Stewart (AP)(Respondent) v. Perth and Kinross Council (Appellants)(Scotland) [2004] UKHL 16

House of Lords
[2004] UKHL 16
Between
StewartRespondentPerth and Kinross CouncilAppellant
Before
Baroness Hale of RichmondLord CarswellLord Hope of CraigheadLord Rodger of EarlsferryLord SteynDate 1 April 2004
[1]I have had the advantage of reading the opinions of my noble and learned friends Lord Hope of Craighead, Lord Rodger of Earlsferry, Baroness Hale of Richmond and Lord Carswell. I agree with their opinions. I would also dismiss the appeal. LORD HOPE OF CRAIGHEAD My Lords,[2]The respondent has for many years carried on business as a dealer in second-hand motor vehicles. The place where he carries on this business is within the area for which the appellants are the local authority and, as such, the licensing authority for the purposes of Part II of the Civic Government (Scotland) Act 1982 ("the 1982 Act"). Section 9 of the 1982 Act enables a licensing authority to resolve that the carrying on in its area of any of the activities mentioned in sections 10 to 27 and 38 to 44 of the Act requires to be licensed in accordance with the provisions of that Act and is to be regulated by those provisions. Among the activities mentioned in Part II is the carrying on of a business as a second-hand dealer. On 4 December 1985 the Property and General Purposes Committee of the appellants' statutory predecessors, Perth and Kinross District Council ("the District Council"), resolved that all dealers purchasing or selling second-hand motor vehicles within the District would require to be licensed with effect from 1 February 1986.[3]The respondent first applied for a licence for his second-hand motor vehicle business in 1986. His application was granted, and a licence was issued to him which was valid until 31 July 1987. The licence was subsequently renewed until 31 July 1990. During 1990 the respondent applied for a renewal of the licence, and a further licence was issued to him. It was valid until 31 July 1993. In 1993 he applied for a further renewal of his licence. His application was considered by the District Council's General Purposes (Licensing) Sub-Committee at meetings which were held on 4 and 18 February 1994. The Sub-Committee refused to renew the respondent's licence on this occasion, on the ground that he was not a fit and proper person to hold a licence. Among the reasons that were given for the refusal was the following:
"He consistently failed over a long period of time to observe the conditions of the licence in respect of pre-sales information sheets and pre-sales inspection reports despite having these matters drawn to his attention on several occasions. The Sub-Committee regard the ability of a licensee to comply with the conditions of a license to be an essential part of the licensing system."
[4]On 13 February 1995 the sheriff pronounced an interlocutor remitting the respondent's application for the renewal of his licence to the District Council for reconsideration. On 6 December 1995 the sheriff's interlocutor was recalled by the Court of Session. On 4 May 2000 the respondent presented a petition to the Court of Session for judicial review of the decision of the District Council to refuse to renew his licence on the ground that its decision was ultra vires. On 15 June 2001 the Lord Ordinary refused the petition. On 1 October 2001 an Extra Division (Lords Coulsfield and Johnston, Lord McCluskey dissenting) recalled the Lord Ordinary's interlocutor, granted the prayer of the petition and declared that the decision to refuse renewal of the licence was ultra vires of the District Council and taken without legal warrant.[5]The only live issue at the end of the hearing before the Extra Division was whether the 1982 Act conferred power upon the licensing authority to subject the respondent's licence to a condition which had been inserted in the licences which were issued to him. The condition was in these terms:
"2.5(a) If the licence holder intends to display for sale/sell any vehicle to a member of the public he must - (i) carry out an inspection and prepare a full Inspection Report on the vehicle prior to it being displayed for sale/sold and make a copy of the Report available for inspection by any prospective purchaser while the garage/showroom is open, in accordance with the sample Inspection Report issued and in a style approved by the Council (see Appendix 2 and Note 3); (ii) display a summary Information Sheet in a prominent position in the vehicle displayed for sale so that it is clearly visible indicating that the vehicle has been inspected, that a full Inspection Report may be consulted in the office/showroom prior to sale and that the purchaser will receive a copy of the Report at the time of sale, in accordance with the sample Information Sheet issued and in a style approved by the Council (see Appendix 3); (iii) complete all sections of the Inspection Report as appropriate and provide the purchaser with a copy of the Inspection Report, which should be signed by both the purchaser and the dealer and dated, at the time of sale; and (iv) retain one copy of the above Inspection Report as part of his records for at least three years."
[6]The sample Inspection Report in Appendix 2 is headed "Used Vehicle Pre-Sales Inspection Report". It requires details of the make, model, colour and certain other details of the vehicle to be inserted. A box is provided in which the odometer reading is to be inserted, against which a statement must be made as to whether it is correct or unverified. Alongside it is another box in which the approximate true mileage is to be inserted, if different from the odometer reading. Beneath these boxes there appear three columns by which provision is made for a detailed examination of various parts of the vehicle to be carried out as listed in column 1, for any defects outstanding to be noted in column 2 and any work carried out before delivery to be stated in column 3 alongside the list of the parts to be examined which are set out in column 1. Beneath these columns the form states:
"The findings of the above report take into account the age and price of the used vehicle described. To be completed on sale of vehicle"
. Provision is then made for the price to be inserted, beneath which there are spaces for the signature of the purchaser and the dealer. Above the space for the purchaser's signature there are these words:
"I acknowledge receipt of a copy of this inspection report."
Beneath the spaces for the signatures the purchaser is told:
"If you purchase this vehicle it is in your interest to keep this report."
Three copies are to be made of this form: a white copy for the purchaser, a yellow copy for the dealer's showroom and a blue copy for the dealer's workshop. Note 3 of the Notes attached to the licence states:
"The defects listed in column 2 of the Report do not need to be rectified before the vehicle is displayed for sale, provided any work carried out at the time of sale is detailed in column 3 and the vehicle is sold in a roadworthy condition and complies with the provisions of the Road Traffic Acts."
[7]The sample Information Sheet in Appendix 3 is headed "Used Vehicle Pre-Sales Information Sheet". It requires details of the make, model and colour of the vehicle, the number of owners, the date of its first registration and certain other details to be inserted, as well as the odometer reading. It requires a statement to be made as to whether the odometer reading is correct or unverified. It provides a space for any other comments. It then states:
"A full report has been completed on this vehicle and is available in the showroom/office. A copy of this report will be given on the day of delivery."
[8]The power which is given to the licensing authority by the 1982 Act to attach conditions to a second-hand dealer's licence is set out in section 24(4), which provides:
"Without prejudice to paragraph 5 of Schedule 1 to this Act, a licensing authority may, after consultation with the chief constable, attach conditions to a second-hand dealer's licence requiring the keeping of records in relation to the dealer's stock-in-trade; and conditions so attached may, without prejudice to the authority's power under this subsection, include provision as to - (a) the information to be included in these records; (b) their form; (c) the premises where they are to be kept; and (d) the period for which they are to be kept."
[9]Paragraph 5(1) of Schedule 1 to the 1982 Act provides:
"Where an application for the grant or renewal of a licence has been made to a licensing authority they shall, in accordance with this paragraph - (a) grant or renew the licence unconditionally; (b) grant or renew the licence subject to conditions; or (c) refuse to grant the licence."
Paragraph 5(2) of Schedule 1 provides:
"The conditions referred to in sub-paragraph (1)(b) above shall be such reasonable conditions as the licensing authority think fit and, without prejudice to that generality, may include - (a) conditions restricting the validity of a licence to an area or areas specified in the licence; and (b) in relation to the grant of a licence, where that licence is intended to replace an existing licence, a condition requiring the holder of the existing licence to surrender it in accordance with paragraph 13 below."
