Upper Tribunal Rejects Appeal for Operator's Licence Revocation and Disqualification

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Appeal No.: T/2021/35 [2022] UKUT 00126 (AAC)

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER [NAME]

IN AN APPEAL FROM THE DECISION OF: [NAME] FOR THE EAST OF ENGLAND TRAFFIC AREA DATED 4 MAY 2021

Before:

Elizabeth Ovey, Judge of the Upper Tribunal Andrew Guest, Specialist Member of the Upper Tribunal Stuart James, Specialist Member of the Upper Tribunal

Appellant: [redacted] attended on behalf of the appellant.

Heard at: [ADDRESS] [POSTCODE] Date of hearing: 13th September 2021 Date of decision: 16th November 2021

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeal be DISMISSED.

SUBJECT MATTER: assessment of financial standing; credit card in director’s name; reliance on [NAME] manager; Priority Freight test; disqualification

CASES REFERRED TO: [COMPANY]. (No. 2) 2002/217; [COMPANY]. 2009/225, [NAME] T/2012/025; [COMPANY]. and [NAME] v. Secretary of State for [NAME] [2010] EWCA Civ 695, [2011] R.T.R. 13; [COMPANY]., [2014] UKUT 0119 (AAC), T/2013/77; [NAME] T/2014/24 [COMPANY]. [2020] UKUT 372 (AAC), T/2020/26

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REASONS FOR DECISION

Introduction

1. This is an appeal from the decision of the [NAME] (“the [NAME]”) for the East of England Traffic Area given on 4th May 2021. By his decision the [NAME]:

(1) revoked the operator’s licence no. [ID] (a standard international goods vehicle licence) held by [COMPANY] (“the Appellant”) from 23.45 on 19th May 2021;

(2) found that the Appellant’s [NAME] manager, [NAME], had lost his repute;

(3) disqualified the Appellant and its sole director, [NAME], from holding or obtaining an operator’s licence for a period of 6 months from 19th May 2021;

(4) disqualified [NAME] from relying on his certificate of professional competence unless and until he had retaken and passed the relevant examinations.

2. [NAME] has not appealed against that decision.

3. An appeal form was received by the Upper Tribunal on 26th May 2021 which is expressed as an appeal by [NAME]. In substance, however, it is an appeal against the [NAME]’s decision revoking the licence and disqualifying the Appellant from holding an operator’s licence and has been treated as such. For completeness, we comment on [NAME]’s personal position at the end of this decision.

The facts

4. The Appellant was incorporated on 25th November 2013 and the nature of its business is to provide freight [NAME] by road. Although the Companies House information in our bundle suggests that there were originally two directors, both called [NAME], the second [NAME] is shown as having resigned on 2nd June 2016 and for the purposes of this appeal the Appellant seems clearly to be a one person company.

5. Until 2019 the Appellant’s registered address for the purposes of the legislation relating to companies was in [NAME] told us at the hearing that the Appellant had carried on business in Manchester. In late 2019 [NAME] and the Appellant moved to Royston, Hertfordshire, and on 9th December 2019 [NAME] as director applied for a new operator’s licence on behalf of the Appellant. The application stated that the Appellant had previously held licence no. [ID] and that it had not been revoked, suspended or curtailed. [NAME] signed the director’s declaration as to observing the standard undertakings, including

3 undertakings relating to records of drivers’ hours, keeping vehicles in fit and serviceable condition, reporting and recording of defects and keeping full records for at least 15 months of safety inspections, routine maintenance and vehicle repairs.

6. The [NAME] manager form provided in connection with the application named [NAME] as the [NAME] manager and stated that he would do six hours work per week on Saturdays. [NAME] signed the standard form declaration confirming, among other things, that he had a contract with the Appellant specifying the tasks to be performed, including responsibilities which we can summarise as being to ensure compliance with the operator’s undertakings mentioned above. The form was also signed by [NAME] as director.

7. The new licence, no. [ID], was granted on 21st January 2020 subject to conditions that:

(1) the Appellant should provide financial evidence “in the name of the [COMPANY]” covering January, February and March 2020 showing that the Appellant “has continued” to meet the required level of available finance throughout the period by reference to an average balance by no later than 30th April 2020;

(2) [NAME] should attend a two day [NAME] manager refresher course by 30th March 2020 and send a copy of the certificate of attendance to the traffic area office in Leeds within 7 days of the course taking place.

It appears from the case summary at p.5 of our bundle that both undertakings were marked as fulfilled and we have seen a copy of [NAME]’s certificate, in fact dated 10th June 2020. We have not seen the financial evidence. The Appellant was authorised to operate one lorry and one trailer.

