Eco-Power.Co.UK Ltd, R (on the application of) v Transport for London & Anor

The Claimant (Eco-Power.co.uk Ltd, “Eco-Power”) manufactures and supplies systems for the reduction of vehicle exhaust emissions.

Under the relevant statutory scheme to which I refer below (Paragraphs 5 and following), the First Defendant (Transport for London, “TfL”) through the Second Defendant (the Public Carriage Office, “the PCO”) is responsible for the activities of hackney carriages or taxis licensed for use in London.

Eco-Power seeks judicial review of the Defendants’ decision of 28 March 2008 to withdraw approvals for the installation and use in London taxis of its emission reduction systems. Following interim relief granted by Griffith Williams J on 28 March, on 7 April Stanley Burnton J ordered a hearing of the application for permission immediately followed by the full hearing if permission were granted. That rolled up hearing was heard before me on 18 April, and this is the reserved judgment from that hearing.

It may assist if at the outset I identify the main players in the events that have led to this claim being made. Mr David Davies (“Mr Davies”) is the sole director and shareholder of Eco-Power. Mr David Stock (“Mr Stock”) is the Head of Service Delivery at the PCO. Mr Randall O’Dell (“Mr O’Dell”) is a Senior Compliance Officer at the PCO. Mr Finn Coyle (“Mr Coyle”) is the Transport Accreditation Manager of the Energy Saving Trust (“EST”, to which the PCO has given the task of assessing emission-reducing systems for approval: see Paragraph 10 below). Mr Matthew Vincent (“Mr Vincent”) is a Consultant Engineer with 10 years’ experience in the development of exhaust treatment systems, retained by EST to assist on the emission-reducing system accreditation programme.

The relevant statutory background is set out in the Claimant’s Skeleton Argument (Paragraphs 2-8) and the Mr Stock’s First Witness Statement 11 April 2008 (Paragraphs 3 and following). It is uncontentious.

Section 362 of the Greater London Authority Act 1999 imposes a duty on the Mayor of London to publish a London Air Quality Strategy. Paragraph 4D.32 of the Strategy published in September 2002, provides that the Mayor will introduce minimum standards to ensure that emissions from London taxis are reduced on a phased basis: and Paragraph 18 states that the Mayor, through TfL, will use regulatory powers to ensure that from set dates all London taxis will comply with increasingly demanding standard limits for emission levels set by the European Council (Directive 98/96/EC), known as “Euro 1”, “Euro 2” and “Euro 3”. Euro 3 - the latest and most rigorous standard - requires a reduction of emissions to below 0.1g/km for particulate matter (PM₁₀) and 0.78g/km for the various oxides of nitrogen (NO_x) when tested to the EEC Emissions Test Protocol 70/220 at a Vehicle Certification Agency accredited emissions test laboratory (“a VCA laboratory”).

The PCO was created as a department of the Metropolitan Police pursuant to the London Hackney Carriages Act 1850 to regulate the activities of London taxis, as the police were obliged to do by s2 of the Act. By s253 of and Schedule 20 to the Greater London Authority Act 1999, all the powers and obligations of the Metropolitan Police relating to taxis were transferred to a new body, TfL, which was created by s154 of that Act. The operation of the PCO was simply transferred to TfL and, by transitional provisions contained in Schedule 20, orders made under the 1850 Act or under various other enactments were treated as having been made by TfL.

One such enactment was the Metropolitan Public Carriage Act 1869, s6 of which now provides that TfL shall have the function of licensing London taxis. Section 6(2) provides that a licence may be granted “on such conditions as may be prescribed”, which (by virtue of s4) means prescribed by a London Cab Order made or deemed made by TfL. One such order (the London Cab Order 1934 (1934 SI No 1346)) provides that a taxi licence may be refused “if the applicant fails to satisfy [TfL] that the cab in respect of which the application is made conforms to the conditions of fitness from time to time laid down by [TfL]…”.

The ability to impose such “conditions of fitness” provided a mechanism by which the Mayor through TfL sought to honour the commitment in the London Air Quality Strategy with regard to reducing emissions from taxis to European standard levels. The current conditions of fitness were issued by TfL on 1 January 2007 (“the 2007 Conditions”). These provide, amongst other things:

“5.3

No fittings, other than those approved, may be attached to, or carried on the inside or outside, of the vehicle.

5.4

No modification may be carried out to a taxi without the prior approval from the PCO. Before considering any unapproved modification to a taxi, approval must be sought from the PCO.

….

13.

New taxi models must meet the current and relevant EC Directive for exhaust emissions, i.e. the respective Euro standard. Current taxi models must meet prescribed emissions standards (currently Euro 3 for NO_x and PM₁₀ by July 2008).”

In short, those provisions meant that new taxis had to be manufactured to a specification that complied with Euro 3 in respect of emission limits, and taxis already on the road were required to meet that standard by some form of modification by July 2008. By virtue of Condition 5, any modification of course had to be approved by the PCO.

The PCO has no particular technical expertise of its own. It therefore gave the task of approving systems of modification for these purposes to EST, an independent non-profit making organisation whose functions include the provision of information, accreditation and evaluation in relation to technologies for clean and low-carbon transport.

In two PCO Notices (32/04 and 09/05), the PCO defined the procedure for securing approval which included (i) execution of emissions testing at a VCA laboratory (“emissions testing”), and (ii) completion of 10,000 miles in use as a taxi while fitted with the emissions reduction system (“durability testing”). The criterion for approval of any system was simple. If the system passed the emissions test (i.e. the emissions were less than the Euro 3 standard levels) before and after the durability testing, EST would recommend to the PCO that approval should be given. As Mr Coyle said (First Statement 11 April 2008, Paragraph 8); “This recommendation is made on the basis of the emissions performance of the equipment only”. Leaving durability aside (as it is not in issue before me), in relation to an application for approval of an emission-reduction systems, the PCO’s only concern was whether that system would reduce emissions to Euro 3 standard levels. Approval was entirely dependent upon this minimum level of functional efficacy.

