Upper Tribunal Upholds Disqualification for Fronting Activities

OUTCOME: Dismissed

IN THE UPPER TRIBUNAL Appeal No. UA-2021-000465-T ADMINISTRATIVE APPEALS CHAMBER [2022] UKUT 00227 ([NAME_1])

Appellant:

[redacted]

DECISION OF THE UPPER TRIBUNAL

Her Honour Judge Beech, Judge of the Upper Tribunal [NAME_6], Specialist Member [NAME_9], Specialist Member

Decision date: 15th August 2022

ON APPEAL FROM:

Tribunal: [NAME_12], [NAME_15] for the South East & Metropolitan Traffic Area Licence No: [ID] Tribunal Venue: Field House, 15-25 Bream’s Buildings, [NAME_16], [POSTCODE] Date: 12th July 2022

This front sheet is for the convenience of the parties and does not form part of the decision

1

IN THE UPPER TRIBUNAL Appeal No. UA-2021-000465-T ADMINISTRATIVE APPEALS CHAMBER

On appeal from the Decision of [NAME_12], [NAME_15] for the South East & Metropolitan Area dated 17th November 2021

[NAME_3] Appellant

Before: Her Honour Judge Beech Upper Tribunal Judge

Specialist Member of the Upper Tribunal [NAME_6] Member of the Upper Tribunal [NAME_9]

Hearing date: 12th July 2022

Representation: Appellant: [redacted]

DECISION

The appeal is DISMISSED

Subject Matter: [NAME_22] was entitled to find that the Appellant as Transport Manager knew that the operator was a “front” on the evidence; whether the period of disqualification ordered following loss of repute was disproportionate.

Cases referred to: 2016/026 [NAME_23] trading as [NAME_25]; Assicurzioni Generali SpA v Arab Insurance Group (2002) EWCA Civ 1642 (2003) 1 WLR 577; 2012/071 [COMPANY_26]; T/2005/367 [NAME_27]; Bradley Fold Travel & [NAME_29] v Secretary of State for Transport (2010) EWCA Civ.695.

REASONS FOR DECISION

1. This is an appeal from the decision of the [NAME_15] for the South East and Metropolitan Traffic Area (“DTC”) dated 17th November 2021

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2 when he found that the Appellant had lost her good repute under paragraph 16(1) of Schedule 3 of the Goods Vehicles (Licensing of Operators) Act 1995 (the 1995 Act”) and disqualified her from acting as a transport manager under paragraph 16(2) of Schedule 3 of the 1995 Act for a period of two years from the date of the decision (with an effective disqualification period of two years and nine months). Background 2. The background to this appeal can be found in the appeal bundle and the written decisions of [NAME_22] and is as follows. The Appellant (“[NAME_17]”) first came to the attention of the [NAME_15] for the South East and Metropolitan Traffic Area (“the [NAME_32]”) when on 28th June 2016, [NAME_17] made an application for a standard national operator’s licence as the sole director of J & K Environmental Services Limited, authorising six vehicles and six trailers. [NAME_17], who had recently qualified as a transport manager, was also the nominated transport manager. The information [NAME_17] provided at that stage was that the company had been incorporated on 21st September 2015; her contact address, home address and the company’s place of establishment was an address in Barnet (“no.25”); the operating centre was situated at [COMPANY_34] in Northolt which would also carry out the preventative maintenance inspections. On her application to be added to the licence as transport manager, [NAME_17] declared that she would commit eight to twelve hours a week to her role as transport manager and further declared that her only other employment was that of director of the company to which she would commit twenty five hours a week.

3. The [NAME_32] was concerned that the company and its proposed operation might be linked to [NAME_35] who had been involved with a number of revoked operator’s licences, had lost his good repute as an individual as well as a transport manager and had been disqualified for an indefinite period from being involved in operator licencing with effect from 23rd December 2014. He was the sole shareholder of [COMPANY_34]. On 22nd July 2016, a police officer attended the workshop premises and had spoken to [NAME_37]. He also spoke to [NAME_17] who was present. She told him that she worked in the office for [NAME_37]. 4. [NAME_17] then notified a change of address to the Office of the [NAME_15] (“OTC”). Her contact and the company’s business address were to be an address in Harrow “(no.47”). An application for an interim licence was refused because of the [NAME_32]’s concerns and [NAME_17] was advised that the [NAME_32] was minded to refuse the licence application. [NAME_17]’s good repute and fronting were raised as issues.

