Upper Tribunal Allows Appeals Against Operator's License Revocation

OUTCOME: Allowed

1

UKUT 0254 (AAC) Appeal Nos. T/2019/32 & T/2019/33 IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER TRAFFIC COMMISSIONER APPEALS

IN AN APPEAL FROM THE DECISIONS OF [NAME_1], Traffic Commissioner for the West of England dated 25 March 2019

Before: Her Hon. Judge J Beech, Judge of the Upper Tribunal [NAME_2], Specialist Member of the Upper Tribunal [NAME_3], Specialist Member of the Upper Tribunal

Appellants:

[redacted]

[NAME_3]

In attendance: [NAME_5] of Counsel instructed by [NAME_5] on behalf of [COMPANY_4] with [NAME_6] in attendance and [NAME_3] in person

Heard at: Field House, 15-25 Bream’s [ADDRESS], [POSTCODE] Date of hearing: 29 July 2019 Date of decision: 21 August 2019

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeals be ALLOWED and that the matters be remitted for a further public inquiry before a different Traffic Commissioner

SUBJECT MATTER:- Failure to undertake an adequate analysis of the evidence; inconsistency of findings; absence of balancing exercise; failing to consider the position of [COMPANY_4] as at the date of the public inquiry; lawfulness of purchasing a limited company with an operator’s licence without any physical assets

CASES REFERRED TO:- 2009/225 [NAME_7] & [NAME_8]; 2002/217 [NAME_9] No.2; [COMPANY_10] v Secretary of State for Transport (2010) EWCA Civ 695; T/2010/49 [COMPANY_11]; T/2017/55 [NAME_11]; 2006/227 Fenlon.

[2019] UKUT 0254 (AAC) 2 T/2019/32 T/2019/33

REASONS FOR DECISION

1. These are appeals from the decision of the Traffic Commissioner for the West of England (“the [NAME_12]”) made on 25 March 2019 when he determined that:

a) [NAME_3] (“[NAME_3]”) had lost his good repute as a transport manager under Schedule 3 of the Public Passenger Vehicles Act 1981 (“the Act”) and Article 2 of EU Regulation 1071/2009 and disqualified him from acting as such for a period of three years; b) Revoked the operator’s licence of [COMPANY_4] (“[NAME_4]”) with effect from 23.59 on 27 April 2019 having found that the company had lost its good repute; that there had been a material change and the company lacked professional competence.

2. We heard the appeals of [NAME_3] and [NAME_4] separately but now produce a joint decision in view of the shared background, the connections between the two Appellants and the fact that the appeals arise from the same public inquiry.

The Background

3. The background relevant to these appeals can be found in the appeal bundle, the transcript of the hearing, the written decision of the [NAME_12] and the Upper Tribunal’s decision T/2014/53/54 [COMPANY_4], [NAME_14] and [NAME_14] (which should be read in conjunction with this decision in relation to [NAME_3]) and is as follows. [NAME_3] had been a director of [COMPANY_4] along with his father, [NAME_13] and his sister, [NAME_13]. At the same time, [NAME_3] held his own operator’s licence trading as “[NAME_15]”. He was the nominated transport manager for both licences. The licences were revoked in June 2014 and [NAME_3] and his father lost their good repute as directors and as transport managers. Both were disqualified for a period of 18 months. The regulatory action was taken as a result of serious and sustained failings in maintenance systems including prohibitions (two being “S” marked), a poor MOT pass rate, failure to adhere to the declared PMI intervals and an ineffective driver defect reporting system. Little improvement had been effected despite two unsatisfactory maintenance investigations and an adjournment of the public inquiry. In addition, [NAME_3] had been unlawfully lending vehicle discs issued to his sole trader licence to [NAME_4] which continued despite notice being given to him that the lawfulness of his actions was in issue. In determining the appeals, the Upper Tribunal concluded that it was a “very bad case” and that the facts demonstrated a “wilful disregard of the need to ensure regulatory compliance” on the part of [NAME_3] and [NAME_13]. Further, the Upper Tribunal was unimpressed with the [NAME_12]’s decision to grant a sole trader licence to [NAME_13] trading as [NAME_4] dismissal of the appeals, the [NAME_12]’s order came into effect from 14 November 2014.

[2019] UKUT 0254 (AAC) 3 T/2019/32 T/2019/33

4. In the interim, [COMPANY_4] made an application for an operator’s licence in August 2014. Because of the significant similarities between the application and the [NAME_4] operation and the suspicion that the application was simply a replacement for the revoked licence, the application was called to a public inquiry. [NAME_17] and [NAME_17] were the directors although [NAME_13] held 90% of the shares. [NAME_17] held the remainder and he was also the nominated transport manager.

5. The application was granted for fifteen vehicles on 9 February 2015 with undertakings prohibiting [NAME_3] and his father from having any involvement in the business. On 9 June 2016, [NAME_13] was added as a director. The prohibition in respect of [NAME_3] was removed in August 2016 and the prohibition in respect of [NAME_13] was removed in December 2016.

6. It is common ground that as soon as the disqualification order relating to [NAME_3] came to an end, he started driving for the company and when the prohibition against his involvement in the company was removed, [NAME_3] became involved in the operation of vehicles. On 19 November 2016, both [NAME_17] and [NAME_17] resigned as directors and [NAME_17] resigned as transport manager. The resignation letter of [NAME_17] complained that he and [NAME_17] were being prevented from moving the business forward and in particular with regard to the operation of a new registered service. He went on to state:

“In this regard [NAME_4] has too many negative connections, many of the people who may supply work see us as connected to the old [NAME_4] (sic) and this is hard to get past. We are dependent upon [NAME_18] and with [NAME_17] have tried to direct the business towards a commercial bus future that insulates the company with revenues beyond those who are not friends to us. … I have been very concerned for some time about the future and the intent of [NAME_3], it is clear to me where this is going and I feel that the direction that is being promoted is not where I feel it should be ..”.

The resignation letter of [NAME_17] informed [NAME_13] that he had been instrumental in obtaining the operator’s licence and that he and [NAME_17] had worked hard to run a quality and professional operation. However:

“.. we are both concerned that the company has become a zombie operation, existing simply to pay wages. .. we have sought to ensure standards are maintained and that the fleet has been looked after but it has become clear to me that decisions made are not in the control of [NAME_17] and myself as the functional directors. This is not how it should be in such a business, as it is now I feel that I have done what I can but that the direction of the company is no longer being guided by myself and [NAME_17] … I cannot support the direction I see coming and that I do not want to be associated with that policy, to be responsible without input. [NAME_3] has indicated to me he feels he should join the board towards the end of this year and that leaves the directors in position without authority ..”.

[2019] UKUT 0254 (AAC) 4 T/2019/32 T/2019/33 7. In his unchallenged evidence to the Traffic Commissioner on 4 March 2019, [NAME_17] confirmed that he had concerns about [NAME_3]’s involvement in the business at a time when the prohibition remained in force. [NAME_3] had already obtained a new sole trader licence and was operating close by. As the operating centre was in the immediate vicinity of’ DVSA premises, such involvement would have been “highly visible”. When the prohibition against [NAME_3]’s involvement in the business was removed, [NAME_17] then became concerned about [NAME_3]’s influence on the business. [NAME_17] considered that [NAME_3] was preventing the directors from moving the business forward. That was borne out in [NAME_17]’s view, by a telephone call he received from [NAME_3] during the evening of [NAME_17]’s resignation. [NAME_3] stated that [NAME_17]’s resignation made things difficult for [NAME_3] and his father as they wanted to apply for new operator’s licences.

