Neutral Citation Number: [2013] UKUT 0643 (AAC)
Appeal No.  T/2013/57
IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of Liz Perrett Deputy TRAFFIC COMMISSIONER for the North East of England
Dated 5 July 2013

Before:
His Hon Michael Brodrick, 	Judge of the Upper Tribunal
Leslie Milliken,			Member of the Upper Tribunal
George Inch, 			Member of the Upper Tribunal

Appellant:
T HENDERSON TRANSPORT LIMITED

	 
Attendances:
For the Appellant: The Appellant did not appear and was not represented.

Heard at:	Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ
Date of hearing:	7 November 2013
Date of decision:	23 December 2013

DECISION OF THE UPPER TRIBUNAL
IT IS HEREBY ORDERED that this appeal be DISMISSED.

SUBJECT MATTER:-	  Good Repute, Professional Competence	

CASES REFERRED TO:-	Appeal 2002/217 Bryan Haulage (No 2)
   Appeal 2009/225 Priority Freight

REASONS FOR DECISION

1.	This is an appeal from the decision of the Deputy Traffic Commissioner for the North East of England to revoke the operator’s licence held by the Appellant with effect from  23.59 on 5 September 2013.
2.	The factual background to this appeal appears from the documents and the Traffic Commissioner’s decision and is as follows:-
(i)	The Appellant is the holder of a standard national goods vehicle operator’s licence authorising 8 vehicles and 14 trailers, which was granted on 31 March 2008
(ii)	On 21 October 2011 the Office of the Traffic Commissioner, (“OTC”), wrote to the Appellant to call it to a Public Inquiry, which was to be held on 20 December 2011.  The Appellant was warned that the Traffic Commissioner was considering regulatory action under ss. 26 & 27 of the Goods Vehicles (Licensing of Operators) Act 1995, ["the 1995 Act"].  The letter spelt out a number of grounds on which action was being considered, including the fact that prohibitions had been issued, that statements of fact or intention had not been fulfilled, that undertakings recorded on the licence had not been fulfilled, that the Appellant company no longer satisfied the requirement to be of good repute, appropriate financial standing or professional competence.
(iii)	Mr Sean Henderson, (“Mr Henderson”), a director of the Appellant company and its nominated Transport Manager, was called to the same Public Inquiry in order that his good repute as Transport Manager could be considered.  His father, John Trevor Henderson, is also a director of the Appellant.
(iv)	The Public Inquiry took place before the Deputy Traffic Commissioner on 20 December 2011.  A report from the Vehicle Examiner showed that between 28 July 2009 and 1 August 2011 a total of 16 prohibition notices were issued to vehicles operated by the Appellant.  Of these 9 were immediate prohibitions and 7 were delayed prohibitions.  Four of the prohibitions were ‘S’ marked to indicate a significant failure of maintenance.  In addition on 5 other occasions vehicles were submitted for the removal of a prohibition but removal was refused. When Mr Henderson gave evidence the Deputy Traffic Commissioner asked him what he had done to try to reduce the number of prohibition notices issued to the Appellant company’s vehicles.  He replied that he checked driver defect forms and that trailers were being maintained by a third party.  He said that he had been unlucky and blamed driver error.  Having made a finding that a ‘huge’ number of prohibitions had been issued the Deputy Traffic Commissioner suspended the licence for 3 days.  She accepted a number of undertakings intended to help the Appellant to achieve compliance and she adjourned the Public Inquiry until a date to be fixed in September 2012, in part, at least, to enable Mr Henderson to demonstrate a significant reduction in the number of prohibitions issued and to give the Appellant ‘one last chance’ to show that it could operate compliantly.  She issued an interim written decision.
(v)	In the event the adjourned Public Inquiry took place on 6 November 2012, after the Appellant had been put on notice by a letter dated 25 October 2012, that additional matters would be considered.  These included the fact that on two occasions on which a vehicle was presented for the removal of a prohibition cheques payable to GVTS were returned unpaid.  At this Public Inquiry the Deputy Traffic Commissioner was told that vehicles had been re-possessed so that there had been significant changes in the size of the operation.  The Deputy Traffic Commissioner was also told that there had been an unauthorised change in operating centre.  At the conclusion of this Public Inquiry the Deputy Traffic Commissioner expressly found (i) that there had been an unauthorised change in operating centre, (ii) that the Appellant had contravened a condition(s) of the licence, (iii) that prohibitions had been issued, (iv) that the Appellant had made or procured to be made statements of fact which were false or statements of expectation which had not been fulfilled and (v) that undertakings recorded on the licence had not been fulfilled.  As a result of these findings the Deputy Traffic Commissioner curtailed the authorisation to 3 vehicles and 6 trailers for an indefinite period.  In addition the licence was suspended from 12 November 2012, until such time as all tachographs, digital downloads, etc were delivered to a Traffic Examiner.  The Deputy Traffic Commissioner concluded that Mr Henderson, the Transport Manager, could no longer demonstrate professional competence.  He was disqualified from acting as Transport Manager for the Appellant or any other operator.  The Appellant was allowed a period of grace, until the date of the reconvened Public Inquiry, during which it was permitted to operate without a Transport Manager.  The Appellant was warned that the issues of good repute, financial standing and professional competence would be considered at the reconvened Public Inquiry.  The Deputy Traffic Commissioner made adverse findings in relation to the credibility of Sean Henderson, the Transport Manger.  She indicated that she would require his oral evidence to be corroborated by written evidence whenever available.
