The Court of Appeal has overturned a judgement of Mrs Justice Foster in July 2023, which had held that in order to operate lawfully under the Local Government (Miscellaneous Provisions) Act 1976, operators had to contract with passengers to provide the journey the subject of the booking.

The issue raised on the appeal is whether an operator, within the meaning of Part II of the Local Government (Miscellaneous Provisions) Act 1976 (“the Act”) is required by the Act to enter into a contract as principal with a person who makes a booking for a private hire vehicle.

By her order of 28 July 2023 Foster J granted a declaration in the following terms:

“In order to operate lawfully under Part II Local Government (Miscellaneous Provisions) Act 1976, a licensed operator who accepts a booking for a passenger is required to enter as principal into a contractual obligation with the passenger to provide the journey which is the subject of the booking.”

In the Court of Appeal, Lord Justice Lewison, upheld the appeal and ordered that the above declaration be discharged, saying:

"The circumstances in which a booking might be made are potentially very varied. The person who makes the booking may do so on behalf of someone else without incurring any contractual liability. Obvious examples are a restaurant arranging a vehicle for a diner who has finished their meal, a carer requesting a booking for a vulnerable person, a hospital arranging for a patient to be collected, a receptionist booking a car for a visiting client and so on. Moreover, a booking may not necessarily specify any journey; or even be made for a journey at all. A vehicle may be booked simply to be on stand-by. It is thus plain (and indeed is now common ground) that the declaration made by the judge is inappropriate. It assumes that the booking is made by “the passenger”, which is not necessarily the case, and it assumes that the contract is one “to provide the journey” which is also not necessarily the case. In addition, the declaration as made stated that the operator was required to contract in order to operate “lawfully”. The implication from this (although not spelled out) is that if the operator did not enter into a contract, it would be committing a criminal offence, even though there is no statutory provision that creates such an offence.

"The difficulties arising out of the declaration show why the court should be very wary of making declarations in general terms. In the present case there is no dispute between the operators and the licensing authority (which has taken no part in this appeal); and the question was approached as one of generality untethered to any particular facts.

"In my judgment, it was not appropriate for the court to have made the declaration."

The appeal was brought by two provincial operators, D.E.L.T.A. Merseyside Limited and Veezu Holdings Limited, who argued that the Act contained no language requiring the operators to contract. They said that the agency business model, under which the operator accepts the booking but the driver enters the contract with the hirer, preceded the Act and was not abolished by it. Further, the Act swept up all contracts in a single provision, section 56, which deems that contracts are with the operator, regardless of who actually contracts with the customer.

Uber argued that section 56 should be read narrowly as only dealing with cases where the operator had sub-contracted to another operator. The Court of Appeal disagreed. It noted that section 56 states in terms that it applies to every contract of hire, not just cases of sub-contracting. It cover both cases where the operator contracted and hadn’t, by producing a uniform result for every contract. Where the operator had contracted it is bound by its contract and where it hadn’t it is bound by the deemed contract.

It was further reported that Uber also pointed to R (United Trade Action Group Ltd) v Transport for London [2021] EWHC 3290 (Admin), in which the Divisional Court held that the Private Hire Vehicles (London) Act 1998 did require the operator to enter into the contract.

The Court of Appeal did not consider that made any difference, since the 1998 Act was differently phrased and contained no deeming provision. The Court expressed no view on whether the Divisional Court was right or wrong, since it was concerned with a different Act in different terms.

The Court of Appeal refused Uber’s application for permission to appeal to the Court of Appeal.