Upper Tribunal Reduces Manager's Disqualification Period

OUTCOME: Allowed in Part

[2019] UKUT 0054 (AAC)

1

Appeal No.: T/2018/59

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER TRAFFIC COMMISSIONER APPEALS

IN AN APPEAL FROM THE DECISION OF: SARAH BELL, TRAFFIC COMMISSIONER FOR THE LONDON AND SOUTH EAST TRAFFIC AREA DATED 9th AUGUST 2019

Before:

Elizabeth Ovey, Judge of the Upper Tribunal [NAME_1], Specialist Member of the Upper Tribunal [NAME_2], Specialist Member of the Upper Tribunal

Appellant: [redacted]

Heard at: [ADDRESS] [POSTCODE]

Date of hearing: 11th December 2018

Date of decision: 12th February 2019

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeal against disqualification be DISMISSED but that the period of disqualification be REDUCED from three years to one year.

SUBJECT MATTER: Loss of repute as transport manager; disqualification; length of period of disqualification

CASES REFERRED TO: 2009/307 [NAME_8] and [NAME_41]; Bradley [NAME_12] v. Secretary of State for Transport [2010] EWCA Civ 695; Silvertree [2013] UKUT 0117 (AAC)

[2019] UKUT 0054 (AAC)

2 REASONS FOR DECISION

Preliminary

1. This is an appeal against the decision dated 9th August 2018 of the Traffic Commissioner for the London and South East Traffic Area (“[NAME_14]”), in so far as the decision related to the Appellant (“[NAME_6]”). By her decision [NAME_14] made a finding that [NAME_6], who holds a certificate of professional competence as a transport manager, was no longer of good repute within the meaning of Schedule 3 to the Public Passenger Vehicles Act 1981 and was unfit to manage the transport activities of an undertaking and therefore, as required by paragraph 7B(2) of that Schedule, disqualified him from acting as a transport manager. The period of disqualification was specified as three years commencing at 23.45 on 30th September 2018.

2. The decision was made following a public inquiry held on 24th July 2018, to which [NAME_6] was called by a call-up letter dated 8th June 2018. The letter duly warned [NAME_6] that [NAME_14] had decided to consider whether he met the requirements of good repute and professional competence, having reviewed his former role as transport manager. [NAME_6] had been the transport manager of [COMPANY_15], which held public service vehicle operator’s licence number [ID]. That company was also called to attend the inquiry, at which [NAME_14] intended to consider whether or not to take regulatory action in relation to its licence. In addition, the inquiry was being held jointly with a public inquiry in respect of the licence held by [COMPANY_17], licence number PK144925. [NAME_6] was never the nominated transport manager of [NAME_16], but had applied to become so.

3. The reason for holding a joint public inquiry was that, as explained further below, [NAME_14] had identified, from the material before her and evidence given at a public inquiry in relation to [NAME_16] held on 23rd April 2018, a possibility that both [NAME_15] and [NAME_16] were engaged in “fronting” for a [NAME_21], sometimes known as [NAME_20] (“[NAME_21]”). This concern was additional to other concerns about both operators which had led to their being called to a public inquiry. Fronting was explained by the Upper Tribunal in Silvertree [2013] UKUT 0117 (AAC) as occurring:

“when appearances suggest that a vehicle, (or fleet), is being operated by the holder of an operators licence when the reality is that it is being operated by an entity, (i.e. an individual, partnership or company), which does not hold an operators licence and the manner in which the vehicle is being operated requires, if the operation is to be lawful, that the real operator holds an operator’s licence.” (para. 4)

This definition was adopted by [NAME_14] in a letter dated 24th April 2018 notifying [NAME_15] that the inquiry to which it had already been called was to be held jointly with an adjourned hearing of the inquiry into [NAME_16]’ licence and that fronting was to be considered.

[2019] UKUT 0054 (AAC)

3 4. [NAME_15] nor [NAME_16] attended the joint public inquiry on 24th July 2018. The outcome as respects the companies was that:

(1) [NAME_15]’s licence was revoked and the company and its sole director, [NAME_22], were disqualified from holding a licence for a period of 10 years;

(2) [NAME_16]’ licence was revoked and the company and its sole director, [NAME_24], were disqualified from holding a licence for a period of three years.