However, after approval, the PCO remained open to considering evidence that a particular system was not performing its function properly and, when the PCO wrote to a supplier informing them of approval, it expressly “[reserved] the right to withdraw authority for its installation an use should any undesirable features become evident or are reported.” This reservation is important: the PCO acted under it when withdrawing Eco-Power’s authorisation, the decision now under challenge.

This claim particularly concerns the ability of Eco-Power’s system to reduce NO_x emissions.

Although I have before me no evidence as to what they might be, I understand there are other ways in which NO_x emissions may be reduced - but such emissions are generally controlled by a technique know as exhaust gas recirculation (“EGR”). Some of the engine exhaust gases are recycled to the intake to dilute the fresh mixture. The exhaust gases affect the combustion process by reducing combustion intensity and limiting gas temperatures in the combustion chamber such that the extent of the reaction between nitrogen and oxygen is itself limited. Mr Vincent said (First Statement 11 April 2008, Paragraph 8):

“Lower NO_x emissions are strongly correlated with reduced in-cylinder gas temperatures, and reduced reaction between nitrogen and oxygen. It is possible to reduce NO_x emissions in other ways, but EGR is a popular, effective and relatively low cost method of securing reduced NO_x emissions. I noted that all the emissions reduction systems approved by EST and subsequently offered for sale commercially following the early 2006 completion of approved trials used some form of EGR.”

It is important to note:

The efficiency with which an EGR emission reduction system works is to an extent affected by the mechanical condition of the taxi. PCO Notice 27/06 recommended a number of servicing requirements be carried out prior to the fitting of any system, but it became apparent that these were not being universally applied by the fitters. Therefore, a further notice was issued (PCO Notice 54/06) which stressed the importance of proper preparation and subsequent maintenance of the taxi, and in particular it introduced a “Fitment Sign-Off Declaration” to provide documentary evidence that various checks had been carried out during fitting. That declaration was to confirm (for example) that “fuel injectors were replaced with new or officially sourced reconditioned units with new nozzles” and “that the air, oil and fuel filters were changed”. The notice said that EST considered that “these measures will maximise the benefit and robustness of any emission reduction system in terms of its operational lifetime and emissions performance”, and it continued:

“The PCO remains confident that all the approved reduction systems are fit for purpose and, if correctly fitted to properly prepared and maintained vehicles that have undergone the measures listed above, will deliver the required standard.”

The Claimant applied for and was granted three approvals for its emission-reduction systems.

The first approval was in respect of a system with EGR (i.e. with the recirculation of exhaust gases into the air intake, so that they re-entered the combustion chamber) as installed in LTi Fairway taxis. The system was tested at Emission Laboratory UK Ltd in Southampton (a VCA laboratory) on an LTi Fairway taxi in May 2007, at a test witnessed by Mr Coyle and Mr Vincent on behalf of EST. The emission test results lay within the maximum Euro 3 limit values and EST consequently recommended approval. Approval to install and use the system on LTi Fairway taxis was given by the PCO on 13 June 2007.

Most Fairway taxis had already been fitted with some form of emission-reduction system, with the result that the first approval obtained by Eco-Power was of limited commercial value. They therefore sought to obtain an approval in respect of another type of taxi, i.e. the TX1-type.

As time passed, Eco-Power was considering improvements to its system. Mr Davies explained (Second Statement 16 April 2008, Paragraph 8) that the emission-reduction systems with EGR tend to clog the particulate filter: London taxis rarely drive at high speed to produce sufficient heat to burn off the collected soot. Eco-Power sought to avoid this problem by developing a system that recirculated gases, not into the air intake, but into the exhaust. Because the exhaust gases were not introduced into the combustion chamber, Mr Davies considered this had two perceived advantages, namely (i) the reduction of particulate matter clogging the filter, and (ii) the avoidance of reducing the temperature of the gases in the combustion chamber. It is not for me to assess the merits of this proposal - but I note that, by recirculating the exhaust gases to the exhaust, they would not re-enter the combustion chamber thereby defeating the well-recognised scientific technique of EGR (see Paragraph 14 above).

In any event, the initial request for an approval for a system for TX1-type taxis was sent by Mr Davies to Mr Stock and Mr O’Dell at PCO on 5 June 2007, in the following terms:

“I would like to seek approval to test the Eco-Power emissions reduction system on the TX1 taxis. The system will be exactly the same as used in the Fairway system. The only slight modification is to reposition the EGR return pipe (as discussed at inspection).”

He (Mr Davies) sent an email in similar terms to Mr Coyle and Mr Vincent that same day.

Precisely what might have been “discussed at inspection” is unclear. By the “slight modification” in moving the EGR pipe, Mr Davies had in mind a system that recirculated exhaust gases to the exhaust rather than through the air intake and combustion chamber. He proposed that the only EGR through the combustion chamber would be that integral to the system as designed by the manufacturer (see Paragraph 15(i) above), which he proposed to leave connected. For his part, when he received the email Mr Stock did not understand precisely what change was being suggested, and he merely relied on EST. There is some lack of clarity as to what happened next. Mr Davies says (Second Statement 16 April 2008, Paragraph 44.1) that he had discussions with “Matthew” (i.e. Mr Vincent), and he said that “everything was OK from the EST point of view”, a message Mr Davies passed onto Mr Stock by email on 7 June. Mr Vincent denies that those discussions ever took place (First Statement 11 April 2008, Paragraph 12).

