Licence "Transfers": The Act Misinterpreted?
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OPERATORS are becoming increasingly dissatisfied with the administration of Section 11 (3) (b) of the Road and Rail Traffic Act, concerning the " transfer " of haulage licences. The protests are being led by the Commercial Motor Users Association's Manchester area, which, through its goods-vehicle-licensing scheme, is in close touch with all phases of licensing matters, Section 11 requires the Licensing Authorities to publish applications for licences or variations and to hear objections, except in the following :three specific instances, under Subsection 3:—
(a) An application which the Licensing Authority is bound to grant; (b) an application for a licence to expire not later than an existing licence under . which the vehicles to which the application relates are authorized to be used for the purposes of a business which the applicant has acquired or intends to acquire; and (c) an appliration as respects which the Licensing Authority is of opinion that, having regard to its ; trivial character, it is not necessary that any opportunity should be given for objection.
Under Subsection 5, the Licensing Authority is given power to "hold such inquiries as he thinks necessary for the proper exercise of his functions under this Act."
Confidential Details Divulged.
The principal complaint is that, although the Act recognizes that the sale of a business is a private matter, the Licensing Authorities are making a practice of publishing applications under Section 11 (3) (b) and of holding inquiries into them, and are, in some instances, actually hearing objections. Prices paid for undertakings and other confidentiat details are being divulged. It is maintained that the Authorities are thus acting outside their powers and the issue is shortly to be raised strongly on appeal.
Let us examine the terms and intentions of Section 11 (3), in conjunction with the Appeal Tribunal's decision on the appeal of the Boston Haulage Co , Ltd., against the refusal of the East Midland Licensing Authority to allow that concern to take over a business.
In order to qualify for the privileges (if any) granted under Section 11 (3) (h), an applicant must satisfy the Licensing Authority that the sale of the business is genuine. For this purpose, the furnishing of a copy of the agreement to the Authority should be sufficient. It is obviously not in the interests of the industry that trafficking in licences should be facilitated, but it' is equally incongruous for intimate details of genuine cases to be exposed
to the eyes of rival operators and for parties to the agreement to be subjected to unnecessary public examination.
Having satisfied this requirement, is there any further reason why a licence should not be "transferred "1' The Tribunal seems to think that there are at least font other questions to answer.
It was submitted for the Boston company that, as there Was an agreement to purchase the business, there Was a presumption in law that the Licensing Authority should exercise his discretion in favour of the purchaser.
",.In our opinion, there is no such prestimption," replied the Tribunal, which
regarded the case as one in which the Authority had discretion given to him under Section 16 of the Act. • In effect, • the Tribunal laid it down that the applicant must satisfy the Authority on the following points :—
(1 ) That, at the time the agreement was made, the vendor had a business as a public carrier.
(2) That the customers for whom he was working, at the time the agreement was made, are ready to transfer their patronage to the applicant.
(3) That the work should be effected under the same class of licence (in this case it was an A licence).
(4) That to carry out the work, it is reasonably necessary for the purchaser to be authorized to use the vendor's vehicles.
Are Inquiries Legal?
In order to provide this evidence, it would, presumably, he necessary for the Licensing Authority to hold an inquiry. The applicant's private business would thus be publicly revealed. This procedure does not appear to be in keeping with the spirit of the Act in this particular.
It is true that Subsection 5 empowers the Licensing Authority to hold such inquiries as he thinks fit, but has this subsection any connection with the previous.parts of the section? We doubt it. This provision was surely inserted in Section 11 as a matter of convenience. If Subsection 5 he intended to apply to 'the whole of Section U, and to override the exceptions specified, the Licensing Authority may hold inquiries into applications which he is bound to grant. Tn that case there can be no application which he is bound to grant and the whole section becomes so much nonsense. Conversely, if Subsection Ii does not apply to Subsection (3) (a), (b) and (c), Licensing Authorities have no power to hold inquiries into applications made under it.
It is important to note that, in the view of the Tribunal, Section 11 (3) (b) does not cover applications for variations of licences by the addition' of vehicles authorized to the operator whose business is being purchased.
The ground for this contention is that paragraphs (a) and (c) commence with the words "an application," inferring an application for a licence of a variation, whereas paragraph (b) definitely refers to "an application for a licence." This is purely a legal quibble and has no practical value. What difference does it make if acquired vehicles be authorized by variation of an existing licence, instead of under a separate licence1
Inthe Boston case, the transaction was "completely subject to the purchasers being able to obtain the said A licences, and the whole of this agreement with regard to the purchase of the five lorries and the said goodwill shall be void if the application of the purchasers for such A licences be refused by the Licensing Authority." The agreement mast have been void when the matter -came to appeal.
Protective Clause in Contracts.
To avoid the possibility of unneces sary complications, therefore, it would be advisable to insert in a contract of sale the proviso that it shall be conditional upon the "transfer" of the licence being authorized "by either the Licensing Authority or the Appeal Tribunal." Furthermore, if the Authority has power to refuse a" transfer," on the ground that it is not reasonably necessary for the purchaser to use all the vehicles connected with the business to be acquired, it might be a protection for both parties if provision were made for the assignment of some lesser tonnage that would meet the Authority's approval, In the Boston case, the agreement stood or fell by the authorization of five vehicles by the Licensing Authority. It may be that he would have considered granting a lesser ton. nage, but, in law, the contract would presumably not have permitted acceptance of such an offer.
The Tribunal has also given a ruling on the question of the class of licence to be granted in respect of an acquired business. " In our opinion," stated the Tribunal, "in the absence of special circumstances, when the holder of an A licence purchases the business of a public carrier, it is reasonable that he should do the extra work accruing to him, by reason of his purchase, with the vehicles authorized under an A licence.".