Neutral Citation Number: [2012] UKUT 270(AAC)

Appeal No.  T/2012/15

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 13 March 2012

 

 

 

Before:

H. H. Michael Brodrick, Judge of the Upper Tribunal

Leslie Milliken Member of the Upper Tribunal

Patricia Steel Member of the Upper Tribunal

 

 

Appellant:

FIRST MANCHESTER Ltd.

 

 

 

 

Attendances:

For the Appellant: Tim Nesbitt, Counsel, instructed by Ford & Warren, Solicitors

 

 

Heard at: Victory House, 30-34 Kingsway, London

Date of hearing: 19 June 2012

Date of decision: 26 July 2012

 

 

 

 

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be ALLOWED to the limited extent that  the penalty is reduced to £213,750 calculated at the rate of £225 per vehicle.

 

 

 

 

 

 

 

 

 

SUBJECT MATTER:-

PSV, penalty for failing to comply with registered timetables.

 

 

CASES REFERRED TO:-

Ribble Motor Services Ltd v Traffic Commission for the North Western Traffic Area [2001]EWCA Civ 267

 

 

 

 

REASONS FOR DECISION

 

 

 

1.           This is an appeal from the decision of the Traffic Commissioner for the North Western Traffic Area to impose a penalty of £285,000 under s. 155 of the Transport Act 2000, (“the 2000 Act”), calculated at the rate of £300 per vehicle.

2.          The factual background to this appeal appears from the documents and the Traffic Commissioner’s decision and is as follows:-

(i)                   The Appellant is the holder of a standard international Public Service Vehicle operator’s licence authorising 950 vehicles, with 461 vehicles in possession.

(ii)                 Over a period of 7 days between 17 January 2011 and 11 February 2011 Susan Ainslie, a Bus Compliance Officer, (“BCO”), monitored 10 out of the 369 live registrations held by the Appellant.  In total she saw 236 of the 240 journeys which she monitored, a non-compliance rate of 1%.  A total of 10 of the monitored journeys left more than 1 minute early, a non-compliance rate of 4% and 43 of the monitored journeys left more than 5 minutes late, a non-compliance rate of 17%.  The overall non-compliance rate as a result of her observations was 23%.

(iii)                Over a period of 5 days between 17 January 2011 and 2 February 2011 Ethelwynne Joan Smith a (“BCO”), monitored 6 out of the 369 live registrations held by the Appellant.  In total she saw 221 of the 224 journeys which she monitored, a non-compliance rate of 1%.  A total of 9 of the monitored journeys left more than 1 minute early, a non-compliance rate of 4% and 39 of the monitored journeys left more than 5 minutes late, a non-compliance rate of 17%.  The overall non-compliance rate as a result of her observations was 26%.

(iv)                Over a period of 5 days between 17 January 2011 and 2 February 2011 Colleen Dudley a BCO, monitored 6 out of the 369 live registrations held by the Appellant.  In total she saw 163 of the 164 journeys which she monitored, a non-compliance rate of 0%.  A total of 4 of the monitored journeys left more than 1 minute early, a non-compliance rate of 2% and 24 of the monitored journeys left more than 5 minutes late, a non-compliance rate of 14%.  The overall non-compliance rate as a result of her observations was 17%.

(v)                 Over a period of 6 days between 17 January 2011 and 2 February 2011 John Turner a BCO, monitored 10 out of the 369 live registrations held by the Appellant.  In total he saw 233 of the 239 journeys which he monitored, a non-compliance rate of 2%.  A total of 14 of the monitored journeys left more than 1 minute early, a non-compliance rate of 5% and 31 of the monitored journeys left more than 5 minutes late, a non-compliance rate of 12%.  The overall non-compliance rate as a result of his observations was 21%.

(vi)                On 15 February the Vehicle & Operator Services Agency, (“VOSA”), wrote to the Appellant providing details of the monitoring exercise.  The Appellant was given the opportunity to comment on the findings.

(vii)              On 2 March 2011 the Appellant provided a detailed reply.  It acknowledged at the outset that some services were not operating in accordance with the registered particulars and that they had been observed to be outside the parameters, of not more than 1 minute early or 5 minutes late, laid down in the Practice Direction issued on 1 January 2005.  The Appellant provided a schedule indicating where the results of the monitoring exercise were contested and why and where they were accepted.  The Appellant contended that if their figures were correct the overall unsatisfactory service provision of 21.11% on VOSA’s figures would be reduced to 15.7%.  The letter made the general point that over the period of the monitoring exercise there were a number of major road work schemes on several of the monitored routes in respect of which insufficient notice had been given to enable the timetables to be revised.  The Appellant also made the point that it found it “considerably more difficult to ensure that services were punctual at intermediate points”.  In addition it invited VOSA to consider whether the sample reviewed by the monitoring exercise was representative of the Appellant’s operation as a whole.  The letter went on to explain how the Appellant company sought to manage and monitor punctuality.  In particular it dealt with disruption caused by road works, pointing out that in most cases, including major schemes, only 2-3 weeks notice was given which was insufficient to obtain new departure slots, to design new timetables or to produce new driver duties.  It also referred to the added complication that many roadworks failed to start or finish on the designated dates.

