Neutral Citation Number: [2013] UKUT 117(AAC)

Appeal No.  T/2012/71

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

TRAFFIC COMMISSIONER APPEALS

 

ON APPEAL from the DECISION of Gillian Ekins Deputy TRAFFIC COMMISSIONER for the Eastern Traffic Area

Dated 12 November 2012

 

 

 

Before:

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

Leslie Milliken, Member of the Upper Tribunal

David Rawsthorn, Member of the Upper Tribunal

 

 

Appellant:

SILVERTREE TRANSPORT LIMITED

 

 

 

 

Attendances:

For the Appellant: the Appellant was represented by its directors, Mr & Mrs Weinstein

 

 

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

Date of hearing: 15 February 2013

Date of decision: 4 March 2013

 

 

 

 

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be DISMISSED.

 

 

 

 

SUBJECT MATTER:- Repute, Professional Competence, Transport Manager, Disqualification, ‘fronting’

 

 

CASES REFERRED TO:- 2011/34 Utopia Traction Ltd

 

REASONS FOR DECISION

 

 

1.           This is an appeal from the decision of the Deputy Traffic Commissioner for the Eastern Traffic Area to refuse the Appellant’s application for a standard international goods vehicle operator’s licence, to find that the nominated Transport Manager, (Paul Douglas Winestein), was not of good repute or professionally competent, to disqualify him from acting as a Transport Manager for three years, to direct that any Certificate of Professional Competence held by him is to be regarded as invalid and to direct as a rehabilitation measure that he is not allowed to re-enter the Transport industry after the period of disqualification until he has retaken and passed the necessary exams to obtain a new Certificate of Professional Competence.

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

(i)                   On 11 May 2012 Paul Douglas Weinstein, (“Mr Weinstein”), a director of the Appellant company signed an application, on its behalf, for a standard international operator’s licence authorising one vehicle and one trailer.  In answer to a question under the heading ‘previous licence history’ reference was made to an operator’s licence held by Silvertree Haulage Ltd, (“Haulage”).  On the same date Mr Weinstein signed an application to become the Transport manager for the Appellant.  He disclosed, in that application, that the operator’s licence held by Haulage had been revoked.

(ii)                 Further inquiries about Haulage revealed that Mr Weinstein was the sole director of that company listed on OLBS, (Operator Licensing Business System), and that the company was dissolved on 21 September 2010.  It became apparent that Mrs Weinstein was also a director of Haulage, though not listed as such on OLBS.  The directors of Haulage did not notify the Traffic Commissioner that the company had been dissolved.  On 29 September 2011 Mr Weinstein signed the Transport Manager questionnaire, as nominated Transport Manager and a director of Haulage.  This would have been in response to a letter dated 26 September 2011, sent to all Transport Managers, to alert them to the changes being introduced on 4 December 2011 when Regulation (EU) 1071/2009 came into force.

(iii)                Once the Traffic Commissioner became aware that Haulage had ceased to exist its operator’s licence was revoked, with immediate effect, on 27 April 2012.  The letter notifying the revocation went on to note that there had been online changes to the operator’s licence held by Haulage, which indicated that vehicles had been added to and removed from the licence after the date on which the company had been dissolved.  It pointed out that if another entity had continued to use the licence after the dissolution of the company such use was unlawful.  The letter added that any entity making use of Haulage’s licence was required to apply for a licence in its own right.

(iv)                On 20 May 2012 Mr Weinstein signed an application to become the Transport Manager of D & S M B Group Ltd, (“Group”).  He declared in this application that the operator’s licence held by Haulage had been revoked.  Group was incorporated in 1994, in the name of ALB Group Ltd.  It changed its name to D & S M B Group Ltd in 2004.  From 2000 until his resignation on 30 June 2005 the Appellant was the Transport Manager of Group, which eventually had authority to operate 10 vehicles.

(v)                 On 3 July 2012 the Office of the Traffic Commissioner, (“OTC”) wrote to Group stating that it appeared that the company had been dissolved in March 2008.  The letter pointed out that an operator’s licence is not transferrable and that any change in entity required an application for a new licence.  The letter also pointed out that a new entity cannot operate, lawfully, until an operator’s licence has been granted.

(vi)                On 16 July 2012 the OTC wrote to the former directors of Group noting that the dissolution of Group had never been notified to the Traffic Commissioner and that the company had changed its name in 2004.  The letter went on to state that as the company which held the operator’s licence had ceased to exist the Traffic Commissioner had revoked the licence with immediate effect.  The letter required the return of all licence documents and discs.