(vi)	The reconvened Public Inquiry took place on 19 June 2013.  The Appellant company was represented by Mr Henderson and a VOSA Vehicle Examiner and Traffic Examiner were also present.  At the start of this Public Inquiry the Deputy Traffic Commissioner asked Mr Henderson whether he had brought the bank statements and phone logs that she had requested.  He replied that he had not.  Mr Henderson said that the application for and the details of a new Transport Manager had been sent to the OTC.  The Public Inquiry Clerk was unable to find the application.  The proposed new Transport Manger was unable to be present because of work commitments.  Financial information was emailed through from a factoring company because the accounts were with the Accountant who was unwell.
(vii)	The Vehicle Examiner gave evidence.  He referred, in particular, to the number of prohibition notices issued to the Appellant’s vehicles and questioned whether safety inspections and driver checks were being done effectively because no defects were being recorded but they were being found when the vehicles were examined at the roadside.  His report showed that in the period from 6 January 2012 to 18 April 2013 11 prohibition notices had been issued to vehicles operated by the Appellant.  Of these 7 were immediate prohibitions, 4 were delayed prohibitions and one was ‘S’ marked to indicated a significant failure of maintenance.  The prohibition rate for vehicles inspected over the previous 5 years was 36%, (46% for trailers) and it was 47% for vehicles and 44% for trailers over the previous 2 years.
(viii)	The Traffic Examiner also gave evidence.  In answer to questions from the Deputy Traffic Commissioner she accepted that in view of missing mileage and suggestions that drivers had not handed in tachographs her marking might have been unduly favourable to the Appellant.
(ix)	Sean Henderson gave evidence.  He sought to explain the missing mileage on the basis that the vehicle had been off the road while attention was given to a problem with the brakes.  It appears that this explanation was contradicted by the mileage shown on a prohibition notice and on documents issued when attempts were made to clear the prohibition.  He said that he had assumed that a particular driver was completing defect sheets but he had not checked.  He told the Deputy Traffic Commissioner that he had signed a contract to have the tachographs analysed because he now recognised that he could not analyse them himself.  When asked about the analysis he said that he had been unaware that it was inappropriate to drive in ‘rest mode’.  He said that he was advised by the contractor that the infringements were not serious.  He dealt with a number of other issues and said that someone came on a weekly basis to check the tyres but he accepted that no record was made of these checks.
(x)	The Public Inquiry was adjourned until 3 July 2013.  The Appellant was sent an email setting out the further information that the Deputy Traffic Commissioner expected to receive on or before 3 July 2013.  Some information was sent but it was not possible to open all the email attachments.
(xi)	On 3 July 2013 Mr Henderson appeared on behalf of the Appellant and the Traffic Examiner was present from VOSA.  In relation to the proposed Transport Manager, Mr Shepherd, Mr Henderson said that he was at work and that he would be going to Turkey the following day.  There were no copy tickets or any other material to confirm this.  Mr Henderson said that he had known Mr Shepherd all his life and that Mr Shepherd used to be his father’s Transport Manager.  He said that he was currently working as a traffic planner for a car transporter company.  He added that he was not aware whether Mr Shepherd had done any refresher training since passing his CPC in 1985.
(xii)	Mr Henderson said that he did not realise that he had been required to provide a written report on the Traffic Examiner’s findings.  He gave various oral explanations for missing mileage.  He accepted that he did not pick up drivers on centre-field and mode switch errors.  He added that he and his father each had 7 hours towards the CPC.
(xiii)	The Deputy Traffic Commissioner gave a written decision dated 5 July 2013.  In her analysis of the evidence the Deputy Traffic Commissioner pointed out that the phone records produced by Mr Henderson did not confirm, as he had claimed that they would, that he had telephoned the Traffic Examiner shortly after he had been requested to produce the tachograph records.  In relation to two cheques which had been dishonoured Mr Henderson produced bank statements for an account in the names of himself and his wife which showed that the cheques had not been met but he did not produce the pages which could have confirmed his earlier explanation that it was his wife who had used the funds which led to the cheques being unpaid.  Nor did he produce any statement from his wife to the effect that she had created the situation in which the cheques were not met.  
