England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21st December 2005

Mr Justice Bean :

1. As every London motorist knows, a congestion charge is payable in respect of a vehicle entering the Central London charging zone between certain hours on weekdays. The daily charge was originally £5 but on 4^th July 2005 was increased to £8. The Defendant, which administers the congestion charge, has a Fleet Notification Scheme permitting payment of the charge in respect of registered vehicles monthly in arrears rather than daily. Moreover, although when the charge was £5 there was no reduction for fleet vehicles, they are now charged £7 rather than £8 per day. The Claimant has operated a Fleet Notification Scheme account since 9^th March 2005. From small beginnings it has grown and now has approximately 1700 vehicles registered on it. On 27^th September 2005 the Defendant amended the terms and conditions of eligibility for the scheme with the intention, it is alleged, of excluding the Claimant. On the same day it determined that the vehicles registered by the Claimant were no longer eligible and that the Claimant's account should be closed. The Claimant seeks judicial review of that decision and of a subsequent decision to reject the Claimant's objections to the closure of its account.
2. Section 295 of the Greater London Act 1999 confers power on the Defendant to establish and operate a road user charging scheme. Schedule 23 to the Act confers discretion upon the Defendant to design the scheme and to promulgate it in subordinate legislation which it makes. By paragraph 11 of schedule 23 provision may be made for exemptions or for the application of reduced rates of charge in the case of any prescribed class of vehicles.
3. The relevant legislation made by the Defendant is the Central London Congestion Charging Scheme Consolidated Scheme Order. Articles 6 (11) and (12) of the Order provide for agreements between a "fleet operator" and the Defendant concerning relevant vehicles specified in the agreement: by paragraph (12)(i) of Article 6 a vehicle may only be so specified if it is "controlled and managed by the fleet operator for the purposes of a business which is carried on by the operator or by a person to whom the operator is a contractor". Para. (13)(a) of the same Article defines "fleet operator" as a person who:–

"(i) controls and manages the minimum number of relevant vehicles used for the purposes of a business carried on by that person, whether or not those vehicles are owned or driven by that person; or

(ii) is a contractor employed by another person to control and manage the minimum number of relevant vehicles for the purposes of a business carried on by that other person, whether or not the vehicles are owned or driven by that other person;…"

4. The detailed rules of the Defendant's fleet scheme are set out in Terms and Conditions. Prior to their amendment on 27^th September 2005 these defined an "eligible vehicle" as:-

"Any vehicle that is owned by, or leased to, or hired by the Fleet Operator; these vehicles must be controlled and managed by the Fleet Operator for the purposes of a business carried on by the Fleet Operator or by a person to whom the Fleet Operator is a contractor."

5. The Terms and Conditions state that the objective of the fleet scheme is to reduce the level of administration and to increase flexibility for fleet operators. There is an obvious benefit for fleet operators, and drivers of vehicles in their fleets, in a reduced charge and a greatly increased time in which to pay the charge without incurring a penalty fine.
6. The Claimant's customers include individual vehicle owners as well as businesses with fleets of up to 15 vehicles. The relevant clauses of the Claimant's terms of agreement with each of its customers, described as "Driver", are as follows:-

1. Purpose of Agreement.

Subject to the Charges and terms below, the purpose of this agreement is the participation by Driver's nominated vehicle/s in FPCU's Central London Congestion Charge Vehicle Management Scheme ("the Scheme")………

4. Hire Fee.

In return for the Driver making the nominated vehicle/s available to FPCU during the Period for participation in the Scheme and for the promotion of FPCU and its business, FPCU will pay Driver an annual fee of £5 per vehicle ("the Hire Fee"). The Hire Fee will be credited against Driver's initial or annual Charges………..