8. [NAME_17] was replaced as transport manager by [NAME_17] in early December 2017. [NAME_3] became a director on 7 July 2017. [NAME_13] then resigned as director on 26 January 2018 but continued to hold 90% of the shares. [NAME_17] resigned as Transport Manager with effect from 21 March 2018 and by an application dated 26 February 2018, [NAME_3] nominated himself as transport manager. That nomination was added to the licence on 25 April 2018. The delay is unexplained.

9. On 5 February 2018, vehicle [ID] caught fire whilst transporting children to school which resulted in an evacuation of the children onto a busy carriageway ([NAME_3] takes issue with the use of the adjective “busy”). A video of the incident was placed on social media by one or more of the passengers. This serious incident was not reported to the DVSA either by [NAME_17] or [NAME_3] in accordance with the procedure set out in PSV112 (which requires reporting to the DVSA within 24 hours and which prohibits work being carried out on the vehicle concerned until the DVSA has had an opportunity to examine it).

10. The DVSA did however learn of the fire and that triggered an unannounced maintenance investigation. The outcome was “unsatisfactory” for the following reasons:

a) The stated operating centre in [ADDRESS], Exeter had been closed for some time without the [NAME_12] having been informed. However, Companies House records had been updated in January 2018 to show the correct address. Vehicle Examiner (“VE”) [NAME_19] visited the compound which was now being used as an operating centre on several occasions but no staff were found on the premises and no repair facilities existed save that there were two shipping containers which contained cleaning materials and “rudimentary brake facilities”; b) [NAME_19] had noted that vehicles operated by [NAME_4] were often in the yard of [NAME_4] in Northlew and so he called there on 12 June 2018. The office staff provided copies of maintenance records and confirmed that the Carmel workshop was carrying out the maintenance for [NAME_4]. This was contrary to the stated maintenance arrangements recorded on the operator’s licence which were declared as “in house”;

[2019] UKUT 0254 (AAC) 5 T/2019/32 T/2019/33 c) On 2 July 2018, [NAME_19] attended the compound in Exeter where [NAME_20], a mechanic connected with [NAME_4] was working. He let [NAME_19] into the office of [ADDRESS] and provided all of the visible maintenance files to [NAME_19] to inspect. [NAME_19] inspected seven vehicle files and scanned the contents. He noted that there were gaps of up to 14 weeks between PMIs when the declared interval was six weeks; d) There was a [NAME_21] decelerometer at the site in Exeter. The calibration certificate had expired on 17 May 2018. The signing fitter on the PMI sheets was often [NAME_20] or “[NAME_22]” who was based at [NAME_4] in Northlew and yet the meter was in Exeter. [NAME_19] concluded that either the meter was taken to Northlew or the inspections were taking place at a location without facilities; e) Maintenance was being undertaken using two sets of PMI sheets for the same inspection with defects being identified on the white set (first in time) which were not endorsed as rectified or signed off and then other defects being identified on the blue set (and not the same defects as those identified on the white set) often with the vehicle travelling about 30 miles between the two sets of inspections. [NAME_19] recalled an encounter with the [NAME_3] a number of years before his present investigation when a remark was made that “they” were going to stop putting defects on the PMI records if it was going to result in “trouble”. [NAME_19] suspected that it was never intended for the white PMI sheets to be seen by the DVSA; f) [NAME_19] found many and significant discrepancies and failures in respect of PMI inspections (quite apart from e) above). By way of example: inconsistent mileage recordings; repairs undertaken for defects not identified on driver defect reports or during the PMI itself; a VOR system that was clearly not working with missing and inconsistent mileage recorded in relation to VOR declarations and an absence of first use checks following a vehicle being VOR’d; the use of vehicles whilst VOR’d; lack of brake testing records and a failure to undertake roller brake testing in line with the recommendations in the DVSA Guide to Roadworthiness; PMI sheets were not being signed off; g) Three vehicles were inspected during the visit and advisory notices were issued for out of date First Aid kits and fire extinguishers; h) All of the vehicles seen by [NAME_19] were displaying the incorrect legal lettering. The fitter was informed. However, three vehicles seen by [NAME_19] on 14 November 2018 were still displaying the incorrect information with regard to the business address. i) The MOT first presentation pass rate was unsatisfactory. There had been 36 tests with 16 fails including PRS and 5 brake fails resulting in a 44% fail rate. j) Between June 2015 and February 2017, five immediate PG9’s, two delayed PG9’s and two advisory notices had been issued to vehicles being operated by [NAME_4].

[NAME_19] was also concerned that [NAME_4], [NAME_4] and [NAME_16] (the sole trader licence of [NAME_13]) were in fact operating

[2019] UKUT 0254 (AAC) 6 T/2019/32 T/2019/33 as one entity as staff at [NAME_4] referred to the separate operations as “branches” when answering the telephone.

11. On 25 October 2018, [NAME_3] submitted a detailed response to the [NAME_23] which failed to address many of the real concerns raised by [NAME_19]. He did not consider the maintenance investigation to be an “honest and fair review” and submitted that too much reliance had been placed on “guesswork”. He was critical of [NAME_19]’s failure to distinguish between failures in systems when [NAME_17] and [NAME_17] were transport managers as compared to [NAME_3]’s performance as transport manager, which he described as being above the national average. [NAME_3] incorporated into his response, The Civil Service Code and made a clear attack upon [NAME_19]’s honesty, integrity and “capability and professional conduct”. He wished to see the digital data gathered by [NAME_19] when he attended the operating centre on 2 July 2018.

12. On 10 December 2018, [NAME_3], using [NAME_17]’s log-in details to access the VOL system, notified the Office of the Traffic Commissioner (“OTC”) of his resignation as director and transport manager of [NAME_4]. On 11 December 2018, the OTC wrote to [NAME_4] regarding the company’s apparent lack of professional competence and absence of any directors, giving the company a deadline of 1 January 2019 to rectify the position. On 29 December 2018, various on-line changes were then made in respect of the licence, with [NAME_17]’s log-in details being used: [NAME_3] submitted an on- line TM1 form in his purported capacity of director (when he had resigned nineteen days before), nominating [NAME_6] as transport manager; an additional operating centre at [ADDRESS], Marsh Barton Trading Estate was added; the nominated maintenance provider became [COMPANY_49] with the same address as the new operating centre; all [NAME_4] vehicles were removed from the licence and five vehicles previously operated by [COMPANY_25] (“[NAME_24]”) were specified. On the following day, [NAME_6] (who had previously been a minority shareholder of [NAME_24] and the nominated transport manager) was registered as a director at Companies House.

13. On 8 January 2019, the OTC wrote to the company indicating that the [NAME_12] was minded to suspend the operator’s licence for lack of professional competence, the absence of any director details on the licence and lack of financial standing. The [NAME_12] was concerned by the application to nominate [NAME_6] as transport manager because of his links with the operator’s licence of [NAME_24] which had been revoked with effect from 31 October 2018. Following a telephone conversation between [NAME_3] and [NAME_26], Senior Team Leader at the OTC, the letter was withdrawn and [NAME_3] was informed that the licence was to be called to a public inquiry.