(vii)              On 16 July 2012 the OTC wrote to the Appellant.  The letter indicated that the Traffic Commissioner was minded to refuse the application on a number of grounds relating to good repute and professional competence and to Mr Weinstein’s repute and professional competence as Transport Manager.  The letter summarised the background, to which we have already referred.  It went on to pose a series of questions and gave the Appellant 21 days in which provide clarification.  The questions were: (i) why was the dissolution of Haulage not declared at the time and why did that licence continue to be used, (ii) which entity had been operating vehicles on Group’s operator’s licence, given that Mr Weinstein was Transport Manager and that the Appellant was hiring a vehicle to Group? A copy of the hire agreement was requested.

(viii)             On 17 July 2012 Mr Weinstein replied.  He described how Haulage was set up in 2005 and why in August 2009 he had no choice but to cease trading, through Haulage, because of large debts.  He said that trading through the Appellant company commenced in 2009, that he cut back to one lorry and gradually worked his way back into credit.  He added that throughout this period he kept maintenance up to date and that none of the lorries had ever failed an MOT.  He said that unfortunately, due to pressure and stress caused by the need to clear debts, he overlooked changing the ‘O’ licence to the Appellant’s name.  He explained that he ceased to be Transport Manager for Group in June 2005 and had informed the Eastern Traffic Area of his resignation.  Between June 2005 and 27 April 2012 he said that he had no knowledge of what Group was doing and, in particular, he said that he did not know that the company had ceased trading and that if he had known the true position he would not have made the approach.  He explained that he contacted Group, on receipt of the letter revoking the operator’s licence held by Haulage, with a view to Group hiring the vehicle, which the Appellant had been using, to keep it working until the Appellant got its own operator’s licence.  He offered to resign as Director and Manager of the Appellant and to appoint a new Transport Manager.  That offer was repeated in a letter dated 31 July 2012.

(ix)                On 23 August 2012 the Appellant was called to a Public Inquiry to enable the Traffic Commissioner to consider the application.  The letter set out the matters about which the Traffic Commissioner had to be satisfied before the application could be granted. It went on to refer to the evidence that the Traffic Commissioner would take into account.  In particular reference was made to Mr Weinstein’s involvement in Haulage and in D & S M B Group Ltd, (“Group”), the fact that Haulage had been dissolved, but that the Traffic Commissioner was not informed, that the licence had been revoked on 27 April 2012, but that that was not declared on the application dated 11 May 2012, the hiring of a vehicle to Group after the revocation of Haulage’s licence and the role of Mr Weinstein as Transport Manger on Group’s licence.

(x)                 On 23 August 2012 Mr Weinstein was called to the same Public Inquiry in his capacity as nominated Transport Manager of the Appellant.  The letter made it clear that the purpose was to consider whether Mr Weinstein fulfilled the requirements to be of good repute and professionally competent.  The letter warned Mr Weinstein of the consequences of an adverse finding on either matter.  It went on to set out the evidence to which the Traffic Commissioner intended to refer in terms almost identical to the letter sent to the Appellant.

(xi)                On 7 September 2012 Mr Weinstein attended a course.  The certificate which he was given at the end of the course confirmed his attendance at an ‘Operator’s Licence Undertakings course’.  It was this certificate that was shown to the Deputy Traffic Commissioner in the course of the Public Inquiry.  It has since emerged that this certificate was wrong and that it should have confirmed attendance at a ‘Transport Manager’s Refresher course’, providing an overview of Operator’s Licence Undertakings.  We allowed Mr Weinstein to adduce the new certificate as fresh evidence.

(xii)               On 11 October 2012 the Public Inquiry took place before the Deputy Traffic Commissioner.  She accepted at the start that the Appellant had demonstrated that it was of appropriate financial standing.  She then set out the background to the decisions that she would have to take and referred to some matters, which she intended to raise.  She stressed that as it was an application it was for Mr and Mrs Weinstein on behalf of the Appellant and Mr Weinstein, in his capacity as Transport Manager to satisfy her that the relevant requirements had been met.

(xiii)             Mr Weinstein then gave evidence.  He referred to the period during which he was Transport Manager of Group and explained that he parted company with Group when it fell into financial difficulties as a result of a factoring agreement.  He said that another reason for leaving was that he wanted to set up his own business, which he did with two other directors, when Haulage was incorporated, and obtained an operator’s licence with authority to operate four vehicles.  He went on to explain that towards the end of 2007 Haulage was owed a great deal of money but was having difficulty collecting it.  As a result but against his wishes Haulage entered into a factoring agreement.  He said that as he had feared it proved a very unsatisfactory arrangement.  Shortly afterwards the other directors resigned and he was left to endeavour to pay off the debts.  In 2009 there was insufficient work to keep the vehicles busy so those on hire were returned, leaving one working vehicle.  At this point he said that Haulage ceased trading and the Appellant company came into being.

