21 January 2002
Vehicle operators are highly regulated. The tendency of the Divisional Court and of the European Court of Justice has been to interpret the regulations in a way that provides for the least driving, citing the social purpose of road safety. This is shown in Re Skills Coaches Ltd  RTR 21, 305 and VI York Pullman Ltd  RTR 18, 273. Operators are entitled to feel frustrated that arguments about practices being safe enough receive short shrift from the courts.
Drivers' regulations are in the process of being rewritten by the drafting of a new set of Working Time Directive compliant regulations in Brussels. With this and with the expected introduction in 2004 of electronic drivers smart cards in place of paper tachograph record sheets, it should come as little surprise that how the road transport industry is regulated is essentially political. That said, in two recent cases, the courts have taken a more rounded view of what kind of regulatory framework operators are and should be under.
The most headline-grabbing instance, reported in December, is that of International Roth GmbH & ors The Home Office, QBD Sullivan J. (5/12/01). In this case, a human rights and EC law challenge was brought to the Government's civil penalty system over the penalisation of hauliers and drivers on whose lorries illegal immigrants were found. The scheme penalises drivers and hauliers regardless of whether they know or have reasonable cause to suspect the presence of stowaways. Fines are imposed of £2,000 per person found. The action was brought by a group of 50 claimants who had been subject to fines of between £8,000 and £60,000. Almost 1,000 Home Office claims for the recovery of fines in the Canterbury County Court were stayed pending the challenge. Given that the sanctions include the impounding of vehicles as security against fines, small to mid-sized operators have been caused real hardship.
In a judgment now being appealed by the Government, Mr Justice Sullivan found that despite the Government's attempt to configure the scheme as civil, it was in fact criminal. As such, it attracted and was in breach of the criminal trial safeguards required by Article 6 of the European Convention on Human Rights. He went on to find that the provisions for the detention of vehicles as security for penalties was in breach of Article 1 of the First Protocol of the convention (the right to the protection of property), because these provisions were not afforded sufficient procedural safeguards. The breaches of convention rights made the scheme in breach of provisions of the EC Treaty (Articles 28 and 49), relating to the free movement of goods and freedom to provide services within the EC. The judge made declarations that the regime was unlawful and incompatible with the convention in those respects, and that accordingly, the individual penalties imposed were unlawful. Judge Sullivan observed that though it was a matter for Government as to how harsh a scheme might be, the question of whether any such scheme was surrounded by sufficiently fair procedures was something for the court to decide. In giving the permission to appeal, Judge Sullivan allowed the Government to continue issuing penalty notices, but only on condition that the fines were not payable pending the appeal. The practice of detaining vehicles was to stop immediately.
It remains to be seen whether the Government's appeal, which began on 14 January, will succeed. The scheme may have to be replaced. That aside, Judge Sullivan's judgment is a landmark one for human rights lawyers in that it is the first time the UK courts have looked at provisions of the EC Treaty through the prism of convention rights: in effect finding that it was an inherent part of EC Treaty law (when it was engaged) that convention rights be protected.
In Interlink Express Parcels Ltd Night Trunkers Ltd  RTR 23, 338, there was concern that the first instance decision meant trouble for goods hauliers given the widespread practice of using agency drivers, often at very short notice. Section 2 of the Goods Vehicles (Licensing of Operators) Act 1995 makes it an offence to use a vehicle without an operator's licence. Section 58 deems that except for owner-drivers, the user is the person whose servant or agent the driver is.
Night Trunkers had a contract to supply drivers to Interlink's vehicles on Interlink's parcel delivery business. Mr Jusitce Ferris concluded that, because the drivers were employed under contracts of employment by Night Trunkers and were fulfiling Night Trunkers' contract with Interlink, Night Trunkers employed the drivers and was the user of the vehicles. Rather conveniently for Interlink, which wished to end the contract, the use was unlawful because Night Trunkers did not have an operators' licence and the contract was void for illegality.
Advice since the 1970s and the decision of Alderton Burgon  RTR 422, DC has been that a lawful use can be arranged. An employment agency can avoid being the employer provided that on a badge of employment test the agency driver gets to be the 'actual' employee of the hirer. But there must be some question as to the artificiality of this. It is not known to what extent the substance has been tested.
In the Alderton case, a written agreement determined the employment status of the driver so that he became the 'employee' of the hirer, with the agency engaged as the hirer's 'agent' for administering payroll functions. The agency was not the employer at all. A consequence of Alderton is that the operator is responsible for pay, tax and national insurance and for providing the provisions of P45s and P60s. This means that agency drivers, who could be driving for different operators from one day to the next, lack certain employment rights as they have no continuity of employment.
The resolution reached by the Court of Appeal, as argued by Night Trunkers throughout, was that the provisions of the act were met if the employment was under a 'temporary transfer' of employment. This follows the House of Lords authority in Mersey Docks and Harbour Board Coggins and Griffith  AC 1. The judgment of Lord Justice Arden picks up on a history of decisions in this area, where a temporary transfer was raised but not sustained on the evidence. Her ruling is of interest in reviving the doctrine and giving it contemporary effect. It met the purpose of the provision, which was to attribute responsibility to the person with control over the driver's activity.
For some, the more cautious speeches in Mersey Docks will continue to prevail. In Lord Justice Simon's view, there was a heavy burden on the general employer to shift the prima facie responsibility for the negligence of servants engaged and paid by such employers, which could only be shifted "in quite exceptional circumstances". However, the Court of Appeal's ruling gives it life, not only in the context of the Goods Vehicles (Licensing of Operators) Act 1995, but elsewhere where tortious responsibility for employees is considered. A modern conception of employment relationships has to recognise that such transfers are a growing practice. In contrast to Simon, Arden noted that, "in this area, cases depend on their own facts and are illustrative rather than determinative".
Critically, as in Interlink, there are two concurrent employers: the general employer and the borrowing employer. The issue is whether the transfer of control is so absolute that the borrowing employer has responsibility for the acts of the borrowed employee. In judging this, the right to control is paramount among factors.
For the commercial haulage operator, the opportunity is there to make arrangements that do not involve taking on agency staff as its own employees in all senses, provided the operator recognises that what drivers do they do for and on behalf of the operator and with a potential bearing on the operator's licence. As with Alderton-type employees there is as great a need to ensure that paperwork and practice does transfer control and responsibility.
Interlink was refused permission to appeal by the House of Lords after an oral hearing before Christmas. The Court of Appeal therefore stands as the final word. n
Richard Serlin and Patrick Sadd are barristers in 199 Strand's transport group.
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