Finally a group of plate owners prepared to put their money where their mouth is

Over the past four years Victorian taxi and hire car plate owners have seen the value of their perpetual licences drop from $480,000 and $70,000 to $150,000 and $20,000 respectively, firstly caused by the Fels reforms and further by the illegal operation of Uber. To show their anger, resentment and pain they have held numerous rallies, lobbied Labor MPs and made their feelings known on social media. However, their patience has run out as the Andrews Government is on the cusp of legalizing ridesharing and they have finally come together to challenge the injustices in court.

by Peer Lindholdt

When as part of the Fels reforms proposed in his 2012 report, annual government taxi plate leases were slashed from the then market rate of $33,000 p.a. to $22,000, as a token he set aside $10 million to compensate hardship cases. In its reply to the reform package the Andrews Government reduced that amount to $4 million. That was the first indication of its hardnosed attitude to the more than 2,500 plate owners, most of them current or retired drivers who had bought a plate at market rate as a secure investment for their future. Prior to 2012, a taxi plate, based on 30 years of government policy, had been considered so sound an investment that banks would accept them as full collateral for a loan. As soon as the Fels recommendations became public knowledge, the banks became nervous and stopped lending against plates while at the same time demanding that many plate owners provide additional collateral or face foreclosure. Some were forced to increase their mortgages, some even had to sell their homes, some went bankrupt and others committed suicide. Even then, not one penny, I’m informed, has been paid out from the paltry hardship fund.

If the plate owners thought they would get backing from the Victorian Taxi Association in challenging the government they were sadly mistaken. Like its counterpart in NSW, its priorities had changed. No longer was its focus on protecting plate values, its priorities had shifted to protecting only the networks, their dominance and control of the industry and defending themselves against the onslaught by Uber. As a consequence the Victorian Taxi Families was born in 2013, later to expand to include hire car licence owners. The organisation is now called VTHF.

Although most of the VTHF’s members were traditionally Liberal supporters, they backed Daniel Andrews and his Labor candidates during the 2014 state election even to the point of turning up in force at Labor MPs’ public election rallies. Their naive belief was that a Labor government would be more inclined to care about small business people. They were wrong and finally they have realised that their only hope of survival and justice is through legal action.

As far back as 2012 when Fels dominated not just Victorian but national media with his plans to reform the taxi and hire car industry, and the value of plates as a result began to slide, OZ Cabbie asked the question, “Why aren’t plate owners launching a class action against their government for compensation?” It seemed logical to us that if a few thousand people stand to lose hundreds of thousands dollars each due to the action of government, gambling a couple of thousand on proper expert legal advice and representation would be worth it even if it fails. The VTHF has finally seen the light and thanks to the impact of Uber and the government’s and the Taxi Services Commission’s incompetence in dealing with Uber’s aggressive and illegal behaviour, their claim will be substantially higher than it would have been when I first suggested it in 2012.

At a meeting of a reported one thousand VTHF stakeholders on 17 July, a presentation was made by the committee and its Legal Counsel, Dr John Walsh of Brannagh, regarding possible legal action against the Government in order to seek compensation of losses for taxi and hire-car licence holders and owners.

I do not know if Dr Walsh is an expert in class actions against government, but at least from the report I have received, he is an optimist, estimating the their chance of winning at 60% to 70%.

The proposed legal action has 2 phases.

Phase 1: The first action is against the Federal Government, seeking a determination ruling that the States have infringed on our constitutional rights by devaluing our licences, both deliberately in the changes made to State legislation and by negligence in failing to enforce the law against illegal participants. If successful, they move to phase 2.

Phase 2: With a favourable determination in hand, they will seek compensation for their losses from the State Government. This may be a private negotiation, or if agreement is not reached, it may lead to another action in Court. Only those who have committed to this action will directly benefit from a successful outcome.

As part of the VTHF’s explanatory note sent to all members, Dr Walsh explains the legal costs involved in the unlikely event that the case is lost. He estimates that the costs of providing his Legal Counsel should not exceed $500,000 - this includes setup costs to third parties, a monthly retainer and court appearance costs.

Risks - what if we lose?

In the event of a loss in court, we may be held liable for all court costs and opposing counsel’s legal fees. Our best estimates indicate that this could be $1million or more. In order to provide us with some security, we feel we need to raise $1 million, which will be kept in a Trust Account, administered by an independent 3rd party as a safeguard. Any funds that are not used will be returned to the contributors.

So in effect, we need to raise $1.5million in order to proceed with a safety net. Two thirds will be held in Trust in the event of a loss, and the remaining third will be used to cover the ongoing legal and set up costs of running accounts, administration, and legal counsel costs.

In order to fairly represent both taxi and hire-car licence holders, we have calculated a share system for contribution. This does set a minimum share cost of $215, where one share will cover a hire-car licence and 7 shares will cover a taxi licence. (This is based on the pre-inquiry values of each, where a hire-car licence was almost $70K compared to taxi licence of around $490K).

Therefore, each licence you wish to claim against needs to be registered. In round figures this means:

  • Hire-car Licences  $215 each
  • Taxi Licences  $1500 each

To achieve the total amount needed, only around 1,000 owners are needed to sign up. Given there are 2,500 taxi licence owners in Melbourne alone, some with multiple licences, reaching the necessary figure should be a walk in the park. The return if the case is successful makes a $1,500 punt a no-brainer. Time to show some fighting spirit!

VTHF are now collating your registrations of commitment. This is your commitment to contribute to your share/s, which you agree to pay subject to our reaching a total commitment from all participants of $1.5million (7,000 shares). Only when this is reached, will you be asked to pay. If we do not reach our goal, it is unlikely we can proceed with this action, as it will prove too risky for all individuals involved, and committee volunteers in particular. Communication with registered participants will be closely maintained.

The PowerPoint presentation from this meeting is available on our website.

Deadline for lodging your commitment is 8 August 2016

All parties who would like to be represented must register their interest by no later than 8 August 2016. Please complete the Registration Form and mail or email, together with a copy of your photographic identification, (Driver’s Licence/Passport/Pension Card) to:

Victorian Taxi & Hire-car Families (VTHF)
888 Mt Alexander Road, Essendon VIC 3040
E: This email address is being protected from spambots. You need JavaScript enabled to view it.

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OZ Cabbie February 2017

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