Although it did not in the event ultimately affect the second approval, this was the first of many unfortunate misunderstandings between the parties, and indeed the first of many misunderstandings that are difficult to explain. Mr Davies had in mind at this stage a system in which the exhaust gases would be recycled, but not reintroduced to the combustion chamber. Mr Coyle and Mr Vincent considered that this was scientifically implausible. As Mr Vincent said in his evidence (First Statement 11 April 2008, Paragraph 13), as he understood the relevant science “… no significant reduction in NO_x emissions would be expected from a diesel engine whose exhaust had been modified in this way, because by definition there can be no influence of the exhaust gas on the combustion process if the recycled gas does not pass through the engine.” Therefore, whilst there may possibly have been some form of conversation between Mr Davies and Mr Vincent concerning some form of modification to the Eco-Power system, I am satisfied that there was no conversation in which the proposed re-routing of exhaust gases was discussed, yet alone such a conversation in which Mr Vincent indicated that such a system would in any way be “OK” as suggested in Mr Davies email of 7 June. Given the scientific novelty of the proposal, Mr Vincent would have been surprised by it and in my view would undoubtedly have recalled any conversation he had had about it at that stage.

In the event, any such misunderstanding as there may have been did not affect the outcome of the second application because, on 18 June, Mr Coyle emailed Mr Davies to say that, so far as EST were concerned, if the system to be fitted to the TX1-type was “in every way identical to the approved system fitted to the Fairway”, then there would be no need to re-test the system for durability. The only test required would be “a full emissions test with the system fitted”. That was accepted by Mr Davies by email the following day.

The tests were done on taxi registration mark T441 AGU, which was visually inspected on 29 June. The emission tests were successfully performed, and on 16 July the PCO gave its approval for the system to be installed and used in TX1-type taxis.

This approval was in respect of a system identical to that in the first approval, and was simply for installation and use in a different type of taxi. There was some overlap in time between the relevant steps taken towards the second and third approvals - Eco-Power sought its third approval for a modified system before the second approval was granted, to which I refer below. In this context, the last paragraph of the letter of approval of 16 July said:

“I [Mr Stock] have been informed that you have subsequently sought to modify the current Eco-Power system by changing the catalyst for a slimmer version and also re-incorporating the vehicles original EGR valve. Please be advised that the authority above does not refer to the modified system and that you will be required to successfully undertake the appropriate emissions testing and durability trial before any further authority can be issued.”

In respect of TX1-type taxis, despite the approval for use of its original system, Eco-Power wished to pursue an application for approval of its modified system, with the EGR entirely reliant upon that provided by the manufacturer’s design and the additional recycling of exhaust gases by-passing the combustion chamber and being reintroduced into the exhaust pipe.

Eco-Power says that it took vehicle T441 AGU (the TX1 taxi used for the tests on the un-modified system, that led to the second approval), and modified that vehicle to remove the EGR, refit the manufacturers’ EGR valve and have recirculation of some of the exhaust gases to the exhaust pipe (by-passing the combustion chamber). This was produced for a visual inspection on 12 July.

The following day (13 July), Mr Stock emailed Mr Coyle saying:

“The points I need to raise about Dave Davies are that he turned up at the PCO yesterday 12-7-07 unannounced and brought with him T441 AGU for Randal to inspect. Dave Davies informed Randal, and showed him, that he had changed the catalyst for a modified slimmer version and also reincorporated the vehicle original EGR valve albeit that the systems cooled EGR circuit remained in position. Dave Davies then informed Randal that he would be testing this next week.”

There is reference there to the proposed system relying on the original EGR valve as manufactured, but no specific reference to the modified Eco-Power system recycling gases other than through the combustion chamber. Mr Coyle responded the same day, as follows:

“Dave Davies is under no illusions that he can modify the system and get away with doing a durability trial.

Seemingly, he wants an approval for the identical system first and then wants to develop a newer, modified system which will have to undergo the durability trial and further emissions testing.”

Given that the second approval was not granted until 16 July, that email (so far as it went) was correct. However, it does not suggest that, although the email referred to the original EGR valve remaining in place (which suggested the system would at least use the EGR in place at the time of manufacture), Mr Coyle understood at that stage that the modification involved the recycling of exhaust gases other than through the combustion chamber.

On 15 July, Mr Davies emailed Mr Stock seeking final approval for the unmodified system (which was granted on 16 July: see Paragraph 25 above) and going on to give further particulars of the proposed modified system, as follows:

“I would also like to give you some more details about the modified TX1 Euro 2 system which was inspected by yourselves last week. This system will be called the Eco-Cat system. It is very similar to the previous system but will have the following modifications.

1.

It uses the same EGR diesel/exhaust heat exchange system but with the recirculation being directly back into the exhaust system instead of back to the air intake. This will have the benefit of slightly heating the diesel to make it burn more efficiently and slightly reducing the emissions tailpipe temperature.

2.

It will utilize the taxis existing EGR system (which was blanked off for the previous system).

3.

It uses a similar configuration of a Diesel Oxidation Cat (DOC) in conjunction with 2 back to back Diesel Particulate Filters. The unit is supplied by a UK manufacturer….

As soon as we have emissions test results (being carried out this week) I will update you further and will request a further inspection to allow us to commence the durability testing.”

This made abundantly clear that the modified system had no EGR other than that in the exhaust system as originally manufactured, and had exhaust gases re-routed to the exhaust thereby by-passing or short circuiting the combustion chamber. However, there is no evidence that this email was ever copied to EST or indeed that Mr Stock discussed the modified system further with EST. He appears to have assumed that Eco-Power and EST were discussing the proposal directly.

However, no one from EST attended any part of the durability trial which ran from 19 July to 4 September (again at Emission Laboratory in Southampton), nor any of the inspections that formed part of the procedure.

