Upper Tribunal Upholds Loss of Good Repute and Five-Year Disqualification for Transport Manager

OUTCOME: Dismissed

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UKUT 0284 (AAC) Appeal No. T/2018/29 IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER [NAME_1]

IN AN APPEAL FROM THE DECISION OF [NAME_1], [NAME_1] dated 10 May 2018

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

Appellant:

[redacted]

In attendance: [NAME_3] at: Field House, 15-25 Bream’s [ADDRESS], [POSTCODE] Date of hearing: 21 August 2018 Date of decision: 28 August 2018

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeal be DISMISSED

SUBJECT MATTER:- Good repute of transport manager. Whether finding of loss of good repute as Transport Manager was proportionate and whether disqualification for period of five years was proportionate.

CASES REFERRED TO:- [COMPANY_4] & [NAME_4] v Secretary of State for Transport (2010) EWCA Civ. 695.

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REASONS FOR DECISION

1. This is an appeal from the decision of the [NAME_1] (“the [NAME_1]”) made on 10 May 2018 when he found that the Appellant (“[NAME_3]”) had lost his good repute as a transport manager and ordered that he be disqualified from acting as such for a period of five years under paragraphs 1 and 16(2) of Schedule 3 of the Goods Vehicles (Licensing of Operators) Act 1995 (“the 1995 Act”).

The Background

2. In July 2013, [COMPANY_5] (“[NAME_5]”) was granted a standard international goods vehicle operator’s licence for 21 vehicles and 32 trailers. At the time when the DVSA investigation commenced, there were 12 vehicles in possession and the sole director of the company was [NAME_6] (“[NAME_6]”). [NAME_3] was the transport manager.

3. [NAME_5] entered creditors’ voluntary liquidation on 20 October 2016. On 29 March 2017, the [NAME_7] (“the [NAME_7]”) wrote to [NAME_5]’s liquidators asking if they wished to apply to continue operating under the licence under Regulation 31 of the Goods Vehicles (Licensing of Operators) Regulations 1995. The letter informed the liquidators that failure to respond would lead to the licence being revoked. No response was received although the licence remained active with vehicles being regularly added to and taken off the list of vehicles in possession.

4. The liquidators were written to again on 30 November 2017 and were advised that unless they requested a public inquiry by 21 December 2017, the licence would be revoked. No response was received; the licence was not revoked.

5. In the interim, on 18 October 2017, an “S” marked prohibition was issued to a semi-trailer being operated by [NAME_5] for an insecure load, an inoperative trailer parking brake and low service brake efficiency. The prohibition was “S” marked because the insecurity of the load and the defect in the parking brake should have been identified during a daily driver walk round check, which had not been undertaken by the driver.

6. On 22 November 2017, [NAME_8] (“TE”) [NAME_9] stopped a vehicle ([ID]) which was being driven by [NAME_10]. The vehicle was displaying an operator’s licence disc issued to [NAME_5]. [NAME_10] stated that he had been employed by [COMPANY_11] (“[NAME_11]”) for about eighteen months and that he had not received any training in drivers’ hours and records from [NAME_11]. Investigations revealed that the sole director of [NAME_11] was [NAME_6] and that the company did not hold an operator’s licence. An examination of [NAME_10]’s tachographs revealed that the operator was not collecting [NAME_10]’s tachographs from him within the 42 day deadline and that [NAME_10] had committed numerous centre field and mode switch offences as well as a number of break offences.

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7. On 9 January 2018, [NAME_12] and [NAME_13] made an unannounced visit to the operating centre of [NAME_5]. [NAME_12] spoke to [NAME_14] (father of [NAME_3]) who stated that [NAME_5] no longer existed having been acquired by [NAME_11] about two years previously although the [NAME_5] name had been retained for goodwill purposes. [NAME_11] and [NAME_6] were based in Essex. [NAME_13] conducted a maintenance investigation which was marked as unsatisfactory because of the “S” marked prohibition, a roadside prohibition rate for trailers of 50%, an annual final test failure rate for vehicles of 15% and ad hoc use of the drivers’ defect reporting system.