(viii)             On 28 March 2011 a meeting took place between representatives of VOSA and representatives of the Appellant company at which the findings arising from the monitoring exercise and the response of the Appellant company were discussed.  As a result some of the challenges made by the Appellant company were accepted while others remained outstanding.  The effect of removing the agreed challenges while leaving those which were still disputed was to reduce VOSA’s initial figure for unsatisfactory service provision from 21.11% to 19.40%.

(ix)                The Traffic Commissioner was provided with a number of letters from individuals complaining about late running, non-running and early departures.  The letters went on to explain the consequences for each individual of the unsatisfactory service which had been provided.

(x)                 On 13 December 2011 the Appellant was called to a Public Inquiry which was to be held on 6 February 2012.  The Appellant was warned that following the monitoring exercise the Traffic Commissioner would consider whether to make a determination under s. 155(1)(a) or (b) of the 2000 Act and whether to impose a penalty if an adverse finding was made.  Annexed to the letter was the evidence to be given by the BCOs who conducted the monitoring exercise.

(xi)                The Public Inquiry began before the Traffic Commissioner on 6 February 2012.  The Appellant company was represented by Mr Chant.  The Traffic Commissioner began by setting out a summary of the position, as she saw it at that stage.  She immediately gave the Appellant company credit for the steps it had already taken in relation to ‘early running’.  Having referred to the statements of Mr Poole and Mr Soper, tendered on behalf of the Appellant the Traffic Commissioner said: “it is clear to me that your clients are taking an extremely proactive view as far as bus service reliability is concerned”.

(xii)               The Traffic Commissioner moved on to discuss with Mr Chant, paragraph 18 of the statement of Mr Soper, the Strategic Development Director for the North Region of the UK Bus Division of First Group.  Mr Soper asserted in that paragraph that if the remaining challenges and the ‘reasonable excuses’ put forward on behalf of the Appellant were accepted then there would be a compliance figure of 82.5%, in addition to which the Traffic Commissioner would be invited to take into account the prevailing operating conditions at the time of the monitoring exercise and, in particular the on-going and ever changing roadworks.  The Traffic Commissioner asked Mr Chant whether he wanted her to deal with the matter on the basis of a compliance figure of 82.5%.  Mr Chant replied that he put forward 82.5% as a ‘starting point’, which did not include the temporary road works, which might or might not amount to a reasonable excuse.  He submitted that if the additional factors which he wished to advance were taken into account the compliance figure would improve to 92.8%.  In the alternative he submitted that the operating conditions at the time of the monitoring exercise meant that it was not possible to achieve the target of 95% compliance.

(xiii)             Mr Poole, the Service Delivery Manager of First Manchester Ltd, then gave evidence.  He adopted his witness statement in which he began by describing the management structure of the Appellant company and, in particular, the role of Area Operations Manager, (“AOM”).  He said that each AOM was responsible for monitoring the performance of services and then acting on the information available to develop improvement plans.  He described the meeting and reporting structure and the fact that he was in daily contact with the AOMs to receive details of service performance and any urgent local issues.  He explained that he had expressed frustration to some of the local authorities about the failure to give sufficient notification of roadworks and the lack of priority given to buses during roadworks.  He went on to describe the four methods used by the Appellant to monitor punctuality and he explained how the information was used by AOMs in their meetings.  He said that the ‘early running’ figure was the first figure which he considered when provided with punctuality data, because, “early running is not tolerated” and it was his aim to keep the figure “as close to zero as possible”.  He gave an assurance that the Appellant would continue to collect and collate information about punctuality and that it would act on that information with a view to improving punctuality and reliability.

(xiv)             Mr Soper then gave evidence on behalf of the Appellant.  He explained the steps that were being taken to improve services which failed to meet punctuality standards by adjusting timetables to allow extra running and recovery time.  He said that once he was satisfied that a punctuality problem was not likely to change, for example as a result of temporary roadworks being completed, action should be taken straightaway.

