Factual and Procedural Background
The claimants, referred to as "Uber" and "Delta", are providers of private hire vehicles (PHVs). The defendant, "KMBC", is the local authority for the controlled district of Knowsley in Merseyside. KMBC adopted a policy in March 2017 requiring PHV driver licence applicants to commit to predominantly driving within Knowsley. This policy was introduced in response to concerns that drivers were obtaining licences from KMBC without intending to operate mainly within the area. Uber and Delta, both holding operator licences from KMBC and other authorities, challenged this policy by judicial review, seeking to quash it. The policy included a declaration that applicants must sign, affirming their intention to work predominantly in Knowsley, with consequences including licence review or revocation if breached.
KMBC had suspended consideration of PHV driver licence applications in early 2017 due to increased demand and later lifted the suspension with the new declaration requirement. A consultation was held in February 2017, followed by a licensing committee meeting in March 2017, where the policy was adopted. The policy stated that licences would not be granted or could be revoked if the driver did not intend to operate predominantly within Knowsley, with limited exceptions for "exceptional circumstances".
The statutory framework governing PHVs includes the Local Government (Miscellaneous Provisions) Act 1976 ("the 1976 Act"), which requires separate licences for vehicle, driver, and operator, all issued by the same local authority for the controlled district where the PHV is used. There is an acknowledged "right to roam" allowing PHVs licensed in one district to operate in others. The policy challenged here sought to restrict this by focusing on the predominant area of operation.
Legal Issues Presented
- Whether KMBC's policy, which treats a lack of intention to work predominantly in Knowsley as evidence that a driver is not a "fit and proper person" to hold a licence under the 1976 Act, is lawful.
- Whether the intended location of operation is a material consideration in determining the fitness to hold a PHV driver's licence.
- Whether the policy is sufficiently clear and certain to be enforceable.
- Whether the policy unlawfully infringes the freedom of establishment under Article 49 of the Treaty on the Functioning of the European Union (TFEU).
Arguments of the Parties
Appellants' Arguments (Uber and Delta)
- The "fit and proper person" test relates solely to the personal qualities and professional qualifications of the individual, not to their intended work location or lifestyle choices.
- KMBC has no discretion to withhold a licence from a person who is found to be fit and proper.
- The policy improperly pressures drivers to restrict their lawful "right to roam" under the statutory scheme.
- The policy is vague, lacking clarity on how "predominantly" is to be measured (mileage, time, or other criteria).
- The policy unlawfully restricts freedom of establishment under EU law by imposing disproportionate burdens on licence applicants.
Respondent's Arguments (KMBC)
- The "fit and proper person" test can include considerations beyond personal qualities, depending on context, including the applicant's intended area of operation.
- Localised governance is central to the 1976 Act, justifying the policy's focus on the predominant operating area to maintain local control.
- Cases in other licensing contexts support consideration of factors beyond personal qualities, such as premises tenure or control.
- The policy is consistent with the inherently local nature of PHV licensing and the need for operators and drivers to be visible and accountable locally.
