A district council has launched an appeal against a ruling that it's overcharged taxi drivers, in what could be a landmark case for the whole industry.
Wakefield Council is challenging a High Court decision last December that the £384 fee it charges taxi drivers for a licence to trade are unlawful.
Three of the UK's top judges are set to decide on the matter, which may see councils across the country forced to fork out millions to reimburse drivers.
Wakefield Council says the amount it charges is necessary to recover the costs of licensing vehicles, as well as the costs of policing the local industry and punishing cabbies who break the rules.
The local authority has been backed by the Local Government Association (LGA) in the case, as most other authorities charge taxi fees in a similar way.
But cabbies argue the fee should only cover the cost of issuing the licence, and nothing more.
At a Court of Appeal hearing in Leeds on Tuesday morning, Wakefield Council's barrister Sarah Clover said the authority was seeking "clarity and guidance" over the issue.
She said: "With the breadth of the duties and the things the council does, in relation to drivers, the critical question is, how is that to be funded?
"The council has always maintained, along with most, if not all other councils, that they are entitled to be refunded for that work.
"There's always been ambiguity about it but the issue is still ambiguous and unresolved."
Ms Clover suggested that the fees system used by the council was already used, nationwide, to licence lap dancing clubs and other sexual entertainment venues. That has not been challenged.
Arguing that the fees were used to help keep people in the Wakefield district safe, she added: "Not only can a faulty vehicle have an impact on public safety, but drivers as well."
Commenting on the complex nature of the case, the lawyer representing taxi drivers said there was a "shanty town of taxi legislation".
Gerald Gouriet QC said the "man on the Wakefield bus would raise an eyebrow" if he was told that the costs applied by the council covered regulation around "how a driver is dressed and whether or not they use offensive language".
He said: "It is my submission that the costs relating to the control and supervision of vehicles does not and cannot embrace costs arising from the enforcement against drivers."
The original case was brought to the High Court at the end of last year by the Wakefield District Private Hire and Hackney Carriage Association, after the council hiked its licence fee by 60 per cent.
The council was initially refused the right to appeal, but that decision was later overturned, leading to the Court of Appeal case.
The judges' final ruling on the matter is expected to be made next month.
If the appeal is lost, Wakefield Council may have to pay out in excess of £1m to drivers in cases dating back as far as 2004.
Local Democracy Reporting Service