Indeed, there is no evidence of any discussions or even contact between Eco-Power and EST concerning the modified system, except an email exchange in mid-August. On 13 August, Mr Coyle wrote to Mr Davies:

“For our records could you please give a breakdown of your system (2 pager or so) using the following headings

Type of System - (schematic etc)

Components

System Function

Required Maintenance

Fitting Time.”

Mr Davies responded on 19 August:

“Please find attached a basic drawing of the system and a parts list. Fitting time is about 2 hours.

Please let me know if you need any more info.”

In respect of this request and response there was unfortunately another basic and fundamental misunderstanding. Mr Coyle intended to request details of the modified system that was at that time being tested in Southampton. Mr Davies, on the basis that he was asked by EST for the information “for [their] records...”, supplied information in respect of the original, unmodified system. Mr Coyle said of the information (First Statement 11 April 2008, Paragraph 16):

“Having analysed the schematic diagram I formed the view that what Mr Davies was now seeking approval for was a system which appeared similar in all respects to that which had been approved before, save that it had a different filter. On that basis and that basis alone, I formed the view that it was not necessary for EST personnel to supervise the emissions testing. The system which I understood was being proposed was one which, from an engineering perspective, could be expected to work.”

By way of clarification, Mr Chamberlain for the Defendants indicated that Mr Coyle identified the schematic drawing as showing an identical system to the original system, but he had apparently been told that the filter had been changed. This change did not appear from the diagram, the filter being built into the catalytic converter and therefore not appearing on the schematic drawing at all.

This misunderstanding is again difficult to credit. Mr Davies was, in my view, naïve to think that EST would be prepared to give approval of a novel emission-reducing system without having had better details of it than those provided by Mr Davies to Mr Stock on 15 July, even if those had been passed on to EST. However, Mr Coyle was at least as naïve in considering that the only modification to the system proposed was a change of filter. He had been put on notice to expect more changes than that in the email from Mr Stock of 13 July: and if this had been the sum total of the change one would have expected Mr Davies to have been pushing harder for dispensation from the durability test. It is difficult to see how the durability of the system could have been affected by a change of filter in the catalytic converter.

Be that as it may and no matter how unreasonable their respective beliefs might have been, I am quite satisfied that the beliefs of both Mr Davies and Mr Coyle were genuinely held. Mr Davies genuinely thought that the information which had been sent through to Mr Stock on 13 July had been passed to EST, and that no further information had been requested by them in respect of the modified system. He believed that the 13 August request was simply a request for information in respect of the original unmodified system, which Mr Coyle wanted for his file. For his part, Mr Coyle genuinely thought that the only modification to the system concerned the filter. I am sure that, had he understood that there was a basic change to the system (in respect of the recirculation of exhaust gases), he would have played a much more active part in the approval process and at least attended the testing in Southampton.

The durability trial commenced on 19 July. There is an issue between the parties as to whether the vehicle was inspected that day, to which I will return (see Paragraph 63 below). On 3 August, the vehicle was taken to the PCO in London for inspection. The durability test ended on 4 September, when the vehicle was inspected again. The emissions and durability testing was successful, and on 5 September Mr Coyle wrote to Mr Stock recommending approval. It is noteworthy that Mr Coyle describes the system in exactly the same terms as he described the original system (“… an emissions reduction system supplied by Eco-Power, comprising a cooled EGR circuit and a combined catalyst and partial flow unit…”), with the following addition:

“This system is a development of Eco-Power’s previous TX1 Euro 2 approval and now uses an Emitec rather than DCL partial filter.”

There is no reference to the change to the recirculation of the exhaust gases (which was the main modification); and again this supports the view that Mr Coyle believed that the system was identical to the original system in every respect except the filter.

The PCO sent an approval to Eco-Power on 11 September. In relation to the modifications made to the original system, this letter again only refers to the change in the filter.

Unhappily, as a result of the failure of the PCO to pass through to EST the information about the modified system that it received on 15 July and/or the misunderstandings between Eco-Power and EST to which I have referred, this approval was based upon, not only the successful test results, but the misapprehension on EST’s part that the system was in engineering terms the same as the original and, in particular, the modified system had an EGR system that recirculated exhaust gases through the combustion chamber. Although passing the functional test was the only criterion for recommendation, had EST appreciated that this system was novel and (in the view of Mr Coyle and Mr Vincent) scientifically implausible, then no doubt they would have played a far more active part in the approval process. At least some of the misunderstandings that clearly occurred may have been avoided. However, that misapprehension was not the result of any attempt on Mr Davies part to mislead. He clearly thought that EST was aware of the nature of the modifications, and was content with them.

As part of their role, when taxis are presented for their annual licence inspection, EST conduct random conformity inspections on emission reduction.

On 23 January 2008, they conducted such an inspection on vehicle registration mark V505 LMX, a TX1-type taxi with a modified Eco-Power system installed. EST saw that the exhaust gases, far from being recirculated through the combustion chamber, were merely being recycled to the exhaust. For the reasons set out above, that came as a surprise to them - and, through the PCO, a letter was written to Mr Davies the following day asking for Eco-Power to make arrangements for that taxi to be presented for inspection and testing on the basis that the owner would be compensated for the loss of the vehicle. Mr Davies readily did so, again evidencing his belief that Eco-Power had obtained approval for the modified system.

Following a meeting, on 6 February Mr Davies sent an email to Mr Stock and Mr Coyle which expressed concern that the taxi owners and fitters of the systems (who were not under Eco-Power’s control) were failing to comply with PCO Notice 54/06 as to the required condition of the vehicle at the time of fitting (see Paragraph 16 above). This was expressed as a general concern, but of course Mr Davies was particularly concerned that if taxi V505 LMX was tested without regard to these requirements it could adversely affect the test result. No response was received to that email until 20 February, when Mr Stock merely said that the points were noted and had been discussed in some detail at their earlier meeting.

