Neutral Citation Number: [2014] UKUT 423 (AAC)

Appeal No.  T/2014/24

IN THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

TRAFFIC COMMISSIONER APPEALS

 

ON APPEAL from the DECISION of John Baker Deputy Traffic Commissioner for London and the South East of England

Dated 24 March 2014

 

 

 

Before:

His Hon. Michael Brodrick, Judge of the Upper Tribunal

Leslie Milliken, Member of the Upper Tribunal

David Rawsthorn, Member of the Upper Tribunal

 

 

Appellant:

LA & Z LEONIDA t/a E T S

 

 

 

 

Attendances:

For the Appellant: Philip Brown of AMD Solicitors

 

 

Heard at: Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ

Date of hearing: 23 July 2014

Date of decision: 16 September 2014

 

 

 

 

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be DISMISSED.

 

SUBJECT MATTER:- Suspension

 

 

CASES REFERRED TO:-  T/2013/47 Dundee Plant Co. Ltd

 

 

 

 

REASONS FOR DECISION

 

 

1.        This is an appeal from the decision of the Deputy Traffic Commissioner for London and the South East of England to find that the Appellant was in breach of s. 26(1)(c)(iii), (ca) and (f) of the Goods Vehicles (Licensing of Operators) Act 1995, ["the 1995 Act"], to suspend the licence for 21 consecutive days to be served before 30 June 2014, to order that the vehicles specified on the licence may not be used on any other operator’s licence and that the licence granted to ETC (Garment Distributors) Ltd is not to come into effect until the Office of the Traffic Commissioner, (“OTC”), has received notification that the suspension of the Appellant’s licence has been served.

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

            (i)           The Appellant is the holder of a standard national goods vehicle operator’s licence, which commenced on 30 March 2009.  The licence authorised 12 vehicles with 10 vehicles in possession.  The nature of the Appellant’s business is the distribution of clothing.

           (ii)           In the period between April 2009 and January 2014 there were 43 roadside encounters involving the Appellant’s vehicles.  As a result 9 prohibitions were issued, one of which was ‘S’ marked to indicate a significant failure of maintenance in relation to a brake defect.

          (iii)           Over the same period the MOT pass rate was 85% against the national average of 75%.  However if the comparison is confined to the last two years the Appellant’s pass rate of 72% is below the national average.

         (iv)           Between February and June 2013 Fixed Penalty Notices were issued for three offences of being overweight and a further Fixed Penalty Notice was issued for failing to produce tachograph charts or a driver card.

          (v)           On 9 July 2013 a maintenance investigation took place as a result of the issue of the ‘S’ marked prohibition.  The result was unsatisfactory for three reasons.  First, the repair of defects was not recorded on the driver defect reporting system and a high proportion of the defect records did not record the mileage of the vehicle in question.  Second, the issue of the ‘S’ marked prohibition and other prohibitions over the previous 5 years and third, the poor MOT pass rate over the previous two years.

         (vi)           On the same day the Vehicle Examiner requested comments from the Appellant on the unsatisfactory aspects of the maintenance investigation.  In an undated reply on behalf of the Appellant Mr Z Leonida said that all the points raised by the Appellant, and more, had been discussed with the transport manager.  As a result he said that the repair of defects and the mileage would both be recorded and that maintenance of and checks on vehicles would be stricter, with a view to reducing prohibitions.  He provided an explanation for one prohibition and suggested that two others should not have been given.  He said that a further 18 ton truck had been obtained with a view to reducing overloading convictions and that drivers were being put through NVQ and CPC courses, with a view to reducing the number of fixed penalty notices.

        (vii)           On 19 September 2013 the OTC received an application from ETS (Garment Distributors) Ltd, (“the company”), for a standard national operator’s licence, authorising 12 vehicles.  The application made it clear that if an operator’s licence was granted to the company the licence currently held by the Appellant would be surrendered.

       (viii)           On 25 October 2013 the OTC wrote to the Appellant to notify it that the Traffic Commissioner intended to hold a Public Inquiry on 2 December 2013 to consider whether to take regulatory action against the Appellant.  The letter made it clear that the Traffic Commissioner was considering taking action under both s. 26(1) of the 1995 Act and s. 27(1).  It set out the consequences of a finding under either or both of these sections.  In particular it stated that under s. 26(1) the Traffic Commissioner: “may direct that a licence be revoked, suspended or curtailed”.  The letter went on to identify the precise grounds on which the Traffic Commissioner was considering action and it summarised the evidence that he intended to take into account.

