Muck It Ltd v Merritt & Ors [2005] EWCA Civ 1124

Case No C1/2004/2652

[2005] EWCA Civ 1124

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE TRANSPORT TRIBUNAL

HUGH CARLISLE QC, President of the Transport Tribunal

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

Date Thursday 15 September 2005

Before

LORD JUSTICE TUCKEY

LORD JUSTICE RIX

MR JUSTICE WILSON

Between

Muck It Limited1 st Appellant

In the matter of the Goods Vehicles (Licensing of 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 Messrs Jeremy Fear & Co) for Appellants

Mr Alan Maclean (instructed by The Treasury Solicitor) for Intervener

Judgment

[1]The licensing of operators of goods vehicles is controlled under the terms of the Goods Vehicles (Licensing of Operators) Act 1995 (the 1995 Act), a consolidating act which in turn reflects the provisions of previous EU Council Directives now consolidated in Directive 96/26/EC of 29 April 1996.

[2]In Great Britain the competent authority for the licensing of operators of goods vehicles is the traffic commissioner for the traffic area concerned. He has power to grant, vary and revoke such licences. He appears to act in a quasi-administrative, quasi-judicial manner. Among his responsibilities is to determine whether the applicant for a licence satisfies the three fundamental requirements for a successful application, namely “good repute”, “financial standing” and “professional competence”. By section 35 of the 1995 Act, a traffic commissioner may hold such inquiries as he thinks necessary for the proper exercise of his functions, and such inquiries are to be held in public. An applicant for a licence whose application is refused or the holder of a licence whose licence has been revoked has a right of appeal from the traffic commissioner’s determination to the transport tribunal (section 37). There is a further appeal, on a point of law only, from the transport tribunal to the court of appeal, as a matter of right (Transport Act 1985, section 117 and schedule 4, paragraph 14).

[3]This is such an appeal on the part of Muck It Limited (“Muck It” or “the company”) and its two directors, Hazel and Hayley Merritt, respectively mother and daughter, against the decision of the transport tribunal (claimed by Mr Hugh Carlisle QC) dated 7 December 2004, upholding the decision of the traffic commissioner for the eastern traffic area (Mr Geoffrey Simms) made on 19 August 2004 revoking Muck It’s operator’s licence under sections 26 and 27 of the 1995 Act and disqualifying it and its two directors from holding operator’s licences for five years. He did so, in the main, on the basis that Muck It had lost its good repute, financial standing and professional competence and that revocation of its licence was therefore mandatory.

[4]The decision of the traffic commissioner, upheld on appeal by the transport tribunal, also related to Mr John Huke, who was Muck It’s transport manager. He is Hayley Merritt’s husband. Every corporate licensee must discharge its requirement of professional competence by the employment of a transport manager who is himself, as an individual, both professionally competent (ie has passed a written examination and is the holder of a recognised certificate of competence, diploma or other qualification) and of good repute (see paragraphs 8 and 13 of schedule 3 to the 1995 Act). The traffic commissioner’s decision was, inter alia, that Mr Huke was not of good repute. There was no appeal by Mr Huke from the transport commissioner’s finding that he had lost his good repute.

[5]Where a licence holder, such as Muck It, is found to have lost its good repute (or to have failed in any of the three fundamental requirements) the revocation of its licence is mandatory under section 27(1). Thus – “The traffic commissioner by whom a standard licence was issued shall direct that it be revoked if at any time it appears to him that the licence-holder is no longer –(a) of good repute,

(b) of the appropriate financial standing, or

(c) professionally competent; and the traffic commissioner shall determine whether or not that is the case in accordance with Schedule 3.”