(xiv)	The Deputy Traffic Commissioner then referred to two prohibition notices that were challenged.  In the case on one vehicle, which was said to have been damaged when it became stuck on waste ground, she pointed out that the driver had not recorded this in the defect book and that Mr Henderson had not recorded the phone call nor the fact that tyres were due to be replaced on the day after the prohibition was issued.  In the case of the second prohibition it was said that an hydraulic pipe burst and that there was trouble with the Electronic Braking System, (“EBS”) warning light.  Once again Mr Henderson accepted that the driver had not recorded this in the defect book and that he could not produce a letter from his maintenance contractor supporting the suggestion that this was a common fault.  At a later stage a letter was produced from the maintenance contractor but it side-stepped the issue which concerned the Deputy Traffic Commissioner.
(xv)	In relation to tachographs Mr Henderson had insisted that if the tachograph is set to ‘rest’ then it will automatically record ‘driving’ if the vehicle moves.  As a result of Mr Henderson’s insistence the Deputy Traffic Commissioner invited the Traffic Examiner to produce a short guide to the relevant parts of the legislation, which confirmed that he was wrong.  He also insisted that there was no need to record ‘other work’.  The Deputy Traffic Commissioner found this difficult to understand given that he received a fixed penalty on 18 April 2013 for failing to record other work.  The Deputy Traffic Commissioner also drew attention to the fact that the report from the firm which analysed the tachographs showed that there had been a ‘raft’ of mode infringements, as well as other infringements.
(xvi)	Mr Henderson insisted on 19 June that an application had been made for Mr Shepherd to become the nominated Transport Manager.  By 3 July 2013 it was apparent that this was not correct.
(xvii)	In relation to safety inspection sheets the Deputy Traffic Commissioner did not conclude, as the Vehicle Examiner had done, that they were not genuine.  However she pointed out that the brake disc problems on which she had commented in December 2011 were still in evidence and that the poor condition of tyres was a recurring theme indicating that checks were not as thorough as Mr Henderson had claimed, or that he is incapable of conducting checks properly.
(xviii)	The Deputy Traffic Commissioner summed up her view of Mr Henderson in this way:
“I have had the opportunity of hearing from Mr Henderson over four days.  I have concluded his evidence is a combination of truth, half-truth and lies.  At first blush he sounds convincing as he presents a picture of a hard working operator being victimised and trying to respond to petty bureaucratic officials.  It takes time to unravel his assertions.  VOSA officers do not have that time.  Once again I am driven to the conclusion that I cannot trust anything Mr Henderson says unless backed up by other evidence”.
(xix)	The Deputy Traffic Commissioner then set out her findings making the point that the decision of 5 July 2013 needed to be read in conjunction with her interim decisions delivered in December 2011 and November 2012 and needed to take into account the pattern of events dating back to the Public Inquiry at which the present licence was granted.  At the conclusion of that Public Inquiry regulatory action was taken against an interim licence and it was clear that defect reporting was an issue, which was the subject of at least one undertaking.  An ‘S’ marked prohibition led to an unsatisfactory maintenance investigation in February 2009.  As a result the Appellant was called to a Public Inquiry held on 14 July 2009.  That resulted in a formal warning to avoid safety critical or preventable prohibition notices and to comply with all undertakings.  The fleet was curtailed from 12 vehicles and 20 trailers to 8 vehicles and 14 trailers.  Within 2 weeks of this Public Inquiry an ‘S’ marked prohibition was issued for multiple defects.  The defects were such that an exemption notice permitted the vehicle to be moved subject to various conditions, but it was only permitted to travel one mile.  Since that prohibition was issued the Deputy Traffic Commissioner has described how the number of other prohibitions which have been issued and the multiple defects for which they have been issued make depressing reading.  Even between the maintenance inspection in April 2013 and the date of the Public Inquiry a further 4 prohibitions were issued, albeit two are the subject of challenge.  The Deputy Traffic Commissioner found that various undertakings had not been fulfilled.  She concluded that the tachograph infringements could not be dismissed as ‘nothing to worry about’ as Mr Henderson had suggested.  Instead she concluded that they demonstrated an ‘ethos of non compliance’, which, she concluded, was endemic in the operation and, she suspected, had been there from the start of the licence.  The Deputy Traffic Commissioner was not satisfied that drivers did walk round checks or that they recorded any defects that arose during the day.  She pointed out that having found, in November 2012, that Sean Henderson was no longer professionally competent he had only taken steps to appoint a new Transport Manager shortly before the Public Inquiry on 19 June 2013 and had not, in fact, ensured that the necessary application had been submitted.
(xx)	The Deputy Traffic Commissioner then turned to the question of good repute.  In paragraph 42 of her decision she summed the matter up in this way:
“Having looked in the round at the way this operation has been run since the licence was first granted I find it to be appalling.  I find that Sean Henderson has failed to assume the control I would expect of a reputable operator.  When his vehicles have been stopped he has himself gone on the offensive to justify his own shortcomings as operator.  He has failed to engage with both officers from VOSA or the Office of the Traffic Commissioner over the years.  He has told me lies and half truths.  He has been responsible for vehicles being on the road which were unroadworthy as best and dangerous at worst.  He has occupied an inordinate amount of VOSA and Public Inquiry time.  He had failed to appreciate the advice given and act upon it.  He has not kept promises to me o to Mr Macartney when the licence was granted”.
(xxi)	In relation to good repute the Deputy Traffic Commissioner was mindful of the question, based on the decision of the Tribunal in appeal 2009/225 Priority Freight, namely: how likely is it that the Appellant will, in future, operate in compliance with the operator’s licensing regime?  She was also mindful of the decision in appeal 2002/217 Bryan Haulage (No 2), namely: is the Appellant’s conduct so serious that it ought to be put out of business?  In weighing up the positive and negative factors relating to the Appellant the Deputy Traffic Commissioner said this: 
“This operator has had far more chances than is usual I suspect because his glib assurances have been accepted at face value over the years.  I am not prepared to accept these assurances any more.  I find that either Sean Henderson has neither the ability nor the will to run a compliant operation, or he is cavalier and indifferent in his approach to the operator licensing system.  Either way he is a danger to other road users and has operated in unfair competition with other operators who do ensure the fleet is maintained properly and that drivers are properly trained and monitored”.
As a result of those findings the Deputy Traffic Commissioner concluded that the Appellant ought to be put out of business, having lost its Good Repute.
(xxii)	The Deputy Traffic Commissioner made no finding in relation to Financial Standing.  This was partly due to the fact that she had not been provided with all the financial information she required and partly because her findings in relation to Good Repute and Professional Competence meant that no useful purpose would have been served by a further adjournment to enable the additional material to be produced.
(xxiii)	The Appellant failed to arrange for a new Transport Manager to be approved by the end of the period of grace.  While Mr Shepherd had been put forward as the new Transport Manager the Deputy Traffic Commissioner concluded that in his absence it was impossible to determine what work he had undertaken and what further training he had had in the period since he passed his CPC in 1985.  In the absence of satisfactory information on those points the Deputy Traffic Commissioner concluded that the Appellant was not Professionally Competent.
(xxiv)	The Deputy Traffic Commissioner came to the general conclusion that it was both necessary and proportionate to revoke the Appellant’s operator’s licence adding: “at present the Operator has no place in the industry”.  She then went on to consider the question of disqualification.  She concluded that, in the light of some small signs of improvement, very late in the day, it was not necessary to disqualify Mr Henderson or his father.
(xxv)	On 21 August 2013 the Appellant filed a Notice of Appeal.  The main point made in the Grounds of Appeal was that the directors of the Appellant company had a responsibility to safeguard the integrity, structure and future of the company to enable it to meet its future obligations and responsibilities.  The Grounds of Appeal went on to indicate that a meeting of the directors had decided that this would be achieved by the following (i) a new company secretary to be appointed, (ii) a professional Transport Manager to be confirmed (subject to contract), (iii) a financial director to be appointed, (iv) the shareholding of the Henderson family to be limited to less than 50% of the company and (v) due and necessary process to be applied to future trading and vehicle management.
(xxvi)	On 16 September 2013 a firm of accountants acting for the Appellant wrote to the OTC to set out a number of steps, which had been or were to be taken.  In relation to those steps that had been taken no dates were given for the relevant appointments.  With the possible exception of the appointment of Chartwise to conduct Tachograph analysis the probability seems to be that the appointments were made after the date of the Deputy Traffic Commissioner’s decision.
3.	This appeal was reached after the mid-day adjournment.  When the appeal was called no-one was present on behalf of the Appellant nor had any message been received by the Tribunal either seeking an adjournment or explaining that the Appellant had been delayed in attending the hearing.  In those circumstances the Tribunal decided to hear and determine the appeal in the absence of the Appellant.