5. The public inquiry was listed for hearing on 21st March 2017. In the days leading up to the hearing, [NAME_17]’s representative wrote to the OTC to advise that [NAME_17] and [NAME_37] had in fact been cohabiting partners for three years although on occasion, [NAME_17] had resided at No.47 with a cousin. She had worked for [NAME_37] for the previous two years as a general clerk, principally in connection with [NAME_33]. She intended to leave that employment once the licence was granted and work independently from [NAME_37] although she hoped to benefit from some of his previous customers and clients (she had incorporated J & K into the name

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3 of the business because they were [NAME_37]’s initials). [NAME_37] had little to do with the management of the workshop.

6. At the hearing, the following evidence was elicited from [NAME_17]: • In addition to [NAME_33], [NAME_37] controlled [COMPANY_73] which had been incorporated on 17th December 2015. [NAME_17] denied that she had any connection with that entity although she had helped draw up a hire agreement between that company and “[COMPANY_38]” because she happened to be in the office at the time. She denied that [COMPANY_38] was a front for [NAME_37] • [NAME_17] had never lived at No.25 even though that is the address she gave as her home, correspondence and business address on the licence application. This was in fact the registered address of [COMPANY_73] until January 2016 when the company changed its address to that of [NAME_33]. As a result of that untruth, when completing the application form, [NAME_17] had failed to provide an address for either the company or herself as transport manager and had failed to disclose to the OTC the address at which she and [NAME_37] were residing • [NAME_17] had remained in a relationship with [NAME_37] although she had moved to an address in Northolt “No.10” which she would also use as her office • [NAME_17] did not have any money or savings, the company had been given a business loan without any security or guarantees. The loan had been drawn down although no instalments were repayable until the licence had been granted. [NAME_33] obtained finance from the same finance company although [NAME_37] had not been involved in the arrangements. The [NAME_32] concluded that the only evident security was the link with [NAME_37]’s businesses • At an early stage, [NAME_17] told the [NAME_32] that she had taken advice from [NAME_39]. She later accepted that she had been lying about that.

7. In a written decision dated 22nd May 2017, the [NAME_32] took all the above matters into account and in particular the links with [NAME_37] and found that she was not satisfied that the company or [NAME_17] were of good repute (in other words, [COMPANY_40] was a front for [NAME_37]). 8. [NAME_17] appealed. In the interim, on 5th July 2017, the OTC received an application from [COMPANY_41] nominating [NAME_17] as the company’s transport manager. The company had been incorporated on 19th May 2015 and had been granted a standard national operator’s licence authorising 3 vehicles and 2 trailers in August 2016. [NAME_44] whose occupation on the Companies House record is that of “driver”, was the sole director. The Operating Centre was [NAME_33] which was also the operator’s maintenance provider.

9. The operator was called to a public inquiry for [NAME_22] to consider [NAME_17]’s suitability for the position in view of the [NAME_32]’s finding that [NAME_17] had not established good repute before her in March 2017. The hearing took

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4 place eight months after the [NAME_32]’s decision, on 1st November 2017. [NAME_44] and [NAME_17] attended and were represented by [NAME_45], solicitor. 10. [NAME_44] told [NAME_22] that he employed one driver and that he had recently secured a contract with BIFA with a three months probationary period. Due to cash flow problems he had not paid invoices for a few months (the decision does not state the nature of those invoices) but he had recently improved the company finances by obtaining a loan (the decision does not state from whom). He knew [NAME_17] because she worked in the offices at [NAME_63] and was aware that she held a CPC. His previous transport manager had left to set up her own business. He was shown as a “green” operator on the DVSA system. 11. [NAME_22] stated that he would not go behind the decision of the [NAME_32] with regard to [NAME_17]’s links with [NAME_37] and the [NAME_32]’s finding that [NAME_17] had not satisfied the [NAME_32] that she was of good repute. He further noted that [NAME_32] had found that [NAME_17] had “attempted to mislead” the [NAME_32]. [NAME_17] told [NAME_22] that she was no longer in a personal relationship with [NAME_37] although she continued to work at [NAME_33]. She did not see him very often. Her intention was to reduce the hours that she worked at [NAME_33] were she to be appointed as a transport manager.