The factual background

[6]In 2000 complaints about fly-tipping, that is to say illegal dumping of waste at unauthorised places, came to the attention of the Environment Agency (North East Thames Area) concerning two vehicles whose registration numbers were H26 YOU and H28 YOU. These vehicles were owned by a company called Abbey Excavations Ltd (“Abbey”), of which Mr Huke was then a director. As a result Mr Huke was interviewed by the Agency on 29 November 2000. In that interview Mr Huke said that he had just that month sold Abbey and its vehicles to a man called Gary Sharpe (sic), of Dartford in Kent. Abbey had operated from Waltham Abbey, Essex. Mr Huke said he was also a director of J & H Skip Hire Ltd, itself of Waltham Abbey (“Skip Hire”), and the transport manager of Muck It.

[7]In 2003 there were further complaints of fly-tipping to the Environment Agency: of incidents involving vehicle J940 KRY on 4 February, vehicle H28 YOU on 18, 20 and 27 February, and vehicle P111 ECT on 3 April. Checks with DVLA showed the first two vehicles to be registered with a company called Bradshaw Tipper Hire Ltd (“Bradshaw”) and the third with Muck It.

[8]Muck It operated from Harlow in Essex, where its address was Threshers, Hastingwood Road, Hastingwood. Its licence nominated correspondence address, however, was J Newton & Co, 134A London Road, South Benfleet, Essex, a firm of road transport consultants (“Newton”).

[9]On 5 March 2003 Mr Huke made a witness statement in the presence of Mr Paul Lockyer, an employee of the Environment Agency who had been one of his interviewers in November 2000. He said that Muck It was owned by his wife (Hayley Merritt). He also said that Muck It had sub-contracted haulage work at a building site (to which two vehicles involved in the fly-tipping sightings had been traced) to Bradshaw. He said that Bradshaw was owned by Gary Sharp (sic), with whom he was in contact by mobile phone number. The last time he had spoken to Mr Sharp to obtain documents at the request of the Agency, he was refused with abuse. He did not at the time say that he had himself at one time been the owner of Bradshaw and had sold it to Mr Sharp.

[10]Almost contemporaneously with the fly-tipping sightings of February/April 2003, Muck It on 14 March 2003 applied to increase its number of authorised vehicles (then four) and to add a new operating centre at Waltham Abbey. The application was signed by Mr Huke. The new operating centre was also used as an operating centre by a company called County Services Ltd (“County”). On 6 May 2003 the office of the transport commissioner wrote to Muck It to say that he was reluctant to grant an interim licence for the new operating centre unless County gave up the site as its operating centre. On 8 May 2003, Mr B J Newell of Newton on behalf of both Muck It and County replied to the office of the transport commissioner to say that County would surrender its licence if Muck It’s variation application was granted.

[11]On 30 June 2003 the Environment Agency’s Mr Lockyer made a witness statement concerning the fly-tipping incidents of February/April 2003 and also described the attempts made to establish contact with Mr Sharp. The mobile number provided to him by Mr Huke had no registered owner. A business centre address for Bradshaw led him to another address, at which nothing was known of Bradshaw or Mr Sharp, and to a further mobile phone number, provided as the contact number for Mr Sharp, which was found to be registered to Mr Huke. Further enquiries revealed that Mr Huke had previously owned and been a director of Bradshaw, but that Mr Sharp had replaced him as director.

[12]On 23 January 2004 the office of the traffic commissioner wrote to Mr Huke, with a copy to Muck It, referring to and enclosing Mr Lockyer’s statement and inviting Mr Huke to make representations about the issue which in the light of that statement had arisen over his good repute as the transport manager of Muck It. On 16 February 2004 Mr Huke replied to say: that he had sold Bradshaw to Mr Sharp on 6 January 2003 (in fact the relevant form 288a refers to Mr Sharp’s appointment as director on 1 June 2002, and his business centre application is dated 7 October 2002); that he had sold Abbey to Mr Sharp on 30 October 2002 and had at the same time sold him his mobile phone in question; and that vehicle P111 ECT had been sold by Muck It on 4 March 2003 (ie one month before the fly-tipping incident of 3 April 2003 involving that vehicle) to County, of which his brother Michael Huke had been a director only up to 18 March 2003 (ie only up to a time which was still before the incident).