         (ix)           On 14 November 2013 the Appellant wrote to the OTC in response to the call up letter.  Under the heading ‘Section 2’ the letter, amongst other things said this: “Mr Walsh raised concerns about the competency of our current CPC holder, Mr Gary Flynn, with this in mind we are sending Mr Flynn on a CPC awareness course as soon as it can be arranged.  In addition to this we are increasing the time Mr Flynn dedicates to his CPC duties from one day a week to between 2-3 days per week”.

          (x)           On 15 November 2013 Gary Flynn wrote to the OTC, in his capacity as transport manger.  He said that following an in depth discussion with the partners in the Appellant, Mr Z Leonida and Mr L A Leonida, it had been decided that it would be prudent for him to attend a CPC awareness course as soon as possible.  Mr Flynn pointed out that he had increased the time spent at the Operating Centre from 1 guaranteed day to between 2 and 3 days depending on his workload, adding that “the company are fully supportive of my role”.  He confirmed some of the improvements mentioned in the previous paragraph.

         (xi)           On 2 December 2013 the Public Inquiry commenced before a different Deputy Traffic Commissioner.  On that occasion the Appellant was not represented but Mr Flynn was represented by Belinda Howard. Mr Flynn said that he had not been the transport manager for the Appellant, (he described it as “the partnership licence”).  He explained that he had been the transport manager on an earlier licence held by Express Transport Ltd but that since that licence had terminated in 2009, (to be succeeded by the Appellant partnership), he had been employed as a driver.  He added that he had not signed the forms GV79 and TM1, both dated 1 March 2009 and purporting to bear his signature.  Given this unexpected turn of events the Deputy Traffic Commissioner decided that the Public Inquiry should be adjourned.

        (xii)           On 10 January the OTC wrote to the company to notify it that the Traffic Commissioner would hold a Public Inquiry at which to consider whether the company met the requirements for the grant of a licence.  Those requirements were set out and the letter made it clear that in considering whether or not they were met the Traffic Commissioner would take into account the links between the Appellant and the company.

       (xiii)           On 24 February 2014 Mr L A Leonida sent a statement to the OTC in advance of the adjourned Public Inquiry.  This was to be held on 10 March 2014 and was intended to consider both the application by the company and the question of regulatory action against the Appellant.  In it Mr Leonida set out the Appellant’s response to the matters that led to the Appellant being called to the Public Inquiry.  He dealt with the matters raised by the maintenance investigation, which we have summarised above.  He explained that the nominated tyre fitters had been changed and that wheel nut indicators had been fitted, with a view to reducing the number of prohibitions.  The statement predicted that by the time of the Public Inquiry the Appellant would have achieved a 100% MOT pass rate over the previous 6 months.  In relation to the initial proposal that Mr Flynn should be the nominated transport manager for the company Mr Leonida accepted that on 2 December 2013, when the Public Inquiry commenced, Mr Flynn had denied that he was the nominated transport manager for the company but added that he had seen no evidence that Mr Flynn had ever resigned as transport manager for the Appellant.  He said that as a result of what happened on 2 December 2013 steps had been taken to nominate another transport manager.  Mr Leonida added that he intended to study for the transport manager CPC so that he could become a nominated transport manager on the company’s operator’s licence.  The witness statement went on to consider the effect of regulatory action.  Mr Leonida said this:

 “A loss of vehicles on the partnership’s operator’s licence would cause it to fail if the company’s application is not granted at the same time.  The contracts, which we have with suppliers prevent us from contracting out deliveries.

If the Traffic Commissioner decides that regulatory action is appropriate in the case of the partnership operator’s licence I would ask that Traffic Commissioner not to make any adverse finding against the partners’ repute”.

       (xiv)           On 10 March 2014 the Public Inquiry commenced afresh before the Deputy Traffic Commissioner whose decision is now under appeal.  He immediately sought to clarify what Mr Flynn was saying.  He was told that Mr Flynn denied signing Form TM/1, dated 1 March 2009 and relating to the Appellant and that he denied signing Form TM/1, dated 18 September 2013, relating to the company but that he did accept signing the letter dated 15 November 2013, (paragraph 2(x) above).  Mr Flynn then made it clear that while he was a CPC holder he had never done the job of a transport manager, even though he accepted that he was the designated transport manager for the predecessor to the Appellant, Express Transport Ltd.  He said that he was paid £80 per month as CPC holder for that company but that he did not have any additional duties.  He insisted that the Appellant had only ever employed him as a driver.  When given an opportunity to clarify the Appellant’s position Mr Brown made it clear that the Appellant’s case was the Mr Flynn had signed the disputed forms.

