Neutral Citation Number: [2012] UKUT 421 (AAC)

Appeal No.  T/2012/46

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

TRAFFIC COMMISSIONER APPEALS

 

ON APPEAL from the DECISION of Richard Turfitt, TRAFFIC COMMISSIONER for the Eastern Traffic Area

Dated 4 August 2012

 

 

 

Before:

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

Leslie Milliken Member of the Upper Tribunal

George Inch Member of the Upper Tribunal

 

 

Appellant:

PRADEEP KUMAR SHARMA t/a RS FRUITSTORE

 

 

 

 

Attendances:

For the Appellant: Mr Sharma appeared in person

 

 

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

Date of hearing: 9 November 2012

Date of decision: 23 November 2012

 

 

 

 

AMENDED DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be ALLOWED, and the matter be remitted to the Traffic Commissioner for rehearing and determination.

 

 

 

 

SUBJECT MATTER:- Miscellaneous, restricted licence, financial resources

 

 

CASES REFERRED TO:- None

REASONS FOR DECISION

 

 

1.           This is an appeal from the decision of the Traffic Commissioner for the Eastern Traffic Area to revoke the restricted goods vehicle operator’s licence held by the Appellant.

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 restricted operator’s licence, issued on 25 April 2005, authorising the use of one vehicle, with an operating centre at Thrifty Car Rentals, 52 Wilbury Way, Hitchen.

(ii)                 On 23 February 2012 the Appellant was sent a letter informing him that to keep the licence in force he had to pay the continuation fee, of £391, by 31 March 2012 and provide current financial information.  The section of the checklist headed ‘financial information’ began with these words: “Legislation requires that for the type of licence you hold and the number of authorised vehicles, you will meet the continuing requirement regarding availability of finance provided you can demonstrate available capital and reserves of £3,100”.

(iii)                The Appellant signed and returned the ‘Licence Checklist Declaration’ on 27 March 2012 and paid the required fee.  The declaration was to the effect that all the information in the checklist, amended if necessary, was correct and that he re-affirmed compliance with all the conditions and undertakings recorded on the licence.

(iv)                On 29 March 2012 the Office of the Traffic Commissioner, (“OTC”), wrote to the Appellant to point out that he had failed to complete the page in relation to maintenance arrangements and that the financial declaration was incomplete.  Those pages were returned.  He was advised that a maintenance agreement was still required, even though the Appellant had no vehicle in his possession.  It was suggested that the company from which he hired vehicles might be able to assist.

(v)                 On 25 April 2012 the Appellant replied.  He confirmed that he did not own any trucks and questioned why it was necessary for him to provide a maintenance agreement, which he did not have.  He said that he had approached the hire companies which he used asking to be provided with a maintenance agreement but was told to “get lost”.  He went on to express his frustration in relation to the requirement to  show financial standing using inappropriate expression which were hardly likely to assist his case.

(vi)                On 15 May 2012 the matter was considered by a number of people in the OTC and was referred onwards to the Traffic Commissioner.  It was pointed out that the amount required to meet financial standing was £3,100 but that no evidence had been submitted.  The recommendation, with which the Traffic Commissioner agreed, was that disciplinary action, potentially leading to in-house revocation should be commenced.  Concern was expressed about the Appellant’s response on 25 April 2012, which suggested that the Appellant was struggling to find the funds to hire a vehicle as and when needed, let alone show the £3,100 required.  The Traffic Commissioner also expressed concern that the Appellant might be achieving a potential advantage as against competitors who were compliant and that he did not understand his obligations under the operator’s licencing regime.  It may be important to note that another recommendation was made, initially, namely that the Appellant had made a false statement/failed to fulfil a statement of expectation in relation to maintenance.  That recommendation was not pursued.

(vii)              On 6 July 2012 the OTC wrote to the Appellant to inform him that the Traffic Commissioner was considering making a direction under s. 26(1)(h) of the 1995 Act to revoke the licence on the ground that there had been a material change in circumstances, in that the Traffic Commissioner wished to be satisfied that the Appellant had sufficient financial resources and that the Traffic Commissioner wished to be satisfied that the Appellant was still fit to hold a licence.  The letter went on to inform the Appellant of his right to require a Public Inquiry.

(viii)             On 18 July 2012 the Appellant telephoned the OTC.  The file note indicates that he was angry about the letter of 6 July 2012 but that he explained his situation, though what he said has not been recorded.  He was asked to put his position in writing so that the explanation could be put before the Traffic Commissioner.  He replied that he had already done this on 29 March, (see paragraph 2(iv) &(v) above).  He was told that that explanation would be put before the Traffic Commissioner.