12. In his written decision dated 6th November 2017, [NAME_22] considered whether there were links between [NAME_44] and [NAME_37]. He did not find any other than the fact that [NAME_44] was one of a number of operators who rented space at [NAME_33] which was owned by [NAME_37]. Neither were there any identifiable financial or business links between them. As for [NAME_17], [NAME_22] stated as follows: “8. .. I had to consider whether she had demonstrated and I was satisfied that it was more likely than not that she could be trusted to undertake the role of transport manager for [NAME_44]. There was no issue over her competence in that she held a valid CPC qualification and had attended update training (sic) in this regard comparatively recently. The [NAME_15] had determined that she could not be trusted to hold her own licence and that the links between her and [NAME_37] were such that conclusions could be drawn.

9. My decision turns on the question whether a person (in this case [NAME_17]) who could not be trusted to hold their own licence could nevertheless be trusted to be a transport manager for another operator. There is a distinction in that as an operator and transport manager all the trust is vested in one person, in the case of a transport manager and separate operator there is a check and balance in that if either one is not fulfilling their duties honestly and effectively the other is expected to take action. I have also taken into account the circumstances of the case before the [NAME_15] in that the findings were that if a licence was granted to [NAME_17] it would in effect be “a front” for [NAME_37]. In the matter before me there is no evidence to suggest that this is the case”. [NAME_22] granted the application subject to an undertaking that an independent audit of the transport operation would be carried out no later than 31st March 2018.

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5 13. On 16th November 2017, upon the appeal from the decision of the [NAME_32] dated 22nd May 2017, the Upper Tribunal upheld the findings of the [NAME_32] with regard to [NAME_17] being a front for [NAME_37] and her failure to establish good repute.

14. On 24th April 2018, [NAME_44] resigned as the sole director of [COMPANY_41] and was replaced by [NAME_47], who also recorded his occupation as “driver” with Companies House. [NAME_50] was then appointed as a director of the company on 1st November 2019, becoming the sole director on 1st March 2020, when Mr [NAME_49] resigned. The OTC was not informed of [NAME_52]’s appointment within 28 days as required.

15. On 12th May 2020, an on-line application was made to increase the vehicle authorisation to ten. A Desk Based Assessment of compliance was then conducted by the DVSA which was marked as “unsatisfactory” partly due to requested documentation not having been received by the DVSA due to the size of the files. Upon receipt of the documentation, the marking was revised to “mostly satisfactory”. The bank statements that were submitted in support of the application showed several large payments made to [NAME_33] which required clarification and it further appeared that [NAME_52] as director was being paid less than some employees despite being the sole director and shareholder.

16. It was determined that the variation application should be referred to a public inquiry. After the call up letter was sent, issues were then identified about [NAME_52]’s failure to declare a conviction when he had been a director of [COMPANY_54] in 2018 (a licence he had applied for) and how that licence application had been funded leading to concerns that the company in question may have been a front for someone who had previously had licences revoked and applications refused ([NAME_55]). Moreover, it was found that [NAME_17] had been registered as the Company Secretary for [NAME_33] between 23rd June and 8th December 2020.

17. The public inquiry took place on 9th February 2021 via Microsoft Teams. [NAME_52] and [NAME_17] attended and were represented by [NAME_80]. Witness statements had been submitted along with other documentation beforehand. [NAME_52] gave an unsatisfactory explanation as to the funding arrangements for [COMPANY_54], stating that his father had funded the business initially when all of the evidence pointed to [NAME_55] having done so. [NAME_52] later accepted that he had made payments to [NAME_55] although these were to repay a loan made by Mr [NAME_57] to [NAME_52]’s father. 18. [NAME_52]’s evidence was that he had been given the opportunity to invest in [COMPANY_41] where he had been working as a driver. He had paid £100 to [NAME_47] for the company as the latter had wanted to leave. It was pointed out to [NAME_52] that the certified accounts for 2019/20 showed a net profit of £142,027 which made it surprising that [NAME_52] had only paid £100 for the business. He stated that there was a total of £37,600 in outstanding finance but did not supply further details. What was not drawn to [NAME_52]’s attention was the shareholders fund which was said to be £246,200, which made the sale price of the business of £100 even more surprising. [NAME_52] was the sole shareholder of the company.