(xiv)             Mr Weinstein said that it did not enter his head to inform the Traffic Commissioner because the two companies had the same directors and the same Transport Manager.  He added that his concern at the time was to pay off the debts and to save his house.  A little later he said that all the debts had been cleared and the requirement to notify the Traffic Commissioner had been overlooked.  At this point the Deputy Traffic Commissioner asked whether it would be fair to say that Mr Weinstein was aware of the consequences if the OTC had been notified that Haulage had been dissolved.  The following exchange then took place:

“Q.  What would have happened to your licence if you had notified them that the company had been dissolved?

A.  Well, they’d have took my licence away.

Q.  All right, so is that why you didn’t notify?

A.  Basically I suppose, yes”.

Mr Weinstein went on to say that at that time, if he had applied for a new licence, he would not have been in a position to satisfy the requirement to be of appropriate financial standing.

(xv)              In relation to the Appellant company Mr Weinstein said that his wife was appointed Company Secretary and that his son and his step son were appointed directors.  He said that he and his wife became directors in October 2011 when his son and step-son resigned. 

(xvi)             Mr Weinstein was then asked about what happened between September 2010, when Haulage was dissolved and October 2011, when he became a director of the Appellant.  He said that the Appellant was running one van and one heavy goods vehicle.  The following exchange then took place:

“Q.  What did you do with the discs that you had for Silvertree Haulage?

A.  It was running with the disc of Silvertree Haulage init.

Q.  You knew that was wrong?

A.  Yes.

Q.  Were you ever stopped by VOSA?

A. Yes, I’ve been stopped in just ordinary checks.

Q. Normally if you are stopped they will do a check on the licence but because you had not dissolved, you had not notified this Office, then VOSA would not also have known that Silvertree Haulage had-

A.  No.

Q. –been dissolved, would they?  So you have been dishonest in two ways.

A. Yes, I suppose so”.

Mr Weinstein added that he did not believe that his wife, his son or his step-son were aware of the situation.  He accepted that the vehicle was being run, unauthorised, from 21 September 2010 until 27 April 2012. 

(xvii)            He said that following receipt of the letter informing him that the operator’s licence held by Haulage had been revoked, he took the disc out of the vehicle and destroyed it.  He went on to explain that the news that the licence had been revoked was received on a Friday and that the vehicle was already loaded for a delivery on the following Monday and he did not want to let the customer down.  As a result he spoke to the man in charge of Group and asked him if he would hire the vehicle previously used by the Appellant company.  He said that he explained that ‘his licence had been revoked’, that he could not work without a licence and that he had a vehicle loaded and did not want to let the customer down.  He said that he was shown paperwork, which indicated that Group still had an operator’s licence but was told that the only way in which it could be done would be for Mr Weinstein to be appointed Transport Manager for Group.  In answer to the Deputy Traffic Commissioner Mr Weinstein added that Group was not operating any vehicles at that point.  A little later Mr Weinstein said that he was ‘assured’ that Group had an operator’s licence.

(xviii)          Mr Weinstein accepted that there was no formal hire agreement and that, at that stage, he was not proposing to have one drawn up.  He explained that he regarded the arrangement as a temporary measure until the Appellant’s application was determined.  He said that under the agreement he, (ie the Appellant) would be paying for the maintenance and insurance of the vehicles, that he would be the driver and that Group would receive 12% of any money earned.  Mr Weinstein was specifically asked whether it occurred to him that it might not be a genuine agreement and that he was just using Group’s licence for convenience.  He replied: “No, I don’t think so.  I wasn’t … It wasn’t meant to come over like that at all”.

(xix)             Mr Weinstein described how the paperwork to become Transport Manager of Group was put before him for signature.  It was pointed out that as a result of the inquiries made when this application was received it was discovered that Group had been dissolved in March 2008.  He said that he was unaware of this and that becoming involved with Group was “the biggest mistake of my life”.  He said that when Group’s licence was revoked in July 2012 his truck was ‘parked up’.

(xx)               Mr Weinstein said that after a time he hired the vehicle out to another operator who worked for his main customer.  He said that he supplied a maintained vehicle, (because it was still on contract), that the hirer paid for fuel and insurance and that he was self-employed as the  driver.

(xxi)             The Deputy Traffic Commissioner asked Mr Weinstein whether he knew what changed in December 2011 in terms of the responsibilities of a Transport Manager.  He replied that he did not know.  He was pressed further and made no response.  Then he accepted that he was not aware of the fact that Transport Managers were now required to demonstrate “continuous and effective management of the transport activities” of the business for which they are the designated Transport Manager.  He agreed that he should have been aware of this and said that he could not understand why it did not come up on the course.