        (xv)           Mr Flynn then gave evidence.  He insisted that he had not signed the two forms and that it was a question of not recognising his signature rather than possibly signing a piece of paper without recognising what it was.  In cross-examination he accepted that he had signed his driving licence and he was invited to compare that signature with the signatures on the disputed forms.  He explained that he had been shown as transport manager for Express Transport Ltd and that his payslips showed an extra payment to cover that position.  He said that he was never asked to be the transport manager of the Appellant and that once he was employed by the Appellant no extra payment was shown on his payslips.  In relation to Express Transport Ltd and the Appellant he insisted that he had always been a driver and had never actually performed the role of transport manager. When asked why he had not performed this role he replied: “Cos I wouldn’t know how to do it to be honest”.  He said that he had obtained his CPC qualification over 20 years ago and that the fact that he had the qualification was one of the reasons for being asked to “come to ETS”.  In relation to being put forward as the transport manager for the company he insisted that he had: “no idea about that one”.  He accepted that in September 2013 Leeds had sent back his CPC certificate, (which was normally kept in the safe), but said that he had no idea why they would have had it and it did not raise any suspicions about something going on behind his back.  In answer to the suggestion that he was making it all up he replied: “What can I gain from this?  Today I’ve lost a job, yeah, that I’ve done for 27 years”.  In answer to the Deputy Traffic Commissioner Mr Flynn said that in his view it was Mr Z Leonida who was in charge of transport and anything to do with vehicles.

       (xvi)           The first witness for the Appellant was Mr Leo Leonida.  He said that he was a partner in the Appellant and a director of the company.  In relation to Mr Flynn he said that he had been employed as a driver but that because he was a CPC holder he was asked, and agreed, to go on the licence as the CPC holder.  He was then asked what role Mr Flynn had as transport manager.  He replied: “Apart from his name being on the licence his main … his sole role was as a driver.  So between Zac and I we were taking on the duties of transport manager”.  Soon afterwards he agreed that this was under the old rules and he was asked his understanding of the need for a transport manager.  He replied: “Because I’m not a CPC holder it was limited but … so I wasn’t aware that we were doing anything wrong”.  He accepted that Mr Flynn had never performed the duties of a transport manager.  He said that when the Appellant succeeded Express Transport Ltd in 2009 the position continued with Mr Flynn nominated as transport manager but never performing that role.  He added that Mr Flynn was paid an annual bonus to reflect the fact that he was named as transport manager and that he was paid £200 per month more than any other driver.  When asked about the 2009 and 2013 application forms he said that Mr Flynn had signed both of them.  In relation to the letter of 15 November 2013 he said that Mr Flynn had expressed concern because he had never acted as transport manager.  He said that he told Mr Flynn: “Don’t worry.  I will be putting my hand up to say that you haven’t done the job but going forward you can … you’ll have to go on a four-day, maybe a three-day week on the road and come into the office”.  He said that Mr Flynn protested that he had never been asked to come into the office to look over documents and that he replied: “Yeah, but we haven’t got a choice.  You’re gonna have to do it now, you know, even though I need you as a driver”.  He was asked to compare the signature on the letter dated 15 November 2013 and the 2013 application form.  He replied that in his view they were the same.  At first he appeared to accept that there were major dissimilarities but then said he could not see that they were that major.

      (xvii)           In answer to the Deputy Traffic Commissioner he said that he completed the 2009 form giving details of the Appellant as transport manager, which said that he would work 45 hours per week.  He said that he would have had to wait for Mr Flynn to return from driving in order to get him to sign the form.  He accepted that Mr Flynn would have been making a declaration listing the responsibilities, which he would undertake as transport manager.  He said that he could not actually recall Mr Flynn signing the application nor could he recall going through the responsibilities, which he would be undertaking as transport manager.  He was then shown the 2013 application.  He said that he thought that his wife had completed it, though he accepted that he had signed it and dated it on behalf of the company.  He said that his wife would have spoken to Mr Flynn to ask him to sign it.  At this point Mr Flynn was asked for his recollection and said that he could not remember speaking to Julia, Mr L Leonida’s wife, about signing the form.  Later Mr Leonida categorically stated that the disputed signatures were made by Mr Flynn and that he knew they were his.

     (xviii)           Turning to the question of maintenance and related issues Mr L Leonida said that in response to recommendations made by the Vehicle Examiner they had bought a tachograph analyser and an infringement book.  He said that the last eight vehicles to be submitted for MOT tests had all passed, which was a significant improvement.  Asked about his understanding of the role of transport manager he said that in the early 2000’s: “we had our procedures in place between Zac and myself … we dealt with all the matters even though our knowledge was limited”.  He accepted that he and his brother had not been aware of the change in the law as to the role of transport manager, which took effect on 4 December 2011.  He said that they had thought that by having a CPC holder’s name on the licence they were compliant as long as he and his brother were doing the job of transport manager.  He added that his awareness was heightened by the application in 2013 and that they had now taken on Adrian Dalton as CPC holder and transport manager for the company.  He said that he had booked himself onto a CPC course and intended to qualify as a transport manager.  He added that he felt embarrassed that he had been operating in ignorance for so long, that this was the first Public Inquiry that he had attended and that they had: “taken everything on board”. 

