Neutral Citation Number: [2014] UKUT 0382 (AAC)              Appeal No.  T/2014/46

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
Elizabeth Perrett, Deputy Traffic Commissioner for the 
North East Traffic Area dated 9 May 2014

Before:
Her Honour Judge J Beech, Judge of the Upper Tribunal
Stuart James, Member of the Upper Tribunal
John Robinson, Member of the Upper Tribunal

Appellants:

MARSHLAND LOGISTICS LIMITED
&
JOHN McGUINNESS

Attendances:
For the Appellants: Tim Nesbitt, Counsel instructed by Marshall Glover solicitor with John McGuinness and David McGuinness in attendance.

Heard at: Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ
Date of hearing: 19 August 2014
Date of decision:   27 August 2014

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that these appeals be DISMISSED

SUBJECT MATTER:-  Fronting; compliance; good repute; disqualification.

CASES REFERRED TO:- Bradley Fold Travel Ltd and Peter Wright v Secretary of State for Transport (2010) EWCA Civ 695; Muck It Limited and others v Secretary of State for Transport (2005) EWCA Civ 1124; 2006/56 Paul Oven Transport Services Limited Appeal; Arnold Transport & Sons Limited v Department of Environment Northern Ireland NT/2013/82; (2014) UKUT 0162 (AAC); 2002/217 Bryan Haulage (No.2); 2009/225 Priority Freight Ltd & Paul Williams

REASONS FOR DECISION

1.	This is an appeal from the decision of the Deputy Traffic Commissioner for the North East of England Traffic Area (“DTC”) made on 9 May 2014 when she revoked the First Appellant’s (“the company”) standard national licence authorising six vehicles and four trailers with effect from 23.59 on 30 June 2014 under ss.26 and 27 of the Goods Vehicles (Licensing of Operators) Act 1995 (“the 1995 Act”) and disqualified the company and its former director, John George McGuinness, the second Appellant (“George McGuinness”) from holding or applying for an operator’s licence in any traffic area indefinitely and further disqualified a former director Kevin Lyons from holding or applying for an operator’s licence in any traffic for three years.  She also found that the good repute of Ian Dicks, the former nominated Transport Manager was lost, as was his professional competence.  The DTC’s decisions in respect of Mr Lyons and Mr Dicks are not the subject of appeals.

