Neutral Citation Number: [2012] UKUT 462 (AAC) Appeal No: T/2012/18

T/2012/19

 

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

(TRAFFIC COMMISSIONER APPEALS)

 

ON APPEAL FROM THE DECISION OF RICHARD HAMILTON McFARLANE,

DEPUTY TRAFFIC COMMISSIONER for the SCOTTISH TRAFFIC AREA,

DATED 19 MARCH 2012

 

Before:

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

David Yeomans, Member of the Upper Tribunal.

George Inch, Member of the Upper Tribunal.

 

 

First Appellant:

STEVEN BARRY SMITH

 

Second Appellant

HELEN GRAHAM

 

-v-

First Respondent:

VEHICLE & OPERATOR SERVICES AGENCY (VOSA)

 

Second Respondent:

THE DEPARTMENT FOR TRANSPORT

 

Attendance:

For the Appellants: Mr J McGeechan, Solicitor

For the First Respondent: Mr C Hallsworth, Solicitor

For the Second Respondent: Mr E Duthie, Counsel, instructed by the Office of the Advocate General, Scotland

 

Appeals heard at:   The Eagle Building, Bothwell Street, Glasgow

Date of hearing: 4 December 2012

Date of decision: 14 December 2012

 

 

DECISION OF THE UPPER TRIBUNAL:

 

IT IS HEREBY ORDERED that the appeals be dismissed.

 

The First Appellant’s application is remitted back to the Deputy Traffic Commissioner for him to consider the matter on its substantive merits.

 

 

Subject matter:

An irregularity resulting from a failure by the traffic commissioner to comply with a requirement in regulation 11 of the Goods Vehicles (Enforcement Powers) Regulations 2001 (as amended) does not of itself render void the proceedings.

 

Cases referred to:

 

Nolan Transport v VOSA and Secretary of State for Transport [2012] UKUT 221 (AAC)

Agip (Africa) Ltd v Jackson [1992] 4All ER 385

Baden v Société Générale pour Favoriser le Dévelopement du Commerce et de l' Industrie en France SA [1992] 4 All ER 161

 

Close Asset Finance Ltd v Secretary of State for Transport (2003/3).

Asset 2 Asset Ltd [2011] UKUT 290 (AAC)

CPT Commercials (Stockport) Ltd and CPT & Sons Transport UK Ltd (2003/90 and 2003/122)

 

Excel A-Rate Business Services Ltd (2005/471)

Barclays Asset and Sales Finance (2007/414)

London and Clydesdale Estates Ltd v Aberdeen District Council [1980] 1 WLR 182

Wang v Comr of Inland Revenue [1994] 1 WLR 1286

R v Soneji [2005] UKHL 49

Patterson v Kent and the Mental Health Tribunal [2006] Scot SC 48

 

 

REASONS FOR DECISION:

 

1)     This was an appeal from the decision of the Deputy Traffic Commissioner (DTC) for the Scottish Traffic Area made on 19 March 2012 when he determined that he had jurisdiction to consider applications from the First Appellant and Second Appellant under regulations 10, 11 and 12 of The Goods Vehicles (Enforcement Powers) Regulations 2001 (as amended) and determined that the Second Appellant had not established joint ownership of goods vehicle registration number P16 STK.

 

2)     The factual background to this appeal appears from the documents, the transcript and the DTC’s decision and is as follows:

(i)     This is an impounding case. Neither the First Appellant nor the Second Appellant is the holder of a goods vehicle operators licence issued under the Goods Vehicles (Licensing of Operators) Act 1995.The DTC found that the First Appellant had established ownership of a goods vehicle, registration number P16 STK. He found that that the Second Appellant (who is the First Appellant’s domestic and business partner) had not established joint ownership. An appeal by the Second Appellant in respect of this finding was withdrawn at the hearing before us, which has the effect of removing her from the proceedings because only an owner, or co-owner, may make an application to the traffic commissioner for the return of an impounded vehicle. We shall therefore refer to Mr Smith as “the Appellant” and to Miss Graham by name.

 

Background to the Impounding of P16 STK

(ii)    On the face of it the issues are simple. The Appellant and Miss Graham run a business that involves the selling of fresh meat at open-air markets. The meat is sold from a goods vehicle that has a side flap that opens upwards, and through which the produce is sold. The vehicle, according to the Appellant, is driven to and from the market without carrying goods. A second 3.5 tonne refrigerated van (which does not need an operator’s licence) takes the meat to the market, and the meat is then moved into, and sold from, the stationary goods vehicle. At the closure of the market, any unsold meat is removed from the goods vehicle and placed back into the smaller vehicle, to be returned to storage.

(iii)  The Appellant says that, on 25 November 2011, he and Miss Graham attended at a market at Bathgate, West Lothian. The weather was bad. Half way through the market, the Appellant and Miss Graham received a call that tiles from their roof had fallen off. They left the market, leaving behind a driver whose job it was to remain until the Appellant and Miss Graham returned. Unfortunately, the weather deteriorated and the market operators, Spook Erections Ltd., decided to close the market early, at 14:50. The driver, therefore, had to move the goods vehicle, despite the fact that it contained produce. At 15:30, VOSA officers observed the vehicle exiting from Bathgate Market.