(xv)              Mr Soper said that in addition to the survey of services carried out by Transport for Greater Manchester, (“TFGM”), the Appellant company carried out its own internal monitoring.  The Traffic Commissioner asked what percentage of the Appellant’s services were covered by this exercise but neither Mr Soper nor Mr Poole was able to tell her, though Mr Poole went on to say that it could be obtained very quickly.  After further questioning from the Traffic Commissioner it became clear that she faced a choice between continuing to deal with the matter, on the evidence before her, which might not present a complete picture, or adjourning to enable the whole picture to be presented.  She decided to adjourn the Public Inquiry.

(xvi)             The first day of the Public Inquiry resulted in considerable publicity that was critical of the level of punctuality achieved by the Appellant.  In addition to the evidence given at the Public Inquiry members of the public provided examples of the inconvenience caused by the failure of buses run by the Appellant to adhere to the registered timetable.  Several members of the public wrote to the Traffic Commissioner.

(xvii)            The Public Inquiry resumed on 13 March 2012.  Mr Chant began by suggesting that they should seek to agree the figures.  The Traffic Commissioner responded by saying:  “Why do we not do it on your figures?  They are pretty bad anyway”.  The Traffic Commissioner went on to suggest that that meant 17½% non-compliance or 82½% compliance and she asked Mr Chant whether he agreed.  He replied that he did, subject to paragraphs 14-21 in his skeleton argument, (which dealt with roadworks), and to some submissions which he would like to make.  There was a brief discussion about the extent to which roadworks could be taken into account.

(xviii)          Mr Soper was recalled to deal specifically with the impact of certain roadworks.  He said that the Appellant was not given any notice of work at Patricroft Bridge, which involved temporary 4 way traffic lights between 17 January 2012 and 28 January 2012.  In addition to the lack of notice he said that the Appellant did not know how long the work would take.  In relation to work at Moses Gate in Farnworth is said that the Appellant was notified on 23 December 2011 that the work would start on 4 January 2012.  Mr Soper said that notices were put up to warn customers of potential delays but the short notice and other reasons meant that it was not possible to change the timetable for 3 registered services.  The work continued from 4 January 2012 to 31 March 2012.  Mr Soper then dealt with the roadworks at Weston Street Bolton.  He said that the Appellant did have notice of these roadworks, which were carried out between September 2010 and 29 April 2011.  He explained that the problem in relation to these roadworks was that the work was sporadic with the result that delays were unpredictable.  Finally he turned to the roadworks at The Crescent, Salford.  He accepted that there had been consultation during the summer of 2010 but he said that one problem was that only on 10 September 2010, (a Friday), that the Appellant was told that they would start over the week-end.  Another problem was that they were of a ‘rolling nature’ so that they had a variable impact on highway conditions, which made it impractical to introduce temporary timetables for the affected services.

(xix)             The Traffic Commissioner asked Mr Soper about the Appellant’s ‘Internal Monitoring findings’, and in particular about the figures for buses leaving the terminal late in the latter part of 2011 and early in 2012.  Mr Soper said that it was clear from the pattern of a significant number of later departures in October, November and December 2011, followed by an improvement in January 2012 that something exceptional must have happened in the months leading up to December 2011.

(xx)               She then turned to the results of 8,343 observations carried out by TFGM.  Mr Poole had to accept that 76% of the Appellant’s services reached the standard set by TFGM, which was that 90% of services should run no more than 1 minute early or 5 minutes late.  In other words the Appellant fell 14% below the lower standard set by TFGM.  Mr Poole went on to accept that none of the services covered by the TFGM observations met the punctuality target of 95% set in the Senior Traffic Commissioner’s guidelines.  In answer to a question raised by the Traffic Commissioner Mr Chant said that overall average compliance rate based on these observations as 86.3%.  In the course of discussion as to how these figures should be interpreted the Traffic Commissioner said of these observations: “Let me say this they are a whole lot more representative because there is a whole lot more observations over a longer period of time”.  The Traffic Commissioner said that in practice the difference between this result and VOSA’s figures would not make a difference in any direction.  Mr Chant responded by pointing out that it is four per cent which is almost a bracket in the guidelines.

(xxi)             Mr Alexander, the Regional Managing Director of First UK Bus, intervened to point out that the Appellant company had information about the performance over the full range of services.  He said that the information showed that where there were problems they were being dealt with but that there were also services which were very good.  The main point which he sought to make was that the Appellant had put in place a process to evaluate the performance on all its services.

(xxii)            Mr Poole was recalled to confirm the contents of his second statement.  This sought to resolve a discrepancy over the number of registered services and to explain the steps taken to improve the ‘action plans’ to improve punctuality were necessary.

