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Cite as: [2004] LLR 211, [2003] ScotCS 315

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Coakley & Ors, Re an Order of the Transport Tribunal [2003] ScotCS 315 (17 December 2003)

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

XA43/02

Lord Osborne

Lord Macfadyen

Lord Weir

OPINION OF THE COURT

delivered by LORD OSBORNE

Appeal to the Court of Session under the Transport Act 1985, section 117(2) and Schedule 4(14)

(FIRST) EDWARD COAKLEY; (SECOND) COAKLEY BUS COMPANY LIMITED; and (THIRD) CENTRAL BUS COMPANY LIMITED

Appellants;

against

An Order of the Transport Tribunal dated and intimated to the appellants on 6 February 2002; amendment thereto, intimated to the appellants on 14 February 2002; and addendum thereto dated 6 and intimated to the appellants on 7 February 2002; upholding a decision of the Traffic Commissioner, M.W. Betts, dated 12 October 2001.

_______

Act: Lindhorst; Russel & Aitken (for first and third respondents)

Alt: McCreadie, Q.C.; Solicitor to the Advocate General (Secretary of State

for Transport)

17 December 2003

The background:
[1] These appeals, under section 117(2) and Schedule 4(14) of the Transport Act 1985, are brought against a decision of the Transport Tribunal dated and intimated to the appellants on 6 February 2002, an amendment thereto, intimated to the appellants on 14 February 2002, and an addendum thereto, dated 6 and intimated to the appellants on 7 February 2002. In that decision, the Transport Tribunal ordered that the appeals to it should be dismissed. Those appeals had been brought to the Transport Tribunal against a decision of the Traffic Commissioner for the Scottish Traffic Area, M.W. Betts, Esquire, dated 12 October 2001, in which he had (a) revoked the public service vehicle operator's licence of the Coakley Bus Company Limited, (b) refused to grant a public service vehicle operator's licence to the Central Bus Company Limited, and (c) disqualified both the Coakley Bus Company Limited and Edward Coakley for a period of five years from holding a public service vehicle operator's licence.

[2] When these appeals came before us, the first and third named appellants were represented by counsel. The second named appellant was not represented. The Secretary of State for Transport was represented by senior counsel. However, at the outset of the proceedings it was indicated by him that his position would be limited to the making of submissions on certain parts of the appeals only. In particular, he stated that he would be making submissions only relating to human rights issues, as specified in the answers, as amended, for the Secretary of State for Transport. These were systemic matters relating to the powers, status and structure of the Transport Tribunal. However, he would not be making submissions on the other aspects of the appellants' appeals. On those matters, there would be no contradictor, in the light of the decision of this court, dated 4 April 2003, in which it was held that, in an appeal from the Transport Tribunal to the Court of Session in relation to a decision of the Traffic Commissioner taken under the Transport Act 1985 in respect of a public service vehicle operator's licence, the Traffic Commissioner had no locus to appear before the court.

[3] The grounds of appeal upon the basis of which the appeals were presented were in the following terms:

"1. The Tribunal in reaching its decision erred in law by having regard to irrelevant material; failing to have regard to relevant material; adopting the wrong tests; reaching a wholly unreasonable conclusion; and accepting and upholding in toto the decision of the Traffic Commissioner ('the Commissioner').

2. The Tribunal misdirected itself in law:

(i) as to the proper interpretation of the Public Passenger Vehicles Act 1981 inter alia by holding that the test as to appropriate financial standing contained in Schedule 3, 2(1) could only be met through the availability of financial resources well in excess of the statutory requirement of those required for the business 'carried on, or proposed to be carried on';

(ii) as to the meaning and effect of the Public Service Vehicles (Operators' Licences) Regulations 1995 (S.I. 1995/2908 as amended) inter alia by holding that the Commissioner having ruled in favour of the appellants in respect of matters of which notice had been given under Regulation 9 was thereafter entitled to engage in an 'evolving process' without meeting the requirements as to notice;

