Licensing decision on Uber—what does it mean for practitioners?


    Feature I | Feature II | Cases | FYI

    Feature I

    Licensing decision on Uber—what does it mean for practitioners?

    Local Government analysis: Tim Williamson, senior associate at Blake Morgan, discusses the practical implications of Transport for London's (TfL's) Uber licensing decision.

    Original news

    Mayor of London, Sadiq Khan, has responded to a petition on TfL’s Uber licensing decision expressing his support for the decision. However he still believes there is a ‘place in London for all private hire companies that play by the rules’. Following the decision, Uber has released an apology letter addressing their conduct and in light of this Khan has asked for TfL to meet with Uber bosses. He says he welcomes innovative new companies as they ‘help Londoners by providing a better and more affordable service’, yet says they are not ‘an excuse for not following the rules’.

    How often is the operating licence reviewed and what legal tests should TfL apply when making a decision not to renew an operating licence?

    The power to grant a private hire vehicle (PHV) operator’s licence is contained within section 3 of the Private Hire Vehicles (London) Act 1998 (PHV(L)A 1998).

    The Secretary of State, in the form of TfL, shall grant a licence to an operator if it is satisfied that the applicant is a ‘fit and proper’ person to hold a London PHV operator’s licence and that any further prescribed requirements are met.

    In considering the question as to whether an applicant is a fit and proper person, TfL must consider the ‘administrative rules’ which set out the criteria for assessing applications for an operators’ licence:

    • convictions
    • business repute
    • right of abode and right to work
    • any previous applications
    • whether evidence has been provided that they have an appropriate radio licence
    • insurance
    • compliance with Health and Safety legislation
    • accounts information needs to be provided

    TfL makes plain that these criteria are not exhaustive and each application must be considered on its own merits. If an applicant is considered to be a fit and proper person then TfL will ask themselves whether the applicant can fulfil his role without posing any likely threat to the general safety of the public.

    If TfL is satisfied that an operator meets the necessary requirements it may grant a licence for five years in the terms applied for or vary the licence in the terms applied for. If TfL is not satisfied that an applicant meets the necessary requirements it may approve the application other than in the terms applied for, impose additional conditions, refuse the application or grant a licence for a period shorter than five years.

    In the present case, the applicant (Uber) had previously sought and been granted a PHV licence despite considerable opposition. An extension had been granted and the licence is to expire on 30 September 2107. This means that Uber was applying for the renewal of a licence although the considerations in determining the application remain the same.

    TfL does also have the power to revoke or suspend an existing licence. One might ask, if the breaches of the law and regulations were as flagrant and serious as is now contended, then why not revoke the licence sooner?

    An appeal is expected, how does the process work, how long does it take and can Uber continue operating during this period?

    Uber has indicated that it will appeal against the decision.

    The PHV(L)A 1998, section 3(7) provides that a person may appeal a decision to refuse the grant of a PHV licence to the magistrates’ court within 21 days beginning on the day they were notified of the decision to refuse the application. The appeal will be by way of a Complaint for an Order. In a case such as this it is likely that the appeal will be listed for a preliminary hearing within two to three weeks of the appeal paperwork being received at the magistrates’ court. The court would typically use such a hearing to make directions regarding the service of witness statements and evidence to be relied upon by the appellant and any response from TfL and service of the appeal bundle. The court will also look to fix a date for the substantive hearing. This will largely depend on the court’s availability.

    In a case such as this one would expect many witnesses would be called to give evidence in an effort to explain how the Uber business model works and to address specifically the concerns about the operation of the business identified by TfL when making the original decision. It could be several months before the matter is determined in the magistrates’ court.

    Uber will be able to operate until the appeal process has been exhausted (section 26(1)). If the appeal to the magistrates’ court is dismissed then Uber has the right to a further appeal to the Crown Court (section 25(6)).

    Is this likely to have come as a surprise to Uber or have concerns been raised with them before about the matters cited as reasons for the failure to review?

