Neutral Citation Number: [2010] UKUT 471 (AAC).

Appeal No: T/2010/67

 

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

(TRAFFIC COMMISSIONER APPEALS)

 

ON APPEAL FROM THE DECISION OF BEVERLEY BELL,

TRAFFIC COMMISSIONER for the NORTH WESTERN TRAFFIC AREA,

DATED 4 AUGUST 2010

 

Before:

Judge Mark Hinchliffe,

Deputy Chamber President (HESC); Judge of the Upper Tribunal.

 

Leslie Milliken

Member of the Upper Tribunal

 

Stuart James

Member of the Upper Tribunal

 

Appellants:

 

Pemberton Transport Ltd (Operator)

Miss Lynne Walker (Transport Manager)

 

Attendance:

 

For the Appellants: Miss Lynne Walker, Director and Transport Manager

 

Appeal heard at: Victory House on 29 November 2010

 

Date of decision: 16 December 2010

 

DECISIONS OF THE UPPER TRIBUNAL:

 

The appeals of Pemberton Transport Ltd and Miss Lynn Walker are allowed and, with the exception of the revocation on grounds of financial standing, all the orders made are set aside.

 

Subject Matter:

 

Requirement to analyse evidence carefully.

Cabotage.

 

Cases referred to:

 

Romantiek 2007/172

Romantiek Transport BVBA & Others v VOSA [2008] EWCA Civ 534.

 

REASONS FOR DECISIONS:

 

1)    This was an appeal from the decision of the Traffic Commissioner for the North Western Traffic Area made on 4 August 2010 when she revoked the Standard International Goods Vehicle Operator’s Licence held by Pemberton Transport Ltd under Section 27(1)(a), (b) and (c) and Schedule 3 of the Goods Vehicles (Licensing of Operators) Act 1995, and under Section 26(1)(h) of the Act. The Traffic Commissioner found that the operator’s Transport Manager, Miss Walker, had lost her repute, and also disqualified the operator and Miss Walker (as the sole director) from holding an operator’s licence indefinitely. The Traffic Commissioner also purported to disqualify Miss Walker from appointment as a Transport Manager for an indefinite period.

 

2)    Although the name of the Appellant on the Notice of Appeal is given as Lynne Walker, it is clear that Miss Walker also wished the tribunal to consider the position of the company. One of the decisions appealed against is the ‘Revocation of Pemberton Transport Ltd licence’. The tribunal therefore agreed to treat the appeal as having been brought by both the operator and the Transport Manager.

 

3)    The factual background to this appeal appears from the documents, the transcript and the Traffic Commissioner’s decision and is as follows:

(i)    Pemberton Transport Ltd was the holder of a Standard International Goods Vehicle Operator’s Licence, authorising 16 vehicles and 18 trailers.

(ii)   On 3 December 2009 the Traffic Area Office received an application for an increase in authorisation, up to 25 vehicles and 30 trailers. The application form, dated 23 November 2009, was signed by Mr Thomas Pemberton, who signed the form as ‘Transport Manager’. On 8 December 2009, the Office of the Traffic Commissioner wrote to the company asking, amongst other things, for a letter from a director of the company authorising Mr Pemberton to sign the application form on behalf of the company. Details of directors were requested, together with completed Director’s Questionnaire(s), and original evidence of financial standing was also sought.

(iii)  On 9 December 2009 a press report appeared stating that:

“A businesswoman with links to the directors of a number of failed haulage firms has taken control at Cheshire operator Pemberton Transport. Lynne Walker became the sole director and owner of Capenhurst-based Pemberton on 6 November when she bought it from the previous owners, the Pemberton family.”

(iv) On 14 December 2009, Miss Walker replied to the Office of the Traffic Commissioner, authorising Mr Pemberton to sign correspondence on behalf of the company. Miss Walker signed the letter as ‘DIRECTOR’. On 22 December 2009, the Office of the Traffic Commissioner noted that, of the items and information previously requested, only the original financial evidence remained outstanding.

