Taxi Driver Online

This is the the novel case of trying to claim compensation for the willfull act of a council illegally with-holding a proprietors license for among other reasons that the applicant had previously held a license and sold it.

R v Knowsley Metropolitan Borough Council ex parte Maguire and Others

Queen's Bench Division (Crown Office List)

HEARING-DATES: 16 June 1992

16 June 1992

COUNSEL:
J Davies for the Applicants; W Braithwaite QC for the Respondent

PANEL: Schiemann J

JUDGMENTBY-1: SCHIEMANN J

JUDGMENT-1:

SCHIEMANN J: On 31st July 1989 on an application for judicial review Otton J, at the request of the applicants before me, quashed various decisions of the respondent council. These were decisions to refuse licences to the applicants. Those decisions were taken on a legally impermissible basis. The council was ordered to reconsider those applications according to law. This the council has now done and licences have been granted to the applicants as applied for. However the applicants maintain that they have suffered damage as a result of the council's illegal actions. The council says that this may well be so but asserts that it is under no legal liability to compensate those applicants for that damage. Otton J adjourned the claim for damages generally. Simon Brown J on 29th January 1991 ordered a hearing of a preliminary issue, namely, whether there is any legal liability to pay damages at all. There is no evidence in front of me in relation to the amount of damages.

Our law in relation to claims for damages for administrative wrongdoings is notoriously unsatisfactory from the claimant's point of view. Thus it comes about, I suspect, that the claim is put in a number of different ways -- in contract, in tort and under statute. Some of those legal routes to a successful claim are themselves beset with difficulty. The issues raised by this case unfortunately are at the edge of developments of the law. I indicated at the beginning of the hearing that if the case were appealed the litigants, even if successful, might, as a result of unrecovered costs, find themselves worse off financially than if they had compromised even on disadvantageous terms. I indicated the problems in the applicants' way and the possibility that the council might find themselves the subject of a complaint of administrative malpractice. However the parties wished the hearing to go on.

The Statutory Background

This is contained in the Town Police Clauses Act 1847 as amended and applied by sections 15 and 16 of the Transport Act 1985 and in Part II of the local Government (Miscellaneous Provisions) Act 1976. It is forbidden to ply for hire without a licence. The licence is to be issued by the local authority. The authority is in principle entitled to refuse to grant a licence in order to limit the total number of hackney carriages in its area, but since the coming into force of the 1985 Act, is only entitled to refuse on the ground that "it 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".

The Facts

Since the passing of the Transport Act 1985 Knowsley Borough Council has experienced considerable conflict between those who already held HCV proprietors' licences and those who sought to take advantage of the new legislation. On 11th March 1988 the relevant sub-committee of the council resolved to issue three proprietors' licences per month commencing in May until there was no significant unmet demand and to circulate advertisements for applications for such new licences. In April the applicants were each sent a letter from the council enclosing an application form which they were asked to complete before 29th April if they wished to be considered for a licence. Thereafter each applicant applied for a proprietor's licence. On 12th May 1988 the relevant committee, having been correctly advised that its previous resolution was illegal, resolved to issue proprietors' licences to all suitable applicants subject to their compliance with the council's policy on vehicle specifications. The committee further resolved to commission a survey in the borough to establish whether there was any significant unmet demand for hackney carriages.

On 18th May an officer of the council wrote a letter to each of the applicants. It is right that I quote it in full:

"Dear Sir/Madam,

ISSUE OF HACKNEY CARRIAGE PROPRIETORS LICENCES

I refer to your recent application in respect of the above.

My Council's Policy and Resources Committee at its meeting held on Thursday 12th May 1988 passed the following Resolution in respect of the issue of Hackney Carriage Proprietors Licences:-

(a) To issue Hackney Carriage Proprietors Licences to all applicants who meet the criteria, and;

(b) To commission a Survey to be carried out immediately in order to determine if any significant unmet demand exists within the Borough.

(My emphasis) Until the results of a survey are known, or until my Council is satisfied that the demand for Hackney Carriage Proprietors Licences has been met then licences will be issued to any applicant who can meet the agreed criteria. The criteria provides that an applicant must (1) Present an FX4 type vehicle for inspection and (2) Be a Fit and Proper person as defined by the Local Government (Miscellaneous Provisions) Act 1976.

Should you wish to proceed with your application then I would inform you that you must present to this Office either proof of ownership or a Bill of Sale in respect of the vehicle you wish to be licensed.