3. The Tribunal erred in law:

(i) by having regard to irrelevant material, namely, evidence relied upon by the Commissioner and undisclosed to the appellants prior to his decision; the personal family circumstances of the First Appellant; a letter accepted by the Commissioner as inaccurate sent by the First Appellant's estranged wife to the Commissioner; conclusions of the Commissioner reached without evidential basis; evidence which the Commissioner was not entitled to have regard to; and conclusions reached by the Tribunal without evidential basis;

(ii) by failing to have regard to relevant material namely, acceptable evidence which substantiated the Appellants' position; the quasi-criminal nature of the Commissioner's findings with reference to section 66 of the 1981 Act; and the evidence produced to the Tribunal in the course of the Appeal Hearing;

(iii) by failing to hold that the Commissioner's conduct and procedure were unfair, that he was biased or at the very least that an objective observer would consider that his comments and conduct raised a suspicion of bias; and that a breach of the rules of natural justice occurred; consequent upon the Commissioner inter alia stating 'I am coloured with my long involvement now with Mr Coakley', likening the First Appellant to a 'poacher', making a comment of a pejorative nature about the 'Irish' in reference to the Third Appellants' financial backers, the Allied Irish Bank; having regard to his own personal knowledge of circumstances, stating that he made 'no inference' from the 288a form, that draft accounts only were required, delaying a decision on the Third Appellants' licence application for an inordinate period of time in full knowledge that the Appellants were seeking to restructure the business, and thereafter attributing material significance thereto contrary to the impression deliberately created in the minds of the appellants and their advisers to the Appellants' prejudice;

4. The Tribunal erred in law by holding that the hearing before the Commissioner afforded the Appellants a fair hearing before an independent tribunal established by law contrary to the Human Rights Act 1998, section 6 and Schedule 1, Part I, Article 6(1);

5. The hearing before the Tribunal did not afford the Appellants a fair hearing before an independent tribunal established by law and is incompatible with the Appellants' Convention Rights contrary to the Human Rights Act 1998, section 6 and Schedule 1, Part I, Article 6(1) et separatim did not per se constitute sufficient guarantee of the Appellants' Convention Rights;

6. The order of the Tribunal is incompatible with the Appellants' Convention rights contrary to the Human Rights Act 1998, section 6 and Schedule 1, Part II, First Protocol, Article 1;

7. The Tribunal failed to give adequate or any reasons for its decision in relation to the individual appellants (Rule 10(2) of the Transport Tribunal Rules 2000 (S.I. 2000/3226) refers);

8. The order of the Tribunal is contrary to European Community Law and in particular to Articles 10, 12, 17, 43, 49, 50, 51, 70 and 75 of the European Community Treaty (as amended) and Council Directive 96/26/EC of 29 April 1996 (as amended by Council Directive 98/76/EC of 1 October 1998) applicable in the United Kingdom."

The submissions:
[4] At the outset of his submissions, counsel for the first and third named appellants indicated that he might not insist in all of the grounds of appeal which had been stated to their full extent. Thereafter, for the benefit of the court, he explained the statutory background to these appeals. That included the provisions of the Public Passenger Vehicles Act 1981, as amended, the Transport Act 1985, the Public Service Vehicles (Operators' Licences) Regulations 1995 (S.I. No.2908, as amended), and the Transport Tribunal Rules 2000 (S.I. No.3226). He also made reference to the Code of Practice for the Traffic Area Offices and the Public Service Vehicle Operator Licensing Guide for Operators, dated October 1998.