2.	The factual background appears from the documents and the Traffic Commissioner’s written decision and is as follows:

(i)	The company was incorporated in May 2007.  Kerrianne McGuinness (a daughter of John McGuiness) was the appointed Company Secretary and Kevin Lyons (a nephew of John McGuiness) was the sole director.  John McGuiness was the sole shareholder.  
(ii)	The company applied for a standard national licence on 2 October 2008.  Mr Lyons signed the application.  The licence was granted on 15 January 2009 authorising six vehicles and four trailers.  At the time of the public inquiry, the company had five vehicles and no trailers in possession.  Ian Dicks was the nominated Transport Manager.
(iii)	At the time of the licence application, John McGuinness and his wife, Dorothy held an operator’s licence trading as John McGuinness Transport which was revoked on 18 March 2009.  The “propose to revoke” letter dated 18 February 2009 referred to previous unanswered correspondence sent by VOSA (now DVSA) dated 9 October 2008 and 14 November 2008 requesting the details of the nominated Transport Manager.   The information was not provided and the licence was revoked accordingly.
(iv)	John McGuinness was also a director of Pellantry Service Limited which held a standard national operator’s licence.  Letters were sent to that company by VOSA on 7 January, 3 February and 4 February 2009 requesting arrangements be made for a maintenance investigation.  Those letters remained unanswered.  The “propose to revoke” letter was sent on 25 August 2009 and referred further to a conviction of Pellantry Services Limited at Grimsby Magistrates Court on 23 January 2009 for an offence of using a vehicle with defective brakes for which the company was fined £1,000.  That conviction had not been notified to the Traffic Commissioner.  No response was received to the letter and the licence was therefore revoked on 9 November 2009.
(v)	On 1 December 2009 an offence PG9 was issued to one of the company’s drivers for use of a defective or expired digital driver card.
(vi)	On 12 January 2010, a new operator maintenance investigation took place which was marked unsatisfactory. 
(vii)	On 15 April 2010, a driver was issued with an offence PG9 for failing to make a record or entry relating to his drivers hours.
(viii)	On 25 August 2010, an offence PG9 was issued to a driver for driving a vehicle without a tachograph being fitted in accordance with the regulations.
(ix)	On 21 September 2010, a driver was issued with a fixed penalty notice for driving a vehicle with the body exterior damaged or protruding.   The “S” marked PG9 noted that “3 of 4 securing devices not applied.  2 of 4 broken.  Glass falling from vehicle”.  The tractor unit was also found to have a defective seal on the filler cap to the tipping oil tank with evidence of leakage for some time.  The fixed penalty notice was not notified to the Traffic Commissioner.  
(x)	On 15 February 2011, the company and a driver (Stephen Eldin) were convicted of five offences of exceeding 4.5 hours driving without taking a qualifying break.  The convictions were not notified to the Traffic Commissioner.  
(xi)	On 17 May 2011, Mr Lyons received three penalty points for using a vehicle in a dangerous condition.  
(xii)	On 24 February 2012, a vehicle failed its annual test for having a tyre tread worn beyond its legal limit (amongst other items); on 2 March 2012, a semi trailer was found to have a damaged tyre and on 23 March a vehicle was found to have a tyre worn beyond its legal limit along with damage to the tyre.
(xiii)	On 24 July 2012, a semi trailer was found to have a wheel nut, washer or stud missing, loose or fractured.
(xiv)	On 25 August 2012, a roadside encounter took place between TE Shaw and Mark Gillespie, a self employed driver and the person responsible for planning the work of the company’s vehicles.  A PG9 was issued for a tyre being worn beyond its legal limit and Mr Gillespie was found to have committed a number of drivers’ hours and tachograph offences between 20 August and 24 August 2012.    Mr Gillespie declined to be interviewed without having received legal advice.  It was that encounter which resulted in the DVSA investigation resulting in the public inquiry.
(xv)	On 29 November 2012, a delayed prohibition was issued for a number of defects including a missing number plate on a trailer and an ABS dashboard warning light which was permanently on.  The vehicle was largely used on Immingham docks and the trip reports produced by the company to explain how it came to be that the vehicle was on a public highway were in the name of Pellantry Services Limited.
(xvi)	On 4 December 2012, a formal request was made (a s.99ZA request) for all digital data for the period 2 July 2012 and 5 August 2012.  TE Hope who had sent the request then made several telephone calls to the company when the data was not received by the deadline of 17 December 2012.  On each occasion, he was told that the relevant person was away and they would get back to him.  Eventually, someone employed by the company did call and having spoken to STE Watkins, an extension to 4 January 2014 was agreed.  The data which was then received concerned 440 journeys undertaken by eight drivers.  The following apparent offences were identified: between 12 June and 19 August 2012, Mark Gillespie had committed four offences of failing to take a qualifying break after 4.5 hours of driving; he had failed to use his driver card on one occasion; he had created three false records and had failed to produce one record.  Between 9 July and 8 August 2012, Michael McGuinness had failed to take a break after 4.5 hours on four occasions; there were three false records and he had failed to produce one record.
(xvii)	On 7 March 2013, a delayed prohibition was issued to a vehicle for a wing badly holed/corroded/missing/torn/split.  The note read that the wing was missing and not acting as a complete shield.  
(xviii)	TE Hope arranged to interview Mark Gillespie on 27 March 2013.  The interview was suspended after he had explained to Mr Gillespie the details of the driver hours infringements identified on analysis.  Mr Gillespie wished to take legal advice.  The interview was recommenced on 5 June 2013 during which Mr Gillespie gave various explanations for the offences identified.  In respect of two explanations, he stated that he thought that he had produced printouts at the time and had endorsed the back of each.  He agreed to produce the printouts within seven days.   The printouts were not produced either by Mr Gillespie or the company.
(xix)	Also on 5 June 2013, TE Hope had arranged to interview Michael McGuinness.  During the morning, TE Hope received a telephone call from John Potter, Transport Consultant, who informed TE Hope that Michael McGuinness was on holiday and would be unable to attend for interview.  The interview then took place on 1 July 2013.  Mr McGuinness was unable to give an explanation for some of the apparent infringements; he accepted that he had created a false record on one occasion and that in respect of three infringements, printouts would be available at the company’s office and they would be produced within seven days.  Neither Michael McGuinness or the company produced the documents.
(xx)	On 5 July 2013, TE Hope interviewed Kevin Lyons.  He was accompanied at the interview by Mark Gillespie who requested that he be permitted to sit in with Mr Lyons whilst he was interviewed.  His request was declined.  The salient questions and answers were:
Q	What position do you hold in the company?
A	Driver
Q	Are you a Director of the company?
A	No longer
Q	Was you (sic) a director of Marshland Logistics?
A	Yes
Q	When?
A	June 2 years ago, as a guess
Q	When did you finish?
A	Two months ago
Q	Who is the Director of Marshland Logistics now?
A	I don’t know, you would have to ask him for that
Q	Who is him?
A	John McGuinness
Q	Who is John McGuinness?
A	Who owns the wagons
Q	Did you sell the company to John McGuinness?
A	No, I just quit, packed in
Q	What about all the company assets, did you sell them?
A	No, I didn’t own it my name was just on the paper
Q	So you have never been a Director?
A	I was just on the paper in name that is all
Q	What papers did you sign?
A	I didn’t read them, he just gave me them and said sign this
Q	Who is he?
A	John McGuinness
Q	Has John McGuinness been carrying out the Director duties?
A	I couldn’t tell you, I am never there, I’m out all week at work, I don’t know who was doing what, I get in a wagon on a Monday and come back Friday, I don’t ask questions
Q	Who owns the vehicles and assets?
A	John McGuinness
Q	Have you ever owned the vehicles or assets?
A	No
Q	Who got you to act as Director?
A	My uncle, John McGuinness
Q	Why did he get you to do this?
A	Don’t know, just asked me
Q	Did you not question why?
A	No, I’m part of the family, he just ask me if I would do it, I said whatever.
Mr Lyons went on to state that he knew very little about the operations of the company.  
(xxi)	At the time of his interview, Mr Lyons was the sole director of the company and had been so since May 2007. It was not until 26 September 2013, that he resigned as a director and John McGuinness was appointed in his place.  These changes were not notified to the Traffic Commissioner.
(xxii)	On 22 November 2013, Michael McGuinness was convicted of knowingly making a false record and was fined £270 with costs of £430.  The conviction was not notified to the Traffic Commissioner.
(xxiii)	On 28 November 2013, the operator licence renewal form and checklist was sent to the company.  On 23 December 2013, Mr Lyons was re-appointed as a Director of the company and on 27 December, he signed the licence checklist declaration in his capacity as Director.  The checklist failed to state that John McGuinness was now a Director of the company.  
(xxiv)	On 15 January 2014, TE Hope completed his report to the Traffic Commissioner.  He concluded that it was apparent that John McGuiness was behind the company and that Kevin Lyons was a director in name only for reasons yet to be established.  TE Hope believed that Mark Gillespie was responsible for the day to day operations of the company as each time he had telephoned the company’s office, it was Mr Gillespie who had answered; it was he who had arranged the interviews and it was he who had taken Mr Lyons to his interview and requested that he be permitted to sit in.  TE Hope had been unable to speak to Ian Dicks and his calls to the office were not returned by Mr Dicks (the DTC accepted that it was unlikely that Mr Dicks received those messages).  TE Hope concluded that the company was “flaunting” drivers’ hours and tachograph regulations in that requested digital tachograph printouts had never been produced.  He did not believe the printouts had even been made in an attempt to hide the infringements identified. The company had made every effort to hinder and delay his investigation by means of not returning calls and being late for or not attending appointments.  He did not consider that the company was complying with its Statement of Intent with regard to the undertakings. 
(xxv)	By letters dated 17 January 2014, the company and Mr Dicks were informed of the public inquiry.  Mr Dicks resigned as Transport Manager in a letter of the same date.  In a further letter dated 30 January 2014, the company was informed that the DTC would be considering the links between John McGuinness and the company and his involvement with previous operator licences which had been revoked.  
(xxvi)	In his letters to the company and the Office of the Traffic Commissioner (“OTC”), Ian Dicks stated that he would not be attending the public inquiry as he was “innocent”.  His role as Transport Manager had been “insulted” and that he had now found that “appalling things” had gone on and as a result of the deceit of company officers,  he must now answer to the Traffic Commissioner.  He was shocked to receive TE Hope’s report as he had been kept in the dark about what had been going on.  When he first started to work for the company, he had worked in the same office as Kerrianne McGuinness (the Company Secretary) who he believed to be the owner of the company.  He had been surprised by her youth and found that the office was chaotic, with children running everywhere.  The filing system was “rubbish” at first.  He did everything properly and was unaware of any infringements.  His position changed within the company when Mark Gillespie started working with the company and was given the responsibility for logistics.  That left Mr Dicks with the maintenance and he continued to do all that was required of a Transport Manager, although he started to work from home.  As a result, he was unaware that TE Hope had been trying to contact him.  He was surprised that Mark Gillespie, who was in a higher position within the company than Mr Dicks, was “flouting” the drivers’ hours rules.  He had never met John McGuinness and had only seen Kevin Lyons once.  He was unaware that it was Mr Lyons who was the director of the company.  Mr Dicks informed the Traffic Commissioner that he intended to retire and would not be attending the public inquiry.
(xxvii)	On 3 February 2014, an “S” marked prohibition was issued for a semi trailer with a tyre worn beyond legal limits and cords damaged in the tread area.  
(xxviii)	In the same month, David and Lisa McGuinness (a son and a daughter of John McGuinness) sat the Transport Manager CPC examinations and passed in March.  Then on 20 March 2014, Kevin Lyons and John McGuinness resigned as directors.  On the same day, David McGuinness was appointed as the sole director and he informed the Traffic Commissioner of his appointment, although the Traffic Commissioner was not informed of the resignations of Kevin Lyons and John McGuinness.
(xxix)	On 21 March 2014, a maintenance investigation was conducted and was marked unsatisfactory (a copy of the report was not within the public inquiry brief).
(xxx)	On 1 April 2014, John Potter conducted a “tick box” audit of the company’s systems and on the same day two TM1 forms were sent to the OTC in the names of David and Lisa McGuinness who were nominated as proposed joint Transport Managers for the company.  
(xxxi)	On 17 April 2014, a delayed prohibition was issued for a wing problem on a semi trailer.  