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6 19. A loan agreement for an interest free loan to [NAME_33] for £10,000 dated 15th April 2020 had been produced. [NAME_52] stated that the loan had been requested as a matter of urgency by [NAME_60], the sole director of [NAME_33] at the time. [NAME_52] could not explain why an interest free loan had been offered or why repayment was set at 5th July 2020 or why if the loan was so urgent it was not actually drawn down until 5th June 2020.

20. As for [NAME_52]’s remuneration, he accepted that as the sole director of a company making a healthy profit, his average weekly pay was just over £500 per week which was no better than some of the drivers’ remuneration and in some cases worse. He stated that he was comfortable with the amount he was being paid and that he was being paid in dividends. He drove every day and relied on the accountant and [NAME_17] to carry out much of the administration. He did not comment when it was pointed out that the fluctuation in his weekly payments did not square with an annual amount of dividend divided by 52. He averred that he spoke to customers and was aware of the amount of business and money that was going through the accounts and, according to his witness statement, he used “the office staff” for invoicing and banking. There was no evidence that office staff were employed other than [NAME_17]. 21. [NAME_17] told [NAME_22] that [NAME_37] did not have any interest in the company. She had not been aware that she was the Company Secretary for [COMPANY_34] but then said that [NAME_60] had in fact asked her to be Company Secretary although all she was doing at that stage was working in the [NAME_63] offices for one day a week to help train a new member of staff. She did not mention her Company Secretary appointment because she did not think that she needed to. [NAME_17] had resigned her role in [NAME_33] in 2018 when she was approved as transport manager on the [NAME_42] licence. She denied that she was in a relationship with [NAME_37] and said that she only attended [NAME_33] one day a week to undertake drivers checks for [NAME_42]. She met [NAME_52] every week and spoke to him regularly about maintenance arrangements. She informed him of any drivers’ hours infringements but she spoke to the drivers herself.

22. At the conclusion of the evidence, [NAME_58] submitted that [NAME_52] was not “business minded” and relied on accountants and those who ran the business. There was no evidence of a fronting arrangement. There was no evidence of suspicious payments from the bank account and the loan to [NAME_33] had been paid back before the issue was raised by the OTC. [NAME_58] did not address [NAME_22] on behalf of [NAME_17].

23. In his written determination dated 17th February 2021, [NAME_22] found that having decided in 2018 that [NAME_17] could be trusted as a transport manager on a licence, the position had changed. [NAME_44] was no longer involved in the company and had ultimately been replaced by [NAME_52]. [NAME_22] accepted that there was no direct evidence of fronting, there was a “a catalogue of circumstantial evidence” which he needed to consider and weigh and in particular: the circumstances in which [COMPANY_54] had been financed; that [NAME_55] funded the [NAME_53] licence; that he was a person who had previously had a licence revoked and had had applications refused; the situation had all of the hallmarks of fronting;