(ix)                On 18 July 2012 the matter was placed before the Traffic Commissioner, with a recommendation that the licence be revoked under s. 26(1)(h) of the 1995 Act.  The Traffic Commissioner took the view that the Appellant had effectively admitted that he was unable to meet the financial requirements for the licence, that he had not requested a Public Inquiry and that he did not intend to submit further evidence.  He therefore revoked the licence on the ground that there had been a material change in circumstances, since the grant of the licence, in relation to finance.  The revocation was ordered to take effect from 2359 on 8 August 2012.

(x)                 On 4 August 2012 the TAO wrote to the Appellant to inform him that the Traffic Commissioner had revoked the licence under s. 26(1)(h) of the 1995 Act.  The letter went on to set out the grounds, namely that there had been a material change in circumstances: “in that the licence holder no longer appears to be of appropriate financial standing and fitness to hold an operator’s licence”.

(xi)                On 19 August 2012 the Appellant filed a Notice of Appeal.  He raised three concerns, in very general terms.  The first concerned the need to provide an advertisement, stating where he would park the vehicle.  The second concerned the need to provide a maintenance agreement and the third related to the fact that he was required to establish financial standing.

(xii)               On 11 September 2012 the Appellant wrote to the Tribunal.  He began by adding a little more detail to his grounds of appeal.  He said that the requirement to provide a copy of the advertisement related to his original application 10 years earlier.  In relation to the requirement to produce a maintenance agreement the Appellant pointed out that the OTC was knowingly asking him to produce a maintenance agreement for a non-existent vehicle.  In relation to the grounds for revocation the Appellant pointed out that the letter informing him of the decision said that the licence had been revoked on both financial grounds and because he was no longer fit to hold a licence.  The Appellant then went on to give more detail of the way in which he had been operating.  He said that because of the amount of legislation, which had been introduced, he had decided that it was not worth owning a lorry so he had always hired vehicles as and when he needed them.  He said that: “he could barely scrape the rent money let alone buy the lorry”.  He went on to say that he had explained all this to an individual in the OTC who had said that she would pass it on to the Traffic Commissioner and come back to him, though the next he knew was that the licence had been revoked.  He ended this letter with some foolish and intemperate remarks to which he added some serious questions, namely why, when he did not have a lorry was he required to lie in relation to the advertisement and to provide a false maintenance agreement and for what was he required to provide evidence of financial standing.

3.           At the hearing of the appeal the Appellant appeared in person.  He explained that he ran a small greengrocery shop and that in the current economic climate it was a struggle to survive.  He said that he had to use a 7.5 ton lorry because it needed to be big enough to carry pallets.  He said that in the period since he was granted the licence he had never, previously, been asked about finance.  He said that he had explained the position to the OTC and that because he did not have his own lorry he refused to sign what he considered would have been a false maintenance agreement.  The Appellant came across as a man of strong views anxious to act correctly, unwilling to sign what he believed would be a false document and who had difficulty in understanding why, when he only hired vehicles, he was required to comply with all the requirements of the operator’s licensing system. 

4.           It seems to us that one explanation of the situation, which has arisen in this case, that there was confusion in the TAO between the information required when an operator is renewing a standard licence and that required when the licence to be renewed is a restricted licence.  Another is that the Appellant was frustrated by what he considered to be unreasonable and unnecessary demands.  The result is that there was a failure of communication on both sides.   It is therefore incumbent on us to set out the position as clearly as we can.

5.           The Appellant wishes to use a goods vehicle, (in excess of 3.5 tonnes), to carry goods for or in connection with his trade or business as a greengrocer.  It follows, as a result of s. 2(1) of the Goods Vehicles (Licensing of Operators) Act 1995, ["the 1995 Act"], that in order to do so lawfully he must hold an operator’s licence.  If he uses a goods vehicle for this purpose without an operator’s licence not only will he commit an offence under s. 2(5) of the 1995 Act but the goods vehicle will also be liable to be impounded under Regulation 3(1) of the Goods Vehicles (Enforcement of Powers) Regulations 2001).  It follows, in our view, that a hire company is unlikely to hire a goods vehicle to the Appellant unless he can show that he holds a valid operator’s licence.

6.           Since the Appellant will only use a goods vehicle for the carriage of goods for or in connection with the business which he carries on he only needs a ‘restricted licence’, (see s. 3(3) of the 1995 Act).  This is, of course, the kind of licence which he was originally granted.  Before a restricted licence can be granted the Traffic Commissioner must be satisfied that the requirements of ss.13B and 13C of the 1995 Act are satisfied.  In addition, if the Traffic Commissioner thinks fit, he can consider whether the requirements of s.13D of the 1995 Act are met.  There are two reasons why we have gone back to the matters that the Traffic Commissioner either must, or may, consider before granting an operator’s licence.  The first is that the position has changed since the Appellant was first granted a restricted operator’s licence.  The second is that these are all continuing requirements throughout the duration of the licence.