8. Unfortunately on 16th October 2020 the lorry failed its annual MOT test for parking brake performance. It failed again on 29th October 2020 for the same reason and on 17th November 2020 for brake systems and components. It only eventually passed on 19th November 2020. Notwithstanding the fact that the lorry had failed the test, the Driver and Vehicle Safety Agency (“the DVSA”) had evidence that the lorry had been used on the road between 16th and 22nd October 2020.

9. The DVSA therefore arranged for a site visit by a vehicle examiner, Mr. [NAME], who attended the [COMPANY] on 7th December 2020 and interviewed both [NAME] and [NAME]. His report shows that six out of the twelve areas of investigation were unsatisfactory. Those areas related to inspection and maintenance records, driver defect reporting, inspection facilities and maintenance arrangements, vehicle emissions, wheel and tyre management and load security. In relation to the [NAME] manager/responsible person assessment, [NAME] stated:

“The responsible person appears to lack any experience or knowledge, there is no evidence of [continuing professional development].

4 [NAME] manager does not know when the vehicle or trailer is next due [preventative maintenance inspection], [NAME] manager has minimal involvement in the management of this operator’s licence. Systems are in place, but the [NAME] manager is not aware of their operation.”

He recommended that the case should be reported to the Office of the [NAME]. The report contained a warning that immediate action was required as there had been failure to comply with the conditions of the operator’s licence and required a written explanation from both the Appellant and [NAME] of the reasons that caused the reported shortcomings and what they were going to do to prevent future problems.

10. [NAME] replied stating that he was unaware that he could not use the lorry on the road after it failed its MOT test. He thought he had two weeks in which to submit it for re-testing and could continue to use it in the meantime. Now that he knew he was wrong, he would avoid similar situations in future. He also said that he was going to implement more frequent brake system tests, to be performed at the DAF centre, and emissions tests to be performed there. He would buy equipment for testing headlamps and stem/pressure washing would take place. He was also working on improving his maintenance systems and stated that he attached further evidence.

11. [NAME] replied going through the various paragraphs of the report in terms which largely amounted to assertions that [NAME] had the relevant systems in place. He described [NAME] as having “repellent [we think this should read “relevant”] experience and training”. He also expressed concern that [NAME] had “seemed to worry [[NAME]] which I do not think this is a wise choice as your fundamental job is to help operators and give them advice” and objected to the comments made about him personally, stating that he had qualified 20 years ago, had done a refresher course to enable [NAME] to get his licence and had “full control” of the licence.

12. These responses were regarded as unsatisfactory by [NAME]. He commented:

(1) to advise and guide the operator is the job of the [NAME] manager and it seemed to him that [NAME] was passing the buck on that responsibility;

(2) [NAME] had provided no evidence to show what systems had been put in place;

(3) there was no satisfactory response from [NAME] about the fact that [NAME] had been driving the lorry on public roads with a known defect relating to the parking brake performance after it had failed its test;

(4) [NAME]’s lack of awareness that driving the lorry in such circumstances was an offence raised concerns about his knowledge regarding safety defects and the knowledge of [NAME] to allow it to be driven without the braking defect being rectified.

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The call-up letters and the public inquiry

13. Both the Appellant and [NAME] were then called to a public inquiry, to be held virtually by [NAME], by call-up letters dated 30th March 2021.

14. The letter to [NAME] as director of the Appellant raised the following issues:

(1) breach of the conditions of the licence consisting of failure to notify any event that affected the professional competence of the operator and [NAME] manager;

(2) failure to observe the laws relating to the driving and operation of vehicles used under the licence;

(3) breach of the undertakings given that:

(a) the lorry and trailer would be kept fit and serviceable;

(b) records would be kept for 15 months of driver defect reports, safety inspections and routine maintenance;

(c) drivers would report promptly any defect which could prevent the safe operation of vehicles and trailers and any defect would be promptly recorded in writing;

(4) that there might have been a material change in the Appellant’s circumstances, namely, that it might no longer have sufficient financial resources.

Further, it was stated that as a result of those matters the Appellant might no longer be of good repute, be of the appropriate financial standing or meet the requirements of professional competence. Failure to meet those requirements meant that the licence was at risk. In addition, the [NAME] was concerned that [NAME] might not be exercising continuous and effective management of the Appellant’s [NAME] activities and so might not be professionally competent and of good repute. That also put the licence at risk.

15. The Appellant was informed of the evidence which the [NAME] would rely on so far as then available and told to collect its own evidence, which should include at least various specified documents. Among those were regular safety inspection records and driver defect reports for the past 12 months, the maintenance contract, evidence of systems for ensuring compliance with the drivers’ hours and tachograph legislation and evidence of payments to [NAME] and his attendance at the [COMPANY]. The evidence was to be submitted before 20th April 2021.

