OPINIONS and QUERIES
Page 39
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CONFUSION ADDED TO CONFUSION
IN the example contained in the article, What You Will Get in Compensation '' (December 13), the case is quoted of a three-year-old vehicle, which, presumably, was first bought new by the operator. Assume that an operator purchases a 1937 vehicle in 1943 for £600. The price of the vehicle when new was, say, £450. In 1948 the vehicle will be 11 years old, but has been in the possession of the present owner for only five years. Referring to your example, should depreciation at 20 per cent, be written off for 11 years or five years? The figures would be as follow:— Furthermore, we are unable to reconcile the basis of compensation for vehicles set forth in your article with Mr. Dalton's statement in the House of Commons, when he said, according to the " Financial Times" of December 18, 1946: "Private wagons were to be compensated at the August, 1939, cost, less depreciation."
.Elingley. L. BUTTERFIELD.
[Our legal adviser replies; "Depreciation on the ' new replacement ' vehicle is to be calculated by the numbell of complete years between the date when the vehicle was registered under the Roads Act, 1920, and the date of transfer. Taking yolir example, depreciation should be written off for 11 years, assuming that the Vrehicle was registerel in 1937. The words quoted from Mr. Dalton's speech were spoken in relation to railway wagons; it will be borne in mind that owners of such wagons get nothing at all to add to the ' cost less depreciation '. '—Fro.] COMPENSATION FOR VEHICLES: A .MATTER OF DOUBT 1 HAVE read the explanation of the compensation provisions of the Transport Bill, given by a solicitor, in your December 13 issue. Although 1 fully agree that the basic compensation for vehicles, under the Bill as drafted, is very unfair, especially having regard to current second-hand market values, I am not convinced that your contributor's interpretation of Clause 48 (b) conveys the meaning that was intended by the authors of
Bill.
There is at least one other interpretation Which can be placed upon it. This interpretation would not admit market value as being the value, for the purpose of this part of the Bill, of either the particular vehicle which is being acquired, or of a normal vehicle of the same type and age with which the vehicle to .be acquired is being compared, in arriving at the difference in value between the two vehicles.
I think it is likely, therefore, that the basic method of arriving at the value of the normal vehicle which is taken for comparison, is to be the same as that employed in connection with the vehicle to be acquired. This would obviously give the same resultant value figure as would be obtained by assuming that the vehicle to be acquired is normal, and, in this way, finding the difference, in respect of which greater or less compensation is to be paid. J. JANES. Watford. [Our legal adviser replies: " I myself had some difficulty in following Clause 48 (1) (b), and it was only by eliminating other possible interpretations that I was convinced (as I still am) that the view expressed in my. article was right. First, the compensation is payable 'if it is established that the physical condition of the vehicle is materially better or worse . . . than the normal physical condition of a vehicle of the same type and age'; in other words, because the value of -the particular vehicle is greater or less than average. The compensation should, therefore, have regard to the real value of the particular vehicle, In fact, it is to be such amount as fairly represents the difference between the value of the vehicle and the value of a normal vehicle of the same type and age.' The word ' value' appears again only once in the Whole clause, and there is no reason to doubt that it is here used in its usual sense of meaning market value. Apart from legal interpretation, the value of a normal vehicle cannot mean the cost of replacement depreciated as provided by Clause 48 (1) (a), as the result of all the calculations in sub-clause (I) would be to bring you back to the second-hand vente of the particular vehicle. Taking my example:—
Basic compensation ... 500 Less depreciation ... 244 Plus second-hand value adjustment:— 256 Normal vehicle (on sub clause 1 [a] basis) 256 This vehicle 420 164 420
Which is absurd. I do Ica see 'bow depreciation on the same basis can be applied to the particular vehicle and still have any relation to the physical condition.' —EDJ STARTING A BUSINESS FOR REPAIRS OR AS PARTS STOCKIST WOULD you kindly give advice to one who has read your valuable journal for many years? 1 am contemplating going into business on my own account, having been in the industry since its infancy, but am undeCided as to whether to open up on the repair side or deal with the sale of spare parts and accessories. I would like to know whether it would be a sound proposition to buy used vehicles for dismantling and sell the spares thus obtained.
I have thought it might be best to fix up a distributing agency for spares and accessories with manufacturers of repute, as I fear that there may be keen competition on the repair side. R.C. Guildford.
[it is quite true that there is, and always will he, room for repair businesses upon which full reliance can be placed. Largely, it is a matter of building up goodwill by quality. You are no doubt kware that there are many established concerns supplyin-g used spares, but it does not necessarily follow that there is not room for more. What happens, normally, is that a broken-down vehicle provides a fair number of really usable parts; those that are too far gone may be discarded, or, as is often the case, built up by some good process and remachined. We find difficulty in believing that you woukl be able to arrange a distributing agency for new spares and accessories, as it is usual for the vehicle distributor to combine such .a service with his vehicle sales. We think that an efficient repair and overhaul business would offer the best prospects.—En.]