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Court of Appeal dismisses appeal by council over bid to include cost of supervising driver conduct in fees for taxi and PHV vehicle licences

The Court of Appeal has dismissed a council’s appeal over whether it acted unlawfully when it resolved to fix the fees for vehicle licences for taxis and private hire vehicles at an amount which included recovery of all or part of the cost of supervising the conduct of drivers licensed to drive such vehicles.

The case of Rehman (On Behalf of the Wakefield District Hackney Carriage And Private Hire Association), R (On the Application Of) v The Local Government Association [2019] EWCA Civ 2166 was an appeal from a ruling in December 2018 of His Honour Judge Saffman in the Administrative Court.

HHJ Saffman had:

  1. allowed the claim of the respondent, Abdul Rehman, acting on behalf of the Wakefield District Hackney Carriage and Private Hire Association for judicial review of a resolution of the council's Licensing Committee on 24 January 2018 adopting proposed fees for licences for PHVs and for hackney carriages, for licences for drivers of such vehicles and for licences for operators of private hire vehicles, and
  2. declared that certain specified misconduct of drivers "cannot be lawfully charged" under section 70 of the Local Government (Miscellaneous Provision) Act 1976 [which concerns the fees chargeable for vehicle and operators’ licences], and
  3. quashed the council's resolution.

The council’s grounds of appeal were:

Ground 1: HHJ Saffman incorrectly restricted himself to determining the meaning of section 70 only of the 1976 Act, when the correct question to be determined was whether driver enforcement costs were recoverable at all, and if so, whether under section 53(2) [which concerns the fees chargeable for the grant of drivers' licences for taxis and PHVs] or section 70. The judge, therefore, erred in refusing to have regard to the following four matters together:

(a) the correct construction of section 53(2) with regard to the recovery of driver enforcement costs;

(b) the correct construction of section 70 with regard to the same;

(c) whether driver enforcement is recoverable at all;

(d) whether the taxi licensing scheme for licence fees should be subject to the general principle that it should be self-financing and not be subsidised by the local rate payer.

Ground 2: The judge incorrectly concluded that there was no general principle that the taxi licensing fee regime should be self-financing.

There was no appeal against HHJ Saffman’s decision that there could be no cross-subsidy between the different licences.

The Court of Appeal (Sir Terence Etherton MR, Lady Justice King and Mr Justice Lavender) dismissed the council’s appeal.

It agreed with HHJ Saffman that the cost of monitoring and enforcing driver conduct cannot be taken into account in fixing the vehicle licence fee under section 70.

“We consider that the wording of section 70 in the context of the structure of the 1976 Act leads clearly to that conclusion, irrespective of the proper interpretation of section 53,” it said.

The Court of Appeal also considered, however, that such cost can be included in the driver's licence fee under section 53. The judges said it was “regrettable” that no one representing drivers appeared before HHJ Saffman or before them to argue that point, “which is plainly relevant to the scope of section 70”.

The Court of Appeal said that what was apparent from relevant provisions of Part II of the 1976 Act, read where appropriate with the Town Police Clauses Act 1847, was that each of the three types of licence – vehicle, operator and driver - had a comprehensive and self-contained statutory regime, which addressed grant, terms, suspension, revocation and fee.

“There is no cross-referencing in relation to any of those matters. The notion that the fee for one type of licence can reflect the costs involved in another, far from being implicit in Part II of the 1976 Act, is entirely contrary to its structure,” the court said.

“What is also apparent, on the other hand, is the similarity in the statutory treatment of some aspects of the three different types of licence. In particular the qualifying requirements for the grant of each licence involve matters which will be relevant throughout the duration of the licence…... The continuing relevance of at least some of those matters throughout the duration of each type of licence is also reflected in the provisions for suspension and revocation.”

The Court of Appeal said that the fact that, in the case of each type of licence, the district council could attach such conditions as they considered reasonably necessary indicated that Parliament envisaged that there would be additional requirements to be observed as conditions of the licence after its grant.

“Plainly, in all those cases the district council would need to monitor compliance with the various requirements and conditions on the basis of which the licence was granted and was to be permitted to subsist until it came to an end or was suspended or revoked. That would inevitably involve, in the case of each category of licence, expense on the part of the district council beyond the cost of the original grant of the licence,” the court said.

Wakefield had contended that the costs of enforcing the conduct of drivers fell within the words "control and supervision of hackney carriages and private hire vehicles" in section 70(1)(c) because, after the grant of a vehicle licence, the driver controls the vehicle.

The Court of Appeal, however, said it was clear that the "control and supervision" mentioned in section 70(1)(c) were control and supervision by the district council, not by the driver. “If the argument is that, by controlling the driver, in terms of monitoring and enforcing the behaviour of the driver, the district council control the vehicle, then that is a very strained and artificial interpretation of the relevant words.”

The court added: “Moreover, in the context of the framework of Part II of the 1976 Act, we consider it is clear that the words in section 70(1)(c) cannot bear the meaning attributed to them by the Council. They cannot have been intended by Parliament to authorise something entirely alien to the structure of Part II, which, on the face of it, has a comprehensive, self-contained regime for each category of licence.”