(xxiii)           Mr Alexander was then called to give evidence.  He accepted that punctuality went to the heart of customer satisfaction.  He gave the Traffic Commissioner an assurance that punctuality was at the centre of all that the Appellant was trying to do.  The Traffic Commissioner pointed out that the letters that she had received, the evidence from TFGM and the evidence from the Appellant all showed that: “an awful lot more has got to be done by First Group in Manchester to improve its service reliability.  That requires a cultural change and it requires some significant commitment, whether it is money, a change in the timetable, getting rid of services”.  Mr Alexander replied that he did not disagree with what the Traffic Commissioner had said and that he felt that a change in culture was “absolutely at the heart of it”.  After a little more discussion the Traffic Commissioner summed up her view by saying that she felt that the problem was “complacency”.  Mr Alexander disputed that view saying that what was needed was “a greater level of local focus”.

(xxiv)          At the start of his submissions Mr Chant came back to the figures for service reliability.  The Traffic Commissioner immediately intervened to say this:-

“Yes.  Look, I am working on the basis of the percentage that we said, whatever it was 82½% or something – because I think that sort of figure keeps coming back.  You will now want me to take off all the roadworks ones.  I am not prepared to do that because I think the overall evidence shows that even despite the roadworks First Manchester are still not achieving the 95% of services running within the window.  They are not achieving that.  That cannot all be down to roadworks.  Indeed, on the operator’s own admission it is not all down to roadworks”.

Mr Chant immediately referred the Traffic Commissioner to the figures presented by TFGM, after which there was some discussion as to how they should be interpreted.  It appeared to be accepted that overall those figures showed a compliance rate of 86.3%.

(xxv)            Mr Chant then went on to submit that the impact of the roadworks described by Mr Soper was such that they amounted, either individually or collectively, to a ‘reasonable excuse’ for the non-compliant services.  When asked by the Traffic Commissioner how he got round the results of TFGM’s monitoring exercise and the Appellant’s own figures Mr Chant invited the Traffic Commissioner to judge the Appellant solely on the basis of the monitoring exercise, save to the extent that the other evidence demonstrated that the Appellant regularly reviewed its performance and collated information about its performance.

(xxvi)          The submissions then continued in this way:-

“Mr Chant: Okay.  My first contention, which is rejected by you, is that you ought to base the penalty on the results of the monitoring exercise by VOSA and that the information that we have provided in these bundles is purely for the purposes of determining whether or not the operator –

The Traffic Commissioner: I am doing it by reference to VOSA – 82½%.

Mr Chant: Yes.

The Traffic Commissioner: I am not taking the roadworks off because I think it would distort the figures.

Mr Chant: Well, I have made my point in relation to those roadworks.  The other way of looking at that, then, madam, if you are not going to take the roadworks off it – and, again, you may reject this contention given that you are looking at 82½% as the overall figures – is that the roadworks created operating conditions which precluded the operator from achieving the 95% benchmark at the time of the monitoring service.

The Traffic Commissioner: That is no reason to impose a penalty?

Mr Chant: It is a reason for you to say that 95% was not achievable and to look at the nature of the roadworks schemes, again as detailed by Mr Soper, and the impact it had by reference to appendices 1 to 3 of Mr Soper’s letter on those observations that were made by VOSA.

The Traffic Commissioner: Alright.

(xxvii)         Mr Chant went on to submit that there were two ways in which an operator can establish a reasonable excuse, the first being the argument based on roadworks and the second being to satisfy the requirements of paragraph 15 of the Practice Direction, (to which we will refer later).  He also raised the question of whether, given what the Appellant had already done, it was necessary to impose a financial penalty.  Finally he submitted that in view of the fact that the Traffic Commissioner had a discretion she should exercise it by using a multiplier lower than the total number of vehicles authorised.  He suggested that as 10% of the vehicles had been monitored then 10% of the fleet was the appropriate multiplier. 

(xxviii)        The Traffic Commissioner then gave an oral decision, though she explained at the outset that it would be transcribed and provided to those who required it.  She began by summarising the evidence which we have already set out.  She expressed surprise that the Appellant said that it found it more difficult to keep to the timetable at intermediate timing points, in other words at selected bus stops between the start and finish points of the service.  She reviewed the positive and negative factors, which had emerged from the evidence.  She referred to the letters, which she had received, and to two in particular which illustrated the severe impact on individuals of a failure to run services in compliance with the registered timetable.

(xxix)           The Traffic Commissioner gave detailed consideration to the results of the Appellant’s own monitoring of services, pointing out that the Appellant appeared to have difficulty in starting services punctually.  In addition she pointed to the fact that when 100 services were monitored over a three week period in January 2012 not a single service reached a compliance rate of 95% or more in any of the limited number of depots monitored.  However the overall total for this exercise was higher than that produced by the VOSA monitoring exercise.  She then turned to the monitoring conducted by TFGM.  She referred to the fact that it was extensive, because 25 routes were monitored and it involved over 8,000 observations.  She added: “I regard that as representative”.  She said that the compliance level rate was 86.3% which was to be compared to the VOSA compliance rate.  She went on: “I have chosen to deal with this on the basis that, as a general state and general statement of the operator’s compliance, at all material times when I am dealing with this, the compliance rate was 82.5% or 83%”.