Paragraph 13(1) of the Schedule provides that a licence may be surrendered to the licensing authority at any time and that it shall thereupon cease to have effect.[10]Condition 2.5(a) falls within the power which is given to the licensing authority by section 24(4) of the 1982 Act, to the extent that it requires information to be included in the dealer's records, the form which that information is to take, the premises where the information is to be kept and the period for which it is to be kept. But it is plain that the condition does more than require the dealer to record and keep information. It also requires the dealer to give information to the purchaser.[11]The power in section 24(4) to attach conditions to the licence is stated by the opening words of that subsection to be without prejudice to paragraph 5 of Schedule 1. Paragraph 5(1)(b) of the Schedule gives a general power to licensing authorities to grant or renew a licence subject to conditions. Two conditions are mentioned in paragraph 5(2) which have nothing to do with the giving of information by a second-hand dealer to the purchaser. But these conditions are stated to be without prejudice to the generality of the opening words of the sub-paragraph. Those words give power to the licensing authority to attach "such reasonable conditions" to the licence as it may think fit. It is to those words that one must go if one is to discover whether those parts of condition 2.5(a) which require information to be given to the purchaser are within the power to attach conditions that is given by the 1982 Act to the licensing authority.[12]Two questions then require to be addressed and answered. The first requires a close analysis of condition 2.5(a) and its effect. The second requires an examination of the scope of the power which the Act gives to the licensing authority. If the effect of the condition is to require the second-hand car dealer to do more than a licensing authority is empowered to require him to do, the condition must be held to be ultra vires of the District Council which attached it to the respondent's licences. What is the effect of condition 2.5(a)?[13]The effect of condition 2.5(a) depends in the first place upon what it requires the dealer to do. This matter is best addressed by looking at those things that go beyond tasks relating to the recording and keeping of keeping of information which fall within the scope of the licensing authority's power to impose conditions on second-hand dealers in section 24(4). It is convenient to identify these additional tasks in the order in which they appear in the sub-paragraphs of condition 2.5(a).[14]Sub-paragraph (i) requires the dealer to "make a copy of the Report available for inspection by any prospective purchaser." Sub-paragraph (ii) requires him to "display" the Information Sheet "in a prominent position in the vehicle displayed for sale so that it is clearly visible." Sub-paragraph (iii) requires him to "provide the purchaser with a copy of the Inspection Report, which should be signed both by the purchaser and the dealer." These provisions have to be read together with the contents of the Report and the Information Sheet. The Information Sheet is the document that will be seen first by the prospective purchaser. It contains a representation as to whether the odometer reading is correct or unverified, an assurance that a full report has been completed on the vehicle and a promise that a copy of it will be given to the purchaser on the day of delivery. The Report contains representations as to whether the odometer reading is correct or unverified and its approximate true mileage, representations about the state of the vehicle following an examination of the matters listed in column1 taking into account its age and price, and advice to the purchaser that it is in his interest to keep the Report.[15]The next question is what effect, if any, these additional tasks have on the dealer's contract with the purchaser. The contract is one of sale to which the provisions of the Sale of Goods Act 1979 apply. That Act was amended in various important respects in relation to contracts made on or after 3 January 1995 by the Sale and Supply of Goods Act 1994. As the licence which is under review in this case was issued to the respondent in 1990, its effect at the time that it was issued must be judged in the light of the provisions of the Sale of Goods Act 1979 as they were prior to their amendment by the 1994 Act.[16]The relevant provisions of the Sale of Goods Act 1979 are these:
"13. Sale by description. (1) Where there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description." "14. Implied terms about quality or fitness. (1) Except as provided by this section and section 15 below and subject to any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract of sale. (2) Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition - (a) as regards defects specifically drawn to the buyer's attention before the contract is made; or (b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal. (3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known - (a) to the seller… any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller … (6) Goods of any kind are of merchantable quality within the meaning of subsection (2) above if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances."
[17]It should be noted in passing that section 14 of the 1979 Act as amended by the Sale and Supply of Goods Act 1994 now provides that, where the seller sells in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality and that, for the purposes of the Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances: subsections (2) and (2A) as substituted for the former subsection (2) by section 1(1) of the 1994 Act. As the law now stands, the description of the vehicle in the Inspection Report is one of the circumstances to be taken into account in a consideration as to whether or not the vehicle meets the required standard.[18]There was no requirement at common law or under the Sale of Goods Act 1979 for the dealer to make any representations to the purchaser about the mileage, condition or state of repair of the vehicle. If nothing was said on either side, the position under the law as it stood in 1990 was that the dealer was bound only by the implied condition in section 14(2) of the 1979 Act that the vehicle which he supplied under the contract was of merchantable quality within the meaning that is given to that expression by section 14(6). But the mere fact that there were defects in the vehicle at the time of delivery would not necessarily mean that it was not of merchantable quality, bearing in mind that the standard to be achieved depends on the market at which the vehicle is aimed and that deficiencies might be acceptable in a vehicle which is being sold as a second-hand vehicle: Rogers v Parish Ltd [1987] QB 933, per Mustill LJ. If the purchaser made known to the dealer that he wanted to purchase the goods for use as a vehicle, so as to show that he relied on his skill or judgment, the dealer would be bound also by the implied condition in section 14(3) that it was reasonably fit for the purpose as a vehicle to drive along the road: see Bartlett v Sidney Marcus Ltd [1965] 1 WLR 1013, 1016C per Lord Denning MR. It is obvious that there was a considerable overlap between these two implied conditions.[19]But if, on the other hand, the dealer said something which could be construed as a representation on which the purchaser relied and which induced him to enter into the contract, different consequences might well follow. The effect of attaching condition 2.5(a) to the licence was to require the dealer to make a series of representations in writing about the mileage, condition and state of repair of every vehicle which was exposed for sale in his premises. Statements which a vendor makes at or about the time of the completion of an agreement may be treated as representations on which the purchaser was entitled to rely and, as such, as part of the agreement: see Scott v Steel (1857) 20 D 253, 257, per Lord Wood. In that case a purchaser who bought a horse upon a representation by the horse-dealer that the horse was steady in harness and quiet to ride was held to be entitled to return the horse and to repayment of the price when it turned out not to be.[20]It is also not inconceivable that an honest dealer might take less than ordinary care in the carrying out of the inspection of the vehicle and the recording of the relevant details on the Inspection Report - in other words that he might carry out these tasks not fraudulently, with the intention of misleading the purchaser, but negligently. The effect of the condition was to expose him to the risk of providing the purchaser in that event with a remedy in damages in circumstances where the purchaser would not have had a remedy for a breach of one or other of the warranties in section 14 of the Sale of Goods Act 1979.[21]It was at one time the law in England that an innocent misrepresentation gave no right to damages: Heilbut, Symons & Co v Buckleton [1913] AC 30. That rule was modified in England by section 2(a) of the Misrepresentation Act 1967. A similar rule to that which had applied in England was also part of Scots law: Manners v Whitehead (1898) 1 F 171; Eastern Marine Services (and Supplies) Ltd v Dickson Motors Ltd , 1981 SC 355; Twomax Ltd v Dickson, McFarlane & Robinson , 1983 SLT 98. In Eastern Marine Services (and Supplies) Ltd v Dickson Motors Ltd the pursuer agreed to purchase a second-hand car from a car dealer on the basis of an assurance that the mileage shown on the odometer was genuine. It was alleged that this assurance was false and that the pursuers were entitled to damages. The action was dismissed on the ground, among others, that in an action founded on misrepresentations inducing contract the representations had to be fraudulent and that the pursuers' pleadings contained no such averment.[22]This rule was abolished by section 10(1) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, on the recommendation of the Scottish Law Commission. Section 10(1) provides:
"A party to a contract who has been induced to enter into it by negligent misrepresentation made by or on behalf of another party to the contract shall not be disentitled, by reason only that the misrepresentation is not fraudulent, from recovering damages from the other party in respect of any loss or damage he has suffered as a result of the misrepresentation; and any rule of law that such damages cannot be recovered unless fraud is proved shall cease to have effect."
