Junction 4 Pallets Ltd v A Delaney, Environmental Health Officer: 1800174/2023
REASONS
[1]The appellant appeals against the prohibition notice dated the 20th of December 2022 number WK / 222022891 issued by the respondent.[2]Following a preliminary hearing on the 30th of June the matter was listed before me on the 5th and 6th of October 2023 to determine a preliminary issue as to jurisdiction namely whether the respondent had authority to issue the above notice under the Health and Safety (Enforcing Authority) Regulations 1998 (the regulations).Law
[3]The relevant legislation is as follows Section 18 Health and Safety at Work Act 1974 Case Number: 1800174/2023 ph outcome re case management 2 Nov 2014 version Health and Safety (enforcing authority) regulations 1998 and in particular regulation 3(1) and Schedule 1 (1). HSE operational guidance OG 00073 and 00075[4]I have not set out in full the above material as both parties were represented by council and a bundle containing this was before the tribunal .[5]The key question to be determined is what is the main activity carried out at the appellant site at Durham Lane Amthorpe Doncaster (the Durham Lane site) and does it fall under Schedule 1 of the regulations.[6]Where the main activity carried on… is specified in Schedule 1 the local authority for the area in which those premises are situated should be the enforcing authority.[7]It is accepted that the City of Doncaster is the appropriate local authority responsible for the site if Schedule 1 applies. It is also accepted that no transfer or assignment of powers has been made between the respondent local authority and the health and safety executive ( HSE ) under regulations 5 or 6.[8]The HSE is the enforcing authority by default unless Schedule 1 applies[9]Schedule 1(1) provides that where the main activity is the sale of goods or the storage of goods for retail or wholesale distribution then the local authority will be the enforcing authority[10]The guidance OG00073 considers further the sale and storage of goods for retail or wholesale distribution, the guidance OG 00075 give guy gives guidance on the concept of main activity.Evidence
[11]The Tribunal had before it and agreed bundle of documents paginated and indexed comprising 97 documents together with a separate bundle containing key legislation and guidance documents[12]The Tribune has heard from the following witnesses who each gave evidence and were cross examined having produced witness statements which were taken as read.[13]The witnesses were - Mr Michael Kelly Managing Director of the appellant - Mr Andrew Dana Delaney the respondent - Daniel Wheatman formerly a senior environmental health practitioner with Doncaster City Council[14]I found each written as to be credible and reliable although I gave little weight to the evidence of Mr Weetman as he has had no dealings with the Appellant since 2015 and had no part in the enforcement notice. In respect of the activities on the site I found Mr Kelly to be the most reliable of the witnesses having everyday knowledge of the business[15]We also viewed video footage of the site taken by a drone Case Number: 1800174/2023 ph outcome re case management 3 Nov 2014 versionFindings of Fact
[16]Having considered all the evidence both oral and documentary I make the following findings of fact on the balance of probability. Some of my findings are set out in my conclusions in an attempt to avoid unnecessary repetition and conversely some of my conclusions are set out in the findings.[17]The appellant operates a pallet business from a number of sites including that at Durham Lane.[18]The appellant has a website which describes the Doncaster Used Yard (i.e., the Durham Lane site) as the first of our used yards located just up the road from our production facility, 180,000 square feet of space for inspecting, grading repairing and storing our large stock of pallets. (emphasis mine).[19]The website also states ‘every day we recover excess used pallets from major retailers and SMEs alike which are taken to one of our 3 strategically located service centres for inspection, repair and grading. At all three sites we keep substantial stocks of popular use pallet types including euros and the UK standards - we also keep a smaller stock of less popular palette types so contact us regarding your specific requirements.[20]Mr Kelly agrees that this is what their website says and explains that the purpose of the website statement is to act as a sales pitch to get the message across to customers and potential customers that the appellant is the place to go to buy pallets.[21]In answer to a question from me, to the effect that of all the activities carried out on the site which was the most important to the business financially, Mr Kelly responded by stating firstly the sale of pallets[22]He went on to tell me that servicing customers own pallets was at this stage a growth area but I have inferred from his explanation that although it is a developing part of the business it is not a major or core business.