Upper Tribunal Upholds Licence Revocation and Disqualification Order

OUTCOME: Dismissed

[2016] UKUT 0539 (AAC)

Appeal No. T/2016/27

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER (Traffic Commissioner Appeals)

ON APPEAL from the DECISION of the SCOTTISH TRAFFIC

COMMISSIONER ([NAME_1])

Dated: 19 May 2016

Before:

Mr E. Mitchell Judge of the Upper Tribunal

[NAME_3] Member of the Upper Tribunal

[NAME_4] Member of the Upper Tribunal

Appellant: [redacted]

Heard at: George House, [ADDRESS], Edinburgh

Date of hearing: 9 September 2016

Attendances: Mr T [NAME_6], solicitor, of [NAME_7]

Date of decision: 1 December 2016

DECISION OF THE UPPER TRIBUNAL

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IT IS HEREBY ORDERED that this appeal is dismissed.

SUBJECT MATTER:-

Disqualification orders and directions under section 28 of the Transport Act 1985

CASES REFERRED TO:-

CG Cargo & Sandhu [2014] UKUT 436 (AAC)

REASONS FOR DECISION

Background

1. In 2003, [NAME_8] was granted a standard international public service vehicle

(PSV) operator’s licence. The operator’s licence specified [NAME_9] as

transport manager for the PSV operation.

2. By notification dated 1 July 2014 (although receipt-stamped 7 August 2014), [NAME_9] notified the Office of the Traffic Commissioner (OTC) that she wished to

be removed as transport manager from the licence.

3. [NAME_9]’s resignation was preceded by a Driver & Vehicle Standards

Agency (DVSA) investigation which led DVSA to conclude there had been a number

of breaches of drivers hours rules by the operation’s drivers.

4. In November 2015, [NAME_8] informed the OTC that he wished to nominate a

[NAME_10] as his transport manager. However, in [NAME_11] subsequent

public inquiry evidence he said that [NAME_12] later decided that he did not want to be

the operation’s transport manager.

5. The Scottish Traffic Commissioner (hereafter “Commissioner”) conducted two

public inquiries on 3 December 2015 and 6 January 2016. At the second inquiry, [NAME_8] produced new evidence as to his financial standing (pp. 971 to 1067 of the

OTC file).

6. The Traffic Commissioner was dealing with a complex multi-faceted case. Not

only did it concern [NAME_11] operator’s licence, the Commissioner also had to

address the professional competence and good repute of [NAME_9] as a transport

manager, whether to revoke an operator’s licence granted to another [NAME_13] (a

partnership trading as [NAME_14]) and driver conduct matters for four PSV

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drivers. We should note that the Commissioner decided that [NAME_9] had lost

neither her repute nor her professional competence and decided not to revoke [NAME_14]’s operator’s licence.

7. [NAME_8] does not dispute the Traffic Commissioner’s findings of fact

concerning events in the period between [NAME_9]’s resignation and the

Commissioners’ public inquiries.

8. The Commissioner’s findings included:

(a) On 23 August 2014, [NAME_8] wrote to the OTC stating that he was in the

process of hiring a new transport manager and would produce further

information in four weeks. In the meantime, the previous transport manager

([NAME_9]) was “coming in weekly to check tachographs and

operations”;

(b) During her tenure as transport manager, [NAME_9] worked part-time

carrying out her duties at weekends;

(c) “latterly the expansion of the business to 5 vehicles, with [NAME_9]’s

full-time employment prevented her from engaging with the drivers and an

absence of robust written procedures resulted in vulnerability in the

effectiveness of the transport manager”;

(d) [NAME_9] “detected infringements on the [tachograph] charts

and…alerted [NAME_8] to the deficiencies in relation to feeder journeys

and neglect of the mode switch. She fully trusted [NAME_8] to raise these

matters with the drivers and he assured her that he would do so. Her trust and

confidence in [NAME_8] to tackle the adverse matters which she drew to

his attention in her role as transport manager was misplaced and breached by

him. Whilst he may from time to time have spoken to drivers, he did not

implement robust measures to ensure that he scheduled duties compliantly and

that a true record of drivers hours was kept”;

