British Oxygen Company Ltd v Board of Trade
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN,LORD JUSTICE RUSSELL,LORD JUSTICE KARMINSKI |
| Judgment Date | 14 February 1969 |
| Judgment citation (vLex) | [1969] EWCA Civ J0214-4 |
| Date | 14 February 1969 |
| Court | Court of Appeal (Civil Division) |
[1969] EWCA Civ J0214-4
In The Supreme Court of Judicature
The Court of Appeal
(Civil Division)
(From Mr. Justice Buckley)
Lord Justice Harman
Lord Justice Russell and
Lord Justice Karminski
In the Matter of the Industrial Development Act 1966:
Mr. MORRIS FINER, Q.C. and Mr. J.P. WARNER (instructed by The Solicitor, Board of Trade) appeared on behalf of the Appellants (Defendants).
Mr. J.A. BRIGHTMAN, Q.C. and Mr. P.E. WHITWORTH (instructed by Messrs. Stafford Clark & Co.) appeared on behalf of the Respondents (Plaintiffs).
I will ask Lord Justice Russell to give the first judgment.
This case raises questions of some complication on the construction of Part I of the Industrial Development Act, 1966, which (in very broad terms) substitutes for a system of investment allowance against profits chargeable to tax a system of grants in the discretion of the Board of Trade in respect of new productive machinery or plant acquired for use in the course of a business in Great Britain. The principal questions for decision are whether the Board of Trade has power under the Act to approve, for the purposes of grant, expenditure by the British Oxygen Company on the provision for use in its business of certain machinery or plant, should the Board of Trade in its discretion think fit so to approve. It appears likely that even if there is such power the Board of Trade will not exercise it, but the Oxygen Company is anxious to establish that the Board of Trade, which considers that it has no such power under the statute, should not be hampered by a view which the Oxygen Company says is erroneous.
Section 1 (1) refers to expenditure incurred by the Oxygen Company in providing new machinery or plans for use for carrying on a qualifying industrial process in the course of its business. The expenditure must be "approved capital expenditure", which is defined as meaning expenditure appearing to the Board of Trade to be of a capital nature and approved by the Board of Trade for the purposes of grant: herein lies a discretion to approve or not expenditure of such a character as the statute qualifies for approval. By section 1 (2) "A qualifying industrial process" is (for present purposes) a process for the purpose of the making of any article or a process incidental to the purpose of the making of any article. It is convenient to state at once that the article in question is gas or different gases. By section 1 (3) certain matters are required to be treated as a process incidental to the purpose of the making of gas: one is "the storage" inthe course of that business of anything which (so far as now material) has resulted from any process, carried on in the course of that business, for or incidental to the purpose of making gas: and here of course that which has resulted is the gas itself: the other matter which is required to be treated as a process incidental to the purpose of making gas is "the packing" in the course of that business of anything which (so far as now material) has resulted from any process, carried out in the course of that business, for or incidental to the purpose of making gas: that is to say again the gas. I remark at this stage that under sub-section 3 we are therefore concerned with new plant and machinery provided for use for carrying out in the course of the Oxygen Company's business the incidental process of the storage of gas or of the packing of gas. Finally, "machinery and plant" has a restrictive definition under section 13(1): it is defined as including any part of any machinery or plant but as not including "any vehicle - except (a) a vehicle constructed or adapted for the conveyance of a machine incorporated in or permanently attached to it and of no other load except articles used for the purposes of the machine": the rest of the definition is not presently relevant.
We are concerned with expenditure by the Oxygen Company in connection with the provision for use in their business of what would ordinarily come under a description of machinery or plant under four heads:
(1) Small Tanker Assemblies. These consist of (a) lorry chassis and cab costing £2,550 and (b) a vacuum insulated tank with pumping unit, controls, valves, pipework, and pressure-raising coil, costing £11,300. The power source for the alternator in the pumping unit is driven by the engine in the chassis. The whole makes one permanent assembly - a road tanker. The tank is filled by the Oxygen Company with gas made by the Oxygen Company in liquid (refrigerated) form and delivered by the assembly to containers at the premises of the customers, the pumping unit serving to overcome such pressure as may exist in thosecontainers. These gases include nitrogen, oxygen, argon and so on, but not hydrogen.