On payment of £13, an appointment will then be made for your vehicle to be inspected at Mersey Bus Testing Station. Provided that your vehicle meets the current Conditions of Fitness required by my Council and that you can then present your vehicle to this office suitably fitted with an approved taximeter and with a valid Certificate of Insurance then (my emphasis) you will be licensed accordingly."

Thereafter each applicant acquired an FX4 taxi and was able to produce a proof of ownership of it. Each taxi passed inspection and was thereafter fitted with an approved taximeter and a valid certificate of insurance was in force. This entailed a considerable financial outlay on behalf of the applicant.

However on 23rd May two taxi drivers, who already possessed proprietors' licences, made an ex parte application to this court for judicial review of the respondent's decision of 12th May. McNeill J issued an injunction preventing the issue of any further licences. On the following day the applicants were informed of the injunction. However it was not until 27th July that the respondents applied for a removal of the stay which was granted. No explanation was given on behalf of the respondents for their delay.

On 9th September 1988 the respondents resolved not to issue any further licences at that stage, but to give detailed and weighty consideration to the question of hardship as a result of their decision of 12th May 1988. At a meeting of the council on 14th October the council resolved as follows:

"(1) . . .

(2) that licences be not issued generally;

(3) that the undermentioned applications shall be considered by the sub-committee on individual merit and ensuring a consistency of approach:-

(a) . . .

(b) applications from those persons who have previously sold a licensed Hackney Carriage Vehicle;

(c) applications from those persons who purchased a Hackney Carriage Vehicle in reliance on the decision of the . . . committee . . . on 12th May 1988 and have subsequently sold the vehicle; and

(d) applications from those persons who purchased a vehicle after 23rd May 1988 being the date on which the stay of implementation was imposed.

(4) that other applications be determined by the Director of Central Services in consultation with the Chairman . . . applying the following modified policy framework:-

(a) that Hackney Carriage Proprietors' Licences be issued to applicants who have provided sufficient satisfactory proof to indicate that an appropriate vehicle was purchased subsequent to and in reliance on the decision of the Policy and Resources Committee at its meeting on 12th May 1988 and prior to the stay of implementation imposed on this Council on 23 May 1988 and who have suffered direct financial hardship as a result provided that the aforementioned purchase is factual and that the said vehicle meets the council's required specification and that such applicants have been deemed as being fit and proper persons to hold a Hackney Carriage Proprietor's Licence;

(b) that applications for Hackney Carriage Proprietors' licences for those persons who have not purchased an appropriate vehicle, or having so purchased an appropriate vehicle have not suffered direct financial hardship be refused . . .".

On 9th November 1988 the present applicants who had previously sold a licensed hackney carriage vehicle were refused licences because of this fact, notwithstanding that they fell within the category of those who had relied on the decision of 12th May 1988.

All those facts are common to all the applicants. Mr Potts has some facts which are peculiar to him. He sold his vehicle in April 1988 with a licence but immediately after doing so received a letter dated 8th April from the council effectively inviting him to apply for a free issue plate. His understanding was that Knowsley insisted on applicants having no other source of income, so he gave up his job when he decided to make application for a further HCV licence. He went in to apply for the licence and before he purchased an FX4 he asked an officer of the council whether he would be excluded because he had previously held and sold a hackney vehicle. He was told that he would not be and on this footing he gave up his job and purchased an FX4 in May 1988. Although these facts are peculiar to him, it has not been suggested to me by Mr Davies that his claim is any stronger than those of the other applicants nor have any submissions been made to me specifically in relation to his case.

What Otton J decided was that this singling out in a disadvantageous manner of those who had previously sold a licensed hackney carriage vehicle was illegal. He quashed the decisions refusing them licences, ordered the council to reconsider the matter and adjourned the damages claim. Since there was nothing wrong either with the applicants or their vehicles they have since then been granted licences by the council.

There follows an extract from his judgment, which I quote because I heard no evidence, and Mr Davies relies on it as containing various findings of fact relevant to the hearing before me. It states:

"The decisions in this Court and the Court of Appeal show conclusively that licences must be issued until the Council is satisfied that there is no significant unmet demand. Knowsley Council recognised this correctly in May, 1988. The decision of the 12th May was impeccable. The letter of 18th May was clearly drafted in pursuance of the policy enunciated in the decision. If the injunction had not been granted on 23rd May, it seems to me that the Council would have had no ground at all for refusing any of these applicants on the basis of a pre-sale. The Council has never sought to argue before me that the fact of a pre-sale prevented them from being a suitable person within the Local Government Act. The decision letter does not so contend.