3.	The public inquiry had originally been scheduled for 28 February 2014.  An application for an adjournment made by the company was granted as a result of Kevin Lyons and Mark Gillespie being on holiday and then as a result of the subsequent non-availability of TE Hope, the hearing did not take place until 7 May 2014, although ultimately Kevin Lyons failed to appear, claiming ill health although no evidence was produced to support that assertion.  Mr Dicks was also absent.

4.	The company, Michael McGuinness and Mark Gillespie (who had driver conduct hearings as a result of their drivers hours infringements) were represented by Marshall Glover, solicitor.  David McGuinness as sole Director and proposed Transport Manager of the company attended along with his sister, Lisa.  The DVSA was represented by TE Hope.

5.	TE Hope was asked questions by Mr Glover.  He did not think that he had been too harsh in stating that the company did not co-operate with him.  As for the drivers hours offences committed by Michael McGuinness and Mark Gillespie, most of them were time barred after six months and as a result of the delay in interviewing the drivers, summons’ could not be issued in respect of them.  Of the falsification offences which were not time barred, he only proceeded with one in respect of Michael McGuinness because he had admitted it.  TE Hope expressed his opinion to the DTC that the company had not been analysing the digital data on drivers hours at all as otherwise the printouts which he had requested would have been available and provided to him.  He conceded that “flouting” was perhaps too strong a word when describing the drivers’ hours offences identified in 2012 but there was certainly a “disregard” for the rules on drivers hours.