[23]By the date when the condition was attached to the respondent's licence it was sufficient to entitle the purchaser to a remedy in damages that he was induced to enter into the contract by the seller's representations and that these representations were negligent.[24]It seems to me to be clear in these circumstances that the effect of attaching the condition to the licence was to affect the contractual relationship between the dealer and the purchaser in a way that, in the event of a dispute about the condition of the vehicle when it was purchased, could prove to be highly material. As Lord Coulsfield said in the Extra Division, a report authenticated and handed over to the purchaser as the condition requires is bound to have considerable importance in any dispute: 2003 SC 551, 557G-H, para 15. The dealer cannot escape from these consequences without refraining from making these representations, which he cannot do without breaching the condition. Any attempt by him to exclude his liability for any innocent misrepresentation contained in the Inspection Report will be void against the consumer in the case of a consumer contract if it was not fair and reasonable to include the term in the contract: section 16(1)(b) of the Unfair Contract Terms Act 1977. What does para 5 of Schedule 1 permit?[25]The question that must now be addressed is whether a condition which has this effect requires the dealer to do more than the licensing authority is empowered to require him to do. Does the 1982 Act permit the licensing authority to impose conditions on the second-hand motor vehicle dealer which regulate the terms on which he trades with his customers?[26]This question raises an issue of statutory construction. Where an authority which is clothed with statutory powers orders something to be done and accompanies this with some sanction or penalty for a failure to do it, this restricts the freedom of action by persons who are affected by it, who would otherwise be free to do as they pleased: Kruse v Johnson [1898] 2 QB 91, 96 per Lord Russell of Killowen CJ. It is a general rule of construction that, while the legislature may make whatever changes to the law that it likes, subordinate legislative authorities can make only such changes in the law as Parliament has empowered them to make. This rule was applied in Rossi v Magistrates of Edinburgh (1904) 7 F (HL) 85, where conditions in an ice-cream vendors' licence which restricted their right to open their shops when they liked and sell what they pleased were held to be ultra vires of the licensing authority; see also Spook Erection Ltd v City of Edinburgh District Council , 1995 SLT (Sh Ct) 107. It was also applied in Mixnam's Properties Ltd v Chertsey Urban District Council [1965] AC 735, in which it was held that the local authority was not entitled under the Caravan Sites and Control of Development Act 1960 to lay down conditions relating to the licensee's powers of letting or licensing caravan spaces to its customers. At p 763 Lord Upjohn said that freedom to contract is a fundamental right, and that if Parliament intends to empower a third party to make conditions which regulate the terms of contracts to be made between others then, even where there is an appeal to a court of law against such conditions, it must do so in clear terms. In the same case at p 755 Lord Reid said that it appeared to him to be a fundamental difference between prescribing what must or must not be done on a caravan site and restricting the site owner's ordinary freedom to contract with his licensees on matters that did not relate to the manner of use of the site.[27]The opening words of paragraph 5(2) of Schedule 1 to the 1982 Act give power to the licensing authority to attach "such reasonable conditions" to the licence as it may think fit. As I said earlier, it is to those words that one must go if one is to discover whether those parts of condition 2.5(a) which require information to be given to the purchaser are within the power to attach conditions that is given by the 1982 Act to the licensing authority. At first sight they give a wide discretion to the licensing authority. It requires a very strong case for a court to interfere with the discretion which has been vested in a body of that kind, which legislates in the interests of the community: Nicol v Magistrates of Aberdeen (1870) 9 M 306, 308, per Lord President Inglis; Da Prato v Magistrates of Partick 1907 SC (HL) 5, per Lord Loreburn LC. As Lord Russell of Killowen CJ said in Kruse v Johnson [1898] QB 91, 99, legislation of this kind ought to be supported if possible, looking to the character of the body which is legislating, the subject matter and the nature and extent of the authority which is given to the body to legislate in matters of this kind.[28]But it is clear that the discretion which is vested in the licensing authority is not unlimited. The authority is not at liberty to use it for an ulterior object, however desirable that object may seem to it to be in the public interest: Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554, 572 per Lord Denning; Newbury District Council v Secretary of State for the Environment [1981] AC 578, 599, per Viscount Dilhorne. The scope which is to be given to the words "such reasonable conditions" must be ascertained from their context. The search is for some indication that it was the intention of Parliament that licensing authorities should be able to regulate not only the records which dealers were to keep to enable checks to be carried out on their activities but also the contracts which they entered into with their customers.[29]We get no help from the two conditions which are set out in paragraph 5(2) without prejudice, as the sub-paragraph states, to the generality. It has to be borne in mind that the provisions of the Schedule relate to the licensing system in general and not just to the licensing of second-hand dealers. Neither of these conditions is concerned in any way with the relationship between the licensee and his customers. Then there are the conditions in section 24(4) which are specific to the case of second-hand dealers. It is obvious that they are concerned only with record-keeping, so here again there is no indication of an intention that licensing authorities were to be able to regulate the way the dealer was to conduct himself in relation to his customers.[30]The principal mischief to which the conditions in section 24(4) are directed is the handling of stolen property. It is well known that the second-hand market is attractive to resetters and others who handle stolen property. One of the principal objects of the legislation in the Burgh Police Acts, which was designed for the benefit and protection of the citizens and to which the idea of licensing second-hand dealers owes its origin, was to enable stolen property to be traced and recovered if it was handled in this way: see General Police and Improvement (Scotland) Act 1862, ss 312-317; Burgh Police (Scotland) Act 1892, ss 434-439. But there is a clear and obvious distinction between the regulation of record keeping for the prevention and detection of crime and the regulation of the way in which the dealers in the ordinary course of business negotiate and enter into contracts with their customers. There is no indication in section 24(4) that consumer protection was one of the objects of the system for requiring that second-hand dealers should be licensed.[31]The closest that section 24 comes to the protection of consumers is in subsection (5), which deals with odometers. It is notorious that the odometers of second-hand motor vehicles are prone to being tampered with. It comes as no surprise to find a subsection which is addressed to the prevalence of this particular mischief in the business of dealing in second-hand motor vehicles. But is instructive to see what the subsection does and does not say. What it says is that the dealer shall keep a record of the mileage reading on the vehicle's odometer when he acquired it. This is, of course, another requirement which is directed to record keeping. What it does not say is that the dealer must provide or make available this information to the customer. The customer's interest in knowing what the reading was when the dealer acquired it is not addressed at all by the subsection. In my opinion this is a powerful indication that it was not the intention that the licensing authority should have power to regulate the dealer's contractual relationship with his customers.[32]There are other sources of information to which it is legitimate to look to see whether, despite the lack of any indication within the four walls of the statute, it was nevertheless the intention that a power to regulate the dealer's contractual relations should be given to the licensing authorities. But here too there is no indication that it was intended that the second-hand dealer's contractual relationship with his customers should be regulated by means of a condition attached to a licence issued to him by the licensing authority.[33]On 2 May 1972 the Secretary of State for Scotland set up a working party to examine the powers available to local authorities in Scotland for the administration of civic government in their areas. The working party submitted its Report on 15 January 1976. It made no mention in the recommendations in section II.37-39 of the Report, which dealt with second-hand dealers, of any need to change to change the system so as to enable local authorities to regulate the terms on which they dealt with their customers. The only recommendation which touched this aspect of the way a second-hand dealer was to be allowed to carry on business was that he should be prohibited from disposing of goods to any person under the age of 18 by increasing the relevant age from 14 as provided by section 443 of the Burgh Police (Scotland) act 1892.[34]In July 1980 a White Paper, Proposals for a Code of Civic Government in Scotland - A Consultation Paper (Cmnd 7958), to which a draft Bill was attached, was published. The 1982 Act, which was based on the proposals in the Consultation Paper and comments which were received on it, received the Royal Assent on 28 October 1982. On 22 February 1983 the Scottish Development Department issued a departmental circular to all local authorities in Scotland: Circular 6/1983. Paragraphs 2.60-2.66 are directed to the provisions in the 1982 Act about the licensing of second-hand dealers. Paragraph 2.60 refers to the option which section 9 gives to licensing authorities to resolve to make these provisions effective in their areas. It states:
"The Secretary of State expects this power to be used only where it is shown to be necessary on the evidence of the Chief Constable in the interests of crime prevention."
