No Mandatory Principal Hire Contract: Supreme Court Clarifies Operator Liability under the Local Government (Miscellaneous Provisions) Act 1976

Introduction

Delta Merseyside Ltd & Anor v Uber Britannia Ltd ([2025] UKSC 31) presented the United Kingdom Supreme Court with a pivotal question about the nature of “accepting a booking” for private hire vehicles (PHVs) outside London. Uber Britannia Ltd (UBL) argued that Part II of the Local Government (Miscellaneous Provisions) Act 1976 (“the 1976 Act”) requires any licensed operator, at the moment of acceptance, to enter as principal into an immediate contract of hire with the passenger (the so-called “hire-contract model”). Delta Merseyside Ltd (DELTA) and Veezu Holdings Ltd (Veezu) contended that the Act allows alternative arrangements—most notably the traditional “agency” and “intermediary” models—under which the operator assumes no immediate contractual liability to provide the journey.

The stakes were high: a ruling for Uber would effectively outlaw long-established business models used by hundreds of regional dispatch firms, transform operator-passenger relations, and potentially increase consumer remedies when journeys fail to materialise. A ruling against Uber would entrench commercial flexibility but leave passenger protection primarily to licensing conditions rather than to implied contractual duties. Lord Briggs (giving the sole reasoned judgment with which the other Justices concurred) dismissed Uber’s appeal and thereby confirmed that the 1976 Act imposes no statutory obligation on PHV operators to contract as principals upon accepting bookings.

Summary of the Judgment

• The Court of Appeal’s decision in favour of DELTA and Veezu is affirmed; Uber’s appeal is dismissed.
• Section 56(1) of the 1976 Act is a deeming provision designed to impose liability only when a hire contract in fact comes into existence; it does not prescribe that a hire contract must arise at the moment of booking.
• Nothing in the text, structure or purpose of the 1976 Act restricts operators to the hire-contract model. The agency and intermediary models remain lawful.
• The court cautions against reading London-specific regulatory language (under the Private Hire Vehicles (London) Act 1998) across to the 1976 Act.
• Section 55A, inserted in 2015 to liberalise “sub-contracting”, confirms—rather than undermines—the plurality of permissible business models.

Analysis

A. Precedents Cited and Their Influence

1. R (United Trade Action Group Ltd) v Transport for London [2021] EWHC 3290 (Admin)
   • Divisional Court held that under the London regime an operator must contract as principal.
   • Supreme Court stresses that decision is non-binding for the 1976 Act and rests on materially different wording.
2. Uber BV v Aslam [2021] UKSC 5
   • Lord Leggatt’s dicta on principal contracting influenced the London case but are treated here as contextual, not determinative.
3. Milton Keynes Council v Skyline Taxis [2017] EWHC 2794 (Admin)
   • Clarified that “operate” in s.80 means “to make provision for the invitation or acceptance of bookings”. Supreme Court adopts this narrow statutory definition.
4. Fowler v Revenue and Customs [2020] UKSC 22
   • Cited for principles on interpreting deeming provisions—though parties agreed s.56(1) creates “real-world” liability, avoiding deep recourse to Fowler.

B. Legal Reasoning

1. Statutory Text and Structure
   • Part II establishes a “triple-lock” licensing system (vehicle, driver, operator).
   • Beyond record-keeping (s.56(2)-(4)) and liability deeming (s.56(1)), the Act is silent on the form of the operator–customer relationship.
   • Had Parliament intended a mandatory hire contract it could have said so explicitly.
2. Function of Section 56(1)
   • It captures operator liability when a hire contract is formed—regardless of whether that contract arose through agency, intermediary, or hire-contract model.
   • Reading an implicit prohibition into s.56(1) would render the deeming provision otiose, contrary to orthodox canons of construction.
3. Historical and Practical Context
   • In 1976 Parliament legislated against a backdrop of varied industry practices.
   • The continued prevalence of agency/intermediary models for almost 50 years without impugnement evidences a settled interpretation.
4. Section 55A “Sub-Contracting”
   • Inserted later to liberalise cross-border dispatching; its permissive language cannot be used to read in previously non-existent restrictions.
   • “Sub-contract” is used colloquially, not in its strict legal sense; thus it provides no foundation for Uber’s claim.
5. Purposive Considerations
   • Passenger safety is secured primarily through licensing conditions, fitness assessments, and criminal sanctions—not through mandating contract forms.
   • Any restriction on commercial freedom demands clear textual warrant, which is absent.

C. Impact on Future Cases and the PHV Industry

• Regulatory Clarity: Confirms that outside London operators remain free to choose between agency, intermediary, hire-contract, or hybrid models, provided they hold requisite licences and comply with record-keeping.
• Local Authority Powers: Licensing authorities may still impose tighter conditions by licence; the judgment merely states that Parliament did not mandate such conditions nationally.
• Litigation Trajectory: Shields regional operators from claims that their business models are ipso facto unlawful, but leaves scope for private claims (e.g., for breach of contract or negligence) in specific factual scenarios.
• Legislative Prompt: If policymakers wish to harmonise booking obligations nationwide, primary legislation—rather than creative statutory construction—will be required.
• Digital Platforms: Confirms that app-based operators (including Uber) may adopt different contracting structures in different jurisdictions, emphasising the need for careful compliance mapping.

Complex Concepts Simplified

PHV (Private Hire Vehicle)

A vehicle that cannot “ply for hire” on the street but must be pre-booked through a licensed operator.

Operator

Under s.80, one who “makes provision for the invitation or acceptance of bookings.” Crucially, the operator may or may not own vehicles or employ drivers.

Agency Model

Operator accepts booking as agent for a driver; driver and passenger contract directly, and operator bears no personal liability at common law.

Intermediary Model

Operator promises only to endeavour to supply a vehicle; actual hire contract is formed later (if at all) between driver and passenger.

Hire-Contract Model

Operator contracts as principal with passenger at the moment of booking, becoming primarily liable for the journey.

Deeming Provision

A statutory fiction that treats a situation as existing (or a person as liable) for specified purposes, regardless of actual legal relationships.

Sub-Operating / Sub-Contracting (s.55A)

Where Operator A, having accepted a booking, passes it to Operator B (possibly in another district) to fulfil the journey. The 2015 amendment permits this cross-border.

Conclusion

The Supreme Court’s decision in Delta Merseyside v Uber Britannia restores certainty to the private-hire market outside London. By holding that the 1976 Act contains no hidden prohibition on agency or intermediary booking models, the Court reaffirms: (1) a strict textual approach to statutory construction; (2) the limited—yet potent—role of s.56(1) as a deeming mechanism; and (3) the freedom of operators, drivers and passengers to configure their contractual arrangements, subject always to the licensing “triple lock.” The ruling confines the London-specific principal contracting duty to its own legislative framework and signals that broader consumer-protection ambitions must be pursued through explicit legislative reform, not judicial implication. For practitioners, licensing authorities and platform providers alike, the message is clear: compliance with the 1976 Act requires careful licensing and record-keeping, but not a particular contracting template at the point of booking.