       (xix)           When he was asked about regulatory action Mr L Leonida said that if the licence was revoked the business would close, if the licence was suspended for a period of time: “we’d lose customers so we’d close”.  Asked about curtailment his immediate reply was: “I’d say we’d close”, but then he added that it was not as simple as that because they could not just close they would have to discuss it with their accountant: “but there’s no way I can replace the contracts or work that I’ve got”.  He added that they were not able to sub-contract work and gave some well-known names as customers who would not permit sub-contract work.  It then became clear that it was the manufacturers for whom the Appellant worked and who paid and that they did not allow other companies to transport the goods.  He added that if regulatory action was taken against the existing licence and the new application was not granted the business could not survive.  He accepted that he had not been doing things correctly but said that they had taken this on board and that the Appellant was now fully compliant and that the company would be fully compliant.

        (xx)           Mr Dalton gave evidence as the new transport manager.  He said that he was qualified by ‘grandfather’s rights’ and through sitting the exam.  He said that Mr Flynn had asked him about the way in which the Appellant was operating and the change to a limited company but that he had not said anything to him about his role as CPC holder.

       (xxi)           On 12 March 2014 Mr L Leonida sent a letter to the Deputy Traffic Commissioner setting out a detailed account of Mr Flynn’s employment with Express Transport Ltd and the Appellant.  The contents of the letter were supported by statements from various members of staff and by payslips for Mr Flynn and other drivers.  This letter prompted an undated response from Belinda Howard, which included the following: “These investigations could have been made between the first inquiry and the second inquiry, not at this stage in proceeding. There appears to be no reason for there to have been a delay in submitting this evidence unless intentional to not allow Mr Flynn the opportunity to cross-examine witnesses and rebut the evidence”.  The response went on to make the point that the evidence was untested and that it created a serious risk that the proceedings would not satisfy the requirements of natural justice.

      (xxii)           The Deputy Traffic Commissioner gave a written decision, which is dated 24 March 2014.  He set out the background and the evidence, which we have summarised above.  He explained that on receipt of the letter dated 12 March 2014 he arranged for a copy to be sent to Ms Howard so that she had the opportunity to comment on behalf of Mr Flynn.  The Deputy Traffic Commissioner decided that it would not be proportionate to reconvene the Public Inquiry, given Mr Flynn’s circumstances.  He decided that he could take the contents of the letter of 12 March into account, but only in a limited way and that given the lateness of the letter and the supporting documents and the absence of any opportunity to test the material he could attach very limited if any weight to it.

     (xxiii)           In relation to the disputed signatures the Deputy Traffic Commissioner concluded that in the absence of expert evidence he was not in a position to make findings as to who signed the 2009 TM/1.  He went on the say that his suspicion was that it was signed ‘on behalf of Mr Flynn’ but added that: “mere suspicion is insufficient to make what would be a finding of forgery”.

    (xxiv)           The Deputy Traffic Commissioner then turned to what he considered to be ‘the core of the inquiry’, notwithstanding that the focus had been on who signed which forms.  He regarded the core issue as the fact that from the outset of his involvement as CPC holder Mr Flynn had not been fulfilling the duties of a transport manager and had not been required or encouraged to do so by those responsible for the Appellant.  He concluded that Mr Flynn handed over his CPC certificate so that a façade of respectable and compliant operation could be created behind which others, who were not qualified and had no proper understanding of the role of transport manager, took on that role.  Taking the evidence as a whole the Deputy Traffic Commissioner concluded that Mr Flynn continued to play his part in this fictitious position until the latter part of 2013.  He pointed to the fact that Mr Flynn admitted that he had signed the letter of 15 November 2013 and that the letter included a reference to what he would be doing as the CPC holder.  He found that it would have been inconceivable for Mr Flynn to sign such a letter if he had truly believed that he was no longer the ‘transport manager’, at least in name.  He went on to point out that irrespective of who signed the 2009 Transport Manager forms it was admitted that Mr L Leonida countersigned them on behalf of the Appellant and that they contained a declaration as to the transport manager’s responsibilities.  He expressly rejected the explanation that it was only by the time of the Public Inquiry that the Leonida brothers realised what being a transport manager entailed.  The Deputy Traffic Commissioner was also unimpressed by the response to the Vehicle Examiner’s email detailing the shortcomings revealed by the maintenance investigation.  He pointed out that the suggestion that Mr Flynn would increase the amount of time at the operating centre from 1 day to 2-3 days was clearly misleading since he had not been allocated any time in which to fulfil the role of transport manager.  He ended this paragraph as follows: “My finding in relation to the operator is therefore that there were a number of deliberate actions taken with the intention of misleading the authorities into believing that the operator had a bona fide transport manager who carried out the duties required of him”.

