Scottish Court of Session Decisions

[1] This appeal concerns a decision of the respondents, as the licensing authority in terms of the Civic Government (Scotland) Act 1982 ("the 1982 Act"), taken on 19 August 1999 refusing an application by the appellant for renewal of a taxi licence. The appellant required the respondents to give reasons in writing for their decision in terms of paragraph 17 of Schedule 1 to the 1982 Act. Following the issue of reasons in writing by the respondents in a letter dated 27 August 1999, the appellant raised the present action in the Sheriff Court seeking to reverse the respondents' decision. The appellant claimed that the respondents had erred in law in reaching their decision. The sheriff, having heard the parties, on 22 March 2000 pronounced an interlocutor in which he repelled the pleas in law for the appellant, sustained the respondents' first plea in law to the effect that the respondents had not erred in law and otherwise repelled the remaining pleas in law for the respondents and refused the appeal. He held that neither the decision to refuse the appellant's application for renewal of a taxi licence nor the reasons set out in the letter of 27 August 1999 disclosed any error in law on the part of the respondents in refusing the appellant's application.

[2] Before we consider the submissions made to us, it is convenient to set out the admitted facts. In December 1997 the appellant applied for a taxi licence, conform to the provisions of the 1982 Act. In terms of section 3(1) of the 1982 Act the respondents were, for the purpose of the discharge of their function as a licensing authority, required, within three months of the application having been made to them, to consider the application and, subject to certain other provisions of the section, to reach a final decision on the application within six months. In terms of subsection (4) it is provided that where the licensing authority have failed to reach a final decision on the application before the expiry of the six month period, the licence applied for "shall be deemed to have been granted...unconditionally on the date of such expiry and shall remain in force for one year...". It is further provided that such grant is without prejudice to certain other powers given to a licensing authority to revoke, vary or suspend a licence. Provision is made by section 3(2) for the local authority to seek an extension of the six month period by way of summary application and for the sheriff, if it appears to him that there is good reason to do so, to extend the period as he thinks fit. In the present case the sheriff in his Note sets out that in 1998 the respondents were awaiting a report from the Fraser of Allander Institute in order to assist them in formulating policy in connection with the issue of taxi licences. It appears that in the course of 1998 that report was received and considered by the respondents. On 3 December 1998 the respondents formulated a policy restricting the number of new taxi licences that they intended to issue. It further appears that the respondents had intended to continue consideration of the appellant's application, and certain other licence applications, until they had received the report and had formulated policy. However, their summary application to the court was incompetent in that it referred to an application by the appellant for a taxi driver's licence. Accordingly, no application for continuation of consideration of the appellant's application was sought or obtained from the court. In the circumstances it was, and is, accepted that the appellant became entitled in terms of section 3(4) of the 1982 Act to the grant of a taxi licence unconditionally on 18 June 1999 for a period of a year, that date being the date of the expiry of the six month period from the date of the submission of the appellant's application. In terms of section 3(5) of the 1982 Act the respondents were thereupon bound to make out and deliver to the appellant a licence so granted. It remains only to note that in terms of section 3(4) such a grant is granted without prejudice to the respondents' powers of revocation, variation or suspension under the 1982 Act and that none of these powers was exercised at any time by the respondents in relation to the appellant's grant of a licence following the date when it was deemed to have been granted.

[3] As stated above the respondents formulated their policy on 3 December 1998. On 14 January 1999, apparently in ignorance of the fact that their application for an extension of time to the sheriff had been incompetent, the respondents purported to consider the appellant's application for grant of a taxi licence and to refuse it. They purported to do so by reference to the restriction policy adopted by them on 3 December 1998 and under reference to section 10(3) of the 1982 Act as amended by the Transport Act 1985. This section concerns taxi and private hire car licences. In terms of subsection (2) it provides that a licensing authority shall not "grant or renew" a taxi licence unless satisfied that the vehicle to which the licence is to relate is suitable in type, size and design for use as a taxi and is safe for that use and that there is in force in relation to the vehicle a policy of insurance or such security as complies with Part VI of the Road Traffic Act 1972. Subsection (3) provides as follows:

It is also convenient at this juncture to note that this subsection, as originally enacted, was in the following terms:

[4] In the event the respondents recognised that their decision was inept. We note that the sheriff states that the matter had been raised by the appellant's agents shortly before the date set down for the hearing of the appellant's application on 14 January 1999. However, recognising that their purported refusal was inept and that in fact the application must already be deemed to have been granted, the respondents wrote to the appellant's agent on 28 January 1999 enclosing the licence dated, as required by statute, to 18 June 1999.