6.	David McGuinness told the DTC that he had been a driver for his father on and off for years.  The company had started with a contract hauling live chickens and some glass recycling work.  Now it was mainly the latter.  He was aware of the contents of the call up letters and had taken his CPC examinations to avoid the company’s drivers getting into trouble and to keep the running of the company in family hands.  His father had been a director and shareholder and it was a family business with four siblings and a cousin involved.  Whilst driving for the company, he had not had any particular interaction with Mr Dicks.  

7.	Since taking over the company on 1 April 2014, he had instructed John Potter to undertake an audit of the company’s systems and the issues identified in the audit were being addressed.  It was like starting off from scratch.  His sister, Lisa, would be overseeing maintenance and the two of them were dealing with drivers’ hours and he would be dealing with driver infringements.  Smartanalysis was to be introduced which would send information from the cab of the vehicles about driver defects every morning. The drivers had received driver training and had watched the VOSA DVD on daily walk round checks.  He would be circulating a Drivers Manual and TomTom tracking was to be installed in every vehicle.  He intended to continue to use Mr Potter for regular systems audits.  As for the most recent PG9 on 17 April 2014, the defect identified was a mud flap which had been ripped off when a vehicle became stuck in mud.  The PG9 issued on 3 February 2014 concerned a trailer which should not have been taken from the yard.  A VOR system was now in place.  As for failing to notify convictions to the Traffic Commissioner, he thought that this responsibility had been left to Mr Dicks.  He was aware that the drivers’ hours offences committed by driver Eldin in 2010 had been committed because the driver was having an affair.  The driver had been sacked.  David McGuinness assured the DTC that he would notify the Traffic Commissioner of all convictions and fixed penalty notices and that he would provide further training to drivers if required.  

8.	David McGuinness was asked about his father’s role in the business.  He replied “He hasn’t got one to be honest.  He is a shareholder but he’s retired as such, he doesn’t, he’s, he’s very rarely in the country .. he’s not in particularly well health, he’s diabetic ..”.  He could not say why the company had been incorporated as he was working elsewhere at the time.  His father had been a director from September 2013 to March 2014 and his father agreed with the ways he proposed to take the company forward. David McGuinness had not spoken to Kevin Lyons about his experiences as a director because David McGuinness had his own mind.

9.	David McGuinness confirmed that Mark Gillespie would continue to source work whilst undertaking some driving and that he too had recently taken his CPC examination.  David McGuinness was not aware that the operator licenses of either Pellantry Services Limited or John McGuinness Transport had been revoked.  He did not know why Kevin Lyons had been the sole director of the company.  He could not say what the company did to tighten up procedures following the convictions of the company and Eldin for drivers’ hours offences. He did not know that his father was a director of the company until his father asked him to take over stating, that he was retiring.  It was his father who had appointed Mr Dicks and had employed Gary Ashton to assist him.  Mr Ashton was a CPC holder and a driver who had left the company at the end of 2013.  David McGuinness agreed that Mr Potter’s audit was “woeful” but he was the new broom.  He also agreed that TE Hope’s report was “not good”.  He accepted that there was no response by the company between 2010 to 2012 when drivers’ hours infringements were taking place.  That would change with Smartanalysis.  He had been unable to look back at past drivers hours’ data because the computer was broken.  

10.	John Potter then gave evidence and readily admitted that the audit which took one day to produce and comprised of a “tick box questionnaire” was not the best of audits he had seen.  It was in fact “quite damning” in the sense that there were no procedures in place or certainly none that could be demonstrated.  He had revisited the company and Lisa and David McGuinness had found more information that would have made the audit “better looking”.  He could not gain access to any old data for tachograph analysis on the OPTAC system used by the company because the computer would not switch on.  No data from the previous twelve to fifteen months could be accessed despite attempts to do so.  Smartanalysis would change that.  Systems were being sorted out.  

11.	Mr Potter confirmed that he had called TE Hope in 2013 to inform him that Michael McGuinness was not available for interview.  He had received a call from the driver who wanted a chat about procedures and  he was then asked to call TE Hope to advise him of the driver’s non-availability.  He was not asked to assist the company any further at that stage.

12.	Lisa McGuinness told the DTC that her father had asked her to study for her CPC and she had done so.  She understood the role although it was easier studying the theory than the practice.  She and her brother looked at the tachograph information together and she was happy that compliance was good within the family; she was not so happy with non-family members.  The infringements that they were identifying were now small but they should not happen at all.  She had inherited a mess with difficult personalities but she could exert control.

13.	Michael McGuinness stated that he had driven with John McGuinness Transport and Pellantry Services Limited for six to eight years in total and he was unaware that those licences had been revoked.  He had not had the sort of relationship with his father in which they could talk.  He had never had any dealings with Mr Dicks although he had worked with the company from the outset.  It was Mark Gillespie who told him what to do.  As for the drivers’ hours printouts which he had said would be available during interview, he had asked Kerrianne for them but he was not given them and he did not inform TE Hope that they were not available.  

