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HOLT v WATSON

Second Division

4 February 1983

1983 S.L.T. 588

( The Lord Justice-Clerk ( Lord Wheatley), Lords Hunter and Dunpark)

4 February 1983

Licensing—Hackney carriages—Conditions to be attached to licences—Applicant advised applicants for new licences must meet certain criteria and required to sign assurance with condition attached—Whether licensing committee disabling itself from exercising its discretion and acting ultra vires.

An applicant for a taxicab operator's licence was advised that the local authority's licensing committee required applicants for new licences to satisfy certain criteria, including, inter alia, that they would have no other employment. He was required to sign an assurance that he would have no other employment or any other business interests. He was granted a licence which contained the condition that he should operate and drive his cab on a full-time basis and have no other employment or business interests.

He was subsequently found doing other work and at a meeting of the licensing committee his licence was revoked “on the grounds that he had failed to comply with the assurance given by him to the committee”. The applicant raised an action in the sheriff court craving recall of that decision and an order that the licence be granted. He was successful before the sheriff principal. The defender, the clerk to the licensing committee, appealed to the Court of Session.

Held:

(1) that by seeking to impose rigid criteria and by requiring a written assurance to be given the committee had disabled itself from exercising in individual cases the discretion which by law it was bound to exercise, and accordingly its actions were ultra vires and the applicant was not bound by the assurance extracted; and

(2) further, by the Lord Justice-Clerk (Lord Wheatley) and Lord Dunpark, that the condition attached to the licence was also invalid; and appeal refused.

Appeal from the Sheriff Principal of Tayside, Central and Fife

John Holt raised an action in the sheriff court of Tayside, Central and Fife at Dundee against Gordon S. Watson, the clerk to the licensing committee of the City of Dundee District Council, craving the court to recall a decision of the said licensing committee revoking the pursuer's taxi cab operator's licence and to order that the licence be granted.

The sheriff refused the pursuer's appeal.

The pursuer appealed to the sheriff principal, who allowed the appeal, recalled the sheriff's interlocutor and set aside the licensing committee's revocation of the pursuer's licence.

The defender appealed to the Court of Session.

The appeal was heard before the Second Division on 6 and 7 January 1983.

On 4 February 1983 the court refused the appeal.

The Lord Justice-Clerk (Lord Wheatley)

In this action which originated in the sheriff court at Dundee the pursuer craves the court to recall the decision of the licensing committee of the City of Dundee District Council dated 10 June 1981 revoking his taxicab operator's licence and to order that the licence be granted. The defender, who is the chief executive of the City of Dundee District Council, is called in his capacity of clerk to the said licensing committee.

The pursuer had first been granted a taxicab operator's licence on 11 June 1980. He had previously worked as a self-employed garage proprietor. Prior to said date he had made an application for such a licence, and he subsequently received a letter dated 16 May 1980 from a Mr Henry, the director of administration, which contained the following passages:

“Dear Sir,

Taxi Cab Operator's Licence — New Application

“The Licensing Committee of my District Council have agreed that the number of licensed taxi cabs in the City should be fixed at 300 vehicles and as a number of licences are available, the Committee will be considering the allocation of these licences to applicants on the waiting list who are prepared to satisfy the criteria of the Committee.

“The criteria is that new licences will not be granted to: 1. Applicants with other employment, full-time, part-time or seasonal. 2. Applicants who will operate more than one cab. 3. Applicants who already hold a Taxi Cab Operator's Licence. 4. Applicants who do not hold a Taxi Cab Driver's Licence. 5. Applicants who are a group or company. 6. Applicants who hold and use an HGV or PSV licence or drive an ambulance.

“If, however, an applicant does not at present satisfy the criteria (e.g. because he is in full-time, part-time or seasonal employment at the present) the Committee will nevertheless be prepared to consider and if appropriate grant the application on the basis that the applicant will take steps (e.g. by terminating his employment) within a reasonable period to satisfy the criteria.

