England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM TRANSPORT TRIBUNAL
MS JACQUELINE BEECH
HGV2007172

		Royal Courts of Justice Strand, London, WC2A 2LL
		16/05/2008

Lord Justice Longmore:

Introduction

1. The Vehicle & Operator Services Agency ("the Agency") is the authority which enforces the regulation of goods vehicle operators in the United Kingdom. It has detained 7 vehicles and 9 trailers belonging to the Appellants on the grounds that they have been used in the United Kingdom without an operator's licence as required by section 2 of the Goods Vehicles (Licensing of Operators) Act 1995. The appellants were licensed under a European Community authorisation issued in Belgium and were thus entitled to carry out "cabotage" in the United Kingdom pursuant to Community Council Regulation (EEC) No 3118/93. "Cabotage" is the right on a temporary basis to operate road services for hire or reward in another Member State. The appellants submit that, although their vehicles were operating road services in the United Kingdom on a basis which was not temporary, the vehicles were nevertheless permitted to carry out cabotage and no further licence was required.
2. There is, of course, no bar to a goods-vehicle operator seeking to obtain a licence in any Member State of the European Community and members of the Banham family were originally licensed to operate their (and their companies') vehicles in the United Kingdom. That licence was, however, revoked for numerous non-compliances with the requirements of regulations relating to over-loading of vehicles, the condition of vehicles, relevant rest periods for drivers and the need to keep proper tachograph records. The Banham family responded by setting up companies in Belgium and obtaining from the Belgian authorities what is termed a "Community authorisation" for cross-border operations that enabled their vehicles to be temporarily used for services in the United Kingdom. In fact the goods vehicles were used entirely (or almost entirely) in the United Kingdom and so were never performing "cabotage" at all. Because the vehicles were registered abroad, the Banhams paid no United Kingdom road tax but, because the vehicles were never (or hardly) in Belgium, Belgian road tax could be (and was) deferred. The Transport Tribunal (from whom this appeal comes) concluded

"144 … There is no doubt in the Tribunal's mind that the Belgium companies were a device in order to enable Gary Banham to continue operating vehicles in the UK once he had been disqualified from holding an operator's licence in this country."

The Tribunal decided that the Agency's detention of the vehicles, which were found not to be performing cabotage, was justified and it refused to order the return of the vehicles to the appellants. The Agency submits that this is purely a matter of English law; the appellants submit that because the vehicles were registered in Belgium pursuant to a Community authorisation permitting cabotage, any complaint that they were not performing cabotage must be dealt with by the Belgian authorities.

Domestic Legislation

3. Section 2 of the Goods Vehicles (Licensing of Operators) Act 1995 provides:-

"2. Obligation to hold operator's licence

(1) Subject to subsection (2) and section 4, [which is not suggested to be relevant], no person shall use a goods vehicle on a road for the carriage of goods –

(a) for hire or reward, or

(b) for or in connection with any trade or business carried on by him,

except under a licence issued under this Act; and in this Act such a licence is referred to as an "operator's licence".

(2) Subsection (1) does not apply to –

…

(b) the use of a goods vehicle for international carriage by a haulier established in a Member State other than the United Kingdom and not established in the United Kingdom;

…

(d) the use of a vehicle of any class specified in regulations."

4. The relevant regulations are The Goods Vehicles (Licensing of Operators) Regulations 1995 ("the 1995 Regulations"). Regulation 33 provides:-

"(1) The classes of vehicle specified under section 2(2)(d) as those to which section 2(1) does not apply are the classes mentioned in Part 1 of Schedule 3."

Paragraph 23 of Schedule 3 contains this entry:-

"23. A vehicle permitted to carry out cabotage in the United Kingdom under Community Council Regulation (EEC) No. 3118/93 dated 25^th October 1993 laying down conditions under which non-resident carriers may operate national road haulage services within a Member State".

5. Further regulations are contained in The Goods Vehicle (Enforcement Powers) Regulations 2001 ("the 2001 Regulations"). Regulation 3 of these regulations provides:-

"3(1) Where an authorised person has reason to believe that a vehicle is being, or has been used, on a road in contravention of section 2 of the 1995 Act he may detain the vehicle and its contents".

Regulation 10 then permits the owner of a detained vehicle to apply to the traffic commissioner for the area in which the detention took place for the vehicle to be returned. One of the grounds on which application can be made is that the vehicle was not being and had not been used in contravention of Section 2 of the 1995 Act. The appellants did so apply; the traffic commissioner held an inquiry and refused the application, as did the Transport Tribunal on appeal. There is now an appeal (somewhat surprisingly as of right) to this court.