[5] Counsel for the appellants went on to describe the factual background to the matter. Prior to the public inquiry which led to the decision of the Traffic Commissioner, dated 12 October 2001, there had been a previous public inquiry into alleged failures on the part of the second named appellants to operate services, which alleged failures had been the subject of complaints from the appellants' competitors. The outcome of that public inquiry was that the Deputy Traffic Commissioner for the Scottish traffic area decided to take no disciplinary action against the second named appellants. However, following that decision, certain monitoring exercises were conducted. In due course, letters were issued to the appellants calling them to a further public inquiry to be conducted by the Traffic Commissioner on 3 July 2001. This was the inquiry, the results of which were under scrutiny in the present appeals. The letter calling the first named appellant to the inquiry, dated 11 June 2001 could be seen at p.691 of Vol.2 of the copy productions. In that letter it was stated that, due to the allegations contained in the relevant Vehicle Inspectorate's report, the Traffic Commissioner would consider whether the first named appellant continued to meet the requirements, as a transport manager, to be of good repute. The Traffic Commissioner had decided to consider his repute in accordance with Schedule 3(4) of the Public Passenger Vehicles Act 1981. A similar letter, also dated 11 June 2001, had been sent to the second named appellants calling them also to the public inquiry to be held on 3 July 2001. That letter, which appears between pps.687 and 690 of Vol.2 of the productions set forth the grounds upon which that step was taken. A further letter, also dated 11 June 2001 had been sent to the third named appellants, calling them to the public inquiry to be held on 3 July 2001 for the purpose of considering their application for a public service vehicle operator's licence. That letter was to be found at pps.610 to 611 of Vol.2 of the productions.

[6] Counsel for the appellants then proceeded to consider in detail the conduct of the inquiry on 3 July and subsequently, at a continued hearing, on 13 September 2001. The result of that inquiry was that the Traffic Commissioner decided that the second named appellants no longer satisfied the requirement to be of appropriate financial standing and no longer satisfied the requirement to be of good repute. Accordingly under section 17(1) of the Act he revoked its operator's licence. Further, it was found that the first named appellant, the nominated transport manager of the second named appellants, no longer met the requirement to be of good repute. Accordingly, it was also found that the second named appellants no longer satisfied the requirement as to professional competence. Accordingly their licence was revoked. The Traffic Commissioner went on to find that the third named appellants failed to meet the requirement to be of appropriate financial standing. Accordingly, under section 14(1)(b) of the Act he refused to grant an operator's licence to that company. In addition, he found that the third named appellants failed to meet the requirement to be of good repute. Accordingly, the Traffic Commissioner refused to grant an operator's licence. Finally, in view of what the Traffic Commissioner described as "the deviousness, deceit and lies displayed by Mr Coakley" the Traffic Commissioner concluded that it was appropriate to disqualify the second named appellants and the first named appellant from holding an operator's licence for a period of five years.

[7] Counsel for the first and third named appellants said that it would be submitted that the decision of the Traffic Commissioner was flawed in law in a variety of respects. That decision should have been set aside by the Tribunal, yet that had not happened. He then proceeded to examine the decision of the Tribunal itself in some detail. The Tribunal had largely followed the Traffic Commissioner's reasoning.

[8] Counsel for the first and third named appellants next proceeded to make a series of detailed submissions in criticism of the decisions of the Traffic Commissioner and the Tribunal. For the purposes of this opinion, it is unnecessary to record a comprehensive narrative of those submissions, since, in the end, our decision was based upon the affirmation of only one of them. That was the submission made in support of ground of appeal 3. The factual circumstances relating to this ground of appeal were to be found in paragraphs 32 to 41 of the decision of the Traffic Commissioner. These circumstances included the making of independent inquiries by the Commissioner following upon the conclusion of the public inquiry oral proceedings on 13 September 2001. It appeared from what was disclosed in the Commissioner's decision that he had been receiving information which he had taken into account in his decision right up to the date of the decision itself. It was obvious from the Traffic Commissioner's decision that some of the information which he had thus acquired was regarded by him as of importance, in particular, that relating to fuel duty rebate payments. It was submitted that this procedure was essentially unfair, since the first named appellant had been given no proper opportunity to comment upon it before the Commissioner formulated his decision. This matter had been the subject of submission to the Transport Tribunal and was dealt with by them in paragraph 22 of their decision. In connection with this submission, counsel for the appellants relied upon Moore v Clyde Pilotage Authority 1943 S.C. 457. In that case the court held that the sheriff had rightly sustained the contention of the pilot, Mr Moore, that he had not been given an opportunity of explaining an adverse report on his past conduct. Reliance was placed particularly upon the observations of Lord President Normand at pps.463-464.