“Each applicant will require to give an assurance to the Committee that he will have no other employment or any other business interests and I accordingly enclose a pro-forma style of letter relating to the assurances which require to be given and this should be completed and given to the police officer when you are interviewed at Tayside Police Headquarters, Lochee Road”.

This was a pro forma letter and it followed upon a resolution of the said licensing committee to the effect that from 29 September 1980 (a) the distinction between private hire taxicab operators' licences and taxicab operators' licences would be abolished and (b) applicants would require to satisfy the following criteria:

“1.That the applicant would have no other employment, full-time, part-time or seasonal. 2. That the applicant would not operate more than one cab. 3. That the applicant would not hold a Taxi Cab Operator's Licence. 4. That the applicant must hold a Taxi Cab Driver's Licence. 5. That the applicant must not be a group or company. 6. That the applicant must not hold and use an HGV or PSV Licence or drive an ambulance”.

In view of the assurances required of him by said letter of 16 May 1980 the pursuer signed the pro forma style of letter which had been enclosed with that letter, thereby giving the required assurances regarding “no other employment”or “no other business interests”. Following that he was issued with his first licence on 11 June 1980.

The licence which was revoked by the licensing committee on 10 June 1981 was granted to him on 14 January 1981, and it contained a condition:

“that you shall continue to operate and drive your cab on a full-time basis and shall have no other employment or business interests”.

On 17 March 1981 a police officer called at the garage premises where the pursuer had previously carried on business as a garage proprietor and found the pursuer engaged in repairing a motor vehicle which did not belong to him and in respect of which work the owners of the vehicle paid the pursuer. This was reported to the licensing committee who considered the matter at their meeting on 10 June 1981. It is not disputed that the committee was entitled on these facts to hold that there had been a breach of the assurances given in the signed pro forma. It has to be noted that this was the only breach of the assurances given by the pursuer which was established and was before the committee. The minute of that meeting records inter alia (1) that the chief constable submitted a report relative to Mr Holt having other business interests contrary to the assurance that he gave to the committee on 11 June 1980, when he was granted a taxicab operator's licence; and (2) that the decision of the committee by a majority was that “the taxi cab operator's licence held by Mr Holt be revoked on the grounds that he had failed to comply with the assurance given by him to the Committee on the grant of his taxi cab operator's licence to the effect that, during the currency of the licence, he would have no other employment or business interests”.

The statutory conditions relating to the issue and revocation of licences are contained in the Dundee Corporation Order Confirmation Act 1969. The basic provisions are (1) s. 5 regarding applications; (2) s. 7 regarding conditions attached to a licence which are required to be reasonable ones; (3) s. 13which deals with the power to refuse to grant a licence for any reasonable cause; (4) s. 16 which restricts the power to refuse, suspend or revoke a licence without giving the applicant or holder of the licence or his representative the opportunity of being heard; and (5) s. 17 which gives an aggrieved applicant or licence holder the right of appeal to the sheriff against an adverse decision of the committee.

In pursuance of his statutory right under s. 17 of the Act the pursuer appealed to the sheriff. The argument advanced to the sheriff on behalf of the pursuer was that the criteria set out in the letter of 16 May 1980 which the licensing committee had sent to him, and in particular the criterion that he should not have other employment, full-time, part-time or seasonal, had deprived the committee of the right to exercise a proper discretion in considering his application. The sheriff was told by a representative of the committee that the reason underlying the policy which was reflected in the said letter was to ensure that taxicabs were not merely operated at peak times but were available on the streets for hire at all times. He was also told that the committee was of the view that operators who had no other employment could pay more attention to the care of their vehicles. While the sheriff expressed obvious doubts about the relevance of the latter point which he apparently did not accept, he considered that the former one was entirely relevant in relation to taxicab operators' licences. In his note he records that he was informed that an individual case would be looked at if it was argued that the particular employment or business interest could not justify the refusal of a licence. This is not recorded as a finding-in-fact, but even if it were to be so treated it is clear — and not disputed — that no intimation of this qualification of the criterion, involving the exercise of the committee's discretion, was included in the letter of 16 May 1980 or was otherwise communicated to applicants like the pursuer. It was submitted to the sheriff by the pursuer's agent that in consequence applicants may have felt inhibited from applying for licences. The sheriff summarily dismissed this submission by saying that the pursuer had not been so inhibited, and that instead of putting forward his argument at the time he merely gave the assurances requested. The reason given by the sheriff for refusing the appeal was that the committee was dealing with a man who not only failed to satisfy a criterion which did not seem to him to be unreasonable but who had also given an undertaking which he seemed to have had little intention of keeping. He rejected an argument that the condition in the licence was so vague as to be unenforceable, and concluded that the committee was justified in revoking the pursuer's licence for the particular breach of the condition found established.

