Anglorom Trans (UK) Ltd, Re [2004] EWCA Civ 998

Case No C1/2004/1076

[2004] EWCA Civ 998

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE TRANPORT TRIBUNAL

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Friday, 30 July 2004

Before

LORD JUSTICE PILL

LORD JUSTICE JONATHAN PARKER

MR. JUSTICE LADDIE

IN THE MATTER OF ANGLOROM TRANS (UK) LIMITED

AND IN THE MATTER OF PARAMOUNT KITCHENS LIMITED

AND IN THE MATTER OF THE GOODS VEHICLES (LICENSING OPERATORS) ACT 1995

(Transcript of the Handed Down Judgment of

Smith Bernal Wordwave Limited, 190 Fleet Street

London EC4A 2AG

Tel No: 020 7421 4040, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

Mr. Tim Nesbitt (instructed by Rothera Dowson) for the Appellants, Anglorom Trans (UK) Limited and Paramount Kitchens Limited

Mr. Alan Maclean (instructed by the Treasury Solicitor) for the Secretary of State for Transport (intervening)

Judgment

[1]This is an appeal from a decision of the Transport Tribunal dated 21 April 2004. That decision was given on an appeal from the decision of the Traffic Commissioner for the Eastern Traffic Area given on 29 October 2003. The appeal concerns the system for licensing of road haulage operators under the Goods Vehicles (Licensing of Operators) Act 1995 (the “Act”).

[2]The Act puts in place a regime which governs the regulation of road haulage operators in the United Kingdom. In particular, it provides for the issue and revocation of licences. The regime is administered by Traffic Commissioners in regional traffic areas. Without a licence, it is a criminal offence to use a goods vehicle for haulage operations. The Traffic Commissioners can not only revoke licences, they can go further and disqualify an operator from holding licences either for a defined or indefinite period in the future.

BACKGROUND FACTS

[3]Three closely related companies, Anglorom Trans (UK) Ltd (“Anglorom”), Teams Kitchens Ltd (“Team Kitchens”) and Paramount Kitchens Ltd (“Paramount”) are haulage operators. They are each standard international licence-holders under the Act. As the Traffic Commissioner said in his decision, all three are under the control of Mr Anchise Ballestrieri. They are all said to use the same operating centre in Basildon and to employ the same transport manager, Mr Brian Briggs.

[4]Mr Ballestrieri and his family have a business in the design, production and distribution of kitchens and kitchen equipment. Apparently Mr Ballestrieri purchased Paramount, which is located in Basildon, in 1989. It manufactured and sold kitchens. However the manufacturing part of the business was brought to a halt when its factory was destroyed by fire in 1997. Prior to that, in 1992, a so-called restricted licence was obtained by Paramount for two vehicles which were engaged at that time in collecting kitchen components from Italy. Since then the kitchen business has expanded considerably. As mentioned above, Paramount now has a standard licence just like its two sister companies. Kitchen furniture imported from Italy continues to feature heavily in Paramount’s business. Goods are supplied to other kitchen retailers in Britain. There are also joint ventures in Turkey and Romania, besides which there are showrooms located in India, Pakistan, Turkey and North Cyprus. As the Traffic Commissioner said, it is a substantial undertaking.

[5]The Traffic Commissioner said in his decision:

“8. Team Kitchens obtained a standard international operator’s licence, authorising ten vehicles and fifteen ‘trailers, in February 1999. 9. Anglorom was formed in 1999 in association with two Romanian nationals, father and son both named Constantin Mihai. These two gentlemen operate the Romanian sector of the business for which they utilise the services of drivers supplied and paid by another Romanian company, Grills, owned by Mihais. Grills and an Italian company carry out maintenance and safety inspections. Typical journeys, covering 10,000 kilometres, involving multiple collection points, can take up to a month. Double manning features as well as relieving drivers who have been away from base for extended periods. This means there is well in excess of the simple ratio of one driver per vehicle.”

[6]Under the licences held by the three companies, a total of 48 vehicles and 75 trailers are authorised. Anglorom’s licence is the largest, authorising 31 vehicles and 50 trailers. Apparently Team Kitchens undertakes journeys within the United Kingdom only. The other two operate internationally.

[7]Anglorom applied to increase its vehicle authorisation. Vehicle examiner Gleeson attended at the Basildon premises on 8 May 2002 to assess its suitability for the increase sought and to examine divers’ hours records. Mr Gleeson was not happy with what he saw. By letters dated 29 July 2003, each of the companies was notified that the Traffic Commissioner would have to be satisfied that there had not been a material change since the grant of their respective licences, whereby the operation was in fact based in Italy, rather than Basildon. The letters also challenged the operators’ good repute (as explained below, a term of art) on the grounds that the licences were granted on the basis that they were for British operations based at Basildon, whereas the examiner’s evidence suggested that they may be controlled from Italy or Romania. The letters also challenged the lawfulness of using non-EU licensed drivers to drive British registered vehicles within the European Union.

[8]The three companies, Mr Briggs and Mr Gleeson were called to a public inquiry at which the Traffic Commissioner was to consider whether to take action under sections 26 to 28 of the Act. The hearing was held in Cambridge on 16 September, 2003. Mr Gleeson gave evidence. So also did Mr Ballestrieri and Mr Briggs. In his decision, the Traffic Commissioner revoked the licences of all three companies under sections 26 and 27 of the Act and disqualified Anglorom indefinitely under section 28. He said:

“30. s. 28 - Although I am entitled to disqualify a company and its directors upon the revocation of the licence, I do not feel this is an appropriate occasion on which to invoke those powers, with the exception of Anglorom Trans (UK) Ltd. The two remaining companies, their directors and the transport manager will very quickly be able to regain their good repute on the cessation of the current practices. I will not place a barrier to an application for a new licence, which will enable either company to continue with its legitimate distribution work in association with its kitchens business.”

