England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
ORDER OF MR JUSTICE WILSON

		Royal Courts of Justice Strand London, WC2 Wednesday, 2nd October 2002

1. LORD JUSTICE KEENE: This appeal raises a number of issues about the licensing of hackney carriages, as the legislation describes them, although these days they would be more normally referred to as taxis. As far as possible I shall use the modern terminology in this judgment. It is brought by David Victor Maud on behalf of himself, the holder of such a licence issued by the respondent authority, and on behalf of Castle Point Hackney Carriage Association. He seeks to overturn the decision of Mr Justice Wilson in the Administrative Court on 18th February 2002 when an application by Mr Maud to quash a decision by the borough council made on 25th June 2001 was dismissed.
2. The council had until that time had a policy of licensing not more than 37 vehicles as taxis within its borough, that borough covering Benfleet and Canvey Island in South Essex. By its resolution of 25th June 2001 the council resolved -

"That the licensing authority removes any entry control to hackney carriage licences and allows free entry within our licensing conditions and regulations, but that implementation be delayed for two months from the date of this decision."

In short, the previous limit of 37 licensed taxis was to disappear under the new policy. It was that decision which the appellant sought to challenge by way of judicial review on the basis that it was unlawful.

3. It is necessary at the outset to deal with the somewhat complex statutory provisions relevant to this appeal. One begins with the Town Police Clauses Act 1847 ("the 1847 Act"). Section 45 makes it an offence to drive, stand or ply for hire without a hackney carriage licence. The granting of such licences is covered by Section 37 which in its original form provided as follows:

"The commissioners may from time to time licence to ply for hire within the prescribed distance, or if no distance is prescribed, within five miles from the General Post Office of the city, town or place to which the special Act refers, (which in that case shall be deemed the prescribed distance,) such number of hackney coaches or carriages of any kind or description adapted to the carriage of persons as they think fit."

Originally Section 1 of the 1847 Act provided that the Act only applied where it was subsequently incorporated in a local Act of Parliament. But the Public Health Act 1875, by Section 171, extended the provisions relating to hackney carriages in the 1847 Act to all urban districts in England and Wales. The licensing authority is now the district or borough council. Section 171 of the 1875 Act also defined the expression "within the prescribed distance" in Section 37 of the 1847 Act as meaning "within any urban district".

4. Section 16 of the Transport Act 1985 introduced an important amendment. There is no dispute that its purpose was to allow market forces to play a larger role in the taxi business. Section 16 reads as follows:

"The provisions of the Town Police Clauses Act 1847 with respect to hackney carriages, as incorporated in an enactment (whenever passed), shall have effect -

(a) as if in Section 37, the words `such number of' and `as they think fit' were omitted; and

(b) as if they provided that the grant of a licence may be refused, for the purpose of limiting the number of hackney carriages in respect of which licences are granted, if, but only if, the person authorised to grant licences is satisfied that there is no significant demand for the services of hackney carriages (within the area to which the licence would apply) which is unmet."

5. Until that provision took effect a licensing authority had a discretion which was largely unfettered as to the number of licences it granted or refused, subject only to the normal administrative law principles. Section 16 clearly limited that discretion. The judge in the court below summarised the legal position thus produced in a way which seems to me to be accurate when he said at paragraph 6 of the judgment:

"(a) before a local authority can refuse an application for a vehicle licence in order to limit the number of licensed taxis, they must be satisfied that there is no significant demand for the services of taxis, within the area to which the licence would apply, which is unmet;

(b) if the local authority are thus satisfied, a discretion, as opposed to an obligation, arises to refuse the grant of a licence; but

(c) if the local authority are not so satisfied, they cannot refuse to grant a licence for the purpose of limiting the number of licensed taxis and are thus obliged to grant it."

6. Finally on this survey of the legislative provisions it is necessary to refer to the Local Government (Miscellaneous Provisions) Act 1976 ("the 1976 Act"). An authority is empowered by that Act to impose conditions on a licence granted by it under the 1847 Act. That power is to be found in Section 47 (1) of the 1976 Act. That provides

"A district council may attach to the grant of a licence of a hackney carriage under the Act of 1847 such conditions as the district council may consider reasonably necessary."

An authority may also license vehicles for private hire but such vehicles may not stand or ply for hire. In effect, their services have to be pre-booked. In the Castle Point borough there are about 170 private hire vehicles licensed.