14. The [NAME_12] then received a letter from [NAME_27], South Western Regional Manager of the Confederation of Passenger Transport UK dated 10 January 2019 to explain the circumstances leading up to the [NAME_12]’s decision to hold a public inquiry. [NAME_3] had informed [NAME_27] in June 2018 that he wished to exit the road transport industry and was training to become a commercial

[2019] UKUT 0254 (AAC) 7 T/2019/32 T/2019/33 pilot. Whilst that would take some time to complete, he was scaling back the [NAME_4] operation in order to reduce the level of financial standing required in order to facilitate the disposal of the business. The licence of [NAME_24] was revoked in July 2018 and the company had been given to 31 October 2018 to submit a new application. Then in September 2018, [NAME_6] informed [NAME_27] that he had decided to submit a new application for a licence and then sought advice as to how to retain some valued clients of [NAME_24] in the interim. It was then that [NAME_27] advised [NAME_6] that he knew of a possible opportunity to buy an existing operation to which he responded favourably. Contingency plans were made to cover the work that [NAME_24] wished to continue with. Discussions then took place from early November whilst [NAME_6] met with the Compliance Manager of Devon County Council to seek approval for the acquisition. It was also important to make a decision as to when the finances “under [NAME_3]’s control” could be separated from the new owners. On 19 December 2018, [NAME_27] accompanied [NAME_6] to a public inquiry into [COMPANY_28] to satisfy DTC Harrington that there was no link between that company and “[NAME_6]’s planned continuation” (it is unclear whether [NAME_6]’s proposed acquisition of [NAME_4] was mentioned at that stage). In any event, with that cleared up, [NAME_3] then resigned as director and transport manager in anticipation that [NAME_6] would be appointed within the statutory period. Following the OTC direction that a transport manager be in place by 1 January 2019, [NAME_13] immediately contacted the OTC (but her explanation was not considered by the [NAME_12] as she was not a director of the company).

15. It was considered essential that the deadline given by the OTC should be met and so [NAME_27], [NAME_3] and [NAME_6] met on 29 December 2018 and used the VOL system to make the necessary changes to the licence. They had no choice but to use the log-in details of [NAME_17] as they were the only ones that [NAME_3] had. All matters were proceeding forwards with the first payment for the company due on 8 January 2019 when [NAME_3] received the “propose to suspend” letter from the OTC.

16. By call up letters dated 28 January 2019, [NAME_4] and [NAME_3], [NAME_17] and [NAME_17] (as transport managers) and [NAME_6] (as director and proposed transport manager) were called to the public inquiry listed for 4 March 2019.

The period immediately before the public Iiquiry

17. Immediately prior to the public inquiry, [NAME_3] submitted written representations. His explanation as to how [NAME_6] became involved with the operation mirrored that given by [NAME_27]. He considered that in purchasing [NAME_4], [NAME_6] would have a ready-made business with an established footing which included accounts for most of the major customers in the area including Devon County Council, Exeter University, [NAME_37] and [NAME_29]. The tendering exercise for some of these contracts could take some time and [NAME_6] had the benefit of contracts already awarded, favourable insurance rates, fuel card accounts and all of these factors made the purchase of the company a more attractive proposition than making a new application for a licence. [NAME_3] agreed to sell [NAME_4]

[2019] UKUT 0254 (AAC) 8 T/2019/32 T/2019/33 Coaches to [NAME_6] with a part payment being made. The balance was to be paid once all the relevant matters were in place and the finances of the company were settled. But for the public inquiry, the contract would have been concluded. [NAME_3] gave a number of explanations for the apparent maintenance failings. He did not consider that the vehicle fire gave rise to criticism of him. He had written a letter which he had sent to the Central Licensing Office in Leeds on 12 February 2018 (rather than the DVSA) as he thought that was the appropriate address and the Central Licensing Office must have misfiled it. The letter appended to [NAME_3]’s response did not include an operator’s licence number, an address for the company and was not addressed to the OTC or the DVSA. He gave an explanation (with supporting documentation) for a significant amount of mileage covered by a vehicle which had been VOR’d at the material time. There was no explanation for why the vehicle had been used whilst the VOR declaration was still in place. He asserted that the [NAME_21] decelerometer was transported between the operating centre and Carmel at Northlew and the reason for two sets of PMI sheets relating to the same PMI inspection was that [NAME_20] would do the topside check of the vehicle at the operating centre and the vehicle would then be driven to Northlew for the remainder of the inspection that required facilities and that explained the mileage covered between the two inspections. The absence of [NAME_21] brake test printouts was because the blue tooth connection between the machine and the printer was faulty (that did not explain why the fitters did not enter the figures manually onto the inspection sheets). As for excessive gaps between PMI inspections, [NAME_3] accepted responsibility and produced either MOT certificates or evidence that vehicles had been MOT’d during those gaps but asserted that each vehicle had undergone a pre-MOT PMI inspection. With the benefit of hindsight, he should have kept those inspections records. We note that all of the relevant dates referred to, pre-dated his nomination as a transport manager and it is therefore assumed that [NAME_3] accepted that responsibility as a director.

18. [NAME_3] asserted that all drivers were trained in daily walk round checks and that audits of those checks were undertaken. By way of example, he attached to his representations, one document entitled “Driver Induction to Daily First Use Checks” dated 9 May 2018, the driver concerned being [NAME_20] (the fitter). He also attached a “First Use Check Inspection Audit” for the week commencing 14 May 2018 which recorded four checks on vehicles undertaken by [NAME_20]. These documents were not considered by the [NAME_12] during the public inquiry.

19. On 28 February 2019, [NAME_6] submitted a witness statement for the [NAME_12]’s consideration. He advised that he remained the sole director of [NAME_4] and the nominated transport manager. He noted the [NAME_12]’s concerns that he had not been listed on the licence as a director, however he believed that the change had been made on the VOL system on 29 December 2018. [NAME_6] set out his history within the road transport industry. He had established [NAME_24] with [NAME_24] in about 2011 and had been a director for a short period but was the transport manager throughout the life of the licence before it was revoked. He had a 25% shareholding.

[2019] UKUT 0254 (AAC) 9 T/2019/32 T/2019/33

20. [NAME_24] had been called to public inquiries in March and July 2018 because of concerns about financial standing. The company had lost a very significant contract with Megabus in 2016 which had generated revenue of £37,000 per week and had required the dedicated use of five vehicles from the fleet along with nineteen drivers. It was difficult for the company to recover from the loss of that contract.

21. The company went into administration on 6 November 2018. He produced the Statement of Affairs showing an estimated total deficiency of £665,672 (with £460,552 owing to HMRC). However, debts were continuing to be cleared and creditors (including [COMPANY_31]) were paying into the administration fund. It was anticipated that with the agreed payment plan and the personal guarantees made, that the whole debt would be paid. The financial standing of [NAME_4] would not be affected by the guarantees given.

22. During the life of the [NAME_24] licence there had not been any concerns about maintenance or other regulatory requirements and the company had been given an opportunity to apply for a new licence at the July 2018 public inquiry, providing financial standing could be met. [NAME_6]’s initial reaction was to leave the industry but he changed his mind and he incorporated [NAME_24] (South West) Limited on 3 October 2018 (he being the sole director) with the intention of making a new application for a licence. That company then became Greenslades Tours (Exeter) Limited and the existing maintenance workshop was separated from that business and became [COMPANY_32].