The decision was made on the ground that, as summarised in paragraphs 24 to 26, there was “strong and cogent evidence” to infer that [NAME_22] ([NAME_21]’ mother) and [NAME_24] were fronting for [NAME_21]. [NAME_14] went on to say, however, in paragraph 26, that even if she was wrong on fronting, the operators had lost their good repute because of their lack of transparency and proper record-keeping.

5. [NAME_14] further stated in paragraph 29 that on her findings [NAME_21] was a de facto and shadow director. He was not called to the inquiry on that basis and therefore [NAME_14] did not make a formal disqualification order, but she did state that if he were to apply for an operator’s licence in the future, the application must be considered by a Traffic Commissioner or Deputy and he would need to address the concerns set out in the decision.

6. As respects [NAME_6], [NAME_14] in effect asked herself whether he had colluded in the fronting which had taken place and concluded that he had not. She nevertheless decided that he had been a transport manager in name only and that it was appropriate to remove him for a period, which she set at three years.

7. The question we have to consider is whether [NAME_14]’s decision in relation to [NAME_6] was plainly wrong: see Bradley [NAME_12] v. Secretary of State for Transport [2010] EWCA Civ 695. To answer this question requires a more detailed consideration of the material before [NAME_14] as it stood on 24th July 2018. Understandably, it was gathered in piecemeal fashion, with the full picture emerging only gradually.

The facts relating to the companies and [NAME_21]

8. It is helpful to approach the material by explaining the information before [NAME_14] as to [NAME_21] and to begin with [COMPANY_27] (“[NAME_27]”), a company which used to hold operator’s licence number [ID]. So far as is relevant, there was a change of ownership of [NAME_27] on or about 31st July 2014 and [NAME_21] was appointed a director on 1st August 2014. A [NAME_28] was appointed a director on 13th August 2014. There were no other directors.

9. On 2nd September 2014 [NAME_21] was convicted of possessing counterfeit £20 banknotes with a face value of £9,600 and of spending three of them. He was sentenced to 16 months imprisonment, suspended for two years, and ordered to do 150 hours of unpaid work. This was a serious offence as defined in paragraph 1(4)(a) of Schedule 3 to the Public Passenger Vehicles Act and accordingly, by virtue of s.82 of that Act and

[2019] UKUT 0054 (AAC)

4 regulation 21 of and Schedule 1 to the Public Service Vehicles (Operators’ Licences) Regulations 1995, S.I. 1995 No. 2908, a relevant conviction for the purposes of the Act including the question whether [NAME_27] continued to be of good repute: see Schedule 3, paragraph 1(2). It appears that the prison sentence was suspended because in the judge’s view the jobs of the [NAME_27] employees depended on [NAME_21]. He is described in a contemporaneous newspaper report as the “new owner” of [NAME_27] who rescued it after it went into administration. [NAME_21] ceased to be a director of [NAME_27] on the day of his conviction.

10. [NAME_27] was called to a public inquiry held by [NAME_14] (sitting as the Traffic Commissioner for the West of England) on 10th September 2015 on a number of grounds, including the facts set out above in relation to [NAME_21]. Another company, [COMPANY_30] (“[NAME_30]”), which held licence number [ID], was also called to the inquiry, it being a joint inquiry because [NAME_28] acquired [NAME_30] on 9th December 2014 and became the sole director. In addition, the former and current directors and former and proposed transport managers of the two companies were called to the inquiry.

11. It is not necessary to go into all the matters considered by [NAME_14] in relation to all the parties who were called. The material points are:

(1) [NAME_14] identified significant serious shortcomings since [NAME_28] took over [NAME_27] and [NAME_30] posing a serious risk to road safety, passenger confidence and fair competition. She concluded that good repute was lost and the companies’ operator’s licences must be revoked;

(2) [NAME_14] further found that neither operator satisfied the financial standing requirements and the licences must be revoked on that ground also;

(3) [NAME_14] found that [NAME_27] and [NAME_30] were at the very least a joint enterprise by [NAME_28] and [NAME_21], relying on the facts that:

(a) in an e-mail received via [NAME_21] held himself out as a director of [NAME_27] in relation to an application to change the bank account into which payments were made;

