Johnson, R (on the application of) v Reading Borough Council

On 18 June 2003 Reading Borough Council, acting through its Licensing Applications Committee, resolved to grant a further 30 taxi licences. That represented an increase of just over one fifth on the 138 licences then in circulation. At issue is the lawfulness of that decision.

The legal framework

By s.37 of the Town Police Clauses Act as amended by s.16 of the Transport Act 1985,

“The [council] may from time to time licence to ply for hire within their administrative or other prescribed area hackney coaches or carriages of any kind or description adapted to the carriage of persons provided that the grant of a licence may be refused for the purpose of limiting the number of hackney carriages in respect of which licences are granted, if, but only if, the person authorised to grant licences 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 council therefore has an unfettered discretion to increase the number of licences it issues. It may de-restrict entirely. The nature of the discretion was considered by the Court of Appeal in R v Great Yarmouth Borough Council, ex parte Sawyer 1989 RTR p.297.

In that case, the council decided to de-restrict entirely. In the course of his judgment, Woolf LJ (as he then was) said (at page 302K) that

“It follows … this appeal is bound to fail. In coming to that conclusion, I would emphasize two matters. First of all the role of the Judge (at first instance) was an extremely limited role, having regard to the provisions of the Act to which I have made reference. The Judge, in coming to his conclusion, was not purporting to express any views as to the merits of the decision of the authority. The authority was given the responsibility under the licensing legislation as amended of coming to a decision with regard to whether or not they were prepared to maintain their previous policies. They came to that decision, and the court can only intervene if it shown that the authority has gone about its task in a way which was unlawful …..”

Bingham LJ (as he then was) also emphasized the width of the local authority’s discretion. As he put it

“A council does not need a reason under the Act to adopt a policy of de-restriction … A decision to de-restrict is very hard to challenge on grounds of irrationality, although no doubt that could be done if the decision was made for obviously unsustainable reasons.”

Bingham LJ also commented on how a council might lawfully approach a decision to de-restrict.

“The council, as I think quite properly, viewed the matter in a broad way, took account of the matters…and reached a decision. I find no ground upon which to impugn the council’s decision-making process. This was essentially a matter of local administration with which this court should be slow to interfere.”

The council commissioned a report from a company called Transport Planning (International) Limited (“TPI”). Its final report was issued in January 2003. Its objectives are set out in paragraph 1.1. They were

“…to determine whether or not there exists a significant unmet demand for hackney carriage services in Reading Borough and…to determine the number of licences required to meet any identified unmet demand in Reading Borough.”

The importance of assessing significant unmet demand to the Council is self –evident. If such demand existed, any refusal of an application for a licence would be unlawful. The study (as it had to) was said (in paragraph 1.3) to cover

“the entire licensing area.”

Section 2 of the Report deals with the difficulty of defining unmet demand. Among other things, it refers to the problem of variable demand. Its “working solution” is to treat significant unmet demand in a three stage process: first, to identify the demand profile, second, to estimate passenger and cab delays and third, to compare those delays to the demand profile.

Additionally, when considering unmet demand TPI took into account “potential or latent demand.”

At 2.21 TPI says this.

“The package of techniques adopted for this study has been designed to address these issues as well as those pertaining to observations of actual conditions at ranks.”

Section 3 sets out the “study method.” There were observations at taxi ranks. Five hundred pedestrians were surveyed. Queues were analysed. Other districts were compared. Hackney and Private Hire operators and other bodies were consulted. Informal ranks were observed.

Section 4 deals with “rank observations.” Each of the 138 licensed vehicles was observed at least once. Section 5 deals with the pedestrian survey in which the public attitude was sought to be obtained. Section 6 is concerned with “general patterns of taxi use-pedestrian survey.” Among other things, it was ascertained that only 2.8% of those surveyed put “waiting time/availability” as the reason for not taking a hackney carriage, some 25% said they had no need to. Section 7 deals with the “potential for improvement- pedestrian survey.” Of those surveyed (504 people), 6.9% suggested an increase in licences. Most suggested lower fares. 7.5% suggested more ranks.

Section 8 deals with the possible consequences of any change in the supply of cabs and demand of passengers. The periods analysed related to peak times on 31 October 2002 and 2 November 2002 at Reading Station only. The conclusion is set out in paragraph 8.8. As it is material to the ultimate suggested increase in the number of licences, I shall set it out in full.