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7 [NAME_52]’s payment of only £100 for total ownership of the company [COMPANY_41] was “unbelievable” particularly when the accounts showed a viable company with net profits of over £142,000; having paid “such a derisory sum” for the company, [NAME_52] then undertook his sole director duties whilst accepting a level of remuneration below that of other employees and the explanation that his remuneration represented annual dividends did not square with an annual dividend split into equal parts; the circumstances behind the loan to [NAME_33] and the catalogue of suspicious payments made in “rounded” sums to [NAME_33], for example, £10,000 in May 2020 for maintenance. 24. [NAME_22] concluded that [NAME_52] was not a controlling mind of the company and was a director in name only. Neither his presentation at the hearing nor the evidence he gave persuaded [NAME_22] otherwise. [NAME_22] did not consider it necessary to find who was the controlling mind and de facto director. It could have been [NAME_37], [NAME_64] or [NAME_17]. It was sufficient to find that it was not [NAME_52]. [NAME_22] answered the [NAME_75] question, how likely is it that operator will operate in compliance with the operator’s licence regime, in the negative. Despite the fairly positive response to the desk-based assessment, [NAME_22]’s findings went to the core of the relationship of trust between operators and Traffic Commissioners, which was a fundamental part of the regulatory system. To enable trust to be established, TCs must know who they are regulating. [NAME_52] was a front for someone else, that trust could not be found. It followed that the operator deserved to be put out of business and an order of revocation for loss of good repute followed. [NAME_22] ordered that [NAME_52] be disqualified as a director for two years and made an order under s.28(4) of the 1995 Act. Those orders have not been appealed by [NAME_52].

25. As for [NAME_17], [NAME_22] found: “I find that whilst she seems to have carried out her transport manager role to an acceptable level in respect of compliance I am bound to conclude that she was party to the situation pertaining to [NAME_52] and either colluded with others in what occurred or did nothing to prevent it. In either case this is unacceptable and consequently I order the loss of her repute as a transport manager. Once repute is lost, I am obliged to order a disqualification from acting as a transport manager and so order for an indefinite period”.

26. It is of note that in addition to the matters identified by [NAME_22], it was not until 25th January 2021 (so shortly before the public inquiry) that the company’s drivers ceased being treated and paid as self-employed drivers which is a matter that in itself goes to the good repute of the operator and the transport manager (see T/2019/[COMPANY_66] and [NAME_67]). 27. [NAME_17] appealed to the Tribunal and was represented by [NAME_18]. In a decision dated 8th September 2021, her appeal was allowed on the grounds that [NAME_22] had provided inadequate reasoning for the decision that she had lost her good repute and inadequate reasoning underpinning the decision that she should be disqualified for an indefinite period, which in any event, appeared to be disproportionate when compared to the period of disqualification imposed upon [NAME_52]. The order reads:

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8 “.. the decision .. is remitted to the same [NAME_15] to be considered afresh in the light of this decision ..” 28. The remitted hearing took place on 11th November 2021. [NAME_17] was represented by [NAME_18]. At the outset [NAME_18] indicated that he was not calling [NAME_17] to give further evidence and submitted that as a result, [NAME_22] was unable to ask her any further questions. [NAME_22] did not agree with this approach, he nevertheless proceeded upon the basis that [NAME_18] would make representations even though no new evidence had been heard as that is what [NAME_18] said he was entitled to do. We should state at this stage that we consider that the words of the order of the Upper Tribunal “to be considered afresh” did entitle [NAME_22] to ask questions and consider further evidence. It may have been helpful to issue a further call up letter but even without such a step being taken, the words of the order clearly entitled [NAME_22] to consider the issues relating to [NAME_17] afresh without restriction and that included hearing evidence from her. We find it surprising that [NAME_17] would not have been keen to assist [NAME_22] in considering her good repute afresh in the hope that when doing so and as a result of her evidence, he would step back from finding that she had lost her good repute.

29. In his decision dated 17th November 2021, [NAME_22] fairly summarised [NAME_18]’s submissions in the following way: “.. there was insufficient evidence to find that she ([NAME_17]) was a party to the “fronting” by [NAME_52] or colluded with others in that regard. There was nothing in the evidence which demonstrated fraud by her and nothing to show that she knew what was going on. Her performance within her statutory role as a transport manager had not fallen below an acceptable level and her repute should be retained”. [NAME_22] reminded himself that he was entitled to draw reasonable inferences from primary facts, relying on 2016/026 [NAME_68] (2002) EWCA Civ 1642 (2003) 1 WLR 577 and he found as follows: a) The background to his decision was that [NAME_17] had unsuccessfully appealed the refusal by the [NAME_32] to grant her an operator’s licence on the grounds that the [NAME_32] believed that the application was a “front” for another person and that [NAME_17] had attempted to mislead the [NAME_32]. When [NAME_22] granted the company’s application to nominate [NAME_17] as transport manager, [NAME_22] highlighted the “checks and balances” in place when the director/operator and transport manager roles were vested in different people in that if one is not fulfilling their duties honestly and effectively, the other is expected to take action. The inference [NAME_22] drew from this background was that [NAME_17] should have been in no doubt what “fronting” for someone else was and how seriously it was viewed by TCs. She should also have been on high alert to spot anything that indicated that [NAME_52] was a sham director (a finding which is not disputed); b) The context of his decision was that all the documentation and evidence showed that there were two people involved in the management of the company between 1st November 2019 and 9th February 2021 – [NAME_17] and [NAME_52]. The company was not large and did not have tiers of