However, by 20 February matters had moved forward. The vehicle was tested on 14 February at Millbrook Proving Ground Vehicle Emissions Laboratory (another VCA laboratory), in the presence of engineers from EST and the Freight Transport Association (“the FTA”). It failed to meet the standard for NO_x emissions by a considerable margin, the emissions being 217% of the required limit. When the system was disconnected altogether, the result was slightly lower but not statistically significantly different (207%).

There then followed, if not further misunderstanding, then an unhappy chapter of correspondence between the PCO and Eco-Power.

Mr Stock wrote to Mr Davies with the results of the tests. Mr Stock, no doubt informed by Mr Coyle, was of course of the view that the modified system that had been approved was essentially the same as the original system with a mere change of filter. This letter reflects that: and is based upon the premise that the system found in this vehicle was not in conformity with the system for which (Mr Stock understood) approval had been given. It said:

“… [W]e would ask that you arrange all of the following:

•

Install the EGR system on taxi V505 LMX as per original schematic supplied to EST (EGR to intake manifold)

•

Install replacement or reconditioned injectors on taxi V505 LMX

•

Forward a written report to the PCO detailing the faults found and the actions taken to rectify these faults within 28 days of this letter. Emissions results from a VCA approved test laboratory, the test to be witnessed, should be supplied as proof of rectification.

•

Supply the PCO with registration numbers of all taxis fitted with this non-conforming system and a plan of action to rectify taxis that are in service with this system.”

There is a letter on the file dated 15 February in those terms, followed by:

“Thank you in advance for your cooperation with this matter. Please do not hesitate to contact me should you have any concerns.”

However, it seems that that letter was never sent in that form. It may be that that version was merely a draft. There is another version in broadly similar terms dated 18 February that, from later correspondence, clearly was sent and received. However, that letter, after the list of required action, continued:

“It is imperative that you comply with the requirements listed above in order to avoid my considering the authority for the installation and use of Eco-Power system and draw you [sic] attention to paragraph three of my letter dated 13 June 2003.”

That was a reference to the express reservation by the PCO to “the right to withdraw authority for its installation an use should any undesirable features become evident or are reported.”

I find this letter difficult for two reasons.

First, it appears to misunderstand the limits to the role of Eco-Power as the manufacturer and supplier of the system. Eco-Power was not responsible for fitting the system - yet the letter said:

“The inspection also revealed that the injectors had not been changed recently. I would like to remind you that it is one of the EST certification conditions that the injectors are removed for cleaning or replacement as part of the process of fitting the exhaust after treatment system. This is also one of the specifically mentioned requirements in the “Fitment declaration Sign-Off” sheets as set out in PCO Notice 54/06 issued on 15 November 2006 and supplied to you at the point your system was first approved by this office.”

This was a point made in Mr Davies’ reply in his email of 10 March: whilst Eco-Power nominated fitters, they were appointed by the PCO.

Furthermore, the letter does not say how Eco-Power was meant to have access to the taxi V505 LMX to make the changes suggested. It had been made available for testing because EST had agreed to pay the owner for the loss of road time. The difficulty in accessing the taxi was again a point made by Mr Davies when he responded in his email of 10 March, in which he asked:

“If you require us to carry out further work and testing can you please make a formal request to the taxi owner to take possession of the taxi.”

No reply was received to this email however, before Mr Stock wrote to Mr Davies on 28 March withdrawing the authority to supply emission reduction systems, to which I refer below.

Second, the final paragraph of the 18 February letter as sent refers to the PCO’s power to withdraw authority for a system “should any undesirable features become evident or are reported”. However, the PCO were at that stage in the belief that they had never authorised any Eco-Power system that did not have EGR with recirculation through the combustion chamber - in other words, the system that had appeared on taxi V505 LMX. There was nothing to suggest that the systems that the PCO had understood they had authorised had failed in any way. On the basis of that belief, the correct approach at this stage would have been to have sought an assurance from Eco-Power that they would only supply systems that complied with the approvals that the PCO understood they had made. As it was, elements of the letter were written on the basis that the modified system had never been approved (and therefore seeking compliance with the approvals that had been granted) - whilst the last paragraph appears to have been written on the premise that the September approval was for the modified system, and that approval was in jeopardy because of the adverse test results. In TfL’s response to the proceedings (a letter to the Claimant’s solicitors dated 4 April 2008, at Paragraph 7) their solicitor said that the purpose of this letter was to give Eco-Power an opportunity to show that their modified system “in fact reduced emissions to the required extent”. If that was the letter’s intention, then it was certainly not clear. The form of the letter could only have caused confusion as to what the PCO’s understanding and position actually was.

As I have indicated, Mr Davies responded to the letter of 18 February in his email of 10 March in which, in addition to the points referred to above, he indicated that, in his view, if the injectors had not been replaced, “this would… make the test results totally invalid as the taxi did not meet the PCO requirements prior to the installation of the system.”

Mr Davies did not receive any response to that email before 28 March, when Mr Stock wrote to him withdrawing authority for the installation and use of any Eco-Power systems. Of course, this is the decision letter that Eco-Power seeks to challenge in this judicial review.

Mr Stock said (First Statement 11 April 2008, Paragraph 41) that, by 28 March, he was facing a situation:

“…that a system which was being sold in substantial numbers to taxi drivers appeared (a) not to work and (b) not to conform to the approval which I had granted. I had to bear in mind that the longer the situation was allowed to continue the longer taxi drivers would potentially be prejudiced by buying a system which they would in due course have to replace. That is why I acted as a matter of urgency.”

His letter of 28 March to Mr Davies read as follows:

“This letter is further to my letter dated 18 February 2008 regarding a conformity inspection conducted by [EST] on taxicab registration V505 LMX that was fitted with the Eco-Power emissions reduction equipment and the subsequent further detailed Emissions Conformity Testing. In this letter I have you the opportunity to comply with a list of requirements within 28 days of the letter of the letter. To date there is no record of any action having been taken to remedy the shortcomings of the Eco-Power system fitted to taxi registration V505 LMX.

