Licence to strike out

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SC (t/a Front Row Taxis Ltd (in liquidation)) v Rhondda Cynon Taf County Borough Council [2017]

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Dolmans Solicitors were instructed to act for Rhondda Cynon Taf County Borough Council in connection with a claim brought against them for an alleged breach of contract and consequential losses arising from the termination of a contract to convey children to and from school. Losses were claimed in excess of £200,000.

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On 22 September 2008, Front Row Taxis Ltd were awarded a home to school contract for 5 years (with an option to extend for an additional 2 years) conveying children to and from educational establishments. Due to change in passenger requirements, this contract was no longer required and it was suspended. In time, Front Row Taxis Ltd was awarded 2 other contracts in its place. Again, due to a change in passenger requirements, those contracts were suspended. On 3 September 2009, Front Row Taxis Ltd were awarded a further contract to convey pupils to and from Williamstown Primary School.

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It was subsequently brought to the attention of the Council’s Taxi Licensing Department that on 9 November 2010, Front Row Taxis Ltd had used an unlicensed vehicle in purported performance of the contract. The licence had, in fact, expired on 30 October 2010. On 10 November 2011, the Council wrote to Front Row Taxis Ltd advising that the contract was suspended with immediate effect as they had "knowingly used a vehicle that was unplated and had its licence revoked." Front Row Taxis Ltd appealed that decision under the Council’s internal procedure. Whilst it was accepted that the license had expired, it was maintained that everything had been done to licence and operate the vehicle within the terms of the contract, and it was pointed out that at no time was the vehicle uninsured and all other aspects of the terms and conditions had been complied with. It was maintained that in the knowledge that the licence was about to expire, Front Row Taxis Ltd engaged with the Council’s Licensing Department to renew the licence, however, were told that there was a new procedure in place which they must follow. SC, on behalf of Front Row Taxis Ltd, went on holiday, leaving matters with his father to progress licensing the vehicle in question. It was maintained that the Council’s Licensing Department had indicated that they would come back to Front Row Taxis Ltd following the earlier enquiry, but that no one did, and so by the time SC returned from holiday, the vehicle had been used on the contract unlicensed.

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The appeal was dismissed and the contract was confirmed as being terminated by way of letter dated 9 December 2010 under the strict terms of the contract which provided that only licensed vehicles could be used. Further, under the terms of the contract, the appeal had been lodged out of time.

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Subsequently, Front Row Taxis Ltd were prosecuted for offences committed under section 46(1)(a) and 46 (1)(e)(i) of Local Government (Miscellaneous Provisions) Act 1976. The Director, SC, was prosecuted for having committed an offence under section 44(3) Local Government (Miscellaneous Provisions) Act 1976. The prosecutions were successful before the Pontypridd Magistrates Court on 1 September 2011. Thereafter, the convictions were successfully appealed on 4 November 2011 in the Merthyr Tydfil Crown Court. The appeal was successful on the mens rea element, i.e. – SC did not "knowingly" commit the offences. The Crown Court’s findings were:

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"On considering this appeal, there were 2 issues to determine:

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1. Whether there was an operator’s licence in force in relation to the Espace vehicle; we are sure there was no such licence in force.

2. Did the Appellant knowingly commit these offences; we are not satisfied that the Appellant was sure that there was no licence in place. The system for so licensing of   vehicles has changed and we do not feel that the Appellant’s enquiries were dealt with properly. He did leave it late, but did not know that the system had changed. We accept that SC would have been extremely concerned about the licensing of the vehicle and we accept that he looked up matters as he said he did. Therefore, we cannot be sure that he knew that the licence was not in force. Changes in procedure by the Council had not been notified to anybody."

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In or around October 2011, the Ombudsman upheld a complaint of maladministration by the Council in relation to licensing, however, only on the basis "...that this would have caused additional and unfortunate inconvenience. I do not consider the Council is solely or largely to blame for the fact that the licence was not renewed within time."