I have come to the conclusion that this modification and additional criterion cannot be justified by statute, or in any other way. It was an arbitrary ground for exclusion of these applicants' legal entitlement. Whether or not these men could sue for specific performance of contract, or whether any issue of estoppel arises seems to me to be entirely irrelevant in this context. In short, I am satisfied that by imposing such a condition the Council were acting ultra vires of the powers vested in them as the licensing authority, and in the execution of their duties under the Transport Act.

If I am wrong, I consider that the applicants are still entitled to relief on Wednesbury principles. I consider that in the circumstances, and on the evidence which has been placed before me -- or indeed the lack of it from the respondents -- and the history of licensing matters until October, 1988, it was unreasonable for the Council to impose such a condition. It was irrational. It was an afterthought.

Finally, these applicants did have a reasonable or legitimate expectation that a licence would be issued to any applicant who could meet the agreed criteria. They presented an FX4 for inspection, and each was a fit and proper person as defined by the Act. They then took all the necessary steps to fulfil the conditions then in force, and they were assured in the last sentence of the letter: 'you will be licensed accordingly'. It is abundantly clear that the pre-sale condition was very much an afterthought, and it came after the results of the survey and after the Council were satisfied that the demand for licences had been met."

Breach of Statutory Duty

The applicants' case is based primarily on contract, but it is also put in various other ways. It is convenient first to consider the claim for breach of statutory duty. The applicants submit that the authority was under a statutory duty not to misconstrue the ambit of their own statutory powers, that the authority did misconstrue the ambit of those powers because it wrongly thought it was entitled to refuse licences to those who had sold licensed hackney cabs merely because they had done so, that as a result it refused the applicants the licences for which application had been made and that as a result of that refusal the applicants have suffered damage. All of this appears in Otton J's judgment.

The question for the court however is whether those facts are sufficient to found a private law action for the damage caused by the breach of a duty imposed by statute. The parties are agreed that not every breach of statutory duty by an authority which damnifies an individual gives him a private law remedy in damages. It will only do so if Parliament so intended. Sometimes Parliament makes its intentions plain in the relevant act. On other occasions (despite the pleas of Lord Du Parcq in Cutler v Wandsworth Stadium Ltd [1949] AC 398 at 410) it does not. But that in principle the matter is regarded as one of parliamentary intention is not in doubt (see most recently R v Deputy Governor of Parkhurst Prison [1991] 3 WLR 340 at 349E and 357E-359H).

In order to establish the intention of Parliament the courts have looked at the words of the Act, at the purpose behind the Act, at the presence or absence of other methods of enforcing the duties imposed by the Act, at whether there is an indentifiable class of persons intended to be benefited by the measures contained in the Act and so on. None of these are litmus tests which can be simply and definitively applied. Hence the uncertainty revealed by litigation in this field.

In the present case there is no indication at all in the legislative provisions that they were passed for the benefit of would be cab drivers rather than the public at large. A refusal of a licence gives rise to a right of appeal to the Crown Court. The imposition of a condition alleged to be unlawful gives rise to a right of appeal to the Magistrates' Court. I am not persuaded that Parliament intended anyone to have a private right of action in respect of any failure by a licensing authority to exercise its powers lawfully. In consequence the claim falls under this head.

Negligence

Mr Davies submitted that the council were negligent in believing that the statute empowered them to act as they did and that the council was under a duty owed to the applicants not to act negligently. He accepted that not every misconstruction of one's powers involves negligence but submitted that some may. This may well be right. If the council had thought that the Town Police Clauses Act 1847 authorised them to spend ratepayers money on sending financial aid to some Third World country that might well have been negligent. However the present misconstruction of their powers does not seem to me to involve negligence on the part of the licensing sub-committee of the council or anyone else. The action complained of was not empowered by the statute and therefore fell to be quashed, but that does not necessarily mean that those who reached the conclusion that they did acted negligently.

However Mr Davies pointed out that it appears from Otton J's judgment that the council put in no evidence as to why it decided to exclude from consideration those who had previously had licences but had subsequently sold them. He drew my attention to the learned judge's comments that the exclusion of the applicants was arbitrary, unreasonable and contrary to what the learned judge referred to as their legitimate expectation. All this, he submitted, pointed to negligence and was not challenged on appeal. The appeal point has, I think, no force: given that the act complained of was indeed outside the statutory powers of the council, there would be no point in appealing the other findings which were additional to the primary finding of law. Otton J was not concerned with the question of negligence and was using epithets in the context of public law.