16. [NAME]’s call-up letter notified him that the [NAME] would consider whether he continued to meet the requirements to be of good repute and professionally competent. He was told to produce similar material by the same date.

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17. Further evidence was produced following the call-up letters to address the requirements to provide original maintenance records and evidence of the system for ensuring compliance with the drivers’ hours and tachograph legislation and to show the payments made to [NAME] and his attendance at the [COMPANY].. The Appellant also provided bank statements and other financial information. Various points on the documentation provided were drawn to [NAME]’s attention by an email dated 29th April 2021, which included the information that the [NAME] could not take account of the [NAME] credit card because it was in [NAME]’s personal name and not in the name of the Appellant.

18. [NAME] on behalf of the Appellant and [NAME] both attended the virtual hearing. Reading the transcript gives the impression that neither of them was very well prepared. [NAME] was clearly struggling at times with understanding the [NAME] and explaining matters in English. It was unclear whether he properly understood the documentation he was looking at or whether he simply did not understand the [NAME]’s questions about it. Some documents [NAME] and [NAME] wished to refer to had been sent late and had not arrived with the [NAME].

19. The overall impression of the Appellant’s operation is that [NAME] relied almost entirely on [NAME]’s assurances about what he was doing and did very little by way of examining records, many of which were kept on [NAME]’s tablet. The tachograph records from the lorry had never been downloaded. There was evidence, in particular by reference to a defective windscreen wiper, that the driver defect reporting system was not working. There was no explanation of the brake testing arrangements, which admittedly could not be carried out at the [COMPANY] and had to be done at the DAF centre, which [NAME] thought might have been closed because of the pandemic. He clearly had no real idea what [NAME] might have been doing about brake testing and [NAME]’s evidence was that he did inspections on a Monday, when he was out of driving hours and so could not take the vehicle to the DAF centre for a brake test. The [NAME] said at the outset that financial standing was not met and at one point retired, leaving it to the clerk to explain the process of doing the necessary calculation. Although the [NAME] seems to have intended that that would not be included in the transcript, it is in fact before us and it does not seem to us clear that [NAME] entirely understood the process even after the clerk’s attempts to explain. What does seem to be the case is that he relied on the [NAME] credit card and on a transfer of £5,000 he had made to the Appellant’s account in April, in preparation for the inquiry. Be that as it may, when the [NAME] returned, he asked [NAME] if he now understood what the [NAME] had been talking about and [NAME] said that he did. The [NAME] then said that it was inevitable he would conclude there was no financial standing.

20. Towards the end of the inquiry the [NAME] asked [NAME] what he could tell him that would assure him that the Appellant would comply with the laws and the rules in future. [NAME] offered some explanation about how he would address financial standing and was then asked what about the actual operation, the maintenance, the driver defect reporting and the management. The answer was:

“I need spend more time with all paperworks and should be okay. If I’m doing all of everything myself, sometimes I’m missing something. But it’s

7 nothing what I can repair in the couple of weeks.”

Later the following exchange took place:

“[[NAME]] It’s a lot of paperwork for one person. But … it’s much, much … it’s progress. Last three months after [[NAME]] inspect my operation place, when I’m started, couple of years ago

[[NAME]] But forgive me, that’s not really evident in your paperwork, is it?

[[NAME]] Sometimes I forget about something. It’s not that doing something special.

[[NAME]] No.

[[NAME]] It’s a lot of paperwork for one person.

[[NAME]] But that’s really why you have a [NAME] manager, isn’t it?

[[NAME]] [NAME] … [NAME] is top man, he’s first man which I’ve spoke as my third [NAME] manager. And he said at the beginning that he doesn’t want much. But truck must be in good conditions. Every previously one [NAME] manager was just a man, this guy is different. So if I’m keep this licence, obviously I want to keep [NAME] because he’s good.”

21. At the very end of the inquiry there were some further exchanges between the [NAME] and [NAME]. The [NAME] described himself as “not very impressed” with the operation or the level of scrutiny or level of knowledge displayed by [NAME]. [NAME] admitted that he had been “really lax” but said that [NAME] had really tried and, recognising the difficulties of an owner driver, he had given him “a bit of leeway”, but his top priority was the vehicle and when it went on the road “that’s 100% legal and up and together”. He said that [NAME] does not go over his driving hours limit but “maintenance is a bit sporadic, I suppose. But it’s getting there.” He recognised that if the licence continued they would have “to really put ourselves together and decide what is going to be best”, but drew attention to what a difficult time it had been during the pandemic. In conclusion he recognised he was not up to date with everything.