(xxii)            Mrs Weinstein gave evidence.  She said that she was a director of the Appellant company and also the company secretary and she accepted that she had a responsibility for making sure that the company was running legitimately.

(xxiii)           The Deputy Traffic Commissioner asked a number of questions about the answers given to the questions at section 13 of the application for an operator’s licence.  She maintained that the questions had been answered correctly because none of them asked for disclosure of the fact that Haulage had been dissolved.  However she accepted that the answer “No” to the question about holding an operator’s licence within the previous 12 months was wrong.

(xxiv)          Mrs Weinstein said that after the dissolution of Haulage steps were taken to pay off its debts and to inform the Inland Revenue and others.  She was then asked why the OTC had not been told.  She said she did not know.  She was aske if it was because they wanted to continue to use the licence. She replied: “I suppose, looking at it from that point of view, to a degree yes, you know, as in same people, same maintenance, same everything, the only difference being a slight change in the name”.  The Deputy Traffic Commissioner pointed out that the change of name was not slight because it meant that there was a different company to the one that held an operator’s licence.

(xxv)            The Deputy Traffic Commissioner explored this point further in the following exchanges:

“Q. … and you had all the benefits of a licence without having to make the application, is that fair to say?

A.  Said like that yes, but-

Q.  And do you also accept your husband’s point that actually if you had needed to have applied you would not have had the finance anyway so you would not have been granted a licence?

A.  No, we wouldn’t have had, no.

Q.  So not only are you having the licence by deception in the sense that you have retained the licence you are not authorised to use, you are also holding a licence that you would not actually have been able to gain anyway because you did not have financial standing.

A.  Probably not, but then that’s that side of the coin.  Our side of the coin was-

Q.  Well, all right Mrs Weinstein-

A.  Sorry. …..

Q.  …Now the licensing system relies on trust.  I have to be able to trust the operator-

A.  Right yes.

Q.  –and that, in your case, is the directors of the company, that is you and your husband, and it seems to me that you have behaved in a wholly untrustworthy way.  Do you accept that?

A.  Yes, I do, yes, it was wrong, very wrong”.

(xxvi)          Mrs Weinstein maintained that she was not aware that they were doing anything wrong by hiring the vehicle to Group after their own licence had been revoked.  However she accepted that they had not obtained any advice because they did not feel that it was necessary.  She described the later agreement for hiring the vehicle and agreed that it was quite different to the agreement with Group.

(xxvii)         When the Deputy Traffic Commissioner asked about the arrangements made after haulage ceased to trade Mrs Weinstein accepted that she was aware that the discs issued to Haulage were being used on the vehicle operated by the Appellant but she added that she was not aware of the implications.  When it was suggested that she had ‘turned a blind eye’ she replied “or being naïve and not finding out properly”.

(xxviii)        A little later the questioning turned to financial standing and Mrs Weinstein agreed that they were running the vehicle to generate the funds to pay for it.  The Deputy Traffic Commissioner pointed out that this was exactly what the regulatory regime was intended to avoid.  Mrs Weinstein countered by  saying: “but the vehicle was always up to spec, always”. 

(xxix)           The Deputy Traffic Commissioner decided to issue a written decision and indicated that she would endeavour to meet the target of doing so within four weeks.  In the event her written decision was given on 12 November 2012.

(xxx)            The Deputy Traffic Commissioner set out the background and the evidence, which we have summarised above.  She found that Mr and Mrs Weinstein, as directors of Haulage, had failed to notify the OTC of a material change in the company’s finances, when it ceased to trade and was unable to pay its debts.  In addition she found that they had failed to surrender its operator’s licence.

(xxxi)           The Deputy Traffic Commissioner considered the wording of the questions in Section 13 of the application for an operator’s licence and accepted Mrs Weinstein’s contention that there was no obligation to disclose that Haulage had been dissolved.  She referred to the fact that it was accepted that one of the answers in Section 14 was incorrect but explained why she did not attach much weight to this finding.  She gave Mr Weinstein credit for correctly disclosing his connection with Haulage.

(xxxii)         Turning to the way in which the operator’s licence and discs held by Haulage had been used by the Appellant the Deputy Traffic Commissioner said that she was satisfied that Mr and Mrs Weinstein were fully aware that Haulage’s licence should have been surrendered when Haulage ceased to trade.  She found that they did not genuinely believe that the licence could be transferred from one company to another.

