Liverpool v Kelly

The Court of Appeal considered the scope of the charging power in section 70 of the Local Government (Miscellaneous Provisions) Act 1976, in particular whether a district council may charge inspection and associated fees to applicants whose vehicles are inspected but who do not ultimately receive a licence. The court held that the phrase "for the grant of vehicle licences" in s.70 is ambiguous and may properly be read to permit charging applicants whose vehicles are inspected even if a licence is not subsequently granted. The court further held that councils may levy inspection charges at the time inspections are carried out, and may structure fees so that inspection charges and administrative costs are separate provided the total sums charged fall within the statutory limits or within any higher maxima lawfully adopted under s.70(2) and the variation procedures in subsections (3)–(5).

The court relied on the plural wording "sums" in s.70(2) and on the flexibility in subsection (6) to permit separate maxima for first and subsequent inspections and for administrative charges. The Department of Transport circular cited by the respondent was not regarded as persuasive authority to restrict charging to successful applicants. The judge's earlier decision that only successful applicants could be charged was set aside and the respondent's claim dismissed.

Background and parties: The respondent, Mr Kelly, owned a hackney carriage licensed by Liverpool City Council. He paid repeated inspection and licence charges to the council. He sued to recover sums paid, asserting the council were not entitled to charge in circumstances where a licence was not granted.

Nature of the claim: A claim for repayment of fees charged by the council in connection with vehicle inspections and the grant of a vehicle licence under the Local Government (Miscellaneous Provisions) Act 1976.

Procedural posture: This was an appeal by the council from a decision of Mr Justice Andrew Smith in the Queen's Bench Division (Liverpool District Registry). Leave to appeal was granted by the judge below.

Issues for decision:

• Whether section 70 of the 1976 Act permits charging applicants whose vehicles are inspected but who are not granted licences;
• Whether inspection charges may be demanded at the time of inspection and separately from other licence fees;
• How the maximum fee provisions in s.70(2) operate in relation to separate inspection and administrative charges.

Court's reasoning: The court found the phrase "for the grant of vehicle licences" ambiguous. It accepted the council's construction that fees charged must arise from functions associated with granting licences, including inspections to determine whether a licence should be granted. The narrower interpretation—that no fee could be charged unless a licence were granted—would improperly shift inspection costs onto applicants whose vehicles pass first time or onto the council. The court also considered the statutory scheme in s.70(2), noting the plural "sums" and that subsection (2) contemplates variation by councils following the notice and objection procedure in subsections (3)–(5). Section 12 of the Interpretation Act 1978 was cited to assist construction. The court held that councils may set separate maxima for first inspection, subsequent inspections and administrative costs so long as the procedural requirements for varying maxima are observed and the aggregate charging policy does not amount to a revenue-raising exercise contrary to the statutory policy.

Outcome: The Court of Appeal allowed the council's appeal, set aside the judge's order and dismissed Mr Kelly's action with costs. The court noted the policy importance of the issue to local authorities and observed that the council's charging regime was similar to that adopted by many other authorities.

Appeal allowed. The Court of Appeal set aside the judge's order and dismissed the respondent's action. The court held that section 70 of the Local Government (Miscellaneous Provisions) Act 1976 can be read to permit a district council to charge applicants whose vehicles are inspected even if no licence is ultimately granted; councils may impose and collect inspection charges at the time of inspection and may structure separate charges for first and subsequent inspections and for administrative costs provided the statutory maximums or lawfully varied maxima are observed and the notice and objection procedures in s.70(3)–(5) are complied with.

Appeal from the Queen's Bench Division, Liverpool District Registry (Mr Justice Andrew Smith). Appeal heard in the Court of Appeal (Civil Division) under neutral citation [2003] EWCA Civ 197; leave to appeal was granted by the judge below.