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A claim was originally brought on 19 February 2014, when SC was represented by solicitors. They ceased to act for SC by 24 April 2014, prior to it being necessary to provide a substantive response.

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The Liquidator of Front Row Taxis Ltd then brought a claim on the same facts in June 2016. That claim was repudiated by the Council’s Principal Solicitor on 22 July 2016. The solicitors acting for the Liquidator responded on 30 August 2016, at which time they offered to settle the dispute in the sum of £25,000, plus interest and costs. On instructions, the offer was not accepted, the same being confirmed by way of letter dated 9 September 2016. Thereafter, there was no further correspondence until the service of these proceedings.

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The claim brought by both SC and the Liquidator was predicated on the basis that the taxi licence was either still valid at the time of the offence or that because SC had lodged an appeal, the statutory provisions of section 77 Local Government (Miscellaneous Provisions) Act 1976 came into play, thus holding over the licence and allowing Front Row Taxis Ltd to continue with the contract until the appeal was determined.

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The Council’s position was relatively straightforward. The vehicle was seen by the licensing authority working on the school contract when the license had expired. That was notified to the relevant department, who suspended the contract on 9 November 2010, and then terminated it on 9 December 2010. SC, having returned from holiday on 4 November 2010, having left his father to pursue a renewal of the licence in his absence, made an out of time Appeal/Application to renew his licence. This out of time Application was not accepted. The Council were of the view that there was, therefore, no holding over provision and no right to appeal as there was no valid licence.

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Once instructed following the issue of proceedings, shortly before the expiry of limitation, we identified a fundamental issue at the outset, being the capacity in which proceedings were being brought. On the face of the Claim Form, it appeared that the claim had been brought on behalf of Front Row Taxis Ltd (in liquidation). In view of the fact that there had never been a contract directly with SC, as opposed to Front Row Taxis Ltd, it seemed clear that the only proper Claimant capable of pursuing any claim for breach of contract would be Front Row Taxis Ltd itself.

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A check of Companies House records showed that SC had been appointed the sole Director on incorporation and that he was the sole shareholder in the company. Significantly, the papers also showed that Front Row Taxis Ltd had been the subject of a compulsory Winding Up Order on 10 August 2015 following a petition presented on 18 December 2014 by HMRC.

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We took the view that in light of the liquidation, SC had no standing to bring a claim on behalf of the company and that any claim for breach of contract between Front Row Taxis Ltd and the Council could only be brought by the Liquidator of the company and that SC’s powers as a Director of the company ceased with immediate effect on liquidation.

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Contact was made with the Liquidator, who confirmed that she had no knowledge of the proceedings, she had not authorised the proceedings and she had not assigned any relevant cause of action to SC.

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In light of the foregoing, an Application was made to strike out the proceedings shortly after filing the Defence on a number of different bases. Firstly, pursuant to CPR 3.4 (2), that the proceedings disclosed no reasonable grounds for bringing the claim and that the proceedings were an abuse of court process. Secondly, pursuant to CPR 24.2, that the Claimant had no real prospects of successfully pursuing the claim and there was no compelling reason why the case should be disposed of at trial.

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Having filed a detailed Application Notice and documentation, the matter came before the Court on 23 June 2017, when the claim was struck out. We also obtained an Order that SC pay the Council’s costs of the action, and further had it recorded within the Order that the claim was totally without merit.

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SC subsequently sought permission to appeal, which was initially dealt with on the papers by His Honour Judge Jarman QC on 14 July 2017, when permission was refused on the basis that there was no real prospect of success on appeal and no other compelling reason for the appeal. SC subsequently sought an oral hearing for permission to appeal, the same also failing.

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The Council is currently in the process of enforcing the Costs Order against SC.

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Comment

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This is a matter that has had a protracted history and has been through various Tribunals causing not insignificant costs to be incurred both in terms of legal fees and management time. Fortunately, by challenging the civil proceedings at the earliest opportunity and at the most fundamental level, i.e. – the capacity to bring the claim, not only is the matter now at an end, but also the Council can recover their costs of the civil action.