The pursuer thereupon appealed to the sheriff principal, who allowed the appeal, recalled the interlocutor of the sheriff refusing the pursuer's appeal to him and set aside the revocation by the committee of the pursuer's taxicab operator's licence. His reasons for doing so were these. He took as his basic legal approach a passage in de Smith's Judicial Review of Administrative Action (4th ed.) at p. 311 which states: “A tribunal entrusted with a discretion must not, by the adoption of a fixed rule of policy, disable itself from exercising its discretion in individual cases”. He considered that the committee in the present case had so disabled itself when it decided, before hearing applicants, that new licences would not be granted to persons who did not meet the six criteria set out in the letter of 16 May 1980. The letter required the applicant to give the required assurances on a pro forma style of letter before the applicant was heard by the committee. He did not consider that the additional conditions typed at the end of the pursuer's licence (quoted supra) were relevant to the purposes of the licensing system, and accordingly in his opinion they were not “reasonable” conditions in the sense of s. 7 of the Act. So far as the reasons given to the sheriff in justification of the policy decision were *591 concerned he did not consider that a condition that the applicant should operate and drive his cab on a full-time basis and that he should have no other employment or business interests would necessarily secure that taxicabs would be available at all hours. He did not doubt the right of the licensing committee to inquire of a new applicant what other employment or business interests he had, and, if he had any which would prejudice the cab operating, to make it a condition of the licence, or require an undertaking, that he would not pursue that prejudicial employment or business interest. The circumstances of each “other employment or business interests” should be considered by the committee. The sheriff principal went on to note that the revocation of the pursuer's licence was not on the ground that he was in breach of the condition, but was on the ground that he was in breach of his undertaking. In his view the committee should not have required the assurances from the pursuer before considering his application, and the pursuer's breach of his assurances, which the committee should not have required him to give, was not a reasonable cause for the revocation of his licence.

In my opinion the sheriff principal reached the right conclusion. The express reason given by the committee for revoking the pursuer's licence was that he has failed to obtemper the assurance given by him as required by the committee. It is not disputed that he so failed. That, however, is not the issue. The issue is whether the committee was entitled to make that requirement or whether it was acting ultra vires in doing so. It was accepted by both parties that this was interlinked with the question whether the condition added to the pursuer's current licence (namely that he should continue to operate and drive his cab on a full-time basis and have no other employment or business interests) was or was not ultra vires. This in turn brought into consideration for present purposes the first of the six criteria set out in the letter of 16 May 1980, namely that new licences would not be granted to applicants with other employment, full-time, part-time or seasonal. Since the committee's decision was based on the pursuer's breach of the assurances, one has to look at the situation when the assurances were given. That was when the pursuer signed the proforma letter provided by the committee for the purpose, which was enclosed with the letter of 16 May 1980 to the pursuer. This was when the pursuer's application for a new taxicab operator's licence was coming under consideration by the committee.