(v)   On 2 March 2010, Mr Pemberton wrote to advise the Traffic Area Office that he had resigned as Transport Manager from 5 March 2010. On 11 March 2010, Miss Walker (who holds a CPC in International Road Haulage Operations issued in 1998) nominated herself as Transport Manager. On the Form TM1(G), in answer to the question “Have you had ANY association in the past with any licence that has been revoked?” -  Miss Walker replied ‘No’.

(vi) On 30 March 2010 the Office of the Traffic Commissioner wrote to the operator to advise that the Traffic Commissioner had decided to hold a Public Inquiry to consider the application to vary the operator’s licence. A letter dated 25 June 2010 gave details of the date (2 August 2010), time and venue for the public inquiry, and a detailed call-up letter, dated 14 July 2010, gave details of the issues to be considered. The call-up letter to the company, which raised the issue of professional competence, states that:

“The Traffic Commissioner has requested that the company’s nominated Transport Manager, Lynne Walker, also attends the Inquiry, where they (sic) may be required to give evidence”.

(vii)          The papers, however, do not contain a copy of any separate call-up letter sent to Miss Walker as Transport Manager.

(viii)         The Traffic Commissioner caused a search (dated 14 July 2010) to be made at Companies House, which disclosed that Miss Walker was, or had been, a director of the following companies:

 

 

(ix) According to Traffic Area Office records, an operator’s licence held by F1 Logistix Ltd was revoked at Public Inquiry in June 2004.

(x)   According to press reports, Pemberton Transport Ltd tried and failed to agree two Company Voluntary Arrangements. It subsequently emerged in evidence, given at the Public Inquiry by Miss Walker, that the operator went into liquidation on 23 June 2010.

(xi) At the Public Inquiry, in answer to questions from the Traffic Commissioner, Miss Walker said that, initially, she had believed that the solicitors acting for Mr Pemberton in the sale of the business to her would have notified the Traffic Commissioner of the sale and her appointment as director. Miss Walker, however, accepted the advice from the Traffic Commissioner that she had the responsibility to advise the Traffic Commissioner of her arrival as a director.

(xii)          In relation to the revocation of the operator’s licence held by F1 Logistix, Miss Walker said that she was neither a director nor Transport Manager when the licence was revoked in 2004, and the Traffic Commissioner did not disagree with this.

(xiii)         The Traffic Commissioner said to Miss Walker:

TC: There is a suggestion in the call-up letter that vehicles specified on this licence are apparently being repaired using the account of Kevin Tinnelly through Scania.

Miss Walker: I do not know what has happened to the vehicles now, but they were never repaired through Kevin Tinnelly while Pemberton Transport was operating them.

TC: Well that is what the letter says …”

(xiv)        The Traffic Commissioner suggested to Miss Walker that she (Miss Walker) seemed “to have been a director of an awful lot of companies that have either dissolved or gone into liquidation”. In due course, Miss Walker explained that she had resigned as director of F1 Hire Ltd some years before the company was dissolved; that F1 Logistix (UK) Ltd was sold in April 2006; and Excel Hire Ltd and F1 Worldwide Ltd were dormant companies.

TC: You have a lot of dormant companies, do you not?

Miss Walker: It was my previous employer that set those companies up.

TC: Yes, but you were director, so whether he was your employer or not initially is of little relevance once you become a director. You have responsibilities.

Miss Walker: Yes.

(xv)          In relation to Pemberton Transport Ltd, the Traffic Commissioner explored the financial arrangements involved in its acquisition, which appear to have involved no investment whatsoever by Miss Walker. In due course, the company hit financial difficulties because Close Invoice & Finance, who provided factoring, withdrew their support. Miss Walker said that this arose because the operator “used Kevin Tinnelly as a sub-contractor and he also factored with Close Invoice.”

(xvi)        There was then some discussion as to the operator’s use of Kevin Tinnelly as a sub-contractor. Miss Walker demurred in relation to the detail, suggesting at one point that it was not Kevin Tinnelly that she had used, but a company called Bulk Transport Ltd. She had, she said, been shown a copy of the sub-contractor’s operator’s licence but she could not remember the details. It was a company based either in Northern Ireland or the Republic of Ireland. Miss Walker added that she did not know that Mr Tinnelly had lost his repute in the North Western Traffic Area and she thought that, at the time, she could sub-contract local journeys to an operator holding an international operator’s licence issued in either Northern Ireland or the Republic of Ireland. With her Notice of Appeal, Miss Walker submitted a copy of an International Goods Vehicles Operator’s Licence issued to Kevin Tinnelly by the Department of the Environment (Northern Ireland) on 16 September 2009.