22. Some additional maintenance documentation arrived with the [NAME] while he was in the course of writing his decision and its content is summarised in the decision. The ultimate position was that the [NAME] was provided with preventative maintenance inspection reports only for 2021 and that there were no print-outs or other records of brake efficiency, although there were references in some of the documents to brake tests having been carried out. The latest brake test result, which [NAME] referred to during the inquiry, showed that the secondary brake had failed the test, although neither [NAME] nor [NAME] appeared to be aware of that. The tachograph checks were done solely on the basis of the driver’s card and there were no infringement or missing mileage reports.

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The decision and the grounds of appeal

23. In his decision the [NAME], having set out the issues and summarised the evidence turned first to [NAME] and concluded that he had “failed to come close” to any of the responsibilities of a [NAME] manager as set out in Statutory Document No. 3 on [NAME]. He found that [NAME] had lost his repute under s.27(1)9b) of the Goods Vehicle (Licensing of Operators) Act 1995. He then continued:

“22. I am therefore satisfied that I must make adverse findings against the operator under sections 26(1)(b), (e), (f) – undertakings to keep vehicles fit and serviceable, to have a satisfactory written driver defect reporting system, and complete and retain maintenance records and 26(1)(h) – material change, relating to financial standing and professional competence. Those necessitate adverse findings under section 27(1)(a).

23. I note the positive features present:

• There is no previous offending history, but this licence has been in existence for such a short space of time, that can count for very little. There is accordingly a low prohibition rate and limited annual test history. There is some evidence of driver walk round checks undertaken by the Director/driver, fitter, but I refer to my comments above. Those are balanced against the negative features and this case amounts to the following: • Ineffective management control and insufficient or no systems and procedures in place to prevent operator licence compliance failings • Ineffective or no analysis procedures in place to detect falsification, drivers’ hours (EC & domestic) and/or Working Time Directive infringements • Ineffective or insufficient driver training with insufficient or ineffective monitoring and disciplinary measures in place • Insufficient and/or ineffective changes made to ensure future compliance This suggests a starting point of SEVERE to SERIOUS, where the licence is at danger, even if there were sufficient financial standing.

24. As the appellate Tribunal identified in 2012/025 [NAME]: “While it is true that a [NAME] manager must ‘effectively and continuously’ manage the [NAME] activities of the undertaking for which he or she works and is now required to be familiar with a wide range of topics, including the law in relation to operator’s licensing, that does not mean that the person or persons who control an entity which operates heavy goods or public service vehicles is or are absolved of responsibility. Such a person must know enough to ensure that someone employed as a [NAME] manager is up to the job and they must also be able to supervise them to ensure that they do a proper job.

9 It is, after all, for the director or directors of a company to set the standards which the employees are required to meet.” This cannot all be attributed to [NAME].

25. So, when I posed the question suggested by the Upper Tribunal in 2009/225 Priority Freight, namely: how likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime, even were there to be financial standing and a competent [NAME] Manager to assist, I could not reach a positive conclusion. The operator will have gathered that I found the conduct of this operation to be so serious as to require revocation. I note that loss of repute under section 271)(a). The positive, such as I could identify, are reflected in the length of disqualification. For the sake of completeness, I went through the potential impact of intervention on this licence. [NAME] indicated that his sub-contract work is undertaken at very little notice. I took account of his financial obligations but also how far this operation had fallen below the basic standard. He suggested that he might return to agency driving, without the additional strains of running his own business.

26. The operator’s licence is revoked under section 27(1)(a) and following adverse decisions under sections 26(1)(b), (e), (f) and (h) from 23.45 on 19 May 2021.

27. The operator and Director are disqualified from holding or obtaining an operator’s licence in any traffic area, for a period of 6 months from the above date, pursuant to sections 28(1) and (4).”

24. The grounds of appeal read as follows:

“At a public hearing regarding my operating licence, I was stripped of my operation licences, my [NAME] manager, and the ability to run my business for six months. I disagree with that decision and would like to appeal against that decision.

The Commissioner was wrong to suggest that I did not have sufficient resources to run my business. After presenting my evidence of having the required amount, I was informed that the bank statements are not made on one day of each month and will not be accepted. It is impossible to complete bank statements for one day as each bank issues statements on a different day.

I ran a person-company, where I’m a driver and owner. All funds at my company disposal have been deposited on the accounts as needed to secure company operations and fulfil the obligations stated in the operating licence.

During the hearing I was asked about the consequences revoking my licence would have on my business. I confirmed that in that case I would be forced to undertake a driving job through an agency. I have never suggested that this would not happen without major financial consequences. Having my licence revoked had a significant effect on my company and my financial situation … Revoking my licence and prohibiting me from holding OC for six months

10 profession is synonymous with causing bankruptcy in a short time. I will not be able to fulfil my financial obligations if the only source of income is my earnings as an agency driver.