     (xxv)           The Deputy Traffic Commissioner concluded that, as a result of the maintenance investigation there had been various breaches of s. 26(1) of the 1995 Act.  The prohibition resulted in a breach of s. 26(1)(c)(iii).  The fixed penalty notices gave rise to breaches of s. 26(1)(ca) and the breach of undertakings recorded on the licence gave rise to a breach of s. 26(1)(f).

    (xxvi)           The Deputy Traffic Commissioner then considered the breach of trust involved in failing to complete applications fully and honestly and the fact that there had been an attempt to deceive a Traffic Commissioner.  On that basis he concluded that there was a strong case for concluding that the Appellant had lost its good repute.  Conscious of the need to conduct a balancing exercise the Deputy Traffic Commissioner then considered the overall compliance history and the action taken to put matters right since the maintenance inspection in July 2013.  He continued: “My conclusion having weighed all the relevant evidence is that despite the serious nature of the fraudulent actions of the operator I am able to find that repute is not lost completely.  I do find however that the repute is severely tarnished as a consequence of what has taken place and that I need to take regulatory action that reflects this and acts as a deterrent to ensure future compliance by the company and others within the industry”.

   (xxvii)           It was on this basis and for these reasons that the Deputy Traffic Commissioner suspended the Appellant’s licence for a period of 21 consecutive days to be served before 30 June 2014.  The Deputy Traffic Commissioner further ordered that during the period of suspension the authorised vehicles were not to be used under any other operator’s licence.  The Deputy Traffic Commissioner went on to grant the application by the company but he directed that that licence was not to come into force until confirmation had been received that the period of suspension had been served.

  (xxviii)           On 15 April 2014 the Appellant filed a Notice of Appeal.  Six grounds of appeal were advanced.  They can be summarised under two heads.  First, that having found that the good repute of the Appellant was severely tarnished, but not lost, and having decided not to revoke the licence the Deputy Traffic Commissioner nevertheless took a decision which would result in the Appellant being put out of business.  This submission was supported by assertions (a) that the Deputy Traffic Commissioner failed to take account of the evidence about the effect of regulatory action, (b) that it was disproportionate and (c) that it amounted to a punishment rather than regulatory action.  Second, that the decision to delay the coming into effect of the new licence until the suspension was completed was flawed as the Deputy Traffic Commissioner’s intention was “clearly not to put the undertaking out of business” and also disproportionate given that the Deputy Traffic Commissioner had stated that he was treating the application by the company as a continuation of the existing licence.

3.        At the hearing of the appeal the Appellant was represented by Mr Brown, who provided us with a helpful skeleton argument, developing the six grounds of appeal, for which we are grateful.

4.        Before coming to the grounds of appeal we wish to stress a number of preliminary points.  First, on any view this was a bad case where for many years the Appellant had nobody in a position to fulfil the important role of transport manager.  Second, the Leonida brothers, who were the partners in the Appellant, endeavoured to fulfil the role of transport manager, without any clear understanding of what that role involved.  Third, the Leonida brothers deliberately misled the authorities, including the Traffic Commissioner, into believing that the Appellant has, in post, a bona fide transport manager, who was properly performing that role.  Fourth, it does not matter whether an operator’s licence is held by an owner operator, a partnership or a limited company because in each case the person or persons responsible for managing the business bear the ultimate responsibility for ensuring that the road transport aspect of the business operates in compliance with the regulatory regime.  That means that they cannot plead ignorance or put the blame on the transport manager because they are required to have sufficient knowledge of the regulatory regime to ensure compliance in general and the proper performance of the transport manager’s duties in particular.

5.        In the present case there were significant adverse factors on one side of the scales and significant favourable factors on the other side.  It is clear to us that the Deputy Traffic Commissioner weighed them up with great care. He reached a decision with which we agree and gave reasons that we support.  At this stage we want to focus on the last half of the final sentence of his conclusion in which he said: “I need to take regulatory action that reflects this and acts as a deterrent to ensure future compliance by the company and others within the industry”.  It is important to note that he had in mind both future compliance by the company and future compliance by others within the industry.  We are satisfied that this was the correct approach.  In our view the absence of anyone fulfilling the role of transport manager was so serious that the Deputy Traffic Commissioner was duty bound to have regard to the message that his decision would send to others in the industry.  The seriousness was compounded by the fact that Mr L Leonida must have known that the forms being sent to the Traffic Commissioner were misleading and that the response to the Vehicle Examiner was also misleading.  In appeal T/2013/47 Dundee Plant Co. Ltd the Tribunal quoted, with approval, a passage from a decision on a stay, relied on in the Traffic Commissioner’s decision in Dundee Plant, in which the Principal Judge said this:

“Other operators with knowledge of this case may be tempted to say to themselves – ‘this operator appears to be getting away with it so why should we bother to incur expenditure of time, trouble and money to run a compliant operation?’ In my view, it only needs one or two other operators to adopt this approach in response to this case to lead to greater and greater numbers doing so in future. If that happens there is a real risk that the operators’ licensing system, which has made a significant contribution to road safety, will be fatally undermined.”