Community Law

6. Although the EC Treaty established an internal market for the free movement of persons, services and capital, transport policy has always been under a separate regime (found in Title V of the Treaty), with the result that there is not a wholly free market in the transport field. Article 70 of the Treaty provides only that the objectives of the Treaty "shall be pursued by Member States within the framework of a common transport policy".
7. For the purpose of implementing Article 70, Article 71(1) provides for the Council to lay down:

"a) common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or Member States;

b) The conditions under which non-resident carriers may operate transport services within a Member State; …"

8. EC Regulation 881/92 lays down the common rules provided for by Article 71(1)(a) so far as carriage of goods by road is concerned. International carriage (as defined in Article 2) is to be carried out subject to "Community authorisation". Article 3(2) provides that:

"Community authorisation shall be issued by a Member State … to any haulier carrying goods by road for hire or reward who:

is established in a Member State … in accordance with the legislation of that Member State,

is entitled in that Member State, in accordance with the legislation of the Community and of that State concerning admission to the occupation of road haulage operator, to carry out the international carriage of goods by road."

This regulation has direct effect but it is also given effect in domestic law by the exemption from the provision of section 2(1) of the 1995 Act contained in section 2(2)(b) of that Act.

9. EC Regulation 3118/93 lays down the conditions provided for by Article 71(1)(b) so far as road haulage within a Member State is concerned. The terms of Article 1(1) of the regulation are important:

"Any road haulage carrier for hire or reward who is a holder of the Community authorisation provided for in Regulation (EEC) No. 881/92 … shall be entitled, under the conditions laid down in this Regulation, to operate on a temporary basis national road haulage services for hire or reward in another Member State, hereinafter referred to respectively as 'cabotage' and as the 'host Member State' without having a registered officer or other establishment therein."

10. Initially, cabotage operations were subject to a framework of Community cabotage quotas, as provided for in Articles 2 and 4, but by virtue of Article 12(2) that system ceased to apply on 1^st July 1998. From that date, as Article 12(3) provided, any non-resident carrier meeting the conditions laid down in Article 1 has been entitled

"to operate, on a temporary basis and without quantitative restrictions, national road haulage services in another Member State, without having a registered office or other establishment in that State."

11. The entitlement conferred by Article 1(1) and 12(3) to operate national road haulage services in another Member State is, therefore, expressly confined to an entitlement to do so "on a temporary basis". That entitlement is dependent on the road haulage carrier holding a Community authorisation.
12. Article 6(1) of Regulation 3118/93 provides that the performance of cabotage transport operations shall be subject, save as otherwise provided in Community Regulations, to the laws, regulations and administrative provisions in force in the host Member State in certain defined areas including rates and conditions governing the transport contract, weights and dimensions of road vehicles, requirements relating to the carriage of certain goods, driving and rest time, and VAT on transport services.
13. Article 8 provides:-

"2. Without prejudice to any criminal proceedings the competent authorities of the host Member State shall be empowered to impose penalties on a non-resident carrier who has committed infringements of this Regulation or of Community or national transport legislation in their territory during a cabotage operation. They shall impose such penalties on a non-discriminatory basis and in accordance with paragraph 3.

3. The penalties referred to in paragraph 2 may, inter alia, consist of a warning, or, in the event of serious or repeated infringements, a temporary ban on cabotage transport within the territory of the host Member State where the infringement was committed. ….

4. The competent authority of the host Member State shall inform that of the Member State of establishment of the infringements recorded and any penalties imposed on the carrier and may, in the event of serious or repeated infringements, at the same time transmit a request that a penalty be imposed. In the event of serious or repeated infringements, the competent authority of the Member State of establishment shall decide whether an appropriate penalty should be imposed on the carrier concerned; the authority shall take into account any penalty imposed in the host Member State and ensure that the penalties imposed on the carrier concerned are, as a whole, proportional to the infringement or infringements which gave rise to such penalties.

The penalty imposed by the competent authority of the Member State of establishment, after consulting the competent authorities of the host Member State, may extend to withdrawal of authorisation to pursue the activity of road haulage operator.

The competent authority of the Member State of establishment may also, pursuant to its national law, arraign the carrier concerned before a competent national court or tribunal.

It shall inform the competent authority of the host Member State of the decisions taken pursuant to the preceding paragraphs."

The Parties' Submissions

14. The appellants submit that on the true construction of the 1995 Act and paragraph 23 of schedule 3 of the 1995 Regulations, the appellants and their vehicles, were permitted to carry out cabotage under EEC/3118/93 and did not, therefore, need an operator's licence within section 2 of the 1995 Act. The facts (as the Tribunal found them to be) that they were not operating on a temporary basis and were not, in truth, carrying out cabotage are nothing to the point, because they were permitted to do so and that is sufficient. Article 8 of EEC/3118/93 enables the host Member State to impose penalties for infringements of the Regulation. Those penalties include a temporary ban on cabotage transport within the territory of the host Member State but do not extend to the detention of any vehicle. The fact that the United Kingdom has not enacted domestic legislation empowering any public authority such as a Traffic Commissioner to impose such a ban is nothing to the point since Article 8(4) empowers the host Member State, in the event of serious infringements, to request the competent authority of the Member State of establishment to impose an appropriate penalty which might, depending on the power of that Member State, include the revocation of the Community authorisation. Only after such revocation, would it be necessary for the appellants to have an operator's licence under section 2.
15. The Agency submits that "cabotage" is essentially the temporary use of vehicles in the host Member State. It is not envisaged that non-temporary use of vehicles is to be "cabotage" at all. Any licence issued by the state of establishment for the performance of cabotage is not a licence to use vehicles in the host Member State on anything other than a temporary basis. Non-temporary cabotage is thus a contradiction in terms. If, therefore, non-temporary services are performed that is outside the terms of any Community authorisation and an operator's licence is needed under section 2 of the 1995 Act. The appellants did not have such a licence and their vehicles were, therefore, liable to be detained pursuant to regulation 3 of the 2001 Regulations.