When I was asked by the Commissioner about what I would do in the future to avoid similar situations and the lack of an unambiguous answer on my part, I only have that English is my second language and the long question was not obvious to me at the moment.

There should be only one answer to correcting all the shortcomings that have arisen. I also disagree that my service in 2020 was below the standard. At that time, due to lockdown, I had limited access to the brake tests, which I run as standard at a DAF service located 0.5 miles from my Operation Centre. This had a direct impact on the December result of Truck MOT. The truck undergoes regular inspection and is in good condition.

With the covid restrictions being lifted, I was happy that I managed to keep my company operational and that no financial organisation is chasing me for unpaid debts. However, with my licence revoked this will likely soon change. Therefore, I consider [NAME]’s judgment too severe and not fair.”

25. The Appellant has not applied for a stay of the [NAME]’s determination.

The legal context

26. Under s.26(1) of the Goods Vehicles (Licensing of Operators) Act 1995 a [NAME] has power to direct, among other things, that an operator’s licence be revoked on any of a number of grounds, including that:

(1) any of the conditions attached to the licence has been contravened (s.26(1)(b));

(2) a statement made by the licence-holder for the purpose of the application for the licence was false or has not been fulfilled (s.26(1)(e);

(3) any undertaking recorded in the licence has not been fulfilled (s.26(1)(f);

(4) there has been a material change in the circumstances of the licence- holder (s.26(1)(h).

27. Further, under s.27(1) of the Act a [NAME] must revoke an operator’s licence if:

(1) the licence-holder no longer satisfies the requirements of s.13A(2); or

(2) the licence-holder’s [NAME] manager no longer satisfies the

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28. S.28(1) of the Act then provides that if a person’s licence is revoked under s.26(1) or s.27(1), the commissioner may also direct that that person be disqualified from holding or applying for a licence either indefinitely or for such period as the commissioner may specify. Under s.28(5), where the person in question is a [COMPANY], the power of disqualification extends also to any director.

29. S.13A(2), referred to in s.27(1), requires among other things that a licence-holder must be of good repute, have appropriate financial standing and be professionally competent. Whether the requirements of good repute and financial standing are satisfied is to be determined in accordance with the provisions of Schedule 3. Whether the requirement of appropriate financial standing is satisfied is to be determined in accordance with art. 7 of EU Regulation 1071/2009

30. S.13A(3), also referred to in s.27(1), requires among other things that a [NAME] manager should be of good repute and professionally competent, again as determined in accordance with the provisions of Schedule 3.

31. Paragraph 8 of Schedule 3 provides that the requirement of professional competence must be satisfied by an individual and enables a company to satisfy the requirement of professional competence by employing a [NAME] manager who is of good repute and professionally competent. The effect of paragraphs 1 and 12 is that a [NAME] may have regard to “all the material evidence” in deciding whether the requirement of good repute is satisfied.

32. Art. 7 of Regulation 1071/2009 requires that an operator should be able to meet its financial obligations at all times during the annual accounting year and must demonstrate that ability by showing in its accounts a certain level of capital and reserves at its disposal. Alternatively, the relevant national authority may decide to take into account a suitable financial guarantee. In practice the United Kingdom has exercised that power and the Senior [NAME] has issued Statutory Document No. 2 containing guidance and directions as to the appropriate financial standing requirement. Statutory Documents are issued under the power given to the Senior [NAME] by s.4C of the Public Passenger Vehicles Act 1991 to give guidance or general directions to traffic commissioners as to the exercise of their functions under any enactment We return to the Statutory Document later, but at this point note that the required level of available resources for one vehicle is and was at all material times £8,000.

33. The call up letter sent to the Appellant referred to the provisions of ss. 26, 27 and 28 identified above and stated that:

(1) the basis of reliance on s.26(1)(b) was a contention of failure to notify any event which affected the professional competence of the Appellant and the [NAME] manager;

(2) the basis of reliance on s.26(1)(e) was a contention that the laws relating to the driving and operation of vehicles used under the licence were not observed;

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(3) the basis of reliance on s.26(1)(f) was a contention that the vehicle and trailer had not been kept fit and serviceable, records of driver defect reports, safety inspections and routine maintenance had not been kept for 15 months and made available and drivers had not reported promptly any defect or symptom of defect which could prevent the safe operation of vehicles and trailers and defects had not been promptly recorded in writing;

(4) the basis of reliance on s.26(1)(h) was a contention that the Appellant no longer had sufficient financial resources;

(5) because of those matters, the [NAME] was concerned that the Appellant was not of good repute, was not of appropriate financial standing and did not meet the requirement of professional competence;

(6) the [NAME] was also concerned that [NAME] was not exercising continuous and effective management of the Appellant’s [NAME] activities and was not professionally competent and of good repute.