(b) the previous director and owner of [NAME_27] arranged to meet [NAME_21] in relation to post purchase matters but was left dealing with [NAME_28];

(c) the previous director and owner of [NAME_30] arranged to meet [NAME_28] on 16th December 2014 but was met by [NAME_21], who described himself as the general manager of the business and set out plans for it;

(d) following a serious traffic accident involving a [NAME_27] vehicle, [NAME_21] described himself as the owner of both [NAME_27] and [NAME_30];

[2019] UKUT 0054 (AAC)

5 (4) [NAME_27], [NAME_30] and [NAME_28] were disqualified for an indeterminate period from holding an operator’s licence;

(5) [NAME_14] referred to fronting and the Silvertree definition in connection with [NAME_21] but made no formal findings of shadow directorship or any similar matter because [NAME_21] was not called in and she did not hear from [NAME_28], nor did he send a statement. She did, however, direct that if [NAME_21] applied to be involved in operator licensing “in any guise” the application must be referred to a Traffic Commissioner or a Deputy.

12. Companies House records as at 27th March 2018 showed that since 12th July 2016 [NAME_21] had been the sole director of [COMPANY_31], of which he was also the sole shareholder until 1st February 2017. His mother acquired his shareholding on that date. [NAME_14] also had prints of that company’s web site and Facebook pages which appeared to show that it was offering buses and coaches for hire and was recruiting staff including drivers “due to continued expansion”. It subsequently emerged that [NAME_21] remained the sole director until 1st May 2018, when [NAME_22] became the sole director.

13. On 6th February 2018 [COMPANY_32] was incorporated with [NAME_22] as the sole director and shareholder. On 20th February 2018 [COMPANY_33] became the majority shareholder in [NAME_16].

14. Turning now to [NAME_15], its operator’s licence start date was 31st December 1992 but [NAME_22] was not appointed a director until 26th July 2016, at which point she was the sole director. As set out in [NAME_14]’s brief at p.3 of the bundle, it was called to a public inquiry on 6th August 2014 to consider an application to add [NAME_21] as the transport manager, in respect of which inquiries from the Central Licensing Office had been left unanswered. The same inquiry was also to consider an application for a standard licence made by [COMPANY_34], of which [NAME_21] was a director and the proposed transport manager. Both applications were withdrawn and the inquiry was cancelled.

15. On 22nd November 2017 an application was made to increase [NAME_15]’s vehicle authorisation from two vehicles to six. At that stage no vehicles were currently specified but [NAME_6] was shown as having been appointed transport manager on 13th November 2017. Evidence of financial standing was requested but the bank statements received were in the name of [NAME_22] personally. By a letter dated 8th January 2018 statements in the name of the company were requested but no reply was received. The application to increase the vehicle authorisation was refused and in the light of the inevitable concerns that [NAME_15] might no longer be of the appropriate financial standing a letter dated 2nd February 2018 was sent to the company informing it that [NAME_14] was considering revoking the licence.

16. In response to that letter, [NAME_21] contacted [NAME_14]’s office by telephone on behalf of his mother, explained that her mother had recently passed away and asked for an extension of time to get the financial information to the office. This was agreed. [NAME_21] later rang back to ask if parent company finances could be used.

[2019] UKUT 0054 (AAC)

6 17. On 26th February 2018 [NAME_22] wrote to [NAME_14]’s office referring to [NAME_21]’ conversation and adding that she herself had been in hospital for four days having surgery. She explained that “we have chosen” to open a new company account to meet [NAME_14]’s request.

18. There was a casenote on the system dated 3rd March 2017 (see p.3 of the bundle) saying that [NAME_22] had given permission for [NAME_21] to be the nominated contact for the licence.

19. On 18th January 2018 a [NAME_35] was appointed a director of [NAME_15]. He resigned on 18th April 2018. The appointment and resignation were not notified. [NAME_35] was a former director of [COMPANY_37].

20. In those circumstances a call-up letter dated 6th April 2018 was sent to [NAME_22] directing that she and [NAME_21] must attend an inquiry to be held on 22nd May 2018. [NAME_14]’s brief at p.4 identifies the concerns which caused [NAME_14] to call [NAME_15] to a public inquiry as the facts that:

(1) it appeared not to have held a bank account until 6th February 2018;

(2) [NAME_21] was the [NAME_21] involved in the revoked [NAME_27] licence;

(3) [NAME_22] was the major shareholder in [COMPANY_31] which appeared to be operating without an operator’s licence.

