Neutral Citation Number: [2011] UKUT 260 (AAC)

Appeal No.  T/2011/04

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of Philip Brown

Traffic Commissioner for the South Eastern and

Metropolitan Traffic Area

Dated 6 December 2010

Before:

Frances Burton, Judge of the Upper Tribunal

Leslie Milliken, Member of the Upper Tribunal

David Yeomans, Member of the Upper Tribunal

Appellants:

J BROWNE CONSTRUCTION LIMITED &

J BROWNE PLANT LIMITED

Attendances:

For the Appellants: Mark Laprell of Counsel

Instructed by Pelly’s Transport & Regulatory Law

Heard at: Victory House

Date of hearing: 16 May 2011

Date of decision: 15 June 2011

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be ALLOWED

REASONS FOR DECISION

1.           This was an appeal from the Decision of the Traffic Commissioner for the South Eastern and Metropolitan Traffic Area, dated 6 December 2010, when he revoked the Appellants’ standard national goods vehicle licences under s. 26(1)(b), s.26(1)(c)(iii), s.26(1)(e), s.26(1)(f), s.26(1)(h), s.27(1)(c) and Schedule 3 (J Browne Construction Company Limited) and s.26(1)(b), s. 26(1)(e), s.26(1)(h) and s.27(1) and Schedule 3 (J Browne Plant Limited)  of the Goods Vehicle (Licensing of Operators) Act 1995,  (“the Act”) with effect from 23.59 hours on 31 January 2011. The Decision also stated that in the case of both Appellant companies the repute of both operators was severely tarnished by reason of the failure of their Directors to ensure full compliance with s 27(1)(c) of the Act.

2.           The factual background appears from the documents, the transcript of the public inquiry and the written Decision of the Traffic Commissioner, and is as follows.

(i)              The Appellant companies each hold standard national goods vehicle operator’s licences authorising 15 vehicles.  In both cases it had come to the notice of the Central Licensing Unit (“CLU”) in Leeds that the nominated Transport Manager was no longer acting in that capacity.  Owing to the Appellants’ failure to answer correspondence in this regard there was also a consequential concern about material change and financial standing.

(ii)             On 19 March 2009 the CLU wrote to J Browne Construction Company Limited (“J Browne Construction”) and received no answer to that letter. In December 2009 an unsatisfactory fleet inspection was recorded by VOSA (owing to prohibitions) and letters of 8 and 26 January 2010 requesting explanations for the shortcomings similarly went unanswered.  This was followed by a further letter from the Regional Intelligence Unit on 9 March 2010 requesting a response by 16 March 2010 and by a “minded to revoke” letter from the Office of the Traffic Commission on 18 May 2010 because of the failures to respond to previous letters, also indicating that unless a Transport Manager was nominated the Traffic Commissioner would consider revocation.  A response was finally received from this Appellant company on 24 May, attributing earlier silence to administrative lapses and providing details of the CPC holder. However confusion over the status and identity of this person continued in correspondence with the CLU and the Appellant company finally requested a 15 month period of grace in order to appoint a new Transport Manager for both the associated operator companies.  However, at the same time there was a failure to demonstrate financial standing as requested by the CLU and the unsatisfactory maintenance report was brought to the Traffic Commissioner’s notice, whereupon a decision was made to call both operator companies to public inquiry to explain their non compliance, in particular in relation to the long period of lack of Transport Manager.

(iii)            With regard to J Browne Plant Limited (“J Browne Plant”) the history was similar.  The CLU wrote to that company on 17 December 2008 about the apparent lack of effective Transport Manager in their case, and they were given until 31 December 2008 to respond by nominating a new Transport Manager. Meanwhile on 23 December 2008 the company replied that a potential CPC holder was awaiting the examination results but that in the meantime there was another CPC holder available to carry out the Transport Manager’s duties, whom they did not, however, wish to nominate as Transport Manager on a permanent basis.  The CLU then wrote again on 7 February 2009 requesting that a Transport Manager be nominated by 21 February 2009, but this received no reply until a “minded to consider regulatory action” letter was sent which produced a reply on 26 March 2009: this response was from the CPC examinee previously referred to, who had in fact failed the examination but was booked to retake it on 15 June 2009. This was followed on 2 July 2010 by a letter from the Commercial Director of the company indicating that there were problems with the CPC holder (who had in any case still not been nominated as Transport Manager on the licence) and a different employee was now taking the CPC course.  As a result the Unit wrote on 22 July 2010 requesting that a Transport Manager be nominated by 5 August 2010. Confusing correspondence had continued throughout 2010 about the identity of the CPC holder, culminating in a request for an 18 month period of grace to nominate a new Transport Manager, as a result of which the Traffic Commissioner had decided to call the operator company to public inquiry in view, inter alia, of the long period without a nominated Transport Manager.