14.	Mark Gillespie stated that he had joined the company in June 2010; he got the work in and he gave it to the drivers.  He would only do a bit of driving himself for “John”.  When he was stopped by TE Shaw in August 2012, he had not been very clued up about drivers’ hours although he had a rough idea.  In respect of some of the apparent infringements, there was something wrong with the tachograph itself and he had told “John” and “John” had said to get it sorted out.  He used to hand his printouts to Kerrianne and he assumed that she had checked them.  However, he knew that the printouts he had handed into Kerrianne would not be found.  He then stated that he had in fact handed the printouts to Mr Dicks along with his driver defect reports.  In any event, he had not told Mr Dicks when he had been stopped although he did tell “John”.  He could not recall what “John’s” reaction was.  

15.	The DTC then dealt with finance.  All that needs to be stated for the purposes of this appeal is that the company was significantly and consistently overdrawn and that reliance was being placed upon a letter addressed to John McGuinness personally offering him an advance of funds for him to use as share capital.  David McGuinness explained to the DTC that finances were normally dealt with by his sister Kerrianne, but that she was in Cyprus, hence the letter being addressed to his father.  As for the bank statements, David McGuinness could not explain why regular and significant payments were being made to “McGJ Bus” or to “J McGuinness” and speculated they may be for his father’s fuel.  Neither was he able to explain further payments made to “D McG”.  He speculated that they were payments to his mother.   He agreed that he had given the DTC the impression that John McGuinness was ill and that he did not take part in the business and that he was abroad more than at home.  

16.	In his final submissions Mr Glover submitted that the issues “boiled down” to communication and a willingness to engage with DVSA and the Traffic Commissioner.  There had been a lack of notification and an unwillingness to engage and comply with DVSA.  But it was different now.  There were two Transport Managers who were determined to “get it right”.  They satisfied the professional competence requirement and they had been proactive in engaging Mr Potter.  There had been IT issues resulting in difficulties retrieving information from the OPTAC system but a new system was now in place.  Daily driver defect reporting was taken “to a new level” as a result of Smartanalysis and Tom Tom was being installed.  All of these features pointed to a new culture with a youthful regime taking charge.  An undertaking was offered that Mr Potter’s services would continue to be used.  The DTC was reminded that the two year history of annual test failures was lower than the national average.  

17.	In her written decision, the DTC determined that had the public inquiry concerned a new application made by David and Lisa McGuinness, they had the will and ability to run a compliant operation with continued input and assistance from Mr Potter.  However, the DTC had to consider the  company’s history since 2007 when it was incorporated and 2009 when it was granted a licence.  On the positive side, the prohibition history was not the worst she had seen and there were “only” two “S” marked prohibitions.  On the whole, the prohibitions were not for multiple defects and the MOT pass rate was above the national average.  Further, whilst TE Hope’s drivers’ hours investigation only covered a relatively short period of time, infringements were identified in respect of only two drivers.  His analysis of the most recent printouts produced at the hearing, revealed two to four minute periods of excessive driving.

18.	On the negative side, she found  the company was a vehicle by which the family, headed by John McGuinness, could continue operating against the background of the revoked licences of John McGuinness Transport and Pellantry Services Limited.  Kevin Lyons was a director in name only having been asked to take on the role by John McGuinness.  He was no more than a driver.  The application for an operator’s licence was an attempt to deceive the Traffic Commissioner from the outset and the DTC was in no doubt that had Mr Lyons added the following footnote to his signature on the application: “I have not read the application form, do not understand the undertakings above, am a director in name only, and will only be a driver within the operation”, the Traffic Commissioner would have refused the application.  The deceit was perpetuated when John McGuinness replaced Mr Lyons as a Director of the company in September 2013 without the Traffic Commissioner being notified.  Had he been, “warning bells would have clanged throughout the Office of the Traffic Commissioner”.  The DTC rejected the evidence of David McGuinness that his father was “in ill health, virtually retired and spent much of his time abroad”.  She further doubted the credibility of the evidence of David McGuinness and Michael McGuinness that they were ignorant of the fact that the previous licences with which their father had been involved had been revoked.  In coming to her conclusion that the licence was a “front”, the DTC further relied upon Mark Gillespie’s evidence about his dealings with John McGuinness during his work with the company; the fact that John McGuinness had been the sole shareholder of the company throughout and the letter sent to him from RBS confirming the availability of funds for him to inject into the company as share capital.  

19.	The other matters to be weighed in the balance on the negative side were the company’s long history of non co-operation with officers from VOSA/DVSA commencing with John McGuinness and the revoked licences with which he was connected and, the non co-operation continuing with the company as was evident from TE Hope’s report.  Prohibition notices in 2009 and 2010 failed to act as a catalyst for the retraining of drivers along with constant monitoring.  In 2011 when driver Eldin and the company were prosecuted for drivers’ hours offences, there was no evidence of training thereafter.  When serious drivers’ hours infringements came to light in August 2012, there was no evidence of an investigation having been triggered within the company or of a commitment to comply in the future.  The DTC would have expected to see evidence that by September 2012, full details of what had happened and why had been collated, along with the relevant printouts duly endorsed and filed properly so as to be readily available for VOSA to consider.  If some failures were due to vehicles being taken for a PMI, then service sheets and other supporting documentation should have been available with odometer readings endorsed upon them.  On the contrary, TE Hope was met with delay and obfuscation.  The Transport Manager was “shocked” to learn of the infringements and was unaware that anything had taken place which was untoward.  She was satisfied that there was no one in overall control.  Whilst John Potter was consulted in June 2013, his services were not used until 1 April 2014 despite the call up letter being sent out in January 2014.  There was no evidence that anything meaningful had been done prior to Mr Potter’s involvement.   All that Mr Potter’s services had been used for in 2013, was to delay a driver’s interview.  The DTC concluded “It would be naive of me to think that the family were unaware of the time periods for the bringing of prosecutions”.