21. The brief also noted that [NAME_6], the transport manager, was currently applying to be the nominated transport manager for [NAME_16] and had been asked to attend a public inquiry on 23rd April 2018 for that company. It appears from p.92 that he joined [NAME_16] on 11th January 2018 and fulfilled the transport manager role from that date. His TM1 form, applying to be the nominated transport manager, stated that he would dedicate 10 hours a week to the company’s business. It was lodged on 21st January 2018.

22. The [NAME_16] inquiry was duly held and was attended by [NAME_6], [NAME_24] and a solicitor on behalf of the company and its director. The call-up letter is not in the bundle of documents before us, but we have a transcript of the hearing and it is clear that financial standing was in issue, as was good repute as a result of failing to respond to correspondence requiring evidence of financial standing to be produced. It further appears that [NAME_16]’ licence was granted with effect from 27th July 2016 but the company did not carry on any activities until October 2017, when it began taking bookings ready for the summer 2018 season. Although the company owned four vehicles, there was only one fit for use, which had been used on only one occasion, on 8th March 2018. That was the only work which, it was said, [NAME_16] had carried out (p.88).

23. During the course of the inquiry it emerged that:

(1) from 22nd November 2016 to 12th February 2018 the registered keeper of the vehicle used on 8th March 2018, 499 YMK, was [NAME_15]. On

[2019] UKUT 0054 (AAC)

7 18th April 2018 the registered keeper changed to [COMPANY_32], which had the same registered office as [NAME_15];

(2) there had been an application to change the [NAME_16] operating centre made on line by [NAME_24] and [NAME_21], who she described as one of her colleagues;

(3) the [NAME_16] bank statements showed a number of transactions which caused [NAME_14] to observe that “they did not look [like] the bank statements of a company that has been dormant, apart from the one journey” (p.96). This was subsequently explained as representing work for bookings [NAME_24] had taken in the expectation of having four operating vehicles but which she had hired out when her own vehicles turned out not to be operational;

(4) the statements showed loans on 6th April 2018 from an entity (the identity of which is redacted) linked to [NAME_15]. Subsequent discussion (see p.97) suggests that the entity in question was [NAME_43]. In the light of those matters [NAME_14] decided to adjourn the inquiry and to send an additional matters letter raising the issue of fronting for [NAME_21]. She also stated that evidence would be needed of how bookings had been dealt with and noted for the record that Companies House print-outs had been obtained that day for [NAME_31], [NAME_15], [COMPANY_37], [NAME_16] itself and [COMPANY_32].

25. We have already referred in paragraph 3 above to the additional matters letter dated 24th April 2018 sent to [NAME_15]. An application to adjourn the inquiry listed to take place on 22nd May 2018 was made on 21st May but was refused. The inquiry was attended by a solicitor, but she had to withdraw shortly before it began because she was without instructions. [NAME_15]’s licence was suspended and it was required to return the vehicle discs by no later than 16.00 on Friday 25th May 2018. In the written confirmation of her decision [NAME_14] recorded that her office had had great difficulty in contacting [NAME_22] and stated that the only reason for stopping short of revoking the licence was that [NAME_22] might be at a medical appointment, having regard to an email she ([NAME_14]) had seen.

26. The [NAME_15] discs were in fact returned under cover of a letter from [NAME_6] dated 30th May 2018, in which he explained that the delay “was due to them sitting ready to go and not being posted in time, due to the bank holiday”. At the same time he notified [NAME_14] that he had resigned as transport manager of [NAME_15].

27. It appears from paragraph 13 of the decision appealed against that the solicitor who attended on 22nd May 2018 for [NAME_15] also attended for [NAME_16], but then had to withdraw owing to potential conflicts of interest. [NAME_16]’ licence was also suspended.