(xvii)       At the conclusion of the public inquiry the Traffic Commissioner retired and then returned and gave an oral decision, which was subsequently typed up and sent to Miss Walker. The Traffic Commissioner considered that the operator’s business was not built on “firm foundations”. She found that Miss Walker had failed to notify her of a material change in relation to her taking control of the business and that her answers in relation Mr Tinnelly were vague and, possibly, deliberately vague.

(xviii)      The Traffic Commissioner accepted that:

 “There are many operators who have a history of a liquidation or a dissolution, and at the inquiry I am able to meet them and find that they are the innocent victims of somebody else’s misfortune or despite them having ploughed an awful lot of money in themselves, they are unable to save the company”.

In relation to Miss Walker, however, the Traffic Commissioner found that she:

“has a long history of involvement with companies that have either been dissolved or liquidated. The companies’ search shows 11 companies from 2002 to the present day in which Mrs Walker has either been secretary or a director … I have grave concerns regarding the activities of those companies including the order for revocation that was made for F1 Logistix Ltd. I have quizzed Miss Walker about those companies and about her dealings with them. I have found her answers to be vague. I have found them to lack transparency and I have found that there is nothing in those answers that convinces me that this is no more than bad luck”.

(xix)        The Traffic Commissioner concluded that:

“Miss Walker’s history, her failure to notify material change, potential abuse of the operator licence regime through the use of Tinnelly’s vehicles and the failure to notify the previous revocation on the TM1(G) when she was specified as the Transport Manager lead me to conclude that this company no longer satisfies the repute requirement. As I said before, Miss Walker is the company, she is the brains of the company and I therefore find that as a director and as the Transport Manager she no longer satisfies the repute requirement”.

(xx)          The Traffic Commissioner also found against the operator on financial standing, it being in liquidation, and on professional competence, Miss Walker having lost her repute as Transport Manager. An adverse finding in relation to material change not having been notified was made. Immediate revocation was ordered.

(xxi)        In relation to the disqualification of the company and of Miss Walker as director, the Traffic Commissioner disqualified both indefinitely and gave the following reasons:

“A long previous history with regard to 11 companies, a failure to notify material change, potentially abusing of the operator licence regime through the use of Tinnelly’s vehicles, and the failure to notify the previous revocation on the TM1(G) form”.

(xxii)       In relation to Miss Walker, the Traffic Commissioner added: “I direct through the disqualification order that she shall not be a director or transport manager for an indefinite period”.

 

4)    At the hearing of this appeal, Miss Walker attended in person. She had supplied detailed Grounds of Appeal, for which we were grateful. The first point made by Miss Walker was that she had informed the Traffic Commissioner’s office of the changes and completed the Director’s Questionnaire and returned it to Leeds on 14/12/09. We find some merit in this point although, ideally, Miss Walker should have notified the Traffic Commissioner immediately of her acquisition and appointment as a director. The current version of Form GV79, revised in 2007, contains an undertaking in the following terms:

 

“I will, ensure that the Traffic Commissioner is notified within 28 days of any other changes, for example a change to the proposed maintenance arrangements; a change in the financial status of the licence holder (e.g. if placed in liquidation or receivership), or a change to Limited Company status or partnership, that might affect the licence, if issued.

 

The application form signed by Mr Pemberton in 1998, however, does not contain such an undertaking. In any event, the Traffic Commissioner does not appear to have appreciated that Miss Walker did write to the Traffic Area Office as a director of the company on 14 December 2009, some 6 weeks after becoming a director, and that it would appear that the Director’s Questionnaire was submitted because the only outstanding matter referred to by the Office of the Traffic Commissioner on 22 December 2009 was the financial standing evidence. We therefore find that the Traffic Commissioner was wrong to attach any substantial weight to the alleged non-notification of material change.