(xxx)            The Traffic Commissioner expressed disappointment with the oral evidence from the Appellant which she had heard on the first day of the Public Inquiry.  In general terms she felt that she had not been given straightforward answers to straightforward questions.  In particular she was not filled with confidence by the answers she received from Mr Poole.  However she recognised that the Appellant had, albeit belatedly, started to take action to improve the punctuality and reliability of its services.

(xxxi)           The Traffic Commissioner reached this general conclusion on the evidence: “The real evidence, as well as the operator’s own evidence, as well as the bus compliance evidence, as well as the TFGM evidence, shows that this company is failing to comply with the Traffic Commissioner’s guidelines, and it is failing across the board and it is failing across the depots and it is failing across its services”.  Then, referring to the submissions from Mr Chant, she said this: “In some respects, Mr Chant, it is irrelevant whether I exclude the roadworks.  If I exclude the roadworks then it clearly has a significant impact on the BCO compliance evidence.  However, even if I exclude the roadworks, it does not alter the findings of TFGM with its monitoring and it does not alter the findings of the operator with regard to its own monitoring of its own services.  I am required – indeed it would be perverse of me not to – to look at matters in the round.  For that reason, I shall deal with this case on the basis that the operator is generally managing to achieve a compliance rate of between 82 and 83 per cent”.

(xxxii)         She then went on to consider the extent to which the Appellant had reviewed its operations.  She accepted that it was doing so by day 2 of the Public Inquiry but she concluded that the review was carried out too late and that insufficient time, focus, effort and resources had been given by the Appellant to ensure reliability and punctuality.  She pointed out that the Appellant had had 12 months since the BCO monitoring exercise but that she had been told by the Service Delivery Director that he had still not got round to making changes.  She then considered the questions raised by paragraph 15 of the Practice Direction.  She concluded that in many cases the registration had not been regularly reviewed in the light of known road conditions and the resources available to the Appellant.  She also concluded that control strategies were inadequate in a number of cases. 

(xxxiii)        Turning to the question of whether or not it was appropriate to impose a penalty the Traffic Commissioner said that, because of complacency, she did not think that the Appellant would focus its mind sufficiently on achieving the objective of the legislation, without the imposition of a penalty.  She then turned to the guidance on the level of penalty and considered the two bands, of 80-84 per cent compliance, with a suggested penalty range of £250-£400 and 85-89 per cent compliance with a penalty range of £150-£250.  In each case, of course, the level of penalty chosen has to be multiplied by the appropriate number of vehicles.  On the basis of 83% compliance the Traffic Commissioner concluded that a penalty somewhere towards the middle of the £250-£400 band was appropriate.  She rejected the argument that the penalty should only be applied to 10% of the fleet, (being the proportion covered by the monitoring exercise), on the basis that the other evidence tended to show that the remaining 90% was also non-compliant.  She chose a figure of £300, which when multiplied by 950 produced a total of £285,000.  In addition she requested and was given two undertakings.  The first was that the Appellant would provide reports three months and six months after the date of the decision setting out the position with regard to monitoring and the actions taken to ensure that the services were reliable. The second was that the Appellant would consent to TFGM sending their monitoring figures to the Traffic Commissioner.  The Traffic Commissioner ended with these words: “I make it clear for the avoidance of doubt at First that I do not expect them to achieve 95% compliance all of the time.  That would be unreasonable of me and it would be unrealistic in present operating conditions in Manchester.  I do expect the operator to take swift proactive action.  That is why I ask for those undertakings”.

(xxxiv)        On 11 April 2012 the Appellant filed a Notice of Appeal against that decision.  The grounds of appeal raised three points.  First, that the Traffic Commissioner failed to consider the extent to which the overall rate of non-compliance should be reduced to reflect non-compliance for which the operator had a reasonable excuse.  Second, that the Traffic Commissioner failed to have proper regard to the Appellant’s own evidence as to the overall compliance rate and/or the evidence of the monitoring conducted by TFGM.  Third, that in setting the penalty rate the Traffic Commissioner failed to give sufficient credit for the steps being taken to improve reliability.

3.           At the hearing of the appeal Mr Nesbitt appeared on behalf of the Appellant.  He provided us, in advance, with a helpful skeleton argument, for which we are grateful.  In general terms is seems to us that Mr Nesbitt accepted that this was a case in which a penalty was appropriate but he questioned the way in which the Traffic Commissioner had reached a figure of £300 per vehicle and submitted that it should have been significantly lower.