(iv)           The public inquiry duly took place at Eastbourne on 21 September 2010 before the Senior Traffic Commissioner, and was attended by Mr L Summers (Managing Director of J Browne Construction and a Director of J Browne Plant), Mr P Hartley (Commercial Director of both companies), Mr J Browne (Director of both companies), Mr M McDaid (the  new Transport Manager – described as “potential” in the public inquiry transcript as he had not yet been formally nominated) and Mr K Harwood (Specialist Business Manager).  Evidence was given for VOSA by the Vehicle Examiner involved (VE Lee Mounsey). The operator companies were represented by Mr R Pelly (Solicitor).

(v)             The Traffic Commissioner considered the following issues: lack of Transport Manager since 19 March 2009 (J Browne Construction) and 17 December 2008 (J Browne Plant) and an unsatisfactory fleet inspection on 4 December 2009 (J Browne Construction).  VE Mounsey gave evidence of his unannounced inspection at the purpose built premises of J Browne Construction in December 2009, a visit which had been generated by an “S” marked prohibition (for obscured direction indicators).  He said that the fleet was a mix of tippers and plant transport vehicles varying in size and axle configuration.  He had retrieved compliance and enforcement history from the VOSA database and while the annual test history was in line with the national average there were driver related deficiencies which were the cause of the 5 prohibitions involved in the maintenance inspection and which had caused the inspection to be unsatisfactory, although Mr Mounsey agreed that the lack of further prohibitions since the date of the inspection indicated that the operator had since done everything it could to comply with the requirements of the licence.  The J Browne Construction licence had been granted in 1995 and changed status in 2007.

(vi)           For the Appellant companies Mr Summers gave evidence that he was a Chartered Civil Engineering surveyor with a postgraduate certificate in Management Studies and was also a member of the Institute of Directors. He said the companies were engineering and utilities contractors. J Browne Plant was the associated transport fleet which they intended to grow into a specialist business.  He said that there had been personnel issues since the departure of the previous Transport Manager in December 2008, when other individuals had stepped into his shoes.  There had then been a problem when one of these employees (Terry Beeston) had failed 2 modules of his CPC, he then left and was followed by James Creedon who had been booked onto a course to take the CPC examination, which he had passed, but subsequently he too left.  However Mr Summers conceded that either these changes had not been notified to the Traffic Commissioner (or alternatively that he was uncertain whether they had been or not as it appeared that it was expected that Mr Creedon would have sent such a notification himself - as previous Transport Managers had - and the Traffic Commissioner was certainly unable to find any such correspondence between March 2009 and July 2010). As a result of this uncertainty the Traffic Commissioner concluded there was a fundamental breach of s 27(1)(c) of the Act since there appeared to be no evidence as to the identity of the responsible person – or whether this was that of the Board of Directors – to ensure that there was a Transport Manager in place and that his identity was notified to the Traffic Commissioner, since VOSA correspondence went to the Company Secretary in the case of each company, although it appeared that Mr Harwood and Mr Hartley had both been brought in to be responsible for transport management.  Mr Summers, however, also gave evidence that one of the long standing fitters (Noel Walsh) had also been available as a CPC holder who could have been nominated as an interim Transport Manager, but despite his 10 or 12 years’ service was not in fact nominated, as the company had preferred to get the right person trained before establishing a permanent Transport Manager in post, which was what had occurred when they had appointed Mr McDaid (having considered training Mr Harwood for that position).  Mr McDaid was, however, more suitable as he was experienced and had previously worked for a very similar company.  The Traffic Commissioner confirmed that he was “quite happy with Mr McDaid” as he had “a track record which works” and Mr Summers confirmed that if the companies kept their licences Mr Hartley would be supervising Mr McDaid. thus ensuring that the same deficiencies as before would not re-occur, and the companies were compliant with operator licensing.  He conceded that they had “made a monumental mess” in relation to the Transport Manager issues but had learned from it, adding that they would be unable to trade without their licences which would put 176 people out of work.