(iv)  At 15:40, the vehicle was stopped by officers and found to contain 30 trays of fresh meat together with knives and display dressings. The driver later told the Traffic Examiners that his instructions were to stay until 16:00 but, because of the weather, the site co-ordinator had said that they could leave early. The driver was asked:

Q13. What instructions did Stevie (i.e the Appellant) give you when he left?

A. Just to stay in the market in the same place and don’t move as someone will take your pitch and to leave when it finished.

(v)   The Appellant's case is that he did not know that it was going to be driven away from the market and neither he nor Miss Graham had authorised such movement.

(vi)  There is a history relating to Mr Smith that may or may not be relevant to the question of knowledge. Whilst trading as Stevie Broons Ltd, he had an operator’s licence revoked in 2009 and was he was disqualified from holding an operator’s licence for two years. On 13 August 2010, at Bathgate Market, a goods vehicle owned by the company was impounded for unauthorised use, and a subsequent application to the traffic commissioner for its return was refused. Miss Graham, on the other hand, did not have such a history.

(vii) VOSA has a policy intended to overcome criticism that any impounding is random or disproportionate. The policy, which is referred to in the Upper Tribunal decision of Nolan Transport v VOSA and Secretary of State for Transport [2012] UKUT 221 (AAC) (see paragraph 263), has the heading “Deciding who to Impound” and, amongst other things, involves the sending of warning(s) to a person or other entity that appears to be using a goods vehicle in contravention of S.2 of the 1995 Act.

(viii)         Alternatively, a previous history of having had a vehicle or vehicles impounded might be accepted as part of the enforcement history that, as the tribunal recognised in Nolan, can be a highly relevant consideration.

(ix)  However, it could be that the facts as claimed by the Appellant to explain the unauthorised use on 25 November 2011, some of which could be independently corroborated, are so particular that the Appellant’s enforcement history is less relevant than his ability, or otherwise, to prove to VOSA, or to the traffic commissioner, on balance of probability, that his story is true.

(x)   In any event, after interviews under caution were undertaken with the driver and with the Appellant, and after VOSA had considered the Appellant’s enforcement history and undertaken a number of other checks, a Senior Traffic Examiner authorised the impounding of the vehicle.

(xi)  By separate applications each dated 15 December 2011, the Appellant and Miss Graham applied to the traffic commissioner for the return of the vehicle. They each stated that they would like their application considered at a hearing. It is common ground that the applications were received on 19 December 2012.

 

The Statutory and Regulatory Framework

(xii) In order to understand the significance of what happened next, it is necessary to set out some aspects of the legal framework. Schedule 1A to the 1995 Act was inserted by S.262 Transport Act 2000 with effect from 1 February 2001, and provided for an impounding scheme to be created by regulations. The schedule states what the regulations may do - for example, regulations may provide that, where an authorised person has reason to believe that a goods vehicle is being, or has been, used on a road in contravention of S.2, he may detain the vehicle and its contents. The schedule also states what the regulations shall do - for example, by paragraph 10(1), it is stated that regulations shall make provision:

(a) enabling the traffic commissioner to hold a hearing before determining an application by virtue of paragraph 9,

(b) requiring him to hold a hearing if requested by a person who claims to be the owner,

(c) as to the time within which the hearing must (our underlining) be held, and

(d) subject to such provision as may be made by the regulations, for the hearing to be held in public.

(xiii)         In accordance with the authority contained within Schedule 1A to the 1995 Act, the 2001 Regulations came into force on 4 January 2002. The scheme was accompanied by a Regulatory Impact Statement (which we shall consider later in this decision). Initially, the regulations did not make any provision as to the time within which any requested hearing must be held.

(xiv)         This omission was remedied by regulation 9(3) of the Goods Vehicles (Enforcement Powers) (Amendment) Regulations 2009, which came into force on 1 October 2009 and which amended the 2001 Regulations. At the same time, using powers contained in the Local Transport Act 2008, amendments were also made to enable VOSA to release an impounded vehicle if satisfied that one or more of the specified grounds was made out, without the case having to go to the traffic commissioner. This was achieved by moving the grounds for return of the vehicle out of regulation 10 and placing them (with an additional ground) into a new regulation 4.

(xv)Thus, after incorporating the amendments, regulations 10, 11 and 12 of the 2001 Regulations now read:

 

Applications to a traffic commissioner

10.—(1) The owner of a vehicle detained in accordance with regulation 3 may, within the period specified in regulation 9(2), apply to the traffic commissioner for the area in which the vehicle was detained for the return of the vehicle.

(2) An application under paragraph (1) shall be given in writing and shall be accompanied by—

(a) a statement of one or more of the grounds specified in regulation 4(3) on which the application is declared to be based; and

(b) a statement indicating whether the applicant wishes the traffic commissioner to hold a hearing.

(3) An application under paragraph (1) shall be served before the expiry of the period specified in regulation 9(2).

(4) Omitted

(5) The period referred to in paragraphs (1) and (3) is subject to regulation 23.

 

Hearings

11.—(1) If—

(a) an application under regulation 10(1) is accompanied by a statement to the effect that the applicant wishes the traffic commissioner to hold a hearing; or

(b) having received an application under regulation 10(1) the traffic commissioner decides that it would be appropriate to hold a hearing before making a determination on the application,

the traffic commissioner shall hold a hearing within 28 days of receipt of the application (subject to the power of the traffic commissioner to extend the period in accordance with regulation 23).