“The analysis suggests that during the peak delay conditions it would have required an additional 20 vehicles in circulation for there to have been no passenger delays observed. The consequences of this level of supply would have been an increase in cab delays [cab waiting time] from just under 4 minutes to just over 12 minutes. During the peak passenger delay conditions it would have required an additional 8 vehicles…for passenger delays to be brought under 1 minute…after a reduction in passenger delays it becomes increasingly difficult, at the margins to achieve further improvements as benefits to passengers is negligible and the disbenefit to the trade becomes disproportionate. It is only possible to provide a marginal improvement in the quality of service to passengers beyond the 8^th additional…licence at the expense of a large increase in cab queuing and delay.”

Section 10 deals with those consulted. Among them was the claimant association. The Report summarised what Mr. Johnson, on behalf of the claimants had to say. As it reflects what he later submitted to the Council, I shall set it out now.

“Mr. Johnson goes on to point out that if any plates were to be issued, the key word is balance. A small percentage could be absorbed. A large number would cause great hardship to the people who had invested a lot of money in purchasing new vehicles to improve the fleet in Reading and still have three or four years of repayments to make. They do not want to be put into a position where drivers have to work an unsafe number of hours in order to maintain their financial commitments. Other problems in not maintaining this balance could be parking, congestion, standards of service and more. There would also be stronger confrontations with the illegal activities of the Private Hire Trade.”

Section 11 deals with informal ranks. TPI was told of informal ranks at which private hire vehicles might be plying for hire. TPI took this as evidence of unmet hackney cab demand. Improvements in ranks were suggested to attract hackney cabs into these areas, where it was noticed they were reluctant to operate.

Section 12 sets out the conclusion and recommendations.

“12.1

On the basis of the analyses conducted we conclude that there is a significant demand for the services of hackney carriages which is unmet.

12.2

To eliminate this…we recommend a licence increase of 8 vehicles…taking the total fleet to 146 [from 138]. This recommended increase represents a rise of 6%. At this level the significant unmet demand will have been eliminated.

12.3

Consideration should be given to relocating the Gun Street Rank.

12.4

Consideration should be given to re-locating and expanding the Yield Hall Lane Rank…

12.5

Consideration should be given to [two] new ranks…

12.6

The anticipated useful life of the current survey is three years… ”

On 14 May 2003 there was a meeting. Among others present were the chairman and secretary of the claimants, three councillors and Mr Mortlock, the “Team Leader Licensing and Enforcement Officer” of the defendants since November 1998. It was said that the report indicated there was unmet demand. When asked how many plates were likely to be issued, an employee of the council replied that

“the survey said a minimum of 8 but it will be how many the elected members decide on.”

On about 21 May the Council was sent an unsigned letter which referred, among other things, to the premiums that existed on having a plate. It suggested a plate was worth £50,000.

On 23 May a representative of the Transport and General Union wrote to Councillor Page. The letter referred to a meeting which had taken place the previous week. It said that the

“…general feeling was that [the Council] intended to issue more licences than recommended by the survey.”

On 10 June 2003 Mr Johnson wrote to Councillor Willis, a member of the Licensing Committee. He suggested that the recommendations and conclusions reached by the study should be adopted. He stated

“the trade should be able to absorb [8 new licences]”

He referred to the financial pressures on owners and drivers. He concluded by saying

“… We strongly recommend that the Committee accept the study and issue no more than 8 plates. If they choose to issue a greater number please only do so taking into consideration all the above points and remember that 200 people and their families depend on you for their livelihoods, as does the taxi sections of Reading’s Transport Strategy.”

On 16 June 2003 there was a meeting between Mr McKee (the author of the Report), Mr Mortlock and Mr Johnson.

On 18 June 2003 Mr Mortlock prepared a report for the Licensing Applications Committee. Its purpose was said to be

“1.1

To allow the Committee to consider the result of the hackney carriage unmet demand survey…and to determine accordingly whether any increase in licensed hackney carriages is necessary. ”

He set out something of the history. He referred to

“…significant problems with private hire cars illegally plying for hire…one way of helping to curb the illegal activities engaged in by the private hire trade and to control their numbers could be to issue more hackney carriage licences, although there is strong resistance from the Reading Taxi Association.”

He said that hackney carriages provided the only means of transport between certain origins and destinations for many people. The demand on Fridays and Saturdays was exceptionally high and that the current numbers of hackney carriages in Reading could not meet the demand. He said that bus services had increased since the survey. He summarised the conclusions and recommendations of the survey. He put forward four options for consideration by the councillors. They were as follows:

“Option 1

The first option is to have regard to the results of the survey and to issue the minimum number of 8 hackney carriage vehicle licences as detailed in the survey… A minimum number of 8 plates must be issued.