In the light of concern that had been expressed at the effect of regulation on dealers in second-hand books or used stamps, it stated that the classes to which any such licensing was to be applied must be precisely defined. Paragraph 2.62 refers to the provisions in section 24(4) about the keeping of records, which it was said could be attached to a licence after consultation with the Chief Constable. No mention is made of an intention that licensing authorities should regulate second-hand dealers by means of the licensing system as to the manner in which they conducted business with their customers. The only mention of the powers available to the licensing authority under paragraph 5 of Schedule 1 is in paragraph 2.100 where, in a reference to the licensing of private markets, it is pointed out that these powers could be used to deal with concerns about noise, crowds and other environmental annoyances to local residents.[35]The absence of any mention in this material of a wish to provide for the protection of consumers through the licensing system is not surprising, in view of the other ways that this need can be and is being met through primary legislation enacted by Parliament. Section 75(1) of the Road Traffic Act 1988, which is derived from section 60 of the Road Traffic Act 1972, makes it an offence for a person to supply a motor vehicle in an unroadworthy condition. That test is satisfied if it is in such a condition that its use on the road would be unlawful in the respects mentioned in section 75(3)(a), read with the Motor Vehicles (Construction and Use) Regulations 1986 (SI 1986/1078), or would involve a danger of injury to any person: see section 75(3)(b). These provisions are backed up by section 77 of the 1988 Act, derived from section 61 of the 1972 Act, which gives power to an authorised examiner to enter the premises of a dealer in second-hand motor vehicles and to test and inspect the roadworthiness of any used vehicle found on the premises. In February 2001 the Scottish Motor Vehicle Testing Unit was created to operate in partnership with the Vehicle Inspectorate. It aims to improve the level of consumer protection within the motor vehicle sector by dealing with matters such as checking the safety of vehicles offered for supply on garage forecourts. Other measures to protect consumers are contained in the Trade Descriptions Act 1968, sections 1 and 14: see also the General Product Safety Regulations 1994 (SI 1994/2328), which gave legislative effect to EC Directive 92/59/EEC on General Product Safety.[36]What is surprising, if it had been the intention to provide for the protection of consumers by means of conditions under the licensing system, is the absence of any mention of this intention in the list of conditions referred to in section 24(4) of the 1982 Act. That is the place where one would expect to find such a novel and far-reaching intention mentioned. One would not expect the licensing authority to have to rely, as it does in this case, on the general power in paragraph 5 of Schedule 1 to the Act to include such reasonable conditions as it thought fit. I agree with my noble and learned friend Lady Hale, for the reasons she gives, that attempts to achieve consumer protection by inserting conditions into licenses granted by local authorities may have effects which, from the consumer's point of view, are entirely arbitrary. This tends to show, in my opinion, that the licensing system is not designed for this purpose. It may have the effect of protecting the public from trading which is dishonest or unscrupulous, but I would not regard consumer protection as a safe guide to the purpose for which conditions may be inserted into licences. I would prefer not to follow my noble and learned friend Lord Carswell in approving the approach which Lord McCluskey took to this issue in the dissenting opinion which he delivered in the Inner House. Conclusion[37]It is plain that condition 2.5(a) was directed to a laudable object and to a matter which was of very real concern to the public. We were shown a copy of a report by the Chief Executive to the District's General Purposes Committee on 25 May 1988 which states that the introduction of conditions in 1986 was preceded by consultation with the police, the Trading Standards Department and the Scottish Motor Trades Association and that they were reconsidered following concerns which certain dealers had expressed about them. We were told that about two thirds of all the licensing authorities in Scotland have followed the District Council's example and have introduced similar conditions into the licences which they have issued to dealers in second-hand motor vehicles. The idea of regulating the relationship between these dealers and their customers evidently has wide support throughout Scotland. In the light of this background I would not wish to disturb the practice of inserting a condition of this kind into second-hand motor vehicle dealers' licenses unless this was absolutely necessary. But wide support for the condition is not enough to make it legitimate. That depends on the intention that is to be ascribed to Parliament.[38]For the reasons which I have given, I would hold that Parliament did not intend the licensing system to be used in this way. The practice of Parliament is to provide for the protection of consumers by means of primary legislation which can be applied uniformly across the country. It is not its practice to delegate powers to legislate in this area to individual local authorities. I consider that the majority in the Extra Division were right to hold that condition 2.5(a) was ultra vires. I would refuse the appeal. LORD RODGER OF EARLSFERRY My Lords,[39]If you want to buy a second-hand car and visit a dealer in Perth and Kinross, you will find, displayed in a prominent position in the cars offered for sale, a summary information sheet indicating that the dealer has inspected the car and that a full inspection report can be consulted in the office or showroom. If you then go on to buy a car, you will receive a copy of the relevant report, which you are advised to keep. You will also be asked to sign another copy, to acknowledge receiving your copy. The report will cover such matters as the state of the tyres, the steering, the lights and the seat belts, whether the car starts satisfactorily and whether the oil pressure is satisfactory, and ending up with the internal and external appearance of the car. The report will tell you what work is to be done on the car before delivery and what defects are outstanding, taking into account the age and price of the car. Clearly, the contents of the report may be of assistance if you subsequently find that there is something wrong with the car and wish to take the question up with the dealer.[40]Such reports, which are not unique to Perth and Kinross, owe their existence to the system of licensing of second-hand motor vehicle dealers under the Civic Government (Scotland) Act 1982 ("the Act"). More particularly, they derive from a set of conditions which the licensing authority attach to the dealers' licences.