(2) A hearing shall take place at the time and place specified by the traffic commissioner in his notice of the hearing.

(3) At a hearing the parties shall be entitled to give evidence, to call witnesses, to cross examine witnesses and to address the traffic commissioner both on the evidence and generally on the subject matter of the proceedings.

(4) Subject to the following provisions of this regulation, a hearing shall be held in public.

(5) The traffic commissioner may direct that the whole or any part of a hearing be held in private if he is satisfied that by reason of—

(a) the likelihood of disclosure of intimate personal or financial circumstances;

(b) the likelihood of disclosure of commercially sensitive information or information obtained in confidence; or

(c) exceptional circumstances not falling within sub-paragraphs (a) or (b),

it is just and reasonable for him so to do.

(6) Where the hearing is held in private the traffic commissioner may admit such persons as he considers appropriate.

(7) A member of the Council on Tribunals or the Scottish Committee of that Council may be present in his capacity as such notwithstanding that the hearing, or part of a hearing, is not in public.

 

Notification of determinations

12. The traffic commissioner shall notify the applicant in writing of his determination of an application as soon as reasonably practicable and, subject to regulation 23—

(a) where no hearing is held, within 21 days after receiving the application; and

(b) where a hearing is held, within 14 days of the conclusion of the hearing.

(xvi)         A new regulation 23 was also added:

 

Extension of time

23.—(1) Where a traffic commissioner considers it to be necessary in order for a particular case to be dealt with fairly and justly, the traffic commissioner may extend any of the periods described in paragraph (3).

(2) A period described in paragraph (3) may only be extended for such period as the traffic commissioner considers appropriate in the circumstances of the case.

(3) The periods are those referred to in—

(a) regulation 10;

(b) regulation 11(1); and

(c) regulation 12.

(xvii)        We note in passing that paragraph 86 of the Nolan decision sets out the amended regulation 10 but, as is stated in paragraph 83, the tribunal has recast its quote to include the four grounds which are, in fact, to be found in regulation 4(3) and not regulation 10(4). Whilst this is in many ways helpful, it has caused a difficulty in the present case.

(xviii)      Regulation 10(4) was actually deleted in 2009 and, having said in paragraph 86 of the decision that the terms of regulation 10 are important and would be quoted in full, the tribunal omitted to include the new regulation 10(5), which is, of course, a very significant provision. Regulation 23 applies to various time limits including, as a consequence of regulation 10(5), the time limit for an owner to make an application to the traffic commissioner (which will nearly always be considered retrospectively after the time limit has passed).  Indeed, it will be seen that regulation 23 creates an entirely new framework and approach for dealing with out of time matters and, therefore, affects much of the jurisprudence concerning these time limits under the regulations.

(xix)         For completeness, therefore, we now set out regulation 4(3):

 

4(3) The grounds are—

(a) that, at the time the vehicle was detained, the person using the vehicle held a valid licence (whether or not authorising the use of the vehicle);

(b) that, at the time the vehicle was detained, the vehicle was not being, and had not been, used in contravention of section 2 of the 1995 Act;

(c) that, although at the time the vehicle was detained it was being, or had been, used in contravention of section 2 of the 1995 Act, the owner did not know that it was being, or had been, so used;

(d) that, although knowing at the time the vehicle was detained that it was being, or had been, used in contravention of section 2 of the 1995 Act, the owner—

(i)     had taken steps with a view to preventing that use; and

(ii)  has taken steps with a view to preventing any further such use.”.  

(xx)So far as 4(c) and (d) are concerned, the various states of knowledge that may be involved were analysed by Millett J in Agip (Africa) Ltd v Jackson [1992] 4All ER 385 at 405, following the graduated scale suggested in the judgment of Peter Gibson J in: Baden v Société Générale pour Favoriser le Dévelopement du Commerce et de l' Industrie en France SA [1992] 4 All ER 161:

 

(i)     Actual knowledge;

(ii)    Wilfully shutting one’s eyes to the obvious;

(iii)  Wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make;

(iv)  Knowledge of circumstances that would indicate the facts to an honest and reasonable person; and

(v)   Knowledge of circumstances that would put an honest and reasonable person on inquiry.

In Close Asset Finance Ltd v Secretary of State for Transport (2003/3) the Transport Tribunal confirmed these categories as applicable to impounding cases, with ‘wilfully’ involving a high degree of fault and, as confirmed in Nolan, categories (iv) and (v) requiring a finding that the owner had not merely been negligent, but had a dishonest motive for not coming to the obvious conclusion.

(xxi)         The upshot of the amendments, so far as relevant to the present appeal, is that if the traffic commissioner receives a request for a hearing or otherwise decides to hold a hearing, she shall (which we take to mean ‘must’ – see below) hold the hearing within 28 days of receipt of the application, and then issue a written determination within 14 days of the hearing. By regulation 23 the traffic commissioner has power to extend these time limits if she considers it to be necessary to do so in order for a particular case to be dealt with fairly and justly, but only for such period as the traffic commissioner considers appropriate in the circumstances of the case.