34. As can be seen from the extracts from the [NAME]’s decision set out above, he found that the Appellant had lost its good repute, was not professionally competent (since it did not employ a [NAME] manager who was professionally competent and of good repute) and did not have appropriate financial standing. On the basis of those findings revocation of the licence was mandatory. The [NAME] also found that the conditions for discretionary revocation set out in s.26(1)(b), (e), (f) and (h) were made out.

Discussion

35. We consider the appeal under the headings (i) financial standing (ii) loss of repute and (iii) proportionality, those being the areas for consideration which appear to us to be raised by the Appellant’s grounds of appeal. We remind ourselves that the task of the Upper Tribunal when considering an appeal from a decision of a [NAME] is to review the material before the [NAME], and the Upper Tribunal will only allow an appeal if the appellant has shown that “the process of reasoning and the application of the relevant law require the tribunal to take a different view”, as explained in Bradley Fold [NAME] v. Secretary of State for [NAME] [2010] EWCA Civ 695, [2011] R.T.R. 13, at paragraphs 30-40. This is sometimes summarised as requiring the Upper Tribunal to conclude that the [NAME] was plainly wrong.

(i) Financial standing

36. The material before the [NAME] at the time of the inquiry showed that the Appellant had an account with [COMPANY] ending in the numbers 2945, an account with [NAME] ending in 7113 and an account with [COMPANY] ending in 7142. The papers also include statements for an [NAME] card with a £7,500 limit. The card appears to have been in [NAME]’s name, but, at least in

13 March 2021, statements were going to the Appellant’s address, so it may have been a card made available to [NAME] as director of the Appellant. Pages 138-139 in our bundle show a calculation of the average of the balance on the three accounts from 16th January 2021 to 16th April 2021 and the available sums under the Visa card amounting to £4,977 plus £1,850, i.e., £6,827. It was on this basis, as we understand it, that the [NAME] said that the Appellant did not satisfy the financial standing requirement.

37. Assuming that the Visa card was a company card, this approach to assessing financial standing was entirely in accordance with Statutory Document No. 2: see in particular paragraph 38, which is part of the directions section of the Statutory Document setting out how the assessment must be approached If [NAME] thought, as the grounds of appeal suggest, that the Appellant’s bank statements were not accepted, he was mistaken.

38. The real difficulty for the Appellant is that [NAME] wanted the [NAME] to take into account also an [NAME] credit card on which there was a credit limit of £5,000 (increasing to £13,000 on or about 21st May 2021) and available credit of £4,446.00 at.10th April 2021. The [NAME] card, however, is a personal card, not a company card. Statutory Document No. 2 states clearly that resources not in the company’s name cannot be considered and cites in support [COMPANY]., [2014] UKUT 0119 (AAC), T/2013/77. That was also a case in which a company sought to rely on an account in the director’s personal name and it was determined that the [NAME] was right in refusing to allow it to do so. A similar problem arose with a similar result in [COMPANY]. [2020] UKUT 372 (AAC), T/2020/26.

39. The upshot is that the [NAME]’s approach at the inquiry followed the Statutory Document which in turn reflects previous decided cases. We understand that [NAME] may feel that as a one-person company the Appellant’s financial resources extend to his personal financial resources, but legally that is not the case. [NAME] has chosen to trade with the benefit of limited liability, meaning that the Appellant’s debts are not his debts. Equally, the Appellant’s resources are not his resources while they remain in the name of the Appellant and his resources are not the Appellant’s resources if they remain in his name. As a matter of fact, he did not draw on his [NAME] card and transfer money to the Appellant in a sufficient amount to ensure that the financial standing requirement was satisfied.

40. At the hearing [NAME] drew our attention to a document at p.197 in our bundle headed “Budget for January, February, March 2021 which he said showed the necessary financial resources. When asked how a budget could show the resources the Appellant had had in the past he was unable to answer and we think his English may have been inadequate to enable him to understand the question. Assuming, however, that the document was intended to show resources available in the past and ignoring the fact that it does not on its face show an average of balances over the three months of January, February and March 2021, it includes what we take to be the undrawn credit on the [NAME] card in each month. The monthly figure shown would in each case be below the £8,000 requirement if the [NAME] figure is excluded. On its own terms, then, the document does not support [NAME]’s case.