28. None of [NAME_15], [NAME_16], [NAME_22], [NAME_24] and [NAME_21] attended the inquiry on 24th July 2018. [NAME_16] lodged a surrender

[2019] UKUT 0054 (AAC)

8 request in advance and returned the vehicle discs. [NAME_24] told [NAME_14]’s office that she would not be attending and sent through a GP appointment card. She said she understood a decision might be made in her absence. [NAME_15] told [NAME_6] that it intended to surrender its licence but had made no surrender request by 24th July 2018. Attempts to contact [NAME_22] and [NAME_21] were met by what [NAME_14] called “a wall of silence”.

The facts relating to [NAME_6]

29. [NAME_6] did attend the inquiry on 24th July 2018 and gave oral evidence. We summarise the salient points as follows:

(1) [NAME_6] knew [NAME_21] from a time when he worked for [NAME_42]., originally as a driver and then doing office work after he suffered a heart attack. [NAME_21] was his manager;

(2) [NAME_6] left that employment and went to [NAME_38], which put him through his certificate of professional competence (“CPC”) as a transport manager. He obtained that in January 2016;

(3) he left [NAME_38] on 2nd August 2017 with the intention of setting up a company offering services as a compliance adviser, but was advised by his CPC trainer to get more experience as a transport manager first. He did not immediately find work;

(4) in about May 2017 [NAME_21] had approached him saying that he was looking at starting up and needed a transport manager. From 2nd May 2017 he was on the licence for [COMPANY_39], for which he was doing four hours a week. Later he became unable to contact [NAME_39] and resigned as the transport manager on 6th April 2018;

(5) it transpired (as [NAME_6] understood matters) that [NAME_21] was setting up a brokerage business under the name [NAME_31] and operational work would be undertaken by [NAME_22]’ company [NAME_15] or [COMPANY_33]. [NAME_21] had approached him to act as transport manager on behalf of his mother;

(6) [NAME_6] started to work full-time for [NAME_15] in about September 2017, although in fact there was nothing for him to do because there were no vehicles and so he was not receiving a salary. He was claiming universal credit;

(7) he was approached to act as transport manager for [NAME_16] by [NAME_24] on the recommendation of [NAME_21]. He made some investigations and inquiries in the industry and was told that [NAME_24] was a nice person who could be trusted. Alarm bells rang some two weeks later when she asked him if he fancied a trip to Eastbourne for a public inquiry;

[2019] UKUT 0054 (AAC)

9 (8) as far as he was aware, neither [NAME_16] nor [NAME_15] had operated any vehicles while he was the nominated transport manager or acting as transport manager;

(9) after he started work for [NAME_15], [NAME_6] rang [NAME_21] three or four times a week and went down to the office, but nothing much seemed to be happening. He kept saying he was going to have to look at resigning, but was asked to be patient. Things “started coming out of the woodwork” in particular with what he heard at the previous inquiries. He left the first one saying that he would be resigning. He was concerned about the situation given that he had previously been in the industry for 29 years without even one tachograph offence against him as a driver;

(10) he thought the [NAME_15] vehicle discs were with [NAME_22] but did not check, which he acknowledged he ought to have done as transport manager. He understood that the [NAME_16] and [NAME_15] discs could be put in a bus (which we understand to imply that any other company could have used the discs on a bus which it operated);

(11) he had seen the [NAME_31] web site but thought that was a 2017 version rather than the 2018 version. He understood that the 2018 version conveyed the message that the company was operating passenger vehicles;

(12) he had seen a coach with [NAME_31] livery in the depot and when he asked about it he was told that was what the branding was going to look like. He had asked whether it had been out on the road and was told it had not. There was no operator’s licence in the window. He thought the coach belonged to [NAME_37];

(13) [NAME_6] was not really able to explain why [NAME_31] should be looking for drivers;

(14) he had known [NAME_35], the director of [NAME_37], for a long time. He had been unaware that [NAME_35] had resigned before [NAME_37]’ licence was revoked, although he was aware of the revocation. He was aware that [NAME_35] had become a director of [NAME_15] for a while and understood it was to have a director on site because of [NAME_22]’ illness;

(15) he had met [NAME_22] three or four times in an official capacity and they had been together when he filled in the transport manager forms. He had seen her in the yard three or four months before the hearing and found out then that she was not well. [NAME_21] was handling the affairs of [NAME_15] for the time being while she was having treatment;

(16) [NAME_6] thought [COMPANY_32] was the brand name for [NAME_31] and was another brokerage company;