Discussion

16. Mr David Phillips QC for the appellants relied on what he called the literal meaning of paragraph 23 of Schedule 3 of the 1995 Regulations in combination with section 2(2)(d) of the 1995 Act. He pointed out that no licence was required for the use of any vehicle of any class specified in Schedule 3. The classes of vehicles were sometimes defined as vehicles as such e.g. a road roller, a steam-propelled vehicle or a recovery vehicle (in paras 13, 18 and 27 respectively) and sometimes as vehicles while being used in a particular way e.g. vehicles constructed or adapted for the carriage of passengers while being so used or a vehicle which is being used for funerals (in paras 4 and 5 respectively). He then submitted that para. 23 was firmly in the former class and no question could arise about whether it was being used for cabotage; it was permitted to be so used and so fell outside section 2(1).
17. I do not see the case quite as simply as Mr Phillips. The fact is that any haulage carrier who holds a Community authorisation pursuant to regulation EEC/881/92 is, by Article 1 of EEC 3118/93, entitled to perform cabotage as of right, initially up to the limit of the quotas set out in Article 2 and thereafter unrestrictedly. If therefore the draftsman of schedule 3 of the 1995 Regulations had wanted any person or vehicle in possession of the right piece of paper to be exempt from the requirement for an operator's licence under section 2 of the 1995 Act, he would have defined the vehicle in paragraph 23 (much more simply) by reference to its Community authorisation under EEC/881/92. He or she he did not do that and so, in my judgment, the reference to "cabotage" in the exemption must have a particular purpose. Paragraph 23 is plainly intended to give effect to EEC 3118/93 (dealing with cabotage operations) whereas it is section 2(2)(b) which gives effect to EEC 881/92 (dealing with true international haulage). If the vehicle is not performing cabotage at all but in truth operating full time in a Member State (in which, as it happens, its authority to operate has been revoked) and not in its State of purported establishment, it cannot be intended that that activity can continue unlicensed. Paragraph 23 must therefore be read as requiring the cabotage actually to exist before the exemption applies. Any other reading would, in my view, border on the absurd.
18. Nor would I accept the strict dichotomy relied on by Mr Phillips between a vehicle as a vehicle and a vehicle while it is being used. It is by no means obvious, that, for example, a recovery vehicle need not be licensed whatever it may be doing. If it is used for purposes other than recovery a licence might well be necessary. In my judgment, each paragraph of Schedule 3 has to be looked at individually. We were shown the predecessor to Schedule 3, Schedule 5 of The Goods Vehicles (Operator's Licences, Qualifications and Fees) Regulation 1984, and it is clear that differing exemptions are added from time to time, creating something of a palimpsest. In such cases it is dangerous to look for overall consistency of draftsmanship.
19. This conclusion is reinforced by consideration of the further articles of EEC/3118/93. Article 6 enables the host Member State to impose regulations in relation to cabotage transport operations in that State. Article 8(2) then empowers that State to impose penalties on a non-resident carrier who has "committed infringements of this Regulation … or national transport legislation during a cabotage operation". This looks to what happens "during a cabotage operation". If there is, in fact, no cabotage operation, then Article 8 and indeed the whole Regulation has no relevance and becomes inapplicable. Paragraph 23 of Schedule 3 likewise cannot apply in such circumstances to exempt the road haulier from the need for an operator's licence.
20. For these reasons I would reject the appellants' argument on construction and uphold the decision of the Transport Tribunal.
21. Mr Phillips complained in his written argument that such a conclusion would be discriminatory against non-domestic road hauliers because (1) a breach of the terms of the United Kingdom licence did not automatically lead to its revocation and (2) the reverse burden of proof (requiring the haulier to show that he had not contravened the 1995 Act before he could have his vehicles returned to him) operated more harshly in respect of non-domestic hauliers who would not have such ready access to relevant information as a domestic haulier. I disagree. The question whether a licence is necessary for non-temporary carriage in the United Kingdom is applicable to both domestic and non-domestic hauliers. The answer is that they must both have licences. The regulations do not impose any burden of proof as such. Regulation 10 says merely that a ground for applying for the return of vehicles which have been detained is that the vehicle has not been used in contravention of section 2 of the 1995 Act. The relevant contravention is the absence of a licence. It is not difficult for a haulier to prove that he has a licence (if, in fact, he does) and, if it be right to regard the provision as reversing the normal burden of proof (which I rather doubt), it applies equally to domestic and non-domestic hauliers and I cannot see that it is any more difficult for a non-domestic haulier to show he has a licence than it would be for a domestic haulier.
22. For these reasons I would dismiss this appeal.

Lord Justice Toulson:

23. I agree.

Lord Justice Tuckey:

24. I also agree.