(e) [NAME_9] had only wanted to act as transport manager for a temporary

period to help him establish his business and she told [NAME_8] “years

ago” that he needed to make alternative arrangements;

(f) [NAME_8] presented as a “nice guy, a genial chap…who wanted to be on

friendly terms and would not present as being resistant to advice or authority”;

(g) [NAME_8] had complied with Traffic Examiner requests for information

and to see him. He had been co-operative;

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(h) “[NAME_8] would have presented himself to [NAME_9] as one who

was listening to her, giving her the assurances she needed to hear, being at the

operating centre when she needed him to be there and so on. I am sure he

would have disliked any confrontation with drivers”;

(i) “[NAME_9] would not have known the extent of non-compliance [with

drivers’ hours and tachograph rules] because she trusted [NAME_8]

implicitly. He was the operator and ultimately he was responsible for his own

licence and speaking to his own drivers. He knew that [NAME_9] did not

have the availability to see the drivers and that the onus was on him to tackle

the infringing behaviour which she had drawn to his attention”;

(j) [NAME_8] “breached the licence undertakings in relation to the drivers

hours rules and tachograph regulations”;

(k) [NAME_8] “has not had in place proper systems to ensure that journeys

were properly recorded; that drivers were taking breaks and rest when required

to do so on all occasions; that he allowed prevalent failure to use the mode

switch both in his own driving and that of his employees”;

(l) The Commissioner found it “incredulous” that [NAME_8] had not himself

read a tachograph analysis report of his operations produced by [COMPANY_17], a transport consultant, and supplied to him prior to the public inquiry

held on 3 December 2015;

(m) The Commissioner had doubts as to whether [NAME_8] had the required

financial standing;

(n) Of itself, the absence of a transport manager called for revocation of [NAME_11] licence because, without a transport manager, [NAME_11]

operation could not meet the requirement for professional competence. In

addition, the Commissioner found that [NAME_8] had lost his good repute

due to his own actions or inactions, and could not be trusted with an operator’s

licence, because he failed to follow the advice of his former transport manager

and a DVSA Traffic Examiner;

(o) [NAME_8] tried to rely on his “genial nature” to circumvent attempts made

to ensure his operation complied with PSV regulatory rules and he had never

paid enough attention to the rules;

(p) [NAME_11] attempts to rectify matters were “last minute” and “too little,

too late”;

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(q) There were no documented roadworthiness failings for [NAME_11]

operation;

9. After the final public inquiry, but before the Commissioner had made her decisions,

[NAME_8] notified the OTC on 28 April 2016 that he wished to vary his

operator’s licence to add a new transport manager. The proposed transport manager

was [NAME_15] who resided in St Leonards-on-Sea. There is no evidence in the OTC

file that the Commissioner was expressly requested to take this matter into account in

making her decision. In fact, the Commissioner, in refusing [NAME_11]

subsequent application for a stay of her decision said she was unaware of this

application when she made her decision.

10. On 19 May 2016 the Commissioner made the following decisions:

(a) she revoked [NAME_11] operator’s licence with effect from 23.59 on 31

May 2016;

(b) under section 28(1) of the Transport Act 1985, she made an order

disqualifying [NAME_8] from holding or obtaining a [NAME_13]’s

licence together with a direction under section 28(4) that the traffic

commissioners’ powers in section 17(2) of the 1981 Act would be exercisable

in relation to a PSV licence held by a company or partnership with which [NAME_8] was involved as described in section 28(4). The order and direction

had effect for two years from 23.59 on 31 May 2016.

11. On 26 May 2016, [NAME_8] applied for the Traffic Commissioners’ decisions

to be stayed pending his appeal to the Upper Tribunal. The Scottish Traffic

Commissioner was on leave and could not deal with the application herself. In her

absence, another Traffic Commissioner made a decision that the Scottish Traffic

Commissioner’s decisions were not to take effect until 7 June 2016 by which time she

would be able to consider the stay application herself.