20.	She was mindful of the Upper Tribunal case of Arnold Transport & Sons Limited v Department of Environment Northern Ireland (DOENI) NT/2013/82 and in particular paragraph 13 and concluded that the company fell within the second category of operator described therein.  The DTC was also mindful of the Upper Tribunal case of Paul Oven Transport Services Limited 2006/56 and concluded that paragraph 17 of that decision was equally applicable to the company’s position in that once allegations had been well supported by the evidence before a public inquiry, the evidential burden shifted to the operator to satisfy the Traffic Commissioner that the deficiencies in their systems have been made good and they had become fully compliant and/or of good repute as at the date of the hearing. 

21.	The DTC further considered the Upper Tribunal cases of 2002/217 Bryan Haulage (No.2) and 2009/225 Priority Freight Ltd & Paul Williams and concluded that whilst David and Lisa McGuinness meant well and were new brooms, John McGuinness did not.  He had a long history of deceit and failure to co-operate with VOSA and the OTC and a failure to ensure that others within his family did so.  Since the grant of the licence in 2009, it had been based on a lie.  Being mindful of the issue of deterrence, the DTC reached the conclusion that the eleventh hour improvements and promises to change were too little too late when balanced against the five years of deceit and non co-operation.  The company could not show good repute and it was necessary and proportionate to revoke the licence.

22.	As for disqualification, the DTC concluded that the operator’s licence should never have been granted in the first place and its operation had been “woeful”.  Despite the belated appointment of David McGuiness, the DTC had no hesitation in disqualifying the company from holding or applying for a licence indefinitely.  The DTC stepped back from disqualifying David McGuinness as his appointment had been recent and he had expressed a willingness to do things right.  At some stage in the future, he might wish to apply for a licence but he would need to show that his systems were in order and that he could comply with the undertakings.  He would need to demonstrate candour, which he had not as yet.  Kevin Lyons was disqualified for three years as a result of being prepared to be a director in name only although the DTC found him to be naive rather than fraudulent.  Finally, the DTC found that contrary to David McGuinness’ assertions about his father’s standing within the company (or lack of it), John McGuinness was very much a force to be reckoned with within the family business and it was his ethos of non co-operation and lack of supervision that had led to the problems.  He was the prime mover in the original application which put forward Kevin Lyons as a director.  The DTC determined that John McGuinness should be disqualified indefinitely in all traffic areas from holding or applying for an operator’s licence.

23.	At the hearing of this appeal, John McGuinness and David McGuinness attended.  Mr Nesbitt provided to the Tribunal a skeleton argument and a chronology for which we were grateful.  Mr Nesbitt began by considering the two main difficulties the company faced: firstly, the regulatory and compliance issues which he described as being relatively orthodox in their nature and secondly, the lack of clarity as to whom had been involved in the company in the past.  He submitted that the DTC’s decision had been too harsh and that on their own, the regulatory and compliance shortcomings were not sufficient to justify revocation.  Further, the lack of clarity as to whom had been involved in the company was not sufficient to tip the balance towards revocation.

24.	Mr Nesbitt took us through the chronology.  He submitted that the only evidence of previous regulatory non-compliance were the two “propose to revoke” letters and those confirming that the licences of John McGuinness Transport and Pellantry Services Limited had been revoked.  These, even with the trip reports in the name of Pellantry Services Limited did not indicate a failure to comply.  In fact the evidence pointed to both companies simply ceasing to operate.  Mr Nesbitt asked the Tribunal to make that finding.  However, in the absence of any evidence having been put before the DTC on this point and in the knowledge that companies may cease trading for many reasons, we refused.  In any event, numerous letters had not been responded to.

25.	Then there was the maintenance investigation in January 2010 which was marked unsatisfactory.  Mr Nesbitt submitted that it appeared not to be that bad (although the single document relating to it in the appeal bundle was illegible).  The Tribunal pointed out that in any event, there was no evidence that the company had written to the OTC following this investigation to inform the Traffic Commissioner about what had gone wrong with the company’s systems and the steps that had been taken to rectify the position.

26.	Then in August 2012, the roadside check involving Mark Gillespie prompted the drivers’ hours investigation.  Whilst TE Hope was required to make a number of calls to remind the company of its duty to produce the necessary data, the company did engage and the overall findings of TE Hope revealed two “bad apples” amongst the drivers.  Mr Nesbitt accepted that those two “bad apples” then remained in post (one scheduling the journeys of all the other drivers).  He submitted that it was not the case that training had not taken place or that the company did not have any systems.  It had the OPTAC system and Mr Ashton analysing the data.  Mr Nesbitt conceded that there was no positive evidence before the DTC that the system was being used and that the company was being compliant at this stage.  He reminded the Tribunal that genuine attempts were made to retrieve the data when Mr Potter was consulted on 1 April 2014, but we note that in the absence of available documentation for the past twelve to fifteen months which should have been located in drivers files or elsewhere, it must have been the case that no downloads had in fact taken place in that time.  Neither was there any evidence of analysis of the data.