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9 management. [NAME_17] gave evidence that she undertook all of the administration. In her words, “invoices and everything”. She gave evidence that she helped [NAME_52] in his role as director, met with him every week to discuss compliance and where necessary asked him to meet with drivers as part of the disciplinary process. [NAME_17] implied that [NAME_52] carried out his duties as if he was a bona fide director overseeing compliance in conjunction with her. If this were true it would mean that [NAME_52] was able to hide the fact that he was a sham director from [NAME_17] for fifteen months. [NAME_22]’s assessment of [NAME_52] when he gave evidence was that he had neither the guile nor intellectual ability to do so. He accepted that he was paid a wage each week as a driver and [NAME_22] did not believe that he would have exerted the extra effort to undertake the additional duties of a director as outlined. In assessing whether the evidence of [NAME_17] was credible in this regard, [NAME_22] took into account the findings made by the [NAME_32] in 2017. c) [NAME_22] repeated his findings with regard to [NAME_52]’s evidence about the purchase of the company; his wages and the payments to [NAME_63] which required explanation. Those financial transactions pointed to [NAME_52] being a sham director and [NAME_17] was the person who, on her own evidence, undertook the administration. There was no one else. In addition, she was employed by [NAME_63] for one day a week and was the company secretary between 23rd June to 8th December 2020. She would inevitably have seen the questionable transactions which would have triggered questions and concerns in relation to [NAME_52]’s directorship and his role. No evidence was presented to show she did anything in this regard. 30. [NAME_22] concluded that [NAME_17] knew that [NAME_52] was a sham director and either colluded with others or alternatively, knowing of it, did nothing as a result. Even at the date of the first hearing, [NAME_17] gave evidence intended to show that [NAME_52] was a bona fide director despite all the factors pointing to the contrary. At whatever stage she knew the true picture, she should have resigned as transport manager and distanced herself from the company. [NAME_22] referred to paragraph 52 of the Senior [NAME_15]’s Statutory Document 1 and the Upper Tribunal’s case of 2012/071 [COMPANY_26] in which it was determined that once a [NAME_32] is satisfied that there is evidence establishing that fronting has taken place, he or she is entitled to take a serious view of such conduct and that those concerned must understand that such a finding put their good repute in jeopardy. The reason is that fronting involves deception. 31. [NAME_22] took account of the fact that [NAME_17] had failed in her own application for a licence on the ground that she was a front for another person and could not be trusted. [NAME_22] had given her a chance to earn that trust by allowing her to be a transport manager and she had breached that trust. The fact that she was the transport manager rather than the director did not limit her culpability or allow her to distance herself from the illegality. [NAME_22] had stated in his original decision that [NAME_17]’s performance in relation to compliance was acceptable, on reflection he believed that he had been generous. In any event, the finding in relation to fronting was so serious that it outweighed any positive findings in relation to general compliance.

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10 32. [NAME_22] concluded that it was a proportionate response to his findings that [NAME_17] lost her good repute as a transport manager under paragraph 16(1) of Schedule 3 of the 1995 Act.

33. Turning to disqualification, [NAME_22] was persuaded that the order should be varied to a period of two years starting from the date of his decision. He had taken into account the period that [NAME_17] had already served prior to the Upper Tribunal decision but had offset this against the fact that she had attended a previous public inquiry which was not the case for [NAME_52]. The overall term was therefore two years nine months.