[9]He directed that the orders for revocation and disqualification would take effect from 23.59 hours, 31 December 2003.

[10]The Transport Tribunal allowed the appeal of Team Kitchens but rejected the appeals of Paramount and Anglorom. The deadline for the implementation of the orders for revocation and disqualification have been extended until the final disposition of this appeal.

THE LEGISLATIVE FRAMEWORK

[11]Section 2 of the Act imposes an obligation on a person intending to use a goods vehicle on a road for the carriage of goods for hire, reward or in connection with any trade or business carried on by him to be in possession of a relevant operator’s licence. There are various exceptions to this obligation. For example it does not apply to the use of goods vehicles for international carriage by a haulier established in another Member State of the EU and not established here (s. 2(2)(b)). There are two types of operator’s licence, namely a standard and a restricted licence. In essence, the difference between them is that the latter is appropriate when the goods vehicle is to be used internally of the operator’s business. Section 3(2) defines a standard licence as follows:

“(2) A standard licence is an operator’s licence under which a goods vehicle may be used on a road for the carriage of goods (a) for hire or reward, or (b) for or in connection with any trade or business carried on by the holder of the licence.” (a) for hire or reward, or (b) for or in connection with any trade or business carried on by the holder of the licence.”

[12]It follows that this type of licence is the one required for carrying on a for-hire haulage business. A standard licence may authorise a goods vehicle to be used for the carriage of goods on both national and international transport operations or it may be limited to national transport operations only (s. 3(5)). I understand that none of the licences in issue in these proceedings were limited to national operations.

[13]Section 5 specifies what motor vehicles and trailers may be used under an operator’s licence. For present purposes it is relevant to note that such a licence shall not authorise the use of any vehicle unless it has an “operating centre” which is in a defined location, for example within the area of the Traffic Commissioner by whom the licence was issued (s. 5(4)(a)). The expression “operating centre” is defined in section 7(3) as follows:

“(3) In this Act “operating centre”, in relation to any vehicle, means the base or centre at which the vehicle is normally kept, and references to an operating centre of the holder of an operator’s licence are references to any place which is an operating centre for vehicles used under that licence.”

[14]As will be appreciated from what has been set out above, the operating center for all three companies in this case was located in the same premises in Basildon.

[15]Sections 8 to 12 of the Act set out the procedure to be followed in applying for an operator’s licence. The detail of this is largely irrelevant to this appeal. However it should be noted that it is possible to make an application which provides details of a transport manager to be employed in the operation (s. 9(2)). Furthermore the Traffic Commissioner is empowered to ask the applicant for information relating to the application including, in particular, all the information covered by paragraph 1 of Schedule 2 to the Act. The latter is in wide terms and is clearly designed to ensure that the vehicles operated under the licence will be maintained in good condition and will be operated safely (e.g. by adhering to legislation relating to drivers’ hours and by not being overloaded). These provisions also require the applicant to give particulars of any notifiable offences in the previous five years. “Notifiable offences” is defined to cover a large number of offences which relate to the failure safely to maintain and operate goods vehicles.

[16]Section 13 is concerned with the Traffic Commissioner’s determination whether to grant an application for an operator’s licence. Sections 13(1) and 13(3) should be read together. They provide, insofar as material: “13.-(1) Subject to sections 11 and 45(2), on an application for a standard licence a Traffic Commissioner shall consider(a) whether the requirements of subsections (3) and (5) are satisfied, .... (3) For the requirements of this subsection to be satisfied the traffic commissioner must be satisfied that the applicant fulfils the following requirements, namely (a) that he is of good repute,

(b) that he is of the appropriate financial standing, and

(c) that he is professionally competent; and the traffic commissioner shall determine whether or not that is the case in accordance with Schedule 3.” (a) whether the requirements of subsections (3) and (5) are satisfied, ....

(c) that he is professionally competent;

[17]Section 13(11) is in peremptory terms:

“If the traffic commissioner determines that any of the requirements that he has taken into consideration in accordance with subsection (1) or (2) are not satisfied he shall refuse the application, but in any other case he shall, subject to sections 14 and 45(2), grant the application.”

[18]Each of the expressions “good repute”, “financial standing” and “professionally competent” in section 13(3) is explained or defined in Schedule 3. Good repute is dealt with in paragraphs 1 to 5 of the Schedule. For present purposes it is only necessary to bear in mind that the scope of the Traffic Commissioner’s inquiries are somewhat differently expressed depending upon whether he is investigating the repute of an individual, such as the transport manager, or of a company. The former is dealt with by paragraph 1(1) and the latter by paragraph 1(2): “1.--(1) In determining whether an individual is of good repute, a traffic commissioner may have regard to any matter but shall, in particular, have regard to(a) any relevant convictions of the individual or of his servants or agents; and

(b) any other information in his possession which appears to him to relate to the individual’s fitness to hold a licence. (2) In determining whether a company is of good repute, a traffic commissioner shall have regard to all the material evidence including, in particular (a) any relevant convictions of the company or of any of its officers, servants or agents; and (b) any other information in his possession as to the previous conduct of (i) any of the company’s officers, servants or agents, or (ii) any of its directors, in whatever capacity, if that conduct appears to him to relate to the company’s fitness to hold a licence.” (a) any relevant convictions of the individual or of his servants or agents; and (b) any other information in his possession which appears to him to relate to the individual’s fitness to hold a licence. (a) any relevant convictions of the company or of any of its officers, servants or agents; and (b) any other information in his possession as to the previous conduct of (i) any of the company’s officers, servants or agents, or (ii) any of its directors, in whatever capacity,

