Apr 01, 2016

By David Grant, Partner and Eliza Buchanan, Solicitor, Logie-Smith Lanyon

There is little doubt that most, and within the Taxi Industry everyone, are aware of the recent decision in the case of Taxi Services Commissioner v Nathan Brenner, in the Melbourne Magistrates’ Court.

Brenner was found guilty of breaching the Transport (Compliance and Miscellaneous) Act , by being the owner of a commercial passenger vehicle without that vehicle being authorised to so operate, and, by driving a commercial passenger vehicle without holding driver accreditation.

Brenner was fined for the breaches of the Act – a total of $1400.

That decision is now the subject of an appeal, to be heard in the County Court of Victoria in May 2016.

But, should Brenner be held solely responsible?  What of the liability of Uber Australia Pty Ltd, and its global parent company, Uber Technologies Inc.?  Why haven’t any of the relevant Taxi Services Commissioners taken action against Uber?

Presently, the Transport (Compliance and Miscellaneous) Act (Transport Act) contemplates breaches of its provisions by “owners” and “drivers”.

Uber asserts that it does not provide any transport services.  Rather, it asserts it simply connects a customer with a driver.  The driver commits any offence where they drive a customer for reward in an unlicensed vehicle.

If that interpretation of Uber’s business model is correct, then there is little or no scope for the Taxi Services Commissioner, or any other body for that matter, to seek to prosecute corporate entities such as Uber Australia Pty Ltd, let alone the San Francisco-based Uber Technologies Inc., because, these companies are not committing any offences against the Act.

This is because, in its current form, the Transport Act only envisages offences made by owners and drivers of commercial passenger vehicles, without the requisite licences, registrations and authorisations required by the Act. Unless Uber Australia Pty Ltd or Uber Technologies Inc. own the vehicles, there is no scope for prosecution of these companies under the Act.

Uber is not an accessory to any offence under the Transport Act, as the breaches are regulatory, not criminal.  Whilst it seems apparent that the Uber app facilitates a breach of the Act, by connecting unauthorised, unlicensed and unregistered Uber drivers with passengers – this is not an offence.  Clearly to stop unauthorised rogue operators operating in this space, the legislation will need to be amended to allow for some parties to be authorised. 

Further, even if the TSC could prosecute the corporate entities such as Uber, for facilitating (or aiding and abetting) breaches of the Act, and had the will to do so, a meagre $1,400 fine would seemingly have little or no impact on a company with an estimated gross revenue in 2015 of $US10 billion.[1]

In order to effectively deter large corporate entities from breaching the law, the Courts must be able to exercise judicial discretion in sentencing, so that penalties imposed have the desired effects: that of deterrence (specifically to the offender, and generally, to the community and industry at large), and, in particular cases, rehabilitation and compensation.

Uber is taking advantage of being once removed.  They live behind the veil that thinly shields them from complicit conduct, or conduct that breaches the relevant Act.

An incorporated entity is, at law, considered to be a “legal person”, as opposed to a “natural person”, a human being. A legal person is able to enter into contracts, sue and be sued, but obviously, is unable to do some certain things a natural person can, such as serve a custodial sentence.

Thus, when a company acts criminally, for example, by endangering the lives of people at workplaces, contrary to the Occupational Health and Safety Act 2004 (OHS Act), the company cannot be ordered to serve a custodial sentence. Instead, the relevant act states that the company is liable to pay a maximum fine of 9000 penalty units, which is presently $1,365,030.00.

The act allows for a fine to be issued to a company that is five times greater than the maximum fine an individual would be liable for, for the same offence. This act recognizes the differences in financial capabilities of large entities and individuals, and penalises companies, on a scale and in a manner that is intended to deter future wrongdoing.

In 2006, the Australian Law Reform Commission considered expanding the penalties available to Courts where companies had committed crimes.  Suggestions by the ALRC included consideration by the Courts of the type, size, financial circumstances and the internal culture of the corporation; and, the existence or absence of compliance programs in place designed to prevent and deter criminal conduct.

The OHS Act enables Courts to impose more significant penalties to corporate entities.  This act is akin to other acts which contemplate offences by corporate entities, such as the Crimes Act, the Corporations Act and the Australian Consumer Law.

Some legislation goes further: the Sentencing Act provides that where a corporate entity is unable to satisfy a court ordered fine, a director of the offending company may, on application by the prosecutor, become jointly and severally liable to pay the fine, despite it being issued to the company.

Presently, however, the Transport Act does not incorporate offences made by corporate entities. In respect of driving a commercial passenger vehicle, this makes sense: a company clearly cannot get behind the wheel of a car.

However, a company can be the owner of a commercial passenger vehicle, and therefore, would be liable to be prosecuted by the Taxi Services Commissioner should it be found to be the owner of a commercial passenger vehicle without that vehicle being authorised to operate in such a manner.

The Transport Act does not presently contemplate any penalties for breaches by corporate entities. It stipulates that a first offence attracts a fine of 5 penalty units ($758.35), and for a second or subsequent offence, a fine of 10 penalty units ($1516.70).

Should a company be found to be the owner of a commercial passenger vehicle, acting without authorization, the maximum fine they would be liable to pay would be $758.35. Clearly this sum is insufficient to have any real deterring effect on the offending company.

In these circumstances, we are reminded of Brenner’s refusal to make an undertaking to the Court that he would not again drive an authorised commercial passenger vehicle. Even for an individual, it is clear that the penalty faced by Brenner was so insignificant that it would not deter him from reoffending.

Finally, in order to capture the international entity, it will be necessary for the Act to clearly intend to operate extraterritorially. 

This is another, in the growing list of challenges that sit in front of our legislators and our regulators.

We await, with great interest, the next installment in this increasingly lengthy saga.

[1] http://www.businessinsider.com.au/uber-revenue-projection-in-2015-2014-11?r=US&IR=T