I am entitled to form my own view as to whether or no that what the council did amounted to negligence and I do not think it did. "As is well-known, anybody, even a judge, can be capable of misconstruing a statute; and such misconstruction, when it occurs, can be severely criticised without attracting the epithet 'negligent'. Obviously, this simple fact points rather to the extreme unlikelihood of a breach of duty being established in these cases". (See Rowling v Takaro Property Ltd [1988] 1 AC 473, [1988] 1 All ER 163 at 502 of the former report).

Mr Braithwaite submits that the council found itself overwhelmed with applications at a time when they had not done a demand survey, that the council were in principle entitled to balance supply and demand for cabs and were not negligent during the interim period in which they were establishing the demand position in adopting a policy of excluding those who had had the benefit of one licensed cab and had chosen to sell it. I think there is force in this submission and that he is entitled to make it, notwithstanding the judgment of Otton J.

Since I do not find the council negligent I do not need to consider the difficult question of law of whether the council was under a duty of care owed to the applicants not to be negligent in its construction of the statute. As appears from Takaro, the answer is not self-evident.

Contract

I can now turn to the primary way in which Mr Davies put his case against the council, namely that it was liable on the basis of a promise contained in the letter of 18th May quoted earlier in this judgment. In substance he submitted:

1. That the council by that letter promised the recipients "until the results of a survey are known or until my council is satisfied that the demand for . . . licences has been been met then licences will be issued to any applicant who can meet the agreed criteria". (Although the wording is infelicitous, all parties are agreed that what was meant was demand for the services of hackney carriages).

2. That the council intended, or must be taken to have intended, to be bound to the applicants to issue licences to them provided that

a. The condition precedent as to meeting the agreed criteria was fulfilled;

b. The condition subsequent as to the results of the survey being known or the council being satisfied that demand for cabs had been met was not fulfilled.

3. In reliance on the promise, and in order to be in a position to fulfil the condition precedent, the applicants

a. Entered into contracts with third parties to buy vehicles and with the council to have those vehicles inspected;

b. Expended monies in pursuit of their obligations under those contracts.

4. The applicants thus, prior to the fulfilment of the condition subsequent had fulfilled the conditions precedent. Nevertheless the council reneged on its promise to issue licences to the applicants in that eventuality.

5. The consequence of the council's change of mind is that the applicants suffered damage in that they had useless vehicles in their garages between the time when the licences should have been granted and the time when they ultimately were granted -- a period in excess of a year.

6. This damage is recoverable as a matter of contract.

The chief difficulty with these submissions lies in identifying the contract. The essence of Mr Davies' submission was that the letter of 18th May was an offer made by the council to each addressee to issue a licence to him provided that he both fulfilled the condition precedent and communicated that fact to the council prior to the fulfilment of the condition subsequent. He submitted that in the present case that offer was accepted by the timely fulfilment of the condition precedent and the communication of that fulfilment to the offeror.

Allegedly in the alternative Mr Davies submitted that the council could be sued on a warranty to grant licences upon the fulfilment of the condition precedent. However we are not at this point in the submissions concerned with negligent misstatement or fraud. In the circumstances of the present case the word "warranty" adds nothing to the main argument in contract. It seems an unnecessary refinement.

Mr Braithwaite advanced a number of arguments against the existence of any contract.

He submitted that it involved fettering the council's discretion and that this was impermissible. That submission was made at a time when Mr Davies was advancing much broader submissions than the facts of this case require. In the present case the council's offer to grant a licence (if that is a proper construction of the letter on 18th May, a matter to which I return shortly) was one which was made to a limited number of addressees and which contained a prescribed mode of acceptance -- the presentation of a qualifying vehicle for inspection accompanied by £13. Prior to such acceptance the council was free to withdraw the offer. In those circumstances it seems to me that the objection based on fettering the council's discretion cannot be sustained. It had decided how to exercise its discretion -- namely by making an offer -- and was bound by any acceptances until such time as it chose to withdraw its offer. This is a common situation for administrative bodies and indeed they could not administer efficiently without being able to make offers capable of acceptance.