(xxii)        However, unless there is an extension, which can only be granted if the traffic commissioner is satisfied that the criteria for an extension are present, the longest that an owner should have to wait whilst the impounded vehicle is detained in storage will be 6 weeks from the date the request for a hearing is received. Given that vehicle storage can be expensive, and will either have to be paid for by VOSA or will, in effect, be paid for by the owner of the vehicle from any proceeds of sale, it is easy to see why Parliament imposed such a tight timescale. In addition, where one of the grounds for the return of the vehicle is established and the vehicle is returned, there is no provision for compensating the owner for the loss of use of the vehicle, pending determination of the application.

 

The Hearings before the Deputy Traffic Commissioner

(xxiii)      The request for a hearing having been received on 19 December 2011, the statutory duty was upon the traffic commissioner to hold a hearing by 16 January 2012.

(xxiv)      Mr McGeechan of JBM Solicitors represented (and represents) the Appellant and Miss Graham. On 10 January 2012 he spoke on the telephone with staff in the traffic commissioner’s office concerning the hearing. He was told that a date for the hearing had not yet been fixed. He then, that same day, sent a letter by FAX to the traffic commissioner’s office, referring to the telephone call that afternoon and saying:

“We understand that a date for the hearing has not yet been fixed and would be very obliged if you could note the dates below where our Mr McGeechan has prior court commitments. We trust this is of assistance re the scheduling.”

The dates for Mr McGeechan’s non-availability were:

Jan 2012:  12, 13, 16, 17, 18, 19, 20, 23, 24, 25

Feb 2012:  3, 6, 9, 13, 20, 21, 24, 27, 28.

 

It will be readily seen that, discounting the weekend, the only available day within the 28 day time limit was 11 January 2012, that is to say, the day after the letter was sent, which was clearly a non-starter. In fact there is no record of any serious attempt to list the hearing within the 28 day time limit. The traffic commissioner’s file shows a conversation between staff and the DTC on 25 January 2012 asking him if he was available to preside at the impounding hearing on 29 February 2012. He said that he was.

(xxv)       Events then took an unusual turn because, also on 25 January 2012, the Appellant and Miss Graham issued a summary application in the Sheriffdom of Lothian & Borders claiming the return of the vehicle from VOSA and claiming financial compensation. Those proceedings were stayed pending the completion of the hearing(s) before the DTC.

(xxvi)      The impounding hearing was then brought forward to 10 February 2012. The Appellant was present at the hearing, but Mrs Graham was not present.

(xxvii)     The DTC initially sought clarification as to ownership. Mr McGeechan told the DTC that the owners were the Appellant and Miss Graham, jointly. The DTC pointed out that this was not entirely consistent with some other aspects of the evidence and Mr McGeechan said that, as a preliminary matter, he wished to raise the issue of the non-compliance with the regulations in relation to the 28 day time limit.

(xxviii)   The DTC insisted on dealing with ownership first - without establishing that one or both of the applicants owned the vehicle there was no valid application, so the time limits for dealing with the application or applications became irrelevant. Mr Smith therefore gave evidence, including evidence as to how he acquired ownership and how he paid for the vehicle, after which Mr McGeechan re-iterated that he wanted the DTC to address the time limit point first. The hearing, he submitted, was not validly convened and, given that the traffic commissioner had no further jurisdiction, the vehicle ought to be returned without more ado.

(xxix)      The discussion then reverted back to ownership and Mr McGeechan proceeded on the (incorrect) basis that Schedule 1(A) of the 1995 Act meant that the owner of a motor vehicle shall be taken to be the registered keeper. In fact, this section simply states that regulations may be made about this - but the regulation that was, in fact, made stated that, in the case of a vehicle which was not hired, "owner" means the person who can show to the satisfaction of an authorised person that he was at the time of its detention the lawful owner (whether or not he was the person in whose name it was registered).

(xxx)       After hearing evidence, the DTC accepted that Mr Smith owned the vehicle and that, therefore, there was a valid application before him.

(xxxi)      Mr McGeechan then addressed the issue around the 'competence' of the hearing. In relation to the power to extend the 28 day time limit, Mr McGeechan submitted that, if the time limit was going to be extended, then it had to be extended before it expired - it could not be extended retrospectively, after it had expired. In fact, in this appeal, there is no suggestion in the transcript, no record in the traffic commissioner’s file, and no suggestion at the time from the traffic commissioner’s office, that any decision had been made under regulation 23, retrospectively, or otherwise.)

(xxxii)     Mr McGeechan then raised a number of other points that it is not now necessary to rehearse but all of which, until the appeal hearing commenced before us, appeared to be ‘live’ issues and which go some way to explaining the time it has taken to bring this appeal to a conclusion. In due course, the hearing before the DTC was adjourned for the DTC to consider the several points raised.

(xxxiii)   Shortly thereafter, on 16 February 2012, the DTC emailed the traffic commissioner’s office to say that, on reflection, he felt that he should have sought VOSA's views as to the legal consequences of the traffic commissioner’s office failing to either list the hearing within 28 days, or ask the traffic commissioner to extend the deadline. He added: "it would be helpful if VOSA could be legally represented - there are a number of legal issues that are emerging as the case(s) develop.”