Whether one considers the pursuer's assurances, the condition added to the pursuer's current licence or the first criterion in the letter, the issue in law is the same, namely, had the committee disabled itself from exercising its discretion in relation to a matter in respect of which it was bound to exercise a discretion? It all stemmed from the letter. It was a clear-cut statement of policy. It limited the number of licensed taxicabs in the city of Dundee to 300 vehicles. It specifically restricted the issue of taxicab operators' licences to applicants on the waiting list who were prepared to satisfy the listed criteria. A person who was not prepared to satisfy these criteria would not be considered. The first criterion excluded an applicant with other employment, full-time, part-time or seasonal without any real qualification whatsoever, and irrespective of the nature of the employment and whether it was in any way inhibitive of or related to the proper and full operation of the licence. The only indulgence shown was a preparedness to consider giving an applicant who did not satisfy the criteria time within a reasonable period to do so. This was with particular relation to other employment. In view of this it is perhaps not without significance that no mention is made there of the right to make representations against the condition. The one purpose which the sheriff considered to be of relevance to the committee's policy was to ensure that taxicabs were not merely operated at peak times but were available on the streets for hire at all times. That, the sheriff held, was a relevant consideration so far as policy was concerned.

The question is whether the terms and conditions imposed were so rigid and restrictive as to go beyond the limits of vires. Section 7 of the Act provides that a licence shall be in such form as the corporation may determine, and shall be subject to such reasonableddn conditions as may be specified in the licence (the emphasis is mine). The committee in considering applications for licences and thereafter granting licences was carrying out an administrative function which involved the exercise of a discretion. It was perfectly entitled to formulate and proceed upon policy grounds provided that these were not so rigid and restrictive as to be incompatible with the aims and purposes of the Act and to disable it from exercising its discretion when this was required. The committee was perfectly entitled to restrict the number of cab operators' licences in the city to meet the needs of the city — cf. the proviso to s. 19 of the Act. On the other hand individuals have a right to apply for such a licence. The committee is entitled to make conditions regarding the qualification for the granting of licence, provided these conditions are reasonable. Subject to this, conditions might be imposed which are designed to secure that there would be a reasonable number of taxicabs available at different times of the day. This might involve a restriction in other forms of employment or other interests but there would require to be a relationship between the two. This could be of particular relevance in the case of a taxicab operator's licence. Inherent in this concept would be the right on the part of the applicant to demonstrate that these other interests would not in any way affect the proper operation of the taxicab operator's licence. Then the exercise of the committee's discretion would come into play. Here the total exclusion of other employment, and in due course other business interests, of any *592 nature whatsoever, irrespective of the circumstances and without any right to the applicant to make representations thereanent, clearly represents an unreasonable condition and constitutes a policy which does not square with the purposes of the Act. In its rigid application it left no scope for the exercise of discretion. The force of this was not lost upon counsel for the appellant who strove to persuade us that, since there were opportunities open to the pursuer to make representations to the committee to the effect that his transgression was so small or so irrelevant that his licence should not be revoked, the policy was perfectly valid and intra vires. These were (1) when he first made his application, which was incidentally before he received the letter of 16 May 1980; (2) at any time during the currency of the licence when he could have reported a change of circumstances, e.g. his other employment, etc., in terms of s. 9 of the Act; and (3) at the hearing on 10 June 1981.

This was based on what was said to the sheriff by the representative of the committee that an individual case would be looked at if it was argued that the particular employment or business interest could not justify the refusal of a licence. This was said to qualify substantially what was alleged to be a rigid rule. So far as that argument is concerned it seems only necessary to point out that the sheriff has not made any finding-in-fact to that effect, and that in any event such a qualification or reservation of right was never brought to the notice of applicants such as the pursuer. In fact the terms of the letter seem to rule out such representations.

In my opinion, for the reasons stated, the condition imposed by the first criterion in the letter of 16 May 1980 was ultra vires. Its terms were so imperative and without qualification that an applicant had either to sign the pro forma assurances or automatically cease to qualify. To oblige an applicant to sign assurances in relation to something which itself was ultra vires was equally ultra vires. Likewise to incorporate into the pursuer's licence an added condition giving effect to that ultra vires condition was likewise ultra vires. It accordingly follows that the committee's decision to revoke the pursuer's licence on the ground that he had breached assurances which had been obtained by means beyond its powers cannot stand. I find it unnecessary to deal with the various cases cited to us, since this case can be decided on its own facts in relation to legal principles which are not in dispute. I would accordingly refuse the appeal and affirm the interlocutor of the sheriff principal dated 26 February 1982.