6. FPCU's Obligations.

In so far as FPCU has arrangements with relevant congestion charge zone authorities allowing for application of the technology (as defined in the FPCU website entry page) and provided Driver performs Driver's obligations including in respect of payment of the Charges FPCU will:-

a) Provide to driver upon initial acceptance into the Scheme and upon any annual renewal a "Service Pack" for each of the Driver's nominated including:-

i) Unique vehicle identity display disc;

ii) FPCU window sticker (or such other promotional device as FPCU may specify from time to time),

i) and ii) together comprising the "Display Items"

b) Maintain an account for Driver of congestion charge zone activity of Driver's nominated vehicle/s and of Charges incurred by Driver available to Driver within Driver's personal pages on the FPCU website;

c) Render by 21^st of each month a statement to Driver by e-mail providing in respect of the relevant month a summary of the information referred to at 5(b) and showing Charges due from Driver by the Payment Date:

d) Provide for Driver such additional benefits details of which may appear within the FPCU website as FPCU may within its sole discretion determine to be appropriate for Scheme Drivers.

7. Driver's Obligations

At all times during the period the Driver will:-

a) Maintain (advising FPCU promptly of any changes by update to

Drivers registration details):-

i) An operational e-mail account;

ii) An operational SMS text messaging facility;

iii) Up to date and accurate personal registration details in the mandatory fields within Driver's registration details;

b) In return for payment by FPCU to Driver of the Hire Fee:-

i) Display within Driver's nominated vehicle/s when within relevant congestion charging zones and as directed by FPCU any Display Items.

ii) Allow access to FPCU upon reasonable notice to any vehicle nominated by Driver's for the purposes of verifying correct installation of the Display Items and proper performance by Driver of Driver's obligations:

c) Pay the Charges by the Payment Date by way of the payment method agreed between Driver and FPCU upon commencement of the Period or as otherwise agreed in writing between the parties during the Period;

d) Co-operate promptly with and carry out any reasonable instructions received by Drivers from FPCU in connection with the Display Items or otherwise for the purposes of this Agreement;

e) Subject the nominated vehicle/s to the control and management of FPCU within the application congestion charge zone for the purposes of effective implementation and use of the Display Items and for the purposes of the Scheme.

f) Permit the nominated vehicle/s to be available for inspection by a duly authorised representative of the FPCU at such place and time as Driver and FPCU shall agree following not less than five working days notice from FPCU requesting inspection.

7. The material placed before me included witness statements from Mr Graeme Craig, Head of Business Operations for Congestion Charging, for the Defendant and Mr Miguel Camacho, Managing Director, for the Claimant. Mr Camacho's evidence about contacts between the Claimant and Capita, the administrators of the scheme who among other things operate a telephone helpline on the Defendant's behalf, was as follows:-

"3……I believe that the first discussion I had with the fleet management staff in which I explained how the Claimant's business would operate was in November 2004, when I sought information about how the vehicles registered to the London Ticket Shop account could be transferred to the new account set up in the name of the Claimant. I am certain that I gave a full explanation of the Claimant's methods of operation to "Clive" of the Fleet Team (the Capita administrators who act on behalf of TfL) on or about 13^th January 2005.

4. Mr Craig notes the objections which were taken by the Fleet Team (in fact, "Clive") to the Claimant's registration of vehicles on 21^st December 2004 and 13^th January 2005…….but does not explain how it was that "Clive" changed his position and agreed to the registration of vehicles on the Claimant's account. What happened was that I telephoned Clive to explain how the Claimant proposed to operate and he agreed in the light of my explanation to withdraw the objections he had voiced. The outcome was that TfL permitted the Claimant to register vehicles and that, as Mr Craig's chronology makes clear, there were 37 vehicles registered on the Claimant's account by 8^th March 2005."

8. There were some e-mail exchanges between the Claimant and the Defendant in the early months of 2005, but those placed before me are not material to the present dispute. By early May 2005 some 60 vehicles were registered on the Claimant's account. Mr Mackie, the Claimant's Technical Director, was then informed by telephone by "Julie" and "Katie" that more evidence of how the Claimant operated was required. The result was a two page letter from Mr Camacho to "Katie" from which it is necessary to quote at length:-

"As per your discussion with James Mackie, our Technical Director, this morning, I would like to clarify for your and TfL's information exactly how our fleet scheme operates.

We have spent almost 10 months developing this scheme using some of the UK's top barristers and solicitors and have spared no expense to make 100% percent sure that we fall well within your terms, conditions and regulations for fleet operators. Even after our countless meetings and late nights with our legal team, we took independent counsel's advice and [it] was confirmed that we do fall within the fleet scheme as operated by TfL. We do understand however that you are not disputing the fact we are operating a legitimate fleet scheme from our numerous telephone conversations and countless e-mails back and forth and the fact that we have been fully operational since March 2005.