[23]HeHe also said analso said and I accept that they had to fid I accept that they had to find a way of nd a way of disposing of the disposing of the irreparable pallets which they chip and sell onirreparable pallets which they chip and sell on,, otherwise they would be otherwise they would be drowning in wood chipdrowning in wood chip.. I take from this that chipping is an incidental but I take from this that chipping is an incidental but necessarily evil in the in the businessnecessarily evil in the in the business..[24]FFrom this arom this and from the statistics I find from the statistics I find that the nd that the main activity on the site is the main activity on the site is the sortingsorting,, gradinggrading,, repair and storage of pallets to sell on wholesalerepair and storage of pallets to sell on wholesale..[25]InIn his statemhis statemeent Mr Kelly gave a list of the operations carried out by the nt Mr Kelly gave a list of the operations carried out by the company. Hecompany. He agreed agreed ththat at pallet desigpallet designn,, manufacturer manufacturer of neof neww palletspallets, , heat heat treattreatmentment,, managing customers pallmanaging customers palleet networkst networks,, sale of new pallets wsale of new pallets were ere rarely rarely if ever carried out at Durham Laneif ever carried out at Durham Lane..[26]EEssentially at Durham Lane the operation comprises the manual sorting of ssentially at Durham Lane the operation comprises the manual sorting of every every pallet intopallet into type and conditiontype and condition,, ppaalletsllets in gooin good order d order go into stockgo into stock and and are are stored for resalestored for resale; ; damagedamagedd ppallets,allets, which are judged to be which are judged to be reparablereparable are are repaired and then stored for resalerepaired and then stored for resale;; ththose judged ose judged to bto bee beyond repair are turned beyond repair are turned into woodchipinto woodchip..[27]In In his statement his statement Mr Kelly Mr Kelly gives the sgives the statistics and tatistics and has has pproduced a spreadsheetroduced a spreadsheet showing a breakdown of the used pallets coming into the site showing a breakdown of the used pallets coming into the site and and I set I set out out Case Number: 1800174/2023 ph outcome re case management 4 Nov 2014 version below in full paragraph 6.7 of his evidence in chief below in full paragraph 6.7 of his evidence in chief.. DuringDuring tthe course of the he course of the hearing other statistics were introducedhearing other statistics were introduced andand Mr VanMr Vannn in his submission sin his submission sought ought toto persuade me that Mr persuade me that Mr KellyKelly’s original statistics required some substantial ’s original statistics required some substantial adjustmentadjustment. . However,However, I rely on Mr Kelly’s evidence in chief but note the I rely on Mr Kelly’s evidence in chief but note the followingfollowing;; a that about 3.8% of pallets required alteration to fit customer expectations a that about 3.8% of pallets required alteration to fit customer expectations b that the pal b that the pallets lets bbeelonging to Amazon longing to Amazon and some other service clients are not and some other service clients are not included in this these statistics and that their stock equals about 25% of the included in this these statistics and that their stock equals about 25% of the pallets on site pallets on site c c that the percentagthat the percentage e of pallets chipped of pallets chipped in that paragraph in that paragraph isis likely to be an likely to be an underestimateunderestimate..’’[28]Paragraph 6.7 of MrParagraph 6.7 of Mr KellyKelly’’ss statement reads as followsstatement reads as follows ‘‘AsAs set out above the set out above the spreadsheet at document 22 of the bundle shows that over the course of 20spreadsheet at document 22 of the bundle shows that over the course of 202222 32% of the pallets handled b32% of the pallets handled by the Doncaster Yard required repairing before they y the Doncaster Yard required repairing before they could be distributed to customerscould be distributed to customers,, a further minima further minimum of 313731 wum of 313731 were ere chippedchipped. . OOut of the total of 1369 191 palletsut of the total of 1369 191 pallets processedprocessed,, 54%54% ((433861 433861 + + 313731 313731 = = 747592747592)) therefore required repair sertherefore required repair servicing remanufacturevicing remanufacture or chippingor chipping. Just . Just 46%46% ((1369 19 1 1369 19 1 –– 7 47592 7 47592 == 621599621599)) of the pallets that came of the pallets that came through the through the DoncastDoncaster Yard was serviceable upon receipt and were ready for redistributioner Yard was serviceable upon receipt and were ready for redistribution without any repairwithout any repair, s, servicingervicing,, remanufacture or chippingremanufacture or chipping.. 100 percent of the 100 percent of the pallets coming into the yard had to be assessed to determine their conditionpallets coming into the yard had to be assessed to determine their condition’’..