(xxxiv)   The hearing resumed on 6 March 2012. Miss Graham attended along with the Appellant, represented by Mr McGeechan. Mr Hallsworth represented VOSA. The DTC said that he had formed the view that, in the adversarial procedure arising in an impounding hearing where VOSA are a party, he had conducted the earlier hearing in too inquisitorial a manner, more appropriate to a public inquiry. He also confirmed his view that VOSA should be legally represented.

(xxxv)    Mr Hallsworth submitted that the question of Mrs Graham's claim to join ownership needed to be determined, and then the question of the 28 day time limit needed to be addressed. Mr McGeechan agreed, subject to the retention of the DTC's positive decision regarding Mr Smith's ownership. Mr McGeechan did not suggest that the DTC should stand down, or that the hearing should be re-started before a different traffic commissioner.

(xxxvi)   Miss Graham gave evidence and was cross-examined by Mr Hallsworth and questioned by the DTC. After some further discussion, the DTC reserved his decision on Miss Graham's claim to be a joint owner.

(xxxvii)  Discussion then moved to the 28 day time limit issue. The parties agreed that the non-compliance and failure to extend was "an oversight". Mr McGeechan repeated his point that that the effect of the oversight was to render the proceedings a "fundamental nullity". He drew a distinction between the discretion that may arise to permit an owner to apply for the return of a vehicle out of time but, he submitted, the deadline for holding a hearing cannot be overlooked where "there has been a complete failure by the judicial body to comply with the time limit".

(xxxviii)                    Mr Hallsworth submitted that the case law from the Transport Tribunal and the Upper Tribunal suggested that an apparently mandatory time limit was, in certain circumstances, better viewed as directory. The word “shall” in one context should retain the same non-mandatory meaning throughout the regulations. Mr McGeechan responded with examples from the criminal law jurisdiction where breach of time limits had automatic, and serious, consequences. Both Mr Hallsworth and Mr McGeechan invited the DTC to rule on Miss Graham’s claim to joint ownership, and on the ‘fundamental nullity’ point arising from the non-compliance by traffic commissioner’s office with the regulations.

(xxxix)   The DTC’s decision is dated 19 March 2012. Amongst other things, the DTC determined that:

·  There was sufficient in the evidence given by Mr Smith to establish that he was the owner of the vehicle for the purposes of his application;

·  In contrast, Miss Graham failed to satisfy the DTC that she, too, was an owner;

·  The public hearing of Mr Smith’s valid application commenced more than 28 days after the application had been received in the traffic commissioner’s office and the traffic commissioner had not, at any time, extended the period beyond the 28 day time limit – and there was no evidence that any thought had been given to so extending it;

·  Impounding hearings are not public inquiries, they are party and party proceedings and it was appropriate to read the regulations as directory, in a way that was less rigid and inflexible than that required by a mandatory interpretation. It would be wrong to make one party (VOSA) lose by default, or to prevent one party from active participation in an examination of the merits of the case, simply because of a failure by the judicial authority to adhere to a time limit in regulations.

·  The hearing to address the substantive merits would be listed for 2 April 2012.

(xl)  On 2 April 2012, at the resumed hearing, Mr McGeechan asked for a copy of all file notes and other records recording all contacts between the traffic commissioner’s office and VOSA. Mr McGeechan and Mr Hallsworth were then permitted to look at the traffic commissioner’s file and a break of about two hours ensued. Mr McGeechan then indicated that he would wish to appeal the DTC’s determinations to the Upper Tribunal. Mr Hallsworth did not object. Both parties and the DTC agreed that the matters raised required a ruling from the Upper Tribunal before any further progress could be made. The hearing was therefore adjourned pending the lodging and resolution of an appeal to the Upper Tribunal in relation to the determinations made by the DTC, so far.

 

The Grounds of Appeal

 

3)     The Grounds of Appeal are dated 12 April 2012. The principal Grounds of Appeal may be summarised as follows:

 

a)     The failure to comply with regulation 11(1) meant that the decisions to convene a hearing on 10/2/2012, and to continue thereafter, were ultra vires, there being no power or authority for the traffic commissioner to hold hearings outside the statutory time limits.

 

b)     The traffic commissioner’s office and the DTC had behaved in such a way as to lead to the impression of inappropriate closeness with VOSA (a party to the proceedings) and the DTC had failed to ensure a fair hearing. The totality amounted to unfairness, bias and a lack of impartiality.

 

This second limb was then broken down into over 50 different complaints – which we mention only to explain why the Department for Transport was invited to consider whether it wished to apply to become a party to the proceedings before the tribunal (it did) and why this case has taken so long. Following two sets of directions by the tribunal and one adjournment, the preparation and service of affidavits and written submissions (and responses to submissions), the case was finally listed for a three day hearing commencing on 4 December 2012, with two witnesses from VOSA in attendance, as well as legal representation by all parties.

 

4)     At the start of the hearing of this appeal, Mr McGeechan withdrew all aspects of the appeal except for the “28 day issue”. This meant that all the DTC’s findings and conclusions, save for the jurisdictional point arising from non-compliance with the 28 day time limit, were accepted. For this reason, the allegations of bias, unfairness and lack of impartiality no longer form part of our considerations and, likewise, Miss Graham’s appeal on grounds relating to the DTC’s handling of the case are also no longer before us. We feel bound to observe that, had the appeal been confined to the “28 day issue” from the start, or at an early stage, the tribunal would have been able to hear and decide this matter several months ago.