[2019] UKUT 0054 (AAC)

10 (17) he did not check the [NAME_31] web site and was unaware of the material on it suggesting that it was an operating company. He could not say why [NAME_31] had paid [NAME_22] £10,000 in December 2017 or £5,000 on 23rd November 2017. He thought he had been “hung out to dry”;

(18) he was aware of what he called the [NAME_30] debacle;

(19) he had returned the [NAME_15] and [NAME_16] discs. [NAME_21] gave him the [NAME_15] discs and [NAME_24] the [NAME_16] discs;

(20) in his covering letter dated 30th May 2018 he had given assurances that the licences had not been used in any capacity, but he did not actually know that.

30. In addition, [NAME_14] has recorded in paragraph 20 of the decision that [NAME_6] confirmed current full-time employment with [NAME_15] on his application to be nominated transport manager for [NAME_16] and that he accepted that that was misleading and the form should have stated that [NAME_15] was not currently operating but he had committed those hours to it.

31. The transcript includes references to previous hearings in the plural. [NAME_6] explained to us that he had attended not only on 24th April 2018 but also on 22nd May 2018 when the licences were suspended.

32. The transcript shows that what [NAME_6] said about the [NAME_30] debacle was in response to an interrupted question from [NAME_14] referring to [NAME_21]’ historic conviction “in terms of –”. It is not entirely clear from the transcript whether [NAME_6] meant that he was aware of the conviction or simply of the previous inquiry relating to [NAME_27] and [NAME_30], but he explained to us that he was aware of the conviction and the suspended prison sentence.

[NAME_14]’s decision

33. We need say little about the decision in so far as it relates to [NAME_15], [NAME_16], [NAME_22] and [NAME_24]. It is, however, relevant to our decision to state that it appears to us that [NAME_14]’s decision as respects those parties was well justified for the reasons she gave. We also quote paragraph 28 of the decision, which reads:

“[NAME_21]’s history is clearly set out in my decision of November 2015. [NAME_21] has chosen not to apply for an Operator’s Licence in his own right. [NAME_21] has endeavoured to use a brokerage to suggest transparency and lawful conduct. However, that is not the conclusion the evidence leads me to for the reasons set out above. Operators must take great care to ensure their operations are lawful and safe, with accurate records kept, including where work is sourced via brokerage arrangements. Any Operator found to be ‘fronting’, particularly where that fronting is for an individual who may be in difficulties in obtaining a Licence, should not be surprised when robust action is taken. It

[2019] UKUT 0054 (AAC)

11 is important that all ‘fronting’ is eliminated to protect the legitimate commercial vehicle industry, both PSV and HGV. I therefore make no apology in making the example of these two Operators and their Directors. In particular, [NAME_22] has been ‘fronting’ in a considered way and for a longer period. The ‘fronting’ is not just directly through [NAME_15] but also by assisting a purported veil of legitimacy through directorship and shareholdings in linked entities. A deterrence message is clearly required. Anyone else tempted to assist in a similar way cannot say they are taken by surprise if a similar fate lands at their door.”

34. [NAME_14]’s reasons for her decision in relation to [NAME_6] are to be found in paragraph 31, which reads as follows:

“[NAME_40] has allowed the use of his name to provide a legitimate front to these two Operators. [NAME_6] failed to take any meaningful steps to satisfy himself that these Operators were not trading. He should have notified CLO immediately his name was associated with the Licences that he was not performing any duties in light of the non-trading. He should also have made it his business to ensure that he had custody of the vehicle discs or that they were returned to CLO. Instead, the evidence I heard is such that it would have been open for me to find collusion on his part. I have stepped back from doing so, just. I have given [NAME_6] credit for attending the July hearing when nobody else did and reduced his period of disqualification accordingly. He also answered my questions directly, albeit a little confused on occasion. I have accepted this time that [NAME_6] was perhaps too trusting of [NAME_21] even knowing his background. However a Transport Manager in name only, which this effectively was, is about as serious as it can be. It is entirely appropriate to remove [NAME_6] for a period to protect the reputation of professional Transport Managers, who attend and conduct their business in a diligent manner.

Accordingly, I have reached the decision [already set out].”