[29]MMr Kelly estimates that aboutr Kelly estimates that about 33% of the pallets arriving into the yard have to 33% of the pallets arriving into the yard have to be chipped he tells us that 46% are ready for sale in the condition that they be chipped he tells us that 46% are ready for sale in the condition that they arrive that leaves about 30% of the pallets which arrive that leaves about 30% of the pallets which require reprequire repair beforeair before being being stored stored as stock as stock for onward distributifor onward distributionon i.e.,i.e., salsalee.. It aIt appears that the ppears that the overwhelming percentage of pallets are in overwhelming percentage of pallets are in act sold act sold on on and that is the core and that is the core businessbusiness..[30]MrMr Kelly explained that some customers have special requirements which Kelly explained that some customers have special requirements which necnecessitate the appelessitate the appellant lant mmaking adaptations to the palletsaking adaptations to the pallets. As. As described by described by Mr Mr Kelly I find this amounted to minor alterations such as the addition or removal of Kelly I find this amounted to minor alterations such as the addition or removal of aa ’’footfoot’’ and do not amount in my view to a and do not amount in my view to a manufacture or a transformation of a manufacture or a transformation of a pallet pallet and in anand in any y event,event, this workthis work amounts to amounts to justjust 3.8% of the pallets3.8% of the pallets which I find which I find consticonstitutes an incidental activitytutes an incidental activity..[31]AAnother incidental activitynother incidental activity,, not part of the core business but an irritant to Mr not part of the core business but an irritant to Mr Kelly,Kelly, requires the appellant to store and then return to renrequires the appellant to store and then return to rental companital companies pallets es pallets which which belong to them and become mixed up with other pallets cobelong to them and become mixed up with other pallets coming into the ming into the yardyard. .[32]MrMr Kelly also told us Kelly also told us that a growth area but as yet that a growth area but as yet still still a relatively small part of a relatively small part of the business is the servicing of pallets belonging to others and in partthe business is the servicing of pallets belonging to others and in particulaicular to r to their largestheir largest client Amazont client Amazon. T. This appears to be a new but growing elhis appears to be a new but growing element of ement of the business in which the appellant sothe business in which the appellant sortrtss,, repairs and redistributes pallets repairs and redistributes pallets belbelonging to Amazon and others onging to Amazon and others back to their own sites asback to their own sites as directed.directed. Case Number: 1800174/2023 ph outcome re case management 5 Nov 2014 version[33]AsAs I I understand it this is a understand it this is a service provided service provided by the appellant for a fee as Mr by the appellant for a fee as Mr Kelly said that this woKelly said that this would have an adverse financial impact if it were to be lost to uld have an adverse financial impact if it were to be lost to the sitethe site. T. The pallets never belonged to the appellant and are not for resale by he pallets never belonged to the appellant and are not for resale by themthem. Mr. Mr Kelly Kelly estimates estimates that 20% of the that 20% of the ppalallleets ts going thrgoing through the site belong ough the site belong to Amazon and are processed in thisto Amazon and are processed in this way.way. AAss way.way. I understand it the statistics I understand it the statistics given by Mr Kelly a paragraph 6.7 of his statement do not include the Amazon given by Mr Kelly a paragraph 6.7 of his statement do not include the Amazon palletspallets. . I accept Mr Kelly’s evidence that this servI accept Mr Kelly’s evidence that this servicing eleicing element is financiament is financially lly important to the businessimportant to the business but I find it falls short but I find it falls short of the main activity.of the main activity.[34]MrMr Delaney has frankly admitted that until the Delaney has frankly admitted that until the appellants had appellants had lodged their lodged their appeal,appeal, he gave no consideration as to whether his jurisdiction might be in he gave no consideration as to whether his jurisdiction might be in issueissue.. He sayHe says hs his note boois note bookk, which has not been disclosed, which has not been disclosed, , containscontains nothing of nothing of relreleevvance to the preliminary point ance to the preliminary point under consideration today. under consideration today. HeHe also generally also generally accepted Mr Kelly’s account of accepted Mr Kelly’s account of how the Durham Lane yard operated however I how the Durham Lane yard operated however I share his view that share his view that tthe use of hanhe use of hand tools to repd tools to repair pallets or breaking down of air pallets or breaking down of the damagethe damagedd pallets was pallets was not the main work activity on site but merely an not the main work activity on site but merely an activity that supported the main activity of wholesale distractivity that supported the main activity of wholesale distribution of ibution of secondsecond--handhand pallets directly from the site and the repair station pallets directly from the site and the repair station serveservess the actthe activity of onward ivity of onward distributiondistribution ConclusionsConclusions..