(xxxiii)        The Deputy Traffic Commissioner then considered the role of Mr Weinstein both as a director and as Transport Manager of Haulage.  She concluded that he would have been fully aware that Haulage had been dissolved and that he was obliged both as a director and as Transport Manager, to notify the OTC and to surrender the operator’s licence and the discs but that he failed to do so.  The Deputy Traffic Commissioner was also satisfied that Mr Weinstein knowingly carried on using a disc issued to Haulage in the vehicle operated by the Appellant.

(xxxiv)        Turning to the arrangement with Group the Deputy Traffic Commissioner concluded that the nature of the agreement justified the conclusion that it was a ‘front’, in other words that it enabled the Appellant to operate without an operator’s licence, in circumstances where it required an operator’s licence, by hiding behind the ‘front’ of apparent respectability and legality provided by Group’s licence.  The Deputy Traffic Commissioner accepted that once Group’s licence had been revoked it was very likely that the vehicle was parked up for about a month.  She also accepted that the more recent arrangement with another operator appeared more credible though she gave reasons for concluding that a question mark hung over it.

(xxxv)         The Deputy Traffic Commissioner correctly directed herself that it is for the person applying for an operator’s licence to satisfy her that all the statutory criteria for granting a licence have been met.  She turned to the question of good repute and set out the approach that she is required to take.  She gave some credit to Mr and Mrs Weinstein for the frankness with which they gave their evidence.  She then referred to the 19 month period during which the operator’s licence and vehicle identity discs issued to Haulage were used to enable the Appellant to operate its vehicle.  She referred to the fact that had the OTC been notified that Haulage had ceased to trade and had been dissolved its licence would, inevitably, have been revoked.  She said that she had found that there was an intention to deceive as a result of a deliberate failure to notify the OTC that Haulage had been dissolved so that the licence and the discs could be used for the vehicle operated by the Appellant, which would not have been in a position to demonstrate that it was of appropriate financial standing.  The Deputy Traffic Commissioner went on to point out that while Mr and Mrs Weinstein may have believed that they were able to operate the vehicle safely they were, in fact, breaching a core principle of operator’s licensing, in that they did not have the money available to meet the requirement to be of appropriate financial standing.  The Deputy Traffic Commissioner concluded that the impact on fair competition was highly significant.  Overall she concluded that there had been a manipulation of the system of licensing, orchestrated by Mr and Mrs Weinstein, which went to the issue of their own and the Appellant’s good repute.  She concluded that the arrangement with Group, lasting from late April 2012 to July 2012, was a front and that the Appellant’s vehicle was therefore being operated in breach of the Goods Vehicles (Licensing of Operators) Act 1995, ["the 1995 Act"].  On this basis the Deputy Traffic Commissioner concluded that both Mr and Mrs Weinstein had failed to establish that they were of good repute and that it followed that the Appellant company was not of good repute.

(xxxvi)        The Deputy Traffic Commissioner then turned to the question of professional competence.  She considered that the unauthorised use of the Haulage licence and disc was highly significant, as was the fact that Mr and Mrs Weinstein were prepared to deceive the Traffic Commissioner.  She took into account that the arrangement to hire the Appellant’s vehicle to Group was a ‘front’.  She also took these matters into account when considering Mr Weinstein’s position as Transport Manager.  In addition she had regard to the fact that Mr Weinstein admitted that he knew nothing about the changes to the position and role of a Transport Manager which were brought about by EU Regulation 1071/2009.  She considered it to be inexcusable.  She gave credit to Mr and Mrs Weinstein for the frankness with which they gave their evidence.  She then considered the overall position and concluded that it was not simply a question of the professional competence of Mr Weinstein being a little rusty.  She held, instead, that he fell so far short of the level of competency required that attending a refresher course would not suffice.  As a result she concluded that Mr Weinstein had failed to establish that he was professionally competent which meant that the Appellant had also failed in that respect.  However she added that the actions of Mr and Mrs Weinstein, in their capacity as directors of Haulage and the Appellant also contributed to a finding that the Appellant was not professionally competent.

(xxxvii)      Given the findings of lack of good repute and professional competence the Deputy Traffic Commissioner was required to refuse the Appellant’s application, which she did.

(xxxviii)     In addition the Deputy Traffic Commissioner found that the deceit and cynical abuse of the operator’s system on the part of Mr Weinstein meant that he was no longer of good repute in his capacity as Transport Manager.  

(xxxix)        Having found that Mr Weinstein had lost both professional competence and good repute in his capacity as Transport Manager the Deputy Traffic Commissioner was required by Paragraph 16(2) of Schedule 3 to the 1995 Act to disqualify him, either indefinitely or for such period as she thought fit.  She decided that a 3 year disqualification was appropriate in all the circumstances.  She directed that any certificate of professional competence held by Mr Weinstein should be regarded as invalid.  The Deputy Traffic Commissioner also exercised the power given by Paragraph 17(2) of Schedule 3 to the 1995 Act because she directed, as a rehabilitation measure, that Mr Weinstein must re-take and pass the necessary qualifications to obtain a new Certificate of Professional Competence.

