The case for owner class action

Has the NSW Taxi Council sold out to the Baird government? It certainly looks that way. At its meeting at the Wesley Centre on 2 February it went to great lengths to convince the crowd of 300 plate owners that any attempt to sue the Government for compensation would be a waste of time and money. It even featured a lawyer from a ‘reputable’ law firm to explain why. Strangely, none of the plate owners I spoke to after the meeting could remember either the name of the lawyer or that of the law firm. When I asked Taxi Council CEO Roy Wakelin-King he refused to tell me on the grounds that “the meeting was confidential”. A couple of the brighter plate owners did pop up demanding a second opinion, but that idea collapsed when they were told what that would cost. In 2013 a Sydney taxi licence was worth around $400,000. Today you’d be lucky to get $150,000. In a few months that could be $50,000 – and you worry about the cost of getting independent advice? There are 4000 plate owners in Sydney. If you chipped in $1,000 each, you would have $4 million in the kitty, enough to fight the Government all the way to the High Court if necessary. Instead you rely on the questionable advice provided by the Taxi Council, an organisation controlled by Cabcharge and Silver Top. They’re the main shareholders in ihail Pty Ltd, which is seeking the government’s support to get their new cartel through the ACCC. In the big scheme of things plate owners have become dispensable to this mob. Your only chance is to find a law firm with a successful record in class actions to prosecute your case against the government - totally independent of the Taxi Council.

In 1999 the Productivity Commission released a research paper entitled “Regulation of the Taxi Industry”. Its primary purpose was to argue for the deregulation of the industry and to canvas the various options available to state governments when doing so. Two methods took prominence – ‘phasing’ and a ‘buyback’. The problem with ‘phasing’ is`, it said, that it would take years and the problem with a ‘buyback’ that it could be costly. There was a third option; ‘deregulation without compensation’ as had happened in New Zealand three years earlier. However, the Commission acknowledged that there were a string of legal reasons why such an act might not work in Australia and that ultimately claims for compensation would have to be resolved by the courts.

by Peer Lindholdt

Disclaimer: I am not a lawyer and the content of this article does not constitute legal advice.

Now, for someone like me, who doesn’t own a taxi plate and never have, to worry whether or not a government shafts a bunch of largely first generation migrants who one way or the other managed to buy a taxi plate or two, believing they were investing in an asset as secure as houses, may seem absurd. Why would I, or anyone else for that matter, care whether a government suddenly decides to change the law to effectively destroy their asset? Because, to do so would be grossly unfair, immoral and an act of bastardry. Because these assets and their growth in value were created by the very governments that are now planning to destroy them. It was not the market, as with shares or real estate, which forced up the value of plates, it was the deliberate restriction on supply by our state governments, who over the years have advertised new licences as a golden opportunity for ‘mum and dad’ investors to own their own business. For the past 34 years 80% of plate owners have consisted of ‘mum & dad’ investors who are either still driving a taxi or did so for many years to pay off their plate, with many retiring in the belief that they had built a  secure nest egg. I mean, if you can’t trust your government, who can you trust, your network or your taxi council? Some diehards still do.

The Productivity Commission’s report was an attempt to motivate all states to deregulate their taxi industry. However, it recognised that the circumstances differ between states and it was therefore only canvassing policy options rather than endorsing any particular approach.

In this article I’m not canvassing different policy options. To me there is only one: Government to buy back all perpetual plates at a fair and reasonable price and If not voluntarily, as determined by a court. Then to reduce its taxi plate lease fees to $5,000 p.a. so we can compete with minicab (ridesharing) services on the much-touted ‘level playing field’.

That of course is not going to happen unless plate owners are prepared to challenge their government in court. Here are some reasons why a class action is likely to succeed – Precedents, Perception of Fairness and Deceptive Conduct.

Precedents

  1. In 1996 the Government of the Northern Territory deregulated the taxi and hire car industry and bought back all plates at market value.
  2. Both when the egg and dairy industries were deregulated in NSW in the ‘90s farmers were paid compensation for the loss in value of their respective market quotas. Like taxi licences, quota numbers were restricted by government, tradable and transferable. Like taxi licences these ‘quotas’ were valuable assets.
  3. In 1999 the NSW Government halved its own lease fee for hire car plates, from $16,000 to $8,000 causing perpetual HC licences to drop in value from $150,000 to $75,000. However, the then Carr Labor Government realised this was grossly unfair, so in 2003, as compensation, it gave each of the 350 HC plate owners a 20-year transferable regular taxi plate on the condition they surrender their perpetual HC plate to the DoT. They did, they sure did, and leased it back for eight grand while leasing out their free taxi plate at whatever the market dictated. Over the 20 years that will probably amount to an income of something like $450,000. Now, that’s what I call compensation. It’s also what is called a precedent.
  4. More current is the 2015 buyback of commercial net-fishing licences announced in Queensland and Victoria. Historically commercial fishing licences have become valuable assets due to government restrictions on numbers. Sound familiar?