4.           In our view the correct starting point is to consider the terms of s. 155 of the Transport Act 2000, (“the 2000 Act”), which provides that:-

“(1) Where the traffic commissioner for any traffic area is satisfied that the operator of a local service has, without reasonable excuse –

(a)        failed to operate a local service registered under section 6 of the Transport Act 1985,

(b)        operated a local service in contravention of that section or section 118(4) or 129(1)(b) of this Act, or

(c)         failed to comply with section 138 or 140(3) of this Act

he may impose a penalty on the operator.

(2)   The amount of the penalty shall be such amount as the traffic commissioner thinks fit in all the circumstances of the case, not exceeding the amount determined in accordance with subsection (3).

(3) That amount is –

(a)        £550, or

(b)        such other amount as the Secretary of State (as respects England) or the National Assembly for Wales (as respects Wales) may by order specify,

multiplied by the total number of vehicles which the operator is licensed to use under all the PSV operator’s licences held by him”.

It is not necessary to quote any of the other subsections, though subsection (6) provides for an appeal to the Tribunal.

5.           It is important to bear in mind a number of general points that arise from the way in which this section has been drafted.  We say that because it seems to us that some of the submissions made to the Traffic Commissioner failed to have these points in mind.

6.           First the power to impose a penalty only arises where the Traffic Commissioner is satisfied that the operator has operated non-compliantly, ‘without reasonable excuse’.  In other words the existence of a reasonable excuse will prevent the Traffic Commissioner from imposing a penalty.  The burden of proving that the existence of a reasonable excuse falls on the operator, see Ribble Motor Services Ltd v Traffic Commission for the North Western Traffic Area [2001]EWCA Civ 267 at paragraph 43.  In that case the Court of Appeal stressed that the expression used by Parliament is ‘reasonable excuse’ in the singular.  In other words Traffic Commissioners are entitled to look at the overall result, rather than being compelled to asses every single reason advanced for the failure of a particular service to operate compliantly.

7.           Second, it is not possible to provide a precise definition of what does or does not amount to a reasonable excuse.  Instead we intend to set out factors that should be taken into account and others which cannot be taken into account.  The weight to be given to any factor will, of course, depend on the facts of the individual case.

8.           Third, once the Traffic Commissioner is satisfied that non-compliance has occurred without reasonable excuse he “may impose a penalty”.  In other words the Traffic Commissioner is given discretion as to whether or not to impose a penalty.

9.           Fourth, once it is decided that it is an appropriate case for a penalty there is then a qualified discretion to impose a penalty of “such amount as the traffic commissioner thinks fit in all the circumstances of the case”.  We have described this as a qualified discretion because Parliament has set an upper limit on the amount per vehicle, which forms the basis of the calculation.  We have underlined the concluding words to stress the express requirement to take all the circumstances into account.

10.        Fifth, it seems to us that once the Traffic Commissioner decides to calculate the penalty by reference to a figure of £550 or less there is then an express requirement, under subsection (3), for the selected figure to be “multiplied by the total number of vehicles which the operator is licensed to use under all the PSV operator’s licences held by him”.  In other words there is no discretion to adopt the submission made by Mr Chant that the multiplier should have been restricted to 10% of the fleet.  We will return to one consequence of this requirement in due course.

11.        In our view an operator who decides to register a local bus service should make allowance, when setting up the timetable, for the traffic conditions found throughout the route, or on a particular part or parts of it, on a day to day basis.  In other words a Traffic Commissioner is entitled to assume that all the regular causes of congestion on the route will have been taken into account in setting the timetable.  This is considered in greater detail in paragraphs 13 & 14 of Practice Direction: Standards for Local Bus Services, issued by the Senior Traffic Commissioner, (“the Practice Direction”), which can be found at:

 http://www.dft.gov.uk/publications/senior-traffic-commissioners-revised-guidance-directions/ 

If follows that such causes of congestion cannot be advanced as a reasonable excuse for non-compliance, because to do so would involve counting them twice.

12.        The Practice Direction took effect on 1^st January 2005.  One section sets out ‘punctuality standards.  Paragraph 6 states:

“It should be the overriding aim of operators to run their registered services to their published times.  Nevertheless it is accepted that traffic and other hazards, such as road works, can cause short-term problems, and Commissioners therefore accept that a bus may be delayed in these circumstances.  But they can see no justification for a bus to run early”.

Then in paragraph 8 the Practice Direction says this:

“Traffic Commissioners have set a target whereby 95% of services should depart from the Timing Points within the bracket of up to one minute early and up to 5 minutes late.  Decisions by the Court of Appeal and the Transport Tribunal have endorsed this approach.  Whilst accepting that a general benchmark of this nature may not always be achievable, that target is the one to which operators should work”.

