R the Green Transport Company Ltd v The West Midlands Integrated Transport Authority and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Ouseley |
| Judgment Date | 16 August 2013 |
| Neutral Citation | [2013] EWHC 2526 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/8664/2012 |
| Date | 16 August 2013 |
[2013] EWHC 2526 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Ouseley
Case No: CO/8664/2012
Mr Jonathan Hough (instructed by Sharpe Pritchard Solicitors) for the Claimant
Mr Daniel Stilitz QC and Ms Holly Stout (instructed by Pannone Solicitors) for the First and Second Defendants
Hearing dates: 25 th, 26 th and 27 th March 2013
The Green Transport Co Ltd, TGTC, the Claimant, has operated bus services since 2001. Its services are focussed on school children attending state-funded schools with wide catchment areas, notably grammar or faith schools. The vast majority of its passengers are school children. It operates 32 school bus services in the West Midlands.
The Defendants together are known as Centro. The West Midlands Integrated Transport Authority, the policy-making body, whose members are councillors drawn from the seven West Midlands local authorities, established an annual travel concession scheme for school children, under the Transport Act 1985. TGTC is a participating transport operator. Put very simply at this stage, the scheme reimburses operators half of the adult fare for each journey by a school-child, because the school-child only pays half fare to the operator.
The West Midlands Passenger Transport Executive, WMPTE, the administrative or executive body, decided on 31 May 2012 to reduce the reimbursement it would pay to TGTC in the year 2012–2013 compared to previous years. It concluded that TGTC's fares were significantly higher than the fares of other operators for comparable journeys in the West Midlands. In the statutory language, TGTC's fares included a "special amenity element."
TGTC says that this decision would put it out of business or make many of its services unviable. It says the decision was unlawful for a multitude of reasons. Centro misinterpreted or misapplied the statutory concept of "special amenity element", and the provisions governing reimbursement. In particular, Centro's approach to what was a comparable journey was either wrong in law or irrational. The decision breached a legitimate expectation and proceeded from an unfair consultation.
Centro riposted, in the light of TGTC's evidence as to how its routes were devised for school children, and how few full fare-paying passengers were carried, that TGTC's services were not even eligible to be part of the concessionary fare scheme, since to be eligible, at least half of the bus accommodation had normally to be available for members of the general public. Services not eligible for the concessionary fare scheme, but which would not be viable without Centro's financial support, could be subsidised but only after a tendering process.
TGTC regarded this as a further error of interpretation or application by Centro, and not relevant to its challenge to Centro's May 2012 decision.
The statutory framework
Part V of the Transport Act 1985 empowers passenger transport authorities to implement concessionary fares schemes. S93 provides for the structure of such a scheme. The scheme can cover places in and in the vicinity of its principal area, i.e. the area of the ITA. The concession, relevant here, is provided for in s93(7); it covers persons up to and including 16 years old, and persons aged 17 and 18 in full-time education. S93(6) imposes a duty on the authority to reimburse the service operators for providing the concessionary fares.
S94 provides for regulations to determine the amount of reimbursement, but by s94(3), subject to any provision in the regulations, "the arrangements with respect to reimbursement and terms of withdrawal" are those which the authority may adopt from time to time, "and must be the same in the case of all [operators of eligible services participating in the scheme]". I shall come back to "eligible services"; but s94(6) provides that "arrangements" in s94(3) covers "the conditions of entitlement of such operators to and the method of determination and manner of payment of reimbursement" for travel concessions. So a broad discretion is given to the authority over reimbursement but participating operators must be treated alike, subject to the regulations or specifically directed or agreed modifications.
S96 is important. S96(1) entitles the operator of an eligible service to participate in the concessionary scheme, subject to exemptions inapplicable here. But s96(5)-(8) provide:
"(5) Subject to any such regulations, where it appears to the authority or authorities responsible for administration of any such scheme, in the case of any operator of an eligible service participating in the scheme, that fares currently charged by that operator for relevant journeys on that service include a special amenity element, the authority or authorities in question may by notice of not less than such period as may be prescribed [42 days] exclude that operator from participation in the scheme in respect of that service unless before the end of that period that operator agrees to appropriate modifications of the current reimbursement arrangements for eligible service operators participating in the scheme.
(6) For the purposes of subsections (4) and (5) above fares for relevant journeys are to be regarded as including a special amenity element if they are significantly high in relation to the general level of fares for comparable journeys in the principal area covered by the scheme (within the meaning of section 93 of this Act).
(7) References in those subsections to appropriate modifications of the reimbursement arrangements there mentioned are references to such modifications of those arrangements as the authority or authorities concerned consider appropriate for providing reimbursement in respect of travel concessions provided for relevant journeys on the service in question by reference to the general level of fares mentioned in subsection (6) above instead of by reference to the actual fares charged (or proposed to be charged) for those journeys.
(8) For the purposes of this section "relevant journeys" are journeys on which travel concessions are to be provided under the scheme in question."
A participating service operator cannot withdraw from the scheme without giving notice. The authority can compel an operator to participate, with provision for appeals and release; ss97–101.
The Travel Concession Schemes Regulations 1986 SI No.77 are designed to ensure that the level of reimbursement to the operators participating in the scheme means they neither gain nor lose commercially from their participation. Regulation 4 provides:
"4. It shall be an objective (but not a duty) of any authority when formulating reimbursement arrangements to provide that operators both individually and in the aggregate are financially no better and no worse off as a result of their participation in the scheme to which the arrangements relate."
The code for reimbursement contained in these Regulations provides in Regulation 5(1) that reimbursement arrangements should lead to "the costs to operators of providing concessions" being met by the authority's payment. By Regulation 5(2) the "costs to operators" are the aggregate of:
"(a) the revenue by way of fares which the authority calculate that the operator has foregone or estimate that he will forego in consequence of the provision of the concessions in question, less any additional revenue from fares which they estimate he has received or will receive by reason of the availability of the concessions; and
(b) any costs additional to basic operating costs which the authority calculate that the operator has necessarily incurred or estimate that he will necessarily incur in connection with providing concessions, less any reduction in basic operating costs which they estimate that he has achieved or will achieve by reason of the availability of the concessions."
So, the reimbursement arrangements are calculated by reference to fares foregone plus additional expenses incurred, less any additional revenue received because the scheme itself has increased demand for the service. This latter reduction for passenger generation is called the reimbursement factor or more aptly the generation factor, GF.
Regulation 7 provides:
"(1) Subject to paragraph (2) of this regulation, it shall be an objective (but not a duty) of an authority when formulating reimbursement arrangements for operators of eligible services to provide that such operators receive appropriate reimbursement for providing concessions to the persons eligible to receive those concessions.
(2) In paragraph (1) of this regulation "appropriate reimbursement" in relation to an operator means appropriate in the light of the total number and fares value of journeys made by persons eligible to receive concessions on the services provided by that operator."
As Mr Stilitz QC for the Defendants rightly pointed out, this scheme is very different from the subsidy scheme, which also operates under Part V of the Transport Act, but through different statutory provisions. The subsidy scheme includes a tendering process, ss89–90, and is designed to support socially desirable services which are not viable without subsidy.
"Special amenity element": the facts
Mr Mack's first witness statement, as owner and managing director of TGTC, provided evidence as to...
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