Taxi drivers lose High Court challenge against liberalisation of licensing regulations

About this case:

• Judgment:
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Alphonsus Muldoon and Vincent Malone, who sued the Minister for Environment and Local Government and Dublin City Council, and Thomas Kelly, who sued the Minister and Ennis Town Council, sought a declaration as to the unlawfulness of the 1978 Regulations (S.I. No. 292/1978), which gave rise to a secondary market in the sale of taxi plates, and the 2000 Regulations (S.I. 367 of 2000), which effectively eliminated that secondary market by an immediate deregulation of the taxi licensing market.

They further sought a claim for damages for breach of statutory duty, breach of constitutional rights (i.e. breach of property rights, right to earn a livelihood, and right to be treated equally before the law), and, in the cases of Mr Muldoon and Mr Kelly, breaches of competition law.

Before delivering the judgment, Mr Justice Michael Peart first provided background to the current case. He noted that the question of how to regulate the distribution of taxi licences had been an issue of tension between successive Ministers for the Environment and the taxi industry for years.

He further noted the controversy that continues to surround the power of the Minister to restrict the number of licences, and whether such power is included within the Road Traffic Act 1961. He noted that during the 1970s, the taxi industry had repeatedly requested that such power be exercised, in order to limit the number of taxis entering the market.

The 1978 Regulations were the eventual product of this debate, and followed quickly upon the decision of Costello J. in State (Kelly) v. Minister for the Environment, which found that the Minister had the ability to restrict or limit the number of licenses.

The result was a number of years in which taxi drivers lobbied local authorities to prevent the issuance of new licences, leading to the emergence of a secondary market, in which licences became valuable assets to be sold or rented out. At the same time, the increasing public demand for taxi services was not being met.

Over the following decades, a number of reports were issued in an attempt to balance these different interests and to address the issue of licensing. The growing frustration and urgency surrounding the lack of adequate numbers of licences eventually culminated in the introduction of the 2000 Regulations.

The plaintiffs, who were considered representative of a large number of taxi license holders, first argued that the Minister acted beyond his powers by delegating the role of deciding on the number of licences to the local authorities.

Delivering the judgment, Mr Justice Michael Peart noted that once it had been determined that the Minister had the power to restrict or limit licences, “it seems to be of little moment who imposes those numerical restrictions, as far as their effect on individual taxi licence holders is concerned.”

He therefore stated his complete satisfaction that “it was within the wide and general regulatory power conferred upon the Minister in section 82 of the Act to delegate to local authorities in the manner in which he did so in the 1978 Regulations.”

In relation to the alleged breach of constitutional rights, Mr Muldoon and Mr Kelly argued that their right to earn a livelihood and right to equal treatment before the law had been breached, due the 1978 Regulations’ restriction on their ability to obtain a licence other than through the secondary market, and the resulting loss of value of that licence.

However, Mr Justice Peart found that as the Regulation applied equally to all, there was no breach of their right to equal treatment. Furthermore, the regulations did not interfere “much less unjustly attack” the taxi-men’s right to earn a livelihood.

The judge cited Hempenstall and others v. Minister for the Environment 2 IR 20 and Gorman v. Minister for Environment and Local Government 2 IR 414 as supporting cases, which found that the State may regulate in the public interest even if to do so diminishes the value of an individual’s property, and that such regulations do not infringe their constitutionally protected property rights.

“They could continue to earn their livelihood” he concluded, finding that it was therefore not necessary for him to address the issue of whether they were entitled to recover damages for breach of a constitutional right.

The judge said in his view they were also not in a position to bring a claim for breach of statutory duty by the defendants. Although the Regulations had led to a loss of money, the judge found that the plaintiffs had entered the market voluntarily, in the knowledge, to be implied to them if necessary, that the regulatory regime could change and that there was a risk that their licences would not hold their value.

He found that the Minister had acted “reasonably, fairly, justly and proportionately in the exercise of the powers given to him in section 82 of the Act of 1961.”

As noted by the judge: “Put simply, he was entitled within the scope of acting reasonably and fairly, to consider that by the end of the year 2000 there was no option other than to regulate as he did, even if that would result in loss of value in existing licences, and opposition from within the industry.”

In relation to competition law, the plaintiff’s argued that State measures brought about a distortion of competition in the market for the provision of taxi services and created an anti-competitive effect.

However, citing Cooke J. in Lifeline Ambulance Services Limited v. Health Service Executive, unreported, High Court, 23 October 2012and Keane J. in Carrigaline Company Limited v. Minister for Transport 1 ILRM 241 in particular, the court found that competition law did not apply to the actions of the Minister or the Councils, as their actions were of a regulatory nature, thus excluding them from the competition terms of the Treaty of Rome.

In relation to specific claims for damages made against Dublin City Council and Ennis Town Council, the plaintiffs claimed that the Councils failed to exercise their power in a fair and reasonable manner, providing a barrier to the obtaining of licences, and therefore causing the emergence of a secondary market.

However, the court found that the Councils owed no particular duty of care to protect the interests of the taxi owners: “The Minister’s duty was to regulate in the interest of the general public in relation to a necessary public service. By delegating power to local authorities to decide on the appropriate number of licenses, he was not creating any obligation upon those authorities to act other than in the same public interest.”

In light of these considerations, the plaintiffs’ arguments were rejected, and relief refused.