23. [NAME_6] confirmed the chronology as set out in the letter of [NAME_27]. He checked the OCRS score for [NAME_4] (green traffic and amber roadworthiness) and ascertained that there were no conditions on the licence and that the shareholders were prepared to sell their shareholding. He was not aware that [NAME_3] had resigned as transport manager and director and when he did find out, he had to work quickly. [NAME_6] met with [NAME_27] and [NAME_3] on 29 December 2018 and he was nominated as transport manager. He thought that he had also been added as a director to the licence. A maintenance agreement was drafted, [COMPANY_49] was added as an operating centre and the vehicle authorisation was updated. He was unaware that [NAME_17]’s log-in details were being used to access the VOL system and had since applied for his own log-in details. Arrangements were then made to transfer the shares although that had not taken place. [NAME_6] assured the [NAME_12] that the [NAME_3] would not have any involvement in the company and an undertaking was offered in that regard. The operating Centres at Unit 65 [NAME_33] which remained on the licence would be removed. The new operating centre had parking spaces for eleven vehicles although [NAME_6] intended to operate eight vehicles. At the time of the hearing, two were in possession.

24. [NAME_6] set out the systems that would be in place including PMI intervals of four weeks, brake tests at every PMI using a calibrated Tapley meter, roller

[2019] UKUT 0254 (AAC) 10 T/2019/32 T/2019/33 brake testing every three months and a transparent VOR system. He had undertaken a CPC refresher course in the previous five years; he would have two administrative assistants; a drivers’ handbook was produced (although not included in the appeal bundle).

25. [NAME_6] requested that the [NAME_12] accept his proposals. Whilst he had been associated with [NAME_24], he retained his good repute and “the door was left open” for him to make a new application.

The public inquiry

26. In attendance at the hearing was [NAME_19] and Senior Vehicle Examiner (“SVE”) [NAME_34]; [NAME_3], who was represented by [NAME_35]; [NAME_6], who was represented by [NAME_36] of [NAME_36]; [NAME_17], who was accompanied by [NAME_17] and [NAME_17], who was unrepresented.

27. At the outset of the hearing, the [NAME_12] indicated that he did not consider that the history of [NAME_4] and in particular the maintenance issues, were of relevance to the issues raised by [NAME_6] wishing to buy [NAME_4], his nomination as transport manager and his directorship.

28. [NAME_19] was then cross examined by [NAME_35] and [NAME_3]’s various explanations for some of his findings were put to him. He was asked whether [NAME_3]’s explanation for the large amount of missing mileage whilst a vehicle was VOR’d addressed [NAME_19]’s concerns. He responded “Possibly. Without going back and looking at all my notes and my analysis of the maintenance documents themselves it’s difficult to comment whether that’s acceptable or not. Because I can’t recall what the defect note was, what the defect on the defect note was for ..” . He was not satisfied with [NAME_3]’s explanations for long gaps between PMI inspections as MOT tests were not a substitute for a full PMI. He dismissed [NAME_3]’s explanation for the replacement of track rod ends on a vehicle prior to MOT which were not noted as defective (the explanation being that MOT examiners like to see new parts during an MOT examination). [NAME_3]’s explanation for the two sets of PMI sheets was not acceptable.

29. One particular area of dispute was [NAME_19]’s findings in relation to the company’s MOT pass rate and the overall failure rate of 44%. Using the OCRS score, [NAME_3] had calculated much more positive figures for the period when he was transport manager. [NAME_19] was asked whether [NAME_3]’s explanation “held water”. [NAME_19]’s response was “Not unless … somewhere in my notes I may have an analysis of the five year and the two year but my concern was the overall fail rate was 44% (sic)”. He was asked to go through the fails that he had recorded. He mentioned a fail on 9 February 2018 for service brake operation on vehicle SIG 8434. [NAME_3] immediately denied that the vehicle had ever been operated by [NAME_4]. In response, [NAME_19] explained that the registration was on the list given to him by the operator. He did not produce the list for the [NAME_12] or [NAME_3] to consider. It was not further explored with [NAME_19] during the hearing

[2019] UKUT 0254 (AAC) 11 T/2019/32 T/2019/33 although [NAME_3] in his evidence repeated his denial that the vehicle was associated with [NAME_4].

30. In his evidence to the [NAME_12], [NAME_3] repeated his written representations and so that evidence is not repeated here. He gave the date of his appointment as transport manager as 15 March 2018. It was sometime after 12 February 2018 that he was informed that he should have notified the DVSA of the vehicle fire by way of a specific form. He did wonder at the time of sending the letter to the Central Licensing Office whether a connection would be made between the letter and the [NAME_4] licence.

31. When he had closed the operating centre down at [ADDRESS], he had removed the address as an operating centre from the operator’s licence using the VOL system and changed the registered address. It was an oversight that he had not also changed the correspondence address to [ADDRESS]. The reason for the vehicle MOTs being kept at [NAME_4] premises was because [NAME_4] owned the vehicles. As for the split PMI regime, [NAME_3] produced a PMI sheet dated 7 March 2018 for vehicle [ID] completed by [NAME_20] which had rectification work shown on it. There were 17 defects recorded. He told the [NAME_12] that this PMI had been undertaken at Northlew with [NAME_20] dealing with the topside and [NAME_22], the underside. The [NAME_12] pointed out that [NAME_20] had recorded “h/brake chambers wound off” with rectification work recorded as “wound in”. The [NAME_12] questioned whether that was something one would find in a topside check. [NAME_3] suggested that part of the topside check could have been done over the pit. [NAME_19] commented that for the brake chamber to have been wound off, someone must have been under the vehicle to achieve that in the first place. He queried how the vehicle could then have arrived in Northlew without brakes. [NAME_3] asserted that it looked like there was question mark next to the defect although [NAME_19] further queried why anyone would put a question mark next to such a statement. [NAME_3] could not answer but highlighted that the defect had been repaired and signed off. [NAME_19] then highlighted another issue with the PMI inspection: there was a question mark against “air leak audible faint” and yet it had been driven on the road. As for the replacement of track rod ends which were not defective prior to an MOT in order to satisfy the examiner that work had been carried out on the vehicle, the [NAME_12] put to [NAME_3] that it was a “ridiculous explanation”. [NAME_3]’s response was “mmmm”.

32. [NAME_3] confirmed his view that the OCRS score applicable to his time as transport manager was not as bad as [NAME_19] had stated and his MOT pass rate of 70% (as he calculated it) was above the national average which he stated was 68.3%, a figure he had obtained from the internet. The OCRS score for his sole trader licence was “green”.

33. As for his use of [NAME_17]’s log in details for the VOL system, [NAME_3] maintained that when he had first used them, the details were automatically saved to his browser and he did not thereafter, notice [NAME_17]’s name in the top right hand of the screen. In any event, he thought the details were those of [NAME_4].

[2019] UKUT 0254 (AAC) 12 T/2019/32 T/2019/33

34. As for the arrangement he had with [NAME_6], [NAME_3] had already transferred two registered services to [NAME_4], leaving the remaining contracts. He accepted that in due course, [NAME_6] would have to notify the companies that [NAME_4] had contracted with to inform them of a material change but [NAME_6] had already approached Devon County Council and had received a positive response. There was no reason why the other companies would not react in the same way.

35. He was not using his sole trader operator’s licence at the time of the hearing.

36. [NAME_17] then gave evidence and the substance of his evidence is set out in paragraph 5 above. As for his VOL log-in details, he had provided those for use when he was on holiday prior to his resignation. He was not aware that they were personal to him and that they were still being used.

37. [NAME_17] then gave evidence. He had been asked to become transport manager at the end of 2016 although the records show that he was in place from 9 June 2017. The company had left the operating centre and workshop in February or March 2017 (Companies House records were amended in January 2018) and he then had a discussion with [NAME_3] about maintenance being undertaken off site because the new operating centre did not have any facilities. As far as he was concerned, they used the white PMI sheets. Once the maintenance was moved, the PMIs took place between two sites and [NAME_17] was concerned about inspections being started and finished at different sites. His understanding was that this could not take place. However, [NAME_3] had told him that it was fine. He was not aware of the blue PMI sheets being used. [NAME_17] resigned as transport manager with effect from 21 March 2018. None of the issues identified by [NAME_19] during the period of [NAME_17]’s tenure as transport manager were put to him by the [NAME_12].