8. On 23 January 2018, [NAME_3] attended an appointment with [NAME_13] as [NAME_5]’s transport manager. He stated that following the “S” marked prohibition, the driver had been dismissed. [NAME_14] was his “eyes and ears on the ground” and he passed all relevant information to [NAME_3]. His father, who was paid through [COMPANY_15] (one of [NAME_3] other business interests), was also responsible for MOT testing. He himself was paid by [NAME_11] as a self- employed transport manager. [NAME_3] followed up the meeting with a detailed letter responding to [NAME_13]’ maintenance investigation findings. [NAME_3] gave assurances in relation to maintenance and systems, giving the clear impression that he was fully in charge of the transport operation. The letter concluded:

“We’re committed and dedicated to ensure our fleet of vehicles are maintained to the best standard possible, and not just a minimum standard, and we will continue to strive to never send a vehicle out that would compromise road safety in any way at all. Problems do occur from time to time, however I can assure you we will do everything we can to keep improving our systems and to minimise wherever possible human errors that are sometimes the cause of failures and prohibitions. We will also give you our commitment that we will continue to invest in our fleet which will help also to improve our OCRS score overall ..”

The letter was signed by [NAME_3] as “[COMPANY_5] part of the [COMPANY_11]”.

9. [NAME_3] also attended an interview with [NAME_12] on 25 February 2018 and at the same time, spoke with [NAME_16]. He stated that he had sold [NAME_5] to [NAME_6] in December 2015 and that as part of the deal, he was required to remain the nominated transport manager for [NAME_5] for four or five years. As he was also a director of two other companies, his father was his “eyes and ears” on the ground at [NAME_5]. [NAME_3] had no responsibility for checking tachographs or discipling drivers, such duties being the responsibility of [NAME_17], the office manager. [NAME_3] was not aware that [NAME_5] had gone into liquidation. He was paid £1,000 per week to remain as transport manager but was unsure as to whether he invoiced [NAME_5] or [NAME_11]. He did not know [NAME_10] and denied that the company employed him.

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10. [NAME_3] was asked to provide a copy of [NAME_5]’s vehicle insurance. He produced an insurance certificate in the name of “[COMPANY_11] trading as [NAME_5]”.

11. Having concluded his investigation, [NAME_16] had concerns that [NAME_3] did not have continuous and effective control of the transport operation due to [NAME_3] working remotely; he was unsure as to who he invoiced for his services; he was the director of [COMPANY_15] which hired “exotic cars” and a director of [COMPANY_18] which organised [ADDRESS] yet the vehicle authorisation on the operator’s licence required a full time transport manager; he was not responsible for disciplining drivers; [NAME_10]’s tachographs had not been collected from him; [NAME_3] denied any knowledge of [NAME_10]; he continued to allow vehicles to be operated on [NAME_5]’s operator’s licence when the tachograph analysis that was done was in the name of [NAME_11] and the insurance was in the name of [NAME_11].

12. The matter was referred to the [NAME_1]. He determined that as [NAME_5] had been in liquidation for more than a year and that as a consequence, could not show financial standing, the operator’s licence of [NAME_5] should be suspended with immediate effect under Article 13.3 of Regulation EC 1071/2009, pending a public inquiry. The decision was communicated to [NAME_6] and the liquidators on 13 March 2018. On 14 March 2018, [NAME_6] requested that the suspension be lifted as it would cause severe hardship to [NAME_11], stating that he could arrange a cross-company guarantee as evidence of financial standing. On 16 March 2018, [NAME_6] sent another email informing the [NAME_1] that [NAME_11] owned [NAME_5] and the two companies had always operated as one and the same company. However, a check of Companies House records revealed that it was not [NAME_11] but [NAME_6] who was the sole shareholder in [NAME_5].

13. By call up letters dated 4 April 2018, [NAME_5] and [NAME_3] were called to a public inquiry under the provisions of ss.26 and 27 of the 1995 Act, the hearing being listed for 9 May 2018. [NAME_10] was called to a parallel driver conduct hearing.

14. On 7 May 2018, [NAME_3] emailed the OTC stating that he would not be attending the hearing as “I am no longer involved with either [NAME_5] or [NAME_11] in any capacity”.. He had sold [NAME_5] to [NAME_6] in December 2015 and ceased to act as transport manager in December 2016 although he accepted that as his name remained on the licence, he remained the nominated transport manager “technically” when in early 2018 he was interviewed by the DVSA examiners. He described his situation as “awkward” as he was not aware that he had continued on the licence (he did not explain why he had not notified the [NAME_1] of his resignation or why he had, in January 2018, given the DVSA examiners the impression that he was still acting as transport manager or why he had signed a letter to [NAME_13] as “transport manager”.