Option 2

The second option would be to move towards a position where the number of hackney carriages was determined by market forces rather than by local authority control. In law, persons who currently own hackney carriages have a legitimate expectation that the prevailing status quo will not change overnight. It would not be reasonable to lift the limit on the number of hackney carriages without some warning. Thereforeif a move towards market forces determining the number of hackney carriages is the favoured option, this would need to be phased in over a period of time. Three to five years would be the minimum period of time that would be necessary to move towards such a position. A number of hackney carriage vehicle licences would need to be issued this year and again in the following years prior to de-limiting occurring in the final year. From an officer perspective, it is felt that an appropriate number of hackney carriage vehicle licences to issue, in order to move towards de-limiting, would be 30 per year….

…. Central government is considering removing the local authority powers to restrict hackney carriage licence numbers in their area.

Option 3

Members may, if thought appropriate, issue in excess of 8 new licences without moving towards de-limiting.

Option 4

Members may choose to disregard the result of the survey … However [this] is likely to lead to an appeal where an applicant for a hackney carriage vehicle licence is refused …”

He enclosed various background papers for the councillors’ consideration. Appendix l was the executive summary and conclusions of the demand survey. Appendix 2 was the claimants’ response to it. Appendix 3 was the Thames Valley Police’s response to it.

Among other things, Chief Superintendent Murray, referred to the problems in Reading, particularly on Friday and Saturday evenings. He said that the police wanted to get the public home safely and quickly: that the police would support any reasonable action to improve the current provision.

The Licensing Applications Committee meeting took place on 18 June 2003. Representatives of the claimants were there. They addressed the Committee. Mr Mortlock’s options were put before it. I have the notes which were taken of the meeting. The following seem to me to be the material parts.

Mr. Mortlock summarised his report and the options.

Mr Mortlock said that Mr. Kayani, the chairman of the Private Hire Vehicle Association said that the Association would be happy with the issue of 30 to 40 additional licences.

It is stated that the Committee listened to Mr. Johnson’s representations. Among other things, he expressed some reservations about the survey. He said it would be irresponsible to issue too many licences. He referred to the financial implications for the drivers.

Individual councillors contributed. Councillor Grieve commented that unmet demand at the station had been measured, but there could be unmet demand elsewhere. She wanted enhanced taxi rank facilities.

Councillor Orton noted the “likely legislation” that would remove the Council’s ability to limit the number of licences. She said that the present system was similar to being a closed shop. She reported that the Chairman of Reading Transport would prefer an increase beyond eight. She said that a third of hackney carriage drivers registered had no hackney carriage plate. She said

“The Council often received requests for licences and plates, so there was demonstrable demand in the community. She thought on balance it should not be the Council’s role to determine whether or not it was viable to run a hackney carriage when market forces would determine it more effectively. However this would need to be balanced against the legitimate expectations of the…trade…”

Councillor Winfield-Chislett (who was in the chair) stated

“The survey undertaken provided quantitative data saying that 8 new plates would deal with unmet demand in the station area. The private hire vehicle issue was separate matter, but illegal plying for hire demonstrated that there was unmet demand for vehicles circulating the town. She supported the recommended improvements to the ranks…Option 3 was therefore the one the Committee needed to consider, but they would need to agree the number of licences in excess of eight. ”

Mr. Patel on behalf of the claimants points out that the survey covered the whole of the borough, not just the station.

Councillor Winfield-Chislett also said that

“…hackney carriages should be available for public use from anywhere in the Town to any other location. Currently the majority of journeys started at Reading Station and this led to unmet demand across the rest of the town which was demonstrated by the amount of private hire vehicles that were illegally plying for hire. By increasing the number of hackney carriages it would address the need for more circulating vehicles, the current demand being met by private hire vehicles.”

Councillor Borgars spoke of her own survey which revealed private hire vehicles using the bus lanes.

Councillor Willis said the total deregulation was his instinct.

“The survey had shown there was demand and he would like to see more than 8 licences issued.”

Councillor Winfield-Chislett proposed

“that the Committee should adopt option 3 as set out in the report, that the Committee should issue in excess of 8 licences but without moving to de-limiting at this stage and that 30 new licences would be the appropriate number to issue.”

Councillor Brown moved an amendment

“because he considered that issuing 32 licences was too many.”

He supported option 3 but proposed that 15 new licences should be issued. Councillor Winfield-Chislett’s motion was carried.

As the minutes put it

“In reaching the decision the Committee had taken into account:

The unmet demand identified by the survey.

