Neutral Citation Number: [2012] UKUT 200(AAC) Appeal No: T/2012/12

 

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

(TRAFFIC COMMISSIONER APPEALS)

 

ON APPEAL FROM THE DECISION OF MILES DORRINGTON,

DEPUTY TRAFFIC COMMISSIONER for the EASTERN TRAFFIC AREA,

DATED 28 FEBRUARY 2012

 

Before:

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

Patricia Steel, Member of the Upper Tribunal.

John Robinson, Member of the Upper Tribunal.

 

 

Appellant:

ALUMINIUM SHAPES LTD

 

 

Attendance:

For the Appellant: Mr T. Nesbitt, Counsel instructed by Rothera Dowson, Solicitors

 

Appeal heard at: Victory House, London.

Date of hearing: 31 May 2012

Date of decision: 18 June 2012

 

 

DECISION OF THE UPPER TRIBUNAL:

 

IT IS HEREBY ORDERED that the appeal be allowed. The directions of the Deputy Traffic Commissioner are set aside. The matter is remitted for re-hearing by a different Traffic Commissioner. A new call-up letter should be issued.

 

 

Subject matter:

The appearance of unfairness at public inquiry.

 

If a licence is found to be void from the outset (ab initio), it is not logical to make directions suspending it and revoking it. However, a finding that a licence is void ab initio will only be made with extreme caution and is not likely to be appropriate where power to take regulatory action exists under the Goods Vehicles (Licensing of Operators) Act 1995.

No such finding should be made without consideration of all the evidence and implications.

 

Cases referred to:

Porter v McGill (2002) 1All ER 465

Al Madina Transport Ltd (2003/350)

 

 

REASONS FOR DECISION:

 

1)     This was an appeal from the decision of the Deputy Traffic Commissioner for the Eastern Traffic Area made on 28 February 2012 when he revoked the company’s restricted operator’s licence authorising 2 vehicles. The Deputy Traffic Commissioner gave an oral decision, extracts from which were then set out in a decision letter dated 28 February 2012.

 

2)     The letter states that: “The operator’s licence must be revoked, as it was void ab initio and such an order is made under S26(1)(h) of the Act”. The revocation was said to come into effect at 23.59 hours on 28 March 2012.

 

3)    At the same time, the Deputy Traffic Commissioner suspended the licence with immediate effect until such time as evidence was received from the operator’s insurers that the operator’s policy of motor insurance was valid. According to the Deputy Traffic Commissioner’s oral decision, and the subsequent decision letter, S26(1)(h) provided the basis under which the licence was suspended, namely that there has been a material change in the relevant circumstances of the licence holder since the licence was issued.

 

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

(i)     In September 2006 the Traffic Area Office received an application for a restricted operator’s licence in the name of Aluminium Shapes Ltd. The names of the directors of the company were given as Geoff Poyner, Paul Doran and Darren Henry. The form was signed by Mr Henry as a director.

(ii)    On 15 September 2010 a laden vehicle was inspected at the VOSA weighbridge at Ross-on-Wye. The vehicle displayed a disc in the name of Eastern Aluminium Co Ltd but the driver said that he was working for Aluminium Shapes Ltd. Enquiries then disclosed that the directors of Aluminium Shapes Ltd were Mr Meyer and Mr Cooke. Driver’s hours offences were also revealed, and it also transpired that the vehicle belonged to Aluminium Shapes Ltd but it had not been specified on its operator’s licence - and no application had been made to increase its authorisation.

(iii)  On 4 October 2011 the operator licence checklist was returned to the Traffic Commissioner’s Office. The checklist declaration was signed by a Mr Oliver Tonkin as director. On the list of directors, the names of Messrs Poyner, Doran and Henry had been crossed out and Mr Tonkin’s name added. No other directors were identified and no explanation was offered. Enquiries of Companies House showed that none of the directors named on the original application form had ever been directors of the operator company.