The way our scheme works is as follows:

1) The user registers all their personal details including vehicle details with fivepounds.co.uk.

2) Before completion of registration the user agrees to the terms and conditions of fivepounds.co.uk, which state they are hiring their vehicle to fivepounds.co.uk for the purpose of promoting the fivepounds.co.uk brand name.

3) To comply with our terms and conditions we at that stage inform the user that they must display an advertising sticker in a prominent position on the front windscreen of their vehicle.

4) Only when the sticker is placed on the windscreen do we physically activate their account with us.

The above process guarantees they are not only falling within TfL's fleet rules but also complies with the Oxford English dictionary's definition of fleet "a number of vehicles or aircraft operating together".

I hope this gives you and TfL a clearer understanding as to the mechanics of our fleet scheme. With this in mind I would hope that you would allow fivepounds.co.uk to operate in exactly the same way as British Telecom, Tesco and other large fleet operators.

We could, if you require, automatically generate a vehicle hire agreement between fivepounds.co.uk and the registered keeper of the vehicle, which would show the vehicle's inclusion in our fleet. This agreement would show the vehicle's inclusion in our fleet. This hire agreement would only confirm the terms and conditions agreed by our users when joining our fleet. Technically, as per our conversation on Thursday 5^th May 2005 at 4.57pm, this would remove the need for us to provide you with a copy of the individual V5(c) certificates. Please confirm this is the case.

I can also confirm that we have now successfully negotiated insurance cover for any vehicle under our fleet scheme for business use directly with one of the world's top insurance underwriters based in London. We are expecting the cover note through very shortly. We have explained our fleet scheme to them in full and they have given us their full support.

In the past 24 hours we have been contacted by politicians, foreign diplomats and various tabloid newspapers, all giving their support to our fleet scheme.

I would of course be more than happy to meet with TfL should you see the need for this at any time convenient to yourselves. I would sincerely appreciate a reply to this letter at your earliest convenience".

9. Mr Craig replied on 17^th May 2005 as follows:-

"Thank you for your letter of 25^th May [this is agreed to be an error and should read 11^th May] enclosing a copy of your terms and conditions. We have carefully considered this document and the information in your letter and have placed them before our lawyers.

I am afraid, however, that the document and the information contained in your letter (and a visit to your website) only serve to confirm that your company is not a "fleet operator" as defined by article 6 of the congestion charging Scheme Order."

After reciting Article 6 (13) of the Order, Mr Craig continued:-

"Despite what is said in clauses 4 and 7(e) of the terms and conditions, in no sense can your company be said in reality to "control and manage" the vehicles of your members. That would mean your company would decide whether a vehicle was to be used on any particular occasion, who was going to drive it, what was it to be used for and where it was to be used. Nor are the vehicle being used for the purposes of your business. They are used for the members' own individual purposes.

The arrangement for fleet operators was designed for the benefit of organisations who operate a fleet of vehicles for the purpose of their business. It envisages a number of vehicles being used for a common purpose. An obvious example is a fleet of delivery vans. The definition is complicated because it has to be wide enough to include the case of a business which operates a fleet which it hires from someone else and that of a business which hires a firm of fleet managers to operate its vehicles. But the definition is nowhere near wide enough to encompass an arrangement such as that subsisting between your company and your members.

Your account remains marked for closure. After your account is closed, the owners of the vehicles registered with fivepounds.co.uk must purchase a valid charge for the periods when they drive within the central London Congestion Charging Zone."