    Uber has attracted a considerable amount of negative publicity and protest throughout recent months. The original decision to award a licence was controversial and prompted a legal action. Uber cannot have been surprised that its application would be subject to a great deal of scrutiny or that there would be a great deal of opposition based on people’s views and evidence about how Uber operates. However one would need a pretty strong constitution not to recoil at hearing one’s business characterised as ‘not fit and proper’ and that a body would not be satisfied that Londoners would be safe in using its services.

    What is the impact on Uber’s drivers of this decision now and if the decision is not overturned?

    All drivers need to be licensed. A driver must obtain a PHV driver’s licence from TfL. The considerations that apply in relation to applications from drivers are different and it is feasible that an operator may be awarded an operator’s licence but refused a driver’s licence. If there is a driver’s licence but no operator’s licence then an Uber driver would still be able to work legally as a private hire driver—just not under the Uber name.

    Uber are on record as saying that this decision demonstrates ‘far from being open, London is closed to innovative companies’. What impact do you think the use of technology had on TfL assessment of Uber’s suitability to hold an operator’s licence?

    TfL has historically been at pains to point out that it recognises that technology is changing and that members of the public are buying the services of PHVs in different ways. I do not believe that there is sufficient evidence to suggest that the decision to refuse the application was based on ignorance of the technology or TfL seeking to deny or resist change. Indeed the first three reasons given for refusing the application have nothing to do with technology whatsoever.

    While the explanation by Uber about the use of ‘Greyball’ technology may have been of a concern to TfL it does not necessarily follow that this decision means London is closed to innovative companies. Indeed London is not the only city in which Uber has encountered difficulty. It is difficult to conclude that all those other cities are closed to innovative companies too. It was not the technology that was seemingly the problem—it was the operation of the business and efforts to comply with regulations. Uber could not re-assure TfL that it was a fit and proper organisation to hold a licence and that Londoners were safe in its hands. That is what it must try to do going forward.

    How much influence do you think the petition created and supported by Londoners, together with the PR offensive and public apology given by Uber will have on the appeals process? Should this intervention be taken into consideration?

    It is worth noting that Uber has not one but two options going forward—an appeal in the courts, which they are pursuing at present; and returning to TfL at a later date and making a fresh application.

    In my view it is perfectly possible that TfL could be influenced by the groundswell of public opinion in support of Uber were it invited to consider a fresh application in time. This is because Uber would no doubt put this forward as evidence of the number of people who do feel safe in an Uber vehicle (which is what TfL has to really focus on) and feel sufficiently strongly about the subject as to make a positive act of support for the company.

    It is less likely that a court of law will be influenced by such matters however, as always, much depends on what use is made of it at a hearing. Lawyers frequently seeks to adduce in evidence character references in some form in support of a person or organisation. However such references are written to address specific issues and concerns and offer re-assurance based on the author's experience of the person or organisation.

    What we have here though is a petition which invites general support from people, who may not even have had cause to use Uber in the first place. There is no way of knowing from the petition that every person signing the petition has used Uber and did feel safe. So while this support is not likely to do any harm, it may not do too much good either. Much, as ever, depends on the forum and the use.

    The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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    Feature II

    Taxi touting or soliciting for hire

    Produced in partnership with Freddie Humphreys of Kings Chambers

    Taxi touting under the Criminal Justice and Public Order Act 1994

    It is an offence for a private individual to offer a taxi service by picking up people from the street. Minicabs may only be pre-booked through a licensed company in contrast to licensed black cabs which can be hailed in the street. For each journey, the booking must be made through a licensed operator and carried out by a licensed driver using a licensed vehicle. Private hire vehicles cannot ‘ply for hire’, nor can drivers actively solicit business from potential customers. A private hire driver may not give out a card with a private telephone number on it as each journey must be booked through an operator. Touting for business in a private hire vehicle is an offence under the Criminal Justice and Public Order Act 1994 (CJPO 1994), s 167. If a person is charged with this offence they will also be charged with having no insurance to carry passengers. The vehicle is not insured unless it has been pre-booked and therefore the passenger is at risk should the vehicle be involved in an accident.