(iv)  On 20 September 2011 a call-up letter had been sent to the operator. Amongst the issues raised was the company’s failure to inform the Traffic Commissioner of any material changes. On 25 October 2011 the operator’s legal representatives requested an adjournment of the public inquiry. Mr Meyer and Mr Cooke were unavailable. Mr Tonkin was also referred to in the letter as a director of the company – he was appointed in April 2011. The application for an adjournment was granted.

(v)   On 27 February 2012 the operator’s legal representatives wrote to the Traffic Commissioner explaining the corporate structure of which the Aluminium Shapes Ltd was a part. The letter went on to state:

“Aluminium Shapes is a company which fully admits that there have been issues with communication and its understandings of the ‘O’ Licensing obligations. As is all too often the case, as a restricted operator, the application for an operator’s licence was made without any real understanding of the obligations they were agreeing to. The application for Aluminium Shapes was made by three senior members of the company who called themselves directors. The board of directors at that time were Martin Cooke and Michael Meyers who had no background in transport. Although they were vaguely aware that their colleagues had made an application for an ‘O’ licence, it was presented to them as a cost saving exercise. They never saw the application and the obligations that attach to it. We accept that ordinarily Traffic Commissioners are entitled to assume that directors have seen the application but unfortunately in this instance, this was not in fact the case”

(vi)  The public inquiry took place on 28 February 2012. After the introductions the Deputy Traffic Commissioner raised the issue of the application form dated 4 September 2006 signed by Mr Henry as director and naming two other people as fellow directors. As the operator’s legal representatives had accepted, it was now clear than none of the three persons named were directors in the legal sense. The Deputy Traffic Commissioner then raised the matter of the licence checklist, which still did not list all the directors and which, according to the Deputy Traffic Commissioner, should have put Mr Tonkin on notice that the application had originally been made by a person or persons who, on the face of things, had no authority to do so. Consequently, the Traffic Commissioner had been given statements of fact about directors that were incorrect.

(vii) The Deputy Traffic Commissioner then announced to Mrs Wood, representing the operator at the public inquiry, that in his view the whole application for this licence was patently false and, therefore, the application being false, the licence had to be removed with immediate effect. This was because it could never have been applied for by Mr Henry.

(viii)         The Deputy Traffic Commissioner said:

 “ … and, as a result of your missive in which you have confirmed that the directors had no knowledge that the application was being made, it could not be argued that Mr Darren Henry acted under the doctrine of agency or delegated responsibility on behalf of the directors, and I can tell you now that you cannot have retrospective permission.”

(ix)  The Deputy Traffic Commissioner said that he would give Mrs Wood “ten minutes to think about this with your clients” but, before he retired, he stated that, as a matter of law, this application should not have been made, could not have been made, and the only means of correcting it was to revoke the licence. Then, having revoked the licence, the issue would be the conduct of the directors, and the Deputy Traffic Commissioner said that he would need very persuasive argument as to why he should not disqualify under section 28. The Deputy Traffic Commissioner then raised the possibility of passing the file to the police because it was an offence to give false information on an application form for an operator’s licence.

(x)   Before retiring, the Deputy Traffic Commissioner also said that Mrs Woods could address him on the question of revocation but he did not see how, as a matter of law, the licence could be regarded as valid. It was “just as if you applied for a passport falsely, that passport would not be valid”. He finally said that, with regard to disqualification, Mr Tonkin may be in a better position than the other directors, given the correction made on the licence checklist.

(xi)  After a short adjournment, Mrs Woods said that the directors had been aware that an application for an operator’s licence was to be made as a cost saving exercise, but they did not sign the application because it was not placed in front of them. The persons named as directors on the form had used the term ‘director’ very loosely – as in Financial Director or Sales Director. There was no intention to deceive. The Deputy Traffic Commissioner said that this was irrelevant. On the evidence it was an “illegitimate” application.

(xii) The Deputy Traffic Commissioner said that he did not accept that lay people did not understand the significance of the term ‘director’ and even if there was no intention to deceive, the form did deceive.