15. On 8 May 2018, [NAME_6] emailed the OTC stating that he would not be attending the public inquiry. The suspension of the licence had had a severe

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effect upon his business and it was closing down that day. He further stated that [NAME_3] had not had any involvement with the business since December 2016. Owing to a period of ill-health, [NAME_6] had failed to remove [NAME_3] as transport manager from the licence. As the [NAME_1] observed in his written decision, [NAME_6] did not explain why he had also failed to nominate a new transport manager in [NAME_3]’ place.

16. [NAME_10] did attend the public inquiry. He told the [NAME_1] that no one from [NAME_11] had ever asked him for his tachographs. After a week “tramping”, he would return to the operating centre to find the office closed. The drivers were expected to deposit their tachographs and paperwork in a bin outside the office which was open to the elements. He had never been warned or spoken to about drivers’ hours or records infringements, he had last seen [NAME_3] approximately eighteen months before the hearing and he had never heard of [NAME_6]. He had continued to drive for [NAME_11] on a daily basis up to and including 8 May 2018 when the business closed. He (and another [NAME_11] driver who accompanied [NAME_10]) were unaware that the operator’s licence had been suspended on 13 March 2018.

17. In a written decision dated 10 May 2018, the [NAME_1] found that [NAME_5] lacked financial standing, having entered liquidation with debts, according to the liquidators’ report, of around £350,000. There had been no functioning and qualified transport manager since December 2016. Vehicles had continued to operate during a period of suspension and the licence had been lent to [NAME_11]. The company’s vehicles and trailers had attracted 33 prohibitions (40% infringement rate for vehicles and 38% for trailers) in the previous 5 years along with two fixed penalties. There had been a breach of the operator’s undertaking with regard to ensuring that the rules on drivers’ hours and tachographs would be observed. The licence was revoked and [NAME_6] was disqualified from holding an operator’s licence for a period of five years.

18. As for [NAME_3], the [NAME_1] conducted the required balancing exercise and in doing so, he took into account the following negative features: [NAME_3] had failed to inform the [NAME_1] that he had ceased to act as transport manager in December 2016 which meant that [NAME_5] had been able to continue in business with the outward appearance of being professionally competent; he must have been aware that [NAME_11] was in fact the de facto operator and that [NAME_5] had gone into liquidation; despite having ceased to act as transport manager in December 2016, he told [NAME_12] that he was [NAME_5]’s transport manager and wrote a letter to [NAME_13] signing himself as the transport manager for [NAME_5]. It followed that [NAME_3] was attempting to give the DVSA officers the impression that he was still the functioning transport manager. The [NAME_1] was unable to find any positive features to put into the balance as [NAME_3] had failed to attend the public inquiry to put any forward. The [NAME_1] described [NAME_3] conduct as “devious” and concluded that his failures had allowed a licence to continue in force when it should have been terminated in December 2016. The [NAME_1] concluded that [NAME_3]’ good repute was lost and that it was proportionate to disqualify him for a period of five years.

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The Appeal

19. In his letter containing his grounds of appeal, [NAME_3] asserted that he did not attend the public inquiry because [NAME_6] had informed him that the hearing would not be going ahead because “the company” had folded. He repeated the contents of the email he had sent to the OTC on 7 May 2018. He maintained that he did not know that [NAME_17] (the office manager) had not been nominated as transport manager in his place. It was an “oversight” on his part in not informing the [NAME_1] of the position. He further maintained that he was unaware that [NAME_5] had entered liquidation. The only change as a result of the company buy out was that the company invoices stated at the bottom that [NAME_5] was the trading name of [NAME_11]. He maintained that [NAME_6] had changed the name on the operator’s licence to [NAME_5] trading as [NAME_11] (although there was no evidence of that within the appeal bundle). The reason for holding himself out as the transport manager in early 2018 was that his father had contacted him and told him that he remained on the licence as transport manager and had asked him as a favour to meet with the DVSA officers. He would not have done this if his father had not been working for [NAME_11] at the time. [NAME_3] described [NAME_6] as a “professional con man” who had duped [NAME_3]. He had taken £500k out of the business and had done the same to [NAME_11]. He still owed over £50,000 to [NAME_3] and his father for the sale of [NAME_5]. He accepted that he should have attended the public inquiry; he had let himself down by failing to inform the [NAME_1] that he was no longer the operator’s transport manager and had been acting under “duress” in lying to the DVSA officers. All of these matters were “errors” on his part and he had not intended to deceive the [NAME_1] or to allow [NAME_19] to continue to trade illegally.