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41. In addition, it does not appear to have been before the [NAME] and for the purpose of deciding whether the [NAME] was plainly wrong it is the evidence before him which we must take into account. [NAME] told us that at the inquiry he had not had available a letter to show that in addition to the sums in its bank accounts the Appellant had available a £1,000 overdraft facility from [COMPANY] (a facility which is included in the budget document). The existence of that overdraft facility does not seem to have been mentioned at the inquiry and so, assuming in the Appellant’s favour that it is available, it does not affect our decision. In any event, even if it could be taken into account, the average balance would only increase to £7,827 and the financial standing requirement would still remain unsatisfied.

42. In those circumstances, the ground of appeal relating to financial standing must fail. Far from being plainly wrong, the [NAME] was plainly right.

(ii) Loss of repute

43. The [NAME]’s finding of loss of repute in paragraph 25 of his decision follows on from his reference to the question posed in [COMPANY]. 2009/225 (“How likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime?”) and his statement that he found the conduct of the operation to be so serious as to require revocation. The statement itself is clearly based on the decision in [COMPANY]. (No. 2) 217/2002 that a finding of loss of repute, with the consequence that revocation is mandatory under s.27(1), requires consideration of whether the operator’s conduct is so serious as to require revocation. Priority Freight states that it will often be helpful, before reaching a conclusion on the [COMPANY] question, to consider the likelihood of future compliance, in effect as part of the reasoning process leading up to the conclusion. The [NAME]’s approach was therefore clearly based on the relevant case law.

44. This brings us to his reasons for his conclusions on the [COMPANY] questions. They are to be found in paragraphs 22 to 24 of the decision. First, the [NAME] made adverse findings on the s.26 issues in all respects. That is to say, the findings covered not only the lack of financial standing and the loss of professional competence in the light of the [NAME]’s decision relating to [NAME], but also the issues relating to the condition of the vehicle, the driver defect reporting system and the maintenance of records. In paragraph 23 the [NAME] set out what he saw as the positive and negative features of the case (also in accordance with Priority Freight). Those features can be seen to be based on the examples of positive and negative features set out in Annex 4 to the current version of Statutory Document No. 10 As can be seen, the negative features included not only substantially defective systems and procedures but also insufficient and ineffective changes made to secure future compliance. The starting point of severe to serious referred to in paragraph 23 also derives from Annex 4.

45. Finally, the [NAME] referred to the principle set out in [NAME] T/2012/025 that the person controlling an entity which operates heavy goods vehicles must know enough to ensure that someone employed as a [NAME] manager is up to the job and must be able to supervise the [NAME] manager to ensure that he or she does a proper job. It is for the director of a company to set the standards which the

15 employees are required to meet. A similar point was made in [NAME] T/2014/24, where it was said:

“it does not matter whether an operator’s licence is held by an owner operator, a [NAME] or a [COMPANY] because in each case the person or persons responsible for managing the business bear the ultimate responsibility for ensuring that the road [NAME] aspect of the business operates in compliance with the regulatory regime. That means that they cannot plead ignorance or put the blame on the [NAME] manager because they are required to have sufficient knowledge of the regulatory regime to ensure compliance in general and the proper performance of the [NAME] manager’s duties in particular.”

46. It is clear that the [NAME] found that there were very serious shortcomings in the Appellant’s operation and that he regarded [NAME] as ultimately responsible for them. The grounds of appeal are not very helpful on this issue, since in one sentence reference is made to “all the shortcomings that have arisen” and in the next [NAME] contends that the Appellant’s service in 2020 was not “below the standard”. He supports the latter assertion by saying that during lockdown he had limited access to the DAF centre where he carried out brake tests, which he says had a direct impact on the December result of the lorry’s MOT. At the hearing before us, however, he told us that he could use the DAF centre during lockdown and it provided a good service. Moreover, the lorry failed its MOT in October rather than December 2020.

47. To the extent that the grounds of appeal accept that there were shortcomings, it is also stated “there should be only one answer to correcting” those shortcomings. No answer is given in the grounds themselves and when [NAME] was asked at the hearing what the answer was, he was unable to tell us. It emerged that the English version of the grounds of appeal is the product of translation, either by a computer programme or by a translator.

48. We therefore see no basis for the conclusion that the [NAME] was wrong in finding, on the evidence before him, that there were very serious shortcomings for which the director and through him the Appellant were ultimately responsible. The [NAME] then rightly addressed the question of future compliance and did so having already stated as a negative factor that there had been insufficient or ineffective changes made to ensure future compliance.

49. We have set out in paragraph 20 above the oral evidence [NAME] gave about future compliance, which also covers changes following [NAME]’s inspection. Allowing for the limitations of [NAME]’s English, it nevertheless gives the impression that he found keeping up with the paperwork burdensome and did not expect he would always get it right. We note that by the time of the inquiry the Appellant had had more than four months to act on [NAME]’s findings and to improve compliance and in our view the [NAME]’s criticisms of what had been achieved in that period, as evidenced before him, were justified. We also note that [NAME] seemed at the inquiry to have no grasp of the scale and extent of [NAME]’s deficiencies as a [NAME] manager, to the extent that he described him as a “top man”.