Wakefield and the Local Government Association (LGA) had emphasised the importance of public safety and confidence, and the need to monitor and enforce the behaviour of drivers in that context.

The Court of Appeal judges said they did “not in any way discount the significance of those matters. The issue, however, is not whether it is desirable in the public interest to monitor and enforce the behaviour of drivers of taxis and private hire vehicles but rather who should pay for that and how it should be paid for.”

The court added: “The Council and the LGA emphasise the limited resources available to local authorities and the potential adverse impact on compliance and enforcement activities if the taxi and private hire vehicle licensing scheme is not self-funding. A general resource consideration of that kind cannot, however, affect the proper interpretation of the legislation governing this or any other licensing scheme.”

The Court of Appeal rejected Wakefield’s allied points that – leaving aside the proper interpretation and scope of section 53(2) - the council's interpretation of section 70(1)(c) would enable the licensing scheme for taxis and private hire vehicles as a whole to be self-funding and that it was a principle of law that such licensing schemes ought to be self-funding rather than being reliant on a local authority's general funds raised from its council tax payers.

The court said it agreed with HHJ Saffman that none of the authorities – R v Westminster City Council (ex p Hutton), Liverpool City Council v Kelly, and R (Hemming (trading as Simply Pleasure Ltd)) v Westminster City Council – justified the interpretation of section 70(1)(c) for which the council contended.

“Each case turned on the particular statutory scheme and provisions in issue. We can see nothing in Hutton which lends any support for any such general proposition of self-funding, and, in any event, that case, like Hemming, concerned the very different statutory provisions concerning the licensing of sex establishments,” the judges said.

Kelly did concern the provisions of section 70 of the 1976 Act but the issue was about the ability to charge for vehicle inspections which failed and so did not result in the grant of a vehicle licence. We cannot see that such an issue, and the decision of the court in that case that the district council could charge for such inspections, throws any light on the very different issue in the present case about the ability to take into account in determining the fee for vehicle licences the costs related to the entirely different and distinct category of drivers' licences.”

The Court of Appeal said that, in any event, it considered that the costs of enforcing the behaviour of licensed drivers could be recovered through the driver's licence fee under section 53(2).

“The relevant words in that provision are ‘the costs of issue and administration’,” it said. “The costs of ‘administration’ must be something other than, and in addition to, the costs of ‘issue’. There is no difficulty in interpreting ‘administration’ in its statutory context as extending to administration of the licence after it has been issued.

“It naturally includes the costs of suspension and revocation, which are events expressly mentioned in Part II of the 1976 Act. Suspension and revocation rest on non-compliance with the requirements and conditions for continuing to hold the licence. As we have said, it would therefore have been obvious to Parliament, when enacting the 1976 Act, that costs would be incurred by the district council in monitoring compliance with such requirements and conditions.”

The Court of Appeal added that there would appear to be “no obvious reason why, as is plain, the costs of monitoring and enforcing the conditions and requirements for vehicle and operators' licences are recoverable under section 70, but those for monitoring and enforcing the conditions and requirements for drivers' licences are not recoverable under section 53.

“As we have said, in the case of all three categories of licence there are conditions of the grant which will have to be satisfied so long as the licence subsists; there will be reasonable additional conditions which the district council will wish to attach to the licence itself; and there are changed circumstances since the grant of the licence which Part II expressly states can result in suspension or revocation.”

In that connection, it was notable, the Court of Appeal said, that, when section 46 of the 1847 Act was amended by the 1980 Act so as to permit the charging of "such fees as the commissioners may determine to be paid" for the grant of a hackney carriage driver's licence, Parliament did not consider it necessary to amend section 53(2) of the 1976 Act.

“For those reasons, both on the literal wording of section 53(2) and, if and so far as necessary, applying a purposive interpretation, we consider that the costs of monitoring and enforcing the behaviour of licensed drivers can be recovered through the fee under section 53(2).”

Gerald Gouriet QC and Charles Streeten of Francis Taylor Building appeared for the respondent. Leo Charalambides, also of Francis Taylor Building, appeared for the Local Government Association, instructed by the LGA’s Shelagh O’Brien. Sarah Clover and Ben Dylan Williams of Kings Chambers appeared for Wakefield Council, instructed by the local authority’s legal services department.

Glynn Humphries, Service Director for Environment and Streetscene at Wakefield, said: “The legal position as to where enforcement costs could be attributed was unclear and this judgement has clarified that the costs of enforcement should be met by the taxi trade through fees and should not be subsidised by the council tax payer.

“We very much welcome the clarity from this judgement but are disappointed we didn’t get this in the High Court last year, which would have saved everyone involved time and money."

Humphries added: “The Council will now review our position in light of the judgement and set up a process to enable drivers to log any claims as easily as possible and try and ensure we assess the claims as quickly as we can.

“We strongly believe that the £1m figure quoted by the taxi trade association does not apply to Wakefield at all. The fees were only applied to vehicles in January 2018 and charges were paused as we sought clarity from the court, which means that no drivers have been charged for this activity from December 2018.

“Going forward we will ensure that all charges are set against the criteria confirmed by the court.”

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