In our view that passage is equally relevant to the present case and it supports the view that the Deputy Traffic Commissioner was right to have regard to the message that his decision would be sending to the industry as a whole.

6.        The decision in Dundee Plant is dated 23 October 2013 so it was available before the Public Inquiry.  However we accept that it was only available in The Digest in June 2014.  The main point advanced in that appeal was that by not revoking the licence the Traffic Commissioner put herself in the position where a 12 week suspension could not be justified because it was tantamount to revocation and was therefore inconsistent with her apparent intention.  The Tribunal found two flaws in this argument.  The first was that it must have been obvious in that case, (just as it must have been obvious in the present case), that the operator was staring revocation in the face.  In that situation the Tribunal concluded that “the most compelling financial evidence would be needed” if the argument that a lengthy suspension would be tantamount to revocation was to have any chance of success.  It ended its discussion of this point by saying: “it follows that, in a case like this, assuming that the traffic commissioner might have been encouraged to impose a shorter suspension had she been determined to provide a lifeline, the actuarial evidence needed to be far more specific, comprehensive and compelling than it was”.  We agree with that approach and, in our view, it is equally applicable to the present appeal.

7.        The second flaw identified by the Tribunal was explained in this way:

“For our part, therefore, we see no difficulty in the traffic commissioner concluding, in principle, that the right thing to do is to draw back from the ultimate sanction and, instead, impose a 12 week suspension. In any event, we consider that it would be a very retrograde step to discourage traffic commissioners from taking tough regulatory action (but falling short of revocation) if, after conducting a balancing exercise, it appears right to do so where a very clear marker is needed. We hold this view even if there is a possibility that the consequence will be to put the business in peril. In an appropriate case (which this is) a traffic commissioner is entitled to say: “I hope you survive but if not – so be it. On these particular facts, the public interest in maintaining the integrity of the system demands nothing less than a lengthy suspension”.

We also agree with the general approach set out in this passage though we will need to consider whether it is applicable in the present appeal.

8.        Mr Brown sought to distinguish the decision in Dundee Plant by pointing out that it was a case that involved the continuation of an existing licence while the present case involved the continuation of an existing business by changing it from a partnership to a limited company.  He submitted that this gave the Deputy Traffic Commissioner the opportunity to take regulatory action by revoking the operator’s licence held by the Appellant while granting a licence to the company.  He further submitted that there was nothing illogical in such an approach.  We do not agree.  In order to revoke the Appellant’s licence for loss of good repute, (which would, realistically, have been the only ground for such action), the Deputy Traffic Commissioner would have had to find (a) that it was unlikely that the Appellant would have been compliant in the future and (b) that the conduct of the Appellant was so bad that it was appropriate to put it out of business.  We are unable to see how the Deputy Traffic Commissioner, having made such findings, could, properly, go on to conclude that the company, with the same people in charge, was of good repute.  In our view the two findings, made on the same day and on the basis of the same evidence would have been wholly inconsistent.  For these reasons we reject this suggestion and we reject the submission that Dundee Plant can be distinguished from the present case.  Instead we take the view that not only is it applicable in the circumstances of the present case it is a decision that greatly assists us.

9.        It is against this background that we now turn to consider the grounds of appeal.

10.      Ground one asserts that the Deputy Traffic Commissioner was plainly wrong in that, having concluded that repute was severely tarnished but not lost, he made an order the effect of which was to put the partnership out of business. 