[13]On 6 July 2004 the traffic commissioner sent “call-up” letters to Muck It informing it of the holding of a public inquiry to consider the revocation of Muck It’s existing licence and the determination of its application for a licence variation; and to Mr Huke to say that the inquiry would determine Mr Huke’s good repute. Both letters said that in view of the serious matters raised the addressees might wish to seek informed advice for example from a solicitor. The inquiry was fixed for 29 July 2004. The letter to Muck It was sent to its nominated correspondence address, and that to Mr Huke to his home, also the address of his wife, Hayley Merritt. On 7 July Mr Newell of Newton sent a copy of the call-up letter for Muck It on to Muck It at its operating centre address, addressing his covering letter to Mr Huke of Muck It. Mr Newell strongly urged Mr Huke/Muck It to consider legal representation. The letter ended:

“I will in fact be on holiday from the end of this week and shall be obliged therefore if you will contact me on the telephone on receipt of this letter with a view to discussing the matter further.”

[14]On 9 July 2004 Mr Huke wrote to the office of the commissioner to say that he would be on holiday on 29 July with his family, and asking to be informed of a rescheduled hearing. On 26 July letters to Muck It (at its nominated correspondence address) and to Mr Huke (at his home address) informed them that the rescheduled hearing of the public inquiry would take place on 11 August. On 27 July Mr Newell of Newton again sent on the letter for Muck It to its operating centre address. Mr Newell’s covering letter, again addressed to Mr Huke of Muck It said:

“Unfortunately I will not be available to represent the Company at the Public Inquiry and as previously discussed with you, I would strongly advise you to instruct solicitors specialising in these matters to represent the Company at the hearing.”

The hearing

[15]Mr Huke attended the public inquiry, but without legal representation. The directors of Muck It, that is to say Mr Huke’s wife and mother-in-law, did not attend. Mr Huke said that he had not received the letter from Mr Newell informing Muck It of the adjourned hearing and that as a result he had misunderstood the need for the company’s attendance with its documents, for instance on its financial standing, as requested in the call-up letter. As a result both Mr Huke and the commissioner’s office spoke on the telephone to Mr Newell that morning: he confirmed that he had sent on the two letters he had received for Muck It to its operating centre, and copies of the correspondence were faxed to the hearing. The commissioner said that he was quite satisfied that proper notice had been given to the company at its nominated correspondence address, and that for good measure that notice had been sent on to the company at its operating centre. In the circumstances he was not prepared to accede to Mr Huke’s request to allow him to represent Muck It. The commissioner said:

“I need to see the company. You are not in any way part of the company. You act as transport manager for the company. I have some questions for the directors, if they attend this inquiry, and questions that you could not answer, Mr Huke.”

[16]The commissioner went on to say:

“in the absence of representatives of the company, the directors, the company secretary, then it is most likely that this licence will have to be revoked because I need to be satisfied particularly on good repute of the company and also on the matters of financial standing.”

[17]The commissioner proceeded, however, to hear Mr Huke on the subject of his good repute. Mr Huke gave evidence consistent with his earlier statements, viz that neither Muck It nor he were in any way responsible for the fly-tipping incidents, since the relevant vehicles were being operated by Bradshaw and County at the material times. Bradshaw he had sold to Mr Sharp, whom he insisted did exist. He sought to prove his existence inter alia by profferring a copy of a driving licence in the name of Gary Sharp of an address in East London. He said:

“If Mr Sharp’s being elusive I really can’t help that.”

As for County, he said that that had been owned by his brother Michael and father William, and financed by him. The company had not prospered, and both brother and father now worked “for me” (ie for Muck It). He seemed vague as to which company had been operating which vehicle, Bradshaw or County, but in the end said that H28 YOU had been sold to County by Muck It.