 

5)     It was agreed that Mr Hallsworth would address us first on behalf of the First Respondent, followed by Mr Duthie on behalf of the Second Respondent, with Mr McGeechan given the opportunity to address us last. In the event, we then went round a second time. We are grateful to all advocates for their assistance, and to those who prepared the various bundles of authorities, written submissions and responses to submissions.

 

 

The Rationale for Impounding

 

6)     Mr Hallsworth spoke about the “mischief” that the impounding regulations were intended to address. At the time of the original proposal to introduce a “detention scheme for the heavy goods vehicles (HGVs) of illegal operators”, a Regulatory Impact Assessment had been issued by the Minister of State. The assessment noted that illegal operators work outside the operator licensing regime that promotes proper maintenance arrangements, road safety, adherence to driver’s hours rules, and loading limits. It also ensured that operators had sufficient finances to keep vehicles roadworthy and that operating centres were suitable and environmentally appropriate. Illegal operators undermined fair competition. Figures also showed that illegally operated HGVs were twice as likely to have dangerous roadworthiness defects as legally operated HGVs and, when involved in accidents with pedestrians, HGVs were up to six times more likely to kill a pedestrian than cars. It was felt that the proposed scheme was not disproportionate and would place “no additional burden on the courts”.

 

7)     In Asset 2 Asset Ltd [2011] UKUT 290 (AAC) the Upper Tribunal considered the nature and financial implications of the impounding scheme and described what happens if the owner fails to make out any of the grounds for return of the vehicle:

 

“In Close Asset Finance, and from time to time thereafter, it has been suggested that impounding is a penal provision with the consequence that a strict quasi-criminal approach to the question of knowledge should be adopted. We are not satisfied that this is correct or that such an approach is necessarily appropriate to a professional and commercial regulatory jurisdiction. Impounding is certainly a preventative measure, but the proceeds of sale following impounding and sale are not retained by way of punishment or civil penalty. After deducting from the proceeds of sale the expenses incurred by the authorised person in exercising functions under the regulations in relation to the property, including for the detention, removal, storage and sale of the property, the balance of the proceeds must be returned to the person who was the owner of the vehicle immediately before it was sold, and the balance will not be retained by any organ of the state by way of punishment or civil penalty (see paragraph 20(4) of the regulations).”

 

 

Case Law on Non-Compliance with Statutory Time Limits

 

8)     We turn now to some of the relevant jurisprudence placed before us. In CPT Commercials (Stockport) Ltd and CPT & Sons Transport UK Ltd (2003/90 and 2003/122), the Transport Tribunal considered the position where an owner (a company) failed to apply for the return of its impounded vehicle within the time limit laid down in regulation 9(2), that is to say, 21 days beginning with the date on which notice is published in the London Gazette. As will be seen from regulation 10(3) quoted above, the word “shall” is used. The tribunal held that the time limit for the making of an application as specified in regulation 10 was “directory”.

 

9)     In Excel A-Rate Business Services Ltd (2005/471) the Transport Tribunal approved this analysis although it noted that, read literally, the regulation would appear to be “mandatory” – which is how the regulation had been interpreted by the traffic commissioner. However, the tribunal stated (at paragraph 7):

 

“The present appeal provides a very good example of the injustice which can result from a literal interpretation of the time limit for applications as set out in the regulations … A literal interpretation of the regulations is more likely to shut out those with a strong claim to the return of an impounded vehicle or trailer than it is those with the weak claim or no claim at all. …

There can be no doubt that a vehicle or trailer is a ‘possession’ for the purposes of Article 1 of the First Protocol to the European Convention on Human Rights. So an owner is not to be deprived of it ‘except in the public interest and subject to the conditions provided by law, and by the general principles of international law’. However, that provision is qualified in that those provisions shall not ‘in any way impair the right of a state to enforce such law as it deems necessary to control the use of property in accordance with the general interest’.”

 

10) The tribunal concluded that it was necessary to read and give effect to the regulations in a manner that was compatible with the Convention. This was done by reading the requirement that the application shall be served before the expiry of the 21 day period “as directory not mandatory” - and by “directory” the tribunal meant that applicants were expected to comply with the time limit, but traffic commissioners retained discretion to accept a late application in an appropriate case.

 

11) In relation to the traffic commissioner’s discretion to accept a late application, the Transport Tribunal, upholding the traffic commissioner’s decision to refuse an out-of-time application, held in Barclays Asset and Sales Finance (2007/414) that:

 

“If owners seeking the return of impounded vehicles are out of time, we must emphasise that it is for them to explain the delay if they expect the traffic commissioner to exercise his discretion in his favour. In this case no explanation of any sort was before the traffic commissioner at the time of his decision.”