(xl)                Mr Weinstein filed a Notice of Appeal, dated 6 December 2012, on behalf of the Appellant.  He submitted that the decision was too harsh, that his character had been discredited and he submitted references to show that he was not the person he had been made out to be.  He asserted that he ran one truck to a high standard of maintenance and that he had now lost a business which he and his wife had built up and which had no debts.

3.           At the hearing of the appeal Mr and Mrs Weinstein appeared in person on behalf of the Appellant.  Shortly before the hearing they provided a document headed Summary of Arguments on Appeal, for which we are grateful.  The first ground of appeal set out in this document concerned the finding that the arrangement with Group involved ‘fronting’.  The submissions on this ground were: (i) that the Deputy Traffic Commissioner never defined fronting, (ii) that she failed to provide sufficient analysis and justification for a finding of ‘fronting’ and (iii) that the Deputy Traffic Commissioner held that there had been dishonesty without putting that accusation to Mr and Mrs Weinstein and without sufficient evidence.  The second ground of appeal was that the Deputy Traffic Commissioner failed to take into account, in deciding about good repute, the long-standing historical good management of vehicles by Mr Weinstein.  The third ground of appeal was that the errors made by the Deputy Traffic Commissioner contributed to her finding that Mr Weinstein had lost his good repute and professional competence, with the result that that conclusion was wrong.  The fourth ground of appeal was that disqualification for 3 years was too long, in all the circumstances.

In our view there is force in the submission that the Deputy Traffic Commissioner never defined what she meant by ‘fronting’.  Unfortunately it is all too easily assumed by those who are familiar with expressions such as ‘fronting’ that everyone in the industry knows what is meant.  In 2011/34 Utopia Traction Ltd  at paragraphs 8 & 9 the Tribunal said this:

“We consider that Traffic Commissioners, (and the Tribunal), should, at some stage and preferably on the first occasion, explain what they mean when using shorthand expressions such as ‘front’ or ‘fronting’.  There are two reasons why this is necessary.  First, while most people in the industry will know what the shorthand expression means, others, and those not in the industry, who may still have an interest in the case, may not know.  Second, it is only by explaining what the expression is understood to mean that it is possible to assess whether the findings of fact which have been made support the conclusion that the use of the shorthand expression is justified”.

“In the context of vehicle operator’s licensing ‘fronting’ means that a person, partnership or company, which does not have an operator’s licence, uses the operator’s licence held by another entity to conceal the fact that they are behaving in a way which requires them to have an operator’s licence of their own.  In other words it deprives the Traffic Commissioner of the right to control an ‘operator’, when Parliament has said that such an entity should be within his or her jurisdiction”.

4.          Another way in which to describe the same situation would be to say that: ‘fronting’ occurs when appearances suggest that a vehicle, (or fleet), is being operated by the holder of an operators licence when the reality is that it is being operated by an entity, (i.e. an individual, partnership or company), which does not hold an operators licence and the manner in which the vehicle is being operated requires, if the operation is to be lawful, that the real operator holds an operator’s licence.

5.          In our view once a Traffic Commissioner is satisfied that the evidence establishes that fronting has taken place he or she is entitled to take a serious view of such conduct.  Those concerned must understand that such a finding puts the good repute of those involved in jeopardy.  The reason is that fronting involves deception.  Where the Police or VOSA stop a vehicle which is being operated in this way the appearance will deceive then into thinking that it is being operated lawfully when the reality is that a criminal offence is being committed under s. 2(5) of the 1995 Act and the vehicle is liable to be impounded under Regulation 3 of the Goods Vehicles (Enforcement of Powers) Regulations 2001.  In addition operating behind the front of respectability provided by the holder of an operator’s licence deprives the Traffic Commissioner of jurisdiction over the real operator of the vehicle or fleet in question.  The Traffic Commissioner, of course, retains jurisdiction over the holder of the licence that is being used to provide the front of respectability and that entity is likely to be called to a Public Inquiry to consider whether or not to revoke the operator’s licence for loss of good repute.  But because the real operator of the vehicle or fleet in question does not hold an operator’s licence the Traffic Commissioner is deprived of jurisdiction over them unless and until that entity applies for an operator’s licence.  In other words ‘fronting’ involves conduct, which can seriously undermine the effectiveness of the regulatory regime.

