would be considered by a reasonable man (``the man in the Clapham omnibus''; per Greer LJ,
Hall v Brooklands Auto Racing Club [1933] 1 KB 205, 224) to be mutually exclusive concepts (not just for reasons of difference in passenger carrying capacity), and therefore there is no need for a reference to the level of passenger carrying capacity in the formulation of the meaning of ``motor car'' for present purposes. The submission of the applicant's representative to the contrary must therefore fail.

15. The applicant's representative referred to the following paragraph from the then Treasurer's Budget Speech in which the proposed enactment of sec 57AF was introduced:

``Whilst the Government recognises that cars are needed in many businesses and professions, it does not believe there is any reason why the revenue should subsidise the full cost of expensive luxury vehicles used for such purposes.''

It was submitted that it was to be implied from that passage that sec 57AF was only applicable to taxpayers whose use of such vehicles was ancillary to their income-producing activities, and was not applicable to taxpayers, such as limousine hire businesses or rent-a-car businesses, whose vehicles ``are their business''. Unfortunately for the applicant, there is nothing expressed in the words of sec 57AF to support such a contention.

16. I am satisfied that the section contains no such qualification. While I am not convinced that there is sufficient ambiguity in the section to warrant recourse to such material, I am nevertheless comforted in my conclusion by the paragraph that follows the one relied on by the applicant, which reads (with my italics):

``The Government has decided to limit to $18000 the amount which may be depreciated for income tax purposes for motor cars and station wagons (including four-wheel-drive vehicles, leased vehicles, and those used to provide services to the general public) ordered after tonight.''

17. Applying the formulation of the meaning of ``motor car'' for the purposes of subsec 57AF(1) to the facts of this case, I am satisfied that the stretched limousines in question qualify as ``motor car'' for the purposes of that section.

18. For the above reasons, the objection decision under review is affirmed.