11.      It seems to us that this ground can only succeed if the Appellant can show that the Deputy Traffic Commissioner intended by his decision to ensure that the business survived as opposed to giving it an opportunity to do so.  We cannot find any express indication in the decision that the Deputy Traffic Commissioner’s intention was to ensure that the business survived.  Nor, in our view, would it be appropriate to infer any such intention.  On the contrary it seems to us that in the passage quoted at paragraph 2(xxvi) above the Deputy Traffic Commissioner was saying in effect: “your repute is severely tarnished but not lost, so you have the opportunity to remain in business, but your conduct has been so bad that I must take regulatory action which not only deters you from non-compliance in the future but ensures that others in the industry will also comply rather than following your example”.  In our view the correct inference to be drawn from what the Deputy Traffic Commissioner said is that if it came to a choice between the importance of deterring other operators from following the example of the Appellant and the question of whether the business could survive then the former was the more important of the two.  Given that this was a bad case and given the importance of maintaining respect for compliance with the regulatory regime we are satisfied that this was the correct approach.  In our view it would have been appropriate for the Deputy Traffic Commissioner to quote the last part of the passage from Dundee Plant, (set out at paragraph 7 above) and to have said:  “I hope you survive but if not – so be it. On these particular facts, the public interest in maintaining the integrity of the system demands nothing less than a lengthy suspension”.  In our view this passage is equally applicable to the fact of this case, it follows that the whole basis of the complaint made in ground 1 is unsound and that that ground fails.

12.      Ground 2 is that the reasoning of the Deputy Traffic Commissioner did not take into account the evidence that the loss of vehicles on the licence would cause the business to fail. 

13.      We accept that the Deputy Traffic Commissioner did not specifically refer to this part of the evidence.  One reason may be that this topic was dealt with briefly in a few short statements.  There was no detailed justification nor was there any independent confirmation of what was being said.  When preparing for the Public Inquiry it should have been clear to the Leonida brothers and it must have been clear to Mr Brown that this was a case which could very easily go either way.  It appears to us that their main aim was to avoid a finding of loss of good repute, which would have led, of course, to mandatory revocation.  Given the fact that the partnership was ‘staring revocation in the face’ it ought to have been clear to the Leonida brothers and it must have been clear to Mr Brown that some form of regulatory action was inevitable.  The sensible course, in that situation, would have been for the operator and its adviser to work out, in advance, the least damaging form of regulatory action and then to set out, in much greater detail than was done in this case, the consequences of each form of regulatory action and why the business might be able to survive in one case but could not in others.  Unfortunately that does not appear to have been done in the present case.  Instead it appears to us that a decision was taken to gamble on avoiding any form of regulatory action.  In a case like this operators who gamble in that way and lose will find it difficult to complain if Traffic Commissioners then take regulatory action that puts the business in difficulty.

14.      It became clear in the course of Mr Brown’s submissions that further detail could have been given and that the absence of written contracts could have been explained.  There was no formal application to admit fresh evidence on this point.  It there had been it would have been rejected because this was evidence, which could, with reasonable diligence, have been put before the Deputy Traffic Commissioner.

15.      In our view the second reason why the Deputy Traffic Commissioner did not specifically refer to the evidence is that he concluded that the need to take regulatory action to deter other operators from following the example of the Appellant outweighed the question of whether or not the business could survive such action.  In that situation and faced with an apparent attempt to avoid all forms of regulatory action it seems to us that the Deputy Traffic Commissioner cannot be criticised for taking the action that he did, which seems to us to be the minimum required to meet the objectives which he had, correctly, identified.  It follows that ground two fails.

16.      Ground three asserts that the Deputy Traffic Commissioner’s decision not to allow the new licence to commence until after the suspension had been served was flawed because: “his intention was clearly not to put this undertaking out of business”. 

17.      Far from the Deputy Traffic Commissioner’s decision being flawed it is this ground of appeal which is flawed for the reasons explained in paragraph 10 above.  In our view the Deputy Traffic Commissioner never expressly stated the intention attributed to him nor is it to be implied from what he said or did. 

18.      Mr Brown developed this ground in his submissions on the basis that it was not the length of the suspension that was in issue but the timing.  His submission was that the Deputy Traffic Commissioner could have achieved his purpose by ordering a three week suspension of the Appellant’s licence but also allowing the new licence granted to the company to come into force before the suspension was served.  We do not agree.  In our view taking this course would have significantly undermined the message, which the Deputy Traffic Commissioner rightly wished to send to the industry generally.  Instead of saying: “this degree of non-compliance will have serious consequences for your business”, it seems to us that the message would come across as: “this degree of non-compliance only merits action which will have no real effect on your business”.  We are quite satisfied that such a course would be more likely to undermine the regulatory regime than it would be to support it.  Alternatively Mr Brown submitted that the Appellant would have been able to survive a very short period of suspension, before the company’s licence became effective, for example over a week-end.  In our view the reasons set out earlier in this paragraph apply equally to this submission.  Adopting it would have sent entirely the wrong message.  It would have been disproportionate in the sense that it unduly favoured the Appellant at the expense of the public interest in respect for and compliance with the regulatory regime.  For these reasons ground three fails.