[5] It appears that in the letter of 28 January 1999, and in a further letter written by the respondents to the appellant on 10 August 1999 upon receipt of her application for renewal of a licence, the respondents sought to make clear to the appellant that the appellant was not entitled to expect that the licensing authority would necessarily renew the licence in view of the adoption by them of a restriction on licence policy on 3 December 1998. The sheriff records that the letter of 28 January 1999 sought to point out that the issue of the licence to the appellant took the number of taxi licences issued at that time beyond the limit of 212 set in terms of the policy and that the letter of 10 August 1999 also set out in more detail how the respondents intended to operate the section 10(3) policy adopted. We observe at this point that the appellant's licence was deemed to have been granted immediately upon expiry of the six month period from the date of submission of the application and that in June 1998 no policy existed which set down a limit of 212 licences for the respondents' area.

[6] The appellant required to apply for renewal of the licence as at 19 June 1999. As noted above, on 19 August 1999 at the hearing of that application the renewal was refused and the appellant applied to the respondents for a note of written reasons for the decision. These reasons were set out in the letter of 27 August 1999.

[7] It is convenient at this stage to take note of a further provision of the 1982 Act which is relevant to the debate before us. Schedule 1 of the Act makes further provisions as to the general system of licensing and in particular the procedural provisions to be followed, including the provisions to be followed in respect of applications for the grant and renewal of licences. Paragraph 5 reads as follows:

[8] It is accepted for the respondents in the present appeal that none of the matters referred to in paragraph 5(3)(a), (b) or (c) are relevant to their decision.

[9] We turn now to consider the terms of the respondents' letter of 27 August 1999. The letter bears to be headed

It continues:

The letter then goes on to set out the circumstances which gave rise to the grant of a taxi licence to the appellant in terms of the Act. In particular the letter states, after referring to the various matters to which we have alluded above:

[10] The letter then made reference to the terms of the Council's Head of Legal Services' letter dated 28 January 1999 in which it appears that it was stated that the licence which was being issued to the appellant was being issued "by virtue of a statutory requirement and not by virtue of a properly considered decision of the licensing authority". The letter went on to state that the licensing sub-committee, in their decision taken on 14 January 1999, had decided to refuse the appellant's application "in order to maintain the new policy". The letter related that at the meeting of the licensing sub-committee on 19 August 1999 the appellant's representative had argued that, in seeking to take account of the policy determined upon in December 1998, the respondents were attempting to take a decision on the renewal of a licence in terms of section 10(3) of the 1982 Act and that to do so was patently incompetent, as that subsection only applied to applications for new grants. It appeared that he had thereafter declined to make any submissions on the merits of the application in relation to the respondents' restriction policy, notwithstanding that he had been referred to the respondents' power to refuse an application if satisfied that there was a "good reason" for doing so.

[11] The respondents' letter then continued as follows:

[12] At the end of the day the issue is a short one. It is whether, in terms of paragraph 5(3)(d) of Schedule 1 to the 1982 Act, the respondents were entitled, upon an application for renewal of a taxi licence, however that licence came to be granted, to take into account a policy for limiting the number of taxi licences to be granted which had been approved by them after the date on which the taxi licence was, in terms of the 1982 Act, deemed to have been granted. Before us counsel for the respondents did not seek to suggest that it was legitimate for the respondents to found solely upon "the expectation", to which reference was made in the letter of 28 January 1999, to the effect that, as the grant was a deemed grant, the appellant should not necessarily expect that the licence would be renewed in view of the Council's policy to restrict taxi numbers to 212. He accepted that the proper question to be determined, and the only question to be determined, is whether a licensing authority is entitled to found upon a policy limiting the number of taxis to be licensed within their area as a reason for refusal only when an application for grant of a taxi licence has been submitted to them or whether that remains a reason for the purposes of paragraph 5(3)(d) as a good reason for refusal of an application for renewal of that grant.