50. In the grounds of appeal it is stated that the long question about what the

16 Appellant or [NAME] would do in the future to avoid similar situations was “not obvious” to him. A lack of understanding does not emerge from the transcript, but, putting that to one side, in any event the Appellant has not subsequently taken the opportunity to answer the question. At the hearing [NAME] told us that he had experience of [NAME] other than [NAME] and they had not attended the [COMPANY] at all. He said he did not know what a good [NAME] manager would do. He repeated what he had said at the inquiry, that [NAME] said he did not want much but the truck must be in good condition.

51. In our view, the [NAME]’s decision on loss of repute was well justified. There had been substantial non-compliance with the requirements of the [NAME] for which the Appellant was ultimately responsible and there was no evidence to show that [NAME] as the sole director of the Appellant understood the nature and extent of the failings and had taken appropriate corrective action. There was certainly no evidence to suggest that he had the knowledge necessary to ensure that [NAME] was up to the job of [NAME] manager and was able to supervise him to ensure he did a proper job. Nor was there any evidence that [NAME] proposed to take steps to put himself in a position to obtain such knowledge. Rather, he apparently proposed to continue to rely solely on [NAME].

52. For those reasons, this ground of appeal also fails.

(iii) Proportionality

53. Under this heading we address the complaint that the [NAME]’s decision was too severe and unfair.

54. To the extent that the Appellant makes this complaint in relation to revocation, it cannot succeed. As we have said, consideration of proportionality is part of the consideration of loss of repute and for the reasons given in our view the [NAME] was not wrong in the way he dealt with this. Having found loss of repute, the [NAME] was obliged to revoke the licence under s.27(1).

55. Even if that were not the case, the [NAME] was obliged to revoke the licence on the grounds of lack of financial standing and lack of professional competence. The lack of professional competence followed from [NAME]’s loss of repute as [NAME] manager.

56. We have, however, considered whether the decision could be said to be too severe and unfair in relation to disqualification, since revocation of a licence does not necessarily lead to disqualification. There is little in the decision to explain the reasons why the [NAME] decided to disqualify the Appellant and [NAME] and it would have been helpful if the decision had said something more on this point. On a fair reading of the decision, however, it seems to us that there is sufficient to show that disqualification was imposed because of the very serious and wide-ranging nature of the problems with the Appellant’s operation which showed that safety was potentially at risk (particularly through the apparent omissions in relation to brake tests, the lack of proper driver defect reporting and the lack of proper analysis of drivers’ hours). In particular, it appears from Annex 4 to Statutory Document No. 10 that a starting point of severe to serious will involve consideration of disqualification. It also seems,

17 however, that the [NAME] was being fairly lenient in imposing a period of six months and in doing so bore in mind the positive features he had identified. A period of disqualification of one to three years is often regarded as a starting point.

57. In our view a period of disqualification of both the Appellant and [NAME] was appropriate [NAME] clearly has some learning to do before he will be in a position to ensure that the Appellant is employing a [NAME] manager who is competent and to ensure that the job is done properly. His belief that he could drive a lorry on the public roads which had failed its MOT test is an example of his own lack of knowledge of basic and important matters and of the risk that he will simply rely on what he is told by someone else without being in a position to assess whether it is, or is likely to be, correct. The fact that when the Appellant was operating in Manchester it apparently employed [NAME] who were even less effective than [NAME] is another.

58. It follows that this ground of appeal fails also.

[NAME]’s personal position

59. While it is understandable that [NAME] tends to see himself and the Appellant as one and the same, it is not legally correct. As we said at the outset, it is the Appellant’s licence which has been revoked and any appeal against the revocation decision must necessarily be brought by the Appellant.

60. We recognise that if the appeal had been successful, there would have been no basis for disqualifying either the Appellant or [NAME]. Given that the appeal fails, however, there remains a theoretical possibility of different outcomes as between the Appellant and [NAME] on the issue of disqualification. Nevertheless in the present case the relevant factors apply equally to [NAME] and to the Appellant, which acts solely through him. It is therefore appropriate that we should make clear that if [NAME] had intended to appeal in his personal capacity as director as well as on behalf of the appellant and ought therefore to have been shown as a second appellant, that appeal would also have failed.

Conclusion

61. For the reasons set out above, the appeal is dismissed.

62. Finally, I have to apologise for the delay in producing this decision, which was the result of other commitments.

(signed on the original)

E. Ovey Judge of the Upper Tribunal 16th November 2021