7.           The first matter which the Traffic Commissioner must consider is whether the requirements of s. 13B of the 1995 Act are satisfied.  That section is satisfied if:

“… the applicant is not unfit to hold an operator’s licence by reason of –

(a)   Any activities or convictions of which particulars may be required to be given under section 8(4) by virtue of paragraph 1(e) or (f) of Schedule 2;

(b)   Any conviction required to be notified in accordance with section 9(1) (convictions etc required to be notified subsequent to the making of an application)”.

8.           The letter of 4 August 2012, in which the Appellant was informed that the licence had been revoked, indicates that it was on the ground of both lack financial standing, as a result of a material change in finance, since the grant of the licence and lack of fitness.  This does not reflect the order made by the Traffic Commissioner, who has very fairly pointed out that the licence was not revoled on the ground of lack of fitness.  Given that there is no suggestion that the Appellant has any relevant conviction and given the contrast between the material which the Traffic Commissioner can take into account when assessing good repute and the much more limited material covered by s. 13B of the 1995 Act we are quite satisfied that the Traffic Commissioner was correct not to revoke the licence on the ground of lack of fitness.  This was a very unfortunate error by the OTC.  We trust that steps have already been taken to ensure that in future decision letters faithfully record the order, which has actually been made.

9.           Under s. 13C of the 1995 Act the Traffic Commissioner must conclude that it is possible to issue a licence in relation to which subsections (2) to (6) of s. 13C will apply.  We can deal quite briefly with a number of these subsections because they did not feature in the Traffic Commissioner’s decision.  Subsection (2) requires that there must be satisfactory arrangements for compliance with driver’s hours and applicable Community Rules.  Subsection (3) requires satisfactory arrangements to avoid overloading.  Subsection (4) requires that there are “satisfactory facilities and arrangements for maintaining the vehicles in a fit and serviceable condition”.  Subsection (5) sets out the requirements in relation to operating centres and subsection (6) deals with the capacity of an operating centre.

10.        The only requirement in s. 13C of the 1995 Act that features in this case is the provision relating to maintenance.  It is important to remember that the requirement is that there must be “satisfactory facilities and arrangements”.  The subsection does not go on to specify who must provide those facilities and arrangements.  In the case of an operator who owns the vehicle or vehicles authorised under the licence satisfactory facilities and arrangements may be provided ‘in house’ or via a contract with a maintenance provider.  The problem in the present case is that the Appellant was not an owner operator, instead he hired vehicles as and when needed.  If, as he has said on several occasions, he was advised to sign a maintenance agreement in order to deal with this requirement we are quite satisfied that it was bad and inappropriate advice, which should not have been given.  If such an agreement had been signed it would have been a sham and it would not have provided evidence of the existence of satisfactory facilities and arrangements for the maintenance of the hired vehicles.  Drawing on the experience of the Specialist Members of the Tribunal what the Appellant should have been advised to obtain was a ‘letter of comfort’ from the hire company, stating that they own the vehicles hired to the Appellant and, assuming that this is the case, that it is their responsibility under the hire agreement to maintain the vehicles in a roadworthy condition.  It seems to us that it would be helpful if a copy of the standard hire agreement was annexed to the letter of comfort.  In addition it would be helpful if the letter described the facilities used for maintaining the vehicles.  At the end of the day, however, it must be for the Traffic Commissioner, in the first instance, to decide what evidence is needed to show that there are satisfactory facilities and arrangements for maintaining the vehicles in a fit and serviceable condition.

11.        We turn now to the provisions of s.13D of the 1995 Act.  By contrast with the provisions which we have just considered the Traffic Commissioner only has to consider s. 13D if he “thinks fit”.  In other words he has discretion as to whether or not it is appropriate to take this provision into account.  The terms of s. 13D, (which applies to both standard and restricted licences), are that:

“The requirement of this section is that the provision of the facilities and arrangements for maintaining the vehicles in a fit and serviceable condition (see section 13C(4) is not prejudiced by reason of the applicant’s having insufficient financial resources for that purpose”.

It is not apparent from the papers before us whether the Traffic Commissioner ever considered that it was appropriate to take s.13D of the 1995 Act into account.  If he did he did not explain why this was appropriate when the Appellant did not own a vehicle but had explained throughout that he only hired vehicles.