[13] For the appellant, it was submitted that in determining what was the proper construction to be placed upon section 10(3) of the 1982 Act it was necessary to have regard to the distinction between the powers of a licensing authority to grant or renew a taxi licence in terms of section 10(2) and the restriction upon those powers in section 10(3) which is imported by the phrase "the grant of a taxi licence may be refused by a licensing authority" for the stated purpose. That being so, the opening words of section 10(3), namely "without prejudice to paragraph 5 of Schedule 1 to this Act" were to be read as meaning that once a licence had been the subject of a grant by a licensing authority, then, when considering an application for renewal of that taxi licence, the licensing authority were not entitled to refuse the application on the ground that they had instituted a policy for the purpose of limiting the number of taxis in respect of which "licences are granted by them". It was significant that throughout the subsection the words "grant" or "granted" were used and no reference was made to a renewal. This was consistent with the general purpose of the legislation, namely, that the holder of a licence should be protected in the livelihood which the existence of the licence provided to the holder, unless and until, for reasons other than a change in policy introduced after the grant of the licence was originally made, it would be appropriate to refuse an application for its renewal. In these circumstances the fact of overprovision arising from the introduction of a policy adopted by the licensing authority following the original grant could not amount to a good reason for refusal of a renewal of such a licence. In the present case, it was plain that the respondents were doing no more than attempting to apply the provisions of section 10(3) at a point where they were considering an application for renewal of a licence. The fact that the licence had been deemed to be granted and that the life of the licence was limited to one year, whereas in normal circumstances a grant made after full consideration of the application by the licensing authority was for three years, did not and could not affect the meaning to be given to the words "grant" and "granted" in section 10(3) so as to restrict them to a grant made by the licensing authority as a final decision after full consideration of the original application for grant of a taxi licence. At the time when the application came before the respondents, and throughout the time during which the respondents required to reach a decision in terms of section 3 of the Act, there was no policy in place to which they could refer for refusal of the grant of that licence. Before the sheriff it was a matter of concession that there was no reason personal to the applicant for refusal of the application for renewal of the licence.

[14] The submission for the respondents was that the words "without prejudice to paragraph 5 of Schedule 1 to this Act" did not serve to suggest that overprovision might not be a good reason for refusal of an application for renewal of a taxi licence. Rather, section 10(3) should be understood as providing a specific ground for the refusal of a taxi licence, additional to those set out in paragraphs 5(3)(a), (b) and (c) of the Schedule. Counsel accepted that it was of note that in paragraph 5(3) the words "shall refuse" appear in contradistinction to section 10(3) where the words "may be refused" are used. He also accepted that if it had been intended by Parliament that a reason for refusal on the ground of overprovision, by way of limiting the number of taxis in respect of which licences were granted, was to be a good reason for the purposes of paragraph 5, it might have been expected that the provisions of section 10(3), when they were amended in 1985, would have incorporated reference to grant or renewal of a taxi licence in a manner similar to the terms of section 10(2). Counsel for the respondent made reference, in particular, to the decisions in the cases of Noble Organisation v. City of Glasgow D.C. 1991 S.L.T. 213 and Noble Organisation Limited v. Kilmarnock & Loudon District Council 1993 S.L.T. 759. In the former case, as the sheriff noted, in the context of refusal of an application for a public entertainment licence to operate an amusement centre, Lord Justice Clerk Ross, at page 216, expressed the opinion that in relation to the grant of such an application, overprovision could fall under paragraph 5(3)(d). In the latter case, which also involved an application for a public entertainment licence, it appears to have been accepted by counsel for the applicants that overprovision of similar facilities as those with which the application was concerned, if established, could be regarded as a good reason for refusing an application for a public entertainment licence. Neither of these cases, in our opinion, is in point. They were not concerned with the specific provisions of section 10 as applied to taxi and private hire car licences. Nor were they concerned with the general issue of the purpose to which section 10 is directed, so far as such licences are concerned. When one looks to the terms of section 10(2) it is clear that at the time when application for grant of a licence is made, a licensing authority requires to be satisfied that the vehicle to which the licence is to relate is suitable. It is reasonable to assume that the licensing authority would have satisfied itself on such matters within the initial period of three months for consideration of the application in terms of section 3(1). If so satisfied, and the grant is made, it could not constitute good reason for refusal to renew that licence that since the grant of the licence the licensing authority had become satisfied that there was no significant demand for the services of taxis in their area which was unmet and for that reason they would refuse to renew the licence. The policy of the Act so far as relating to safety of the public is clearly met by section 10(2) and (4) of the Act. Once a licence has been granted, in our opinion, the scheme of the Act so far as it concerns the licensing and regulation of taxis and private hire cars, is to allow the licence holder to operate so long as the vehicle licensed is suitable for the purpose and that there is in force the appropriate policy of insurance or other security as complies with Part VI of the Road Traffic Act 1972, subject always to such other reasonable conditions as may be imposed in terms of paragraph 5(2). Such reasonable conditions can be imposed even if the original grant, being a grant made in terms of section 3(4), was unconditional. Any matter of overprovision which may arise subsequent to the original grant, can

