Neutral Citation Number: [2013] UKUT 11 (AAC) Appeal No.  T/2012/66

 

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

TRAFFIC COMMISSIONER APPEALS

 

ON APPEAL FROM THE DECISION OF NICK JONES,

TRAFFIC COMMISSIONER for the WEST MIDLANDS TRAFFIC AREA dated 20 September 2012

 

 

 

Before:

Her Honour Judge J Beech, Judge of the Upper Tribunal

Leslie Milliken, Member of the Upper Tribunal

Stuart James, Member of the Upper Tribunal

 

 

 

Appellant:

HARKIN GROUP LIMITED

 

 

Attendances:

For the Appellants: James Backhouse of Backhouse Jones solicitors

 

 

Heard at: Victory House, 30-34 Kingsway, London, WC2B 6EX

Date of hearing: 11 December 2012

Date of decision: 8 January 2013

 

 

 

 

DECISION OF THE UPPER TRIBUNAL

 

IT IS HEREBY ORDERED that the appeal be ALLOWED and the matter be remitted for rehearing before a different Traffic Commissioner

 

 

 

SUBJECT MATTER:-   Refusal of application for operator’s licence; unlawful operation & fairness of hearing

 

 

CASES REFERRED TO:- T/2009/225 Priority Freight Ltd

 

 

 

 

REASONS FOR DECISION

 

 

1.           This was an appeal from the decision of the Traffic Commissioner for the West Midlands Traffic Area made on 20 September 2012 refusing the Appellant’s application for an operator’s licence under s.13A(2)(b) of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”).

 

2.           The factual background appears from the documents and the Traffic Commissioner’s oral and written decisions and is as follows:

 

(i)              J & J Harkin Limited was a company which held a standard national operator’s licence authorising four vehicles and two trailers.  The licence was granted in 1994; the sole director of the company was John Harkin and the Transport Manager was Daniel Harkin.  On 6 February 2012, a winding up order was made on the petition of the Commissioners for HM Revenue & Customs which had been presented on 7 December 2011.  The total estimated deficiency of assets over liabilities was £1,287,485, with the sum of £681,876 owing to the Inland Revenue. 

(ii)             On 3 January 2012, the Appellant made an application for a standard national operator’s licence authorising four vehicles and two trailers.  The nature of the Appellant’s business as set out in the Company House details is that of renting and leasing machinery.  In the application for the operator’s licence the Appellant’s trade or business was described as “Construction/plant hire”.  The sole director of the company was John Harkin; the proposed Transport Manager was Daniel Harkin.   A further application on a revised form was submitted on 20 January 2012.  On both forms, it was recorded that the licence of J & J Harkin would be surrendered if the Appellant’s application was granted.  An application for an interim licence was made.  No reference was made to the financial difficulties of J & J Harkin.

(iii)            By a letter dated 31 January 2012, the Office of the Traffic Commissioner (“OTC”) acknowledged receipt of the new application form.  It reminded the Appellant that it was unlawful to operate goods vehicles until authority to do so had been granted.  The Appellant was warned that do so would risk the successful grant of its application.  The letter noted that John Harkin was the sole director of both the Appellant and J & J Harkin and that the vehicles to be specified on the Appellant’s licence were currently specified on that of J & J Harkin.  The Appellant was asked to explain why the vehicles were being transferred and to confirm whether J & J Harkin Ltd had any foreseeable financial difficulties.  By a letter dated 1 February 2012, Daniel Harkin replied:

“The vehicles have been purchased by Harkin Group Ltd from J & J Harkin Ltd and therefore a new licence is being sought by Harkin Group Ltd to operate the vehicles.  As declared on the application, the current licence held by J & J Harkin Ltd .. will be surrendered if a new licence is granted. 

The only foreseeable financial difficulties related to J & J Harkin Ltd is a winding up petition present (sic) by HM Revenue and Customs, which is due to be heard on 6^th February 2012”.

(iv)           On 23 May 2012, the Appellant was informed that its application for an interim licence to operate vehicles had been refused.  The Appellant was reminded that it had no authority to operate vehicles until an authority was granted and that the company must await the outcome of its full application at a public inquiry. 