[19]The requirement to demonstrate professional competence must be satisfied by an individual (Schedule 3 para 8(1)). For a company to satisfy the requirement it must have one or more transport managers who must be of good repute and professionally competent (Schedule 3 para 8(2)). Special provisions are made for situations where there is a single transport manager and he dies, ceases to work for the business or to be of good repute. In such cases the Traffic Commissioner can give the company up to 18 months to find a replacement. Similar provisions exist to cater for cases in which a company has more than one transport manager and one of them dies, stops working for the business or ceases to be of good repute. (Schedule 3 para 10 and 11)). Schedule 3 paragraph 13 provides that an individual is to be regarded as professionally competent only if he has passed the appropriate exam or has some other qualification recognised by the Secretary of State.

[20]The difference between a company and an individual, such as a transport manager, is reflected not only in these requirements but also in the requirement that, if the individual’s good repute or professional competence is to be challenged, he must be given proper warning that such an attack is to be made against him (Schedule 2 para 15). Thus, in summary, it can be seen that the company may be allowed to continue to operate a licensed haulage business for a limited period even if its transport manager is proved to be lacking in good repute or competence. On the other hand, the transport manager is free to take his qualifications anywhere else and, presumably, he can retain those qualifications even if there is a finding of lack of good repute against his current employer (e.g. because the directors have committed sufficiently grave offences).

[21]The Traffic Commissioner has wide powers to ensure that the holder of a licence continues to operate under it in accordance with the Act. He may revoke, suspend or curtail the licence. He can also go further and disqualify the licence holder. The former group of powers are covered by sections 26 and 27. Section 26 covers a wide variety of matters which can trigger revocation, suspension or curtailment including being convicted of certain offences and making false statements in the application for a licence. One of the grounds is that, since the licence was issued, there has been a material change in any of the circumstances of the licence-holder that was relevant to the issue of the licence (s. 26(1)(h)). In addition to these powers, the Traffic Commissioner is required to revoke a licence if those characteristics which the operator needed to demonstrate in order to obtain a licence in the first place, no longer apply.

(c) professionally competent;

[22]Where an order for revocation is made, the operator can apply immediately for a new licence. However in particularly serious cases, the Traffic Commissioner can go further and, in addition to revoking the licence, he can disqualify the licence holder under section 28:

“28.-(1) Where, under section 26(l) or 27(1), a traffic commissioner directs that an operator’s licence be revoked, the commissioner may order the person who was the holder of the licence to be disqualified (either indefinitely or for such period as the commissioner thinks fit) from holding or obtaining an operator’s licence; and so long as the disqualification is in force (a) any operator’s licence held by him at the date of the making of the order (other than the licence revoked) shall be suspended, and (b) notwithstanding anything in section 13 or 24, no operator’s licence may be issued to him.” (a) any operator’s licence held by him at the date of the making of the order (other than the licence revoked) shall be suspended, and (b) notwithstanding anything in section 13 or 24, no operator’s licence may be issued to him.”

[23]Disqualification is clearly a much more serious punishment than revocation, suspension or curtailment. It is a criminal offence for a disqualified person to apply for a new licence (s. 28(2)). Furthermore section 28(4) provides: “(4) Where the traffic commissioner makes an order under subsection (1) in respect of any person, the commissioner may direct that if that person, at any time or during such period as the commissioner may specify(a) is a director of, or holds a controlling interest in (i) a company which holds a licence of the kind to which the order in question applies, or (ii) a company of which such a company is a subsidiary, or

(b) operates any goods vehicles in partnership with a person who holds such a licence, that licence of that company or, as the case may be, of that person, shall be liable to revocation, suspension or curtailment under section 26.” (a) is a director of, or holds a controlling interest in (i) a company which holds a licence of the kind to which the order in question applies, or (ii) a company of which such a company is a subsidiary, or (b) operates any goods vehicles in partnership with a person who holds such a licence,

[24]Although the Traffic Commissioner has power to cancel a disqualification order (s. 28(6)), there can be little doubt that this is the ultimate sanction and, in most cases, would have the effect of destroying a haulage company’s business or, in the case of an individual, severely curtailing his ability to work in a responsible position in the industry.

[25]The only other provisions which need be referred to are contained in section 58. Subsection (1) contains a definition of “transport manager”:

““transport manager”, in relation to a business, means an individual who is in, or who is engaged to enter into, the employment of the holder of a standard licence and who, either alone or jointly with one or more other persons, has continuous and effective responsibility for the management of the transport operations of the business in so far as they relate to the carriage of goods.”

[26]Furthermore section 58(4) provides:

“(4) For the purposes of this Act, a person who is an applicant for, or a holder of, a standard licence, or who is a transport manager, shall be regarded as being engaged in a road transport undertaking if (a) in a case where that person is an individual; he is either (i) the holder, or one of the joint holders, of an operator’s licence, or (ii) in the employment of a person who carries on a road transport undertaking and that undertaking gives him responsibility for the operation of goods vehicles used under an operator’s licence; or ...” (i) the holder, or one of the joint holders, of an operator’s licence, or (ii) in the employment of a person who carries on a road transport undertaking and that undertaking gives him responsibility for the operation of goods vehicles used under an operator’s licence; or ...”

[27]I can now consider the two decisions.