[15] In these circumstances, we are satisfied that the sheriff erred in his determination. It appears that he proceeded upon the view that there was no prohibition in substance or in form arising from the 1982 Act which prevented the respondents at the meeting on 19 August 1999 from considering matters in the way set out in their letter of 28 August 1999. He did so on the basis that he distinguished a grant by operation of law from a considered grant by licensing authority, as being a form of compensation to the applicant for failure of the respondents to meet the statutory time table. In our opinion, there is nothing in the Act which gives any countenance to such a proposition. The Act contemplates that the period of the licence granted in terms of section 3(4) will be limited, in order that the licensing authority can thereafter give consideration in early course upon renewal to imposing such conditions which they might otherwise impose as conditions upon grant or renewal. What they are not entitled to do, however, upon consideration of an application for renewal of that licence, is to have regard to a policy which they had not determined upon at the time either when the application for grant was received by them or indeed at any time during the period when it ought to have been considered, and a final decision reached, by them. In our opinion, what the respondents were truly doing was attempting to invoke section 10(3) on an occasion when it was no longer open to them to do so. This is quite apparent from the terms of the letter of 27 August 1999 and its referral throughout to the restriction policy which was put in place following upon the respondents' decision on 3 December 1998. The sheriff seems to have placed some emphasis on the fact that the initial grant had been "backdated to June 1998". In fact, the provisions of section 3 of the Act required that in June 1998 the licence should be immediately issued upon the failure of the respondents to reach a final decision upon the application. The fact that their failure to do so arose from their own actings cannot, in our opinion, affect the matter or entitle them to use that failure as the basis for a good reason in terms of paragraph 5(3)(d). More particularly is this so since counsel for the respondents before us did not seek to argue the matter upon the basis that the appellant was advised, prior to application for renewal, that the respondents intended to take account of their policy decision in December 1998 when considering the application for renewal.

[16] In the whole circumstances we are satisfied that the sheriff's decision is flawed. In his decision the sheriff erred in attempting to distinguish, for the purposes of what constituted the grant of a licence, between a grant which was secured after a final decision within a period of six months and a grant which arose by reason that the licensing authority had made no decision with six months. Each is a grant for the purposes of the 1982 Act. Accordingly, when considering an application for renewal of that grant at the conclusion of the period for which the original grant was in force, the respondents were not entitled to take into account a policy which was determined upon during the period after the licence came into force. For all these reasons we shall allow the appeal and in so doing, we shall recall the sheriff's interlocutor, sustain the first plea-in-law for the pursuer and appellant to the extent of holding that the defenders and respondents in arriving at their decision of 19 August 1999 erred in law, repel the remaining pleas-in-law for the pursuer and appellant, repel the first, second and fourth pleas-in-law for the defenders and respondents, sustain the third plea-in-law for the defenders and respondents to the extent of remitting the case back to the sheriff to direct the defenders and respondents to consider further the application of the appellant for renewal of a taxi licence.