[EST] has advised me that following careful consideration of a number of aspects of the exhaust after treatment system supplied by Eco-Power for fitment to Euro 2 LTi TX1 taxi models, they have recommended that Eco-Power should be removed from the list of companies eligible to supply exhaust after treatment systems for taxis in support of the Mayor’s Taxi Emission Strategy.

In the light of this recommendation it is with immediate effect that I withdraw authority for the installation and use of any further Eco-Power emission reduction systems. A PCO Notice has been issued to this effect. Please instruct all of your appointed installation agents that as of today, any further systems supplied by Eco-Power shall not be recognised or accepted as complying with EST requirements.

If you wish to challenge the EST recommendation and the PCO’s subsequent withdrawal of approval, you should do so in writing to the Accreditation manager, transport at [EST].”

The terms of this letter require some comment.

On 30 March, Eco-Power sought a without notice injunction to restrain the PCO from withdrawing any of the three approvals granted and to restrain them from publicising any withdrawal, an order granted by Griffith Williams J. These proceedings were formally issued on 2 April.

In the face of proceedings, the Defendants sought to obtain further evidence of the efficacy of the modified system. At Mr Stock’s instigation (First Statement 11 April 2008, Paragraph 52), on 4 April TfL’s solicitors wrote to Eco-Power’s solicitors proposing a re-test on a particular protocol on the basis that, if the vehicle with the modified system passed that test, then the PCO would be prepared to reconsider their decision. That offer met with no positive response from Eco-Power, and the Defendants proceeded to conduct the further test without the Claimant’s cooperation. On 9-11 April, EST organised the further testing of a TX1-type taxi registration mark Y342 HKE fitted with a modified Eco-Power system at the Millbrook Laboratory. In respect of two tests, the vehicle failed to meet the Euro 3 limit for NO_x emissions, the emissions being 212% and 232% of the limit respectively. The tests were witnessed by Mr Geoff Lee of the FTA. Although Eco-Power declined to play a part in the protocol for the tests, Mr Davies attended on 11 April and witnessed the final test.

Before I come on to deal with the legality of the Defendants’ action in relation to this matter, I should first deal with an outstanding issue relating to the 11 September 2008 approval. What system was then approved?

Although I do not consider it is crucial to the determination of this claim and despite the belief of EST that they were recommending a system not dissimilar from the original system in engineering terms (but simply with a different filter), I consider that on an objective basis the approval was in respect of the modified system, i.e. the system with no additional EGR through the combustion chamber, but with exhaust gases being recirculated to the exhaust end of the system. I do so for the following reasons (Paragraphs 60-65 below).

The approval was granted by the PCO. Although they may not have been cognisant of the implications, undoubtedly they were aware that the system for which approval was being sought was the modified system, and not simply an identical system with a different filter. The email from Mr Davies to Mr Stock of 15 July made that abundantly clear.

That information was not passed on to EST, who were under the impression that the system (save for the filter) was identical to the original. That belief resulted from their misunderstanding of the information provided by Mr Davies on 19 August. They considered that was information in relation to the new system for which approval was being sought: it was provided as information on the original system for which approval was given on 16 July. In any event, as a result of this misunderstanding, EST played almost no part in the inspection and testing process for the third approval. They did not, for example, ever inspect the vehicle on which the system was fitted.

The misunderstanding on the part of EST was not engendered or encouraged by Eco-Power. Mr Davies, having sent the email of 15 July to Mr Stock, assumed that EST were aware of the changes in the system as outlined in that email. Despite any naivety on Mr Davies’ part, he did not do anything deliberately, recklessly or even carelessly to encourage such belief.

In particular, I am entirely unconvinced that the August durability and emissions tests were done on a vehicle other than a vehicle fitted with the modified system, as suggested by the Defendants may have been the case. This suggestion is made as the result of photographs purporting to have been taken as part of an inspection on 19 July. These photographs show that the system is one in which there is proper EGR, i.e. recirculation of exhaust gases through the combustion chamber. These photographs are certainly odd. However:

It was submitted by Mr Butler for the Eco-Power that it is likely that these photographs may have been taken at an earlier inspection on 29 June. That may have been the case. Certainly, in the circumstances, it seems to me that the photographs have little evidential weight as to what the vehicle’s emission reduction system was in place at the time of the August tests, compared with the other available evidence. Whilst the Defendants have been careful not to allege fraud at any stage, these photographs are certainly insufficient for me to find that Mr Davies and Eco-Power have committed any form of deception - which would have had to be sophisticated in nature - to ensure that the August tests were in fact performed on a taxi with an unmodified system. They had no motive for doing any such thing, and the evidence points sharply to the contrary. Nor am I persuaded that the vehicle the subject of the tests was unmodified, as the result of any form of mistake.

In any event, there was an inspection of the taxi that was the subject of the tests on 3 August. The report of that refers to “Front EGR hose from EGR tube to exhaust has gone hard and brittle due to excess heat and has split. Recommend a better heat resistant EGR hose” (emphasis added). That is a clear reference to a hose by-passing the combustion chamber and routing back to the exhaust, in the fashion of the modified system. That is cogent evidence that the taxi that was being tested had a modified system fitted.

In all of the circumstances, if I were required to make a finding, I would be satisfied on the balance of probabilities that the vehicle tested in August 2007 as part of the process for the third approval had fitted a modified system, with exhaust gases being recirculated by passing the combustion chamber and back to the exhaust end: and that, neither by accident nor design, were those tests performed on a vehicle with the original system fitted. In any event, in favour of the Claimant I propose to accept that as a premise for the purposes of this judgment.