[35]II find that tfind that the main activity at the Durham Lane site falls under schedule 1 he main activity at the Durham Lane site falls under schedule 1 paragraph paragraph 11 of the of the 1998 1998 regulations regulations and is the sale and the storage of pallets and is the sale and the storage of pallets for wholesale for wholesale distribution.distribution.[36]WWholesale is sholesale is set out in the get out in the guidance as the resale uidance as the resale ((sale without sale without transformation)transformation) TrTranansformation according to the Oxford English dictionary means a mark sformation according to the Oxford English dictionary means a mark changed in form nature or appearancechanged in form nature or appearance. The. The kind of minor change described by kind of minor change described by Mister Kelly as remanufacturing for shortMister Kelly as remanufacturing for short of transformatiof transformation and applies to less on and applies to less than 4% of the panels in any eventhan 4% of the panels in any eventt..[37]ReRepairing pallets for resale is in my view not a transformationpairing pallets for resale is in my view not a transformation. T. Thhe pallet arrives e pallet arrives as a broken pallet and is sold on as a palette in good repairas a broken pallet and is sold on as a palette in good repair. The. The repairrepair may may well transform the well transform the value of the itevalue of the item as Mr Vanm as Mr Vannn suggests but the goods suggests but the goods i.e.,i.e., the the pallets pallets reremain main the same objectthe same objectss and are not themselves transformedand are not themselves transformed..[38]I do not acI do not accept the appellant’s argument thcept the appellant’s argument thatat broken pallets are equivalent to broken pallets are equivalent to part finished goodspart finished goods. . Some Some are used and broken gooare used and broken goods which the ds which the appellant appellant makes ready for sale by repairing makes ready for sale by repairing but but looking looking at the examples in the guidance I at the examples in the guidance I make a make a distinctiondistinction between between ddamaged goodsamaged goods and part finished goods. and part finished goods. Considering the Considering the guidance,guidance, I I infer that hainfer that hadd the pallets come in fthe pallets come in from the rom the appellanappellantt’’ss manumanufacturing sifacturing site at te at ‘‘the farmthe farm’’ to be heat treated at the Durham to be heat treated at the Durham Lane sLane site or to be stored at Durham Lane pending return to ite or to be stored at Durham Lane pending return to ‘‘the farmthe farm’’ for heat for heat treatment they might constitute part finished goodstreatment they might constitute part finished goods. . Similarly,Similarly, if theif they arrived in y arrived in kit form at the Durham Lane site kit form at the Durham Lane site to be put tto be put together there as pallets then they ogether there as pallets then they would arrive as part would arrive as part finished goodsfinished goods. . However,However, in my view what arrives on the in my view what arrives on the site are fully formedsite are fully formed pallets which maypallets which may,, in some casesin some cases, , require repair and in require repair and in some casome cases disposalses disposal,, if beyond repairif beyond repair,, but these are notbut these are not part finipart finished goodsshed goods i.e.,i.e., goods requiring constructiongoods requiring construction or finishior finishing in some way.ng in some way. Case Number: 1800174/2023 ph outcome re case management 6 Nov 2014 version[39]AAs I have already described I find that the chipping operation to be a secondary s I have already described I find that the chipping operation to be a secondary activity to the main activity of selling palletsactivity to the main activity of selling pallets.. I note that in the website I note that in the website description thedescription the palpalletslets arare described as being e described as being in in stockstock and this wouldand this would reinforce reinforce mmy view that the y view that the pallets pallets stored on site are stored there stored on site are stored there as stock as stock for the purpose for the purpose of saleof sale..[40]CChipping the pilots enables the appellant to dispose of the rubbish where the hipping the pilots enables the appellant to dispose of the rubbish where the pallets are otherwise irpallets are otherwise irreparabreparablele. T. The appellant may be able to sell the he appellant may be able to sell the chippings and chippings and that contributes to the financial viability of the Durham Lane site that contributes to the financial viability of the Durham Lane site but I find that Mr Kelly regards that as a necessary evil rather than a core part of but I find that Mr Kelly regards that as a necessary evil rather than a core part of the business and I infer that he would rthe business and I infer that he would rather bather bee repairing pallets than chipping repairing pallets than chipping themthem. T. This may well behis may well be processing and transformative but I find it to be an processing and transformative but I find it to be an incidental activity and not part not a main activityincidental activity and not part not a main activity of the site but incidental to the of the site but incidental to the main activity.main activity.[41]SServicing pallets for clients such aservicing pallets for clients such as AmazonAmazon is a growing part of the business is a growing part of the business but is yet to atbut is yet to attain tain the status of main activity on this site and is the status of main activity on this site and is still still a relatively a relatively small percentage small percentage (20 %(20 %) ) of the pallets of the pallets passing through.passing through.[42]I find the main activity on the site to fall within I find the main activity on the site to fall within SSchedule chedule 11(1)(1) of tof the reguhe regulations lations and to lie within the jurisdiction of the local and to lie within the jurisdiction of the local authority that is authority that is the City of Doncaster the City of Doncaster CoCouncil and its officer Andrew Delaney was empowered to issue the notice uncil and its officer Andrew Delaney was empowered to issue the notice pursuant to section 19 of the pursuant to section 19 of the HHealth and ealth and SSafety at afety at WWork ork AcAct 1974 reference WK t 1974 reference WK 222220228912022891..