(a) provides:

"If the licence holder intends to display for sale/sell any vehicle to a member of the public he must (i) carry out an inspection and prepare a full Inspection Report on the vehicle prior to it being displayed for sale/sold and make a copy of the Report available for inspection by any prospective purchaser while the garage/showroom is open, in accordance with the sample Inspection Report issued and in a style approved by the Council (see Appendix 2 and Note 3); (ii) display a summary Information Sheet in a prominent position in the vehicle displayed for sale so that it is clearly visible indicating that the vehicle has been inspected, that a full Inspection Report may be consulted in the office/showroom prior to sale and that the purchaser will receive a copy of the Report at the time of the sale, in accordance with the sample information sheet issued and in a style approved by the Council (see Appendix 3); (iii) complete all sections of the Inspection Report as appropriate and provide the purchaser with a copy of the Inspection Report, which should be signed by both the purchaser and the dealer and dated, at the time of sale; and (iv) retain one copy of the above Inspection Report as part of his records for at least 3 years."
All but three local authorities in Scotland license second-hand motor vehicle dealers and it appears that, for about twenty years, many of them have applied similar conditions without challenge. In the present proceedings, however, by a majority, an Extra Division of the Court of Session have held that condition 2.5(a) is ultra vires and so void: Stewart v Kinross and Perth Council 2003 SC 551. The licensing authority have appealed against that decision.[41]Today, we are used to the idea that legislation applying throughout the country regulates such matters as public health, the development of land and the protection of consumers. But, in the past, local bodies often dealt with issues of that kind by means of regulations that applied only in the particular community. The general aim was to ensure the good conduct and efficiency of the various trades and activities for the benefit and protection of the citizens in the burgh: Reid v Mini-Cabs 1966 SC 137, 143 per Lord Avonside. With increasing prosperity and better communications in the nineteenth century, it became both possible and desirable to introduce a greater measure of uniformity. The Burgh Police (Scotland) Act 1892 provided a common structure, which local authorities could adopt, if they wished, but supplement with local Acts and bye-laws. A prominent feature of the 1892 Act was the power that it gave the magistrates to control many activities by a system of licensing. Some instances, such as the licensing of hackney coaches, omnibuses and carriages of any kind, with a power to make bye-laws fixing the fares, would be familiar today. Others, such as the licensing of porters, messengers, chimney sweepers, golf cadies [sic] and vendors of newspapers, with a power to make bye-laws regulating their conduct and charges, speak of a rather different world. A notable absentee is liquor licensing, which was not introduced until the First World War. The 1892 Act also contained elaborate provisions, not involving licensing, to combat the kinds of fraud, eg, in delivering under-weight quantities of coal and supplying under-weight loaves of bread, that were common at the time. In addition, however, it made provision for licensing brokers, including dealers in second-hand goods, and pawnbrokers. The tenor of these provisions, in sections 433 to 453, suggests that the main aim was to prevent the resetting of stolen goods through such outlets.[42]The 1982 Act repealed the 1892 Act and swept away many provisions which had become out of date. While the number of activities that could be made subject to licensing was cut back drastically, Part II still provides for local authorities to license and regulate a considerable range of activities. There is no a priori reason to suppose that, in selecting them, Parliament had exactly the same aims in mind as ninety years before. Section 9(2) allows a licensing authority to resolve that:
"any activity provision for the licensing and regulation of which is made by the optional provisions shall require to be licensed in accordance with the provisions of this Act relating to that activity and shall be regulated by those provisions."
Although licensing and regulation are inter-related, they are not co-extensive. In the case of window cleaners, Parliament provides only for a system of licensing in section 43; it does not actually go on itself to regulate the way that they are to carry on their trade. In other cases, however, there are more or less elaborate provisions regulating aspects of the way in which the activity is to be carried on. Sections 14 to 19 are examples in relation to taxis.[43]Only in the case of metal dealers is a local authority actually required to have a system of licensing and to regulate the trade, under sections 28 to 37. Otherwise, Part II simply permits local authorities to adopt the relevant provisions in relation to the activities in question: operating a vehicle as a taxi or private hire car, carrying on business as a second-hand dealer, boat hiring, street trading, operating a market, using premises as a place of public entertainment, selling meals or refreshment late at night and window cleaning. In addition, under section 44, the Scottish ministers can designate an activity as one for which a licence may be required and which is to be regulated in accordance with the provisions in the relevant order. No single theme unites this list of activities in Part II, except that in each case there may be good reason for controlling who conducts the activity and how it is carried on. For instance, taxis should be mechanically sound, the drivers should have clean licences and passengers should be protected from excessive fares. On the other hand, boats hired out to the public should be safe and late-night food outlets should not cause disturbance to people living nearby; window cleaners have access to people's houses and could have opportunities to plan or carry out thefts. All these are different, but sufficient, reasons why a local authority may decide that, in their area, people should not carry on the activity in question without a licence and that it should be regulated in accordance with the relevant provisions of the Act.[44]Local licensing authorities have autonomy in deciding whether or not to adopt the system for any particular activity. Whether they choose to do so may depend to some extent on the political complexion of the council: some councils may prefer to trust to market forces and to spare their council tax payers the cost of administering a licensing system; others, faced with a similar situation, may take the opposite view. In some areas the number of people carrying on a particular activity may be so small that the council judge that it is not worth licensing and regulating. On the other hand, the commercial importance of the same activity in another area might make that council think that it should be licensed and regulated under the Act.[45]Often, when called upon to identify the scope of powers given to a body under an Act, a court examines the long title and other provisions in order to identify the purpose for which the powers were given. In the case of the 1982 Act, however, it is not easy to apply that approach, precisely because the long title merely refers to "the licensing and regulation of certain activities" and there is no single reason for providing for such a régime. So, in relation to second-hand motor vehicle dealers, all that the general structure of the Act allows one to say is that, in the view of Parliament, there are good reasons for permitting a local authority, if they so resolve, to introduce a system of licensing and regulation.[46]Sections 24 to 27 concern second-hand dealers. If a local authority resolve, under section 9(1), that these sections are to have effect in their area, then in terms of section 24(1):
"Subject to subsection (3) below, a licence, to be known as a 'second-hand dealer's licence' shall be required for carrying on business as a second-hand dealer."
In other words, what is licensed is carrying on business as a dealer in second-hand goods or articles of any description: subsection (2). But, under section 9(3)(c)(iii), the council may resolve that sections 24 to 27 are to have effect only in relation to particular classes of second-hand dealing. In the present case, the council resolved that they were to have effect in relation to second-hand motor vehicle dealers. The appeal accordingly concerns a condition in the licence which the authority granted to Mr Stewart to carry on business as a dealer in second-hand motor vehicles.[47]Where a licence is required for an activity, Part I of the Act applies and, by section 4, the licensing system falls to be administered in accordance with the provisions of schedule 1, except in so far as special provision is made elsewhere. Even though the provisions creating the system are thus relegated to a schedule, they are in fact central to the operation of Part II of the Act.[48]In terms of paragraph 5(1)(b) of schedule 1, where an application is made for the grant or renewal of a licence, one of the licensing authority's powers is, in accordance with the paragraph, to "grant or renew the licence subject to conditions". Paragraph 5(2) provides:
"The conditions referred to in sub-paragraph (1)(b) above shall be such reasonable conditions as the licensing authority think fit and, without prejudice to that generality, may include - (a) conditions restricting the validity of a licence to one area or areas specified in the licence; and (b) in relation to the grant of a licence, where that licence is intended to replace an existing licence, a condition requiring the holder of the existing licence to surrender it in accordance with paragraph 13 below."