7. I turn to the events which occurred in that borough and which gave rise to this litigation. In the year 2000 the borough council commissioned a well known firm of consulting engineers, Halcrow Fox, to determine whether or not there was a significant unmet demand for taxi services in the borough. The firm carried out observations of both taxis and passengers at a number of official taxi ranks and one unofficial rank in the borough. It also conducted an interview survey of pedestrians and a consultation exercise with both taxi and private hire associations and groups representing business and commerce.
8. In January 2001 Halcrow Fox produced its report. It noted that 90 per cent of the demand was accounted for by one rank, namely that of Benfleet Station. The average delay to passengers there was less than one minute. At the other ranks 85 per cent of departures were by private hire vehicles rather than by licensed taxis, amounting to some 400 hirings per week. Of these, some 150 private hire cars were, said the report, leaving these taxi ranks with passengers. The other 250 were leaving the ranks empty "presumably in response to telephone bookings". The 150 departures with passengers by private hire cars from ranks were described in the executive summary of the report as "rank hirings." It commented at paragraph 28 thereof that the total of 400 departures per week -

"are in effect pseudo hackney carriage activity and as such should in law be undertaken by an appropriately licensed vehicle."

It went on to state at paragraph 29:

"To assess the number of additional hackneys required to undertake these 400 cab departures it is assumed that the fleet would operate in the same manner as it does currently at Benfleet Station. Thus since the 150 extra cab departures constitutes around a 5% increase in cab activity it would require an additional two vehicles in circulation to serve this extra demand. Treating the empty cab departures as pseudo rank demand adds a further three licences to the requirement. It is therefore prudent to set the degree of latent demand at five licences rather than two licences."

That passage comes in a section of the summary which is entitled "Latent demand for hackney carriages".

9. The Report noted that the main delays to passengers occurred in two ranks on Canvey Island where, on average, they had to wait 5.9 and 4.3 minutes respectively for a cab. The executive summary concluded that there was a significant demand for the services of hackney carriages which was unmet. It added at paragraph 33 of the summary:

"Evidence from the public attitude interviews has provided some evidence of suppressed demand for hackney carriages in Castle Point."

Its recommendations included the following:

"Halcrow Fox recommends that the licensing authority removes entry control from its hackney carriage market and allows free entry.

This policy will benefit from (sic) the public by legitimising plying for hire activity on Canvey Island, and provide the best chance of achieving a service that genuinely serves the whole of the borough."

10. What then happened after the production of that report is summarised by Mr Justice Wilson, very helpfully, in his judgment in the court below at paragraph 11:

"Following receipt of the report, the defendants sent copies of it to representatives of the taxi drivers, including the claimant, and of the private hire drivers, and invited them to attend a meeting of their licensing subcommittee on 26 February 2001. At that meeting a director of Halcrow Fox elaborated on the report. The representatives of the two sets of drivers asked questions and made comments. The taxi drivers urged that any increase of licences be finite, whereas the private hire drivers supported the recommendation of Halcrow Fox. At the end of the meeting the subcommittee resolved to recommend to the finance and policy committee that five more licences be issued forthwith and that a further five licences be issued at the end of one year. In April that committee referred the issue to the full council, which convened a special meeting on 25 June at which the director of Halcrow Fox and the representatives of each set of drivers again attended and spoke. There was also a well-argued written submission by the claimant's solicitors. The minutes of that meeting conclude in this way:

`Members raised a number of issues and questions directed at both representatives of the hackney and private hire trade and the survey company. These included what the private hire trade hoped to gain from deregulation, how representative were their views of the trade, comments on previous Counsel advice that the permit system could not be introduced, the implication of Human Rights legislation, the experiences of other local authorities in terms of whether they adopted the recommendations of the studies by Halcrow Fox, and the Council not having a legal obligation to appoint taxi ranks.

After a lengthy discussion it was:

Resolved -- "

The resolution I have already set out was then passed.

