Neutral Citation Number: [2013] UKUT 0427 (AAC)
								Appeal No.  T/2013/35

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
James Astle, Deputy Traffic Commissioner for the 
West Midland Traffic Area dated 28 March 2013

Before:
Her Honour Judge J Beech, Judge of the Upper Tribunal
John Robinson, Member of the Upper Tribunal
David Rawsthorn, Member of the Upper Tribunal

Appellant:

PAUL GRAFTON

Attendances:
For the Appellant: James Backhouse solicitor of Backhouse Jones solicitors

Heard at: Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ
Date of hearing: 20 August 2013
Date of decision:   3 September 2013

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be ALLOWED and the matter be remitted for re-hearing

SUBJECT MATTER:-  Good repute of a transport manager; disqualification.

CASES REFERRED TO:-  None

REASONS FOR DECISION

1.	This was an appeal from the decision of the Deputy Traffic Commissioner for the West Midlands Traffic Area made on 28 March 2013 when he found that the Appellant was no longer of good repute as a transport manager and disqualified him until such time as he passed the CPC examination.
 
2.	The factual background appears from the documents and the Deputy Traffic Commissioner’s written decision and is as follows:

(i)	Wellings Limited (“the company”) was the holder of a standard national operator’s licence authorising 24 vehicles and 6 trailers.  Its business was in waste management and disposal and its sole director at the time of the public inquiry was William Kirkham Wellings (“Mr Wellings”).  The Appellant became the nominated transport manager in December 2011 although he had joined the company in the previous year as plant manager.  He resigned as transport manager in December 2012, notifying the Office of Traffic Commissioner (“OTC”) on 24 December 2012.
(ii)	The company’s regulatory history prior to November 2011 was as follows:
a)	In September 2006, a public inquiry was held to consider the company’s unsatisfactory maintenance record;
b)	In July 2008, there was a maintenance investigation which was marked as unsatisfactory;
c)	In February 2010, a further public inquiry was held to consider amongst other things, prohibitions, convictions and drivers’ hours offences.  The company’s licence was curtailed for a period and the transport manager’s repute was tarnished.  The transport manager at the time was Mr Wellings;
d)	24 August 2010, a further public inquiry was held to consider financial standing.  The outcome was a further vehicle curtailment and the imposition of a financial condition. 
(iii)	On 30 May 2012, five months after the Appellant had become the nominated transport manager, an unannounced maintenance inspection took place.  The reason for the inspection was the issuing of an “S” marked PG9 in February 2012 for an ABS light indicating the existence of a fault (in fact the fault had been the subject of numerous earlier investigations by Greenhous Daf, the specialist agent, who could not identify the cause).  There was also damage to a tyre.  There had also been a delayed prohibition issued on 24 May 2012 for a worn steering track rod which had excessive abnormal movement.  This had been identified at the previous maintenance inspection (“PMI”) and the workshop copy of the record had been annotated “ordered 28/4/12”.
(iv)	VE Speight inspected four vehicles and one trailer and three delayed prohibitions were issued for tyre damage, an oil leak and excess wear on an axle shackle pin.  Upon VE Speight’s return on 22 June 2012, a further three vehicles and one trailer were examined and all received clear reports.  However, another “S” marked prohibition had recently been issued on 15 June 2012 for a loose wheel washer. The driver defect report for that day had not recorded any defects.  VE Speight noted that prior to December 2011, repairs were contracted out to Andy Farlow.  The inspection frequency of six weeks was not complied with and gaps of up to 136 days appeared in the records.  Details from the records were missing and the roadworthiness declaration was not signed.  Post December 2011, inspections were undertaken by West Pennine.  The driver was given a copy of the second side of the inspection sheet who then handed it into the company’s workshop for the workshop staff to decide upon the appropriate course of action.  The roadworthiness declaration was not signed although there was in most cases, a signature above the box annotated “at time of test”.  The full report was then sent by West Pennine to the company and filed with the invoice.  The original reports were not updated when work was undertaken.  Inspection frequencies had improved, the vast majority being undertaken within six weeks although there were some gaps of up to 85 days.  VE Speight was of the view that the system employed by the company was difficult to audit as it did not produce one single, fully completed document.  
(v)	VE Speight described the driver defect reporting system as comprehensive.  Defect reports were audited fortnightly.  VE Speight was concerned that there were shortcomings in the driver defect reporting system as the PMI records noted numerous lighting defects which should have been picked up on the daily driver walk round checks.  There was however, evidence of regular communications with the drivers via memos designed to improve the drivers’ checks.  
