CONTRACT LICENSING PR( EDURE IS TIGHTENED UP
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Sergeant Appeal Fails. Licensing Authorities to Examine Circumstances of Contracts. Refusal of Fuel a Good Ground for Rejecting Application
THE Appeal Tribunal's decision in the Sergeant case, which has just been released, is likely to cause a marked change in the -attitude of the Licensing Authorities towards the granting of Contract A licences. The Tribunal states that a Licensing Authority should not -rely chiefly on his knowledge or judgment of an applicant's character -or reputation, but should -examine the circumstances of a -contract, as well as its terms as to the work to be done under it. He may also consider whether the -customer is " responsible " and is under an obligation -to employ the vehicle. Indirect hints on the framing of contracts are given.
A Licensing Authority is 'held to be justified in finding -that the vehicles forming the subject of an application for a Contract A licence would not be used exclusively for the purposes of the contract, if he had decided, as Regional Transport Conunissioner, not to grant the necessary fuel. Although the question of rates does not enter directly into the matter, it could not be contended, says the Tribunal, that a contract would probably be performed if the rates were so low that vehicles could not be maintained and operated.
QUESTIONS of principle, some of which were raised in an appeal in 1937 by Edwin Clark against a decision of the Metropolitan Licensing Authority (then Mr. Gleeson E. Robinson, who is now chairman of the Appeal Tribunal), arose in the appeal of Mr. Harold Sergeant, of •Rogerstone, Mon.. against the South Wales AttthoritY's refilsal to grant a Contract A licence for 10 vehicles (including three to be acqUir.ed). The vehicles were to be used :under contract to the Northern Alurniniorn Ca.. Ltd.. for which concern Mr. Sergeant was already carrying goods, .chiefly to London and the Midlands. The traffic wassubstantially "one-way."
Representations by Associations Because of the importance of the case, the Tribunal invited representations from the Road -Haulage Association, the Traders' Co-ordinating Committee on Transport, the Railway Executive, the Road Transport Executive, Northern Ala-Minium Co., Ltd., and from -eight local operators who had hitherto worked for that concern.
The Licensing Authority held a public inquiry to consider the application, and had, in fact, conducted -public inquiries in many such cases, because of a substantial increase in the rramber of applications -for Contract A licences. He said that he regarded this development as likely to cause wasteful competition.
The Tribunal emphasizes that a Licensing Authority is not entitled to exercise any discretion as to the need for additional transport, once he is satisfied that an application for a Contract A licence complies with the . provisions of Section 7 (1) of the Road and Rail Traffic Act, 1933. The appeal was considered on that basis alone.
in his decision, the Licensing Authority explained that he refused the licence on the same general grounds as had been stated by the Metropolitan Licensing Authority in Clark's application in 14,37, namely, that he was not satisfied on the evidence before him that it was -an application which he
ought to grant. Although the Metropolitan Authority's decision, at that time, was reversed by the Appeal Tribunal, the South Wales Authority still held that the Metropolitan Authority was correct.
As already reported in "The -Commercial Motor," the South Wales Licensing Authority maintained that, as in the capacity of Regional Transport Commissioner he had decided that he ,cotild not 'issue fuel coupons for the work, he could not, as Licensing Authority, grant the licence. He thought that to grant a licence and then refuse the fuel would tend to bring the administration of the 1933 Act and the fuel-rationing system into public disrepute, and possibly ridicule.
He added that the position would
have been just the same if the Licensing Authority had been a -different person
from -the officer 'who had jurisdiction
to want fuel. Moreover, he said:— " From the evidence before me I am satisfied that if I granted this applica-don, the road hauliers concerned, who would be losing a large proportion of their work, would seek, and would be entitled to seek, other wodlc which -they would probably obtain in the lucidity, and would be entitled to an issue of fuel for that -purpose, in addition to which the work which is now done by them on the return journeys would have to be done by other operators, as would -not be able to do it. and it might well be that -additional fuel would have to be granted for that purpose.
Power to Graut Fuel
in its decision, the Tribunal makes no statement as to the jurisdiction of the Regional Transport Commissioner to authorize or refuse issues of fuel coupons, but attaches a five-page appendix which sets out the procedure in the granting or refusing of fuel coupons and the reasons for refusal in this particular case.