[9] Looking at the circumstances of the present case, Regulation 9(2)(e)(i) of the Public Service Vehicle (Operators' Licences) Regulations 1995 contemplated the holding of an inquiry by the Traffic Commissioner, as had happened here. It was submitted that the common law implied that the rules of natural justice required to be followed in the conduct of such an inquiry. That had not occurred in the present case. Counsel for the appellants, referring again to Moore v Clyde Pilotage Authority, also drew our attention to the observations of Lord Fleming at p.465 and Lord Moncrieff at pps.466-467. The problem for the appellants here had been that no proper opportunity to respond to material obtained by the Traffic Commissioner after the completion of the oral proceedings of the inquiry had been afforded. Reliance was also placed upon Ryrie (Blingery) Wick v The Secretary of State for Scotland 1988 S.L.T. 806 and particularly what was said by Lord Cullen, as he then was, at pps.809-810. The fact that, in that case, the court was unable to say what influence the representations which the pursuer might have made would have had was unimportant. Nevertheless reduction was granted. Likewise, in the present case, it was not possible to say what difference to the decision any representations which the first named appellant might have made would have had. Yet that did not constitute a reason why the remedies sought should not be granted. However, it was plain from what had been said by the Traffic Commissioner that the material which he had obtained subsequent to the oral proceedings in the inquiry would have had a material bearing on the issue of "good repute". In Regina v Gaming Board for Great Britain, ex parte Benaim and Khaida [1970] 2 QB 417, the Court of Appeal in England had been concerned with whether the Gaming Board had conducted their proceedings in accordance with the principles of natural justice. At p.430, Lord Denning, M.R., considered that the Board had a duty to act fairly. They had to give the applicant an opportunity of satisfying them of the matters specified in the legislation. They had to let him know what their impressions were so that he could disabuse them. Those observations were particularly apt in the present case. The Traffic Commissioner here ought to have given the appellants an indication of how his approach was developing. Thus where the Commissioner took a pro-active approach, if he elicited material of significance after the oral proceedings had been completed, he had a duty to disclose that material for comment. Counsel for the appellants also relied upon Errington v The Minister of Health [1935] 1 K.B. 249 and, particularly, the observations of Greer L.J. at pps.259-264. In the circumstances of that case there had been an on-going investigatory process, as had occurred in the present case. Nevertheless, where material of significance to the ultimate decision was elicited, the interested party had to be given an opportunity of commenting upon it. In the circumstances of the present case, counsel for the appellants pointed out that section 66 of the Public Passenger Vehicles Act 1981 created criminal penalties in respect of the making of false statements for the purposes of obtaining the grant of a licence under the Act. It was thus of particular importance that a Traffic Commissioner should give applicants every opportunity to comment upon material which might lead to adverse conclusions regarding their credibility. In the present case the Traffic Commissioner should not have concluded that a lie had been told by the first named appellant without giving him a proper opportunity of commenting on material used to reach such a conclusion.

[10] Having considered the foregoing submissions in relation to ground of appeal 3, we enquired of counsel for the Secretary of State for Transport whether he intended to make any submissions on the same subject matter. He indicated that he did not. In that situation we felt able, without requiring counsel for the appellants to make submissions on all of his other grounds of appeal, to reach a decision. However, we would wish it to be emphasised that the decision which we have reached on the foregoing matter has been reached in the absence of any contradictor of the appellants' submissions.