 

5)    Miss Walker next submitted that she was the victim of the Traffic Commissioner’s dislike of Mr Tinnelly. It is certainly true that the Traffic Commissioner spent a good deal of time exploring the operator’s links, if any, with Mr Tinnelly, and that Miss Walker’s answers were far from consistent, especially in relation to the identity of the sub-contactor. The Traffic Commissioner also appears to have taken a stern view of the fact that local journeys were being sub-contracted to an operator who was not based in Great Britain, or authorised by a Traffic Commissioner. 

 

6)    At the hearing before us, Miss Walker stated her belief that the sub-contracting arrangement she had with the holder of an International Goods Vehicles Operator’s Licence issued in Northern Ireland was not, at the time, unlawful. The tribunal noted that there are special provisions relating to vehicles being used under the terms of the Goods Vehicles (Operators’ Licences) (Temporary Use in Great Britain) Regulations 1980 (as amended by The Goods Vehicles (Operators' Licences) (Temporary Use in Great Britain) (Amendment) Regulations 1990). These Regulations include provision for the use in Great Britain of Northern Ireland vehicles that have an operating centre in Northern Ireland, provided that certain conditions are met. Both own account, and hire and reward operations are covered. Additionally, the issue of cabotage was considered at length by the Transport Tribunal in Romantiek 2007/172 and the tribunal’s decision was subsequently upheld by the Court of Appeal in Romantiek Transport BVBA & Others v VOSA [2008] EWCA Civ 534.

 

7)    In the present case we cannot reach a definitive conclusion as to the implications of the operator sub-contracting to Mr Tinnelly because the background, circumstances and extent of the sub-contracting were not adequately explored in evidence at public inquiry. Additionally, the question of whether or not the work in Great Britain was undertaken on a temporary basis was not discussed. We do not doubt that the Traffic Commissioner had profound misgivings in relation to Miss Walker’s association with Kevin Tinnelly and/or Bulk Transport Ltd, and that a Traffic Commissioner’s intimate knowledge of their areas, and those who are operating or have operated in their areas, is a great strength of the system. However the Traffic Commissioner did not have the required information before her, so the key facts and applicable legal framework could not be adequately considered. Had she felt that the issue required a more in-depth investigation, the Traffic Commissioner might have considered an adjournment, the operator being in liquidation and therefore not operating in any event. But a finding of “potential abuse”, in our view, left this important matter evidentially unresolved. We therefore find that the Traffic Commissioner’s assertion that there was potential abuse of the operator licence regime through the use of Tinnelly’s vehicles was not a proper basis for the taking of regulatory action. Any actual finding of abuse would, clearly, have to be considered carefully in relation to the validity of any applicable Northern Ireland Operator’s Licence at the time of the sub-contracting, and having regard to the relevant regulations and the evidence. 

 

8)    In relation to the answers given in Form TM1(G) we think that the question: “Have you had ANY association in the past with a licence that has been revoked?” is somewhat ambiguous. For example, suppose a proposed Transport Manager had had an association from 2002 until 2003 with an operator’s licence that was held by a company until its licence was revoked in 2009 - would there be a duty to disclose this on a TM1(G) form completed in 2010? We do not think so, because in such a case the Traffic Commissioner cannot have any legitimate interest in the fortunes of an operator after a proposed Transport Manager has long ceased to be associated with it. At the other extreme, the position may be very different if the association ended, say, on the day before revocation took place. In the present case, Miss Walker told the Traffic Commissioner that she was neither a director nor Transport Manager of F1 Logistix Ltd when its licence was revoked in June 2004 and, as far as we can see from the evidence, this assertion is correct. Nevertheless, the Traffic Commissioner found that Miss Walker should have answered the question ‘Yes’ - because F1 Logistix Ltd had had its operator’s licence revoked in 2004, some 6 months after Miss Walker had resigned. In many similar cases a proposed Transport Manager may justifiably say that he or she did not know that, 6 months following resignation, the licence had been revoked. In the present case, the matter was not pursued further and there is no evidence or suggestion that the issues leading to revocation were in any way linked to Miss Walker’s previous association with the company. We therefore find that the Traffic Commissioner was wrong to attach significant adverse weight to the facts in this regard, especially given the timescale and the lack of relevant background information.

