Cross-border hiring and sub-contracting is increasingly becoming the norm for many hackney carriage and private hire drivers and operators throughout England and Wales. In terms of the licensed trade, local authority and geographic boundaries are increasingly becoming a thing of the past.
There was recognition of this by the Government when in 2015 it introduced the Deregulation Act.
Section 11 of the 2015 Act amended the Local Government (Miscellaneous Provisions) Act 1976 to introduce the ability for licensed operators to sub-contract work to almost any other licensed operator regardless of where in the country they are licensed – including the ability for operators to sub-contract work to themselves.
Cross-border hiring and sub-contracting are of course different things in law but in essence the principle is the same in that in both cases vehicles and drivers operate in areas where they do not hold licensed issued by the local authority for that area.
Whilst cross-border hiring and sub-contracting are increasingly becoming an industry norm, for local authorities this continues to be increasing headache. In the context of hackney carriage and private hire licensing, local authorities are there to protect the public by making sure that driver and vehicles that operate in their local area are suitable, fit and proper according to standards set locally. If however they have drivers and vehicles working in their areas but licensed elsewhere, they are largely rendered powerless to regulate parts of the trade operating in their areas.
If every hackney carriage or private hire licence holder were subject to the same fitness criteria and assessments regardless of where they are licensed, there would theoretically be no problem where they then choose to go on and operate. The Government has however not implemented national standards for hackney carriage and private hire licence holders therefore standards very greatly around the country. To some extent the licensed trade has capitalised on this with some drivers seeking to apply for their licences in local authority areas where fitness standards and checks are less stringent even though they had no intention of working – even predominately – in the area where they have obtained their licences.
There has as a consequence of this tension been quite a lot of litigation in this area. The first significant case that dealt with the issue of cross border hiring was in 2008 in the case of Newcastle City Council, R (on the application of) v Berwick-Upon-Tweed Borough Council & Ors  EWHC 2369 (Admin). In this case Newcastle City Council complained that Berwick-Upon-Tweed Borough Council was issuing a disproportionately high number of hackney carriage licences, believing that it should only refuse a licence where the driver appeared to be unfit. Many of these vehicles licensed by Berwick-Upon-Tweed ended up working in Newcastle.
The High Court in the Newcastle case held, amongst other things, that the nature of the licensing system was local in character and with public safety being the main consideration. A local authority should therefore take into account the location where the taxi was to operate…in determining whether to grant a licence under the said section 37 [Town Police Clauses Act 1847] a licensing authority may require an applicant to submit information pursuant to section 57 Local Government (Miscellaneous Provisions) Act 1976 in order to ascertain the intended usage of the vehicle.
What arose out of this case were intended use policies adopted by local authorities as a means to curb the practice of cross border hiring. These policies effectively made an applicant for a hackney carriage or private hire licence sign an undertaking that they will predominantly be working within the area where they are licensed. It also gave local authorities the discretion to refuse a licence application if the applicant or licence holder failed to comply with the undertaking.
A recent High Court case (6 & 7 February) however has called into question the lawfulness of intended use polices by local authorities.
Delta Taxis & Uber v. Knowsley Metropolitan Borough Council
In late 2016 the Knowsley MBC noticed an increase in applications from private hire driver licences from applicants living outside its area. To address this, in March 2017, the council adopted an intended use policy. The policy required drivers to sign a declaration that they intended to drive predominantly in the council’s area and that they face the prospect of not having their licence renewed or revoked if they drove predominantly elsewhere.
Delta Taxis Merseyside and Uber Britannia Limited separately applied to judicially review the council’s adopted policy with permission to bring the proceedings being granted. The case was heard by Mr Justice Kerr in the High Court in Manchester.
Knowsley Council sought to persuade the High Court that an applicant who had little or no intention of working within its boundaries was not a fit and proper person within the meaning of section 51 of the Local Government (Miscellaneous Provisions) Act 1976, because such a driver would be undermining a principle of “local licensing” that has been recognised as central to the private hire regime provided by the 1976 Act above. The council argued that the fit and proper person criterion stretched beyond merely including personal characteristics.
Uber argued that a private hire licence is a licence to drive anywhere and the law does not confine such a licence to any particular local authority area provided that the vehicle and driver used to fulfil a booking are licensed by the same authority as licensed the operator who dispatched them.
It further argued that section 75(2) of the Local Government (Miscellaneous Provisions) Act 1976 gave a private hire driver the “right to roam” provided the trinity of licences, referred to above, are intact. Uber also relied on a number of decided cases including Dittah v Birmingham City Council (1993) and Shanks v North Tyneside Borough Council (2001).
