On Matters Relative to Leasing

Is Leasing Legal?

A recent inquiry on the InterNet asked:
Are leasing or rental arrangements prohibited by the Manitoba Taxicab Board?

Yes, although those specific words will not be found in any regulation. Under common law, taxicab business licences have imbedded within them a legal principle called "care and control".

The licence holder is only authorized to "operate a taxicab for hire". That's all. Only the licence holder may "operate" a taxicab for hire. A licence holder may be the driver, but more importantly as the holder of the licence, he must exercise or have care and control of the vehicle at all times.

If any attempt is made to lease a licenced taxicab, then the licence holder is not only doing something not authorized by the licence, but he's also abandoning his responsibility for care and control of the vehicle.

Under a leasing arrangement, a lessee is the one "operating a taxicab for hire". But the lessee is not the licence holder, therefore a lessee would be operating a taxicab for hire without a licence to do so.

Furthermore, such an arrangement automatically absolves an insurance company of any liability in the event of a claim of any kind. Effectively then, a lessee is operating a taxicab for hire without the authority to do so, and without insurance.

Under the "care and control" legal principle, the licence holder has full responsibility for the operation of the taxicab, which can only be properly exercised if the driver is controlled, something that cannot be done under a leasing arrangement.

From an InterNet discussion 1 May 2000

Designated Agents

In Toronto, Designated Agents are individuals to whom owners assign to act as agents for their cabs. The individual can be a driver, another owner or broker. The By-law appears to recognize designated agents and only requires that they file a written notice of agreement with the Licensing Commission.

Interesting situation. How is it that owners are even allowed to have yet another level of action between holding the actual plate and the actual delivery of public service? Does the By-Law truly "allow" Designated Agents or is it an absence of legislation which by liberal interpretation people infer "allow"? Where does imbedded care and control over both the vehicle and the driver come into the equation?

If in fact, Designated Agents really are "allowed" under hard legislation, did that happen as a conscious MLC decision taken in good knowledge, or was it something that just slipped through back in antiquity without real awareness of eventual consequences?

As described, it would seem that licence holders somehow escape responsibility for care and control imbedded in the issuance of all licences, escape responsibility for whatever happens to that plate when in use, and escape responsibility for legislative and regulatory requirements attached to all licences as a simple matter of common law.

From an InterNet discussion 24 April 1997


There is a subtle legal issue about leasing that may pose problems in some jurisdictions, depending on its licencing legislation/regulations. A Taxicab Business Licence (or medallion, permit, or whatever name it goes by) typically states that the "holder of this licence is hereby authorized to operate a taxicab for hire, from the date shown above to 28 February 1997". Wording may vary from one jurisdiction to another.

What this typically means is that the licence holder is authorized to "operate", which carries with it imbedded "care and control" over the vehicle and the driver. If the licence holder is authorized to "operate", then that is all he is authorized to do. He is not authorized to "lease", for that is not what the licence states.

With leasing in place, many licence holders go to extraordinary measures to prove with absolute legal clarity that they have no care and control over the vehicle or the driver. However, in the event of an accident, injury, crime, mayhem of any sort, who is in charge? The licence holder is in charge and is responsible, absolutely regardless of whatever "arrangements" are in place between the lessee and the lessor.

A curious situation then emerges that seems to have escaped the attention of the insurance companies and regulatory authorities. Within a licence to operate, care and control of the vehicle and the driver is imbedded within common law. However, if a lease is in place with companion denial of care and control by the licence holder, then who does have care and control?

The driver has care and control of the taxicab, but in common law is in non-compliance because he does not hold a licence to operate a taxicab for hire. He may have a licence authorizing him to "drive" a taxicab, but that does not authorize the driver to operate a taxicab for hire as a business.

This situation emerged out of the "good old days" when typical taxicab companies owned the vehicles, held the licences in their own names, employed the drivers, trained them, supervised them, disciplined them, and did whatever it took to instill pride, self-esteem, and excellence of public service. On this, revenues were based.

That changed quite significantly when changes to the tax laws provoked emergence of the independent contractor, as many regulatory authorities tended not to notice this subtle change and in many jurisdictions never did catch up.

I do not disagree that leasing can be a positive experience in dispatch companies characterized by knowledgeable, caring, and responsible management. However, by the very nature of leasing and its impact upon the widespread independent contractor, severe atomization emerges as a natural consequence in far too many cases. Cohesive, consolidated supervision becomes an extremely difficult task.

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