 

12) Turning now to the judgments of the courts, as long ago as 1980 some doubt had been expressed concerning the terms ‘mandatory’ and ‘directory’ - see London and Clydesdale Estates Ltd v Aberdeen District Council [1980] 1 WLR 182 (particularly the dictum of Hailsham LC at pp189-190). Subsequently, in Wang v Comr of Inland Revenue [1994] 1 WLR 1286, in an appeal from Hong Kong, the Privy Council followed and applied the dictum of Lord Hailsham. After reviewing earlier case law Lord Slynn of Hadley, giving the judgement of the Privy Council, observed at page 1296:

 

“that when a question like the present one arises – an alleged failure to comply with a time provision – it is simpler and better to avoid these two words ‘mandatory’ and ‘directory’ and instead ask two questions. The first is whether the legislature intended the person making the determination to comply with the time provision, whether a fixed time or a reasonable one. Secondly, if so, did the legislature intend that a failure to comply with such a time provision would deprive the decision maker of jurisdiction and render any decision which he purported to make null and void?

 

“In the present case the legislature did intend that the Commissioner should make his determination within a reasonable time… If the Commissioner failed to act within a reasonable time he could be compelled to act by order of mandamus. It does not follow that his jurisdiction to make a determination disappears the moment a reasonable time has elapsed.”

 

13)                                                                                                                                                                                                                                          In R v Soneji [2005] UKHL 49 the House of Lords considered the jurisdiction of a court to make a confiscation order outside the statutory time limit for doing so (which was six months, unless the court was satisfied that exceptional circumstances applied). Lord Steyn referred to Lord Hailsham’s reservations and accepted his conclusion that the courts should adopt:

 

“the more flexible approach of focusing intensely on the consequences of non-compliance, and posing the question, taking into account those consequences, whether Parliament intended the outcome to be total invalidity. In framing the question in this way it is necessary to have regard to the fact that Parliament ex hypothesi did not consider the point of the ultimate outcome. Inevitably one must be considering objectively what intention should be imputed to Parliament.”

 

14) In Soneji, a number of House of Lords authorities to similar effect were quoted in which, repeatedly, the House declined to apply the mandatory /directory distinction, concentrating instead on the consequences of non-compliance, and addressing the question of what, in the light of the consequences, must Parliament be taken to have intended. It was also noted that the Court of Appeal had adopted the same approach, and reference was made, with approval, to the “elusive distinction between directory and mandatory requirements”.

 

15) Lord Steyn concluded that the rigid mandatory and directory distinction, and its many artificial refinements, had outlived their usefulness. Instead, the emphasis ought to be on the consequences of non-compliance and posing the question whether Parliament can fairly be taken to have intended total invalidity.

 

16) This approach was also followed in Scotland by Sheriff Principal Dunlop QC in the case of Patterson v Kent and the Mental Health Tribunal [2006] Scot SC 48.

 

 

Does “shall” mean “must”?

 

17) Mr McGeechan argued that a flexible approach to the interpretation of regulation 10 in terms of time limits applicable to applicants did not mean that a similarly flexible approach was required when the regulation 11and 12 time limits applied to the judicial authority itself.

 

18) Paragraph 10(1)(c) of Schedule 1A to the 1995 Act provides that regulations shall make provision as to the time within which the hearing “must” be held. Regulation 11(1) of the 2001 Regulations now provides that when the traffic commissioner holds a hearing, he “shall” hold it within 28 days of receipt of the application, subject to the power to extend.

 

19) Article 1 of the First Protocol to the European Convention on Human Rights provides:

 

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

 

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

 

20) Article 1 of the First Protocol is a qualified right. It protects a person’s right to the peaceful enjoyment of their property. The article refers to ‘possessions’ which has a wider meaning than just land and property interests. It can certainly include a vehicle. The state or a public authority cannot deprive a person of their property, or interfere with a person’s property, unless there is a law that allows them to do this, and doing so is necessary in the public interest and proportionate. The state must strike a fair balance between the interests of the property owner and the general interest of society as a whole. If a person’s property is taken away by the state unlawfully, or a person’s right to peaceful enjoyment is interfered with by the state disproportionately, then they should be compensated by the state.

 

21) We remind ourselves that Parliament has provided for an extension of the 28 day time limit, but only in certain prescribed circumstances, namely if the traffic commissioner is satisfied that it is necessary in order for a particular case to be dealt with fairly and justly. And, even then, the traffic commissioner is obliged to limit the extension to such period as is appropriate in the circumstances of the case. The inference is that, unless this criterion is satisfied, the time limit should not be extended.

 

22) If possible, we must read the regulations in a way that gives effect to the Convention and we must assume that Parliament’s intention was to strike the right balance under the Convention. Given that the authority for the regulation derives from the Act, and the regulation should be taken to comply with the Act, we think that the word “shall” in regulation 11(1) means “must”, as used in the Act. In short, subject to the limited flexibility offered by regulation 23, it is Parliament’s intention that the traffic commissioner must hold a hearing within 28 days, and this statutory duty is part and parcel of the legal framework that legitimizes state interference with possessions in the public interest, but keeps such interference within proportionate limits.

 

 

The Consequences of Non-Compliance

 

23) We therefore turn now to look at the practical and legal consequences of the non-compliance by a traffic commissioner. In the majority of cases, we believe that the most likely immediate practical consequences of non-compliance by the traffic commissioner with the time limit for holding a hearing will be financial loss incurred by a party or parties. Unnecessary storage charges would almost certainly be incurred, which someone would have to pay, and the owner of the vehicle would be deprived of their vehicle and would be unable to use it. This may result in an alternative vehicle having to be hired, at substantial cost. In an extreme case, we could envisage that an extended period of vehicle detention may put someone out of business.