(vii)          The Traffic Commissioner also heard evidence from Mr Jeremy Browne, a Director of both companies (and of other family companies) who indicated that he had a BSc in Surveying and a Masters Degree in Business Administration.  He said that the businesses had been in existence for 40 years and that he was the owner, so that as such he took ultimate responsibility for any failure to deal with licensing authority correspondence, but would have hoped that the person actually responsible (the companies’ Plant and Transport Manager) would have dealt with such correspondence.  He said that the Company Secretary for both companies had been his mother but that she had not done anything in that capacity for some time, she lived in Ireland and had recently resigned.  It appeared that neither this nor the death in 2005 of Mr Browne’s late father, also a Director, had been notified to the Traffic Commissioner, nor had the appointments as Directors of Mr Summers and Mr Hartley, nor the resignations as Directors of a Mr Smallbone and Mr McArthy, although Mr Browne explained that there had been a restructure and the Companies House records did now reflect all these changes.

(viii)         Mr Browne gave evidence that he was involved in the management of the companies. He visited the yard weekly but had delegated the operational management to Mr Hartley and Mr Summers.  He accepted (and apologised for) the breach of s. 27(1)(c) in relation to the nomination of a Transport Manager but reiterated that if the companies lost their licences they would be unable to operate and many people who had worked for the business for 20-25 years or more would be adversely affected as they would be instantly out of work.

(ix)           Mr Hartley then gave evidence confirming that he was a Chartered Surveyor, with a BSc Hons in Quantity Surveying and a Certificate in Management Studies who had worked for the companies since 2007. He said that he had very recently been appointed a Director, and in his post as Commercial Director did not have much knowledge of the transport side but had appreciated that a Transport Manager was necessary: he had thought that that was James Creedon, who had subsequently been removed, and he had himself then brought in Keith Harwood as Transport Co-Ordinator and had arranged for him to train as a CPC holder.  He accepted that without a nominated Transport Manager the companies were operating illegally in licensing terms but thought that this had been an administrative failure that would not happen again.  Mr McDaid then gave evidence that he was by occupation a Transport Manager with a national CPC, and was fully aware of the companies’ transport operations, which he described as “not engaged in major haulage work”.  He said he was not really surprised therefore that the Directors were not fully aware of the detail of compliance with operator licensing and that other aspects of their business had taken priority, although he added that the companies had a “very good name in the industry” and the transport division was “run really well”.

(x)             In final submissions Mr Pelly underlined the credibility of the witnesses, which the Traffic Commissioner accepted (stating that he “believed that they believed what they believed”).  He also accepted that the operators had been operating lawfully for a long time.  Mr Pelly emphasised that throughout the time that there had not in fact been a nominated Transport Manager in place there had been a CPC holder available who could have been nominated.  The operators belonged to the RHA.  As such there had been “no hint of disregard” of the licensing regime.  Mr Pelly relied on the Priority Freight authority for the proposition that it was very likely that the companies would have learned from their experience and be likely to be compliant in future.  He submitted that neither operator deserved to be put out of business.  The Traffic Commissioner, having determined earlier that he did not need to concern himself with financial standing, then reserved his decision and later made the determination in his written Decision of 6 December 2010.