11. The reference in that minute to advice by counsel that the permit system could not be introduced came about for this reason. It had been suggested earlier by the appellant's solicitors that, if the heart of the problem was the undue congregation of taxis at Benfleet Station and the corresponding lack of a proper taxi service elsewhere, particularly on Canvey Island, this could be dealt with by imposing a condition on any extra taxi licences granted probiting them from plying for hire at Benfleet Station. It was that proposal on which counsel's advice had been taken and which, it seems, counsel had advised would be unlawful.
12. In the Administrative Court the borough council's decision was challenged on three grounds, none of which commended themselves to the judge, but all of which have to varying degrees been pursued before this court. The one which clearly gave the judge most difficulty and which has been put at the forefront of the appellant's case concerns the lawfulness or otherwise of a condition being attached to a hackney carriage licence preventing the taxi from plying for hire in part of the authority's district. The terms of Section 47 (1) of the 1976 Act set out earlier empower a district council to attach "such conditions as the district council may consider reasonably necessary". That, as a matter of ordinary administrative law principles, is clearly not a wholly unrestricted discretion.
13. Mr Wolfe, on behalf of the appellant, submits that those principles would permit a condition of the type suggested. He relies, in particular, on the decision and passages in the judgment of Mr Justice Glidewell, as he then was, in R v Metropolitan Borough Council of Wirral, ex p The Wirral Licensed Taxi Owners Association [1983] 3 CMLR 150, where the authority had resolved only to grant licences to taxis which met a particular vehicular specification, such that they would have to be akin to a London taxi. In the course of his judgment Mr Justice Glidewell held that the limits to the authority's discretion were to be found in the well known passage from the judgment of Lord Greene MR in Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223 at 233. The principles there set out are too familiar to require quotation in this judgment. Mr Justice Glidewell also referred to the planning cases of Pyx Granite v Ministry of Housing and Local Government [1958] 1 QB 554 and Fawcett Properties v Buckinghamshire County Council [1959] 1 Ch D 543, from which he derived the now uncontentious proposition that a condition must not be imposed for an ulterior objective but only for a purpose for which the statutory powers have been enacted. His judgment continues at page 161:

"What are the council's functions under this legislation in relation to the licensing of taxi cabs? As I see it they are to achieve, so far as they can, the safety, convenience and comfort of passengers in hackney carriages, the safety of other road users and to ensure that there is some way in which those who wish to use either hackney carriages or private hire vehicles can readily distinguish the one type of vehicle from another."

14. Mr Wolfe submits that those are indeed the appropriate principles but that an equally appropriate purpose of this legislative power to impose conditions would be to achieve a proper distribution of taxis throughout the borough. It is argued that a condition imposed on a hackney carriage licence which prohibited plying for hire at a particular rank or in a particular street in order to try to ensure proper availability of taxis at other ranks in other streets is lawful. In particular, it is submitted that that would clearly relate to the licence and its use. It would, says Mr Wolfe, plainly not be imposed for some ulterior purpose and it would be consistent with the legislative purpose of ensuring the safety of other road users and the convenience of passengers. In addition, he says that it would not be perverse.
15. The judge below had taken the view that section 37 of the 1847 Act, by its language, only permitted the licence to be granted for a taxi to ply for hire across the whole of an authority's area. That was based on the words in that section, as amended by the 1875 Act, "a licence to ply for hire within any urban district". It is submitted by Mr Wolfe that those words do not have the meaning adopted by the judge but merely denote the area of the licensing authority's jurisdiction. In other words, they define the geographical extent of that jurisdiction. They do not, contends Mr Wolfe, require the licence to be granted for the whole of the district in question. Therefore, one should simply apply the conventional administrative law principles. Here, the purpose of the condition would have been within the legislative object of the powers under Section 47 of the 1976 Act, and emphasis is placed on the broad wording, as it is described, of that empowering section which deals with conditions.
16. For my part, I prefer the judge's construction of Section 37, particularly bearing in mind the history of the phrase now under consideration. In its original form the words read that the commissioners might "from time to time license to ply for hire within the prescribed distance"; I emphasise the last four words. An alternative to the prescribed distance was then given. It seems to me that those words "within the prescribed distance" did not relate - or certainly did not relate solely - to the jurisdictional area of the commissioners. They denoted where the hackney carriages, as they truly were at that time, could ply for hire. Those words were later replaced by the words "within any urban district", as Mr Wolfe emphasises. But I cannot accept that that alteration was intended to render the phrase solely a jurisdictional one rather than one dealing with the area where the vehicle could ply for hire.
17. There is to my mind an even stronger point against Mr Wolfe's contention. If he were right, it would enable an authority to create by its licensing system two classes of taxis: one unrestricted as to where a taxi could ply for hire and the other restricted. The latter would patently be a second class type of taxi which could not operate from all the stands or perhaps all the streets in the borough or district. That seems to me to be contrary to the whole legislative approach adopted more recently by Parliament in this area of activity, the approach being to allow, as far as possible, open competition in the trade. As Lord Justice Woolf said in R v Great Yarmouth Borough Council ex p Sawyer [1989] RTR 297 at 298, the policy of the Transport Act 1985 is -

" ..... to remove restraints and allow market forces to take their course in a way which did not exist before Section 16 of the Transport Act 1985 came into effect."

In the same case Lord Justice Bingham (at page 303) referred to the Act of 1985 substituting "a free market policy" so long as the authority was not satisfied that there was no unmet demand. To bring into being a two-tier structure of licensed taxis within a district would fly in the face of that legislative approach.