(vi)	The annual test history for the two year period prior to 29 May 2012 was as follows: the initial pass rate was 43% for vehicles and the final pass rate was 70%.  The initial pass rate for the trailers was 63%.  Headlamp aim accounted for a large proportion of initial failures and there were occasions when vehicles failed with multiple defects.  
(vii)	VE Speight  noted that since the previous public inquiry (August 2010) there had been seven delayed prohibitions, four of which having been issued at the roadside.  Some defects should have been identified on the daily walk round checks and there was evidence that reported defects had not been rectified.  Three defects related to tyre damage which was partly due to the nature of the company’s work.  Tyres were checked on a regular basis by a third party contractor and VE Speight advised that additional checks should be completed by the drivers during the course of the day and that had been auctioned by the Appellant.  Overall, VE Speight recommended that systems should be refined.  The report was marked as unsatisfactory.
(viii)	The Appellant’s response to the report was that having taken over as transport manager, he had identified the shortcomings in relation to the PMI’s and had negotiated a new maintenance contract with West Pennine, to include for the first time, roller brake testing.  The failure of West Pennine to sign off the PMI sheets had been rectified following meetings with the contractor and a letter of confirmation.  Gaps in PMI frequencies related to trailers being used as storage at customer premises for recycled material.  Trailers could be off the road for long periods of time with no record in the respective maintenance folder stating the reason.  This had now been rectified with a new system with each trailer receiving a first use inspection prior to being removed from the customer’s premises.  The Appellant set out the history of the problem of the “S” marked ABS light fault.  He produced invoices from Doctor Air Brake and Greenhous Daf evidencing the repeated checks undertaken by that specialist agency to find the cause of the problem.  The Appellant contended that if the test history of the company was assessed since the new contractor was in place, then the final pass rate was 87.50%.  The Appellant enclosed the PMI programme for all vehicles for the following twelve months.  He enclosed memos to drivers concerning driver defect checks.  In addition, Ms Casey Starling had passed her national CPC examination and she was employed in the transport office and was responsible for auditing the driver defect reporting system.  The Appellant also indicated that a new computer system with a scanner and printer had been installed in the workshop and an impressed stock of £4,500 was kept in the workshop to improve maintenance.  Each vehicle was equipped with a “toffee hammer” for checking wheel nuts and each driver was instructed in their use.  The external tyre contractor inspected the condition of the vehicle tyres three to four times a week and the drivers were now instructed to check the tyres at least three times a day.  The Appellant averred that maintenance systems had improved over the previous six to seven months and he hoped that this improvement would continue.  
(ix)	Between 15 June and 6 November 2012, a further three delayed prohibitions were issued to the company’s vehicles including that “S” marked as a loose wheel washer could be freely rotated by hand and the pointer was out of alignment.  That prohibition was issued when the vehicle was presented for annual test.  
(x)	By letters dated 17 January 2013, the company and the Appellant were called to a public inquiry which was held on 28 February 2013.  On 27 January 2013, the Appellant wrote to the OTC confirming that he would attend the hearing.  He pointed out that he was the nominated transport manager for a twelve month period and tendered his resignation on 30 November 2012 giving one month’s notice.  The reason for doing so was the poor financial standing of the company and the constant battle he had with the company to obtain parts and tyres.  He would receive from the company’s suppliers on a daily/weekly basis requests for payment of past invoices.  The company had continuous problems with payments to suppliers and on many occasions the company’s bank accounts were on “stop” and this caused the Appellant considerable pressure and distress as it would not allow him to effectively carry out his responsibilities as transport manager.  Further, in 2012, his job title was changed to Transport/Operations Manager reducing the time he was able to dedicate to his transport manager functions.  He expressed concerns about delayed payments to suppliers at management meetings.  The Workshop Controller was attempting to cut costs and was delaying the ordering of parts.  On some occasions parts orders were delayed for the sake of a few pounds.  The Appellant felt so strongly about his situation that he left the employment of the company without having an alternative job to go to. He felt he had no option.  He considered he had suffered significant financial pressure as a result and was unemployed.  He could not afford representation at the hearing but he had no doubt that the company would be represented and that attempts would be made to place responsibility for the company’s position upon him and to blacken his repute.  