He submitted that the consideration moving from the promisee was not adequate. I accept that nothing much of value was given to the council by these applicants who parted with £13 for an inspection which no doubt involved its own expense. However one must remember that detriment to the promisee qualifies as consideration as well as benefit to the promisor. These applicants parted with money for the inspection which was pointless in the absence of a licence and for the vehicles which they would not have purchased but for the promise of a licence. It is not for the court to gauge the adequacy of consideration in general and I reject the submission based on absence of considerations.

His most impressive submission is that the letter of 18th May on its proper construction is not to be taken as an offer capable of acceptance but rather as an accurate representation of council policy as it was at the time of the letter. He submits that we are not here in the field of contract at all but rather in the field of local government administration. Councils are always adumbrating policy documents but these are not to be construed as offers to the world at large and that the same applies to letters setting out policy.

In my judgment this submission is well founded. There is no reason to suppose that neither the council or the applicants ever thought in terms of contract. That is not conclusive and I accept that there are cases where the courts will after considering the relevant documentation and actions find that the parties have entered into a contract, notwithstanding the fact that they may never have applied their minds consciously to doing so. A good example is Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484. But it will be remembered that in that case the defendants offered their reward in order to persuade people to buy their product. "If the vendor of an article . . . with a view to increase its sale or use, thinks fit publicly to promise to all who buy or use it that, to those who shall not find it as surely efficacious as it is represented by him to be he will pay a substantial sum of money, he must not be surprised if occasionally he is held to his promise" -- per Hawkins J at page 489. In the present case to construe the letter of 18th May as a contractual offer seems to me to be to lose touch with reality and to insert the law of contract into an inapposite situation.

Estoppel

Finally, Mr Davies sought to mount a submission on the basis of estoppel by convention. In substance this was a submission that, although in truth the council was not contractually liable to the applicants, the council had acted as though there was such a contract and the council is now estopped from contending the contrary. It is true that the council -- rightly in my view -- perceived those who had acted on the indication given in the letter of 18th May as having a strong claim to a licence, but there is no indication before me that the council ever represented that it ever thought of such a claim as a contractual claim as opposed to a claim based on a desire to administer well and fairly.

Conclusion

It follows that the applicants' claims fail. They fail because we do not have in our law a general right to damages for maladministration. "There are many types of administrative conduct which, although wrongful, do not fall within the categories of wrongs for which damages can be awarded against a private person and where there is no right to award damages for breach of statutory duty; in such cases the courts have at present no power to award damages". As this quotation from the Law Commission's 1969 working paper indicates, the problem has been recognised.

It was referred to again in 1988 in the report of the distinguished Committee of the Justice -- All Souls Review of the Administrative Law of the United Kingdom entitled "Administrative Justice; some necessary reforms". Paragraph 11.33 of that report might have been written with the present case in mind. It states:

"When a citizen has been adversely affected by administrative action which he considers to be wrong, the primary redress which he seeks will often be the reversal of the offending decision; thus, he will wish to secure the payment of a grant which has been withheld, the repayment of money wrongfully demanded, the abandonment of an excessive claim for tax, the granting of a licence which has been refused, the withdrawal of an order requiring him to discontinue his business activities and so on. Yet in many cases, the offending administrative act may cause the citizen pecuniary loss before it is reversed; for example, the market stall holder whose licence is revoked in breach of natural justice may succeed in getting his licence restored by the court, but, on the law as it stands, he cannot recover in respect of the loss of income which he suffered while he had no licence, unless he can prove a tort such as negligence. So if a planning authority imposes a restriction in good faith, but unjustifiably (perhaps under a mistake of law), the person aggrieved can no doubt get the Court to set aside the decision but even if he has suffered heavy financial loss he said no remedy for that."

The committee suggested legislation to remedy this state of affairs. Others, while recognising the points made by the committee, disapprove of the remedy suggested (see for instance Craig Administrative Law 2nd Ed Chapter 15.)

The arguments ingeniously advanced by Mr Davies are an attempt to remedy what from the point of view of his clients are shortcomings of our administrative law by extending the concepts of negligence, contract and estoppel. While I have considerable sympathy with his clients I do not think that I am at liberty to extend the law in the way he suggests. The applications fail.

MR DAVIES: May I have legal aid taxation?

SCHIEMANN J: Yes.

SOLICITORS:
Nyland & Beattie, Widnes; The Solicitor for the Metropolitan Borough of Knowsley, Merseyside