Judicial Review: DfT under pressure

The High Court rejects BCA’s core aim but sends the DfT away for a rethink and rules Section 19 operators cannot cross-subsidise with commercial work

The High Court has rejected a claim that the Department for Transport was operating an unlawful, non-prosecution policy with regard to Section 19 permit operators, but says that the DfT will no longer be able to defer enforcement on the grounds of uncertainty.

Additionally, the Judicial Review brought by the Bus and Coach Association said that a permit operator – in the main, community transport organisations – cannot run a profitable service, such as a contract, in order to subsidise non-commercial services, or any other activities unrelated to road passenger transport.

The High Court decided that charitable status, or a constitution preventing the distribution of profits, would not automatically provide an exemption as ‘exclusively for non-commercial purposes’ as the transport activity may not be identical to its overall objectives as an organisation.

The court says that, in order to establish the Section 19 operator’s EU ‘non-commercial’ exemption, each operator would need to have its activity examined. In particular, it said, the level of payment it received, whether it ran contracts gained in public procurement, the size and scale of its operation, and the way in which staff were employed, whether as unpaid volunteers or whether paid at comparable rates to commercial drivers.

In its conclusions, the High Court’s response said that the principles of what constitutes ‘non-commercial’ set out by the BCA had been agreed by the other parties: ‘Nor did any of the parties identify any issue regarding the proper interpretation of the non-commercial purposes exception about which they now disagree.

‘In the absence of such an issue, an argument in the abstract about whether or not the law is clear is not itself a question of law on which a court can adjudicate. That is not to say that there is or will be no dispute about how the question whether a community transport organisation falls within the exception is to be answered on the facts of any particular case. Indeed, it is apparent that in some cases the application of the test is likely to be far from straightforward.’

It continued: ‘…the Secretary of State cannot appeal to such an alleged lack of certainty or clarity regarding the correct legal test to justify a decision not to take action to enforce the provisions of the EU Regulation.

‘Applying the test to particular facts may be difficult. But that is not, of itself, a good reason for choosing not to enforce the law. This is particularly so in the present context where article 22(1) of the EU Regulation requires national authorities to take all necessary measures to ensure that the provisions of the EU Regulation are implemented.’

‘Fight goes on’: Martin Allen

The BCA’s founder, Martin Allen, says that although the High Court refused to rule on the definition of ‘non-commercial,’ operators will continue to press for court action against alleged licensing infringements.

“The DVSA now has no excuse not to investigate these complaints,” Martin told B&CB. “The High Court has clearly said this is about the size and scale of these operations and the level of payment.

“I am disappointed to see that the Community Transport Association has said it was not opposed to the principles established at Judicial Review – it was.”

Martin – who has seen his own company’s contract work taken by a CTO – told B&CB that there is also the separate issue of driver licensing, which he believes may form another challenge to permit operations.

“I believe that any driver receiving payment must have a commercial driving licence and that even volunteer drivers must have a Driver CPC.” This, says Martin, is enshrined in Regulation 1071/2009 which establishes that: ‘…disparities have several adverse consequences, in particular a distortion of competition… as well as the risk that undertakings employing staff with a low level of professional qualification may be negligent in respect of…. the rules on road safety and social welfare, which may harm the image of the sector.’

‘Threat has been headed off’: CTA

In its response to the ruling, the Community Transport Association’s legal team said: “An attempt by the Bus and Coach Association Limited to force the hand of the Department for Transport to prosecute community transport organisations who operate without public service vehicle operator’s licences (known as “O” licences) has failed.”

Providing its own spin on the High Court’s conclusion, while warning of its interpretation ‘…that these potentially relevant factors must not be used as a checklist’, the CTA’s legal team said: “A lot of progress has been made in heading off what could have developed into an existential threat for many CTO’s [sic]. There is now a good opportunity for a clear and practical approach to community transport licensing reflected in appropriate guidance from the DfT.”

‘DfT’s hand forced’: CPT

The Confederation of Passenger Transport says that, although the legal challenge failed to obtain a judgement on what constitutes ‘non-commercial’ it will force the hand of the DfT in redrafting guidance for S19 operation.

“The judgement is not a complete disappointment for the commercial sector, however. The Court sets out a number of agreed principles which DfT will find it difficult to omit from the new guidance which must inevitably be prepared now the JR has run its course. It will no longer be possible for DfT to defer any enforcement of the underlying EU Regulation – which has been written into British law as part of the Brexit process – on the grounds that there is uncertainty, and/or that a legal opinion is awaited,” said CPT International Manager, Steven Salmon.

“There was never any doubt, in our mind, of the meaning of the term ‘exclusively’, however difficult this is for some CT organisations. The key is in the first principle. The totality of road transport operations need to be looked at and if any of them are carried on, even partly, for commercial purposes, the exemption cannot be used.”

‘A race to the bottom’: TAS Partnership

In its response to the hearing, the TAS Partnership – which provided an advisory role – said: “…the judgement gives little of the clarity for which both the community and commercial transport sectors might have been hoping.

“Consequently, the DfT must now produce much more detailed, explicit and nuanced guidance than it has managed to date. In its proposals so far, it has focused on interpreting ‘non-commercial’. The Court has explicitly rejected this approach. In its next attempt to draft guidance, the DfT will have to grapple with understanding the community transport sector’s varied purposes and identifying the factors associated with these.”

TAS director, John Taylor, continued: “The judgement has endorsed many of the specific points that we made and reached the conclusion that we anticipated. Now that it has been fought to a standstill in the courts, the time has come for a more constructive path to be pursued.

“The last five years have seen massive cuts to budgets for school, social care and public transport, and this has forced commissioning authorities to encourage a race to the bottom on a lowest cost basis. Now let’s turn this round and focus on the passengers.”

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