The representations of the [claimants]

The likelihood that the government would remove the right of local authorities to determine the number of hackney carriage licences in its area against the legitimate expectation of the [claimants] under the status quo.

The representations of other persons for more than 8 licences, e.g. Chair of Reading Transport Limited.

The knowledge that there was unmet demand throughout the town and not just in popular pick-up points such as Reading station due to the high instances of private hire vehicles plying for hire around the town.

It was therefore agreed that 30 would not be an unreasonable increase, bearing in mind that this was the Head of Environment Consumer Services’ recommendation if the Committee wished to adopt option 2 as set out in the report. The Committee was also mindful that it would need to review the situation at the end of the first twelve months after the increase to assess the impact.”

There is also a statement from Mrs Winfield-Chislett. I shall only refer to limited parts of it. She states that

“[Her] recollection as to why we opted for 30 plates was based on the fact that the survey we had commissioned concentrated on all the town centre activity and showed that the station ranks accounted for nearly 90% of rank hirings. Therefore its recommendation of a minimum new release of 8 licences, only covered what would be needed to cover the shortage of cabs at this location. The RTA confirmed that approximately 90% of all town centre hirings started at the railway station ranks…. Members of the Committee felt that other locations and ranks in the town were not being properly served if at all…. I would summarise the reasoning of the Committee as being that whilst increasing the number of taxi licences by the minimum number of 8 may be enough as far as the railway station was concerned, more would be needed to provide a service in other parts of the town and borough. Members of the Committee were aware from their role as councillors that taxis could be hard to pick up from ranks other than the station …. The ….. survey also looked at other things but did not put these into their model to come up with a definitive figure of the number of new licences that should be issued if it was to be above the minimum of eight. The Committee felt that it was up to them to set that figure balancing the findings of the report and a number of factors that had been brought to the Committee’s attention. These included looking at the illegal plying for hire by private hire vehicles in parts of the town and a survey of members of the public, both of which showed that the town as a whole is not properly served by taxis. Basically if you wanted a taxi in town you needed to go to the railway station. You couldn’t expect to flag one down or pick up a taxi from other ranks in the town, although clearly there was a demand for this … This led [the] Committee to [the] view that 8 additional taxis would not be enough for the town as a whole and considerably more would be required. 30 cabs represented an addition of about 20 per cent of the existing l38, which Committee hoped would be sufficient to provide a comprehensive taxi service to all parts of the town. It was impossible to be scientific about the additional number of plates.”

Mr Patel on behalf of the claimants submits that the council’s decision was based upon a wrong interpretation of the TPI report. The council assumed that the recommendation of 8 new licences applied only to unmet demand at the railway station: that if only 8 new licences were issued there would still exist unmet demand elsewhere in Reading. He makes the following points.

First, TPI were commissioned to determine whether there was significant unmet demand for the whole of Reading. There was no geographical restriction.

Second, TPI did not limit itself to empirical data obtained during rank observations but also considered anecdotal evidence in coming to its conclusion and recommendations. The pedestrian survey indicated that delay at ranks was only a minor deterrent to hackney carriage use.

Third, the council was irrational in concluding that if 8 new licences were issued there would remain unmet demand. Such a conclusion was not supported by any evidence. Insofar as it relied upon the members’ own observations it was based upon improper and irrelevant considerations. Insofar as it relied upon the observations in the survey of informal rank activity by private vehicles, it was wrong and/or a misinterpretation of the report. The TPI report concluded that the presence of private hire vehicles was a consequence of existing hackney carriage vehicles being reluctant to operate in those areas.

Fourth, the choice of 30 new hackney carriage licences was irrational. It was based upon Mr Mortlock’s option 2. That figure was put forward by him as appropriate in the context of de-restriction. Moreover, he never sought to justify it.

Fifth, even if the TPI report could be read as being limited to the railway station there was no, or no proper basis for concluding that 22 new licences would be required. By far the greatest demand was and would be at the railway station.

Sixth, monitoring the number of licences in twelve months’ time would not help. By then the damage would be done. The council would not be empowered to cancel a licence at that time.

Mr Harrison on behalf of the defendants makes a number of points.

First, he submits that the council had an unfettered discretion to issue any number of taxi licences it wished. The only statutory restriction was as to the circumstances in which it could choose to limit the number of licences issued. I do not take that to be in issue.

Second, he submits that there was on the evidence sufficient opportunity to the claimants to put their case to the relevant committee. This application could only succeed if the decision to issue the additional 22 licences to the 8 suggested by TPI was irrational in the Wednesbury sense. Although there is some criticism by the claimants of the consultation process, essentially there is no dispute about that proposition.