(2) Large Tanker Assemblies. These are articulated assemblies. They consist of a tractor costing £4,000: a running gear consisting of an axle and wheels to the rear with coupling readily attached to and detachable from the tractor, costing £1,100: and items costing £15,600 similar to those under heading 1(b) above, mounted on the running gear as a permanent assembly integral with the running gear. The function of the whole assembly is the same as that of the Small Tanker Assembly. The only difference between the Small and Large Tanker Assemblies is that the latter being articulated the tractor is readily severable from the rest, which with the aid of legs lowered at the front can stand on its own: in theory, discharge from the latter could take place with an alternative source of power for the alternator, but there is no evidence that this was ever done.
(3) Hydrogen Trailer Assemblies. These consist of (a) a trailer, attachable to and detachable from a tractor, consisting of a flat with rear wheels costing £620: (b) 9 high-pressure cylinders between fore and aft bulkheads banked together with valves and so forth, the whole permanently attached to the trailer, except for statutory testing and maintenance, costing £6,020. The main distinction between this and items (1) and (2) is that this relates to hydrogen: the hydrogen is not made in refrigerated liquid form but is delivered in these banks of cylinders to customers in gaseous form compressed to a pressure of 224 atmospheres: this pressure makes it unnecessary to have any pumping system (or therefore dependence on the engine of the prime mover of the trailer assembly) for delivery to the customer's container: indeed the hydrogen trailer assembly may be left at the customer's premises, separate from the prime mover, to discharge the hydrogen either into the customer's storage container or into his direct user pipeline or a combination of both.
(4) Individual Gas Cylinders. These are individual gas cylinders which are filled with various gases at varying pressureshigher than atmospheric pressure and delivered in that form to customers who use the contents direct into their pipelines and return them for exchange for fresh ones when nearly exhausted. They remain the property of the Oxygen Company, who deliver and collect them as mere lorry-loads. These cylinders are bought by the Oxygen Company at an average cost of about £20 each. The Oxygen Company's purchases of them are very large - for example, over £1,500,000 in the year September 1965-66.
The first question is what in respect of items (1) to (3) inclusive is the impact of the definition of "machinery and plant".
I take item (1) first. It is argued that those parts of the assembly other than the chassis and cab are plant and machinery and not a vehicle. It is said that it is unlikely that such important and expensive plant should be outside the contemplation of the statute just because it is made mobile, and that its attachment to or incorporation with the chassis and cab does not deprive it of its character or quality of plant so as to down grade it (so to speak) to being a part of a vehicle. Further it was argued that when the expenditure was incurred separately on the "plant" part of the assembly it was not assembled with the chassis and cab and could not be described as a vehicle. The language of paragraph (a) of the definition of "machinery and plant" was relied upon in this connection. It was said that in defining this exception from an exception the language selected drew a distinction in any case covered by it of certain mobile machines between the vehicle that conveyed the machine which was incorporated in or permanently attached to "it", that is to say the vehicle, and the machine which was "load" conveyed by the vehicle — see the words "no other load".
For the Board of Trade it was however argued that there was no warrant for separating into parts what was in the ordinary use of language plainly a vehicle. The "plant" part of the assembly when separately acquired or provided was in any event not provided atthatstage and as such for use in the business but for use by assembling it with the chassis and cab, so that the whole assemblyas such might be provided for use in the business. And what of the case when the whole assembly was bought as such by a claimant? It was said that it was altogether too refined an argument to rely on the drafting of a convenient way of describing a particular type of mobile machinery - for example a mobile crane - in paragraph (a) in order to show that a vehicle was not a vehicle: it was not easy (it was said) to see how the draftsman could readily have described the limited type of mobile machinery embraced by paragraph (a) without using language that suggested a dichotomy between vehicle and machine. If, it was said, assemblies such as No. 1 (the small tanker) were not wholly a vehicle it would be astonishing that Parliament had left in uncertainty and for argument...
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