12. On 1 June 2016, the Scottish Traffic Commissioner refused [NAME_11]

application for a stay. By this time, she had been made aware of the application for

[NAME_15] to be specified as transport manager on [NAME_11] licence. The

Commissioner’s stay refusal decision records that, in her view, the proposal for [NAME_15] to be the designated transport manager did not require her to re-open the public

inquiry or change her decision.

13. [NAME_8] made a renewed application for a stay to the Upper Tribunal. This

was refused by Upper Tribunal Judge Levenson on 9 June 2016.

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The public inquiries

14. In the light of [NAME_11] grounds of appeal, we have analysed the inquiry

transcripts to see what they reveal about [NAME_11] plan to nominate a new

transport manager and to enter into new contracts.

The inquiry hearing on 3 December 2015

15. At this hearing:

- p.783H of the OTC file – the Commissioner was informed a transport manager

application had been made but the Commissioner was “astonished that he [the

proposed manager] has not been brought as a witness”;

- p.785B – the Commissioner, speaking to a solicitor appearing for [NAME_8], said it was “extraordinary” that his preparation for the inquiry did

not include presenting as a witness his proposed transport manager

- p.785H – the Commissioner notes she was dealing with an operator with a

“very precarious licence”;

- p.799H – [NAME_11] solicitor requested an adjournment because the

Commissioner’s observations caused him a “degree of concern”. From the

Commissioner’s final decision, it is clear that the reason for the adjournment

was a potential conflict of interest on the part of the solicitor who appeared for

[NAME_8] at the inquiry.

16. The Commissioner agreed to the request for an adjournment.

The inquiry hearing on 6 January 2016

17. At this hearing, [NAME_8] was represented by [NAME_16] (who represented

him before the Upper Tribunal):

- p.873G – [NAME_8] accepted in evidence that he had not had a transport

manager since [NAME_9] departed in 2014;

- p.875H – in response to the Commissioner’s questions, [NAME_8]

accepted it was a “serious matter” for an operator with a standard licence to

operate without a transport manager;

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- p.877A – [NAME_8] informed the Commissioner that, following [NAME_9]’s departure, he placed advertisements for a new manager without

success and so he thought “well, I’ll just carry on”;

- p.877F – [NAME_8] said he can “only wholeheartedly apologise” for

carrying on his operation without a transport manager…I’ve been sticking my

head in the sand”;

- p.879B – [NAME_8] informed the Commissioner that [NAME_12], his

proposed transport manager, was “quite a quiet man” who was “a bit scared to

come up to the PI”. [NAME_8] added that “once I mentioned the public

inquiry to him, he declined”;

- p.879B – [NAME_8] said an organisation called the [COMPANY_17] had

tried to locate a transport manager for him but candidates in England were not

willing to travel to Scotland;

- p.879F – more recently, an organisation called [NAME_18] located a potential

transport manager who lived in Glasgow and he would be willing to attend the

inquiry;

- p.881C – despite the above evidence, [NAME_8] told the Commissioner he

did not know the name of the potential transport manager identified by [NAME_18]

and, furthermore, he had withdrawn his interest. [NAME_18] continued to search for

a transport manager;

- p.883A – [NAME_8] said he felt let down by the organisations he had paid

to try and find a transport manager for him;

- p.883D – [NAME_8] informed the Commissioner that, if his licence were

revoked, the business would be finished, staff laid off and vehicles repossessed;

- p.925F – in closing submissions, [NAME_11] solicitor said “[NAME_11] licence is in extreme danger given what you have heard”;

18. Given the way in which this appeal has developed, we set out in full the

Commissioner’s reasons for making a disqualification order:

“57. Having decided to revoke this licence I now apply myself to the question

of disqualification. I am of the view that there has to be such and I have come

to the view, having regard to the case law, that this is far from a case in which

I have to impose a lengthy or indefinite period. It is far from being the worst

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case I have seen. There was no evidence of fraud or manipulations through

falsifications or such like. This was the first time at Public Inquiry and as [NAME_16] pointed out there was not a history of roadworthiness failings.