Decision:
[11] As we have already explained, the Traffic Commissioner, in this case, decided to hold an inquiry in relation to the matters which he was considering. His decision to do so and his indication of the scope of the inquiry are explained in the letters convening it, sent to all three appellants, dated 11 June 2001. The holding of such inquiries is, of course, governed by the provisions of section 54 of the Public Passenger Vehicles Act 1981 and also Regulation 9 of the Public Service Vehicles (Operators' Licences) Regulations 1995. Under Regulation 9(3) of those Regulations, the Traffic Commissioner is obliged to:

"take into account any representations which he receives by virtue of and in accordance with any notice which he gives under paragraph (1) before he decides whether or not to take any action which the notice stated he was considering."

Against this background of statutory provision, we are persuaded that indeed the common law does import into the conduct of inquiries such as are mentioned, the principles of natural justice which it recognises. We are confirmed in this view by what was said in Moore v Clyde Pilotage Authority. In that case, as in this, a right to be heard was available to the individual affected by the decision in question. Of that Lord President Normand, at p.464 said this:

"The right to be heard, which is statutory in this instance, carries with it a right to hear the evidence against the pilot in order that he may have a reasonable right of reply, for no man has a reasonable right of reply unless he knows what he has to meet, and a right of reply is clearly included in a right to be heard."

Again, Lord Moncrieff, at p.468 said:

"I cannot hold that a statute which ordains, in terms of the ordinary common legal understanding of the administration of justice, that one whose conduct is being investigated is to have a right 'to be heard' is properly observed if the only opportunity afforded is limited to being allowed to make an ex parte statement; and it does not include a further opportunity of hearing and answering any adverse evidence which may be tendered. Such a restriction infers a denial of the most rudimentary conception of justice....".

The nature of this right was further elaborated by Lord Denning, M.R., in Regina v Gaming Board for Great Britain, ex parte Benaim & Khaida, at p.430, where he said:

"The statute says in terms that in determining whether to grant a certificate, the Board 'shall have regard only' to the matters specified. It follows, I think, that the Board have a duty to act fairly. They must give the applicant an opportunity of satisfying them of the matters specified in the sub-section. They must let him know what their impressions are so that he can disabuse them."

Similar views were expressed by Greer, L.J. in Errington v The Minister of Health at pps.261-264.

[13] Since the present appeals are brought from the decision, not of the Traffic Commissioner, but of the Transport Tribunal, it is necessary to examine how they approached this aspect of the case. So far as we can see, their approach to the matter is set out in paragraph 22 of their decision where, after referring to Regina v Gaming Board for Great Britain ex parte Benaim and Khaida and Errington v The Minister of Health, they say of the Traffic Commissioner's enquiries following upon the conclusion of the inquiry hearings:

"But he was open about what had been done and invited comments on the results of his enquiries, both during the hearings and later. Mr McAteer duly wrote his letter of 1 October 2001 and did not suggest the Traffic Commissioner's procedure had been unfair. Although we think that it is preferable if traffic commissioners resist personal research and rely upon a written statement, we see no unfairness in what occurred."

Looking at what is said in paragraph 26 of the Traffic Commissioner's decision, we cannot agree with the conclusion that there was no unfairness in what occurred. Accordingly, we conclude that the Transport Tribunal erred in law in reaching the opposite conclusion. In all of these circumstances, we shall make an order (i) quashing the decision that the third named appellants have failed to meet the requirement for a licence to be of appropriate financial standing; (ii) quashing the decision that the third named appellants fail to meet the requirement to be of good repute; and (iii) quashing the decision to disqualify the first named appellant from holding an operator's licence in any traffic area for a period of five years. We make no remit in relation to the application of the third named appellants, which was refused, on account of the fact that we were informed that a fresh application has been made by them which can now be considered. We think it right to say that we think that our decision in relation to the adverse conclusion reached by the Traffic Commissioner in relation to the first named appellant has been rendered virtually academic on account of the information which was placed before us during the course of the hearing to the effect that he had decided to relinquish his involvement in the public passenger vehicle industry. No doubt, if he were to reconsider that decision and seek to become the holder of an appropriate licence, in view of the circumstances disclosed in this case, his application would be given particularly careful scrutiny.