19.      Ground four asserts that the decision to suspend the Appellant’s licence and to make the serving of the suspension a condition precedent to the commencement of the company’s licence was disproportionate, having regard to the fact that the Deputy Traffic Commissioner treated the company’s licence as a continuation of the existing licence.

20.      When considering this ground of appeal we must decide at the outset the factors to be taken into account when assessing proportionality in the context of this case.  Are they limited to the impact on the business of the Appellant and the company or was the Deputy Traffic Commissioner correct to take the impact of the industry as a whole into account?  We are quite satisfied that he was duty bound to take the impact on the industry as a whole into account.  While he did not refer to the passage in Dundee Plant, quoted at paragraph 5 above, he clearly had those considerations in mind.  In our view, given the matters to which we have referred in paragraph 4 above, this was a case where the Deputy Traffic Commissioner had to achieve a balance between the impact on this business, on the one hand, and the impact on respect for and compliance with the regulatory regime on the other.  We have already indicated that in our view the latter was the more important of the two factors.  In our judgment if the Deputy Traffic Commissioner’s sole concern had been the message he was sending to the industry generally the period of suspension would have been longer.  In balancing that factor against the impact on the business of the Appellant and the company it seems to us that, on the evidence before him, he achieved a proportionate result.  On the basis of that evidence anything less than 3 weeks would have sent entirely the wrong message to the industry generally.  Anything more than 3 weeks would have been more likely to deprive the business of any prospect of finding a way to survive.  For these reasons we are satisfied that ground four fails.

21.      Ground five asserts that the decision to suspend the Appellant’s licence was disproportionate in that by the date of the Public Inquiry the Appellant was ‘in effect compliant’.

22.      We accept that the correct date for assessing compliance is the date of the Public Inquiry.  The fact that the Appellant was compliant as at the date of the Public Inquiry was one of the factors, which tipped the scales in the Appellant’s favour on the issue of good repute.  However we do not accept that the fact that an operator is compliant by the time of a Public Inquiry automatically means that no regulatory action can be taken.  There will be cases in which it is necessary to bring home to an operator that its past behaviour has been non-compliant and unacceptable.  There will be cases in which, in addition, it is necessary to deter non-compliance in the future.  Lastly there will be cases in which it is necessary to send a message to the industry generally that non-compliance, even when later corrected, is so serious that regulatory action has to be taken.  In our view the present case falls into all three of these categories.  Indeed the facts of this case bear comparison with those of Dundee Plant, (above), where there had been a long period of non-compliance and the operator only just avoided a finding of loss of good repute.  In that case a 12 week suspension was upheld even though the operator was compliant by the date of the Public Inquiry.  For these reasons we reject ground five, which is, quite simply, misconceived.

23.      Ground six asserts that by ordering the suspension to be served before the new licence came into effect the Deputy Traffic Commissioner was imposing a punishment rather than a regulatory sanction.

24.      If the Deputy Traffic Commissioner’s sole concern had been the impact on the business of the Appellant and the company there might be something in this point.  However as we have explained in paragraphs 11,15 and 18 above the Deputy Traffic Commissioner, quite rightly, took the view that he must have regard to the impact on respect for and compliance with the regulatory regime by operators generally.  In our view it follows from the fact that he was required to take a wider view of the outcome that the suspension was a regulatory sanction rather than a punishment.  Its primary purpose and the Deputy Traffic Commissioner’s intention in imposing it, was to send a message to operators generally and to the Appellant and the company in particular that non-compliant operation cannot be tolerated.  While its effect may be to put the Appellant and the company out of business we are quite satisfied that this was not the Deputy Traffic Commissioner’s intention.  On the contrary it seems to us that he was striving to send an appropriate message to the industry generally while at the same time giving the Appellant and the company the chance to find a way to remain in business.  For these reasons we are satisfied that ground six fails.

25.      Since all the grounds of appeal have failed the appeal must be dismissed.

26.      The Deputy Traffic Commissioner directed that the suspension had to be served by 30 June 2014.  In other words he allowed the Appellant to choose a period of 21 days within just over three months from his decision.  In our view it would be appropriate to allow a broadly similar period.  In deciding on this period we also have in mind that it should give the Appellant time, (if so advised), to make an application to the Traffic Commissioner pursuant to s.26(8) of the 1995 Act for the suspension to be cancelled or varied.  In our view that would be a more appropriate way in which to put forward the further evidence about the consequences of a three week suspension, which now appears to be available. Subject to the result of any such application the Appellant’s licence is suspended for a period of 21 consecutive days to be served before 31 December 2014.  All the other orders made by the Deputy Traffic Commissioner remain in force.

 

 

 

 

His Hon. Michael Brodrick, Judge of the Upper Tribunal, Principal Judge for Traffic Commissioner Appeals, President of the Transport Tribunal.

16 September 2014