However there was the knowing pattern of not having professional

competence on the licence and the neglect of making sure drivers, including

him, were compliant which continues given the infringement reports lodged at

the inquiry. He cannot come straight back in which could be the case if I did

not disqualify, for such would offend fair competition and further would not

set down the necessary regulatory marker which is required to secure the

purposes of the regulatory regime. A period of two years will reflect the latter

and also the period during which he chose to operate without transport

manager arrangements.”

Legal framework

19. Section 12(1) of the Public Passenger Vehicles Act 1981 (“the 1981 Act”)

prevents a public service vehicle from being used on a road for carrying passengers

for hire or reward “except under a PSV operators' licence granted in accordance with

the following provisions of this Part of this Act”.

20. The requirements for granting a standard PSV operators’ licence are contained in

sections 14ZA and 14ZC of the 1981 Act (section 14).

21. The requirements in section 14ZA include that a traffic commissioner is satisfied:

(a) an applicant for a licence is of good repute (section 14ZA(2)((b)). Under

Schedule 3(1) determinations as to good repute must have regard to all the

relevant evidence including, in particular, information a commissioner has as

to a person’s previous conduct in operating vehicles in the course of a

business;

(b) an applicant is professionally competent (section 14ZA(2)(d)). Questions as to

professional competence are to be determined in accordance with Schedule

3(4), (5) and (6) to the 1981 Act. Schedule 3(4) provides that, where an

individual is not himself professionally competent, the requirement for

professional competence is satisfied “if, and so long as, he has a transport

manager of his road passenger transport business who is of good repute and

professionally competent”;

(c) an applicant has designated a transport manager in accordance with Article 4

of the 2009 Regulation (Regulation (EC) no 1071/2009) who is of good repute

(as determined in accordance with Schedule 3(1) to the Act) and

professionally competent (as determined in accordance with Schedule 3(6) to

the Act) (section 14ZA(3)(a) and (b)).

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22. The requirement for professional competence is a qualifications-based

requirement. Schedule 3(6) to the 1981 Act provides:

“An individual shall be regarded as professionally competent for the purpose

of Part II of this Act if, and only if,—

(a)he has demonstrated that he possesses the requisite skills by passing a

written examination organised by an approved body and is the holder of a

certificate to that effect issued by that body; or

(b) he is the holder of any other certificate of competence, diploma or other

qualification recognised for the purposes of this paragraph by the Secretary of

State.”

23. [NAME_8] did not claim personally to meet the qualifications-based

requirement for professional competence, the only way in which he could meet the

requirement for professional competence was by having a transport manager who was

professionally competent and of good repute.

24. The requirements in section 14ZC include that a traffic commissioner is satisfied

there will be adequate arrangements for securing compliance with the requirements of

the law relating to the driving and operation of the vehicles proposed to be used under

the licence.

25. On issuing a standard licence, section 16A of the 1981 Act requires a traffic

commissioner to attach certain conditions, including a condition requiring the licenceholder

to inform a traffic commissioner of:

(a) any event which could affect the fulfilment by the licence-holder of any of the

requirements of section 14ZA(2) of this Act, and to do so within 28 days of

the event; and

(b) any event which could affect the fulfilment by a transport manager of the

requirements mentioned in section 14ZA(3)(a) and (b) of the 1981 Act, and to

do so within 28 days of the event coming to the licence-holder's knowledge.

26. A failure to comply with a section 16A condition is a criminal offence (section

16A(3)) and is also a ground on which a traffic commissioner may revoke an

operator’s licence.

27. Section 17(1) of the 1981 Act requires a traffic commissioner to revoke an

operator’s standard licence in certain cases, including where;

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(a) the licence-holder no longer satisfies the requirements of section 14ZA(2),

including, that is, the requirement for good repute and professional

competence;

(b) the designated transport manager no longer satisfies the requirements of

section 14ZA(3).