(xi)	Then on 26 February 2013, the Appellant emailed the OTC again.  He referred to a telephone conversation that he had had with a member of the OTC staff that morning.  He confirmed that he had just started an eight week contract as an HGV driver in Cornwall which he had taken because of his desperate financial position.  As a result, he would be unable to attend the hearing on 28 February 2013.  He emphasised that he was not trying to avoid the hearing and would be willing to attend after his contract had come to an end if “you still deem it necessary”.  He understood that his repute was in question but his defence of financial standing of the company had now been proven to be correct as the company had ceased trading.  He apologised for the “late cancellation and any inconvenience caused” and that it had been his intent to attend the hearing.
(xii)	On 27 February 2013, Eversheds LLP wrote to the OTC informing the office that following a period of financial difficulty the company had gone into receivership in respect of sums owed to Barclays Bank on 18 February 2013.  It was hoped that the company could be sold as a going concern although the vehicles were not being operated in the interim.  The receivers would not be represented at the public inquiry.
(xiii)	At the public inquiry hearing, Mr Wellings appeared in his personal capacity as the director of the company and was accompanied by Mr Collins, Operations Manager, Ms Starling, Transport Manager and Mr Stewart, Head of Sales.  VE Speight attended on behalf of VOSA who spoke to his report.  He confirmed that the Appellant had been helpful and co-operative and that he had adopted the recommendations made by VE Speight between his two visits.  He agreed that following the Appellant’s nomination as transport manager, inspection intervals had improved and the PMI records were more thoroughly completed.  VE Speight had seen a memo sent by the Appellant to West Pennine concerning the shortcomings of the contractor in relation to completion of the records.  VE Speight was of the view that whilst there had been improvements with the maintenance contractor, repairs in house had not been dealt with.  VE Speight did not see anything during the course of his two visits which suggested that there was a shortage of money to pay for parts.  There was a stock of parts on site albeit that the tyres were second hand but he did see the independent tyre contractor on site.  The workshop was adequately equipped and staffed.  
(xiv)	Mr Wellings then gave evidence.  He summarised the background and history of the company including the history of failed transport managers (including himself).  He said that the Appellant had come “highly recommended”.  He had acquired his CPC by grandfather rights and had failed the international CPC examination three times whilst in the employment of the company.  He was very hands on as a transport manager, making sure that the work was done but he had a “complete and utter lack of mis-management (sic) and misunderstand for transport sort of regulations and rules (sic)”.  He was “pretty well clueless”.  He was part of the senior management of the business and attended weekly meetings and monthly board meetings.  He did not mention the lack of finance at any stage or that parts were not being supplied because of outstanding bills.  In fact the maintenance budget was £70,000 for the year ending October 2012 and the actual spend was £163,000.  The over-spend was the result of the Appellant’s lack of preventative maintenance programmes resulting in vehicles breaking down and the need to pay for reactive repairs.  He did not understand how a fleet of vehicles should have been operated.  The company did not pay bills until it was chased for them but Mr Wellings thought that this was how most companies operated.  Mr Wellings repeated that at no stage in two years did the Appellant raise issues about lack of funding in management or board meetings.  Mr Wellings was critical of the Appellant’s management style in relation to staff and health and safety.  He concluded by stating that the Appellant had “jumped before he was pushed” and that it was a “complete lie” that the Appellant had been unemployed.  He had been driving.  
(xv)	In his written decision, the Deputy Traffic Commissioner (“DTC”) set out under the heading “findings” the company’s regulatory history.  He then described the history of prohibitions from 24 August 2010 as worse than unsatisfactory.  He also made reference to the annual test history since May 2010 repeating the figures given by VE Speight.  He repeated the findings of VE Speight in relation to the maintenance investigation conducted in May and June 2012 and rejected Mr Wellings contention that the recent unsatisfactory maintenance history could be laid at the door of the Appellant alone.  An operator was required to supervise and monitor the actions of a transport manager.  Neither did he accept that the company had been the victim of a succession of unhappy appointments of transport managers.  The choice of a transport manager was that of the operator.  The DTC did not accept the written contention of the Appellant that the failures to meet the maintenance standards required by the operator licensing regime were as a consequence of a lack of resources being made available to him.  He had “clear and persuasive evidence from Mr Wellings that this was not the case.  The Appellant had failed to appear at the hearing to give any contradictory evidence and by his failure he had deprived the DTC of the opportunity of testing the reliability of the written submissions the Appellant had made.  He accepted the evidence of Mr Wellings that the Appellant had a more than adequate budget and that the Appellant and the Finance Director were responsible for setting the budget.    The DTC accepted that in the very recent past improvements had been made.  However, the long history of unsatisfactory investigations and the failure to implement new systems, left him with no confidence that the company would succeed in being compliant in the future and would meet the standards expected of an operator of repute and professional competence.