27.	Mr Nesbitt referred to the company’s better than average annual test pass rate and the outcome of Mr Potter’s report.  Whatever misgivings there may be about the detail and depth of that audit, it having taken one day to complete, it resulted in an overall marking of 71% with many of the red markings being for minor failings.  Mr Nesbitt described the red markings as a “harsh counsel of perfection”.  Mr Potter had confirmed the changes that had taken place as well as those which were proposed, for example, Smartanalysis and Tom Tom tracking.  

28.	It was submitted by Mr Nesbitt that whilst the DTC acknowledged that this was not the worst compliance case she had dealt with, the fact that the DTC then went onto describe Mr Potter’s audit as “depressing” made it clear that the DTC was not keeping the overall compliance picture in mind.  She further incorrectly recorded that Mr Potter had agreed with her that his audit was “depressing”.  We pointed out to Mr Nesbitt that whilst it was not put to Mr Potter that his audit could be so described, he did describe his audit as being “quite damning in a sense”, which is equally negative.  Mr Nesbitt concluded his submissions upon past and future compliance by submitting that the overall compliance picture was not such as to have warranted revocation in itself and was disproportionate.  

29.	As for the DTC’s conclusion that the company was a “front” for John McGuinness, that conclusion was wrong.  John McGuinness was the head of the family with wide ranging business interests and had a role to play in determining who the officers of the company should be.  If there were no “black marks” against him in regulatory terms, then there was nothing wrong with John McGuinness influencing the appointment of directors.  It was unfortunate that the correspondence concerning John McGuinness Transport and Pellantry Services Limited was not dealt with by the company at the public inquiry.  Kevin Lyons “was wrong” when he said that he was a director in name only.  He simply failed to fulfil his functions as a director and should not have assumed the role.  Mr Nesbitt asked the Tribunal to speculate that “perhaps” the appointment of John McGuinness was an attempt to address those failings and he would not have done that if he was being deceitful.  Mr Nesbitt asked the Tribunal to find that in fact there was some confusion as to roles within the business evidenced by Mr Dicks assertion in his correspondence that he thought that Kerrianne McGuiness was in fact the owner of the company.  

30.	Mr Nesbitt described the “tone” of the DTC’s decision concerning John McGuinness as being “very negative” and the finding that the company was being used as a “vehicle” so that the family haulage business could continue as “strongly negative”.  Further, the DTC was wrong to reject the evidence of David McGuinness that his father was “in ill health, virtually retired and spent much of his time abroad” as there was no evidence to the contrary.  Mr Nesbitt concluded that the history of this now compliant company was not such as to justify revocation, which was a disproportionate response.

31.	As a discreet point of law, Mr Nesbitt submitted that on two occasions in her decision, the DTC had concluded that the company had failed to satisfy her of its good repute.  Mr Nesbitt argued that in making that determination, the DTC had reversed the legal burden of proof which remained on the DTC at all times.  He referred to the Court of Appeal decision of Muck It Ltd (supra) and in particular paragraphs 63 and 69.  Mr Nesbitt acknowledged the Tribunal decision of Paul Oven Transport Services Limited (supra) but submitted that the core principle remained that even where there is clear and strong evidence on an issue adverse to an operator, the burden on the operator is evidential only and once evidence is given by an operator, however poor that evidence was, the legal burden remained on the Traffic Commissioner to analyse the evidence and determine whether he or she was satisfied that regulatory action was necessary and proportionate.  In this case, where it could not be said that there was a complete absence of systems in place and as a result, revocation was not a foregone conclusion, the DTC’s approach to the evidence was crucial.  In reversing the burden of proof, the DTC’s decision was fundamentally flawed and could not stand.  Mr Nesbitt submitted that the matter should be remitted for a rehearing.

32.	Dealing with this last point first, this was an unusual public inquiry.  The company had not been compliant throughout its history but had late in the day taken steps to put systems in place in order to demonstrate that at the date of the public inquiry, the company was capable of compliant operation.  The DTC did not conclude that maintenance was a real issue and indeed characterised it as a positive feature in the balancing exercise.  Her approach was the same in relation to drivers’ hours infringements. The real issues were the evidence of “fronting”; the identification of the moving force behind the company; the links between the revoked licences and the company’s licence; the lack of evidence of compliance in the past and a lack of co-operation with VOSA/DVSA.  

33.	The evidence that Kevin Lyons was a director in name only and had played no part in the control or administration of the company whilst purporting to be the sole director was overwhelming (not least by reason of Mr Lyons’ own admissions in interview).  There can be no doubt that the grant of the operator’s licence was based on a deceit as described by the DTC.  The evidence that it was John McGuinness who had caused Mr Lyons to accept the appointment and sign the application for an operator’s licence was equally overwhelming.  The irresistible conclusion was that John McGuinness was the perpetrator and driving force behind the deceit.  The fact that two licences associated with John McGuinness were revoked within the same year as the grant of the company’s licence as a result of failures to respond to correspondence concerning the identity of a Transport Manager in one instance and arrangements for a maintenance inspection in the other, gave rise to an irresistible inference that the company was incorporated and a new licence applied for in the expectation or in the event that one or both of those operations would fail.  A further irresistible inference was that the company was a vehicle to enable John McGuinness and his family to continue operating within the haulage industry without the scrutiny that  compliant operators are required to undergo when applying for an operator’s licence.   Further, when John McGuinness did become a Director for a short period, that change was not notified to the Traffic Commissioner and when the licence checklist had to be signed by a Director, rather than John McGuinness undertaking that function as sole Director, Kevin Lyons was re-appointed and he then signed the checklist which perpetuated the deceit by not mentioning that John McGuinness was also a Director.  Taking the evidence as a whole, the irresistible inference was that John McGuinness was the driving force behind the company.