Third, he emphasised the deference which should be accorded a decision taken by democratically elected councillors following a meeting. As it was put in the Great Yarmouth case (see above) the court should not consider such decisions with over-refinement.

Fourth, the purpose of the survey was limited. It was to tell the councillors the minimum number of licences needed if the Council was to act lawfully in refusing any application for a licence. 8 new licences would achieve that object.

Fifth, as to the survey itself, he submits that while it did contain information relating to the Borough as a whole, the analysis which led to the key conclusions was that at the railway station. There was nothing irrational in the Councillors considering the reports conclusions in the way they did. There was nothing too in the report dealing with the peak Saturday night hours.

Sixth, Mr. Harrison refers to the letter from the Transport and General Union of 23 May 2003. That shows, he submitted, that option 3 was a live option.

Seventh, Mr. Harrison took me through the record of the meeting at which the decision was made. He submits that it is plain this matter was carefully and rationally considered by the councillors. The comments I have quoted above were rational. There was evidence of a premium on plates. The private hire association was asking for 30 to 40 licences. The possible options were before them. Their legitimate concerns were expressed. A suggestion of 16 new licences was rejected as not enough. As to the choice of 30 new licences, that reflected their view that such a number would be an improvement to the town and was consistent with the legitimate expectations of the claimants. It was rational in deciding upon 30 to take into account what had been said to the councillors by their professional and expert adviser. Moreover, although they knew (as the Union letter makes plain) there was the possibility of more than 8 new plates being put forward by the Committee, no alternative number was put forward by the claimants.

It seems to me Mr. Harrison is right.

First, although I am conscious that Regina v Great Yarmouth Borough Council (see above) on its facts concerned the Council’s policy decision to de-restrict, some of the observations within it seem to me appropriate in the present case. Real deference should be paid to the decision of decision takers who are democratically elected and who take their decision following at least adequate consultation (as in my view this undoubtedly was) with interested parties. That decision should not be judged in an over refined and over legalistic way.

Second, the widest possible discretion is given to the Council. It can de-restrict entirely (subject only to the legitimate expectations of those affected, not something raised in argument before me). Any decision taken to increase the number of licences should be looked at bearing in mind the width of the discretion it has.

Third, it seems to me the essential purpose of the survey was to ensure that the Council did not act unlawfully by refusing applications for plates because there was unmet demand. The fact that it suggested that unmet demand could be met as required by Section 37 of the Town Clauses Act, as amended, by 8 new licences did not in any way fetter the Council’s discretion in deciding to grant more than eight.

Fourth, I agree with Mr. Harrison; although the Report was said to cover the whole Borough, someone deciding the number of additional licences was entitled to come to the view there was concentration on the area of the railway station, particularly as far as the analysis was concerned.

Fifth, there was before the councillors a great deal of local information. The police expressed views. So did the local private hire organisation. There was some evidence of plates being at a premium. I see nothing objectionable in local councillors, plainly familiar with Reading, using their local knowledge of how the taxi system operates in practice. Indeed, they would be failing in their duty as councillors if they ignored their local knowledge.

Further, the Committee knew the government was contemplating the possibility of requiring total de-restriction.

As to the views the councillors expressed, they seem to me to deal with the relevant factors in a sensible and rational way. Different councillors expressed different views which, Report or no Report, they were entitled to hold.

Sixth, it is clear from the documents that it was known to the claimants that the Council was contemplating a greater number of additional licences than eight. It was mentioned in the meeting of 14 May 2003. The Trade Union knew. Mr. Mortlock put it forward as an option. It was known too that Mr. Mortlock, albeit in the context of de-restriction, had suggested that 30 additional licences would not be unlawful. In spite of that, the claimants did not put forward an alternative additional number of licences other than eight. They restricted themselves to referring to the need to maintain balance.

Seventh, when deciding upon 30 extra licences the Committee in part relied upon the expert advice of Mr. Mortlock to the effect that that would be lawful (albeit in the context of de-restriction). No-one suggested to the contrary. The Committee was entitled to rely on that advice.

Eighth, having regard to what Mr. Mortlock said and the factors identified in paragraphs 63-7 above, and bearing in mind the extent of the discretion vested in the Council, it seems to me the Committee was entitled to take the decision it did for the reasons expressed in the Minutes. It was not in my view a decision which could be described as irrational.

In short, I have concluded that this application for judicial review must fail.