 

9)    Finally, Miss Walker dealt with her alleged “long previous history with regard to 11 companies”. It is not necessary to go through her explanations because, on the evidence before us, we simply cannot see any evidentially supported suggestion or specific instance of malpractice. We think that, generally, a distinction might be drawn between service as a director on the one hand, and as a Company Secretary on the other, given the focus in the 1985 act on the role and responsibilities of a director. In the present case, however, there is no evidence whatsoever of any conduct, whether as a director, Company Secretary or Transport Manager, which deserved criticism from the Traffic Commissioner. The Traffic Commissioner appears to us to have taken a broad brush ‘no smoke without fire’ view that, upon careful analysis, lacked substantial foundation. The tribunal, therefore, concludes that the Traffic Commissioner was wrong to refer in such relatively vague but negative terms to Miss Walker’s history.

 

10) It is clear that the licence was rightly revoked on financial grounds. The company is in liquidation, and was so at the time of the public inquiry. However, we do not think that the Traffic Commissioner’s other conclusions are sustainable. There was no evidentially established basis upon which the Traffic Commissioner could reasonably conclude that the company, or Miss Walker in any capacity, had lost repute. Still less is there any proper basis to justify an indefinite disqualification, either as an operator or director of a company with, or seeking, a Goods Vehicles Operator’s Licence. Miss Walker does not appear to have been called up, separately, as Transport Manager and, in any event, there is no statutory power to disqualify someone from making application to serve as a Transport Manager in the future. For these reasons the appeal is allowed and – with the exception of the revocation on grounds of financial standing – all the orders made are set aside.

 

11) The current application form for a Goods Vehicles Operator’s Licence (GV79) asks the question: “Have you, anyone named in this application, or any company which had someone named in this application as a director or majority shareholder, ever had an application for an operator’s licence refused or had a licence revoked, suspended or curtailed in ANY traffic area?” Miss Walker must understand that, should she ever apply again for an operator’s licence, whether on her own account, or as a partner or as a director, she should answer ‘Yes’. Likewise, should she seek to be a Transport Manager, the relevant question (currently Q12 on Form TM1(G) must be answered in the affirmative.

 

12) There is a further matter that has caused the tribunal some concern. Miss Walker believed that the Traffic Commissioner had found against her in relation to the suggestion that vehicles specified on the operator’s licence were apparently being repaired using the account of Kevin Tinnelly through Scania. We pointed out to Miss Walker that this aspect does not feature in the Traffic Commissioner’s final decision. Miss Walker told us that she had, nevertheless, written to the Office of the Traffic Commissioner to ask what evidence the Traffic Commissioner had for putting such a suggestion to her at the public inquiry. By email dated 18 November 2010, a staff member in the Traffic Commissioner’s Office wrote to Miss Walker to say that the letter the Traffic Commissioner was referring to was, simply, the call-up letter. Miss Walker, however, pursued this further, asking how the Traffic Commissioner had been informed regarding vehicles being repaired on Mr Tinnelly’s account. A reply dated 24 November 2010 then advised that, on 29 March 2010, the Traffic Commissioner had received an email from a member of VOSA enforcement staff with regard to the allegation - but the Traffic Commissioner had decided that the email was not disclosable. We consider, therefore, that if the Traffic Commissioner had wished to pursue the allegation she might have considered asking the VOSA enforcement officer to prepare a disclosable statement for service on the operator in advance of the public inquiry. Unsurprisingly, Miss Walker was left with a strong sense of injustice, and a suspicion that there was more to the Traffic Commissioner’s question than was being disclosed to her.

 

13) We note that this decision, although subsequently typed up, was delivered orally at the end of a reasonably lengthy public inquiry. Such a practice has been discouraged by the tribunal in cases where serious regulatory action is taken, partly because it may give an unfortunate impression of haste or pre-determination to those whose businesses and livelihoods are adversely affected, and partly because it can deprive the Traffic Commissioner of an opportunity to reflect upon, and carefully analyse, the detail and substance of the evidence.

 

 

Judge Mark Hinchliffe, DCP

16 December 2010