    Elements of the offence of taxi touting

    The elements of the offence are:

    • a person
    • solicits another person to hire his vehicle to carry him as a passenger
    • in a public place

    It is a strict liability offence and requires no concurrent intention or mental element.

    'Public place' includes any highway and any other premises or place to which at the material time the public have or are permitted to have access. The soliciting need refer to any particular vehicle. The mere display of a sign on a vehicle that the vehicle is for hire is not soliciting for the purposes of the Act.

    The Transport Operational Command Unit (TOCU) has been in operation since 2003. It is part of the Metropolitan Police Service but is funded by Transport For London (TFL) and it and enforces the anti taxi touting legislation. It has a policy to arrest and charge where touting has taken place and routinely uses undercover officers in touting hotspots to catch offenders.

    Statutory defence

    It is a defence to a charge of taxi touting for a defendant to show that he was soliciting for passengers to be carried at separate fares by public service vehicles on behalf of the holder of a PSV operator's licence for those vehicles whose authority he had at the time of the alleged offence.

    CJPOA 1994, s 167(4)

    No offence is committed where soliciting people to hire licensed taxis is permitted by a scheme under the Transport Act 1985, s 10, the schemes for shared taxis, whether or not supplemented by provision made under section 13 of that Act which modifies the taxi code.

    Prosecution for taxi touting

    Following arrest and charge for touting a defendant will be required to provide fingerprints and DNA samples to be collected as the offence is a recordable offence. These records are kept on a database and can be checked against records of past and future crimes where DNA is available. A 'recordable offence' is an offence punishable with imprisonment. This is one of the minority of non-imprisonable offences which are also recordable offences specified in regulations made under PACE 1984, s 27.

    PACE 1984, ss 118, 27, Code D, Notes for Guidance 4A

    The police have the power to take non-intimate samples without consent where a person has been charged with a recordable offence or informed, he will be reported for a recordable offence. This power can only be exercised if:

    PACE 1984, s 63(3A)

    • the person has not had a sample taken in the course of the investigation of the offence, or
    • has had a sample taken previously from which a DNA profile has been created but the sample has since been destroyed and the person claims that the DNA profile did not come from his sample

    The offence is summary only and so can only be tried in the Magistrates' court.

    CJPOA 1994, s 167(5)

    Sentencing for taxi touts

    A defendant convicted of an offence of touting is liable for a maximum penalty of a level 4 fine of £2,500 on the standard scale and discretionary driving licence disqualification. The defendant would also be convicted of driving without valid insurance which carries a maximum penalty of a £5,000 fine and an endorsement of 6-8 penalty points and discretionary disqualification.

    CJPOA 1994, s 167(5)

    The Sentencing council have produced guidelines for this offence based upon a first time offender who has pleaded not guilty to the charge. See: Magistrates' Court Sentencing Guidelines or Online Magistrates' Court Sentencing Guidelines. Every court must, in sentencing an offender, follow any sentencing guidelines which are relevant to the offender's case. The court must also, in exercising any other function relating to the sentencing of offenders, follow any sentencing guidelines which are relevant to the exercise of the function, unless the court is satisfied that it would be contrary to the interests of justice to do so. The guidelines stipulate that the sentencing starting point should be identified according to the nature of the offence including the following examples:

    CJA 2009, s 125

    • licensed taxi-driver touting for trade who makes the approach rather than waiting for a person to initiate hiring
    • PHV licence held but touting for trade rather than being booked through an operator
    • no PHV licence held

    The sentence starting point ranges from a conditional discharge and 1-3 months disqualification in the first instance to a maximum fine and disqualification for 6-12 months in the third example.