6.          In the present case there is no dispute that the vehicle owned by the Appellant appeared, for a time, to be operated by Group.  However the Deputy Traffic Commissioner found that, during that period, the Appellant provided the vehicle and paid for the insurance, the driver, the fuel and maintenance.  She would have been entitled, on the evidence, to find in addition, that the Appellant provided the work, which the vehicle undertook and that clear evidence of the contractual arrangements between the Appellant and Group was hard to find.  The Deputy Traffic Commissioner, rightly in our view, went on to contrast this arrangement with the more recent arrangement made by the Appellant, which she described as: “a more credible arrangement in terms of a formal hiring out of the vehicle”.  We are quite satisfied that these findings were fully justified by the evidence and that they demonstrate that the reality was that the Appellant was the true operator of this vehicle but that the reality was hidden by the front of legality provided by Group’s licence.  In other words the findings justified the conclusion that this was a case of fronting.

7.          We reject the suggestion that there was insufficient analysis of the evidence or justification for the finding of fronting.  The Deputy Traffic Commissioner set out the material parts of the evidence fully and carefully.  Before reaching the conclusion that this was a case of fronting she set out most of the factors, which led her to that conclusion.  She did so quite briefly for the simple reason that there was no dispute about these points.  In our view her approach cannot be faulted.  On the contrary considering the decision as a whole it is to be commended because of the obvious care which the Deputy Traffic Commissioner has taken and the way in which clear conclusions have been expressed and justified by identifying and assessing the relevant evidence.

8.          We also reject the suggestion that the Deputy Traffic Commissioner found that there had been dishonesty without putting such an allegation specifically and that such a conclusion was against the weight of the evidence.  It is only necessary to consider the evidence which we have summarised, and, in particular the passages quoted at paragraph 2(xvi) and (xxv) above to see that Mr Weinstein accepted, in answer to the use of the word ‘dishonest’ by the Deputy Traffic Commissioner that he had been dishonest.  In the case of Mrs Weinstein she accepted that she and her husband had acted in an untrustworthy way as directors.  In our view, despite the argument advanced by Mr and Mrs Weinstein that they considered the arrangement with Group to be perfectly proper, there was ample evidence to justify the conclusion that they had acted dishonestly, both in relation to the use of the licence held by Haulage and in relation to the arrangement with Group.

9.          In considering the submission that the Deputy Traffic Commissioner failed to give sufficient weight to Mr Weinstein’s “long-standing good management of vehicles” we must bear in mind that this was an application for a new operator’s licence and not a disciplinary hearing at which the Deputy Traffic Commissioner was considering whether or not to revoke the licence.  On an application for a new licence it is for the Applicant to satisfy the Deputy Traffic Commissioner that the requirement to be of good repute is met.  At a disciplinary hearing it would have been for the Deputy Traffic Commissioner to be satisfied that the Appellant had lost its good repute and, before reaching that conclusion, that it was appropriate and proportionate to put the Appellant out of business.  Given the contrast between these two approaches it seems to us that the Deputy Traffic Commissioner was entitled to focus on the issues of the use of the licence held by Haulage and the use of Group as a front.  In our view the conclusions reached on these issues clearly demonstrated that those in charge of the Appellant could not be trusted to operate, at all times, in accordance with the regulatory regime.  A long-standing history of operating well-maintained trucks is only one aspect of the regulatory regime.  In our view the Deputy Traffic Commissioner was entitled to conclude that it counted for little in all the circumstances of the present case.

10.       Having rejected the Appellant’s submissions in relation good repute and professional competence insofar as they concerned the Appellant it follows that we reject them also in relation to Mr Weinstein in his capacity as Transport Manager.  We are satisfied, in all the circumstances of this case, that this was not a disproportionate response.  That leaves the question of disqualification.

11.       In our view this was a bad case.  The failure to notify the Traffic Commissioner that Haulage had ceased to trade was followed by a long period during which it’s licence and discs were used on a vehicle operated by the Appellant, a different company and therefore a different legal entity, which required its own operator’s licence.  As Mr and Mrs Weinstein admitted in evidence all this occurred at a time when they knew that the Appellant, if it had applied for an operator’s licence, would not have been able to satisfy the requirement to be of appropriate financial standing.  Then, when the true position emerged and the licence held by Haulage was revoked there followed a shorter period during which the arrangement with Group provided a front of respectability for what, in reality, was unlawful operation.  The first question is whether the Deputy Traffic Commissioner was right to disqualify Mr Weinstein in his capacity as Transport Manager.  The answer is that she was because having held that Mr Weinstein had lost his good repute and professional competence as a Transport Manager she was obliged by the terms of paragraph 16(2) of Schedule 3 to the 1995 Act to disqualify him.