34.	Obtaining an operator’s licence by deceit and then using deceit to mask the true controlling mind or minds of the company strikes at the heart of the regulatory system and will inevitably result in a finding that good repute is lost and that revocation is a proportionate and inevitable outcome.  It is clear and obvious that to avoid such findings, evidence is required from the operator to refute the irresistible inferences to be drawn from the matters set out in paragraph 33 above.  No evidence was put before the DTC as to why the company was established; no explanation was given as to why there was a lack of co-operation with VOSA and the OTC prior to the licences of John McGuinness Transport and Pellantry Services Limited being revoked; no explanation was given about the role that John McGuinness played within this company.  Indeed it was accepted by David McGuinness that the impression he had given to the DTC was that his father had little if any involvement in the company (an impression which the DTC rightly rejected); no one was called by the company to give evidence about the history of the company and the compliance systems which were in place throughout the life of the licence or alternatively why there was no evidence that systems were in place.  In short, the company failed to provide any substantive evidence to the DTC upon the central issues other than the up to date picture in relation to present compliance and future intentions.  Whilst the DTC used words in her decision which imply that she had reversed the burden of proof, she had correctly identified in her decision that the company had an evidential burden to discharge.  We are satisfied that her phraseology is understandable in the face of evidence which gave rise to irresistible inferences which justified a finding of loss of repute and which clearly called for explanatory evidence from the company in order to rebut them.  The DTC analysed the evidence, she undertook a balancing exercise and her conclusions are well supported by the evidence.

35.	The Tribunal does not agree that in referring to Mr Potter’s audit as “depressing” or in wrongly attributing that description to Mr Potter, the DTC had mischaracterised the overall substantive compliance picture.  This was a bad case in which there was little if any evidence of regulatory systems being in place or utilised up until 1 April 2014.  Whilst the OPTAC system was present on a computer within the company’s office, there was no evidence it had been used for a considerable period of time.  However, the DTC clearly felt that that David and Lisa McGuinness along with Mr Potter’s assistance could run a compliant operation had she not also found that the company was a “front”, it’s licence had been obtained by deceit; it had failed to co-operate with VOSA and it had failed to demonstrate regulatory compliance in the past with evidence of systems in place and in operation.  We are satisfied that the DTC’s approach in relation to compliance in the absence of any involvement of John McGuinness was fair and balanced.  She indicated that David McGuinness could consider making an application for a licence in the future providing he was able to satisfy the Traffic Commissioner that he could be trusted.  We reject Mr Nesbitt’s submission that the DTC was overly harsh or negative in her assessment of either the company or of John McGuinness.  

36.	The Court of Appeal decision in Bradley Fold Limited & Peter Wright v Secretary of State for Transport (2010) EWCA Civ 695 makes it clear that for the Tribunal to overturn the DTC’s decision on the facts, we must be satisfied that reasoning and law require us to take a different view to that of the DTC.  We do not find that we can or should take a different view in this case.

37.	Turning now to John McGuinness, Mr Nesbitt submitted that the order of disqualification was too harsh and should be set aside.  His client’s regulatory history was “not bad”.   He had not attended the public inquiry to give evidence because he had ceased to be a Director of the company as at the date of the hearing (although he was a Director when the call up letter was received) and he did not see the need to attend.  In the alternative, it was submitted that a shorter period of disqualification would be proportionate.  

38.	John McGuinness was responsible for causing Kevin Lyons to agree to becoming a Director in name only and was responsible for the deceit which resulted in the licence being granted.  He was involved with two licences which had been revoked for non-compliance and non co-operation.  We do not agree that against that background, disqualification was too harsh.  The issue is whether the order should be indefinite or for a finite period.  The Tribunal is now aware that John McGuinness chose not to attend the public inquiry held by the DTC when he had been the sole shareholder and driving force behind the company and when he was a Director of the company when the call up letter had been sent out.  He was aware that his involvement in the company and his past regulatory history were going to be considered.  We are satisfied that his failure to attend the hearing was a cynical attempt to avoid having to answer difficult questions thereby thwarting the legitimate inquiry of the DTC into a company he had set up and then used to continue operating thus avoiding the rigorous and close scrutiny that honest and compliant operators readily submit to when making an application for a licence.  We are satisfied that against that background, we have no hesitation in stating that the order of indefinite disqualification is neither wrong nor disproportionate.  If it became generally known that an operator with the background of John McGuinness had not been disqualified indefinitely, then that would tarnish the reputation of the licensing system as there is no place for dishonest operators within a regulated industry.  If at some future date, John McGuinness feels that he is able to persuade the Traffic Commissioner that he has rehabilitated and can be trusted in the future, then he can apply to have the order set aside.  

39.	In the result, these appeals are dismissed.

Her Honour Judge J Beech
27 August 2014