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knowledge 4 April 2023 |

Regulatory Licensing: Policy can Lawfully Change

A recent decision of the Court of Appeal has reiterated that the policy underlying a regulated market can lawfully change and that generally a market participant that is disadvantaged by such a change need not be compensated for its adverse effects.

The recent decision of the Court of Appeal in Muldoon v Minister for the Environment and Local Government1 considered long-running litigation stemming from the deregulation of the market for taxi licences in 2000.  The judgments are lengthy and deal with many complex legal, regulatory and competition law issues.  Nonetheless, two points in the judgments are especially notable for policy-makers, for regulatory authorities and for those participating in a regulated market.

Policy can lawfully change and so can licences

Mr Muldoon and others held taxi licences that they had acquired in the secondary market for taxi licences that had existed prior to 2000.  At the time, the number of such licences in issue had been capped and so, demonstrating the effects of limited supply and soaring demand, prior to 2000 licences had been trading for large sums of money (typically, many tens of thousands of pounds).  After several unsuccessful attempts to reorganise the market, in 2000 the then-Minister introduced effective deregulation by statutory instrument and the significant value of a taxi licence evaporated overnight.

Several licence-holders claimed that the State had unlawfully interfered with their property rights in the relevant taxi licences or had breached their constitutional right to earn a livelihood.  While the appeal was rejected because of the delay in first bringing the claim that was being appealed, nonetheless the Court considered the merits of the claims related to the licences and made important comments.  Relying on and reiterating some previous decisions on the nature of licences, the Court of Appeal has said that:

  • the policy governing a regulated market can lawfully change from time to time, and
  • irrespective of whether a licence is regarded as a property right or as conferring on the holder the right to participate in a particular market, an incumbent does not generally have any legal complaint or entitlement to compensation if that incumbent suffers harm due to a change in the licensing regime that the new policy causes.

Costello J said:

“It is inherent in the nature of a licence that the property rights arising in licences created by law are subject to the conditions created by law and to an implied condition that the law may change those conditions.  There is no property right in the value of the licence and therefore a regulation which has the effect of devaluing the licence does not interfere with any property right in the licence…”

In respect of the earning potential that the licences offered, she said:

“The appellants were still entitled to work as taxi drivers, they were not entitled to protection against competition or to any guaranteed level of income.  The infliction of a pecuniary loss does not in itself establish that an infringement of the constitutionally protected right to earn a livelihood had taken place.”

The limitation period for challenging legislation: from when does the clock run?

Muldoon also answers an important question as regards the appropriate limitation period to be applied in a challenge to legislation.

Even though Mr Muldoon was seeking damages, the claim was in substance a public law claim to which Order 84 of the Rules of the Superior Courts 1986 applied.  Therefore, the Court held that the application ought to have been brought “promptly” and, even then, in any event within three months of the date when the grounds for the application first arose.  While the running of time may be postponed if legislation has a “continuing impact” on a person, in Muldoon the legislative change in 2000 had immediate effect on him and so the claim had been brought well outside the permitted time.

Key takeaways

Participation in a regulated market is subject to the implied condition that the policy and structure of that market may change.  When change does occur, generally a market participant that is disadvantaged by such a change will not be entitled to compensation for its adverse effects.

  1. [2023] IECA 61 (16 March 2023).

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.