Example problem question and answer

Example problem question

Following concerns regarding the safety of driverless cars, Parliament enacted the (fictitious) Driverless Cars Authorisation Act 2024. The aim of the Act was to require that manufacturers of driverless cars have the approval of the Secretary of State before selling their cars for use within the UK.

Section 1 of the Act states:

Section 1: Authorisation to Sell Driverless Cars

(1) No person may sell a driverless car except under a licence granted by the Secretary of State.

(2) A licence granted under subsection (1) may be subject to any conditions the Secretary of State thinks fit.

(3) The Secretary of State may choose to delegate the powers granted by subsection (1) and (2) to anybody he deems suitable.

The Secretary of State delegated his powers under Section 1 to the Driverless Cars Manufacturer Association (‘DCMA’). This is a self-regulatory body, formed by the various manufacturers of driverless cars. The Secretary of State chose the DCMA because of its expertise.

Initially, the DCMA granted a licence to two manufacturers, AutoDriver and RVT Motors. Both licences were granted on the condition that ‘the licence may be revoked at any time, if the DCMA considers that the safety of the vehicles authorised to be sold is called into question’.

Following three accidents involving cars manufactured by AutoDriver, the DCMA has revoked AutoDriver’s license with immediate effect. It has not given reasons for this decision. AutoDriver has released a public statement maintaining that there is nothing wrong with the safety of their vehicles; the fault for the accidents lay with the drivers of the other vehicles involved. For two of the accidents, the drivers of the other vehicles were over the legal alcohol limit for driving.

It recently emerged that the week before AutoDriver’s licence was revoked, Sir Gerald Chestnut, a former Chief Executive of RVT Motors, had been appointed as the Chair of the Licensing Committee of the DCMA.

Advise AutoDriver.

Example problem question answer

AutoDriver’s issue with the DCMA raises several issues involving judicial review. These include whether the DCMA, as a private organisation, is subject to judicial review; also whether AutoDriver’s licence to sell driverless cars was withdrawn lawfully, in particular whether the DCMA complied with the right to be heard. Another issue is that the DCMA withdrew the licence without giving reasons. Finally, the membership of Sir Gerald Chestnut on the committee that withdrew AutoDriver’s licence raises potential questions of bias. Each of these issues will be considered in turn.

Is the DCMA subject to judicial review?

Prima facie, the DCMA appears to be a private organisation, essentially a trade organisation made up of different manufacturers of driverless cars. Ordinarily, private bodies such as this are not subject to judicial review as they are not public authorities. However, in this instance the DCMA is not acting in a private capacity, but instead has been authorised by the Secretary of State to act on their behalf. As the delegation of power from the Secretary of State to the DCMA is authorised by statute, it will be subject to judicial review.

Because it is authorised by statute, the DCMA can be distinguished from the principles as expressed in Datafin.¹ In this case, the DCMA is ultimately acting under a power authorised by statute. The power under which the DCMA is acting has lawfully been delegated to it by the Secretary of State under Section 1(3) of the Driverless Cars Authorisation Act 2020. As Lloyd LJ stated, ‘if the source of power is a statute … then clearly the body in question will be subject to judicial review’.² By contrast, the issue in Datafin was whether the Panel on Takeovers and Mergers, which was not acting under statute, was subject to judicial review. Given that in Datafin it was accepted that the Panel was subject to judicial review because its power, although not derived directly from statute, was nevertheless ‘governmental’, it is clear that since the DCMA is acting under a statutory power, it would be subject to judicial review.

Right to be heard

Having established that the principles of judicial review apply to the decision by the DCMA to withdraw AutoDriver’s licence, this decision could be challenged on the basis that the DCMA did not follow the rules of natural justice, the right to be heard, and the rules against bias. As Lord Reed stated in R (Osborn) v Parole Board, justice ‘requires a procedure which pays due respect to a person whose rights are significantly affected by decisions taken in the exercise of administrative or judicial functions. Respect entails that such persons ought to be able to participate in the procedure by which the decision is made’.³

The issue with the DCMA’s decision is that they withdrew AutoDriver’s licence without allowing AutoDriver to make any representations on their own behalf: they could have given reasons as to why their licence should not be withdrawn. This contravenes the right to be heard as expressed in Ridge v Baldwin.⁴ In McInnes v Onslow-Fane, the requirements of the right to be heard in any case is explained, and in particular whether fairness requires that a hearing is required before making a decision. Megarry V-C suggested that there were three categories of decision; application, expectation, and forfeiture. Forfeiture decisions are those where a right can be taken away, and so are most likely to require a hearing. This ensures that the person whose rights are at risk can put forward arguments as to why those rights should not be taken away.