Under paragraph 5(3)(a)(ii) the licensing authority are to refuse an application to grant or renew a licence if, in their opinion, the applicant is not a fit and proper person to be the holder of the licence. Paragraph 5(3)(c) and (d) provide that the authority are to refuse the application if, in their opinion, "(c) where the licence applied for relates to an activity consisting of or including the use of premises ..., those premises are not ... suitable or convenient for the conduct of the activity having regard to - (i) the location, character or condition of the premises...; (ii) the nature and extent of the proposed activity; (iii) the kind of persons likely to be in the premises...; (iv) the possibility of undue public nuisance; or (v) public order or public safety; or (d) there is other good reason for refusing the application."[49]These provisions in paragraph 5 apply to the licensing of persons carrying on business as dealers in second-hand motor vehicles, just as they do to people carrying on other licensed activities. In the case of second-hand dealers, however, these general provisions are supplemented by the special provisions in section 24(4) and (5):
"(4) Without prejudice to paragraph 5 of Schedule 1 to this Act, a licensing authority may, after consultation with the chief constable, attach conditions to a second-hand dealer's licence requiring the keeping of records in relation to the dealer's stock-in-trade; and conditions so attached may, without prejudice to the authority's power under this subsection, include provision as to (a) the information to be included in these records; (b) their form (c) the premises where they are to be kept; and (d) the period for which they are to be kept. (5) A second-hand dealer acquiring a second-hand motor vehicle for the purpose of its re-sale in the course of his business shall keep a record of the mileage reading on the vehicle's odometer when acquiring it."
Subsection (4) specifically allows the local authority to attach conditions to a second-hand dealer's licence requiring him to keep records of his stock. Subsection (5) is different. It is not actually concerned with the licensing of second-hand dealers; it is a measure by which second-hand dealers are regulated, if a licensing authority resolve that sections 24 to 27 are to apply to dealers in their area. In that event it becomes an offence, in terms of section 24(6) and (7), for any second-hand dealer acquiring a second-hand motor vehicle for resale to fail to keep a record of the mileage reading at the time he acquired it. The obligation to keep the record applies to all second-hand dealers in the area, whether or not they are exempted from the licensing requirement by section 24(3). So, in the areas where the local authority adopt sections 24 to 27, it is an offence for a dealer to fail to keep a record which second-hand dealers in other areas are under no obligation to keep.[50]The contention for the respondent, Mr Stewart, was that local authorities had been given power to license second-hand dealers simply because of their potential for facilitating crime by resetting stolen goods. This could be seen from the power that was given in subsection (4) to attach conditions to the licence, requiring the keeping of records in relation to the dealer's stock. It could also be seen in subsection (3), which exempted certain businesses from licensing control - in particular, (b) a business as a wholesale dealer purchasing exclusively from licensed second-hand dealers, (c) a charitable business and (d) a business as a second-hand dealer incidentally to another business. These businesses were exempted, he said, because there was less risk of such dealers being involved in disposing of stolen goods. Since the suppression of resetting was the aim of the licensing régime, the authority had no power to attach condition 2.5(a), which had nothing to do with that aim.[51]My Lords,[51]I readily accept that part of Parliament's reason for providing for the licensing of second-hand dealers was a legitimate fear that they might provide an outlet for stolen goods. That is not to say, however, that this was the limit of Parliament's concern. Section 24(5), which applies to any second-hand dealer, whether he requires a licence or not, shows that Parliament considered that local authorities should be able to take a limited step towards protecting customers from the risk of buying a car in which the odometer had been adjusted so as to show a smaller mileage than the car had actually done. Therefore, when local authorities are considering whether to resolve to adopt sections 24 to 27, they may legitimately have in mind the desirability of combating this particular kind of fraud against customers.[52]Mr Bovey QC submitted that, even if this were so, subsection (5) was as far as the legislation went to protect customers buying second-hand cars. In one sense, that submission is certainly correct: the only way in which sections 24 to 27, if adopted, actually regulate second-hand dealers is to be found in that subsection. Anything else that is to be done by way of regulating the activity must be done through the licensing mechanism.[53]For example, the authority can refuse a licence if the premises are not suitable or convenient for the conduct of the business of dealing in second-hand motor-vehicles, having regard inter alia to the safety of the public and the location, character or condition of the premises. These provisions take the licensing authority far beyond any narrow concern with the possibility of opportunities for reset. For example, where second-hand cars are involved, the possibility of road safety concerns in relation to cars going to or from the premises is obvious. But it would also be open to a licensing authority to refuse an application for a licence if the showroom or site was not suitable for selling second-hand cars because it was inadequately lit and customers would not be able to see to inspect the cars before buying them. It must follow that the authority has power under paragraph 5(1)(b) to grant a licence subject to a condition that the premises should be adequately lit for this purpose.[54]Indeed, once a licence has been granted, the only way that a licensing authority can regulate the manner in which any activity is carried on is by attaching appropriate conditions to the licence. So, for instance, Parliament has not enacted that second-hand dealers must keep a record of their stock. It is a matter for the licensing authority. If they want dealers to do so, they must attach conditions in terms of section 24(4). Since, however, the power to attach those conditions in section 24(4) is without prejudice to paragraph 5(1) of schedule 1, authorities must be able to use conditions that they attach in reliance on that general provision to regulate other aspects of the business.[55]The critical question is the extent of this power in the case of dealers carry on their business as dealers in second-hand motor vehicles. The test is not in dispute. Guidance can be found in the approach that Viscount Dilhorne summarised for conditions attached to planning permissions in Newbury District Council v Secretary of State for the Environment [1981] AC 578, 599:
"It follows that the conditions imposed must be for a planning purpose and not for any ulterior one, and that they must fairly and reasonably relate to the development permitted. Also they must not be so unreasonable that no reasonable planning authority could have imposed them."
That approach was approved by Lord Keith of Kinkel in Grampian Regional Council v Secretary of State and Aberdeen District Council 1984 SC (HL) 58, 66. Here, therefore, the conditions attached to the licence must be for a licensing purpose and not for any ulterior purpose. They must also fairly and reasonably relate to the business that the licence holder is permitted to carry on as a dealer in second-hand cars. In addition, they must not be so unreasonable that no reasonable licensing authority would have imposed them.[56]Mr Bovey did not contend that condition 2.5(a) was so unreasonable that no reasonable licensing authority would have imposed it. Since it appears that about two-thirds of the authorities that license second-hand motor vehicle dealers have imposed a similar condition, that concession was perhaps not surprising. Nor was it suggested that the licensing authority had any ulterior purpose in attaching the condition. The nub of the case is therefore whether the condition fairly and reasonably relates to Mr Stewart's business as a dealer in second-hand motor vehicles.[57]In Mixnam's Properties Ltd v Chertsey UDC [1965] AC 735 the council issued a licence authorising the use of land as a caravan site under the Caravan Sites and Control of Development Act 1960. The legislation allowed the council to issue the licence subject to such conditions as they might think it necessary or desirable to impose on the occupier of the land in the interests of persons dwelling thereon in caravans, or of any other class of persons, or of the public at large. The legislation then went on to list a number of possible conditions, all of which related to the situation on the site. The council imposed conditions which regulated inter alia the rent that the site owner could charge caravan occupiers and the security of the occupiers' tenure. The House held that these conditions were ultra vires. Lord Reid, who was applying the same kind of test as Viscount Dilhorne enunciated in the Newbury District Council case, summarised his decision in this way, at p 752:
"In the present case there appears to me to be a fundamental difference between prescribing what must or must not be done on a site and restricting the site owner's ordinary freedom to contract with his licensees on matters which do not relate to the manner of use of the site. Conditions can make the site owner responsible for the proper use of the site and it is then for him to make such contracts with his licensees as the general law permits. I can find nothing in the Act of 1960 suggesting any intention to authorise local authorities to go beyond laying down conditions relating to the use of sites, and in my opinion the general words in section 5 cannot be read as entitling them to do so."