3.           At the hearing of the appeal Mr Mark Laprell of Counsel appeared for the Appellant companies and the management who had attended the PI were also present personally. Mr Laprell referred to the detailed grounds of appeal submitted by Mr Pelly which relied on (i) the fact that whether an operator is professionally competent is to be judged at the date of the determination i.e. either at the PI or at the time of the Traffic Commissioner’s Decision; (ii) the lack of a nominated TM from late 2008 to September 2010 when there was no such person nominated might be relevant to repute but not to professional competence at the date of the PI or Traffic Commissioner’s Decision; (iii) the Traffic Commissioner had considered repute and found that the Appellants should not be put out of business, so if they should not be put out of business under s. 27(1)(a) there was no logic for their being put out of business under s.27(1)(c) for a past failure no longer relevant; (iv) the Traffic Commissioner failed to make any findings of fact in respect of any of the relevant issues  under s. 26(1); (v) Under his heading “Evidence” in paragraphs 18-22 of the Decision the Traffic Commissioner failed to make any findings of fact or to place them in context, but merely summarises the evidence, however omitting the positive evidence of VE L Mounsey, and there were no findings about maintenance, drivers’ hours or any other aspects of the companies’ compliance; (vi) paragraph 22 of the Decision similarly summarised the submissions without assessing their merit; (vii) the Traffic Commissioner did not consider that in fact the companies did not need the standard national licences which required a nominated Transport Manager as they only carried their own goods, and this was relevant to the significance of the s. 27(1)(c) breach and the weight to be given to it; (viii) the Traffic Commissioner when considering the s. 26(1) provisions did not take account of the fact that there was now a suitable person in post as Transport Manager; (ix) there was no analysis of the significance of the prohibitions; (x) the Traffic Commissioner’s reference to s.26(1)(e) was unclear; (xi) in relation to s. 26(1)(f) the Traffic Commissioner did not state which undertaking was breached; (xii) in relation to s. 26(1)(h) it was not stated which failures to notify which changes was relied on. (xiii) the Traffic Commissioner had not stated how he had had regard to Bryan Haulage No 2 and  Priority Freight, so that it was unclear how these authorities featured in his balancing exercise, and even how his reasoning in relation to Priority Freight  arrived at a negative answer thus apparently finding in the operators’ favour “in the hope and expectation” that each could get its house in order: (xiv) the Traffic Commissioner’s Decision was contradictory in that he found the Appellants should not be put out of business under s. 27(1)(a) but should be put out of business under s. 27(1)(b) (which findings were incompatible)  and yet had not only indicated that they could apply for a new licence but in effect invited them to do so: it was therefore submitted that the s.27(1)(b) question should have been decide in the Appellants’ favour.

4.           Mr Laprell said that in view of the long and detailed grounds of appeal in the skeleton argument which he had thoughtfully sent ahead of the hearing (for which we thanked him) focussed on only two points: (i) the fact that the Traffic Commissioner accepted the honesty of the Appellant operators’ witnesses: para 534B of the public inquiry transcript; (ii)  the fact that the Traffic Commissioner accepted that the real issue was that of the nomination of a Transport Manager and that the maintenance issues were of limited importance, i.e. that the operator was broadly compliant in regulatory terms despite the absence of a nominated Transport Manager: paras 535D and 535C.  He submitted that the entire hearing had turned on the issue of the Transport Manager, whereas at the date of the hearing there was a suitable Transport Manager in post, who gave evidence and who was accepted by the Traffic Commissioner.

5.           Mr Laprell submitted that the Appellants had drawn attention to the over reliance on Mr Creedon but the Traffic Commissioner did not refer to this in his Decision, nor did he refer to the fact that the Appellants could have operated without a standard licence although this point was made at para 537F.  Mr Laprell submitted that in the circumstances that at the date of the public inquiry Mr McDaid was in post and accepted by the Traffic Commissioner as suitable the Appellants must be taken to have complied with Schedule 3 of the Act which states that an operator “shall be regarded as satisfying the requirement [of professional competence] if and so long as he has as the transport manager of the transport undertaking …an individual who is (a) of good repute, and (b) professionally competent.”

6.           Mr Laprell continued  that since the mandatory revocation for lack of professional competence under s. 27(1)(c) was thus apparently wrong it was illogical for there to be discretionary revocation under s.26(1) when it was accepted that the nominated Transport Manager and not maintenance was the core issue.

7.           Generally on the merits Mr Laprell submitted that although there had been some unanswered correspondence it was clear that as soon as the existence of the letters had been made known to the Directors, they were answered, and the Traffic Commissioner did not reject the Directors’ evidence in this respect. Equally the Directors had assumed (wrongly as it turned out) that the new Transport Manager would be professionally competent in his dealings with the Traffic Commissioners.  As a result disciplinary proceedings were commenced against Mr Creedon leading to his ultimate dismissal.  