38. Finally, [NAME_6] gave evidence. He told the [NAME_12] that he wanted to buy [NAME_4] because of the existing contracts as the tendering process could otherwise take a considerable time to complete. There was no reason why those contracts could not continue. He had already discussed the position with [NAME_8] of Devon County Council and there was no issue. Having paid a small amount as a down payment, he had hoped that the sale could be completed early to mid-January. Now, it was on hold. No vehicles had been operated until two or three weeks before the hearing. There were two vehicles presently specified on the licence.

39. He confirmed that he had not been involved in the financial side of [NAME_24] and did not know why HMRC was owed two thirds of the debt. He had seen the [NAME_37] contract held by [NAME_4] but had not spoken to anyone about whether it would continue. He was waiting for the outcome of the public inquiry. Neither had he sought legal advice about how the contracts would “transfer”. He would need to look into it before the sale was completed. He confirmed that no physical assets were being transferred in the sale. He was buying the company registration, the operator’s licence and

[2019] UKUT 0254 (AAC) 13 T/2019/32 T/2019/33 the contracts and he did not believe that there would be any difficulty with them (the [NAME_12] indicated that he would like to see the contracts). The vehicles had been the subject of finance agreements and those had been novated.

40. Whilst the hearing was taking place, [NAME_34] considered the maintenance records produced by [NAME_3] at the beginning of the hearing. Vehicle FJ56 KUH was inspected on 12 August 2018 and this was the first record which showed that a Tapley meter had been used for brake testing. Written on the PMI sheet were the words “calibration expired on brake tester”. On 25 September 2018, a PMI inspection revealed defects with the brakes which were repaired. No roller brake test was undertaken and there were no Tapley meter recordings or any other brake performance indication following repair. Vehicle [ID] had a brake performance test on 30 May 2018. The next brake test was on 21 February 2019 but there were no PMI or other records associated with that test. There was also a PMI inspection on 21 November 2018. [NAME_34] was particularly concerned by a PMI record dated 7 September 2018 for vehicle [ID] which had a declaration written on the back “bus taken before wheels could be re-torqued 7.9.18 at 13.35”. The next note was three days later on 10 September 2018 which records that the wheels were torqued. It followed that the vehicle had been in operation in the intervening period without the wheels being re-torqued.

41. [NAME_19] looked at one vehicle file over the short luncheon adjournment and he noted that two PMI inspections showed no evidence of brake testing. There was a brake test duplicated within half an hour of each other for one vehicle which were both passes which [NAME_19] thought was “rather strange”. There was also a driver defect report for a damaged mirror which was not signed off as rectified.

42. In his closing submissions, [NAME_35] asked the [NAME_12] to find that [NAME_3] had retained his good repute. There was nothing untoward about the proposed sale of the business. [NAME_3]’s failure to retain pre-MOT PMI sheets and his approach to MOTs had been a “learning curve”; he had explained one significant amount of missing mileage whilst a vehicle was VOR’d and [NAME_3] appreciated that the paperwork was not as robust as it could have been; the recordings of non-rolling brake tests were more of an issue but roller brake testing had been undertaken; three vehicles had been inspected by [NAME_19] and they were clear of defects; the use of two sets of PMI sheets was not a device to mislead although it did cause a degree of concern; the evidence of [NAME_3] concerning his OCRS score compared to the MOT pass rate put forward by [NAME_19] required due consideration and that many of the matters pre-dated [NAME_3]’s nomination as transport manager. [NAME_3] had put forward evidence of other compliance including his own training record, the defect reporting induction driver’s training and gate checks, a forward planner and driving licence checks (of which there was no evidence of in the appeal bundle).

43. On behalf of [NAME_6], [NAME_36] submitted that the only issue in his past was the revocation of the [NAME_24] licence. However, in the [NAME_12] delaying the date of revocation, [NAME_6] had been given an opportunity to return to

[2019] UKUT 0254 (AAC) 14 T/2019/32 T/2019/33 operator licensing subject to satisfying the regulatory requirements by the delay in the revocation of the [NAME_24] licence. Whilst that invitation contained in the decision letter related to a new licence, the decision to buy a going concern instead was based on the advice given by [NAME_27]. [NAME_6]’s good repute could not therefore be tarnished as a result of the approach that he took. He had acted in good faith and taken appropriate advice. The purchase of the business made commercial sense. The arrangements for maintenance and regulatory systems set out by [NAME_6] meant that the company could be trusted going forwards and the [NAME_7] question could be answered in the positive. The [NAME_12] was urged to allow the licence to continue with undertakings in relation to the absence of future involvement of [NAME_3] and the transfer of the shareholding within a certain period of time. In response to an enquiry, [NAME_36] agreed that he could provide the [NAME_12] with copies of the contracts by the end of the week.

44. On 8 March 2019, [NAME_36] emailed the OTC stating that in the time available, the company had only been able to receive clarification by email of the contractual position in relation to [COMPANY_46]. An email from [NAME_8], Passenger Services Manager for Devon County Council was attached which confirmed that work would continue to be provided to the company provided that [NAME_13] confirmed that she was selling the company as she was recorded on the council’s records as being the Managing Director. Work under the latter contract with [COMPANY_38] had already commenced and in the previous two weeks, work to the value of £15,000 had been undertaken demonstrating that it was a contract of significant value. He enclosed two sample invoices for the provision of two buses on 9 February 2019 for the total sum of £900 and an email from [NAME_39] of [COMPANY_40] attached to [NAME_36]’ email, confirmed that [NAME_4] would continue to be one of the company’s preferred operators and that work would be offered as normal. Private hire work might also be considered. [NAME_36] advised that in respect of [NAME_37] he had been unable to obtain written confirmation that the contract would continue but he had been “advised verbally it has been confirmed that the material change will not affect the contractual basis. We have requested email confirmation and whilst I appreciate the cut-off point is today, if that confirmation arrives, I will forward it”. Nothing further was sent to the [NAME_12] by [NAME_36].

The Traffic Commissioner’s decision

45. In his written decision dated 25 March 2019, the [NAME_12] confirmed that the maintenance issues were irrelevant to [NAME_6] or the company “as it would be constituted” should the sale be completed. [NAME_24] had not given cause for concern in relation to maintenance. However, the [NAME_12] proceeded upon the basis that the purchase of the business had not yet been completed and it was possible that it would not be. He therefore made his determination of the company as it was prior to 29 December 2018 as “that could well be the way it stays”.

[2019] UKUT 0254 (AAC) 15 T/2019/32 T/2019/33 46. [NAME_3] sought to write-off any history that pre-dated his role as transport manager or director. The unchallenged evidence of [NAME_17] was that [NAME_3] had influence over the operation earlier than that. The [NAME_12] relied upon [NAME_17]’s concerns over the split PMI process which began in February or March 2017 but was assured by [NAME_3] that it was all in order.