18. In my view a condition preventing a taxi from plying for hire from a particular taxi stand or stands, or in a particular street or streets, would fall outside the scope of the powers granted by Parliament.
19. Despite Mr Wolfe's attractive submissions, I conclude that the authority was right to adopt the advice it had been given by counsel on this particular point.
20. The remaining grounds of challenge deal with the approach to be adopted in assessing whether or not there is unmet demand for taxis in the borough or district in question. It is contended that the respondent authority was wrong in law to take account of what Halcrow Fox described in their report as "latent demand" for taxi services.
21. The foundation of this argument is derived from the decision in R v Brighton Borough Council ex p Bunch [1989] COD 558, of which we have the benefit of a transcript. The judgment delivered on 14th March 1989 by my Lord, then Mr Justice Kennedy, dealt with the following situation. The relevant committee had decided that they were satisfied there was no unmet demand, having had surveys carried out by a research lecturer. Their decision was challenged on the basis that the surveys had not attempted to measure what was there called "latent demand", by which was meant demand which was not visible because a person who knew that it would be difficult to get a taxi might make other arrangements. The judge rejected that submission. At page 10 of the transcript of judgment he referred to the respondent's emphasis on the wording in Section 16 of the Transport Act 1985 whereby a licence may only be refused in order to limit the number of hackney carriages if the authority were satisfied "that there is no significant demand." The judgment then puts the point in this way, referring to the submissions being made by the respondents:

"The statutory use of the present tense must render it unnecessary to consider latent demand and anyway the authority could only be satisfied by evidence of such demand as is measurable, which is only patent demand. I accept that submission."

Mr Wolfe adopts the same argument and relies on that as authority.

22. It appears to me that this submission misinterprets what was being said in Bunch, probably because of the use of the phrase "latent demand". In Bunch there was no evidence, so far as one can discern, from the surveys of any significant unmet demand - patent or latent. It was simply being argued that the committee should have assumed that a number of people were making alternative arrangements and the consultant should have gone out to try to ascertain this, and all of this was then described as latent demand.
23. In contrast, in the present case one at least of the two components of the so-called "latent demand" consisted of private hire vehicles being used illegally as taxis, in that they were being engaged by passengers at ranks where they were waiting. This was especially true at ranks on Canvey Island. To my mind it is a misnomer to call that latent demand, as Halcrow Fox did. It is a clearly manifested demand for a taxi service, and it is a current demand. None of the arguments about the use of the present tense in the statutory provisions in any way prevents that evidence from being taken into account by the authority.
24. I would also emphasise that there may be more than one method for assessing the current demand for taxis. The appropriate methods are not necessarily confined to counting passenger queues or calculating the delays to passengers. If there is convincing evidence of suppressed demand that may be relevant. For example, if it can be established by interview that there are number of people in the district who wanted a taxi on certain occasions but could not find one and in the end, as a second best, resorted to choosing a less satisfactory alternative solution, that to my mind would be relevant evidence of current demand. The local authority would have to be satisfied that the demand was, first, and foremost, for a taxi, so that inconvenience was being caused to the public through the shortage of taxis. It is in the end all a question of evidence.
25. I cannot see that the respondent went wrong in law in having regard to what Halcrow Fox termed "latent demand", although the phrase was perhaps, in the light of the case law, an unfortunate one. In my judgment this particular ground has no validity.
26. Finally, there is a third ground advanced by Mr Wolfe related to the one with which I have just dealt. Relying on the decision in Bunch, it is submitted that there was no evidence that the 150 trips were trips which could only have been provided by a taxi; that was another criterion referred to in Bunch. The appellant in particular challenges the interpretation put by the respondent on those 150 trips per week carried out by private hire vehicles leaving ranks with passengers on board. It is said that there is no evidence that in those instances those vehicles were plying for hire. They may have been pre-booked and so were acting lawfully as private hire vehicles.
27. Yet it was the consultants Halcrow Fox whose survey identified those 150 trips by observation and who themselves concluded that those trips were being done illegally. They described them in paragraph 28 of the executive summary as "rank hirings", by which I take them to mean that the vehicles were being hired at the rank in question. That was a conclusion to which those consultants were entitled to come, given the expert observations they were carrying out. It does not seem to me that the respondent can be faulted for having based its decision on the conclusions of an independente firm of reputable consulting engineers and for having accepted that evidence contained in their report.
28. It follows that, in my judgment, Mr Justice Wilson was right in the decision to which he came. Despite the persuasive manner in which Mr Wolfe has advanced his various grounds, at the end of the day I can see no merit in any of them and I would dismiss this appeal.
29. LORD JUSTICE BUXTON: I agree. I have nothing I wish to add.
30. LORD JUSTICE KENNEDY: I also agree.

Order: Appeal dismissed with the costs subject to detailed assessment