8.           With regard to mitigation of these administrative failures of Mr Creedon’s, Mr Laprell submitted that the Traffic Commissioner had also persistently interrupted Mr Summers when he had been trying to explain what had happened and that this was not fair, especially considering he had “held his hands up” to the breach in relation to the nomination of a Transport Manager and was trying to give what the Traffic Commissioner had called “a reason of sorts”.  However there had been no doubt that Mr McDaid had been accepted as Transport Manager and there had been a specific period of 7 days allowed from the end of the public inquiry for his paper work to be processed at Leeds so that he could be formally nominated as Transport Manager. It was therefore strange that the Traffic Commissioner could accept that Mr McDaid was competent at the time of the public inquiry in September (with no issues about his ability, and that he was duly nominated) if the Decision in December was then to revoke the licence for past failure, especially as the regulatory regime was supposed to be such and not a punitive process. He added that he was instructed that, after the Traffic Commissioner had left the room, he had had to be called back to deal with the issue of Mr McDaid’s appointment as Transport Manager since the Decision had been reserved and was not expected immediately. Mr Pelly had then expressly asked the clerk, who had spoken to the Traffic Commissioner to confirm that there had been no misunderstanding, that the operator companies could continue to operate the next day pending processing of the formal nomination of Mr McDaid by the CLU at Leeds and had received an affirmative answer, having been specifically told, in front of Mr Pelly and others, that “wheels can roll”.  Mr Laprell submitted that it was a paradox to revoke the licences after he had expressly authorised Mr McDaid’s appointment.

9.           Mr Laprell continued that it was clear that the Appellant companies took regulation very seriously, as in their business there was much in relation to Health and Safety, waste regulations and construction requirements that imposed daily demands under the correct compliance regimes,  and the quality of the customers they served – local authorities, government agencies and utilities - was such that they expected to have to do this and were therefore well aware of requirements for working with such entities.  This aspect, however, had not even been mentioned in the Decision.  In summary Mr Laprell submitted that the Traffic Commissioner had got the determination badly wrong: as if there was no repute issue there should have been either no action, or perhaps a warning.  Moreover, he submitted, that a Traffic Commissioner’s Decision should be clear and transparent, not a document in which it was necessary to read between the lines.  However, he submitted, that was not realistically possible in the case of the present Decision, from which much could not be gleaned, regardless of how closely it was studied. For example, he said that it was impossible to say how the Traffic Commissioner had taken the consequences of the breach in respect of nomination of the Transport Manager into account, or to compare it with Priority Freight in that respect (where that company’s Transport Manager had been in place throughout the breaches committed in that case).  He added that the Traffic Commissioner says at para 540H that he will look at Priority Freight, but when the Decision is read he only refers to the name, without analysing and balancing the similarities and differences.  (Mr Laprell commented that at p 541 the Traffic Commissioner expressly says he is “going to look at the parallels” -  but then in the Decision does not refer to them). He added that wherever there are findings of fact in the Decision they not  not appear to have been expressly applied either to Priority Freight or to  Bryan Haulage No 2.

10.       Finally Mr Laprell asked if we could give an oral Decision with Reasons to follow at a later date as there was some commercial sensitivity in awaiting even an expedited Decision. The case was well known and the companies would probably go into liquidation if the determination of the appeal was adverse because there would be ongoing commercial damage which to some extent had already started owing to the uncertainty of outcome.  We therefore adjourned to discuss an oral Decision, and later returned to deliver it, allowing the appeal, with Reasons to be provided in writing within the service standard timescale .

11.       With regard to the issue of the failure to nominate a Transport Manager, it appeared to us that, although clearly such an obvious failure cannot be overlooked, this was more of a technical rather than substantive breach, since there had at all times been a longstanding employee with a CPC who could have been nominated, albeit that he was not: and at the same time there were other employees who were actually performing the functions of Transport Manager. 

12.       As far as the mandatory disqualification for lack of professional competence under s 27(1)(c) is concerned we accept that at the date of the public inquiry and at the date of the Decision the Appellant companies had in place a suitable individual (Mr McDaid) approved by the Traffic Commissioner as the nominated Transport Manager and we consider that this satisfied Schedule 3 of the Act.  Accordingly, revocation for lack of professional competence was not proportionate, and on the basis of the other evidence neither was mandatory revocation for loss of repute, nor discretionary revocation for breaches of s.26(1). 

13.       Accordingly, we allow the appeal but request that VOSA makes a further maintenance inspection in 6 months’ time.  The Appellants will be aware that no doubt the Traffic Commissioner will be more than usually vigilant in expecting full compliance with the licensing regime and will be unlikely to overlook any future administrative lapses .

Frances Burton

Judge of the Upper Tribunal

15 June  2011