10. There followed correspondence in which Mr Camacho made representations to persuade the Defendant to change its mind. By a letter of 10^th August the decision was temporarily withdrawn but on 24^th August the Defendant gave notice of a change to the definition in its Terms and Conditions of the phrase "controlled and managed", defining these words as meaning that "the Fleet Operator is able to direct when, by whom and for what purpose the vehicle is to be driven". This change took effect on 27^th September 2005, and by a letter of that date the Defendant decided to close the Claimant's fleet scheme account on the grounds that the eligible vehicle registered by the Claimant "will not be controlled and managed by Fivepounds directing when, by whom and for what purpose the vehicle is to be driven".
11. In the light of these changes to the Defendant's Terms and Conditions, the Claimant decided to amend its own terms of business. New clauses 7(g) and (h) state that the customer shall "give [the Claimant] control and management of the nominated vehicle for the purposes of [the Claimant's] business"; and "comply with any directions given by [the Claimant] for the purposes of its business as to when, by whom and for what purpose the nominated vehicle is to be driven during the Period".
12. In response to objections from the Claimant the Defendant, by a letter of 14^th October 2005, did not accept that the Claimant had the ability to direct when, by whom or for what purpose its customers vehicles are to be driven. The letter stated that "the use of the phrase "control and management" in your client's revised terms and conditions is considered to be a device, which does not reflect the true agreement between your client and its customers".
13. The Claimant seeks judicial review of the Defendant's decision of 27^th September 2005 that the vehicles registered by the Claimant were no longer eligible for the Fleet Scheme and that its account should be closed; and of the rejection in the letter of 14^th October 2005 of the objections raised by the Claimant to closure of its account. The Grounds of Claim may be summarised as follows:-

(1) The words "control and manage" do not requires that directions are actually given to drivers, only that the Claimant has the legal right to give such directions;

(2) There is no requirement that the purposes for which fleet vehicles are used must be wholly or primarily the purposes of the fleet operator;

(3) The Claimant does in fact control and manage vehicles for the purposes of its business;

(4) Alternatively, the revised definition of control and management introduced on 27^th September 2005 is ultra vires the terms of the Order;

(5) Alternatively, the Defendant has acted in breach of the Claimant's legitimate expectations;

(6) Alternatively, the Defendant has acted in breach of the Claimant's Convention rights.

Ground 1 - Control and management

14. In my judgment it is wholly artificial and unreal to describe the vehicles registered with Fivepounds under there congestion charge fleet scheme as being "controlled and managed" by Fivepounds, whether in the ordinary meaning of those words or as defined by TfL's amendment of 27^th September 2005. The only element of control which has in practice been exercised under the scheme so far is that participating vehicles must display an identity disc and a sticker advertising Fivepounds. There is also a power, I suspect rarely exercised in practice, to require the driver to make the vehicle available for inspection so as to ensure that these exiguous obligations are being fulfilled. But, as Ms Lieven for the Defendant submitted, the vehicles are no more "controlled and managed" by Fivepounds than a bus displaying a prominent advertisement under a long-term contract is controlled and managed by the advertiser. One might arguably say that the vehicle registered with Fivepounds (and similarly the bus) is to a very limited extent used for the purposes of the advertiser's business as well as for the primary purpose of the driver or the bus company, as the case may be. But whether under the Order, the initial TfL Terms and Conditions or the amended TfL Terms and Conditions, this does not amount to control and management.
15. Mr Coppel on behalf of the Claimant relied on the decision of McKenna J in Ready Mixed Concrete v Minister of Pensions and National Insurance [1968] 2 QB 497. That well known case, the first of a long line over the last 40 years attempting to capture in words the distinction between employment and self-employment, includes the observation that:-

"Control includes the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when, and the place where it shall be done. All these aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant. The right need not be unrestricted…… To find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matter one need look no further."

16. Counsel did not attempt to select from the many later cases in the Court of Appeal and House of Lords; and it would have been a futile exercise. The wording of the contract is significant but not conclusive in employment or tax law. Even if it were, I am concerned in this case with interpretation of subordinate legislation and terms and conditions created pursuant to that legislation. It is clear to me that "control and manage" in the present context means to do so in practice and to a significant (that is more than de minimis) extent. I do not consider that the obligation of the driver to display the "Display Items" and the somewhat notional rights to inspect come anywhere near conferring powers of control and management in this sense on the Claimant. (I shall consider further the amendment of each side's Terms and Conditions on 27^th September under Ground 4.)

Ground 2 - The alleged primary purpose requirement.