12.       The second question is whether the Deputy Traffic Commissioner correctly exercised her discretion to specify an appropriate rehabilitation measure.  In terms of the merits we are quite satisfied that she was right to consider a rehabilitation measure and that requiring Mr Weinstein to re-take and obtain the necessary qualifications to secure a new certificate of Professional Competence was an appropriate and proportionate response.  The history of this case demonstrates a lamentable ignorance on the part of Mr Weinstein as to the duties and responsibilities of a Transport Manager.  In our view this was made all the worse by his admitted ignorance of the changes made by EU Regulation 1071/2009.  Respect for and proper compliance with the regulatory regime ideally required that Mr Weinstein should not be in a position to act as a Transport Manger until he can demonstrate that he is familiar with the up to date requirements of that position.  Whether this is what the order made by the Deputy Traffic Commissioner achieves is another matter.

13.       In dealing with the question of rehabilitation in the body of her decision the Deputy Traffic Commissioner said this: “I am also required to consider an appropriate rehabilitation measure.  In terms of this, I direct that before Mr Weinstein is allowed to re-enter the transport industry he should re-take and pass the necessary qualifications to secure an new Certificate of Professional Competence”.  The only indication of the provision under which this requirement was made comes in the order at the start of the decision, which refers to Paragraph 16(2) to Schedule 3 to the 1995 Act.  It seems to us that there may well have been a misprint because it does not appear that Paragraph 16(2) provides for any power to impose a rehabilitation measure.  In our view what the Deputy Traffic Commissioner probably had in mind was Paragraph 17(2).  Paragraph 17 deals with the power of a Traffic Commissioner to cancel an order for disqualification or, with the consent of the disqualified person, to vary it.  Paragraph 17(2) provides that: “The traffic commissioner by whom a disqualification order is made under paragraph 16(2) may specify measures with which the disqualified person must comply before the order can be cancelled or varied”.

14.       Unless there is some other provision that enables a Traffic Commissioner to impose a rehabilitation measure we feel bound to question whether the order made by the Deputy Traffic Commissioner will achieve that she intended.  It seems to us that her intention was (a) that the Certificate of Professional Competence held by Mr Weinstein should be regarded as invalid, for all time, and (b) that he was not to be allowed to re-enter the industry after the expiry of the disqualification until he had obtained a new Certificate of Professional Competence.  In our view the terms of Paragraph 16(3)(b) make it clear that a Certificate of Professional Competence is only to be treated as ‘not valid’ while the disqualification is in force.  In other words at the end of the three year period of disqualification Mr Weinstein’s original Certificate of Professional Competence will once again be valid.  Given what appears to be the purpose of s. 17(2), namely to put in place a pre-condition before any application to cancel or vary an order for disqualification can be made, it seems to us that once the three year period of disqualification has expired Mr Weinstein will have no obligation to secure a new Certificate of Professional Competence, despite the fact that this is clearly what the Deputy Traffic Commissioner intended and despite the fact that, in our view, it was an appropriate and proportionate requirement.

15.       Our provisional view, (because the point was not fully argued), is that there is a way in which the Deputy Traffic Commissioner could have achieved what we have assumed to be her intention.  She had power to disqualify Mr Weinstein indefinitely.  At first sight that is a draconian power and we can quite understand that the Deputy Traffic Commissioner may have felt that it was a power, which should be used sparingly and only in exceptionally serious cases.  However it is important to remember that the draconian nature of an indefinite disqualification is tempered by the power granted by Paragraph 17(1) “at any time”, [subject to sub-paragraph (2)], to “cancel or, with the consent of the disqualified person, vary the order”.

16.       In the present case three main consequences would have flowed from an indefinite disqualification.  First, Mr Weinstein would have been prevented, by the terms of paragraph 16(3)(a) from acting as a Transport Manager, while the disqualification remained in force, i.e. for an indefinite period unless he persuaded the Deputy Traffic Commissioner to cancel the disqualification.  Second, his Certificate of Professional Competence would not have been valid for the duration of the disqualification.  Third, he would only have been able to avoid these two consequences by making a successful application to cancel or vary the disqualification.  However he would only have been able to make such an application after qualifying for a new Certificate of Professional Competence.

17.       This is the background against which the length of this disqualification has to be considered.  Once this is understood it seems to us that Mr Weinstein can consider himself very fortunate not to have received an indefinite disqualification.  Given the gravity of this case and his ignorance of what is required of a Transport Manager we are far from persuaded that a three year disqualification was too long.  While it appears that Mr Weinstein may recover his professional competence at the expiry of the period of disqualification he will also have to satisfy the Traffic Commissioner that he is of good repute before he can be accepted as a designated Transport Manager.

18.       For all these reasons the Appeal is dismissed with immediate effect

 

 

 

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

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

4 March 2013