The decision to withdraw AutoDriver’s licence is a classic example of a forfeiture decision, and a hearing should have been required. If one was held, this would ensure that the requirements of fairness were fulfilled as it would give AutoDriver the opportunity to respond to the concerns raised about the safety of its vehicles following their involvement in the three car accidents. Having established that a hearing is required, there is then the question as to the form that the hearing should take. Given the importance of the issues, in that without the licence AutoDriver is simply unable to trade in the UK, it seems highly likely that an oral hearing would be required,⁵ and following R v Secretary of State for the Home Department, ex p Tarrant, AutoDriver would be allowed legal representation.⁶

The DCMA gave no reasons when withdrawing AutoDriver’s licence

Another issue is that the DCMA gave no reasons for withdrawing AutoDriver’s licence. Although there is no statutory duty to give reasons, and there is no general duty to give reasons at common law, the common law can require reasons in certain circumstances. ⁷ Following R v Higher Education Funding Council, ex p Institute of Dental Surgery,⁸ reasons are required when the decision is important, or where the decision is aberrant (or, as described in R v Civil Service Appeal Board, ex p Cunningham,⁹ when the decision ‘cries out for some explanation’).

The decision of the DCMA is surely one of these instances, given the importance of the decision to AutoDriver (as stated above, without the licence AutoDriver can no longer legitimately trade in the UK).

Issue of bias

The final issue is the question of bias. If the decision-maker is found not to have complied with the rule against bias, then the decision can be unlawful. The issue here is that the committee within the DCMA which decided to withdraw AutoDriver’s licence was chaired by Sir Gerald Chestnut, who was a former chief executive of one of AutoDriver’s competitors, RVT Motors. As examples of actual bias are rare, and there is no evidence to give rise to actual bias,¹⁰ the focus has to be on the automatic disqualification rule and apparent bias.

Automatic disqualification rule

As shown in Dimes v The Proprietors of the Grand Junction Canal,¹¹ the automatic disqualification rule has generally been found when the decision maker has a financial interest in the decision in question. On the facts presented, it is important that Sir Gerald Chestnut is the former Chief Executive. This means that on the face of it, he does not have a financial interest as an employee. However, it may be possible that he still owns shares in the company or has some other financial interest. If this was the case then Sir Gerald would be disqualified from making the decision.

If Sir Gerald has severed all links with the RVT Motors then it would seem unlikely that he has an interest so closely connected with RVT Motors that the rationale of R v Bow Street Metropolitan Stipendiary Magistrate, ex p Pinochet (No 2) would apply.¹²

Apparent bias

It is more likely that apparent bias would apply. The test for apparent bias is as explained in Porter v Magill;¹³ that is, whether a ‘fair-minded and informed observer’ would conclude that there was a ‘real possibility' of bias. The ‘fair-minded and informed observer’ is deemed to be aware of ‘all the facts that are capable of being known by members of the public generally’ and to apply their judgment to those facts. On this basis, it could reasonably be argued that there is a real possibility that Sir Gerald might be biased in favour of his previous employer, particularly if he has retained an affinity to the company and wishes that it continues to do well.

However, cases such a Taylor v Lawrence may indicate otherwise.¹⁴ In Taylor, the ‘fair-minded and informed observer’ was deemed to have an intricate knowledge of the practices of the legal profession, such that there was no possibility of bias. It might be that if the ‘fair-minded and informed observer’ had knowledge of the driverless cars industry, they may conclude that there is no bias because of its nature.

Conclusion and remedy

Having concluded that the DCMA is subject to judicial review and that the decision to withdraw AutoDriver’s licence is unlawful, on the basis that no reasons were given and that the right to be heard required that a hearing should have been held, the remedy that AutoDriver should seek needs to be discussed. Under the Senior Courts Act 1981, section 31(1), a quashing order should be sought, which would quash the decision and require the decision maker to reconsider the matter in a way which gives effect to the requirements of fairness.

¹ R v Panel on Takeovers and Mergers, ex p Datafin plc and others 1987] QB 815.

² ibid, 849.

³ [2013] UKSC 61 [68].

⁴ [1964] AC 40.

⁵ [2013] UKSC 61.

⁶ [1985] QB 251.

⁷ R v Secretary of State for the Home Department, ex p Doody [1994] AC 531, 564.

⁸ [1994] 1 WLR 242.

⁹ [1992] ICR 816.

¹⁰ Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 [39].

¹¹ (1852) 10 ER 301.

¹² [2000] 1 AC 199.

¹³ [2001] UKHL 67.

¹⁴ [2002] EWCA Civ 90