Mrs Wood: I accept it was misleading, Sir. All I am saying is it was not done so knowingly.

DTC: Now, when is the revocation going to take place or would you like to address me further on a point of law?

A discussion then took place about an RHA Audit which had been submitted late, and then the Deputy Traffic Commissioner said:

DTC: Right. So it is a question of how long, if at all, I give before the revocation takes place because at the moment, and I am going to ask you to take instructions on this because this is absolutely fundamental, your clients have no valid policy of insurance to operate those vehicles because all commercial policies of insurance are dependant upon there being a legitimate and lawful operator licence in place. Now, I wonder how you are going to get over that hurdle. So as a matter of road safety how can I allow an operator who is technically unauthorised to operate and, therefore, without valid insurance cover, how can I allow them to carry on operating?

Mrs Wood took instructions and again said that Mr Henry had been given authority to make the application although the directors accepted that they did not have sight of the application.

DTC: That is their problem. That is the end of the issue …

Mr Tonkin subsequently interjected:

Mr Tonkin: Are you saying that … there is no licence, it is void ab initio, if you like?

DTC: Correct, The application was void.

Mr Tonkin and Mrs Wood then began to question the implications of this:

Mr Tonkin: There is either a licence or there is not a licence, so there is not a licence even though there is a licence …

And shortly after:

Mrs Wood: I am still a little confused on for what reason I would be asking you to delay revocation. What would be the benefit of that if there never was a licence? … You would be delaying an invalid licence.

(xiii)         The Deputy Traffic Commissioner said that he would have to revoke the licence because he had to correct the situation, but he would defer consideration of disqualification pending a police investigation.

(xiv)         Finally, Mrs Wood pointed out that the original application had been accompanied by a set of accounts that listed the true directors.

 

5)     At the hearing of this appeal, the Appellants were represented by Mr Nesbitt who submitted a skeleton argument for which we were grateful.

 

6)     The principal point made was that the Deputy Traffic Commissioner had not presided over a fair hearing in that he had clearly pre-judged issues, failed to entertain explanations and failed to follow a fair, transparent and proper procedure. The consideration of alternative explanations or characterisations of any impugned conduct is a requirement of a properly reasoned judicial decision. The balancing exercise should involve (amongst other matters) allowing or facilitating the giving of evidence, the weighing up of the evidence to make findings of fact, the consideration of any explanation or mitigation, an assessment of the level of culpability to be attributed to the operator or its directors, the weighing in the balance of matters going to the credit of the operator or directors, and a consideration of the consequences of revocation. Where a complex matter of law arose, submissions should be invited and in any event, after all the evidence, closing submissions should be permitted. The Deputy Traffic Commissioner’s decision failed to involve any of these steps.

 

7)     We agree with Mr Nesbitt’s submission as to the unsatisfactory conduct of the public inquiry. On the basis of the test laid down in the case of Porter v McGill (2002) 1All ER 465 we feel obliged to ask ourselves what conclusion would have been reached by a fair minded, independent member of the public with full knowledge of all the relevant facts, who considered the Deputy Traffic Commissioner’s approach in context? We feel compelled to say that such a person would have been bound to conclude that the Deputy Traffic Commissioner appeared to have made up his mind from the outset to revoke the licence, come what may. As the Transport Tribunal said in Al Madina Transport Ltd (2003/350), there may well be times when the Traffic Commissioner might indicate that it is no longer necessary to address him or her on a particular topic. It may even be appropriate, on occasion, to say words along the lines of: “I cannot exclude the possibility of revocation or disqualification”. But there is a difference between: “I cannot exclude the possibility” on the one hand, and “I am minded to revoke the licence” on the other.

 

8)     Having read the entirety of the transcript with some anxiety, and noted it’s complete lack of structure with no proper opportunity for the operator’s legal representative to call evidence or make uninterrupted submissions, and having regard to the Deputy Traffic Commissioner’s comments throughout the proceedings, we are driven to the conclusion that the Appellant and its directors do not appear to have received a fair hearing.