CASE VIC: 22 Oct 2015 “Commercial net fishing in Port Phillip Bay will cease by April 2022, under a $27 million compensation package unveiled by the Andrews government that has been blasted by the commercial fishing industry.

Forty-three licence holders will be affected by the move, some of whom have been fishing in the bay for decades, and who have followed in the wake of their fathers and grandfathers”.

$27 million to compensate 43 fishermen! The same government that has offered $4 million to an industry with 2,500 taxi licence owners.

CASE QLD: 21 Aug 2015 “The Queensland Government will cancel some commercial fishing licences after implementing its new net-free fishing zones near Mackay and Rockhampton.

Licence buy-backs and compensations will be two settlement packages offered to commercial fishermen, Fisheries Minister Bill Byrne told the Opposition during budget estimates on Friday.

He said $10 million had been set-aside for fishermen who wanted to transition out of the industry.

“We will be paying an attractive price for those licences plus an incentive to go with that,” he said.

Under the package, the first commercial licences could be surrendered from April next year. The government has announced compensation payments in the first year will range from $350,000 up to $1.6 million to licence holders, “depending on catch histories.”

No doubt a top class legal team could dig up more and better examples than the above but I doubt it would be necessary.

As the Point to Point Taskforce pointed out in its report: “For example, it is arguable that the provision of compensation to NSW hire car licence owners when entry was liberalised in 2003 reinforced an expectation of compensation for taxi licences, and that this has been factored into the price. In the absence of this precedent, investors would have weighed the policy risk more carefully.” 

Perception of fairness

The NSW Government has offered NSW plate owners a blanket compensation package of $20,000 for one plate and $40,000 for two or more. To confuse the issue it is discriminating between owners based on for how long they have owned their plate(s). Those who bought plates after 2006 can apply for additional compensation provided they could prove they are experiencing severe financial hardship caused by the reforms. The more recent the purchase, the higher the compensation.

This is called ‘wedge politics’ and is a deliberate attempt by the government to avoid a class action by destroying unity amongst owners. The Taxi Council is colluding in this effort. Only a court can decide whether the ‘adjustment package’ meets the ‘perception of fairness’ test. Any reasonable person would say “It does not”!

In its report the Productivity Commission wrote: “There is no clear cut rule as to when compensation does, or does not apply if government action erodes the value of government created ‘property rights’. Aside from property rights, the consideration of compensation can also hinge on notions of fairness.”

For more than 30 years owning a perpetual taxi licence has come with property rights treated similarly to those of real estate. The reforms will eliminate those rights. Perpetual plates will eventually be turned into annual leases with a 9-year life span, TfNSW has revealed. So not only is the government eroding their value, it is also planning to repossess them through compulsory acquisition.

In 2003 IPART estimated the combined value of perpetual licences in Sydney to be between $1.2 and $1.3 billion, by 2014 that had doubled to around $2.5 billion. In 2016, as a result of the reforms, that valuation has dropped by $2 billion. The public, not the government, as it likes to pretend, will provide $250 million through a $1 levy on all point-to-point fares for up to 5 years, to fund the so called ‘industry adjustment package’. It’s a giant scam and the Taxi Council is an active partner in its execution.

If plate owners want fair compensation they will have to fight for it … independent of the Taxi Council.

Deceptive Conduct

For 16 years IPART has been conducting annual reviews of the NSW taxi industry according to a set of guidelines (Terms of Reference) provided by the transport minister of the day. IPART’s job was to recommend fare adjustments and the number of additional taxis needed to meet the demand of a growing population. Every year the Terms of Reference have contained a paragraph stating that when considering the number of new licences to be released it should ensure that “it would not have an unreasonable impact on existing licence holders”. The 2015 legalisation of ‘ridesharing’ and the proposed reforms of the taxi industry would, by any reasonable person, be seen as having had not just an unreasonable, but a devastating impact on plate owners. For 16 years they have been led to believe that the government would protect their asset from any sudden market collapse. This belief was further strengthened by its annual tendering of new annual licences at rates above the lease rate in the private market. Then came UberX.

To avoid a stampede of sellers, the networks who control the plate market, and their front organisation, the NSW Taxi Council, told the plate owners to trust them, that they were negotiating with TfNSW and Transport Minister Constance personally for ‘a level playing field’ and a fair deal. At every opportunity the mafia troika of Wakelin-King, Bowe and Wilkins have turn up to tell ‘the peasants’ not to jeopardize their negotiations by upsetting the government with demonstrations or blockades of the city, airport or Bridge. Shamelessly these conmen advised their sheep to hold on to their fleece even as it is burning and to not even entertain the idea of a class action against the pyromaniac (TfNSW). These three stooges even had the gall to tell the sheep at the Wesley Centre that the government has no obligation to pay any compensation at all and that any kind of action against it could jeopardise the offer already on the table.

If John Bowe told them that Reg Kermode is still alive and living on the North Pole, they would probably believe that too.

Who said “nothing ventured, nothing gained?” Believe me, the meek and the gullible won’t inherit the earth.  •

 
 
 
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OZ Cabbie February 2017

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