13.        In our view the effect of these two paragraphs is to take a sensible and pragmatic approach to short-term problems causing congestion beyond that which should have been taken into account when setting the timetable.  These paragraphs recognise, for example, the probability that accidents will happen and that road works will inevitably occur from time to time and that additional congestion will be the result.  The alternative to this pragmatic approach would have been prolonged Public Inquiries so that the consequences of such events could be assessed to determine whether or not they amounted to a reasonable excuse.  Instead it seems to us that the effect of the Practice Direction is that it is accepted that an operator, whose services come within the bracket of up to 1 minute early and up to 5 minutes late, for 95% of the time, has a reasonable excuse for not achieving 100% compliance. 

14.        It follows, in our judgment, that an operator who wishes to advance a reasonable excuse, in order to avoid the imposition of a penalty, must satisfy the Traffic Commissioner of two things.  The first is that the matters that are being advanced as a reasonable excuse have not already been taken into account (a) in setting the timetable and (b) by the target of 95% of services falling within the bracket of up to 1 minute early and up to 5 minutes late.  This is necessary in order to avoid the same factor being counted twice.  The second is that but for the matters advanced as a reasonable excuse the services run by the operator would have come within the target set in paragraph 8 of the Practice Direction.  It is necessary for the operator to satisfy the Traffic Commissioner on the second point because the existence of a reasonable excuse means that no penalty can be imposed.  In our view matters that improve the compliance rate, but do not bring it within the target set in paragraph 8 of the Practice Direction, cannot amount to a reasonable excuse but they would be part of the circumstances of the case which must be taken into account when deciding on the amount of the penalty.

15.        Paragraph 15 of the Practice Direction sets out some additional factors to be taken into account when deciding whether or not an excuse is a reasonable excuse.  The material part of paragraph 15 reads as follows:-

“In arriving at that decision, (i.e. whether or not the operator had a reasonable excuse for non-compliance), a Commissioner will wish to consider whether the operator had managed registered services with the objective of achieving appropriate levels of reliability and punctuality.  In particular the Commissioner will wish to consider:

(a)      Whether the registration has been regularly reviewed in the light of known road conditions and the resources available to the operator.

(b)      Whether the control strategies are appropriate and adequate.

(c)      Whether adequate resources are provided”.

16.        In the course of his submissions, (see paragraph 2(xxvii) above), Mr Chant invited the Traffic Commissioner to conclude that one way in which a reasonable excuse could be established was by the operator demonstrating compliance with the requirements of paragraph 15 of the Practice Direction.  We doubt whether this can be correct.  The reason is that the more closely an operator complies with the requirements of paragraph 15 the less likely it will be, in the absence of some other factor, that the operator will be non-compliant.  In our view paragraph 15 is not directed at the justification, or excuse, for non-compliance.  Instead it is there to enable Traffic Commissioners to test whether or not the ‘excuse’ is a ‘reasonable’ excuse.  An operator who fails to do what is required by paragraph 15 may find that it is difficult, if not impossible, to persuade a Traffic Commissioner that the justification for non-compliant operation amounts to a reasonable excuse.  On the other hand the operator who complies with paragraph 15 but is in a position to say “despite my best efforts circumstances which have not already been taken into account make it impossible to achieve the required standard” is likely to be able to establish that the excuse is a reasonable excuse.

17.        We draw attention to a passage in Annex A to the Practice Direction where the following appears:

“Operators should contact their Traffic Area Offices when services are unexpectedly disrupted for more than a short time and any event that was not known to the Operator in time to vary the timetable, (for example unannounced road works or unexpected consequences of a known event).  This will avoid resources being wasted on monitoring services during periods that would not be taken into account in assessing performance”.

It seems to us that this passage recognises a distinction between short-term and long-term disruption.  The former is likely to be covered by the requirement to operate 95% of services within the margin of no more than 1 minute early and no more than 5 minutes late.  The latter may create such lengthy or extensive disruption that the 95% target is no longer achievable.  That may, in turn, enable the operator to claim to have a reasonable excuse, alternatively it would be a factor to be taken into account in deciding (a) whether or not a penalty was appropriate and (b) if it was, the amount of the penalty.