THE TRAFFIC COMMISSIONER’S DECISION

[28]Having referred to the close connection between the three companies, the Traffic Commissioner set out what he understood to be their case, as presented by their solicitor. For present purposes it is only necessary to point out that, according to them, “Mr Ballestrieri decides upon the programme for the vehicles, passing his instructions to the Mihais who in turn instruct the drivers” and “Mr Mihai and his sons are working to Mr Ballestrieri’s instructions”. As far as Mr Briggs was concerned, their case was that “his duties include supervising goods coming into the warehouse and the allocation of duties to the two British drivers of the 7.5 tonne vehicles who distribute products from the Basildon warehouse.” Mr Nesbitt of Counsel, who appears on behalf of the Appellant companies on this appeal, has not suggested that these submissions were inaccurate. The Traffic Commissioner then considered three complaints against the companies’ activities and Mr Briggs’ role in them. First he considered whether it was unlawful for the companies to utilise non-EU drivers on the non-UK parts of any haulage contract. He concluded that there was not. That point was not pursued further. Second he determined that the Basildon centre was not run as an operating centre as required by the Act. He held this to be a material change in circumstances. Third he considered how the three businesses were being operated. He made the following findings:

“24. I find [the activities of Paramount and Anglorom] are controlled form within Romania. For the purposes of the transport operations, the companies are established in Romania. Had I been aware of these intentions, at the time the licence applications were made, I would have refused to grant the licences. 25. Section 58 defines a transport manager who: “has continuous and effective responsibility for the management of the transport operations of the business insofar as they relate to the carriage of goods.”

Mr Briggs plays no part in instructing or controlling the drivers. He gives no advice in the planning of the journeys, a duty of care imposed on all operators under EC Regulation 3821/85. He remains largely unaware of the precise location of the vehicles. Any control over vehicle movements exercised from within Great Britain falls to Mr Ballestrieri, not Mr Briggs. The transport manager’s contribution is entirely retrospective, which is quite unsatisfactory and fatal to his good repute and the operators’ ability to satisfy the requirement of professional competence. 26. In conducting an exercise of determining good repute, I am required, as a consequence of the Transport Tribunal decision in Bryan Haulage, to consider whether the licenceholders’ conducts is such that they should be put out of business. In the present cases I have found the operator’s activities to be incompatible with the legislation; they are fundamentally flawed. For those reasons it is inevitable, that they cannot continue. No evidence has been adduced which might suggest there was contingency, the employment of British licensed drivers for example, to provide for any adverse findings I might make against the current practices. Each of the three companies has failed to satisfy me that it remains of good repute.”

[29]Based on these findings, he revoked all three companies’ licences under section 26(1) by reason of the failure to use the authorised operating centre. He also revoked under section 27(1) because of his finding of loss of good repute and failure to satisfy the requirement of professional competence. In addition, in paragraph 30 of his decision (set out at paragraph 8 above) he disqualified Anglorom. He added:

“31, Anglorom Trans (UK) Ltd is disqualified indefinitely from holding or obtaining an operator’s licence in any Traffic Area. I make no orders under s.28(4).”

[30]Finally, he allowed a period of two months before his orders became effective “to allow for an orderly termination of the current businesses”.

[31]That decision was appealed to the Transport Tribunal by the companies. It is not clear from the documents whether Mr Briggs appealed against the finding that he was not of good repute and would need to apply to regain it. He was not represented before this court on this appeal.

THE TRANSPORT TRIBUNAL’S DECISION

[32]The Transport Tribunal has wider powers to look at new evidence than this court does. However no new evidence was put before it although, as I understand it, it was taken through some at least of the transcript of the evidence given below. Its summary findings of fact is somewhat fuller than the Traffic Commissioner’s. Nothing turns on this because Mr Nesbitt does not challenge any of those findings.

[33]On the issue of whether the Basildon premises were used as an operating centre within the meaning of the Act, the Transport Tribunal allowed the companies’ appeals. In addition, it allowed the appeal of Team Kitchens. As a result, Team Kitchens continues to hold a valid standard licence. As will be explained below, this may be of significance. As far as the other ground of the Traffic Commissioner’s decision was concerned, the Transport Tribunal summarised the relevant findings of fact as follows:

“(e) Mr Briggs played no part in instructing or controlling the drivers; he had no input into planning journeys; he remained unaware of the precise location of the vehicles; any control exercised from with (sic) the UK was undertaken by Mr Ballestrieri, not Mr Briggs whose contribution to the transport operation was entirely retrospective and fatal to his good repute and the operators’ ability to satisfy the requirement of professional competence.”

[34]It then went on to determine the issue of the revocation of Paramount’s and Anglorom’s licences and the disqualification of the latter:

“8. ... However, the real issue is the location of the control base of the transport operations of those two companies and in relation to that, we are satisfied that the Traffic Commissioner’s conclusions were correct. There was no evidence of control or direction from within the UK by Mr Briggs and there was no evidence of any transport planning being undertaken at Basildon. Neither company produced evidence of disciplinary procedures being instituted or enforced by Mr Briggs, neither was there evidence of drivers hours infringements being identified and acted upon. It is difficult to envisage any situation where a Transport Manager could be considered to be in effective control of day to day operations when: all of the drivers lived abroad; they are not permitted to enter the UK; they are employed by a drivers agency based in Romania; the Transport Manager cannot communicate with them because of language barriers; discipline and enforcement must necessarily be left to others who are also based in Romania. We are satisfied that there was no evidence to show that Mr Briggs either on his own or with others, satisfied the requirements of s. 58 of the Act and that as a result, neither the companies or Mr Briggs by virtue of his involvement in this operation, were of good repute. Having correctly found that the transport operations undertaken by Paramount and Anglorom were based somewhere other than the UK (most likely Romania) the Traffic Commissioner rightly concluded that this was fatal to good repute; revocation of the licences of Paramount and Anglorom inevitably followed. Further, having also found that the nature of the operations of Anglorom had all the features of a third party hire and reward haulage operation without any connection with the kitchen business (which is not a finding that can be criticised) the Traffic Commissioner’s decision to disqualify that company was not plainly wrong or disproportionate.”