    The aggravating and mitigating factors should then be considered and applied to the starting point which has been identified. Aggravating factors include:

    • commercial business or large scale operation
    • no insurance or no valid insurance
    • no driving licence and/or no MOT
    • vehicle not roadworthy
    • deliberately diverting trade from taxi rank
    • PHV licence had been refused or the defendant is ineligible for licence

    It may be a mitigating feature, though not a defence, for a defendant to assert that they were providing a service when no licensed taxi is available.

    The TOCU usually sends those charged with a touting offence to the same courts so that the court can maintain a consistent level of sentence. TOCU analysis of a sample of cases found that the average fines for touting and having no insurance were £150 for each offence. Around half of those convicted in the sample had their licences suspended for an average of eight months. The sentencing guidelines were introduced after this research to strengthen the deterrent effect of the sentence imposed.

    Changes in legislation in respect of taxi and private hire services

    The Law Commission for England and Wales reviewed the multiplicity of current law regulating taxi and private hire services, and recommended wholesale reform of the law. In its report 'Taxi and Private Hire Services' it found that numerous pieces of legislation applied to this industry, with different laws applying in London, Plymouth, and the rest of England and Wales. Detailed requirements are determined by individual local licensing authorities, and there is a lack of consistency in the standards applied. Because of this, the Commission recommends the repeal of much of the existing legislation and replacing it with a single legislative framework to regulate both taxi and private hire services.

    The core of the new framework proposed is the creation of an offence of using a vehicle on a road to carry passengers, where both the vehicle and the driver have been hired for that purpose, without the appropriate licences. A further offence would differentiate between the different types of service by prohibiting anyone other than a licensed taxi driver, in a licensed taxi, from agreeing to use a vehicle for hire for a journey that starts “there and then”.

    Local authorities will continue to administer licences applied for in their area. They will do so on the basis of national standards, which they will have no discretion to vary for private hire vehicles and drivers.

    The Commission recommend the abolition of a number of out-of-date offences replacing them with a more streamlined set of offences contained in their draft Bill together with reliance on the general criminal law or on licence conditions. The Commission suggested that the Secretary of State has the power to designate the most important nationally set standards so that breach of them will be a criminal offence. Read the full report here.

    The government has yet to publish a response to the Law Commission report or indicate whether it intends to implement the wholesale reform proposed by the Commission.

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    Reigate and Banstead Borough Council v Pawlowski [2017] EWHC 1764 (Admin), [2017] All ER (D) 100 (Jul)

    The case stated in the appellant local authority's appeal against the justices' decision, allowing the respondent's appeal against its revocation of his private hire vehicle driver's licence, did not properly arise out of the justices' decision and was irrelevant. The Administrative Court, in dismissing the appeal, also found no error in the justices' approach to awarding the respondent his costs.

    R (on the application of Hemming (t/a Simply Pleasure Ltd) and others) v Westminster City Council [2017] UKSC 50, [2017] All ER (D) 115 (Jul)

    The Supreme Court held that the respondent sex shops were not entitled to restitution of that part of a licensing fee which had been unlawfully charged upfront at the time of the application for the licence (but could lawfully have been charged if and when the licence application was successful). By accident of the litigation history, the local authority had in fact already refunded that part of the fee following the Court of Appeal’s decision. Accordingly, the licensees now need to repay it—subsequent to it being ‘reasonable’ (which is an obligation imposed by the relevant statute).

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    Mayor responds to Uber petition

    Mayor of London, Sadiq Khan, has responded to a petition on TfL’s Uber licensing decision expressing his support for the decision. However he still believes there is a ‘place in London for all private hire companies that play by the rules’. Following the decision, Uber has released an apology letter addressing their conduct and in light of this Khan has asked for TfL to meet with Uber bosses. He says he welcomes innovative new companies as they ‘help Londoners by providing a better and more affordable service’, yet says they are not ‘an excuse for not following the rules’.

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