Following the recent test results referred to in Paragraph 57 above, the PCO (on the advice of EST) reconsidered its decision of 28 March. In Mr Coyle’s view, the test results provide a proper basis for withdrawing the approval (Second Statement 16 April 2008, Paragraph 9). Taking into account Mr Coyle’s opinion, “the recent test results would cause [Mr Stock] to withdraw that approval with immediate effect” (Second Statement 16 April 2008, Paragraph 1). Therefore, on this reconsideration, leaving aside the first and second approvals (which concerned the original unmodified system, and which the Defendants concede should stand: see Paragraph 55(iii) above) and working on the basis that (as I have found) the third approval was in respect of the full modified system, the EST advice is that the approval should be withdrawn and the PCO would propose to follow that advice.

Mr Chamberlain primarily relied upon the decision on this reconsideration on the basis that, even if I were to find that there had been unlawfulness in the manner in which the PCO had come to its decision of 28 March (which of course he did not accept), then if the reconsidered decision were lawful then it could not be in the interests of justice to grant any discretionary remedy. There is considerable force in this submission, and I propose at least to look at the reconsidered decision first.

The decision was made in purported exercise of the reservation in the approval itself, i.e. a reservation of “the right to withdraw authority for its installation and use should any undesirable features become evident or are reported”. The PCO submit that throughout, but particularly in making their recent decision on reconsideration, they have only had a concern about the efficacy of the modified system. I shall return to this submission in due course - but it certainly reflects the simple criteria for approval to which I have referred (see Paragraph 11 above). They no longer rely upon the failure of the system to conform to that approved. For the reasons I have given above, I consider that the system approved in the 11 September approval was the modified system and consequently that this concession is well made. As the only criterion is efficacy, the PCO have relied upon the advice of EST in coming to their decision (as they did when coming to the original decision of 28 March).

The PCO have come to the decision that in relation to the Eco-Power modified system “undesirable features” have become evident in the form of a lack of efficacy, based upon the following evidence (Paragraphs 71-4 below).

The modified system, without any additional EGR through the combustion chamber, is implausible as a matter of science or engineering. Whilst the heating of the diesel may result in some greater efficiency in combustion, EGR relies upon the exhaust gases reducing the temperature in the combustion chamber and thereby reducing the reaction between the oxygen and nitrogen in the combustion chamber, and hence reducing the NO_x emissions. By routing the exhaust gases round the combustion chamber, the technique relied upon by EGR is robbed of efficacy. It is no answer to say that the EGR through the combustion chamber that was part of the manufacturers’ specification is restored. It is the insufficiency of that EGR to reduce emissions to Euro 3 levels that has resulted in the need for modification.

The February test results show that the modified system is ineffective. The results have been criticised by Eco-Power because they were obtained from a vehicle that had not been prepared as it should have been according to PCO Notice 54/06: the prior to the tests, the fuel injectors were not replaced, and the fuel gauge was not recalibrated. Of course, the results of the tests were not marginal - the emissions were over twice the Euro 3 limit - and it was open to EST to take defects such as the failure to change the injectors and recalibrate the fuel gauge into account in assessing the absolute test results. But in any event, in addition to the absolute results on the modified system, a comparative test was performed between the taxi with the modified system and the taxi with no emission-reduction system at all. That comparative test was specifically designed to negate any potential mechanical deficiencies in the vehicle (Mr Coyle First Statement 11 April 2008, Paragraph 21). The test result for the taxi without any system was not statistically different from the result with the modified system in place. That was powerful evidence that the modified system was simply ineffective in reducing NO_x emissions, and was of course consistent with EST’s evaluation of the implausibility of the system on engineering first principles. It was expressly relied upon by Mr Coyle when he wrote to Mr Stock on 26 March recommending that the Eco-Power approvals be withdrawn: and it was consequently in the mind of Mr Stock when he made the initial decision on 28 March (see First Statement 11 April 2008, Paragraph 38). It is clearly something to which both EST and the PCO could properly take into account in considering whether to revoke the approval of the modified system.

The recent April test results appear to confirm the ineffectiveness of the system. Mr Davies sought to undermine the test results in his Third Statement 16 April 2008 supported by the evidence of Mr David Tullett (who was a fitter at the garage that fitted the modified system to taxi Y342 HKE on 9 April). The criticisms are as follows.

EST discounted the results of the tests performed in August for the purposes of obtaining initial approval. Whilst the EST and PCO were concerned with the possibility that the tested vehicle did not have the modified system fitted - a concern reiterated in the recent evidence of Mr Coyle (Second Statement 16 April 2008, Paragraph 9), Mr Vincent (First Statement 11 April 2008, Paragraphs 21-27) and Mr Stock (Second Statement 16 April 2008, Paragraph 1) - EST were also entitled to take into account (i) the scientific implausibility of the modified system being able significantly to reduce NO_x emissions, and (ii) their own inability to replicate the results in the February and April tests. These two factors gave cause to treat the August test results with caution. In any event, whilst the PCO do appear at times to have overconcentrated on the possibility that the August tests had been performed on a vehicle with an unmodified system, the decision on reconsideration appears to have been unaffected by any such consideration. EST have come to a view on the efficacy of the modified system on the basis of the scientific evidence, and consider that, on that evidence, the system does not appear to be effective in reducing NO_x emissions to below the Euro 3 limit. It is, with respect to the submissions made on behalf of the Claimants, clearly a view to which EST could properly come on the technical evidence available. That is the basis of its recommendation for the withdrawal of the approval for the modified system, which itself was the foundation upon which the reconsidered decision to withdraw approval was made by the PCO.

I now turn to deal with the specific grounds relied upon by Eco-Power.