17. In para. 26 of his witness statement Mr Craig expressed the view that "control and manage" in the context of fleet schemes means:-

"….where the fleet operator (as the organisation registering its vehicles) decides whether a vehicle is going to be used on any particular occasion, who was going to drive the vehicle, what the vehicle was going to be used for and where it was to be used – primarily for the purpose of the business and not for the individual's own purpose. "

18. It is an interesting question whether this interpretation of the Defendant's Terms and Conditions is precisely correct. Mr Coppel submitted that many companies have a fleet of vehicles operated by a fleet management company which arranges servicing, repairs, cleaning and replacement of vehicles from time to time; but the fleet management company (as opposed to the employer) does not instruct Mr Jones to drive a particular car to Swindon starting at 9am next Thursday. I accept this submission. But it does not assist him in the argument that his client exercises control and management over the vehicles registered with it. As to a primary purpose rule, it may be that in some situations there is a genuine dual purpose: Ms Lieven gave the example of a sub-contractor carrying out servicing or repairs for a utility company with a fleet of vans in the livery of the utility company. The vans may be said to be used to a substantial degree both for the purposes of the utility company and for the purposes of the sub-contractor. But this is not the same issue as control and management, and is a long way from the facts of the present case.

Ground 3 – Does the Claimant in fact control and manage the vehicles?

19. It will be apparent from the previous paragraphs of this judgment, for the reasons I have given, that the answer in my view is "no".

Ground 4 – Is the amendment to the Claimant's terms and conditions ultra vires the Order?

20. TfL's amendment to the definition of "controlled and managed" requires the fleet operator to be able to direct "when, by whom and for what purpose the vehicle is to be driven". Mr Coppel gave the example of a car hire company operating within the congestion charging zone. It makes a particular vehicle available to a particular hirer for a particular period; but (except possibly for restricting use to the UK mainland) it does not presume to tell the hirer where, when or for what purpose the vehicle is to be driven. On a literal reading of the impugned words, if one adds "in all respects" or "in detail", it would appear that a car hire company would not qualify. But to some extent car hire companies can and do in practice impose restrictions on the use of the vehicle (for example named driver only, or non-business use only) which may be considered sufficient. The amendment does not require the Fleet Operator to be able to give directions in minute detail. As sensibly interpreted it does not seem to me that the new definition is ultra vires the terms of the Order. In any event I do not consider that the amendment altered the Claimant's position. Even on the pre-27 September basis it was not, in my view, controlling or managing the vehicles registered as part of its "fleet".
21. It is convenient at this point to consider whether the Claimant's amendment to its own Terms and Conditions makes any difference. I consider that it does not. Although it purports to give the Claimant sweeping powers over vehicles registered under its scheme, there is no evidence that any attempt has been made or is likely to be made to exercise those powers in practice. I have no doubt that if such powers were exercised the Claimant's customers would rapidly withdraw from the scheme. At one time the Defendant alleged that the Terms and Conditions were in this respect a sham, an allegation which was withdrawn and which Mr Coppel declared indignantly should never have been made. But it does seem to me that there is a high degree of legal fiction in the suggestion that the Claimant's powers to give directions in this way will actually be exercised in practice.

Ground 5 – Breach of legitimate expectation

22. Mr Coppel submitted that the alteration by the Defendant of its Terms and Conditions with the specific intention of excluding the Claimant from participation in the fleet scheme amount to a breach of the Claimant's legitimate expectations and an abuse of power. As he puts it:-

"The Claimant was permitted to participate in the fleet scheme for several months, with the full consent and approval of the Defendant's servants and agents, and has invested considerable sums in infrastructure and IT on the basis – clearly communicated by the staff operating the Fleet Scheme – that the Defendant was content with its activities. It now stands to lose the benefit of that investment. Those facts are sufficient to establish a representation by the Defendant on which the Claimant relied to its detriment."