47. [NAME_17] stated that he had never seen the blue PMI sheets. This was unchallenged. The [NAME_12] was concerned as was [NAME_19], that the white records were never meant to be provided to the DVSA whilst the blue records put forward a much more positive view of the operation. Even in [NAME_3]’s own evidence bundle, the white PMI sheet (referred to in paragraph 30 above) painted a worrying picture. It identified three immediate and three delayed PG9’s. A broken door glass and the handbrake chambers wound off, absent explanations, appeared to identify significant failures in maintenance. At least six of the defects were driver-reportable. The identification of the handbrake chamber wound off and worn chamber threads were not consistent with the explanation that the white PMI sheets were topside only, although the parking brake was presumably obvious from the vehicle not staying where it was put. Eight of the items were left unrectified but they were not recorded on the blue PMI sheet dated two days later. Neither recorded tyre depths. The records painted “an appalling picture”.

48. The system of split inspections with the vehicle travelling 30 miles during the inspection is not one that is contemplated by the Guide to Roadworthiness. Whilst the [NAME_12] was asked to accept that the split inspections could be aggregated, that was not possible. [ID] was signed off as roadworthy by [NAME_3] on 9 March 2018 when 8 defects identified on 7 March 2018 had not been rectified. The whole approach was nonsense and demonstrated a reckless approach by the operator and [NAME_3] as transport manager.

49. The [NAME_12] accepted that the driver defect reporting was inadequate by reason of the nature of the defects identified on just one vehicle ([ID]). [NAME_3] had suggested in evidence that the defects found on that vehicle must all have happened after the driver had conducted his walk round check. The [NAME_12] concluded that if that was the case, the vehicle must have spent the 6 March 2018 “in a war zone”. His submission was “nonsense”.

50. An instrumented check of brake performance was required at every PMI and roller brake tests at least quarterly. These standards were a very long way from being met, even when taking into account tests using two devices which had expired calibrations. [NAME_3]’s excuse about a faulty printer was “appalling” and did not explain why manual records were not made.

51. It was also of great concern that the operator chose not to keep pre-MOT inspection records. There was no sensible reason to discard the documents.

52. The [NAME_12] doubted [NAME_3]’s account that he had reported the vehicle fire to the Central Licensing Office in Leeds having spent five years in the office and being familiar with the way in which post was dealt with. However, even if the letter had been lost in the post, that did not explain why it was sent to Leeds in

[2019] UKUT 0254 (AAC) 16 T/2019/32 T/2019/33 the first place. [NAME_3] had had enough interaction with the OTC to understand that it was separate to the DVSA. An online search produced the PSV112 form and the local DVSA office was a “literal stone’s throw from the operating centre”.

53. [NAME_3]’s response to [NAME_19]’s findings was to seek to apportion blame on others and to attack the integrity of [NAME_19] himself. That complaint was a matter for the enforcement agency. In making his protestations, [NAME_3] claimed that his MOT performance was better than the national average when under his directorship. By his own figures, the company’s MOT rate was 70% when the overall PSV national test pass rate in 2016/17 was 86% on initial presentation and 91.2% after failures that could be rectified at the testing location were removed. The operator’s performance fell “woefully below” those figures, even when using his own figures.

54. All of the above pointed to a complete lack of management control by the operator and transport manager and that was without going back to the earlier performance prior to the summer of 2017. [NAME_3]’s response to having this pointed out to him was to seek to blame other .. “My response is to find that his good repute as a transport manager is lost”.

55. As for “the transactions” carried out on 29 December 2018 using the log-in details of [NAME_17], the account holder’s name was clearly visible on the VOL screen and would have been apparent to all those present. In his letter, [NAME_27] stated “we had no choice but to use the account ..”. To continue as they did was “utterly deceitful”. Further, [NAME_6] had told the [NAME_12] that he knew that [NAME_3] had resigned as director “several days” after 10 December 2018 so both he and [NAME_3] knew that [NAME_3] was not entitled to sign the TM1 form nominating [NAME_6] on 29 December 2018. They colluded in making a false statement which affirmed the [NAME_12]’s finding that [NAME_3]’s repute as transport manager was forfeit.

56. Turning to the transfer of ownership of the business, [NAME_6] had referred to the purchase of a “going concern” although the registered services had been cancelled and there was no transfer of the operating centre, staff or vehicles. The only “asset” bar the operator’s licence was the goodwill and “specifically” two contracts with [NAME_29] and [NAME_29]. [NAME_6] did not know whether there were clauses in those contracts that required material change to be notified despite his assertion that he had undertaken due diligence. The [NAME_12] referred to having allowed seven days for the contracts to be provided (although the transcript records “the end of the week” and [NAME_36] referred to the cut-off date being 8 March 2019, so four days). The [NAME_12] recorded that no contracts had been provided to him but referred to the emails summarised in paragraph 44. He dismissed the email from [NAME_39] of [COMPANY_40] as it was unclear whether he was aware of the extent of the “buy out”. In any event, the [NAME_12] did not expect there to be a problem with [NAME_6] obtaining work from [NAME_29] as [NAME_24] had undertaken rail replacement work and it was clear that [NAME_39] and [NAME_6] knew each other as [NAME_39]’ email opens with “Hi [NAME_6]”. Similar was true with Devon County Council. The [NAME_12] was concerned that [NAME_6] was unable to

[2019] UKUT 0254 (AAC) 17 T/2019/32 T/2019/33 supply anything in relation to [NAME_29]. That, along with his lack of knowledge of any possible termination clauses “indicates that the contract was actually worth little to [NAME_6]”.

57. The [NAME_12] found that the value in buying the business did not lie with the contracts but lay in it’s operator’s licence. By buying the company and the licence, [NAME_6] had side-stepped the scrutiny that applies to new applicants. He referred to T/2010/49 [COMPANY_11] which makes a distinction between a finding of loss of repute of an existing operator and a finding that someone should be permitted to join the industry. By proceeding as he had, [NAME_6] had hoped that the [NAME_12] would apply the test of whether or not to put someone out of business rather than whether or not they should be given the [NAME_12]’s official seal of approval. That was not right. Neither was it right that the changes in the company should proceed without publication in Notices and Proceedings which gives the opportunity to others to make representations.

58. Because of the gross failings in maintenance and the “entirely inappropriate sale of the licence” the [NAME_12] found that [NAME_4] had lost its good repute. In normal circumstances, the [NAME_12] would have found that [NAME_43] had lost their good repute as operators. However, the role played by [NAME_27] was “troublesome”. He had a part to play in bringing the parties together and provided advice. He was present when the on-line changes were made. An operator might expect to be able to rely on advice from its trade association. The [NAME_12] therefore drew back from taking away their good repute.

59. As for [NAME_17], the primary concern was that he shared his log-in credentials for which the [NAME_12] warned him and all VOL account holders that the account is personal to them. Otherwise “the other matters are too old for him to be held to account and he ultimately did the right thing and resigned from his post”. As for [NAME_17], the issues with him were “rather dated” and he had been given an assurance that the split inspection process was acceptable. He needed to show more resolve and make his own enquiries but on balance, no adverse finding in relation to his good repute was appropriate.

The [NAME_3]

60. In the days leading up to [NAME_3]’s appeal, he made a number of email applications to adjourn the appeal hearing so that he could continue with his attempts to obtain [NAME_19]’s working documents from the DVSA. He was also concerned that a letter from the [NAME_12] to an officer of the CPT, referring to [NAME_4] (the existence of which, the [NAME_12] had apparently acknowledged), had not been disclosed to him. Despite requests for a fully reasoned application for an adjournment with supporting documents, [NAME_3] failed to provide the same and as a result, he was advised that his application would be considered as a preliminary issue at the beginning of the appeal hearing.