20. At the hearing of his appeal, [NAME_3] attended and represented himself. He repeated the substance of his appeal letter. He said that he had been in transport since he had left school and [NAME_5] had been his grandfather’s business. After a period of ill health caused by stress, [NAME_3] had decided to sell the business to [NAME_11] in December 2015. Part of the agreement was that the purchase price would be paid by staged, monthly payments over two years with 50% up front. It was agreed that [NAME_3] and his father would continue to work within the company for twelve months. [NAME_3] would visit the operating centre once a week, mainly at weekends whilst his father worked full time. In December 2016, he asked to be replaced as transport manager and as he was aware that [NAME_17] had a CPC qualification, [NAME_3] understood that Mr [NAME_17] would take over the transport manager role. [NAME_6] was a “likeable” person and as his father had continued to work within the company, [NAME_3] assumed that the [NAME_1] had been informed of all relevant changes. [NAME_3] accepted that the [NAME_1] had not been informed of the purchase of the company, the change of directors and his resignation as transport manager. The DVSA investigation came like a “bolt out of the blue”. He attended the interview with [NAME_13] and wrote the letter addressed to [NAME_13] because his father had asked him to and had put [NAME_3] in a “really bad position”. He then denied that he had in fact attended a meeting on 23 January 2018 with [NAME_13] even though that was the

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evidence of [NAME_13] and that is what his own letter refers to. He asserted that he had only attended one interview and that was on 25 February 2018.

21. As for his financial involvement with the company after it had been sold, he said that as at January 2018, he and his father were still owed £30,000 (c/f the figure of £50,000 in [NAME_3]’ appeal letter). The purchase price should have been paid over two years but [NAME_6] had asked for a six month payment holiday to purchase new vehicles. [NAME_3] gave inconsistent accounts as to the weekly payments of £1,000. He told the Tribunal that they had continued, although he also said that they had in fact stopped. In any event, the payments were split between himself and his father and these were in addition to the staged payments for company.

22. [NAME_3] accepted that the absence of a transport manager had allowed [NAME_20] to operate vehicles under [NAME_5]’s licence whilst building up debts, particularly to HMRC and further accepted that it was a fatal error in failing to attend the public inquiry. He had no answer to the question posed to him: why should he escape the consequences of lying to DVSA officers? He did however consider himself to be in a unique position in that he had acted as a result of “complete loyalty” to his father, being motivated by a desire to ensure that his father could continue working in the transport industry.

Discussion

23. During the course of the hearing, the Tribunal made clear to [NAME_3] that we do not take account of evidence which should have been before the [NAME_1] but was not. [NAME_3] was keen to persuade us that the reason why he did not attend the public inquiry was because of misrepresentations made by [NAME_6], we do not accept his account. His letter of 7 May 2018 made it clear that it was his decision not to attend the hearing because he no longer had any connection with the business. We are in any event satisfied that had [NAME_3] attended before the [NAME_1] on 9 May 2018, the [NAME_1]’s decision would not have been any different, either in relation to loss of repute or the period of disqualification as the matters now raised by [NAME_3] cannot be categorised as positive features which might have caused the [NAME_1] to come to a different decision. The undisputed evidence before the [NAME_1] was that [NAME_3] had remained as the nominated transport manager on the licence having failed in his duty to inform the [NAME_1] of his resignation or indeed about the other material changes in the ownership of the business and the use to which the licence was being put. He had then held himself out to be [NAME_5]’s transport manager to [NAME_13], [NAME_16] and [NAME_12] and had lied about the extent of his involvement with the company to all three DVSA officers and in particular, in the letter following up [NAME_3]’ meeting with [NAME_13]. It was inevitable that the [NAME_1] would conclude that [NAME_3] had lost his good repute and that he could not be trusted in the immediate or foreseeable future as a transport manager. We do not consider that a disqualification period of five years is disproportionate upon the facts of this case. Indeed, a longer period would have been difficult to question bearing in mind the misconduct of [NAME_3].

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24. It follows that we are satisfied that the [NAME_1]’s approach to the issues of good repute and disqualification was neither plainly wrong nor disproportionate. Further, we are not satisfied that this is a case where either the law or the facts impel us to interfere with the [NAME_1]’s decision as per the Court of Appeal decision in [COMPANY_4] & [NAME_4] v Secretary of State for Transport (2010) EWCA Civ. 695 . The appeal is dismissed.

Her Honour Judge Beech 28 August 2018