Similarly, Lord Upjohn said, at p 763E - G:
"In my opinion, however, the powers of local authorities are subject to the limitation that Parliament never intended to empower them to lay down any conditions which entitle them to prescribe the actual terms and stipulations which must be included in or omitted from any contract between the occupier and a caravan owner. Of course, it cannot be disputed that the local authority can indirectly fetter the freedom of contract of the occupier, for example, by prohibiting caravans of a certain size on the site, but the scheme of the Act, in my opinion, falls far short of empowering them to dictate the terms of contracts."
He went on, at p 764A - C: "Secondly, freedom to contract between the subjects of this country is a fundamental right even today, and if Parliament intends to empower a third party to make conditions which regulate the terms of contracts to be made between others then even when there is an appeal to a court of law against such conditions, it must do so in quite clear terms. There are no such terms in section 5. Indeed, although the ejusdem generis rule has no application I should have thought that had Parliament intended to empower local authorities to exercise such a right it would have done so in a clear sub-paragraph. Nothing in my vi[58]On behalf of the licensing authority Mr Peoples QC submitted that condition 2.5(a) does not go that far. It first requires the dealer to inspect the cars that he intends to sell. In itself, that does not touch on the dealer's relationship with the buyer. The condition then requires that a prospective customer should have access to the report before buying a car and should be given a copy to keep when he buys it. In his submission, these requirements regulate the circumstances in which the parties contract, but do not prescribe the terms on which they contract. All that condition 2.5(a) does is to require the dealer to give the customer certain information about the state of the car, based on the inspection. This may well be information that the dealer would otherwise not have provided and, doubtless, if the statements are inaccurate, the purchaser may seek to avoid the contract or, if they have been made fraudulently or negligently, to claim damages in delict. But that is not the same as interfering with the parties' freedom of contract. Mr Bovey, on the other hand, submitted that, given that the condition has these potential effects, in reality, it does actually interfere with the parties' freedom of contract and so is ultra vires.[59]The point is a narrow one, but I have come to the view that condition 2.5(a) is indeed ultra vires. I start by accepting that, looked at objectively, the purpose of the condition is not to prescribe the terms on which dealers may contract with their customers. In this respect, it is different from the conditions in Mixnam's Properties Ltd v Chertsey UDC which were designed to prescribe the nature of the relationship between the occupier of the site and the people living in the caravans. Here the purpose of the condition is, rather, to affect the way that dealers conduct their businesses by requiring them to provide information which their customers can take into account in deciding whether to buy a car. In other words, it limits the dealer's common law freedom to keep quiet about the state of the car that his customer is thinking of buying. In itself a limitation on a common law freedom is not an unusual feature of a condition: indeed, as Viscount Radcliffe suggests in the Mixnam's Properties case, at p 754G, restricting common law freedoms is of the essence of conditions. It is what they are designed to do. If that were, in substance, the only effect of the condition, then it would be unobjectionable.[60]In reality, however, the effects of condition 2.5(a) are liable to extend further. If the information provided by the dealer is accurate, no problem will arise. But there is a substantial risk that, from time to time, the dealer or his mechanic carrying out the test may overlook a defect, with the result that the report will be inaccurate. In that event, by inviting the customer to have regard to the report, the dealer will be misrepresenting the state of the car to him. Leaving aside fraud, if it can be said that the misrepresentation was negligent, then the dealer will be liable in damages for any loss that the customer suffers as a result. More importantly for present purposes, perhaps, even if the misrepresentation in the report is not negligent, a customer who can show that he relied on the report may well be able to avoid the contract. So, in that respect, the operation of the condition is liable to have a considerable impact on the contracts between the dealer and his customers.[61]In some cases the impact may be still greater and more direct, however. The condition requires the dealer to make a series of statements to the prospective purchaser about the state of the car. Those statements are made at the time when the customer is contemplating the purchase. On the very form that the customer reads, he is told that, if he buys the car, it is in his interest to keep the report - suggesting that he may be able to exploit the information in it to his advantage after the purchase is complete. Moreover, a copy of the report will be one of the papers that the customer has to sign and take away when he buys the car. In these circumstances, it is at the very least arguable that, depending on the facts, and looking at the matter objectively on the totality of the evidence, the statements will fall to be treated not merely as misstatements but as terms of the contract, warranting the state of the vehicle: Hyslop v Shirlaw (1905) 7 F 875, 881 per Lord Kyllachy; Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623; Heilbut, Symons & Co v Buckleton [1913] AC 30, 51 per Lord Moulton. In that event, the effect of the operation of condition 2.5(a) is indeed to oblige the dealer to include a very important term or terms in the contracts that he makes with his customers.[62]The relevant events in the present case arose before the amendments to section 14 of the Sale of Goods Act 1979. It is none the less worth noting that, in terms of section 14(2) and (2A), the statements made by the dealer in the inspection report would be among the "circumstances" to be taken into account when determining whether a car was of "satisfactory quality".[63]In these circumstances the operation of condition 2.5(a) is liable to interfere with the dealer's freedom to settle the terms of his trade with his customers. I am satisfied that Parliament cannot have intended local licensing authorities to have the implied power to attach a condition with such a significant effect on the commercial contracts of dealers, such as Mr Stewart.[64]For these reasons, as well as for those given by my noble and learned friends, Lord Hope of Craighead, Baroness Hale of Richmond and, subject to the observation of Lord Hope, by Lord Carswell, I would dismiss the appeal. BARONESS HALE OF RICHMOND My Lords,[65]My noble and learned friends, Lord Hope of Craighead and Lord Rodger of Earlsferry, have already set out the relevant legislation and the facts. The simple issue is whether the power, in para 5(1)(b) and (2) of Schedule 1 to the Civic Government (Scotland) Act 1982, to grant a second hand motor dealer's licence on "such reasonable conditions as the licensing authority think fit" gives the authority power to insist on a detailed inspection report being made available to all purchasers. I agree with them, for the reasons they give, that it does not.[66]It might be a very good thing for second hand motor dealers to be subject to such requirements. This local authority imposed these particular requirements after widespread local consultation and with the support of the local chamber of commerce. The authority is the democratically elected body responsible for local government. These are the strongest possible indications that the local population agrees with what their local council has done. Other local authorities have followed their lead. But the fact that this is a good thing, which the public locally support, is not enough to bring it within the statutory powers of the licensing authority.[67]There are several reasons why it would be surprising if it were within their powers to impose these particular conditions. First, consumer protection of this type is normally achieved by legislation, such as the Sale of Goods Act 1979, the Consumer Credit Act 1974, and the Consumer Protection Act 1987, which applies not only throughout Scotland but throughout the United Kingdom. These requirements have not been imposed by national or even local legislation but by the insertion of locally devised conditions into licences to trade.[68]Second, the effects of doing it in this way, viewed from the point of view of the individual consumer, are entirely arbitrary. If she buys a second hand car from a second hand car dealer in this locality she will enjoy this extensive protection. (Indeed, it would theoretically be possible for the authority to insert these condition in some traders' licences and not in others, but that might leave them open to challenge on other grounds.) If she buys a second hand car from a second hand car dealer in another locality she may not. Nor will she enjoy this protection if she buys a second hand car, even from a dealer in this locality, if his main business consists of selling new cars but he also, as is usual, sells second hand cars which have been taken in part exchange for new ones.