23. After referring to R v North and East Devon Health Authority (ex parte Coughlan) [2001] QB 213, Mr Coppel relied on Rowland v Environment Agency [2005] Ch 1. From the lengthy passage in the judgment of Lightman J set out at para. 67 of the judgment of Peter Gibson LJ, and the observations of Peter Gibson LJ himself in the next paragraph, I derive (so far as relevant for present purposes) the following propositions:-

a) By a representation, which may include a regular practice and a course of dealing, a public body may create an expectation from which it would be an abuse of power to resile;

b) The general rule is that the representation must be clear, unambiguous and unqualified, but this is not invariable; the test is whether the public authority has acted so unfairly that its conduct amounts to an abuse of power;

c) The citizen must place all his cards on the table, making full disclosure, and his expectation must be objectively reasonable; though whether there has been such a failure of disclosure by a party as to disentitle him from having a legitimate expectation must depend on the particular circumstances of the case;

d) Where the court is satisfied that the public body made the representation by mistake, the court should be slow to fix the public body permanently with the consequences of that mistake.

24. The subject matter of Rowland v Environment Agency was whether the public had rights of navigation over a non-tidal stretch of river flowing through land owned by the Claimant. Ms Lieven cited a case of a type much closer to the present facts, R v Inland Revenue Commissioners (ex parte MFK Underwriting Agents Ltd) [1990] 1 WLR 1545 at 1569, where Bingham LJ (as he then was) said:-

"No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the revenue is of a less formal nature a more detailed inquiry is in my view necessary. If it is to be successfully said that as a result of such an approach the revenue has agreed to forgo, or has represented that it will forgo, tax which might arguably be payable on a proper construction of the relevant legislation it would in my judgment be ordinarily necessary for the taxpayer to show that certain conditions had been fulfilled. I say "ordinarily" to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the taxpayer should have put all his cards face upwards on the table. This means that he must give full details of the specific transaction on which he seeks the revenue's ruling, unless it is the same as an earlier transaction on which a ruling has already been given. It means that he must indicate to the revenue the ruling sought. It is one thing to ask an official of the revenue whether he shares the taxpayer's view of a legislative provision, quite another to ask whether the revenue will forgo any claim to tax on any other basis. It means that the taxpayer must make plain that a fully considered ruling is sought. It means, I think, that the taxpayer should indicate the use he intends to make of any ruling given. This is not because the revenue would wish to favour one class of taxpayers at the expense of another but because knowledge that a ruling is to be publicised in a large and important market could affect the person by whom and the level at which a problem is considered and, indeed, whether it is appropriate to give a ruling at all. Secondly, it is necessary that the ruling or statement relied upon should be clear, unambiguous and devoid of relevant qualification."

25. In the early days of the scheme, as set out above, the Claimant dealt with the Defendant's agents by telephone. When the letter of 11^th May 2005 was written there were only 60 vehicles registered under the scheme; there are now some 1700. Until that letter was written I do not consider that the Claimant had placed all its cards face up on the table; nor had it received a clear, unambiguous and unqualified representation from the Defendant that its arrangements qualified under the Defendant's fleet scheme. The observations of Bingham LJ in the MFK case are directly in point. Anyone who chooses to build up a business on the strength of one or more discussions over a telephone helpline cannot complain of a breach of a legitimate expectation if, once the position is set out in writing, he receives a negative response.
26. Mr Coppel further argues that it was an abuse of power for the Defendant to amend its Terms and Conditions on 27^th September 2005 with the intention of singling out the Claimant. But since in my view the amendment was immaterial this submission does not take Mr Coppel any further. Moreover, it is not illegitimate to close a loophole of which only one person has taken advantage, simply because that may be described as singling that person out.

Ground 6 – Breach of Convention rights

27. I share Ms Lieven's difficulty in understanding how the termination of the fleet account on the grounds that the Claimant does not meet the relevant terms and conditions can engage Article 1 of Protocol 1 to the ECHR, on which Mr Coppel relied. The Claimant entered into an agreement with the Defendant. When in the Defendant's legitimate opinion the Claimant was shown not to meet the terms of the agreement, the Defendant terminated it. The authority cited by Mr Coppel of Wendenburg v Germany (ECHR, 6^th Feb 2003), concerning the exclusive rights of audience of barristers practising in German Federal courts of appeal, shows that in some cases goodwill may constitute a "possession" for the purposes of Article 1 of Protocol 1; but it does not affect English law relating to the termination or amendment of a contract.

Conclusion

28. I conclude accordingly that Fivepounds have not made out any of their grounds of challenge and that the application for judicial review must be dismissed.