34. The Appeal By a Notice of Appeal dated 6th December 2021, [NAME_17] appealed. There were three grounds of appeal:

1. [NAME_22]’s decision to remove [NAME_17]’s good repute and to disqualify her for a period of two years commencing from the date of the decision is inconsistent with [NAME_22]’s earlier decision, since overturned by the Upper Tribunal, that no new evidence had emerged since the making of the original decision. [NAME_18] did not provide the clarification needed for this ground to make sense and it was not pursued at the hearing;

2. The decision to order the commencement of the period of disqualification to commence on 11 November 2021 is reasonable and irrational (we take that to mean “unreasonable and irrational”) in that: a. [NAME_22] ought to have ordered the commencement date to be that of the original disqualification; b. By ordering that the period of disqualification commence on 11th November 2021, [NAME_22] effectively imposed a period of two years nine months rather than the two years expressly imposed; c. The effect of the order for disqualification was to penalise [NAME_17] in respect of her successful appeal against the earlier order for disqualification;

3. When considering the disqualification imposed against [NAME_52] (two years), the decision in respect of [NAME_17] was disproportionate.

35. Prior to the hearing of this appeal, [NAME_18] filed a skeleton argument for which we were grateful although it did contain new grounds of appeal which we set out below. We gave [NAME_18] permission to rely upon them.

36. His first point concerned the inferences drawn from the primary facts found by [NAME_22] concerning the background to the public inquiry. [NAME_22] had identified as primary facts that: i. [NAME_17] had attempted to mislead the [NAME_32] in 2017; and ii. That he had highlighted when granting [NAME_42]’ application to add [NAME_17] on its licence as transport manager, the “checks and balances” in place when the director/operator and transport manager roles were vested in different people in that if one was not fulfilling

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11 their duties honestly and effectively, the other is expected to take action. From these primary facts, [NAME_22] had then drawn the inference that [NAME_17] should have been in no doubt what “fronting” was and how seriously it was viewed by TCs and that she should have been on high alert to spot anything that indicated that [NAME_52] was a sham director (a finding which is undisputed). 37. [NAME_18] submitted that in coming to his determinations, [NAME_22] had failed to conduct any evaluative exercise and that in any event, the test for drawing inferences set out in [NAME_70] v [NAME_16] (supra) was not met. [NAME_18] took us to a passage in paragraph 44 of the judgment of Lord Clyde (Lord President of the Court of Sessions): “ .. It is plain – when the proof of a disputed fact is in question – that, if the evidence is so scanty and so poor as to give rise to nothing better than surmise or conjecture, the fact cannot be held to be proved in law. For on surmise or conjecture, more or less probable in itself, is neither better nor worse than any other, where proof is concerned. On the other hand, the evidence – little and poor though it be – may be sufficiently circumstantial to afford ground on which a reasonable judge or jury may make an inference of fact from the little that is established; and this inference may be enough to prove, or negative, the disputed fact”. In this instance, there was more than one inference to be drawn from the primary facts that [NAME_22] had found. [NAME_18] did not indicate what alternative inference could be drawn from [NAME_22] findings.

38. As for [NAME_22]’s findings of primary fact concerning context (set out in paragraphs 29 b) and c) above), he had failed to make an assessment of [NAME_17]’s ability or otherwise to see through a sham and his finding that [NAME_52] had neither the guile nor intellectual ability to deceive [NAME_17] was to make an unwarranted assumption concerning the intellectual ability of [NAME_17] to detect such a fraud. [NAME_18]’s skeleton argument reminded the Tribunal that [NAME_17] was Romanian with English as her second language. [NAME_18] submitted that if it was a sensible proposition that [NAME_17] was a “dupe”, then the inferences [NAME_22] drew did not “stand up” ([NAME_18] did not point to any particular aspect of the evidence which might support such a proposition). He further submitted that [NAME_22] concentrated on the background circumstances rather than the position as at the date of the public inquiry. If there was a guiding mind behind [NAME_52], then there was also a guiding mind behind [NAME_17]. [NAME_22] went too far in finding that there cannot be a sham company without the complicity of the transport manager. 39. [NAME_18]’s third point went to the proportionality of the order of disqualification of two years nine months. He submitted that it “smacked of “I am going to start again because you have appealed”..”. [NAME_18] submitted that [NAME_52] had been the greater offender in this fronting operation and if a disqualification order of two years was proportionate for him then it was wrong to find that an order equivalent to two years nine months was not too severe for [NAME_17].