12.        It seems to us that the best indication of what has happened is to be found in the terms, on the one hand, of the financial checklist, (quoted at paragraph 2(ii) above), the terms of the referral dated 15 May 2012, (see paragraph 2(vi) above), and in the decision letter dated 4 August 2012, (see paragraph 2x above) and on the other the letter of 6 July 2012, which uses the expression ‘financial resources’. Each of the documents in the first category refers to ‘Financial Standing’ or to a figure of £3,100 or to both.  ‘Financial standing’ is the expression used in s.13A(2)(c) of the 1995 Act to describe one of the mandatory requirements for a standard licence. There is a similar contrast in the amounts which are required.  The figure of £3,100 represents the amount agreed by Traffic Commissioners in relation to the financial resources which may be required under s.13D, if the Traffic Commissioner ‘thinks fit’.  By contrast the figure of £8,500, which must be shown in relation to the first vehicle authorised under a standard licence is set by reference to Article 7 of Regulation (EC) No 1071/2009 of the European Parliament and of the Council, (“Regulation 1071/2009”)

13.         ‘Financial standing, is defined in s. 13A(2)(4)(c) by reference to ‘Article 5 of the 2009 Regulation’, in other words Regulation 1071/2009.  That Regulation, according to Article 1, “governs the admission to and the pursuit of, the occupation of road transport operator”.  By virtue of Article 2(3) ‘road transport operator’ includes the occupation of ‘road haulage operator’.  The occupation of ‘road haulage operator’ is in turn defined in Article 2(1) as meaning: “the activity of any undertaking transporting goods for hire or reward by means either of motor vehicles or combinations of vehicles”.  In other words the 2009 Regulation applies to the first limb of s. 2(1) of the 1995 Act, [s. 2(1)(a)], but not to the second limb, [s. 2(1)(b)], which is confined to the use of goods vehicles for the carriage of goods for or in connection with any trade or business carried on by the operator.  Since the provisions of the 2009 Regulation do not apply to the circumstances in which a restricted licence can be issued, (see s. 3(3) of the 1995 Act), there is no requirement, when applying for or renewing, such a licence to show that there are resources available which would satisfy the requirement of ‘financial standing’ as defined in Article 5 of the 2009 Regulations.

14.        What appears to have happened here is that the TAO has, in many of its dealings with the Appellant, overlooked the fact that this is a restricted licence and instead has treated it, for the purposes of any financial requirement, as a standard licence.  None of those who considered the matter thereafter appear to have spotted this error, which was then compounded by the terms of the decision letter dated 4 August, which failed to reflect the terms of the decision which the Traffic Commissioner actually made.  The result, in our judgment, is that the licence was revoked on a false basis, which means, in turn, that the appeal must be allowed.

15.        We have considered whether we can substitute our own decision.  While highly desirable in many ways we are satisfied that there are too many loose ends in this case, with the result that the appropriate course is to remit the matter for rehearing and determination by the Traffic Commissioner.  It is most important that any further requests for information from the Appellant are couched in terms which are (a) appropriate for a restricted licence and (b) take into account that he is not an owner operator but an operator who hires vehicles as and when required and that those vehicles are, almost certainly, maintained by the hire company.

16.        It seems to us that before any further steps are taken in this case the Traffic Commissioner should do three things.  The first is to provide general guidance to the OTC in relation to the distinction between standard and restricted licences and the information required in relation to each.  If necessary appropriate alternations will have to be made to standard letters and documents.  The second is to set out what is required, in the case of an operator who hires vehicles for use under the operator’s licence, to show that there are satisfactory facilities and arrangements for maintaining the vehicles in a fit and serviceable condition.  The third is to decide whether, in the case of an operator who hires vehicles, to exercise the discretion to require the operator to show that the provision of the facilities and arrangements for maintaining the vehicles in a fit and serviceable condition is not prejudiced by reason of the applicant’s having insufficient financial resources for that purpose.  If the Traffic Commissioner does decide to exercise this discretion, (whether in this or any other case), he should set out his reasons so that, if necessary, they can be considered on appeal.

17.        We indicated that we would provide the Appellant with a link to the Guidance given by the Senior Traffic Commissioner.  In relation to finance it is this:-

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4326/no-2-finance.pdf

However we should make it clear that much of this guidance is directed to standard rather than restricted licences, with the result that its value to the Appellant may be limited.

18.        Finally we express the hope that there can be a fresh start to the relationship between the Appellant and the OTC.  It seems to us that it has suffered through some degree of fault on both sides.  The Appellant appears to have become frustrated, uncooperative and at times rude, which is not the best way to get assistance from those who work in the OTC.  On the other hand his frustration is, to some extent, understandable given the mistakes which appear to have been made by the OTC and the fact that they do not appear to have tailored their requirements for information to a case where the operator is hiring vehicles rather than operating those that he owns.

19.        For these reasons the appeal is allowed and the matter is remitted to the Traffic Commissioner for rehearing and determination.

 

 

 

 

 

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

Principal Judge for Traffic Commissioner Appeals, President of the Transport Tribunal.

23 November 2012 amended 11 December 2012