 

9)     We asked Mr Nesbitt to address us on the concept of an operator’s licence being void ab initio. Mr Nesbitt contended that a better concept would be a “nullity” but he argued that, as a matter of practice, such a concept should be invoked with extreme caution. Even where the licence holder made, or procured to be made, a statement of fact which (whether to his knowledge or not) was false for the purposes of an application for a licence, the power to revoke had been given by virtue of S.26(1)(e). It was not possible to revoke or suspend, let alone defer revocation or relax the suspension of, a licence that did not, in law, exist.

 

10) We agree that the use of the idea of a licence that is void ab initio is fraught with difficulty and would generally be inappropriate unless, for example, none of the scenarios envisaged by section 26 or 27 could apply. This might arise where, say, a person fraudulently applied for a restricted licence in another person’s name without his knowledge or agreement. In those circumstances, S.26(1)(e) could not apply because the false statements of fact would not have been made, or procured to be made, by the named licence holder. Nevertheless, it is an indication of how rare such a situation appears to be that we have found no jurisprudence from this jurisdiction on the point. We also noted that, as a matter of logic, declaring a licence to be void ab initio would appear to deprive the Traffic Commissioner of the power to revoke it, and so it would also deprive the Traffic Commissioner of the power to disqualify anyone found deserving of disqualification.

 

11) These observations lead us to consider the inherent illogicality and inconsistency in the Deputy Traffic Commissioner’s findings. He purported to revoke a ‘void ab initio’ licence on the grounds that since the licence was issued, there had been a material change in the circumstances of the licence holder that were relevant to the issue of the licence – S.26(1)(h). However, it is clear from the Deputy Traffic Commissioner’s words that he was not concerned with a material change, he was concerned with a problem that arose right at the start, at the time of application. Had he found that the licence holder, for the purposes of an application for a licence, made or procured to be made a statement of fact which (whether to his knowledge or not) was false, then he could have considered revocation under S.26(1)(e) – but only after a fair hearing, and only if he found that it was the licence holder who had made, or procured to be made, the false statements. If he was concerned that the licence holder may not have made or properly authorised the making of the application containing the false statement(s), then he should, first, have investigated the matter fully and fairly. Having considered the evidence and made findings on the point, and if appropriate, he may than have turned to consider the status of the licence itself in the light of his conclusions, and invited representations or submissions on what his powers, if any, might be. But, in our view, there was no full and fair investigation of the extent to which the true directors of the company knew about, or authorised, the application.

 

12) We are also puzzled by the Deputy Traffic Commissioner’s thinking in relation to the suspension – also on the basis of S.26(1)(h). First, although we have not heard argument on the point, we are not entirely happy with a revocation and a suspension on one and the same ground under S.26. The wording of the S.26 suggests that the Traffic Commissioner may direct that the licence be revoked, suspended or curtailed on any one of the S.26 grounds. Of more significance, however, is the illogicality of suspending a licence that is considered to be void ab initio, and to do so on the grounds that, since the licence was void ab initio, any motor insurance held by the Appellant would be invalid, and to further make provision to lift the suspension of the void licence in specified circumstances.

 

13) We conclude that the process of this public inquiry was seriously flawed and the outcomes are plainly wrong. We set aside all the Deputy Traffic Commissioner’s directions. We cannot substitute our own decision because evidence will need to be taken. It is for a different Traffic Commissioner to determine the status of the operator’s licence having regard to the circumstances of the application made in 2006. If it is determined that the licence issued was not void ab initio, and is therefore subject to the regulatory provisions of the 1995 Act, it will then be for the Traffic Commissioner to consider, after a fair hearing, whether there are grounds for exercising any of the Traffic Commissioner’s powers under the Act. If there are such grounds, it will then be for the Traffic Commissioner, having asked the correct questions, to decide whether it would be right to take such action. In our view, a new call-up letter should be issued that fully sets out the issues to be considered.

 

14) The appeal is allowed.

 

 

Judge Mark Hinchliffe, DCP

18 June 2012