28. Section 17(2) and (3) of the 1981 Act permits a traffic commissioner to revoke an

operator’s licence in certain cases, including where there has been a contravention of

any condition attached to a licence and where, since the licence was granted, there has

been a material change of circumstances.

29. Section 50 confers a right of appeal to the Upper Tribunal against certain traffic

commissioner decisions including a decision to revoke a licence and a decision to

disqualify a [NAME_13] by order or direction under section 28 of the Transport Act

1985.

30. Section 84(1) of the 1981 Act provides:

“It is hereby declared that nothing in this Act is to be treated as conferring on

the holder of a licence granted thererunder any right to the continuance of any

benefits arising from, or from a licence granted under, this Act, or from any

conditions attached to any such licence.”

31. Section 28(1) of the Transport Act 1985 gives a traffic commissioner power, upon

revoking an operator’s licence, to order the former holder of the licence “to be

disqualified, indefinitely or for such period as he thinks fit, from holding or obtaining

a [NAME_13]'s licence”.

32. Alongside an order under section 28(1) of the 1985 Act, a traffic commissioner

may also under section 28(4) direct that, if a disqualified person is a director of, or

holds a controlling interest, in a company which holds a PSV licence or operates a

PSV vehicle in partnership with a person who holds a PSV licence, that the powers

under section 17(2) of the 1981 Act (revocation and suspension of operators’ licences)

are exercisable in relation to that licence.

33. Section 28(6A) gives a traffic commissioner power to cancel a disqualification

order and any direction given under section 28(4).

Grounds of appeal

34. [NAME_8] relied on the following written grounds in his appeal to the Upper

Tribunal:

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1. The Traffic Commissioner erred in fact and law in finding that [NAME_8] had been involved in “a knowing pattern of not having professional

competence on the Operator licence”. The Commissioner’s error was her

failure to take into account that a new transport manager had been nominated

before she gave her decision.

2. The Traffic Commissioner erred in fact and law in applying the [NAME_21] without taking into account the nomination of a new transport

manager.

3. During the period starting with the second (and final) public inquiry – 6

January 2016 - and the date of the Traffic Commissioner’s decision – 16 May

2016 – DVSA Vehicle and Traffic Examiner inspections concluded “the

Operator’s vehicles and records were found to have been in good order and

issue free”. In the light of those findings, the Commissioner’s decision to

revoke [NAME_11] licence was disproportionate.

4. During the period referred to in ground 3, in reliance on the positive DVSA

inspections [NAME_8] entered into new contractual obligations. His

obligations under those contracts persisted after the date on which his licence

was revoked. As a result, the decision to revoke was disproportionate.

5. The Traffic Commissioner’s decision to revoke [NAME_11] licence was

wrong because none of the features which led to the decision in [COMPANY_19], which the Commissioner relied on in her decision, were present in this

case.

35. At the hearing before the Upper Tribunal, [NAME_11] solicitor informed the

Tribunal that he no longer challenged the Commissioner’s decision to revoke his

licence. He only wished to challenge the disqualification order, in particular whether

the period of disqualification was disproportionate. In support of his case that the 2

year period of disqualification was disproportionate, [NAME_8] argued:

1. the delay of some four months between the conclusion of the second public

inquiry and the Commissioner’s decision was too long and, as [NAME_16]’s

skeleton argument put it, “impacts upon the credibility of the regulatory

regime”;

2. as time elapses following a public inquiry without a decision having been

given, the operator could ‘perhaps be forgiven’ for taking the view that

revocation of a licence was not inevitable. Further, the PSV industry itself

would expect swift and severe action when that was called for;

3. according to the skeleton argument, the Commissioner seemed to concede

during the 6 January 2016 inquiry “that had matters been otherwise she may

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have been prepared to take into account the nomination of the Transport

Manager made after the conclusion of the evidence” ([NAME_11] solicitor

relied on p.31 of the transcript / p. 887 of the OTC file). Given this

‘concession’ and the evidence as a whole, the disqualification order and in

particular its length were disproportionate.