What the Tribunal had to decide was whether, having regard to his refusal as Regional Transport Consmissionts. to authorize fuel, the Licensing Authority could say that he was not satisfied that the fuel would be allocated, and whether, if that was so, he would be justified under Section 7 PO of the 1933 Act in refusing a grant a Contract A licence.
Section 7 (1) states:—
" If, on an application for an A licence, the applicant satisfies the Licensing Authority that any of the authorized vehicles will be used exclusively for the purpose of a contract entered into by -the applicant with a person carrying on a trade -or business loot being the business of carrying or arranging for the carrying -of 'goods) for the carriage of goods for or in connection with that trade -or -business during -any continuous period of not less than one year, the Licensing Authority shall, unless he is satisfied that, having regard to the previous conduci. of the applicant in the capacity of .a carrier of goods, he is not a -fit person to receive a licence. grant the application so far as regards those vehicles, subject to conditions for securing that those vehicles shall be used exclusively -for the purpose of the contract and shall at the termination of the contract cease to be authorized vehicles unless the Licensing Authority -on an application made to him with respect thereto 'otherwise directs."
"Used Exclusively"
In Clark's appeal, the Tribunal maintained that the words "used exclusively" must have the same meaning in their various contexts in Section 7(1). The Licensing -Authority, however, had held that, when used towards the end of the section, the words must be regarded -as -having a negative sense, namely, that the vehicles should not be used except for the purpose of a contract. Earlier in the section, on the other hand, they had a positive meaning, and implied that -the vehicles would actually have to be used or set aside under the contract, and the Licensing Authority would have to be satisfied that this was so. The South Wales Authority took this view in the Sergeant Case.
During the hearing of the appeal, Mr. Samuel-Gibbon, far the appellant. -argued that "used exclusively" meant "will be used only far." There was, be -said, no -requirement that an applicant should satisfy the Licensing Authority as to any future use. An applicant was required merely to satisfy hina of the -form that future use would take under a contractual obligation. , Mr. Norman Letts, for the R.H.A., held that it was necessary to satisfy the Licensing Authority that the vehicle would actually be used, and that refusal to grant fuel prevented that intention from being carried out.
Commenting on Mr. Letts's argument; the Tribunal says that it might be desirable to grant a Contract A licence in circumstances requiring that a vehicle should be set aside for an
emergency, such as to carry life-saving apparatus. In such -a case the nature
of the work :would recanire the exclusive use of the vehicle, although the eventuality might never arise.
Mr. Stockdale, for the sRailway Executive and the R.T.E., ask-ed either that the decision in Clark's case should be reversed or that the Tribunal should explain its decision in such a way as to ensure that Contract A licences should, in future, be granted only to meet the legitimate needs which, he contended, were contemplated when Section 7 (I) was drafted.
Counsel said that the British Transport Commission wished to assume with confidence, after the "appointed day," when Contract A licensees applied for permits to carry beyond 25 miles, that the licences had been granted to meet only the legitimate needs of industry.
It cannot be doubted," says the Tribunal, "that the provisions of Section 7 (1) of the Act must have been intended to ensure that . . vehicles should not be authorized to carry goods for hire or reward except in accordance with quite definite and strict provisions governing the grant of licences . . and it would be quite contrary to the whole purpose of the Act if licences could be acquired under Section 7 (I) without adequate safeguards. . . .
Insufficient Protection
"The imposition of a condition to be attached to Contract A licences could not, however, be regarded as sufficient protection. A great part of the mischief would have been done when the time came to punish or apply sanctions for the breach of the condition. Although statutory conditions are attached to all carriers' licences (Section 8), this is the only case in which the Licensing Authority is required to be satisfied that a condition will be carried out before he grants a licence."
ln the Tribunal's opinion, contracts contemplated when the 1933 Act was passed would have been 'entered into for the genuine etnployment of vehicles with proper safeguards for their economic use. They were not contracts of the later type "entered into as a means for getting the grant of a Contract A licence to provide an excuse
for the vehicle being on the road, as has happened only too frequently since
the 1933 Act came into force and carriers' licences became such valuable acquisitions."