The appeal

35. We summarise [NAME_6]’s grounds of appeal as follows:

(1) he was penalised because [NAME_14] could not penalise [NAME_21] in relation to [NAME_15] and [NAME_16], just as she could not in the [NAME_27] and [NAME_30] case;

(2) he understood that there was a group structure under which [COMPANY_33] was a holding company and [NAME_31] was a brokerage company. The business plan was to take struggling companies into the group and those companies would operate the work, together with outside companies in busy periods. At the relevant time [NAME_16] and [NAME_37] were in the group, but only [NAME_37] was operating. The intention was to get the [NAME_16] vehicles back on the road and to acquire vehicles for [NAME_15]. There was no work for him to do pending the resolution of those matters;

[2019] UKUT 0054 (AAC)

12 (3) he had no reason to look at the [NAME_31] web site;

(4) he believed that the [NAME_15] discs were in the office. He had not started his role in relation to [NAME_15];

(5) he did not allow his name to be used as a front. He resigned when [NAME_21]’ connection with [NAME_16] emerged at the first hearing and questions of financial standing arose;

(6) he has found nothing to say that he was obliged to inform the Central Licensing Office that he had no “job” to do.

36. [NAME_6]’s oral submissions to us were in effect a repeat of his evidence at the inquiry and what is said in his grounds of appeal. He understandably stressed his length of experience in the industry with an unblemished record. He also made clear the importance to him of having gained his CPC, which he sees as a form of retirement provision now that he is unable for health reasons to drive.

37. We do not accept that [NAME_14]’s decision was plainly wrong in so far as she decided that [NAME_6] had lost his good repute, although he did not collude in the fronting which took place between September 2017 and May 2018, the period in which he was nominally the transport manager for [NAME_15] and, for the latter part of the period seeking nomination as transport manager for [NAME_16].

38. The difficulty for [NAME_6] is essentially that, being aware that [NAME_21] had been convicted of a serious offence, he allowed a situation to continue in which, from the point of view of the licensing system, [NAME_15] and [NAME_16] could operate provided they had vehicles on the road (if necessary by having a formal agreement in place by which they had access to a vehicle even if they did not own it). He knew from the outset that [NAME_21] had some practical involvement with [NAME_15] and that [NAME_21] was engaged in establishing a group which would include operators. His appointment as transport manager of [NAME_15] in particular became increasingly farcical as time passed, he continued to be contracted to work full-time for the company and he did nothing. These arrangements, as [NAME_14] concluded, enabled [NAME_15] and [NAME_16] to engage in transactions with [NAME_31] at a time when the latter company’s web site plainly implied that it was operating, vehicles had in fact been owned by both companies and the vehicle discs were apparently available to be used in vehicles owned or providing services operated by [NAME_31].

39. We do not go behind [NAME_14]’s conclusion that [NAME_6] was simply too trusting of [NAME_21], but the way in which the situation was allowed to drift for months on end demonstrates that [NAME_6] was not as alert as he ought to have been to the duties and responsibilities of a transport manager. S.82 of the 1981 Act applies the definition of “transport manager” found in article 2 of Regulation (EC) No. 1071/2009, which states that a transport manager is a person who “effectively and continuously manages the transport activities” of the company employing him. In our view, such management requires the performance of duties and exercise of responsibilities, even when the company is not actively providing services, of a significantly more active nature than the steps taken by [NAME_6] to ascertain what is happening in relation to the business.

[2019] UKUT 0054 (AAC)

13

40. In the present case, the fact that [NAME_6] was the transport manager for [NAME_15] implied to the Central Licensing Office and [NAME_14] that, among other things, he accepted responsibility for ensuring that the vehicle discs were in appropriate custody and could not be misused. He himself recognised at the inquiry that he ought to have checked where the discs were. Indeed, the fact that he was the transport manager with a full-time contract implied that he was performing duties which secured compliance with all aspects of the regulatory system and which required full-time employment. It was not sufficient for him to say that there was nothing to do and for him to do nothing when he was representing to the regulator that he was actively discharging duties and responsibilities.

