Nov 24, 2015

In this article we address some frequently asked questions surrounding the legality of ride hail.

Can the Government ban the use of the Uber app?

The use of the Uber smartphone app is governed by telecommunications, privacy and consumer legislation rather than the Transport (Compliance and Miscellaneous) Act 1983 (Vic) (the Act).  In order for the Government to ban the app itself, two significant issues would need to be overcome.

First, the various laws relevant to mobile phone applications (which include the Telecommunications Act 1997 (Cth), the Privacy Act 1988 (Cth), the Spam Act 2003 (Cth) and the Competition and Consumer Act 2010 (Cth)) are Federal laws.  This means that the Federal Government (as opposed to the Victorian Government) would need to legislate for change.  As we know, each Australian state and territory has a different set of taxi and transport laws.  Because the legal position on Uber is not uniform across Australia (particularly following the ACT’s recent decision to bring Uber within the law), the Federal Government are unlikely to legislate to ban the app.

The second issue is that the Taxi Services Commission is under extreme pressure from Uber and consumers on one hand to legalise Uber, and the taxi industry on the other to enforce existing laws.  The attitude of Uber and its blatant disregard for the law (poorly disguised by the catchphrase “disruptive technology”), competing with calls from the taxi industry to enforce the law, has left the TSC scratching their heads.

In our view, the TSC do have the power to take action, but there needs to be a will to do so.  We have seen the taxi industry try to respond by developing iHail, an app proposed by networks and designed to compete with Uber, but this was thrown out by the ACCC as anti-competitive.  What we see is the regulators continuing to allow illegal behaviour by Uber, while existing industry players are not being permitted to operate in the same way in order to compete on a level playing field.

Can the TSC impound or destroy Uber drivers’ cars, suspend their driver’s licenses, or impose other prohibitive penalties to put a stop to their behaviour?

The TSC was formed and its powers set out under the Act.  This means that the TSC’s powers of enforcement and its ability to impose penalties are limited by the Act.  While the TSC can issue fines, it does not have the power to impound or destroy vehicles.  Similarly, while the TSC can cancel or suspend driver accreditations and vehicle licences, its power does not extend to suspending ordinary driver’s licences.

As you may be aware, Roads and Maritime Services (the New South Wales regulator) has issued 3-month licence suspensions to Uber drivers.  The power to do so appears to exist under laws relating to compulsory insurance requirements for commercial vehicles in NSW (which differ to those required for private use vehicles). 

Unfortunately, while some commercial vehicles are required to pay greater TAC premiums, these vehicles are described in the TAC schedule of premiums as "taxis licensed under the Transport Act 1983" (and as we know, UberX vehicles are not licensed).  Further, the only penalties that may be imposed for a failure to make compulsory third party insurance payments under section 109 of the Transport Accident Act 1986 (Vic) are monetary fines.

Can the taxi industry sue the Taxi Services Commission?

While the legal position is not entirely clear, the view appears to be that the TSC has the power to enforce the Act, but not the duty (an important distinction).  It appears to follow that third parties may not have a cause of action against a regulator for failure to enforce, even in circumstances where the illegal activity is causing loss or harm to that third party.

Further, it is likely that the TSC will argue (in fact, it has argued) that appropriate enforcement action has been and continues to be taken.  An article in the Age newspaper in late October reported that the TSC claims to have issued 355 fines to Uber drivers (totalling almost $600,000), in just over 12 months.  The TSC issued proceedings against Uber driver Nathan Brenner in a test case, and is awaiting the outcome of that case.

Despite these issues, we consider that an argument remains that an affected party may be able to take steps to require a regulator to enforce the law.  There are however a few hoops to jump through:

  1. it may be difficult to establish that offences have actually occurred;
  2. there may be issues with proving that the regulator has not taken steps to enforce the law; and
  3. the evidence available may be insufficient to establish the loss that has been suffered.

Related to this issue is the question why the TSC hasn’t taken steps against Uber (as opposed to the drivers).  As noted in our previous articles, it is the drivers, not Uber, who commit the offences under the Act.  The issue of Uber’s conduct remains under review, however, and together with the VTA we are continuing to consider the position.

Can the taxi industry sue the Government?

Administrative laws in Australia provide a general right for an affected party to review a decision made by a regulatory authority.  Such a review will look into whether the decision-maker had authority to make the decision, and whether the correct procedures were followed in the making of the decision.

The issue of course with Uber is that to date no decision has been made.  Administrative review will therefore not be available until such time as a decision is made.  In those circumstances, a review of the decision can be obtained, considering whether the decision maker had authority to make the decision, whether the decision was made for a proper purpose, and whether the decision maker acted fairly and considered all relevant matters (and no irrelevant matters) in making the decision.

The issues are certainly complex and the technological and legal landscape continues to shift.  The fight is far from over, and we are continuing to work with the VTA to explore avenues and options available to the taxi industry.

Brought to you by Logie-Smith Lanyon Lawyers.