The Buying and Selling of Carriers Licences
Page 39
If you've noticed an error in this article please click here to report it so we can fix it.
LICENSING CASEBOOK
BY NORMAN H. TILSLEY
'They are not negotiable assets '—Mr. Muir THE Metropolitan Licensing Authority, Mr. D. I. R. Muir, has again spoken Out against the purported sale of goods licences; but I, for one, am not sure that his advice—sound in all respects and aimed at helping established operators and newcomers to the industry alike—will be taken too seriously by
the people it is aimed at.
Mr. Muir has for a long time been campaigning against trafficking in licences. Not so long ago in these columns I highlighted a case in which a Smalffield widow, a Mrs. Charman, had her licence revoked, and two other people consequently lost their savings, because they were under the erroneous impression that licences can be sold or transferred. I commented then that the whole unfortunate affair would not have happened "had Mrs. Charman or her solicitor sought the advice of either the Licensing Authority or, better still, an experienced road transport lawyer ". • Last month Mr. Muir announced that he proposed to take a stronger line to stamp out licence trafficking. He proposed in future, he said, to publish and list for public inquiry all applications in his area which gave rise to suspicion that a licence might have been sold: He stated this during an inquiry, to which he invited the Press, into applications by two operators who told him that they were quite prepared to pay £200 for B licences. In one case—that of Mr. Nicholas Taafe of Chalfont St. Giles, who was buying a business with vehicles to carry coke for the Eastern Gas Board —a firm of chartered accountants reporting on the business that Mr. Taafe was proposing to purchase had actually stated that: "the B licence of the vendor would be well worth f_200 since they (B licences) are in demand and are also difficult to obtain ".
In view of this, it is not surprising that Mr. Taafe, asked by Mr. Muir why he thought he had to pay £200 for a new licence, replied: "I consider it is well worth it because an application can be -turned down ".
Mi. Taafe did not seem the least put out by Mr. Muir's remark that in the four years that he had been Licensing Authority, he had never known an application for a B licence to carry coke in sacks for the Gas Board ever to be refused. Instead, Mr. Taafe went on to explain that the E200 was not merely for the licence but was for the contract between the Gas Board and the vendor.
When asked by Mr. Muir what would be the objection to applying for a licence, supported by the Gas Board, Mr. Taafe said: "They would not support me because they considered the haulage was well sewn up". The Gas Board would only support him, apparently, if he " took up" the vendor's contract.
In reply to Mr. Muir's question "Why should the vendor benefit by £200 ", Mr. Taafe said that he "did not look at it that way ".
The second operator, Mr. W. Stokes of Luton, also admitted that he was paying £200 for a contract and a B licence. He thought that licences were transferable from vendor to buyer.
As reported in The Commercial Motor on April 26, Mr. Muir granted the two applications. In a long statement he made it clear that, so far as he was concerned, the licensing system did not work against the small man in favour of the "big guns" in the business, as was often suggested. Nevertheless, the small operator was too often at a serious disadvantage because he sought, obtained and acted on, advice from sources which were manifestly incompetent.
"Licences are not for sale, and anyone who advised in a contrary sense was either acting in good faith in ignorance of the law, or was giving wrong advice presumably with -dishonest intentions ", he continued.
He also made it clear that where an established business was taken over and payment made for vehicles and goodwill, both parties ought clearly to understand that the licences were not negotiable assets and did not form part of the goodwill. He had heard it argued that in practice it was difficult, if not impossible, to value the goodwill of a business separately from the right to carry it on. This was a fallacious doctrine.
Mr. Muir said he was satisfied that small operators were misled into paying inflated sums for " goodwill", believing that the only safe way to expand their business was to take over a business which another haulier wished to sell. They were told that this was the way to avoid the need to come to an inquiry and face objectors.
Of course, Mr. Muir's words are meant to encourage hauliers, or prospective hauliers, to " have a go" in the courts. But who can blame the small man in particular—or his larger counterpart, for that matter—from shying away from the courts where he is more than likely to meet objections from the Railways, British Road Services and independent operators who, understandably, cannot themselves risk losing even the smallest amount of traffic?
For the newcomer, or the smaller haulier, such advertisements as are often to be seen for the sale of an A or B licence (I have actually seen a Contract A licence offered) must hold an attraction. and it is well known that licences have a market value which varies according to the commodities that can be carried and the radius over which the holder can operate.
For these reasons, Mr. Muir's statement may fall upon deaf ears. But his plea to the haulage industry to assist him in weeding out applications for takeovers which are not genuine, must be heeded.
The danger in the selling and buying of licences is twofold. Where no genuine business exists, an established operator holding a licence with a similar user to the " licence " that is offered for sale, can integrate the vehicles he purchases with his own fleet, and inevitably his competitors will feel the pinch of the extra vehicles. Alternatively, a newcomer can enter the industry without the necessary stringent tests which are applied to newcomers, who may, by cheaper rates, etc., take business from existing hauliers.
Section 173 (1) (c) of the 1-960 Act permits a Licensing Authority to determine applications without publication in part I of "Applications and Decisions ", and many applications are in fact dealt with in this way, subject to the submission of documentary evidence which is prima facie satisfactory. Mr. Muir cannot investigate the bona fides of all such applications; but where he is in doubt, he proposes to publish applications in the hope that when responsible hauliers see such applications which they know concern non-existent or moribund businesses, they will exercise their statutory rights of objection and thus prevent misuse of the licensing system.
To me, section 173 contains a small loophole in the licensing system. Hauliers, not only in the Metropolitan Area, but in all areas, should in their own interests investigate all applications and lodge objections if they know that there is no business to be taken over, or a licence is not being operated.