40. Specifically in relation to the points made by [NAME_6]:

(1) his understanding of the group arrangements (which was explained rather more fully in his grounds of appeal than in his evidence at the inquiry) may explain why he did not think that [NAME_31] was operating rather than providing brokerage services but does not alter the fact that he simply did nothing in relation to [NAME_15]. It is therefore not necessary to consider the difficulties which might arise if the more detailed explanation constituted fresh evidence;

(2) even if it is accepted that he had no reason to look at the [NAME_31] web site, at least after he initially saw it, as he told [NAME_14], again that does not alter the fact of his inaction in relation to [NAME_15];

(3) we have explained why he ought to have ensured proper custody of the [NAME_15] discs. This applies all the more in relation to [NAME_16], as respects which he was acting as transport manager, albeit not on a full-time basis;

(4) reading paragraph 31 of the decision as a whole, we do not think that [NAME_14] has found that [NAME_6] knowingly allowed the use of his name to provide a legitimate front, but rather that she found that his inaction enabled fronting to take place without his knowledge;

(5) although [NAME_6] has found nothing which states that he was obliged to tell the Central Licensing Office that he had no job to do, he was obliged to dispel the impression that he was exercising the duties and responsibilities of a transport manager when he plainly was not doing so, even to the extent required in relation to a company not actively operating. In addition, he himself accepted that when he applied to become the transport manager of [NAME_16], he ought to have made clear that he was not actually working full-time for [NAME_15] but had committed those hours.

41. In those circumstances, we conclude that [NAME_14] was not influenced by a wish to penalise [NAME_6] because she could not penalise [NAME_21] when she found that

[2019] UKUT 0054 (AAC)

14 [NAME_6] had lost his good repute. It follows that, as explained at the outset, a mandatory ground for disqualification was established.

42. The remaining question is whether the period of disqualification was excessive. Here we part company with [NAME_14]. To the extent that her reasons for choosing the period of three years are expressed, she proceeded on the basis that [NAME_6] had effectively been a transport manager in name only, which “is about as serious as it can be”. We entirely agree as a matter of principle that for a transport manager to be a transport manager in name only is a very serious matter. In the present case, however, we think that to impose a three year period of disqualification fails to take into account the following matters:

(1) since [NAME_14] did not find collusion on the part of [NAME_6], it follows that he accepted the [NAME_15] appointment in good faith. He did not start with the intention of being a transport manager in name only. Although we agree that he ought to have taken more active steps than he did, it is understandable that he kept hoping that matters would be resolved and he would have a proper job to do. This is particularly so given that [NAME_15] did apply for additional discs in November 2017;

(2) when matters came to a head with the inquiries of 23rd April and 22nd May 2018, [NAME_6] did resign reasonably promptly owing to his concerns about how the companies were being operated;

(3) in other cases in which a person has been disqualified for being a transport manager in name only, an operating business has been actively run by someone else: see, for example, 2009/307 [NAME_8] and [NAME_41], referred to in connection with this principle in Statutory Document No. 3 at paragraph 25. In such circumstances, the nominated transport manager is aware of the extensive business for which he is responsible but which is in fact being managed by another person. The unusual feature of the present case is that [NAME_15] was not itself operating and on [NAME_14]’s findings, [NAME_6] was not aware that, as seems to have been the case, [NAME_31] was effectively operating what ought to have been [NAME_15]’s business. We note also that in the [NAME_10] case, [NAME_44] was disqualified for six months only;

(4) in the present case, [NAME_24] has been found to have fronted, whereas [NAME_6] was simply too trusting, but has been disqualified for the same period as [NAME_6]. That is so despite the facts that [NAME_14] says she has given [NAME_6] credit for attending the inquiry (unlike [NAME_24]) and states that he answered her questions directly. Even allowing for the importance of the diligent conduct of business by transport managers, we do not think that it is appropriate to make no distinction in terms of the period of disqualification between [NAME_24], the sole director of [NAME_16], and [NAME_6], given her collusion in [NAME_21]’ fronting arrangements and [NAME_6]’s absence of collusion.

[2019] UKUT 0054 (AAC)

15 43. For those reasons, we dismiss [NAME_6]’s appeal against disqualification but reduce the period of disqualification to a period of one year calculated from 23.45 on 30th September 2018.

44. Finally, we regret the delay in producing this decision, which resulted from the Christmas break and Judge Ovey’s other professional commitments.

(signed on the original)

E. Ovey Judge of the Upper Tribunal

13th February 2019