[2019] UKUT 0254 (AAC) 18 T/2019/32 T/2019/33 61. On 29 July 2019, [NAME_3] made an application to Mrs Justice Farbey, the President of the Upper Tribunal (Administrative Appeals Chamber), to recuse the writer of this decision from hearing the appeal. The application was refused with an indication that it could be renewed as a preliminary issue at the beginning of the appeal hearing.

62. At the outset of the appeal hearing, [NAME_3] abandoned his recusal application but renewed his application for an adjournment which was refused, the Tribunal being satisfied that insofar as there were question marks over the substance of the evidence of [NAME_19] which were not clarified or made the subject of further inquiry by the [NAME_12] during the public inquiry hearing, then that is a criticism that [NAME_3] could make of the [NAME_12] in his appeal rather than require an adjournment for evidence to be produced. [NAME_3] had failed to provide any documentation which might have assisted the Tribunal to consider whether an adjournment was required for disclosure to be made of the letter referred to in paragraph 60 above, we determined that as [NAME_3]’s case should in any event be remitted for a further hearing for the reasons set out below, an adjournment was not required. We refused to substitute our own decision for that of the [NAME_12].

63. The grounds of appeal which [NAME_3] pursued before the Tribunal can be summarised as follows:

a) The [NAME_12] failed to undertake any proper and separate analysis of [NAME_3]’s conduct as an operator and his conduct as a transport manager. The OTC did not add [NAME_3] to the licence as transport manager until 25 April 2018 and therefore he did not have any authority to act as such until that point. The maintenance investigation commenced on 13 June 2018 which was only 49 days after his name was added to the licence. Whilst he had been a director since July 2017, there was a distinct difference between the two roles with the latter being solely concerned with the control and direction of the business. Any issues relating to a transport manager’s repute prior to 25 April 2018 should not be attributed to [NAME_3]. He highlighted a number of instances which pre-dated 25 April 2018 which the [NAME_12] had improperly attributed to him as transport manager (for example, the notification of the vehicle fire which had occurred on 6 February 2018). [NAME_3] also pointed to the [NAME_12]’s determination that [NAME_3]’s conduct in signing the TM1 form nominating [NAME_6] as director in his purported capacity as a director (when he had resigned 19 days earlier) went to his repute as transport manager when it was clear that his findings in this regard related to [NAME_3]’s repute as an operator;

b) The [NAME_12] failed to conduct a full and fair balancing exercise. He failed to consider that [NAME_3]’s tenure as transport manager for [NAME_4] was relatively short and if the [NAME_12] had looked at that in isolation, [NAME_3]’s OCRS score was Green/Green. He had failed to consider that [NAME_3] had held a single vehicle operator’s licence for three years without any maintenance issues having been raised. He had further reduced the licence authorisation of [NAME_4] from 15 to 12 when his own external

[2019] UKUT 0254 (AAC) 19 T/2019/32 T/2019/33 commitments were increasing. The [NAME_12]’s determination that any failings which could have been attributed to [NAME_42] were “somewhat dated” meant that the action taken in respect of [NAME_3] was based on failings which were “dated” resulting in the action taken against him being disproportionate. Had the [NAME_12] attempted to make more sense of the data, rather than finding that the split PMI inspections amounted to a serious failing in the maintenance systems, the [NAME_12] should have determined that quite the opposite was true;

c) [NAME_3] believed that [NAME_19]’s data was flawed and therefore his report was unreliable. He highlighted the evidence of [NAME_19] concerning the vehicle SIG 8434 which the company had not operated. This had potentially skewed the statistics that the [NAME_12] had before him. [NAME_3] asked the question: which other elements of [NAME_19]’s evidence were unreliable? He submitted that the [NAME_12] should have made further enquiry.

Discussion

64. We do not agree with [NAME_3]’s attempt to limit the period of time that the [NAME_12] was permitted to scrutinise his conduct as transport manager. His nomination was signed on 26 February 2018 and [NAME_17] resigned with effect from 21 March 2018. If [NAME_3] did not start to discharge the functions of transport manager until 25 April 2018, the issue then arises as to who was discharging those functions between 21 March and 25 April 2018? The Tribunal enquired of [NAME_3] as to whether it was him or whether the licence did not have either a transport manager or a period of grace. [NAME_3] opted for the licence not having a transport manager in the period, which if correct, is something that should be taken into account when considering [NAME_3]’s repute as a director (and the sole director at the time). Further, [NAME_3] remained transport manager until 10 December 2018 and it was clear from the evidence of [NAME_19] and [NAME_34] that there were continuing concerns raised by the PMI sheets produced at the public inquiry and that there were questions to be answered by [NAME_3] for the period up to his resignation. In the circumstances, we reject [NAME_3]’s submission that the [NAME_12] should only have considered his role as transport manager between 25 April 2018 and 13 June 2018.

65. We do however agree with [NAME_3] that the [NAME_12]’s analysis of the evidence before him was flawed and in some respects his conclusions were wrong and/or inconsistent for the following reasons:

a) The [NAME_12] found that the maintenance issues which were identified in the period when [NAME_17] was the transport manager were “rather dated”. However, these appear to have been taken into account when considering [NAME_3] as transport manager. [NAME_3] is correct to raise this issue as [NAME_19]’s investigation included analysis of PMI sheets that were created as far back as March 2017 when [NAME_17] was the transport manager. It is unclear therefore, why the [NAME_12] concluded that the very real concerns raised in 2017 were written off as being rather dated when

[2019] UKUT 0254 (AAC) 20 T/2019/32 T/2019/33 considering the good repute of [NAME_17]. It may be that the [NAME_12] was satisfied that [NAME_3] was in fact in control of the maintenance regime as the director at the time but if that was his conclusion, then he should have said so. [NAME_3] considers that [NAME_17] should also be “in the frame” for some of the maintenance failings identified by [NAME_19], none of them date back beyond March 2017 and [NAME_17] resigned as transport manager in December 2016. Of course, [NAME_3] was the sole director during the period covered by the investigation and consideration should have been given to his conduct in that role during the relevant period;

b) An example of the failure to analyse the historical position concerns vehicle [ID] and the split PMI on 7 and 9 March 2018 when [NAME_17] was transport manager and [NAME_3] was nominated to take his place. It appears that the [NAME_12] accepted [NAME_17]’s evidence that the regime was instituted by [NAME_3] and that [NAME_17] had been assured by him that such a regime was acceptable. Does this conduct of [NAME_3] go to his good repute as an operator/director or as a transport manager or both?

c) In coming to his determination that [NAME_3] had lost his good repute as a transport manager but had retained his repute as a director, the [NAME_12] failed to undertake any proper analysis of [NAME_3]’s conduct in either role and failed to consider the position during the period when he was both director and transport manager. [NAME_3] and the Tribunal have had difficulty in determining why the [NAME_12] felt able to find that [NAME_3] had lost his good repute as a transport manager but not as a director. Clearly, some detailed analysis was required to justify such a finding and [NAME_3] has been put on notice that a fresh analysis might lead to him losing his good repute as a director as well. He submits that it should lead to him retaining his good repute as both transport manager and director. That will be a matter for determination by a different traffic commissioner. This issue has previously been before the Tribunal in the case T/2017/55 [NAME_11] which concerned a determination by a Deputy Traffic Commissioner that an owner operator and transport manager had lost his good repute as a transport manager but had retained it as an owner operator. In that case, the Tribunal determined:

“It is clear from the DTC’s decision, that she felt able to compartmentalise the issue of good repute as an operator and the issue of good repute as a transport manager in [NAME_11]’s case. It is questionable whether such an approach is feasible or appropriate when considering an individual in [NAME_11]’s situation and if it is feasible or appropriate, the DTC did not set out the reasons for such a proposition in her judgment”.