[35]Like the Traffic Commissioner, the Transport Tribunal allowed the companies some time to adjust to the consequences of its decision:

“9. It is of note that the Traffic Commissioner indicated that Paramount, Team Kitchens and Mr Briggs would quickly regain their repute once the current practices had ceased. As a result, we intend to allow the appeal in relation to Team Kitchens and to dismiss the appeals of Paramount and Anglorom, allowing sufficient time for Paramount to revise its operational practices and to apply for a new licence and for Anglorom to make appropriate arrangements to wind down its business. The order in relation to Paramount and Anglorom will not therefore take effect until 23.59 on 16 June 2004.”

THE PRESENT APPEAL

[36]It appears that the right to bring an appeal to the Court of Appeal from a decision of the Transport Tribunal is not conditional on obtaining permission to appeal. If this is so, it appears to be due to an oversight in the rules. In any event, at an earlier stage, Brooke LJ expressed the view that this case should be considered by the Court of Appeal. The importance of at least one issue raised is attested to by the application by the Secretary of State to intervene. This application was unopposed and we had the considerable benefit of the submissions of the Secretary of State’s counsel, Mr Maclean. Before considering the points raised on behalf of the companies, I think it right to say something about Mr Briggs, even though he was not represented before us.

MR BRIGGS

[37]Mr Briggs is the companies’ transport manager. He has the necessary exam qualifications as required to make him professionally competent within the meaning of the Act. As I have pointed out above, the Act draws a distinction between a transport manager and the company for which he works. His good repute and professional competence are personal qualities which allow him to hold the post of transport manager. If he wants, he can use them to secure alternative employment. If a company breaches the rules set down by the Act, for example if it or its directors are convicted of a relevant offence, it may lose its licence or be disqualified, but that does notmean that the transport manager will automatically be punished in like manner. Similarly, as noted above, the Act makes it clear that a company with a licence may be allowed to trade if its, or one of its, transport managers loses his good repute. In my view it is important to keep the responsibilities, liabilities and culpabilities of the company and its transport manager separate.

[38]The finding of the Traffic Commissioner against Mr Briggs appears to be based uponthe finding that, in each of the three companies, he failed to perform the functions of a transport manager. It was his managing director, Mr Ballestrieri, who did that. I have difficulty in seeing how the failure of a transport manager to use his expertise for the benefit of an employer because his employer declines to use his skill properly can justify a finding of loss of good repute against him. Perhaps if a transport manager were to conspire with his employer to run a sham haulage business, his qualification being used to ghost an otherwise illicit business, it may be that this would justify a finding of loss of repute. Even there, the vice would not be the failure of the transport manager to perform as a transport manager but his participation in a deception designed to avoid the Act. In any event, in all cases it is incumbent on the Traffic Commissioner to explain what the manager has done which justifies a finding adverse to him. There was no such explanation here. A finding, as here, that the transport manager could not carry out his duties because the managing director insisted on taking over fromhim, may have adverse repercussions for the company, but it does not justify a finding of loss of good repute as against the manager.

[39]In this case it is clear that the Traffic Commissioner did not consider that Mr Briggs was in any way dishonest or lacked competence. On the contrary it anticipated him recovering his good repute “very quickly” on the cessation of the “current practices”. In other words, what the Traffic Commissioner wanted was for Mr Briggs to take over the full duties of transport manager. This is hardly an indication that there is something about him personally which justifies taking away his qualifications.

[40]Mr Briggs’ treatment below becomes even more surprising when the decision of the Transport Tribunal is considered. It will be recalled that Team Kitchens’s appeal was allowed. Its haulage business was being conducted properly. Its transport manager is Mr Briggs. The inescapable conclusion is that the Transport Tribunal determined that Mr Briggs had not lost his good repute, at least when working for Team Kitchens. On the other hand it appears to have been found that he had lost his good repute in respect of his work for Paramount and Anglorom. I do not see how it is possible for someone to be of good repute and not of good repute at the same time. Mr Maclean did not feel able to support such a proposition.

[41]This problem has arisen, so it seems to me, because both the Traffic Commissioner and the Transport Tribunal determined that if the employer lost its good repute, its transport manager must do likewise. In my view this is not a correct approach to adopt. The Traffic Commissioner and the Transport Tribunal must consider the actions of the transport manager separately from those of his employer. If he loses his good repute because of things he has done or failed to do, he must lose it for all employers. I do not see how it can be justified to punish him, with potentially severe consequences for his ability to secure employment, simply because his employer excluded him from doing the job that he was qualified to do. It follows that, in my view, even though he is not represented before us, this court should make it clear that there is no basis, on the material in this case, to impugn Mr Briggs’ repute.

[42]In my view this has other consequences. The Traffic Commissioner was apparently of the view that Mr Briggs was competent and, if allowed to carry out his duties and shoulder his responsibilities, the companies would meet the requirements under the statute and should recover their licences. This is the effect of paragraph 30 of his decision. The same point can be made about the decision of the Transport Tribunal. Not only is that inherent in paragraph 9 of its decision (set out at paragraph 5 above) but it must have played a part in the decision to allow Team Kitchens’s appeal. I take it that both tribunals have therefore held that, were Mr Briggs to be allowed to act properly as the transport manager of Paramount, it should be allowed to have its licence, just as Team Kitchens has. This has repercussions in relation to the issue of proportionality considered below.