[18]At the end of the hearing, the commissioner said that he had made summary decisions against Muck It, in the light of its failure to attend the hearing, but would reserve his decision and reasons as to Mr Huke’s good repute. He said:

“Now, I have indicated to you, in the absence of the directors or anybody representing the company with authority, that the licence will have to be revoked on the material change on finance and on good repute of the company because it is the company’s burden to discharge that of good repute and if they do not come to make those representations then I cannot be satisfied. And also on the question of financial standing…If the licence has to be revoked then I could not grant a variation application…[Y]ou have come here today, you have made your representations, you have answered my questions, you have put your challenges to the Environment Agency – so what I will do is reserve my decision on your good repute, carefully consider it and then communicate written reasons and a written decision to you…I am ordering the revocation of the Muck It licence under section 26 on the failure to produce finance, which is a material change, and on the finding against good repute and financial standing under section 27, and refuse the variation application because of the fall of the licence…And I will also consider disqualification of the company and its directors and I will consider that also while I am considering your own good repute.”

The traffic commissioner’s written decision

[19]In his written decision dated 19 August 2004 the traffic commissioner(i) formally confirmed the decisions he had already made in relation to the revocation of Muck It’s licence,

(ii) announced his reserved decision in respect of Mr Huke’s good repute, and

(iii) delivered consequential decisions relating to a further ground of revocation of Muck It’s licence and the disqualification of Muck It and its directors. In terms of the provisions of the 1995 Act his decisions were expressed as follows:

“35. At the conclusion of the hearing, I announced my decision to revoke the licence under s.26(1)(h) on the grounds of a material change in the absence of financial evidence. 36. I indicated, too, that the licence must be revoked under the mandatory provisions of s.27(1)(a) & (b) because the licence holder has failed to appear, to discharge the burden, to satisfy the requirement of financial standing and to be of good repute. My reserved decision is principally to determine John Huke’s good repute, which ultimately I have found to be lost, causing a mandatory revocation of the licence under s.27(1)(c). 37. The revocation of the licence entitles me to disqualify the company and its directors. This is a particularly bad case for the reasons promulgated in the preceding paragraphs. The directors have stood aside while John Huke has manipulated the company, its vehicles and its operator’s licence to his own advantage especially in evading those who are charged with enforcing the law governing the illegal disposal of waste.”

[20]In the earlier part of his decision the traffic commissioner set out the facts which he had found in support of his reserved conclusions. Those facts are not in dispute on this appeal and I can therefore take them relatively briefly. In essence, and in my own words, he found that through his role as transport manager or director, or close relation of a director, of a number of companies, linked also by geographical location and by the incestuous use of each other’s vehicles, Mr Huke had manipulated those companies and their licences and vehicles to throw dust in the eyes of the authorities.

[21]Thus, Mr Huke was transport manager of Muck It and the husband of its owner, Hayley Merritt; his wife and mother-in law were its directors. County had been set up with the aid of his finance, and his brother and father installed as its directors - before being taken in to work for Muck It. He had been owner and director of both Bradshaw and Abbey until they had been supposedly sold to the mysterious Gary Sharp, whom the commissioner did not explicitly find not to exist as the alleged purchaser of Mr Huke’s business, but whom he clearly considered to be a mere cipher. (He remarked that the signature of Mr Sharp on the copy of the driving licence was “a very poor match” of the signature of Mr Sharp on the change of directors form for Bradshaw. He also said that whereas it may be that Mr Sharp conducted some form of business in Gravesend in his own name, there was not a scintilla of evidence to suggest his control of Bradshaw.) Mr Huke was also transport manager, and he and his wife were directors, of Skip Hire. All of those companies were linked together by being associated as registered keepers or licensed operators of the same vehicles, both those involved in reported fly-tipping incidents and others.

[22]As for the vehicles involved in the fly-tipping incidents of February/April 2003, the following facts appear from the commissioner’s express findings or the documents he relied on. J940 KRY (involved in the incident of 4 February) had been specified on the licence of County until 22 August 2002; on 28 November 2002 it is shown by DVLA records as having been acquired by Bradshaw. H28 YOU (involved in the incidents of 18, 20 and 27 February) had been specified on Muck It’s licence until 17 July 2002 and on County’s licence from 22 August 2002 to 14 April 2003; but the DVLA records show it, as well as J940 KRY, as having been acquired by Bradshaw on 28 November 2002. P111 ECT (involved in the incident of 3 April) was shown by DVLA records as having been acquired by Muck It on 7 October 2002 but was specified on the County licence from 17 January to 14 April 2003; meanwhile Mr Huke says it was “sold” to County on 4 March 2003, but the DVLA transfer form recording that sale is dated 10 April 2003. The commissioner expressly found that this transfer was without substance.