It is of note that at paragraph 59 of this present case, the [NAME_12] determined that there had been a complete lack of management control “by the operator and transport manager”. The operator for all intents and purposes was [NAME_3];

d) Prior to the public inquiry, [NAME_3] made his position clear that he considered that [NAME_19]’s investigation had produced an incorrect

[2019] UKUT 0254 (AAC) 21 T/2019/32 T/2019/33 outcome and that [NAME_19] must have taken into account inaccurate information to come to the conclusions that he did, for example, on the MOT first time fail rate. [NAME_19] appeared to have attended the public inquiry without the notes and documentation that he had used to prepare his report. He was therefore unable to look back at that documentation to confirm aspects of his report. Examples are set out in paragraphs 28 and 29 above and with regard to the second example and vehicle SIG 8424, [NAME_19] did not produce the list that he maintained had been provided to him by a member of staff of the company and which recorded the vehicle as one having been operated under the licence. Neither did the [NAME_12] ask him to produce it. The importance of this point is two-fold: (i) If the challenges to [NAME_19]’s evidence had been the subject of further enquiry by the [NAME_12] with determinations on the issues raised by [NAME_3], then [NAME_3] would not be left with a sense that his challenges had been ignored. It may well be that the [NAME_12] had concluded that even putting on one side the challenged evidence, this was a bad case of regulatory non-compliance and that the challenges made little difference to the overall position. But if that was the case, then the [NAME_12] should have said so. Instead, matters were left hanging in the air; (ii) In documenting his challenges, [NAME_3], in no certain terms, attacked the integrity, honesty and competence of [NAME_19]. Rather than addressing this issue “full on”, the [NAME_12] failed to make any determinations on those challenges and simply stated that [NAME_3]’s “complaints” were a matter for the DVSA. This is a surprising approach to this issue and is inconsistent with the approach of other traffic commissioners who consider that such attacks, if unfounded, raise an issue of trust which is a cornerstone of the operator licensing system. If a director or transport manager makes such allegations against a DVSA officer which are found by a traffic commissioner to be baseless and/or scurrilous then good repute is very much in issue as is the issue of trust. Traffic Commissioners often quote the Tribunal case 2006/227 Fenlon in this regard.

We are satisfied that the issues raised by [NAME_3] should have been the subject of determination;

e) The [NAME_12] found that the use of [NAME_17]’s log-in details by [NAME_3] was “utterly deceitful”. [NAME_3] had given an explanation that having used log-in details once, they were then stored and did not require any further in-putting when [NAME_3] wished to log on to the VOL system. The [NAME_12] did not question [NAME_3]’s explanation and in the circumstances, it is unfair to determine that the use of such was “utterly deceitful” without putting that allegation fairly and squarely to [NAME_3].

f) Finally, the [NAME_12] failed to make any reference to having undertaken a balancing exercise when determining the good repute of [NAME_3] as a transport manager. He simply stated that his response to [NAME_3]’s attempts to blame others for his failings as a transport manager, was to find that [NAME_3]’s good repute was lost. The [NAME_12] may have concluded,

[2019] UKUT 0254 (AAC) 22 T/2019/32 T/2019/33 particularly against [NAME_3]’s background of the serious regulatory failings (summarised in paragraph 2 above) that there was very little to be weighed into the balance of a positive nature but he was nevertheless required to identify any positive features which could be balanced against the negative, for example, [NAME_3]’s regulatory compliance as a sole trader operating one vehicle and his decision to reduce the authority on the licence once he had determined that his future lay in an alternative career to vehicle operation.

66. For all of the reasons set out above, this appeal must succeed and the matter remitted for a further public inquiry before a different traffic commissioner.

[COMPANY_4]

67. We do not need to summarise [NAME_5]’s submissions made on behalf of the company as they are set out in the reasons we give below for allowing this appeal:

a) It is well established that a traffic commissioner must determine the case against either an individual or a company as at the date of the public inquiry. In determining that he could and should consider the position of the company as at 29 December 2018, the [NAME_12] fell into error. He should have considered the position as at 4 March 2019 although it may be that very little had changed between the two dates;

b) We do not consider that there is anything wrong in principle in a company with an operator’s licence being purchased without physical assets. There is value in a business registration and in the name of a company which, in the normal course of events, will have goodwill attached to it. In this instance, there was a likelihood of two singnificant contracts transferring with the sale and indeed, work had been carried out for [NAME_30] immediately prior to the public inquiry hearing, thus demonstrating that one contract at least was continuing. This does not mean that the acquisition of the company should not be the subject of close scrutiny, particularly if there is any suspicion of “fronting” but the [NAME_12]’s approach was plainly wrong;

c) [NAME_6] was being advised and was assisted by [NAME_27], an officer of [COMPANY_44]. It cannot be suggested (without hearing from [NAME_27]) that there was anything underhand in the acquisition of the company by [NAME_6]. It clearly was not a “front” and he had been encouraged to apply for another licence. Whilst it might have been prudent to write to the [NAME_12] to inform him of [NAME_6]’s intentions, that advice was not given and we are not satisfied that this failing can be detrimental to [NAME_6]’s position in view of the assistance he was receiving from [NAME_27];

d) Without hearing from [NAME_27], no inferences could or should have been drawn about the manner in which it was proposed that [NAME_6] acquire the company. Indeed, it was [NAME_27] who undertook all of the relevant

[2019] UKUT 0254 (AAC) 23 T/2019/32 T/2019/33 changes on the VOL system on 29 December 2018 on behalf of [NAME_43]. There is of course the issue about the use of [NAME_17]’s log- in details in order to effect the changes, but we are far from satisfied that the use of the details of a director who had resigned in December 2016 by [NAME_3], should have resulted in a finding that [NAME_6] and [NAME_27] had been “utterly deceitful” in the use of the details. It may reflect badly on [NAME_3] but without some questioning by the [NAME_12] of [NAME_6] and [NAME_27] upon the issue, the [NAME_12] should have stepped back from the finding that he made;

e) It is unclear why [NAME_27] did not add [NAME_6] onto the licence as a director when he was up-dating the VOL system. However, [NAME_6] was clear that he thought that his directorship was one of the changes made. He was not questioned about that by the [NAME_12]. If it is contemplated, prior to the next public inquiry That that there was something untoward about [NAME_6]’s directorship not been added to the VOL system, then [NAME_27] should be invited to attend the hearing;

f) There is no question that the nomination of [NAME_6] as transport manager was flawed as a result of [NAME_3] signing the form as a director when he was not and that reflects badly on him but the [NAME_12] did not question [NAME_6] about this or about his understanding of when [NAME_3] had ceased to become a director and why it was that he thought that [NAME_3] could nominate him. It follows that the [NAME_12]’s finding that [NAME_43] had colluded in [NAME_6]’s nomination cannot stand unless and until [NAME_6] has been challenged on this issue;

g) The [NAME_12] should not have considered the position of the company as though it was a new application and in doing so, he applied the incorrect test. He should have asked himself the [NAME_9] and [NAME_7] questions. Of course, if he had, the [NAME_12] may have come to the same conclusion but the correct test should nevertheless have been applied.

Conclusion

68. It follows from our findings above in respect of the [NAME_12]’s decisions, that both appeals are allowed and we are satisfied that both matters should be remitted for further consideration by a different Traffic Commissioner.

Her Honour Judge Beech 21 August 2019