18.        We have pointed out in paragraph 10 above that where a Traffic Commissioner decides to calculate a penalty by reference to a figure of £550 or less the sum selected must then be multiplied by the total number of vehicles licensed under all the licences held by the operator.  It was stressed in the Ribble case, (at paragraph 34), that it was important that the sample of journeys monitored was sufficient to be representative of the operator’s operation as a whole.  Although this was said in a slightly different context it is, in our view, an important consideration when setting the level of any penalty to be imposed.  If there is no evidence to suggest that the sample is not representative then the Traffic Commissioner is entitled to assume that it is and that the level of non-compliance established by the monitoring exercise is representative of the operation as a whole.  On the other hand if there is evidence, that tends to suggest that the monitoring exercise may not reflect the general level of performance on all the operator’s services, the Traffic Commissioner must assess it.  If that assessment leads to the conclusion that the overall level of compliance differs from the level found by the monitoring exercise then the Traffic Commissioner must take this into account when deciding, in accordance with paragraph 3.2 of Annex B to the Practice Direction, into which penalty range the case falls and where in the range it comes.

19.        With these principles in mind we come back to the grounds of appeal. The first was that the Traffic Commissioner failed to consider the extent to which the overall rate of non-compliance should be reduced to reflect non-compliance for which the operator had a reasonable excuse.  As we understand it even if every explanation put forward by the Appellant was accepted it was not suggested that that would have raised compliance levels to the 95% target.  It follows, in our view, that the first ground of appeal fails. 

20.        The second ground was that Traffic Commissioner failed to have proper regard to the Appellant’s own evidence as to the overall compliance rate and/or the evidence of the monitoring conducted by TFGM.  Mr Nesbitt submitted that the Traffic Commissioner was wrong to settle on a non-compliance figure of 82-83% and that in doing so without further explanation she ignored the evidence of the TFGM monitoring exercise and the Appellant’s own evidence, which gave an higher reliability figures.

21.        The Traffic Commissioner described the monitoring exercise conducted by TFGM as: “a whole lot more representative because there is a whole lot more observations over a longer period of time”.  In other words far from giving reasons to reject the results of that exercise she appeared, during exchanges with Mr Chant, to be treating these results as more representative of the Appellant’s overall rate of compliance.  Having come to that conclusion it seems to us that the Traffic Commissioner could only disregard the picture presented by these results after giving reasons for rejecting them.  Unfortunately she gave none.  Nor did she give reasons for rejecting the Appellant’s own figures, though it would appear that the exercise conducted by the Appellant does not enable a like for like comparison and concentrated more on the departure and arrival times at the start and the end of each service, rather than at intermediate points.  It monitored services at 5 depots out of 9.  It is self-evident that a monitoring exercise conducted by an operator lacks the independence of such an exercise conducted by BCOs or by an organisation such as TFGM.  It follows that any suggestion that such an exercise provides a more representative view of the level of compliance is likely to be examined with great care.  Traffic Commissioners will no doubt wish to ensure that the methodology is sound, that the results are accurate and reliable and that they do indeed provide a representative picture of the overall reliability of all the services provided by the operator.

22.        We are driven to the conclusion that the Traffic Commissioner was plainly wrong not to take the evidence of the  TFGM monitoring exercise into account when determining the level of the penalty, which was clearly appropriate, in this case.  Rather than send this case back we have decided to reassess the position ourselves.  We propose to accept and act upon the Traffic Commissioner’s assessment of the TFGM exercise.  On that basis the compliance rate is towards the bottom of the 89-85% bracket, in other words it falls in the bracket above the one in which the case was placed by the Traffic Commissioner.

23.        The Third ground was that in setting the penalty rate the Traffic Commissioner failed to give sufficient credit for the steps being taken to improve reliability.  It seems to us that the Traffic Commissioner was unimpressed by the efforts that the Appellant had made.  She concluded that their approach could be summed up as ‘complacent’.  She was critical, in our view rightly so, of the suggestion that the Appellant found it: “considerably more difficult to ensure that services were punctual at intermediate points”.  In our view the Appellant has failed to show that the Traffic Commissioner was plainly wrong not to give the Appellant greater credit for the steps that it was taking to improve compliance, beyond those factors to which she expressly referred. In paragraph 30 of the typed version of her decision the Traffic Commissioner said this:-

“What matters is that this operator has known for a considerable period of time that it cannot comply and that it has not been complying and in my view it has not taken enough proactive action.”

It seems to us that the Traffic Commissioner is saying that operators can only expect limited credit for remedial action when they take it some time after the problem, which it is designed to solve, has become apparent.  In our view that is an appropriate and proportionate response with which we agree.

24.        It follows that the Appellant has succeeded, but only, on the second ground of appeal and that we must now reassess the level of penalty.  The case now falls at the more serious end of the penalty range in a different bracket, namely £150-£250.  In our view the appropriate level of penalty is £225 per vehicle, which means that the penalty is reduced from the figure of £285,000 imposed by the Traffic Commissioner to one of £213,750. 

25.        To that limited extent the appeal is allowed.

 

 

 

His Hon. Michael Brodrick, Judge of the Upper Tribunal,

Principal Judge for Traffic Commissioner Appeals.

26 July 2012