 

24) The question of the jurisdictional consequence is more difficult. It is the Appellant’s case that the traffic commissioner’s jurisdiction depends upon adherence to the statutory and regulatory framework and that the traffic commissioner has no jurisdiction to act outside this framework, especially where the state has interfered with an owner’s right to peaceful use and enjoyment of their property. Mr McGeechan went further and submitted that, following the loss of jurisdiction by the traffic commissioner, VOSA was under a duty to return the impounded vehicle to the owner without more ado.

 

25) The First and Second Respondents submit that, just because the time limit for holding a hearing has not been complied with, it cannot have been Parliament’s intention to deprive the traffic commissioner of jurisdiction. Mr Hallsworth pointed out that the oversight had not occurred in bad faith, and Mr Duthie contended that the breach was, in any event, ‘de minimis’. Both Respondents submitted that if Parliament had intended that the traffic commissioner should lose jurisdiction following non-compliance, then it would have clearly said so, and made alternative arrangements.

 

26) Moreover, even if the traffic commissioner did lose jurisdiction, it did not follow that VOSA would have to return the vehicle to a (possibly) illegal operator, and there was no reason why VOSA should have to shoulder the entirety of storage charges, purely as a consequence of a failure by the judicial authority. It was agreed that VOSA had grounds to detain and had followed the impounding rules meticulously. VOSA was a party to proceedings and it would, therefore, be quite wrong to make a party lose a case without consideration of the merits, because of a failure by the judge.

 

27) Moreover, should VOSA decline to return the vehicle under regulation 4, then depriving the traffic commissioner of jurisdiction would be to the clear detriment of owners, because the traffic commissioner was the only first-instance judicial authority with clear statutory power to return the vehicle. In these circumstances, depriving the traffic commissioner of jurisdiction would leave the vehicle with VOSA, with no obvious remedy or way forward.

 

 

The Tribunal’s Conclusions

 

28) The preponderance of guidance from the superior courts is to the effect that concepts such as mandatory and directory requirements are not particularly helpful. In looking at Parliament’s intentions, we consider that Parliament has imposed a compelling statutory duty upon the traffic commissioner, if he has decided to hold an impounding hearing or has been asked to do so, to hold such a hearing within 28 days of receipt of the application, and to give written reasons for his determination within 14 days of the hearing. The purpose of these time constraints is to limit the cost and consequences of the interference with property that will inevitably arise when a vehicle is impounded, and this statutory duty is part and parcel of the legal framework that legitimizes state interference with possessions in the public interest, but keeps such interference within proportionate limits.

 

29) We do not consider that the degree of non-compliance was minimal. Proportionately, it was significant. However, we accept that there was no bad faith, and Mr McGeechan’s non-availability, and offer of dates after the 28 day time limit, may have inadvertently encouraged staff in the traffic commissioner’s office down the road of non-compliance.

 

30) We are aware that, in England, Rule 7(1) of the Tribunal Procedure (First-tier Tribunal) (Health, Education and Social Care Chamber) Rules 2008 specifically preserves jurisdiction in the event of non-compliance:

 

7(1) An irregularity resulting from a failure to comply with any requirement in these Rules, a practice direction or a direction, does not of itself render void the proceedings or any step taken in the proceedings.

 

However, the Goods Vehicles (Enforcement Powers) Regulations 2001 (as amended) contain no such saving provision.

 

31) Were it not for the legal absurdities that would arise if the traffic commissioner lost jurisdiction, we would have found that there was little more that Parliament could have done to insist on compliance other than to use the imperative language that it did. However, the scheme as drafted authorises detention of a vehicle under regulation 3, and then only permits return of the vehicle if, following an application by the owner, either VOSA or the traffic commissioner (or the Upper Tribunal) is satisfied that one or more of the grounds is established. So depriving the traffic commissioner of jurisdiction could create a ‘limbo’ situation, which we doubt that Parliament can have intended, and which would not be in the interests of the parties. At the very least, it would force owners into the courts to recover their property, and the courts may not have the same level of commercial transport specialist knowledge and expertise as is possessed by the traffic commissioners.

 

32) We find force in the argument that that if Parliament had intended that the traffic commissioner should lose jurisdiction following non-compliance, then it would have clearly said so, and made alternative arrangements; and we do not believe that Parliament can have intended that a party (even an agency of the state) should lose a case without consideration of the merits, simply because of a failure by the judge.

 

33) We conclude that an irregularity resulting from a failure by the traffic commissioner to comply with a requirement in regulation 11 of the 2001 Regulations (as amended) does not of itself render void the proceedings. Rather, in the event of a breach of statutory duty, other remedies must apply. We do not profess expertise in this area, but we could envisage that the state may face financial liability, and the traffic commissioner could also be compelled to hold a hearing if the matter was being allowed to drift.

 

34) We find that the DTC was right to find that he retained jurisdiction. The appeal is dismissed. We remit the application back to the DTC for him to consider the matter on its substantive merits.

 

Judge Mark Hinchliffe, DCP

14 December 2012