THE ARGUMENTS CONCERNING SECTION 58 OF THE ACT

[43]Paragraphs 2 - 5 of the Notice of Appeal read as follows:

“2. Wrongly, and/or in error of Law, the Traffic Commissioner/Transport Tribunal failed properly to Address whether the requirements of good repute/professional competence of a company required by the [Act], could be satisfied by transport management activities being shared by more than one individual. 3. Wrongly and/or in error of Law, in circumstances in which the transport management activities were shared between an official Transport Manager and a Director, finding that management did not amount to continuous and effective responsibility and/or satisfied the requirements of good repute/professional competence. 4. Wrongly and/or in error of Law, treating the definition of the Transport Manager in Section 58 of the [Act] as imposing an obligation in relation to the nature of the company’s management structure and duties. 5. Wrongly and/or in error of Law, treating the definition of the Transport Manager in Section 58 of the [Act] as imposing obligations which the failure to discharge would inevitably amount to a loss of good repute/professional competence.”

[44]Although Mr Nesbitt puts it a number of ways, all these grounds come down to a single point. He argues that there is nothing in the Act which requires the transport manager to carry out the management of transport operations himself. He says that the definition in section 58(1) allows him to discharge his duties either by himself or with others. Here, at least some of the relevant functions were carried out and the responsibility for them was shouldered by Mr Briggs. Those which were not were taken on by Mr Ballestrieri. The management was shared between the two of them. That is enough.

[45]I do not accept this argument. The findings below were to the effect that much if not most of the relevant management functions and responsibilities were not Mr Briggs’ but were Mr Ballestrieri’s. As noted already; that was, in substance, the submission made to the Traffic Commissioner by the Appellants’ solicitor. Divesting the transport manager of his responsibilities does not meet the requirements of the Act.

[46]Schedule 3 paragraph 8(2) provides that a company must employ a transport manager. As a matter of common sense, this cannot mean that it simply has to employ an individual with the relevant qualifications. It must be a reference to employing someone who not only has the necessary qualifications but uses them for and on behalf of the company. If the employee does not perform the relevant transport management functions, he is not acting as a transport manager. The result is that the company fails to meet the requirements of Schedule 3 paragraph 8(2)(a) because, in substance, it has no transport manager. For that reason it does not have the necessary professional competence, as defined by the Act. If this is so, it fails to meet the requirements of section 13(3)(c) and its application for a licence must fail. Alternatively, if it already has a licence, it falls within section 27(1)(c) and the Traffic Commissioner has the power to revoke. In this case, both the Traffic Commissioner and the Transport Tribunal have held, in effect, that the relevant companies had no transport manager because Mr Briggs, whatever his qualifications, was not acting as one.

[47]In my view, the Traffic Commissioner and the Transport Tribunal cannot be faulted on this issue. The approach is consistent with the definition of transport manager in section 58(1). He is a person who “has continuous and effective responsibility” for the management of the transport operations. Someone who does not have such continuous and effective responsibility is not, for these purposes, a transport manager. Mr Maclean also points to the fact that Schedule 3 paragraph 8(2)(a) requires the company to have a transport manager “in respect of its road transport undertaking”. He points to the provisions of section 58(4)(a)(ii) (see paragraph 26 above) which stipulate that this is only fulfilled if, in the relevant business, the transport manager is given “responsibility for the operation of goods vehicles” used under the licence. If he is not given that responsibility, the requirements of paragraph 8(2)(a) are not met.

[48]In addition to this, it seems to me that it is appropriate to have regard to the provisions of Directive 96/2/EC. Mr Maclean explained that this and the Act were drafted contemporaneously. The Act is meant to implement the Directive. Both he and Mr Nesbitt agreed that the Act should be read, so far as possible, consistently with the Directive. In the light of that, the provisions of Article 3(1) are germane and appear to support Mr Maclean’s argument. They are as follows:

“1. Undertakings wishing to engage in the occupation of road transport operator shall: (a) be of good repute; (b) be of appropriate financial standing; (c) satisfy the condition as to professional competence. Where the applicant is a natural person and does not satisfy requirement (c), the competent authorities may nevertheless permit him to engage in the occupation of road transport operator provided that he designates to the said authorities another person, satisfying requirements (a) and (c), who shall continuously and effectively manage the transport operations of the undertaking. Where the applicant is not a natural person: - requirement (a) must be satisfied by the person or persons who will continuously and effectively manage the transport operations of the undertaking. Member States may require that other persons in the undertaking also satisfy this requirement. - requirement (c) must be satisfied by the person or persons referred to in the first indent.”

Where the applicant is not a natural person:

[49]If anything, this makes it even clearer than the Act that the transport manager must manage continuously and effectively. Since both the Traffic Commissioner and Transport Tribunal have held that he did not, Paramount and Anglorom do not meet one of the core requirements of the Act. It is no answer to say that some of the relevant functions were carried out by Mr Ballestrieri. No doubt a transport manager can use other staff to help him fulfill his duties. But he must be the responsible person within the company. Here Mr Briggs was not responsible at all for the transport management functions discharged by his superior, Mr Ballestrieri. The reference in the definition in section 58(1) to the manager having responsibility “jointly” with another does not help the Appellants. There was no joint responsibility between Mr Briggs and Mr Ballestrieri. Mr Briggs had no responsibility for the actions of Mr Ballestrieri.

[50]It follows that the Appellants fail in relation to this issue. The Traffic Commissioner’s and the Transport Tribunal’s findings that Paramount and Anglorom failed to fulfill the professional competence requirement of the Act because they had, in effect, no transport manager, was fully justified.