(v)             By a call up letter dated 1 August 2012, the Appellant was notified that a public inquiry was to be held.  Financial standing, good repute and the Appellant’s connection with J & J Harkin Ltd was to be investigated, in view of the latter company having gone into liquidation.  The letter advised the Appellant that if the company had been operating vehicles, any evidence of legal trading or outsourcing must be provided to the public inquiry.

(vi)           The public inquiry was held on 20 September 2012.  It was a conjoined hearing with J & J Harkin Limited.  John Harkin and Daniel Harkin attended without representation.  Despite a request for financial information to be provided to the Traffic Commissioner by 6 September 2012, none was forthcoming.  At the outset of the hearing, Daniel Harkin stated that he thought that the request for financial standing only related to J & J Harkin Ltd.  In any event, some uncertified internet copies of bank statements were handed to the Traffic Commissioner, who commented that financial standing may be academic.  He did however note that the Appellant was making regular petrol payments from its account.  He asked whether the Appellant had been operating vehicles.  Daniel Harkin confirmed that they had but under the J & J Harkin licence and that the Appellant had been doing so since 6 February 2012, when that entity went into liquidation.  The Traffic Commissioner pointed out that the Appellant had been warned that it had no authority to operate and that when its application for an interim licence had been refused, a further warning had been given.  He also referred to the calling in letter.

(vii)          Daniel Harkin attempted to explain.  He stated that J & J Harkin had gone into liquidation after 32 years but they had overlooked the issue of surrendering the company’s licence and that had been an error.  The Traffic Commissioner interrupted and reminded the Transport Manager that a licence could only be surrendered by a liquidator.  Daniel Harkin commented that no correspondence had been received by J & J Harkin in relation to the surrender of its licence.  He was interrupted by the Traffic Commissioner and upon further questioning, Daniel Harkin agreed that the Appellant did not have authority to operate the vehicles as the liquidator had not given the company authority to do so.  Upon further questioning, he stated that the company first became aware that it should not have been operating when it took legal advice the week before the public inquiry. 

(viii)         The Traffic Commissioner then questioned John Harkin.  He repeated that the position with the licence of J & J Harkin had been an oversight on their part.  Daniel Harkin added that they had taken legal advice two days before public inquiry and that the vehicles had then continued to operate the following day and that they were operating on the day of the public inquiry.  This was to fulfil contractual obligations.  When asked if there was anything else they wanted to say, Daniel Harkin stated:

“.. all we can say is this .. is an oversight on our part.  As John says we’ve never been in liquidation before so it’s an unprecedented circumstance for us.  In our defence we’ve operated .. an Operator’s licence for 18 years.  We’ve never had any action from the Transport Commission (sic) or VOSA previously.  We’ve always operated the wagons properly.  Again, going back to the liquidation of J & J Harkin, no action’s been taken against the directors of J & J Harkin in terms of the liquidation .. (in answer to a question, he confirmed that he had no evidence of that) .. and John or myself have no criminal conviction of any kind .. and although we’ve operated the wagons without the licence .. the lorries have been run properly, properly managed, properly financed, properly maintained, taxed and insured.”

 

(ix)           The Traffic Commissioner pointed out that the demise of J & J Harkin had coincided with the application for a licence by the Appellant and that gave rise to suspicion and that it was his view that the Appellant had not been forthcoming with information particularly in the reply to the written enquiry about the financial difficulties with J & J Harkin.  Daniel Harkin averred that they thought that the Appellant had the authority to operate.  The Traffic Commissioner then concluded the hearing.

(x)             An hour later, the Traffic Commissioner delivered an oral decision which was later confirmed in writing.  Having set out the short history of the matter, he referred to the application form for a licence which made it clear that the Appellant had no authority to operate; the refusal of an interim licence and the call up letter which referred to the need to produce evidence of legal trading or outsourcing if the Appellant had been operating vehicles.  Having summarised the evidence of the Harkins’ he found that the new application was made to circumvent the forthcoming liquidation of J & J Harkin Ltd knowing that there were substantial debts.  He did not accept the evidence of John or Daniel Harkin that they did not know that they could not operate vehicles.  This finding was based on watching and listening to them give evidence and in view of the number of occasions that advice had been given that the Appellant did not have authority to operate.  The Traffic Commissioner concluded that the Appellant had knowingly operated illegally without a licence and its officers had not been truthful to him.  Trust is an integral part of licensing system and unauthorised operation disadvantaged other lawful operators.  The application was refused under s.13A(2)(c) of the Act. 