(xvi)	The DTC revoked the company’s operator’s licence having found that the company lacked financial standing and good repute and because of prohibitions and material change.  The DTC concluded that the degree of failure to comply with the requirements of the licensing regime during the Appellant’s tenure of office as transport manager resulted in him losing his good repute and that such a finding was not disproportionate.  The Appellant was disqualified until such time as he passed the CPC examination as a transport manager.
3.	At the hearing of this appeal, the Appellant was represented by James Backhouse who provided us with a skeleton argument for which we were grateful.  He relied on two grounds of appeal.  The first was that in his written submissions to the DTC, the Appellant had given an account of difficulties encountered by him in his role as transport manager.  The company’s financial standing had resulted in little or no monies being made available for parts and repairs.  He had written those submissions prior to the company going into receivership and the letter from Eversheds confirmed that the company had been in financial difficulties for some time.  When it became clear that there were  significant differences in the evidence submitted by Appellant about the financial constraints he had found himself working within and that given by Mr Wellings at the public inquiry, then it was incumbent upon the DTC to have adjourned the hearing to allow the Appellant an opportunity to put his own case forward prior to making findings as to where fault lay in relation to maintenance and then making adverse findings in respect of the Appellant’s repute with the inevitable result that disqualification followed.  
4.	We agree with this submission.  The Appellant had set out his account soon after the letter calling him to the public inquiry was sent out.  His assertion that the company was in financial difficulties was confirmed by the appointment of receivers in February 2013, two months after the Appellant had left the employment of the company.  Whilst it was unwise of the Appellant to absent himself from the public inquiry, he may be forgiven for believing that his submissions to the DTC were supported by the company’s subsequent and swift demise.  Once it became clear that Mr Wellings was contesting the Appellant’s account about the state of the company’s financial position and that he was blaming the Appellant for the maintenance deficiencies for a period of two years prior to the Appellant’s resignation and, in doing so, undertaking what can only be described as a character assassination, then the DTC should have given the Appellant an opportunity to answer the very serious allegations made by Mr Wellings.  It is to be borne in mind that the receivers anticipated that the company would be sold as a going concern.  In his evidence Mr Wellings provided a list of the ways in which the company had improved its maintenance systems.  It may well have been the case that Mr Wellings had hoped that he would play a part in the future of the new company.  In those circumstances, his evidence should have been tested by the DTC hearing evidence from the Appellant who Mr Wellings was seeking to blame for the company’s maintenance shortcomings, not only over the period of one year when he was transport manager but over a much longer period.  We do not consider the email sent to the OTC by the Appellant on 26 February 2013 to be a refusal to attend a hearing but rather an explanation for his failure to attend.  He made it clear that he would appear to give evidence after his driving contract had come to an end and in view of the evidence of Mr Wellings, he should have been given that opportunity. 
5.	Mr Backhouse’s second point concerned the merits of the finding that the Appellant was no longer of good repute.  He submitted that the DTC made little attempt to differentiate between the situation prior to December 2011 when the Appellant became the transport manager and thereafter.  Further, not only did he accept Mr Wellings evidence that finance was not an issue within the company but that the Appellant had acquired his CPC by grandfather rights which was simply not correct (and we note that a cursory examination of the operator’s file would have revealed details of the Appellant’s CPC certificate).  It may have been for that reason that the DTC ordered that the Appellant would only regain his repute when he had passed a CPC examination.  
6.	Having found that the DTC should have given the Appellant an opportunity to answer the allegations made by Mr Wellings, this appeal is bound to succeed and we see no merit in considering whether the determination of the DTC concerning the Appellant’s good repute was justified on the evidence before him.  It will be for the DTC at the rehearing to consider all the evidence that the Appellant wishes to put before him and to make a fresh determination.  
7.	In the result, the appeal is allowed and the matter is remitted for rehearing.  

Her Honour Judge J Beech
3 September 2013