PROPORTIONALITY OF RELIEF

[51]Mr Nesbitt argues that the findings made by the Traffic Commissioner and by the Transport Tribunal do not justify the orders made. He says that revocation of licences and disqualification of Anglorom were disproportionate. Both orders will have severe adverse effects on the Appellants. The disqualification order will have the effect not only of closing down Anglorom but, because of the interdependence of the three companies, also of closing down Team Kitchens and Paramount. He says that the Traffic Commissioner’s and Transport Tribunal’s powers under the Act must now be exercised in line with the provisions of Article 1 of Protocol 1 to the European Convention on Human Rights. In particular this is so because a licence under the Act is to be regarded as a possession of which the operator is deprived by an order for revocation or disqualification.

[52]The application of Article 1 to proceedings under the Act was considered by the Court of Appeal in Crompton (t/a David Crompton Holdings) v Department of Transport North Western Area

[2003] EWCA Civ 64

, [2003] RTR 517.

[53]In many cases when the Traffic Commissioner or Transport Tribunal assesses whether there has been a loss of good repute it must carry out a balancing exercise. As pointed out above, it is possible to take into account a wide variety of matters. Article 1 reinforces that. The point was put particularly clearly by Kennedy LJ in his judgment in Crompton:

“That brings us back to the 1995 Act, which also contains no definition of good repute, but it is noticeable that in Sch 3 the opening words of para 1(2) dealing with a company are more restrictive than the opening words of para 1(1) dealing with an individual. When a traffic commissioner is considering if an individual is of good repute he can have regard to “any matter”, but if he is considering a company he must confine himself to “all the material evidence”

. The difference in wording is a little surprising, but Parliament cannot have intended a traffic commissioner ever to have regard to immaterial evidence, so the conclusion must surely be that the schedule requires the traffic commissioner when considering alleged loss of repute to focus on matters relevant to the individual’s fitness to hold a licence, bearing in mind - “(a) that an existing licence is a possession safeguarded by Article 1 of the First Protocol, and (b) that if loss of repute is found the inevitable sanction is revocation, possibly followed by an application for a fresh licence which may or not be granted. There must therefore be a relationship of proportionality between the finding and the sanction, and that relationship has a direct bearing on the approach to be adopted in any set of circumstances to the question of whether or not the individual has lost his repute.””

[54]It should be noticed that Crompton decides that, once there has been a finding of loss of repute, revocation is inevitable. First Protocol considerations come into play in determining whether there has been a loss of repute.

[55]It seems to me that these principles have little application in this case. Here there is no question of balancing various factors to determine whether the Appellants conducted themselves so badly as to justify a finding of loss of repute. This is a case where no balancing is appropriate or possible. The Appellants have lost their licences because they have failed to use a transport manager as required by the legislation. Had that finding been made at the stage when they were applying for their licences, it would not have been open to the Traffic Commissioner to have granted them. The position can be no different simply because the Appellants have secured licences. It follow that, once it had been determined as a question of fact that the Appellants had failed to comply with this core statutory requirement, a finding of loss of repute was inevitable as was the consequential order for revocation.

[56]I should add that, even had a balancing exercise been appropriate, I cannot see how the orders for revocation could be challenged. Because the Appellants had failed to meet this core requirement it was entirely proportionate to revoke the licences. Mr Nesbitt suggests that a lesser punishment should have been imposed so as to minimise the risk of closing down the companies. However that concern was addressed by the Traffic Commissioner and the Transport Tribunal, both of whom suspended the orders in order to allow the companies time to adjust. In the case of Paramount (and Team Kitchens before the Traffic Commissioner) that was designed to ensure that they would not be put out of business.

[57]This leaves only the question of the disqualification order against Anglorom. Once, as here, the relevant tribunal has found that the holder of the licence has lost its good repute and that revocation follows, it is difficult to see how Article 1 plays any further part in shaping the penalty to be imposed. However, whether based on Article 1 or not, the approach to be adopted by the Traffic Commissioner and the Transport Tribunal is clearly set out in Bryan Haulage Limited v Vehicle Inspectorate [No 1] [TT 1 of 2002], a decision of the Transport Tribunal:

“6. ... The Traffic Commissioner was clearly entitled to consider allegations of breach of regulations by drivers as the starting point for considering whether the Appellant had failed to comply with its undertakings in relation to drivers hours and the keeping of records. However, in order to take action under s. 26 or to make a finding of loss of good repute under s. 27 or make an order of disqualification of directors under s. 28 of the Act, the Traffic Commissioner was obliged to make an assessment of the nature, number and gravity of the breaches of regulations revealed by Mr Prime’s investigations and whether there was any evidence of instruction, encouragement or acquiescence on the part of the Appellant. That assessment and the Traffic Commissioner’s findings of fact based upon that assessment should be clearly set out in his decision. They are not. In relation to the Appellant’s systems and the steps taken by the Appellant to prevent breaches of the regulations, the Traffic Commissioner was further obliged to make an assessment of the evidence and make appropriate findings of fact, indicating the weight, if any, to be given to that evidence. It is not apparent from the Traffic Commissioner’s decision that such an assessment was made or that he made the appropriate findings of fact. It is a further requirement that the Traffic Commissioner consider the weight, if any, to be attached to the Appellant’s general record, performance, reputation and enforcement history. Again, such an assessment is not evident from the substance of the decision. In the absence of adequate reasoning, it is impossible to assess what matters were taken into account by the Traffic Commissioner, the weight he placed upon those matters and whether he made the appropriate balancing exercise when considering the extent to which he should exercise his enforcement powers. In the circumstances we are satisfied that the appeal must succeed.”