Pointing out that legal arguments on the words "used exclusively " had hitherto seemed to have obscured the importance of the evidence on which a Licensing Authority should be satisfied. the Tribunal declares that the nature of the contract is really the vital consideration in applying the section.
After stating that experience of the operation of the Act had now shown the importance of the evidence to be produced, the decision says: "The Tribunal cannot take the view that it is in the interests of the public, or of transport operators, or of industry that a Licensing Authority should be limited in the carrying out of his duty to attempting, merely from his knowledge of any one of the many thousand operators or new applicants in his area, to decide whether he is satisfied that the particular applicant will be likely to observe apd carry out the condition that the vehicles will be used for no other purpose. It would lead to most undesirable consequences if, merely on such grounds, Licensing Authorities were to decide beforehand which licence-holders would or would not be likely to comply with a condition."
Temptation to Break the Law
Referring to the temptations of some Contract A licensees to operate outside the terms of their licences, because their contracts afforded them no security, the Tribunal says that "during the years 1937-39 there was in some Traffic Areas a considerable substratum of such illegal operators." Offences were difficult to detect.
"The most distressing aspect of these cases," says the Tribunal, "has been the proof that a large number of lawbreakers have been created. Such laws are virtually unenforceable because they appear to those concerned to be unjust: The fault, however, is not, in this case, in the law, but in its administration."
In the interests of operators, the Tribunal lays down, a Licensing Authority should look chiefly at the contract and all the circumstances, and not rely solely, or even mainly, on his knowledge or judgment of an applicant's character or reputation. In deciding whether vehicles will be used only for the purposes of the contract, it may be necessary to consider not only the written terms as to work, but also whether the customer is "responsible" and is under any obligation to employ the vehicle.
A Licensing Authority might feel that he could not be reasonably satisfied where a contract was so worded that the employer (1) was under no obligation to employ the vehicle, or (2) was obliged to employ it only if there was more work than his own vehicle could do, or (3) could cancel the contract if he found there was insufficient work, or because for some reason it was economic to do so, or (4) need employ the vehicle only during certain seasons.
The mere fact that a vehicle would be used only seasonally would not matter if the terms of the contract, as to payment during the continuous period of a year, were such that an operator would not be forced. or seriously tempted, to seek work outside.
The Tribunal points out that where traffic is generally in only one direction, a vehicle operated under Contract A licence must frequently return empty. If the operator received regular payment covering the cost of the journey in both directions, there was no real danger of illegal operation, "except by an operator of vicious temperament." The mere fact that operation with loads in only one direction might be wasteful would not concern the Licensing Authority in that capacity, although as Regional Transport Commissioner he might decide that petrol would be wasted and should not therefore be authorized.
If the contract provided for payment to cover the cost in only one direction, it might be impossible to keep the vehicle going without working illegally, or the temptation to do so might be so great that the Licensing Authority would feel that it would not be resisted.
"A Licensing Authority would not be justified in refusing a Contract A licence merely because the rates and charges to be paid for hire of the vehicles would be inadequate or cause wasteful competition," says the Tribunal: "but, on the other hand, if the rates and charges were so inadequate that the vehicles actually could not be maintained and operated, it could not be contended that the contract was one which would probably be performed."
Applying to the present case the principles enunciated, the Tribunal says that the terms of the contract were such that the Licensing Authority might reasonably have been satisfied that the vehicles would be used exclusively for work tinder it. Nevertheless, if he looked at the circumstances, which were that the Regional Transport Commissioner had decided not to authorize fuel for work under a contract with 'the Northern Aluminium Co., Ltd., he was justified in finding, as Licensing Authority, that he was not satisfied that the vehicles would be used exclusively under contract.
Why Such Persistence ?
"Moreover," the Tribunal continues, "a Licensing Authority might well ask himself . . . why an appellant still pressed for a licence when he had been refused fuel to use the vehicles in accordance with the licence. The Tribunal cannot . . decide that the Licensing Authority was satisfied, nor can they . . . decide that he ought to have been satisfied. The Tribunal themselves are not satisfied."
The Tribunal makes it clear that there is no suggestion that Mr. Sergeant might have operated outside the terms of his licence, and that there is no reflection on the Northern Aluminium Co., Ltd.
The appeal has been dismissed without costs.