[23]The commissioner therefore concluded that he was entitled to pierce the veil of incorporation between these various companies. He expressly found that Mr Huke had been controlling these companies. The licences previously held by Abbey, Bradshaw and County no longer existed. “They had served their purposes and were left to die.” As for Muck It:

“32. Directing myself in accordance with Bryan Haulage & Richardson, I find the conduct of John Huke to justify action consistent with putting a licence holder out of business. Because of my findings that John Huke is the person controlling the activities of Muck It Ltd and that company’s directors failed to appear to satisfy me of their good repute and that of the company, they too deserve to lose their road transport business on my finding that Muck It Ltd, its directors Hayley Merritt and Hazel Merritt and its transport manager John Huke are not of good repute.”

The transport tribunal’s decision

[24]There was no appeal by Mr Huke from the commissioner to the transport tribunal, only by Muck It and its two directors. They were represented on their appeal and made three submissions. First, the commissioner ought to have adjourned the hearing before him in the absence of the company, alternatively he ought to have allowed Mr Huke to represent the company. Secondly, the commissioner had erred in making summary decisions against the company on the basis that, in its absence, it had failed to meet its burden of proof. Thirdly, the commissioner had failed to carry out a proper balancing exercise before disqualifying company and directors.

[25]The tribunal thought that it would have been preferable if the commissioner had allowed Mr Huke to represent the company and its directors, and also that he should have reserved all his decisions and dealt with everything at once in his written decision. However, it rejected the appeal on the twin grounds that the commissioner had been right to say that the burden of proof lay on the operator and licence holder throughout, and that in any event Mr Huke had been able to say everything that could have been said in defence of the good repute not only of himself but the company and its directors as well. It reasoned (at paras 4 and 6):

“As appears form the transcript, Mr Huke was ready and able to meet the case against him on repute, which case was identical to that against the Company. Indeed, as the Traffic Commissioner expressly found, Mr Huke controlled the activities of the Company. We are satisfied that Mr Huke was able to advance all the arguments on the issue of repute and that the failure to permit him to represent the Company was of no consequence…But, for the reasons stated, we are satisfied that this made no difference to the overall result. The allegations of loss of repute were identical: the Traffic Commissioner put these to Mr Huke and considered them all with care.”

[26]As for disqualification, the tribunal said at para 7: “If Mr Huke had been representing the Company he may well have said that the directors of the Company knew nothing about its activities. This is the highest at which submissions in favour of the directors could have been put. Even so, we are satisfied that the Traffic Commissioner would have made the same orders…” and the tribunal cited the commissioner’s findings that the directors had stood aside while John Huke had manipulated the company, its vehicles and its operator’s licence to his own advantage.

Submissions on this appeal

[27]On behalf of the appellants Mr Tim Nesbitt now submits:(1) that the commissioner had erred not to adjourn the hearing to allow the company to appear;

(2) that he had also erred in not permitting Mr Huke to represent the company;

(3) that he, and the Tribunal, were wrong to say that under sections 26/27 of the 1995 Act the burden lay on the company to satisfy the commissioner not to revoke the company’s licence;

(4) that in any event the commissioner had failed to carry out a proper and proportionate balancing exercise in deciding whether to revoke the company’s licence and thus put it out of business;

(5) that the commissioner had erred in relation to findings of fact;

(6) that the company and its directors had been disqualified without a sufficient balancing exercise or sufficient justification.

