TurnerLegal Regulatory Consulting & Compliance (Pty) Ltd. Reg. No: 2013/110067/07

Memeburn - The legal view: what actions can Uber take when it comes to its impounded vehicles?

The legal view: what actions can Uber take when it comes to its impounded vehicles?

The recent controversy surrounding the impoundment of Uber affiliated taxis in Cape Town has highlighted the need for consumers to be more aware of who they do business with. Uber, an app-based transportation platform headquartered in San Francisco, California, launched in Cape Town last year. The company uses a smartphone application to receive ride requests, and then sends these trip requests to affiliated drivers.

While Uber affiliated taxis operate much like metered taxis do, they do not use actual meters, relying on electronic pre-payment and GPS to determine the distance covered. Uber has been well received in Cape Town for its affordability, user-friendliness and quality of service.

However, Uber made headlines at the beginning of January this year, when over 30 motor vehicles operating for Uber were impounded by the City of Cape Town’s traffic police. Passengers in the vehicles at the time were reportedly left to find alternative transport to their destinations. The city officials said among other issues, there was ambiguity relating to the correct licensing category applying to Uber partners. Following the impoundments came the news that increasingly agitated metered taxi operators in Cape Town were urging action against Uber for allegedly operating illegally. Uber has criticized the impoundments and stated that it takes great care to carry out background checks to ensure its affiliated drivers have a valid PDP, operating license, roadworthy certificate and commercial insurance.

Laws on impoundment

While we cannot speculate on Uber’s gripe with the impoundment of these motor vehicles, we can look at the regulatory framework governing the impoundment of motor vehicles and thus extrapolate possible reasons for the impoundment.

The National Land Transport Act, 2009 (hereinafter referred to as ‘the NLTA’), which regulates the provision of road-based public transport services, states that a motor vehicle used for the operation of public transport may be impounded by an authorised officer only if that motor vehicle is being used without the necessary operating licence or permit or contrary to the conditions as stipulated in the operating licence. The only offences that warrant impoundment as listed in Section 90(1)(a) or (b) of the NLTA is operating without a valid operating licence or operating contrary to the conditions stipulated in an operating licence.

Thus, we can reasonably infer that in all probability the drivers of the impounded motor vehicles either did not possess valid operating licences at all or were operating in contravention of the conditions as stipulated in their operating licences.

Who needs an Operating Licence?

The NLTA states that no person may operate a road-based public transport service unless he or she is a holder of an operating licence. A public transport service is defined under the NLTA as follows:

“A scheduled or unscheduled service for the carriage of passengers by road or rail, whether subject to a contract or not, and where the service is provided for a fare or any other consideration or reward…”
Therefore, no person or company may provide a public transport service without possessing a valid operating licence.

Operating licences are issued by Provincial Regulatory Entities according to certain classes and/or categories of motor vehicles, which include a scheduled service, an unscheduled service (which includes a minibus taxi-type service), a charter service, a long distance service, a metered taxi service, a tourist service, a staff service, tuk-tuks, adapted light delivery vehicles and a learner service.

The taxi industry is highly regulated to ensure that routes are not oversubscribed. When a person applies for an operating licence, the Provincial Regulatory Entity will consult with the City of Cape Town to ensure that a specific route or area is not oversubscribed and will play an important role in rejecting or granting an application for an operating licence.

The City of Cape Town takes this role very seriously as the oversubscription of routes may lead to violence and protests, a case in point being the minibus taxi wars in 2013.

Who is the operator?

Uber is a platform providing a service to drivers, namely finding passengers for drivers. Uber, therefore, does not provide a public transport service and the taxi driver is the operator.

This means the onus is on the driver of the motor vehicle to acquire a valid operating licence. Although Uber is not a public transport service provider, their reputational integrity is inextricably linked to the provision of a public transport service.

Uber’s responsibilities

Uber should not get involved in the public transport service debate, however, it needs to ensure that the operators it assigns to consumers have the necessary operating licences and the conditions stipulated in those operating licences allow the operators to travel to the required destination. This is an internal process between Uber and its operators.

Uber is correct in its submission that the form of public transport envisaged does not fall within the categories as provided for in the NLTA. The taxis associated with Uber are ordinarily viewed as metered type taxis, the shortfall being that Uber does not use sealed meters to determine the fare at the end of a trip but uses a predetermined fare based on distance.

In order to comply with the NLTA and thus obtain a valid operating licence, taxis associated with Uber simply need to install meters in their motor vehicles. Taxis associated with Uber are not bound to only transport passengers as referred to them by Uber and can utilise their meters in the conveyance of passengers not associated to Uber.

What consumers can do

Uber administers the fares paid by consumers and acts as an ’agent’ between the operator and consumer, taking a ‘finder’s fee’ from the cost of the fare.

While Uber may not necessarily have any legal obligations to reimburse consumers, from a business and ethical perspective it is advisable that Uber attend to the reimbursements of consumers who were left stranded due to the impoundments, particularly in the mitigation of their business reputational risk.

To protect themselves, consumers can request that a taxi driver produce an operating licence when they enter the taxi. In the event that the driver does indeed possess an operating licence, we strongly advise that consumers also check that their intended destination falls within the route or area stipulated in the operating licence. If the consumer’s destination falls outside this route or area, consumers are advised to get out of the taxi immediately.

Date of Publication: 29 January 2015, Author: TT Publication: