Neutral Citation Number: [2014] UKUT 0347 (AAC)                          Appeal No: NT/2014/21

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
(TRANSPORT APPEALS)

ON APPEAL FROM THE DECISION OF
THE HEAD OF THE TRANSPORT REGULATION UNIT, NORTHERN IRELAND
DATED 26 FEBRUARY 2014

Before:
Judge Mark Hinchliffe, Deputy Chamber President (HESC); Judge of the Upper Tribunal.
Mr G Inch, Member of the Upper Tribunal.
Mr A Guest, Member of the Upper Tribunal.

Appellant:
SOE HAULAGE LIMITED

Respondent:
DEPARTMENT OF ENVIRONMENT, NORTHERN IRELAND (DOENI).

Attendance:
For the Appellant: 	Mr D McNamee, Solicitor.
For the Respondent: Ms N Fee, Counsel.

Appeal heard at: 	Bedford House, 16-22 Bedford Street, Belfast
Date of hearing: 	10 July 2014
Date of decision: 	25 July 2014

DECISION OF THE UPPER TRIBUNAL:

The appeal is allowed.
The case is remitted back to the Department to be re-heard and re-considered by an authorised decision-maker other than Mr D Armstrong or Mrs G McIntyre.

Subject matter:	
Constitution of the deciding body; Natural Justice;
Advance disclosure to operators of available relevant evidence prior to the public inquiry.

REASONS FOR DECISION:

1)	This was an appeal from what is described as the decision of the Head of the Transport Regulation Unit (TRU), made on 26/2/2014, when he revoked the appellant company’s operator’s licence on the grounds that the company did not satisfy the requirements to be of good repute and have professional competence. The appellant company’s standard international licence authorised the use of ten vehicles and ten trailers. The licence has been in place since July 2012 and Mrs Jacqueline Magee is the sole director of the company, and is its nominated transport manager.  The operator was disqualified from holding or obtaining an operator’s licence for 3 years and Jacqueline Magee was disqualified from acting as a transport manager for 3 years.

2)	So far as it is pertinent to the key issues that we have had to decide, the factual background to this appeal appears from the documents, the transcript and the Head of the Transport Regulation Unit’s written decision, and is as follows:
(i)	Jacqueline Magee is the wife of a Mr Aiden Magee, who was a director of Magee Haulage Ltd (MHL), a company which has now been wound up but which previously held an operator’s licence. An application for renewal of the operator’s licence by MHL was refused in February 2012 on grounds of loss, or lack, of repute. A significant number of tachograph and tachograph record offences are recorded against MHL, including “tacho interrupter device fitted”, “speed limiter defective”, and “fail to produce tacho charts”. Sixteen offences recorded would now be categorised as either most serious infringements or very serious infringements under EC Directives and, as a result of DVA prosecutions, MHL and its drivers have been convicted in court six times.
(ii)	On 30/4/2013, information was received in the TRU that, on 20/11/2012, a vehicle registered to and operated by the appellant company was intercepted by Her Majesty’s Revenue and Customs (HMRC) and found to be carrying Hydrocarbon Oil, upon which UK excise duty had not been paid. The notification from HMRC stated that “the vehicle running tank was found to contain and react to SET Test for red diesel”. The vehicle was seized and, as no appeal against seizure was made, the vehicle was sent to auction. Then, again, on 24/11/2012 a vehicle registered to the appellant company was intercepted by HMRC and found to be carrying Hydrocarbon Oil, upon which UK excise duty had not been paid. The notification from HMRC stated that: “the vehicle belonged to SOE Haulage Ltd and failed SET Test for contaminated fuel”.
(iii)	In layman’s terms, the allegation was that the vehicles were being used on the public highway whilst unlawfully running on red diesel, or fuel contaminated with red diesel – which is rebated diesel from Great Britain or Northern Ireland. Such diesel is identified with a red marker dye. There are techniques for removing the dye, generally known as laundering, but such techniques leave a residue that can be detected.
(iv)	A report from DVA dated 31/5/2013 states that six vehicles that were or had been specified on the appellant company’s operator’s licence had previously been registered to Aiden Magee or MHL.
(v)	In order to ascertain the true facts surrounding the HMRC report, to further explore possible links between the appellant company and MHL, and to check the appellant company’s financial position in view, particularly, of the HMRC allegations, a public inquiry was called, and the call-up letter dated 9/7/2013 fixed the date of the public inquiry as 13/8/2013 which, at the request of the appellant company’s legal representative was postponed to 25/9/2013.
(vi)	Prior to the hearing, an amended report from HMRC stated that the vehicle was detected “using rebated heavy oil as a road fuel” rather than being “used in the carriage/conveyance of Hydrocarbon Oil which had not borne UK excise duty” – although the factual particulars as set out in (ii) above remained unchanged.
(vii)	There is no transcript of the hearing on 25/9/2013 but we have a “Note”, which records that the Head of the TRU, Mr Armstrong, was accompanied by Gillian McIntyre (Deputy Head, TRU) and that Jacqueline Magee attended, represented by Mr McNamee.
(viii)	It is recorded in the note that Mr McNamee pointed out the amendment to the HMRC report, and:
“He also made Mr Armstrong and Mrs McIntyre aware of the reasons surrounding the downfall of Magee Haulage Ltd …and … pointed out that the operator had no links with Magee Haulage Ltd and (Jacqueline Magee) had resigned from her position as company secretary, although paperwork had not been sent and was not reflected in the Company House records. Mr McNamee said that Mrs Magee had little or no dealings in the running of Magee Haulage and only started SOE Haulage when her youngest child had started school.”
(ix)	Jacqueline Magee gave evidence in relation to the HMRC report, and said that the driver was the same in both instances. He had filled the vehicles with rebated fuel and had “pocketed the difference”.
(x)	The note states that “both Mrs McIntyre and Mr Armstrong went on to question Mrs Magee”, who told the inquiry that her husband had no decision-making role in the company but is paid a small wage to do some mechanical work. Mr McNamee complained that “there appeared to be a mindset that because Mrs Magee shared the name Magee, she was in some way responsible for the offences of MHL”. Mr Armstrong denied that there was any such mindset.
(xi)	A number of necessary documents in relation to financial standing were not available. Mrs Magee said that they could be made available, hopefully, within two weeks. Mr Armstrong asked that they be provided and also asked Mrs Magee to provide evidence of the purchase of vehicles from MHL, which were now owned by the appellant company. The note concludes:
“Inquiry ended by Mr Armstrong advising Mrs Magee that as soon as all documentation had been made available to the unit, a decision would be issued”.
(xii)	Correspondence was sent to the appellant company asking that the purchase invoices, correspondence from HMRC, and the latest profit and loss accounts be submitted by 11/10/2013. Mrs Magee then submitted some documentation relating to the purchase of the vehicles, and said that the profit and loss account should be available within a few days. However, Mr McNamee had advised against disclosing any information relating to HMRC correspondence as this was subject to an appeal before the relevant tax tribunal. Subsequently, a draft profit and loss account for y/e 30/11/2012 was submitted.
(xiii)	The TRU also became aware of a recent detection by officers on the M6 near Carlisle, dated 5/8/2013, when vehicle SF07BYN, a vehicle specified on the appellant company’s operator’s licence, was found to have a micro chip wired in which was believed to be a tachograph manipulation device. The papers also contain details of ten occasions when tachograph or drivers hours/records infringements by the appellant company were detected in England between 17/4/2012 and 8/1/2013. The appellant company had not disclosed any of these matters at the hearing on 25/9/2013.
(xiv)	HMRC also issued a statement of facts relating to three incidents on 14/5/2012; 20/11/2012 and 24/11/2012. In each case the vehicles had fuel in the running tank checked which tested positive for red diesel. The vehicle on 14/5/2012 was registered to the appellant company. On 20/11/2012 the vehicle was registered to the appellant company and specified on its operator’s licence. On 24/11/2012 the vehicle was registered to the appellant company. The report described the fuel as “Laundered”. A post-detection audit was then carried out on the operator in respect of fuel misuse. This assessment of unpaid duty amounted to £32,165 and, in addition, a penalty of £21,389 was imposed. The statement explains that: “the objective of the post-detection audits is to assess for repayment the rebate allowed on the total quantity of rebated oil used by the offender”.
(xv)	As a result of all these matters, Mr Armstrong decided that the public inquiry should be reconvened for 29/11/2013, and appropriate correspondence was sent. Mrs Magee replied direct to say that she would attend “the next meeting on Friday 29th November”, but Mr McNamee then asked for the public inquiry to be postponed, which was agreed.
(xvi)	The public inquiry reconvened on 19/12/2013.
(xvii)	At the start of the hearing, the clerk of the court announced:
“This is a public inquiry to be held by Donald Armstrong and Gillian McIntyre, Head and Deputy Head of the Transport Regulation Unit, Bedford House, Belfast. Under Section 32 of the Goods Vehicles (Licensing of Operators) Act (Northern Ireland) 2012 Mr Armstrong and Mrs McIntyre will consider matters relating to Standard International Licence Number ON1115000 in the name of SOE Haulage Limited. SOE Haulage Limited is currently licensed to operate ten vehicles and ten trailers from operating centre 133 Rehaghy Road, Dungannon, Co. Tyrone.”
(xviii)	Throughout the public inquiry, Mr Armstrong appeared to take the lead, but Mrs McIntyre played a full part in asking questions of all witnesses.
(xix)	Mr McNamee said that the HMRC assessment had been appealed to the tax tribunal, and this could take some time to resolve. He said: “… they are quite busy. I know some of my appeals from 18 months – 2 years ago are only being heard now in January and February, so that’s a rough timescale.”
(xx)	In relation to the chip found, which was thought to be a tachograph manipulation device, Mr McNamee said that he had been in correspondence with the police and it appeared that the device could not have been utilised. So far as the other infringements were concerned, Mrs Magee said: “When you break it down in detail, there isn’t that many for 2 – 3 years work.”
(xxi)	In due course, Mr Armstrong asked about links between the appellant company and MHL. He said:
“In the inquiry in September, you said that SOE had nothing to do with Magee Haulage. Mrs Magee was setting up a completely new business and she had nothing to do with the previous company. Let me read from an article that came out of the ‘Irish Trucker’, this is publicly available on the web. January 2012 Mrs Magee, when you had your own licence for SOE …”
(xxii)	Mr Armstrong then read extracts from the article about MHL, which refers to “Jackie Magee, who is wife of Managing Director, Aiden” as “Office Manager” and comprises a series of quotes allegedly from (or about) Mrs Magee concerning MHL ,such as:
•	“We specialise in international transport to the UK and various destinations throughout continental Europe …”
•	“ ‘ Aiden likes to lead by example’ Jackie laughs”
•	“The price of diesel is hitting every haulage firm hard”, and
•	“In conclusion, Jackie praises Magee Haulage’s drivers for their contribution to the company’s success”
(xxiii)	Mr McNamee asked why the article had not been disclosed prior to the moment it was produced by Mr Armstrong half way through the hearing. Mr Armstrong said that it was a public document. Mr McNamee responded:
“It is my view that the purpose of the inquiry is to remove the licence at all costs and is clearly pulling rabbits from a hat in order to do so”.
Mr Armstrong then said that he would allow two weeks for a written response to the article, along with any written correspondence from Mr Logue, an expert who could deal with the roadworthiness and tachograph infringements.
(xxiv)	Mr Armstrong concluded with the words:
“We have 28 days to issue a decision but we will do our utmost to get it issued before then.”
(xxv)	Mrs Magee’s subsequent written response to the article was a statement that she did not make any comments to the magazine and it was her husband who had given the quotes “and used my name, as I was his wife”.
(xxvi)	Mr Logue’s report, dated 10/1/2013, lists 13 roadworthiness prohibitions and another 13 driver’s hours prohibitions, with comments (most of which were simply a record of Mrs Magee’s responses, rather than his own expert judgment). In relation to the unauthorised device found on 5/8/2013, Mr Logue says that “Mrs Magee was unable to comment much on this … she was not aware of any device and as far as she knows VOSA have not been able to operate what they found”. Mr Logue, however, was unable, himself, to offer any comment as he had not seen any paperwork. No correspondence with the police, or any evidence to support the contention that the device could not be used, was produced.
(xxvii)	The written decision, dated 26/2/2014, made no mention of Mrs McIntyre, the Deputy Head of the TRU. The decision referred only to Mr Armstrong, and is headed: “Decision of the Head of the Transport Regulation Unit”. In contrast to the final remarks at the public inquiry referring to “we” – the decision has Mr Armstrong referring to “I” – as in:
 “In this regard I am satisfied that SOE is, in fact, a front for Magee Haulage Ltd, an operator that lost its licence in 2012 due to loss of repute, and yet its officers continue to have roles in this company”
and
“I ask myself if, on the basis of the evidence before me, Mrs Magee can be trusted to comply with the requirements of the Goods Vehicles Act and conclude that the answer is ‘No’. This is based on a number of factors that have emerged over the period of this inquiry …”
(xxviii)	Regarding links between the appellant company and MHL, Mr Armstrong notes Mrs Magee’s role as company secretary of MHL, the provenance of most of the SOE vehicles; payments made to Aiden Magee who was the named holder of the SOE credit card and appeared to have a car paid for out of company accounts, and the interview with a trade magazine. Mr Armstrong said that Mrs Magee’s explanation for the interview was “plainly unbelievable”.
(xxix)	All final decisions were made by Mr Armstrong alone.

3)	At the hearing of this appeal, the Appellants were represented by Mr McNamee and the Respondents were represented by Ms Fee – both of whom submitted skeleton arguments, for which we were grateful.  

4)	We first asked Ms Fee about Ms McIntyre’s presence on the bench, and her active involvement throughout both parts of the public inquiry in asking many questions, but then her apparent absence as a decision-maker. Ms Fee said that Ms McIntyre participated in order to gather information, but Mr Armstrong had made the decision alone. We asked what would happen if we remitted the case back to be re-heard – who would deal with it? Ms Fee said that the Department was the statutory decision-maker and could easily appoint someone else to preside.

5)	We consider this a serious procedural irregularity. Anybody watching and listening to the two hearings, including the introductory and closing remarks, would conclude that this was, in effect, a tribunal made up of two persons. There is nothing wrong with this, although it would not happen in any case before a Traffic Commissioner in Great Britain unless, possibly, they sat with an assessor. We accept that the statutory decision-maker in Northern Ireland is the Department of the Environment (Northern Ireland) and that, as Ms Fee said, the Department can appoint anyone to discharge that function. Whether or not this somewhat surprising position is calculated to inspire public confidence in those who have to make these extremely serious and consequential judicial decisions - that are so important to business, and crucial to road and public safety - is another matter.

6)	The key point here is transparency and clarity as to the nature and composition of the judicial decision-making body. Openness about responsibility for judicial decision-making is a fundamental principle of justice. There may be strictly defined circumstances in which, for reasons of ill health or other misfortune, it is possible, within limits, to change the composition of the decision-making body (such as the illness of a jury member), but generally a change of any significance nullifies the proceedings and the case must be re-heard. Suppose someone watching the hearings thought that Mrs McIntyre was more sympathetic to the appellant than Mr Armstrong – what suspicions would arise if, for no good reason, Mrs McIntyre then appeared to have been excluded from the decision-making? If Mrs McIntyre’s role really was that of, in effect, counsel to the inquiry rather than participating judge, one imagines that the position would have been made clear at the hearing and that Mr Armstrong would not have referred in his concluding remarks to: “We have 28 days to issue a decision but we will do our utmost to get it issued before then.”

7)	That in itself is sufficient basis for us to remit the matter back to be re-heard by someone other than Mr Armstrong or Mrs McIntyre. We understand that Mr Armstrong has now retired, so there may be a new Head of the TRU who can preside. Failing that, we would have suggested that the Department appoint a Traffic Commissioner to deal with the matter since this case is complex, and whoever deals with it will need to be very familiar with the judicial responsibilities involved in conducting public inquiries, and the considerable body of tribunal jurisprudence that must be followed.

8)	This leads us to Mr McNamee’s main point, namely the failure to disclose all the material evidence in advance. In particular, the production of the article at the second hearing meant that Mrs Magee was caught unawares and could not make the extensive enquires necessary to support her explanation (including enquiries of the magazine and journalist involved) prior to the hearing.

9)	This tribunal is moving away from long recitations of previous case law in favour of clear statements of the applicable principle. In this case, the principle is that so far as is reasonably possible, an operator called up to a public inquiry should be told about all the material evidence that the decision-maker may reasonably consider to be relevant, and should be given an appropriate opportunity to consider, prepare and present a response to it - at a hearing, should they wish. If information that has a reasonable prospect of becoming relevant to the outcome becomes available at the last minute, it should be disclosed at the earliest opportunity, and time to consider it, or an adjournment, should be offered. This rule applies even if, in the event, the information does not attract adverse weight. If an operator has been put on the back foot by the surprise production of new evidence part way through the hearing, an unfortunate sense of unfairness and injustice may arise – even if the information happens to be available, somewhere on the internet.

10)	It may well be that the Department has a wealth of information and it is not always clear what is, and is not, likely to be relevant. But in putting the brief together and giving the person(s) presiding the information that they need in order to conduct a robust and thorough public inquiry, the general rule should be - if something is worth telling the decision-maker about, then it is worth telling the operator too.

11)	Although Mrs Magee was given an opportunity to make a written response, the impression of “pulling rabbits from a hat” is difficult to discount. For this reason also, we find that this appeal must be allowed and the public inquiry re-heard by a fresh deciding officer.

12)	Mr McNamee made a number of other points that we need not, now, address in detail. However, we think it may be helpful if we say that, in our view, there is no reason whatsoever why the Department should wait for the final disposal of tax tribunal proceedings before addressing the question of repute in a case such as this. There is nothing inherently undesirable in parallel proceedings before different bodies, applying different laws, and with different statutory responsibilities. The avoidance of fuel excise duty through the unlawful use of red diesel directly undermines fair competition and no responsible regulator can tolerate it. There is a substantial public interest in regulators speedily preventing operators from avoiding their fiscal responsibilities and competing unfairly by fuel misuse. It would be entirely unconscionable for a regulator to wait years before discharging his or her statutory duties on the basis of different proceedings being carried on elsewhere.

13)	Operators must therefore be in a position to demonstrate that they take all reasonable precautions to ensure that this unlawful behaviour is avoided and prevented. It will rarely be a good excuse to blame drivers. If abuse and contamination is as widespread as Mr McNamee would have us believe, then operators must put pro-active systems in place to test and detect in order to prevent illegal fuel from being carried on authorised vehicles – either as cargo, or in the running tank, and in our view it matters little which. Such conduct goes to the heart of fair competition and repute, and we can conceive of very few circumstances where the use or unlawful carriage of illegal fuel would not have a devastating effect upon an operator’s ability to continue to hold an operator’s licence.

14)	We also consider that decision-makers are perfectly at liberty to consider who the controlling mind of a company is, and to lift the veil of incorporation to find out the true culprit if wrongdoing by a company is found. 

15)	We further consider that it is possible for a new company to be, in effect, a front for a company that has been wound up where – in truth – the new company is a front for the controlling mind of the person behind the wound-up company.

16)	Finally, there is nothing improper in the decision to reconvene the public inquiry before a decision has been issued if either expected information is not produced as required, or unexpected and potentially relevant information subsequently becomes available.

17)	We would add a caveat, however, that it is generally desirable that the public inquiry ends when the hearing ends. There may be exceptional circumstances when it is appropriate to ask for or permit the submission of additional documentation after the hearing has concluded - but this practice is fraught with danger as it is not then possible to ask questions about the material, and incorrect assumptions might be made that could have been corrected by proper scrutiny on the day. Nor should the decision-maker routinely go off and make further enquiries once the hearing has concluded. In our view operators called to public inquiry should be required to produce all that they need at the hearing in order to answer the matters raised in the call-up letter and cannot expect to be allowed to produce a raft of evidence subsequently – whilst, on the other hand, they should not be required to answer new matters raised either on the day, or after the hearing has concluded, without having had a proper chance to consider and prepare their response followed by an opportunity to be heard in evidence, should they wish. If the operator can deal with a new matter immediately (especially if they are legally represented) then all well and good. But, as a general rule, if new and relevant matters arise, the correct procedure is to give as much advance warning as possible, and then to hold a new or reconvened hearing.

18)	The issues raised in this case, particularly the use of unlawful fuel, fronting, and serious tachograph offences (especially tampering with a device) if established next time following a fair and judicial process, are prima facie matters of significant gravity because they undermine both fair competition and the operator licensing system, and tachograph tampering and infringements not only affect competition but directly challenge road safety. Consequently, the outcome of this appeal, based upon procedural matters, should not be taken as any indication as to the likely outcome of the re-hearing of the public inquiry. All options, including possible revocation and disqualification, remain open.

Judge Mark Hinchliffe, DCP
25/7/2014