The basis of Eco-Power’s case based on legitimate expectation is summarised in Paragraph 22 of Mr Butler’s Skeleton Argument:

“The Claimant submits that it had a legitimate expectation to the entitlement to sell its modified system, and that the decision to withdraw approval unlawfully defeated this expectation.”

I agree with Mr Chamberlain, that this is not a case of legitimate expectation at all. There was not in this case an unconditional promise to allow Eco-Power to sell its modified system upon which the PCO reneged: rather, there was an approval under Condition 5.4 of the 2002 Conditions given by the PCO to Eco-Power in respect of the modified system, to enable that system to be installed and used on TX1-type taxis. That approval was expressly subject to the right of the PCO “to withdraw authority for its installation and use should any undesirable features become evident or are reported.” This case concerns the question of whether that express right has been lawfully exercised by the PCO. If it has been lawfully exercised, then Eco-Power can have no complaint that they could have legitimately expected anything else.

It is to that issue that I now turn. Eco-Power rely upon the following matters to show that the PCO’s decision to withdraw the approval was irrational.

Eco-Power submit that the blanket withdrawal of approvals was disproportionate, even if the modified system had evidenced undesirable features. For what it is worth, I agree: but that issue was dealt with by the Defendants’ concession in relation to the first and second approvals, recorded above (Paragraph 55(iii)).

For reasons which will be apparent from the above, I do not consider that the PCO’s decision on reconsideration was based upon any mistake of fact that played any material part in their reasoning, within the principles set out in E v The Secretary of State for the Home Department [2004] EWCA 49.

The only procedural point pursued by Eco-Power is that they have never been given an opportunity of making representations in relation to the withdrawal. I accept that the PCO was slow in taking on board points made by Eco-Power in various emails, described above. They appear to have ignored some.

However, during the last two weeks, Eco-Power have had more than adequate opportunity of addressing the real issue in this case, namely the functional adequacy of the modified system. The PCO has made it clear that it is only this issue that has guided its decision on reconsideration, and that is why EST set up the April tests - to provide further evidence as to the efficacy or otherwise of the system. Eco-Power had every opportunity to cooperate in a joint test, or obtain their own evidence as to the efficacy of the modified system if they wished. They have not done so. Whatever the position may have been in the past, Eco-Power have by now had sufficient opportunity to make whatever representations, and submit whatever evidence (including technical evidence, and any test results of its own), upon which they wish to rely. It is simply not arguable that they have been prejudiced in any way by having been given an inadequate opportunity to respond.

That deals with all of the specific grounds relied upon by Eco-Power. In my judgment, for the reasons I have given, I do not find any compelling.

Having considered the background and the evidence relied upon by the PCO in coming to its reconsidered decision, it is difficult to see how the Claimants can properly say the PCO was not entitled to come to the view that “undesirable features” have become evident in the Eco-Power modified system in the form of a lack of efficacy. The PCO based their decision upon the engineering opinion of EST, which was itself based upon test results and other technical evidence that clearly evidenced a lack of efficacy. The lack of scientific plausibility, the comparative tests in February (of the modified system against no system at all), the April test results which appear sound and the fact that the April results more or less replicated the February results produce a compelling overall picture. Of course, I do not have to decide upon the efficacy of Eco-Power’s modified system: but it is difficult to see how I could say that the PCO was not entitled, on that evidence, to have sufficient grounds of concern about the efficacy of that system to withdraw the approval for it. The PCO have acted on the advice of EST - independent expert technical assessors - which they were entitled to do. Eco-Power’s real complaint, is that they do not agree with the conclusions to which EST and, on EST’s technical recommendation, the PCO have come. However, for the reasons I have given, I consider that the PCO made no error of law in coming to their decision on reconsideration, recently made. The Claimant has, in my view, fallen far short of showing any such error of law.

It is unnecessary for me to come to any conclusion on whether the decision of 28 March, without more, would have been a lawful decision. However, in my view, despite the unfortunate aspects of the PCO’s decision making to which I have referred, that decision was nevertheless a lawful one. In coming to that view, I have particularly in mind the letter from Mr Coyle to Mr Stock of 26 March, in which he recommended withdrawal of the approvals. Although Mr Coyle and Mr Vincent appear to have been sceptical about the August test (see Paragraph 74 above), that letter was firmly based upon technical evidence alone and does not mention the 19 July 2007 inspection at all. At that time, EST had sufficient technical evidence - as I have described above, and as set out in Mr Coyle’s letter of 26 March - to give them genuine concerns about the efficacy of the modified system. On the basis of that technical evidence, EST recommended the withdrawal of the 11 September approval - which the PCO accepted. As I have indicated, the PCO were entitled to rely upon the evidence of EST. Had it been necessary for me to have decided the point, I would have found the decision of 28 March to be a lawful one.

However, for the reasons I have given, it is clearer still that the decision of the PCO on reconsideration was lawful: and, as Mr Chamberlain submitted, if that decision is lawful then the Court would be all but bound to exercise its discretion against granting relief to the Claimants in respect of any illegality in the 28 March decision. Certainly, in the circumstances of this case, I would exercise my discretion thus.

That leaves the question of relief. Given the submissions made on behalf of Eco-Power, I cannot say that the claim was unarguable, and I shall formally give permission to judicially review. On the substantive claim, whilst the claim essentially fails, I will hear submissions on the appropriate relief in respect of the first and second approvals, if that cannot be agreed. It may be that the position with regard to those approvals can be dealt with by an undertaking from the PCO that those approvals will continue. In relation to the third approval, I shall dismiss the claim, and hear submissions in relation to consequential orders, including discharge of the injunction against publicising the approval withdrawal and costs.

Finally, may I thank the legal representatives of all parties. I well appreciate that this claim has been brought with considerable urgency and speed, and I can only commend the preparation of the parties which has made my task easier than it otherwise might have been.