[58]Particularly where disqualification is in contemplation, it is necessary for the licence holder to be informed what material is being used to justify this most draconian order and he must be able to see that a proper balancing exercise was carried out by the Traffic Commissioner, as indicated in Bryan. In my view that was not done here. On the contrary, it is impossible to see in the decisions of the Traffic Commissioner and the Transport Tribunal what special features justified disqualification of Anglorom, whereas Paramount, which operated in the same way, with the same personnel from the same location was not disqualified. As explained above, both the Traffic Commissioner and the Transport Tribunal thought that Paramount would be properly run and should be allowed to recover its licence if it modified its practices, particularly by making proper use of a transport manager. In the case of Team Kitchens, the Transport Tribunal held that it was properly run with Mr Briggs operating as its transport manager. There is no explanation for why the same considerations did not apply to Anglorom. If it had done something particularly heinous which justified the ultimate sanction, that should have been stated clearly in the decisions. As it is, there is nothing in either of them to indicate that a proper balancing exercise was undertaken at all. Not only is there no discussion of what differentiated Anglorom from the other two companies, but there is no reference to matters which should have been taken into account on Anglorom’s side such as its previous clean record, the lack of evidence of breach of driver’s hours regulations and the lack of any indication that its vehicles were unsafe or were operated unsafely. The only point of difference between Paramount and Anglorom identified by the Transport Tribunal is that the latter “has all of the features of a third party hire and reward haulage operation without any connection to the kitchen business”. A standard licence (unless limited in some respect - and it is not suggested that Anglorom’s is) allows the operator to engage in a haulage operation for hire or reward (see s. 2(1) and s. 3(2)(a)). Neither Mr Nesbitt nor Mr Maclean could suggest what the Transport Tribunal had in mind when referring to this part of Anglorom’s activities. I am not persuaded that the Traffic Commissioner or the Transport Tribunal have set out any considerations which would justify the disqualification order. I would allow the appeal to that extent.

[59]In the result, I would dismiss the appeal of Paramount and allow the appeal of Anglorom only in relation to the issue of disqualification. Mr Nesbitt suggested that this court should extend the suspension of the revocation orders for 4 to 6 months more to enable Paramount and Anglorom adequate time to apply for and obtain new standard licences. I do not doubt that the court has power to do that but, in my view, there are no good reasons why that power should be exercised in the Appellants’ favour in this case. It is now nine months since the Traffic Commissioner told the companies that they needed to have a proper and functioning transport manager in place. There is nothing before us to suggest that the Appellants have revised any of their practices in this regard, even when the message was reinforced by the decision of the Transport Tribunal. There is no material before this court which suggests that it would be difficult for them to change their practices. I see no reason why these companies should be allowed, in effect, to operate in beach of the requirements of the Act for 15 months.

[60]It is time for the Appellants to comply with the Act. If the refusal of a further extension of time has the effect of concentrating their corporate minds, so much the better. Mr Maclean reminded us that they can apply for interim licences under section 24(1) of the Act. Whether they do so is a decision for them to make. Whether any such application would be successful is entirely a matter for the Traffic Commissioner.

[61]I have had the advantage of reading in draft the judgments of Laddie J and Pill LJ. I agree with both judgments.

[62]I agree. The Traffic Commissioner revoked licences held by companies on a finding of loss of good repute and failure to satisfy the requirements of professional competence under Section 27(1) of the Goods Vehicles (Licensing of Operations) Act 1995 (“the 1995 Act”). The Transport Tribunal dismissed an appeal against those findings. Their reasoning appears at paragraph 8 of their decision, the relevant part of which is set out at paragraph 34 of the judgment of Laddie J (“the judgment”).

[63]Section 27(1) of the 1995 Act appears at paragraph 21 of the judgment. It provides that whether the licence holder is of good repute and professionally competent is to be determined in accordance with Schedule 3 to the Act.

[64]Paragraphs 1 to 5 of Schedule 3 deal with “Good Repute”. Paragraph 8(2), under the heading “Professional Competence”, provides that, where a company is required to satisfy the requirement of professional competence, it does so if and so long as – “(a) it has in respect of its road transport undertaking a transport manager….. and (b) that transport manager….. is(i) of good repute, and

(ii) professionally competent” The expression “transport manager” is defined in Section 58(1) of the 1995 Act, paragraph 25 of the judgment.

(i) of good repute, and (ii) professionally competent”

[65]What the Tribunal in substance found was that the two companies did not have a transport manager within the meaning of the section 58. They were in my judgment entitled on the evidence to make that finding. To have a transport manager is a fundamental requirement for holding a licence. In these circumstances, I agree with the Tribunal’s decision to revoke the licences and with the reasoning and conclusions of Laddie J.

[66]On a finding that there was no transport manager, it was not a necessary part of the reasoning of the Tribunal to find, as they appear to have done, lack of repute under paragraph 8(2)(b) of Schedule 3. The Tribunal appear to have thought that a finding of lack of good repute in Mr Briggs necessarily followed from a finding that there was no transport manager. I do not agree. In the case of Mr Briggs the finding was, for the reasons given by Laddie J, unjustified. It would have been open to find a lack of good repute in the companies under paragraph 1 of Schedule 3 but the Tribunal have not made clear whether they took that route.

[67]I too am puzzled by the Tribunal’s finding, near the end of paragraph 8, as to a third party hire and reward operation. Counsel were unable to help as to its significance and relevance. I too would allow the appeal against the disqualification order. On the relevant findings of the Tribunal, it was not justified.