Finally, Uber argued that the council had no discretion to refuse a private hire licence if the applicant or licence holder complied with the “fit and proper” criteria set out in section 51 of the 1976 Act. Common law (McCool v Rushcliffe (1998) and Leeds City Council v Hussain (2002)) has established that “fit and proper” criteria relates to the personal characteristics and qualifications of the driver, not where he might drive.
Delta Taxis argued that a private hire driver’s licence is generic in nature, or in other words, it is a licence to drive private hire vehicles generally rather than being attached to a specific vehicle.
Therefore, any assessment by the council of a private hire driver’s fitness and propriety is restricted to their fitness to drive private hire vehicles in general. The locations in which a private hire driver might lawfully work are not relevant to that assessment.
Mr Justice Kerr rejected the council’s case. He accepted the arguments put forward by Uber mentioned above and with the argument made by Delta Taxis that the licence to drive a private hire vehicle was a generic permission, without geographic control.
He ruled that Knowsley Council’s approach was contrary to the decided cases on the meaning of “fit and proper person” namely McCool v Rushcliffe (1998) and Leeds City Council v Hussain (2002). These cases have established that the “fit and proper” criterion relates to the personal characteristics and qualifications of the driver.
Mr Justice Kerr accordingly quashed the council’s policy.
This case has cast doubt over the validity of intended use policies. Whilst any future litigation on the matter will be determined on the individual merits of each case, it is hard to see how the judgement in this case will not to some extent be relevant because, in essence, intended use policies operate very much in the same way.
Whilst the Court ruled the policy unlawful, additional arguments put forward, primarily by Delta Taxis, raised further relevant questions around local authorities’ means to lawfully control the issue cross-border hiring. It was not necessary for Mr Justice Kerr to rule on these points (because the policy itself has already been declared unlawful), but he did provide verbal observations indicating that there may be scope for persuading the Court on the lawfulness of these means.
The additional arguments put forward were (1) that the policy was vague, uncertain in effect and that it was disproportionate and (2) it may be lawful for a council to adopt appropriately worded conditions which promotes the principle of localism with regards to private hire licensing.
With reference to the first additional argument, Mr Justice Kerr indicated (without ruling on the point) that whilst it was strongly arguable that the policy was a disproportionate measure to meet the council’s expressed aspirations of promoting public safety he was yet to be persuaded that the intended use policy was so uncertain of meaning as to be unenforceable.
Mr Justice Kerr expressly refrained from deciding the point relating to legalities of imposing licence conditions as an alternative to policies, but he did verbally indicate in his judgement that he was “fortified” by what he had heard in thinking that a fit and proper person might, in principle, be required to abide by a condition (otherwise lawful) imposed in order to meet any perceived erosion of localism.
It is worth pointing out that, although Delta Taxis and Uber were in unison with regards to their primary argument that the council’s policy was unlawful, it parted on the issue of the lawfulness of conditions which promotes the principle of localism with regards to private hire licensing.
Whilst Delta Taxis accepted that it may be lawful for a council to adopt appropriately worded conditions, Uber other hand argued that such a condition would in all cases offend established common law principles established in the case of Padfield v Minister of Agriculture, Fisheries and Food because it would curtail the ‘right to roam’ which is fundamental to the legislative scheme for private hire vehicles given by the 1976 Act.
The additional arguments relating to the lawfulness of conditions over policy is important because, although the policy per se was ruled unlawful, Mr Justice Kerr verbally indicated (again without ruling on the point) that these issues might arise for decision in future litigation.
The tension between local authorities and the licensed trade over cross-border hiring is not one that is going to be solved until the Government brings in changes to legislation. The crux of the matter is that local authorities are largely rendered powerless to maintain local standards when vehicles and drivers from potentially anywhere in the country can legitimately operate in their districts regardless of the suitability criteria that these “out of town” vehicles and drivers would have had to meet to get their licences elsewhere.
Until such a time when the Government brings in the necessary legislative changes to address the issues around cross-border hiring, there will be more litigation arising out of local authorities’ efforts to curb the practice in their local areas. Whilst there remains unanswered questions, Mr Justice Kerr’s judgement reinforced that important point that policy should act as a guide to the exercise of the statutory functions. Policy does not exist to create a statutory discretion which local authorities does not have.
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Taken from the March 2018 PHTM edition. This article was written by Stephen Mccaffrey, Head of Kings View Chambers & Taxi Defence Barristers.