[14] Before parting with this matter, we think it appropriate to make observations on two aspects of what has occurred in this case. First, having regard to the requirements of natural justice which we consider apply to a situation in which a Traffic Commissioner conducts a public inquiry, we have been concerned by the conduct by the Commissioner here in pursuing investigations of his own following upon the closure of the inquiry proceedings on 13 September 2001. Where investigations are made at such a stage in proceedings, no doubt it would be possible for the requirements of natural justice to be observed if the applicants were to be given a full and effective opportunity to rebut any adverse inferences which might be drawn by the Traffic Commissioner on the basis of the results of his investigations, which we do not think was done in the present case. That might be achieved either by the reconvening of the oral proceedings and the giving of full notice to the applicants of the nature of the material elicited, or, alternatively, by the full disclosure of that material and the affording of a full and effective opportunity to comment upon it. However, we think that the better course might well be for such investigations not to be conducted at all, unless there exists a compelling reason for the taking of such a course, which is stated. We consider that, in cases where such investigations are conducted, there may be a serious danger that the proceedings will not satisfy the requirements of natural justice, as we have explained them, unless great care is taken to follow one or other of the courses which we have mentioned.

[15] Secondly, we wish to comment upon the absence of a contradictor in the present proceedings upon the grounds of appeal which have commended themselves to us. As we have already narrated, an Extra Division of the court, at an earlier stage in these proceedings, decided that the Traffic Commissioner could not be represented before this court for the purpose of defending his own proceedings and decision against criticism. (See Coakley v Secretary of State for Transport 2003 S.L.T. 1367). It appears from that decision that the court contemplated that the Secretary of State would have available to him the transcript of the proceedings before the Traffic Commissioner and the written reasons given by him for his decision. Further, as Lord Kirkwood put it, on pages 1370 and 1371 of the report, in paragraphs [12]:

"In the event of an appeal to the Court of Session on a point of law, it seems clear that the Secretary of State will have all the information before him to enable legal arguments to be presented on his behalf, including arguments in support of the commissioner's decision and in relation to important points of legal principle or human rights issues.... While we were told that the Secretary of State took the view that it would not be appropriate for him to be involved in the merits of an appeal, where he had not been the decision maker, I do not consider that we were presented with any convincing reason as to why he should not be in a perfectly good position to deal with any issues of law which arise in the course of an appeal. In the circumstances I have reached the conclusion that in an appeal of this nature to the Court of Session the proper contradictor is the Secretary of State and not the traffic commissioner."

Unfortunately, in these appeals, matters did not proceed in the manner contemplated by the Extra Division. Despite what had been said in their decision, the Secretary of State decided to confine the submissions which he was prepared to make to this court to what were described as human rights issues, being submissions in relation to the compliance of the system of Traffic Commissioners and the Transport Tribunal with international requirements. The result of that posture and the earlier decision of the Extra Division has been that no person was represented before the court who was both able and willing to make submissions concerning the appellants' contentions in relation to what might be called the merits of the appeals themselves, leaving aside human rights issues. The unfortunate result has therefore been that this court has had the disadvantage of requiring to make a decision on the appeals without the benefit of a contradictor in relation to, inter alia, the matters which have formed the grounds of its decision. That state of affairs inevitably has an effect upon the standing of this court's decision.

[16] In the circumstances described, it may be that the decision of the Extra Division should be reviewed by a larger court. Alternatively, it may be that the Secretary of State will wish to review his approach to the scope of his submissions in future cases similar to this one.