[69]Third, it is clear that the original purpose of requiring second hand dealers to be licensed or registered with the local authority was to insist upon their keeping records which would help in tracing stolen goods and deter them from accepting goods of doubtful provenance. There is no national equivalent to these powers in England and Wales, but there are numerous local Acts of Parliament giving such powers to particular local authorities. Recent examples are in the Kent County Council and Medway Council Acts of 2001, the purpose of which (as explained by Mr Paul Clark on third reading in the House Commons on 22 March 2001) is 'to regulate the second hand trade, with the aim of reducing the amount of acquisitive crime, such as burglary, by making it harder to dispose of stolen goods and turn them into cash. Home Office research, supported by police intelligence, shows that a large proportion of stolen property passes through unregulated second-hand dealers'. The Scottish legislation clearly goes some way beyond this, but the question is how far.[70]The general principles are well established. The courts are slow to interfere with what the local representative authority has decided for the benefit of the locality: see Kruse v Johnson [1898] 2 QB 1. All regulatory activity involves some interference in the freedom to carry on whatever business one wants in the way that one wants.[71]Nevertheless, conditions imposed by local authorities must(a) be for the purpose of regulating the activity requiring to be licensed and not for any other purpose;(b) fairly and reasonably relate to the activity being licensed; and(c) be reasonable in the modern public law sense of that word: see Newbury District Council v Secretary of State for the Environment [1981] AC 578, 599. This is a question of statutory construction, but this statute gives only limited help. Little can be made of the reference in the long title to 'the preservation of public order and safety and the prevention of crime', because this is apt to describe Part IV, which deals with a variety of criminal offences, rather than Parts I to III, which deal with licensing certain activities. The condition-imposing power in Schedule 1 is common to all the activities which can or must be licensed under Parts I and II. It is impossible to discern a single or uniform purpose even from the licensing provisions themselves, because the trades regulated are so disparate, the techniques used so different, and the mischiefs at which each licensing regime is aimed so various. Paragraph 5(2) gives two limited examples of the type of conditions which might be imposed, as to geographical area and giving up a previous licence. Paragraph 5(3) details the circumstances in which a licence may be suspended or revoked, in particular because the person concerned is unfit or the premises unsuitable. This suggests that conditions may be aimed at ensuring that the traders are fit and their premises suitable. The activity licensed is 'carrying on business as a dealer in second hand goods or articles' (s 24(2)). But there is a distinction between how one carries on a business and the terms upon which one trades.[72]This brings us to the third and most important principle: a power to license and impose conditions upon the conduct of a business will not without more include a power to impose the terms upon which the trader contracts with his customers: see Mixnam's Properties Ltd v Chertsey Urban District Council [1965] AC 735, in particular Lord Upjohn at 763E-G. The respondent in the case before us relies heavily on the Chertsey principle. The appellant does not dispute the principle but says that it does not apply in this case. All that the disputed conditions require is that the dealer gives his customers certain information about the state of the vehicle at the time when it is sold. This may be useful evidence should a dispute arise. But it does not dictate the terms upon which dealer and customer contract with one another, unlike the Chertsey case, in which the local authority imposed upon the caravan site occupier the equivalent of Rent Act protection for its caravan dwellers.[73]To an English lawyer, the appellant's argument is quite unreal. Even if the statements made in the inspection report were not terms of the contract of sale, they are representations of fact. Under the Misrepresentation Act 1967, even innocent misrepresentations can give rise to liability in damages. Under section 3 that liability cannot be excluded unless the exclusion term satisfies the test of reasonableness introduced by the Unfair Contract Terms Act 1977. Clearly, therefore, a requirement that a trader makes certain detailed representations to his customers affects the legal relationship between them in a way which it will be difficult for the trader to avoid. But it is also quite possible that the contents of the report will be regarded as contractual terms. In an ordinary hire purchase transaction, where the vehicle is bought by a finance company and hired to the customer, such statements are generally construed as collateral warranties to the consumer and would be antecedent negotiations under section 56 of the Consumer Credit Act 1974. In an outright sale, they are highly relevant to construing the content of the condition now implied by section 14(2) of the Sale of Goods Act 1979 that the goods are of 'satisfactory quality' and were among the circumstances relevant to deciding whether the goods were of 'merchantable quality' under the previous version. This condition cannot be excluded in consumer sales: Unfair Contract Terms Act 1977, s 6(2)(a).[74]Hence, had this been an English case, I would have had no difficulty in concluding that it fell the wrong side of the Chertsey line. As my noble and learned Scottish friends have both reached the same conclusion, I have no difficulty in agreeing with them that this appeal should be dismissed. LORD CARSWELL My Lords,[75]I have had the advantage of reading in draft the opinions of Lord Hope of Craighead and Lord Rodger of Earlsferry, and for the reasons which they give I would dismiss the appeal. In so agreeing, however, I should like to add a few words expressing my views about the scope of the Civic Government (Scotland) Act 1982 (the Act).[76]In so far as it has been argued that the object and purpose of the Act, in its application to second-hand dealers, is to prevent crime, by keeping track of second-hand goods on sale to the public and reducing the risk that such goods may have been stolen, I should not be willing to accept that the scope of the Act is so limited. Lord Hope of Craighead and Lord Rodger of Earlsferry have concluded that condition 2.5(a) of the conditions prescribed by the respondent Council is to be regarded as ultra vires on the ground that the operation of that condition could have the effect of interfering with the contractual relations between a dealer and his purchaser. I accept the correctness of that conclusion, but regard the Act as having a somewhat broader scope than the prevention of crime, the preservation of public order and safety and the protection of the environment, the objects mentioned in paragraph 3 of the circular sent out on 22 February 1983 by the Scottish Development Department.[77]In my opinion the scheme of the whole Act shows that its thrust is fairly wide, extending to the regulation of various trades for a variety of purposes, one widely applicable objective (though not the only one) being the protection of the public from dishonest or unscrupulous trading. In that respect I agree with the view expressed by Lord McCluskey when he said at paragraph 7 of his judgment that the purpose of licensing by a public authority is to enable the public to be reasonably assured that their legitimate interests are being safeguarded by the public authority in respect of those traders who are granted licences. It is apparent from perusal of the Act and consideration of the wide variety of activities to which the licensing schemes may apply that the precise mischief to which the control of traders is directed will vary materially according to the trade which is concerned. So the type of consumer protection (for this in effect is what it is) required in the case of boat hire or the operation of taxis will differ from that material to the sale of second-hand clothes, which in turn differs from that needed to protect the purchaser of second-hand jewellery.[78]The appellant council will have, in the light of the decision of the House, to reconsider the terms of the licences which it grants to second-hand car dealers, as will other councils in Scotland who grant such licences under the powers contained in the Act. My object in expressing the views which I have set out in this judgment, however, is to make it clear that they can exercise those powers for the purposes of consumer protection, so long as they do not interfere with the terms of trade between dealers and customers. I think that that still leaves them with a good deal of scope to fulfil the objects of the legislation by suitably framed conditions.

Cited in 2 later judgments