4.	We can deal quite shortly with the grounds of appeal because they refer to steps which the Appellant says that it will take at some unspecified time in the future.  The insuperable problem which the Appellant faces is that in paragraph 17(3) of Schedule 4 to the Transport Act Parliament has said that: “The Tribunal may not on any such appeal, (i.e. an appeal from a Traffic Commissioner”), take into consideration any circumstances which did not exist at the time of the determination which is the subject of the appeal”.  In the context of this appeal this means that the Tribunal cannot take into account any appointment or other step that had not been made or taken before 5 July 2013.  All the indications are that the steps set out in the Grounds of Appeal are steps that the Appellant proposes to take in the future.  If follows from the terms of paragraph 17(3) of Schedule 4 that the Tribunal is not permitted to take them into account.  As a result the only ground of appeal fails.
5.	Since we have decided to hear and determine this appeal in the absence of the Appellant we take the view that we ought to review all the material in the Appeal File to ensure that the decision reached by the Deputy Traffic Commissioner is founded on the evidence and that she had drawn appropriate and proportionate conclusions from the evidence.
6.	Overall the approach adopted by the Deputy Traffic Commissioner was both careful and measured.  She gave the Appellant and Mr Henderson, as the Director acting for the Appellant at each stage of the Public Inquiry, and, in the early stages, also the Transport Manager, every opportunity to show that he and it could learn the lessons from what had gone wrong in the past and could take steps to put matters right.  As the Public Inquiry moved on from stage to stage it became increasingly apparent that Mr Henderson’s understanding of what had gone wrong was limited and his ability to take steps to put matters right and to provide much needed leadership was wanting.
7.	We have quoted three passages from the Deputy Traffic Commissioner’s decision, [see paragraphs 2(xviii), 2(xx) and 2(xxi)] because in our view they go to the heart of this case.  We are satisfied from our consideration of the papers that everything that the Deputy Traffic Commissioner has said in those three passages is both supported and justified by the evidence in the appeal file.  The overall picture is a devastating criticism of Mr Henderson, as the directing mind of the Appellant company, and therefore of the company itself as the holder of the operator’s licence.
8.	Putting it bluntly the evidence and the Deputy Traffic Commissioner’s findings show that Mr Henderson (and through him the Appellant) is either unable or unwilling to understand the importance of compliance with the regulatory regime.  In addition it shows that Mr Henderson lacks the skill and/or the ability to lead and manage the Appellant company in a way which ensures that it operates in compliance with the regulatory regime.  The result has been that the Appellant’s vehicles have been allowed onto public roads when they were, at best unroadworthy or, at worst dangerous to other road users.  Throughout the various stages of this Public Inquiry Mr Henderson has proved adept at making convincing promises to improve the standard to which the Appellant company operates.  In practice, however, when those promises have been put to the test they have been found wanting.  At best it has been a case of too little too late.  We agree that the most recent signs of improvement were insufficient, given the appalling past history, to rescue the Appellant company from the findings that it was no longer of good repute or professionally competent.
9.	Having considered all the evidence in the appeal file we are satisfied that this was a bad case of an operator persistently falling well below the standard required for compliance with the regulatory regime.  Past experience made it clear that promises to reach the required standard would probably not be met and that, in any event, Mr Henderson and through him the operator could not be trusted to keep promises to improve.  In our view there was overwhelming evidence that the Appellant was unlikely, in the future, to be able to operate in compliance with the regulatory regime.  That conclusion is graphically demonstrated by the number and the nature of the prohibitions issued to the Appellant’s vehicles over a significant period of time, coupled with the inability of Mr Henderson and through him the Appellant to achieve a sufficiently dramatic improvement to warrant yet another chance.  In our judgment this was a clear case where the manner in which the Appellant had operated, over a significant period, meant that it was appropriate to put the company out of business because it has no place in the industry.
10.	In our view there was ample justification for findings that the Appellant had lost its good repute and its professional competence.  Either finding on its own required the Deputy Traffic Commissioner to direct that the operator’s licence had to be revoked.  The reason is that s.27(1) of 1995 Act provides that revocation is the mandatory consequence of a finding of loss of good repute, or loss of professional competence or both.
11.	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.
23 December 2013