Lord Hunter

While I am not to be taken as dissenting from the broader grounds of decision which have commended themselves to your Lordship in the chair, I would, for myself, be disposed to decide the present appeal on more limited grounds. In my opinion the licensing committee by sending out the letter dated 16 May 1980 sought, on any reasonable interpretation of the terms of the letter, to impose a rigid set of criteria which applicants on the waiting list for taxicab operators' licences had to undertake in writing to satisfy, either immediately or within a reasonable period, if they wished an application even to be considered by the committee. I am further of opinion that, by seeking to impose these rigid criteria, and in particular the criterion numbered 1, and by requiring the relative written assurances to be given by the applicant in the pro forma provided, the committee disabled itself from exercising in individual cases, including that of the respondent, a discretion which it was by law bound to exercise when performing its statutory functions under the relevant provisions of the Dundee Corporation Order Confirmation Act 1969. I consider that the attempted imposition of a rigid criterion of this nature as a condition precedent to consideration by the committee of an application by the respondent was outside the scope of the Act and ultra vires of the committee, and that, in consequence, the respondent was not bound by an assurance so extracted. I would accordingly hold that, in these circumstances, the purported revocation by the committee of the respondent's licence, which revocation bore to proceed solely on breach by the respondent of such an assurance, cannot stand.

For the foregoing reasons I would agree that the appeal should be refused, and that the interlocutor of the sheriff principal should be affirmed. I would, however, as I have indicated, do so on the ground covered by the third plea-in-law for the pursuer and respondent, which was added by amendment.

Lord Dunpark.

On 10 June 1981 the licensing committee of the City of Dundee District Council revoked a taxicab operator's licence which the respondent held. The respondent appealed to the sheriff, who refused his appeal. On his appeal to the sheriff principal the sheriff's interlocutor was recalled and the revocation set aside. The appellant, who is the clerk to the said licensing committee, appealed to Court of Session.

The ground upon which the licensing committee revoked the respondent's licence is recorded in the minute of that committee's meeting on 10 June 1981 as follows: that the respondent “had failed to comply with the assurance given by him to the Committee on the grant of his taxi cab operator's licence to the effect that, during the currency of the licence, he would have no other employment or business interests”. It is not disputed that, if that assurance was validly obtained by the committee, the respondent was in breach of it.

Your Lordship in the chair has narrated the circumstances in which that assurance was obtained from the respondent by the committee. It is plain that the committee demanded from every applicant for a new licence a written undertaking that he would have no employment other than operating a taxicab and that, without such an undertaking, a new licence would not be granted. I agree with your Lordships that by *593 imposing this general, rigid condition the committee disabled itself from exercising any discretion in individual cases. I find nothing in the Dundee Corporation Order Confirmation Act 1969 which entitled the committee to lay down ab ante fixed rules of policy to the total exclusion of that discretion when considering individual applications. It follows that the committee had no power to demand the undertaking and that the undertaking which they obtained from the respondent was invalid. It was, therefore, one which they had no power to enforce or to revoke.

I therefore agree that the appeal should be refused and that the interlocutor of the sheriff principal dated 26 February 1982 should be affirmed. As the committee's purported revocation was not based upon breach of the condition which they annexed to the respondent's licence, I would sustain the third plea-in-law for the respondent, which was added by amendment in the Court of Session. However, I agree with your Lordship in the chair that the condition which was annexed to the respondent's licence was also invalid. It was annexed in accordance with the same fixed policy rule which excluded the exercise of the discretion which the committee was bound to retain in considering individual applications.
Representation

* Counsel for Pursuer and Respondent, J. A. Cameron, Q.C., Jones; Solicitors, Russel & Aitken, W.S.— Counsel for Defender and Appellant, Horsburgh, Q.C.; Solicitors, Haig-Scott & Co., W.S.
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