 

3.           At the hearing of this appeal, the Appellant was represented by James Backhouse who provided a helpful skeleton argument for which we were grateful.  His first point was that it was wrong of the Traffic Commissioner to have called the Appellant to a public inquiry at all because at the time of the calling in letter, there was no evidence before the Traffic Commissioner of unlawful operation.  The application for a licence should have been granted within nine weeks rather than being refused nine months later.  Mr Backhouse further complained that the length of unlawful operation was significantly contributed to by the delay in refusing the Appellant’s application for an interim licence and the length of time it had taken for the call up letter to be issued and the public inquiry to take place. 

4.           We reject that submission.  Against the background of one company going into liquidation with considerable debts, not least to the Inland Revenue, it was only proper for the Traffic Commissioner to have legitimate concerns when a closely connected company appeared to be stepping into the breach by taking over the business and assets of a failing and insolvent company, thus avoiding the debts that had accrued within that failing company and thereby enabling the connected company to operate at a competitive advantage over those who are scrupulous in meeting their trading liabilities.  As it transpires, the Traffic Commissioner’s suspicions were well founded, in at least one respect: the vehicles that once belonged to J & J Harkin were being operated unlawfully by the Appellant.  The reasons for J & J Harkin failing were not explored.  Nevertheless, it matters not that there was a delay in the consideration of the interim application or indeed in calling the Appellant to a public inquiry.  If the Traffic Commissioner’s finding that the Appellant knew that it was operating without authorisation were well founded, neither the OTC or the CLU can be blamed for the length of time that the Appellant was doing so. It is of note, that no attempt was made by either Daniel Harkin or John Harkin to chase the application for an interim licence for a swift determination and we ask ourselves, why apply for an interim licence at all if Daniel and John Harkin believed that they had authority to operate using the licence of J & J Harkin unless and until the Appellant’s application was granted?

 

5.           Mr Backhouse’s main point, which is one that we have considerable sympathy with, concerns the conduct of the hearing itself.  The total recording time, including the introductions and the delivery of an oral decision was 20 minutes.  The Appellant was not legally represented and neither Daniel nor John Harkin appear to have been appropriately prepared for the hearing.  That might be because there was little they could rely on or they just simply failed to appreciate what was expected of them.  We do not know.  The difficulty with the conduct of the hearing is that the Traffic Commissioner concentrated on one issue, which was the unlawful operation of vehicles by the Appellant.  Whilst that issue was and is an extremely serious one in the context of operator licensing and is usually fatal to an application, particularly when a negative impression has been given to a Traffic Commissioner as a result of the demeanour of the witnesses, the Traffic Commissioner did not even attempt to explore which other aspects of the Appellant’s operation could be weighed into the balance when determining whether the Appellant was of good repute.  In fact, when attempts were made in order to refer to the positive aspects of the Appellant’s conduct, the witnesses were cut short by the Traffic Commissioner.  Neither did he explore the circumstances in which J & J Harkin failed.  Again, it may be that adverse inferences are inevitable when a company fails owing the Inland Revenue (amongst others) a considerable sum of money but the Appellant should have been given a proper opportunity to explain what had occurred.  We regret to find that the transcript makes uneasy reading and whilst his determination may well be justified, the Appellant should have been given an opportunity (with guidance if necessary) to put its case as a whole so that a balancing exercise could be undertaken and the principles set out in the Tribunal decision of Priority Freight Ltd (citation above) could be applied. 

6.           In the circumstances, this appeal is allowed and the case is remitted for rehearing before a different Traffic Commissioner.  The Appellant must of course be warned that the success of this appeal does not give the company authority to operate vehicles over 3.5 tonnes. 

 

 

 

Her Honour Judge J Beech

8 January 2013