36. At the hearing, we asked [NAME_16] what order he submitted the Upper

Tribunal should make in the event that it found a disqualification order was justified

but that the period of disqualification was disproportionate. He had no submissions to

make and we informed him that, if his client wished to makes submissions, these were

to be received by the Upper Tribunal within two weeks. To date, no such submissions

have been received.

Conclusions

37. We do not accept any of the arguments put forward by [NAME_16] on behalf of

[NAME_8].

38. There is no justification for the argument that the period of time taken to issue a

decision permits an operator to assume a licence will not be revoked. That is correct

as a matter of principle and, moreover, in this case [NAME_8] conceded at the

public inquiry that his licence was at risk.

39. In any event, we do not accept that the time taken by the Commissioner to

produce her decision in this case was unreasonable. As we noted above, the public

inquiries were concerned with a number of regulatory matters and, for [NAME_11] case alone, the OTC file contained over 1,000 pages of evidence

including some 200 pages of financial evidence that were not supplied until the day of

the second inquiry.

40. We had difficulty understanding the ground of appeal based partly on a supposed

concession by the Traffic Commissioner. The portion of the transcript referred to by

[NAME_16] (p.887 onwards of the OTC file) does not contain any concession of a

type referred to by [NAME_16].

41. We do not accept that the Commissioner was plainly wrong to fail to take into

account the April 2016 nomination of a new transport manager. The Commissioner

was not in fact aware of this nomination when she made her decision. It if is argued

that the OTC administration was at fault for failing to draw the nomination to the

Commissioner’s attention, then we would disagree. [NAME_8] could and should

have taken steps to ensure this was done. But, in any event, we fail to see how a

nomination of a new transport manager residing at the opposite end of the country

made four months after the conclusion of the inquiry could have made a difference in

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a case where an operator, at the date of the inquiry, had already been without a

transport manager for some eighteen months.

42. We also do not accept that the post-inquiry DVSA investigations undermine the

Commissioner’s decision. These have not been proved in evidence but, even if we

accept [NAME_11] account, they make no difference. The Commissioner was

well aware that the roadworthiness of [NAME_11] operation was not in issue and

so further confirmation of that could not have made any difference.

43. [NAME_11] decision to enter into new contractual obligations, despite his

concession at the inquiry that his licence was precarious, carries no weight in his

favour. There was no justification at all for him assuming that his licence would not

be revoked. All he was entitled to do was proceed on the basis that his licence might

be revoked.

44. In our view, the Commissioner cannot be said to have been plainly wrong to

impose a two year disqualification order. She took a very dim view of an operator

who did not himself have professional competence who thought he could stop seeking

a transport manager – who would supply that professional competence – once his

initial attempts had come to nought and who had previously chosen to ignore the

advice of a transport manager. The Commissioner was not plainly wrong to place

significant weight on these features of the case. The requirement for a professionally

competent transport manager is an integral part of how the regulatory scheme seeks to

ensure safe public transport operations.

45. We were perplexed by [NAME_16]’s reliance on the CG Cargo decision ([2014]

UKUT 436 (AAC)). [NAME_16] asserted that this was referred to in the Traffic

Commissioner’s decision but it was not. Moreover, in CG Cargo the Upper Tribunal

referred with approval to the Senior Traffic Commissioner’s statutory guidance that:

“Traffic Commissioners may wish to use as a starting point for a first public

inquiry consideration of a disqualification period of between 1 and 3 years, but

serious cases, where, for example, the operator deliberately puts life at risk and/or

knowingly operates unsafe vehicles or allows drivers to falsify records, may merit

disqualification of between 5 to 10 years or in certain cases for an indefinite

period. It is always open to a disqualified person to make application for removal

or reduction of the order.”

46. We do not see how it can properly be argued that the decision in the present case was

contrary to the general principles to be found in CG Cargo.

47. For the above reasons, [NAME_11] appeal against the Commissioner’s

disqualification order and direction is dismissed.

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Mr E. Mitchell, Judge of the Upper Tribunal,

2 December 2016

(signed on original)