- While the policy's drafting could be improved, the concept of predominance is understood and accepted by operators like Delta.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Newcastle City Council v Berwick-upon-Tweed Borough Council [2009] RTR 34 |
Discretion under section 37 of the Town Police Clauses Act 1847 to refuse licences where drivers intend to operate unregulated outside the licensed area. |
Referenced to illustrate the difficulties of regulating cross-district PHV operations and the local authority's concerns about control. |
| Shanks v North Tyneside Borough Council [2001] LLR 706 |
Operator may use vehicles inside and outside their licensed area; lawful to operate beyond the licensing district. |
Accepted as correct that operators and drivers can operate beyond the licensing area, supporting the "right to roam". |
| Blue Line Taxis (Newcastle) Limited v Newcastle City Council [2013] RTR 8 |
PHV licensing regime is inherently local; operators must be based in and operate within the licensing area. |
Considered but questioned by the court regarding statutory requirements for physical premises and true locality. |
| Windsor and Maidenhead Royal Borough Council v Khan [1994] RTR 87 |
Supports local nature of licensing and operator restrictions. |
Referenced as part of the legal context for localised licensing. |
| Dittah v Birmingham City Council [1993] RTR 356 |
Operator requires a licence from the area where they intend to operate; must operate vehicles and drivers licensed by that district. |
Accepted as part of the statutory interpretation supporting local licensing. |
| McCool v Rushcliffe Borough Council [1998] 3 All ER 889 |
Fit and proper person test concerns personal qualities and professional qualifications. |
Relied on by appellants to argue the policy misapplies the test by including intended work location. |
| Leeds City Council v Hussain [2002] EWHC 1145 (Admin) |
Reinforces focus on personal qualities in fit and proper person test. |
Supports appellants' argument limiting the scope of the fitness test. |
| R v Warrington Crown Court, ex p RBNB [2002] 1 WLR 1954 |
Fit and proper person test is context-dependent but primarily about personal characteristics. |
Considered by the court in assessing the scope of the fitness test. |
| Congreve v Home Office [1976] QB 629 |
Government cannot unlawfully deter lawful behaviour by imposing improper conditions. |
Invoked by appellants to argue that the policy unlawfully restricts drivers' lawful rights. |
| Darlington Borough Council v Kaye [2005] RTR 14 |
Local authority may adopt policies to assess fitness and propriety including relevant criteria. |
Relied on by KMBC to support policy adoption for fitness assessment. |
| R v Newington Licensing Justices [1948] 1 KB 681 |
Fit and proper person test can include consideration of premises tenure in specific licences. |
Distinguished by the court as relating to specific licences, not generic driver licences. |
| R v Preston Crown Court, ex p Cooper (unreported) |
Fitness can be affected by control or influence over licence holders in specific contexts. |
Also distinguished as not applicable to generic driver licences. |
| R (Uber London Limited) v Transport for London [2017] EWHC 435 (Admin) |
Application of proportionality in restricting freedom of establishment under EU law. |
Referenced to frame the proportionality argument regarding the policy's impact on freedom of establishment. |
| R (Lumsdon) v Legal Services Board [2016] AC 697 |
Principles of proportionality and legitimate aim in restricting freedoms under EU law. |
Applied in context of proportionality analysis of the policy. |
Court's Reasoning and Analysis
The court analysed the statutory framework governing PHV licensing, emphasising that the "fit and proper person" test under section 51 of the 1976 Act is a mandatory threshold based on personal qualities and professional qualifications, not on the applicant's intended work location or lifestyle. The court rejected KMBC's position that discretion exists to withhold licences from fit and proper applicants based on their willingness to work predominantly in Knowsley.
The court acknowledged the localised nature of the licensing regime but found no statutory basis for restricting the "fit and proper" assessment by intended operating location. It distinguished cases cited by KMBC relating to specific licences (e.g., premises licences) where location may be relevant, noting that a PHV driver's licence is generic and permits operation anywhere within the controlled district, subject to the "trinity of licences".
The court accepted the existence of a lawful "right to roam" allowing drivers and vehicles licensed in one district to operate in others, and concluded that KMBC's policy unlawfully attempts to curtail this right by imposing a predominance requirement as a condition of fitness.
Regarding the policy's vagueness, the court sympathised with concerns about uncertainty but did not find it necessary to decide definitively on that point. Similarly, while the policy arguably imposed a disproportionate restriction on freedom of establishment under EU law, the court did not decide on proportionality since the policy was already unlawful on primary grounds.
The court noted that while the policy was unlawful, it did not preclude the possibility that KMBC could impose lawful, narrowly defined, and proportionate conditions on licences in future litigation, but expressed no view on such hypothetical conditions in this case.
Holding and Implications
The court QUASHED the entire KMBC policy document, including provisions relating to new applications, renewals, and revocations, on the basis that it unlawfully treats the absence of an intention to work predominantly in Knowsley as evidence that a driver is not a "fit and proper person" under the 1976 Act.
The direct effect is that KMBC's policy cannot be enforced and licence applicants cannot be required to commit to working predominantly within Knowsley as a condition of fitness. The decision does not set new precedent beyond confirming the proper scope of the "fit and proper person" test and the statutory "right to roam". The court refrained from ruling on the potential lawfulness of future narrowly tailored conditions restricting operating areas.