[NAME_3] no: UA-2021-000465-T

12 [NAME_18] referred to paragraph 4 of the Tribunal case of T/2005/367 [NAME_27] in which HHJ Brodrick stated: “.. it is obviously unsatisfactory that the [NAME_15] did not give reasons for his orders of disqualification and in particular for the distinction made between the partners …” [NAME_18] submitted that the above quotation described the position that [NAME_17] had found herself in i.e. being treated differently and more harshly by [NAME_22] than the director, [NAME_52], without any explanation as to why her conduct warrants harsher treatment. The orders of disqualification should have been the same for [NAME_52] and [NAME_17].

Discussion 40. The regulatory system is based on trust and amongst other matters, TCs need to know who they are dealing with, that they are trustworthy and that they have not been excluded from the regulatory system by reason of adverse findings resulting in orders of revocation and/or disqualification. Fronting is intended to undermine those basic requirements and it strikes at the heart of the regulatory system. [NAME_22] was right to take a serious view of [NAME_17]’s conduct. 41. [NAME_18]’s first point about [NAME_22]’s findings with regard to the background to the public inquiry is misconceived. First of all, whilst [NAME_18] referred to [NAME_22] relying on the [NAME_32]’s finding in 2017 that [NAME_17] had attempted to mislead her (and having read the [NAME_32]’s judgment we would go further and find that [NAME_17] had lied to the [NAME_32] in a number of material respects) [NAME_18] failed to mention the [NAME_32]’s finding that [NAME_17]’s application in 2017 was a front for someone else. Whilst not named, it is obvious that the “someone else” was [NAME_37]. This too was referred to by [NAME_22]. It is unarguable that [NAME_22] failed to properly evaluate the evidence he relied upon and then failed to draw proper inferences. His conclusion that [NAME_17] should have been in no doubt what fronting meant and how seriously it was viewed and that as transport manager she should have been on high alert with regard to signs of fronting is plainly right.

42. As for [NAME_22]’s findings with regard to context, the facts found by [NAME_22] were irresistible. It was not suggested to [NAME_22] that [NAME_71] lacked the ability to see through a sham director and if it had been, then that would have given rise to questions about [NAME_17]’s ability and competence to be a transport manager. The fact that she is a Romanian with English as her second language was again, not a matter that was raised on behalf of [NAME_17] and from the contents of her witness statement and the transcript of the first public inquiry, it would appear she has no difficulty in understanding or communicating in English. The primary findings of fact were well made out and the inferences drawn from them are not open to criticism.

43. Turning then to the period of disqualification, [NAME_18]’s submission that [NAME_22] did not provide any reasons for the disparity between the order of two years for [NAME_52] and in effect, two years and nine months for [NAME_17] is incorrect. [NAME_22]’s stated reason was that [NAME_17] had come before a Tribunal in 2017 which was concerned with fronting and that her own

[NAME_3] no: UA-2021-000465-T

13 application on that occasion was found to be a front. [NAME_52] had not been before a [NAME_32] before. We are not satisfied that in the circumstances of [NAME_17]’s case that two years nine months is disproportionate or that she should have been treated in the same way as [NAME_52]. Transport managers are the “eyes and ears” of the TCs and in this case, [NAME_17] had not only attempted to obtain a licence in 2017 by lying and by acting as a front for someone else but she had, by being the nominated transport manager for [NAME_42] facilitated that fronting operation.

Conclusion 44. There is no merit in this appeal and in all the circumstances we are not satisfied that [NAME_22]’s decision was plainly wrong in any respect and neither the facts nor the law applicable in this case should impel the Tribunal to allow this appeal as per the test in Bradley Fold Travel & [NAME_29] v Secretary of State for Transport (2010) EWCA Civ.695. The appeal is dismissed.

Her Honour Judge Beech

Judge of the Upper Tribunal

15th August 2022