[28]By means of these submissions Mr Nesbitt attempted in effect to call into question every aspect of the commissioner’s and the tribunal’s reasoning and decisions. Thus he challenged the findings as to the provision of notice to the company and as to the manipulation by Mr Huke of the companies he controlled and the complicity and complaisance of Muck It through its directors. On those aspects of his submissions, it will be necessary to consider whether there is any question of law on which the appellants to this court are entitled to present an appeal. Secondly, he challenged the commissioner’s discretion neither to adjourn nor to allow Mr Huke to represent the company: but on those submissions, the company in effect succeeded before the tribunal subject to the latter’s critical finding that the absence of representation on behalf of the company would not have made any difference to the outcome. On those aspects of the appeal, therefore, the issue must be whether the tribunal was entitled to come to that conclusion. Thirdly, he challenged the commissioner’s and tribunal’s holding that the burden of proof for the purposes of revocation of a licence under sections 26 and 27 of the Act lay on the licence holder. If he were right in that submission, that might destroy the commissioner’s summary decisions which depended on the burden of proof, but that would still leave open the question whether the commissioner’s reserved findings as to good repute were such as to justify his revocation of Muck It’s licence, either as a matter of law or discretion. Fourthly and finally, he challenged the separate decision to disqualify company and directors for five years, and the question arises as to whether that was justified in all the circumstances.

[29]I shall deal with those issues in turn, starting with the commissioner’s procedural decisions, since logically they come first.

The commissioner’s procedural decisions

[30]The commissioner’s decisions which are criticised are those whereby he refused Mr Huke’s requests to adjourn the hearing for the sake of the company which had not appeared or at least to allow him, Mr Huke, to represent the company. The tribunal rejected the submission that the commissioner should have adjourned, but accepted that he “should have permitted Mr Huke to have represented the Company”.

[31]Mr Nesbitt repeats both submissions to this court. He argued that the importance of the issue of revocation of Muck It’s licence, and therefore of the continued existence of its business, necessitated an adjournment. He sought to reopen the findings in relation to notice. He relied on Mr Huke’s statements to the commissioner that the company had not received from Mr Newell the letter of 26 July sent by the office of the commissioner to Muck It to inform it of the adjourned hearing date; and that if Mr Huke or the company had realised that its presence had been necessary then it would have been represented by Mr Newell or a solicitor, and would have brought to the hearing documents in relation to its financial standing.

[32]In my judgment it is not open to the appellants to reopen any issue as to notice, and in any event it is wholly clear on the documentary evidence which was before the commissioner that the company received proper notice of the adjourned hearing date. That notice was correctly sent to Muck It’s correspondence address at Newton. In any event Mr Huke’s protestations that the relevant letter had not been sent on to Muck It at its operating centre address, or that it did not know of the adjourned date, or that if it had known it would have been represented at the hearing, were wholly unrealistic and in my judgment correctly disregarded by the commissioner. Mr Newell had confirmed that morning that he had sent on to Muck It the notice letter. Mr Huke personally knew of the adjourned hearing date. He knew from the original call up letters that the public inquiry was directed at Muck It as well as himself. It was after all Muck It’s licence which was under threat of revocation; it was also Muck It which had made its variation application. Mr Huke also knew of the seriousness of the situation, of which Mr Newell had himself advised Mr Huke; he also knew that Mr Newell would not be representing either him or the company, and he had disregarded Mr Newell’s advice to obtain the services of a solicitor. The directors of Muck It were his wife and mother-in-law. His wife was the owner of the company. He had just been on a family holiday with his wife. It is wholly unbelievable that the company did not know everything there was to know of the situation. If perchance there was anything to do with the date of the adjourned hearing that the company, of which he was in any event the transport manager, in the form of its directors did not know, and in my judgment there was nothing, it could only be because, as so clearly emerged from the commissioner’s ultimate findings, Mr Huke was in effect the real controller of the company, and the directors were simply willing to leave everything to him. In all these circumstances the commissioner was plainly entitled to proceed in the absence of Muck It, on the basis that it had received proper notice, had chosen not to come (or at any rate had left it to Mr Huke to represent it), and that it would have been wrong to adjourn again a public inquiry which had already been adjourned once at the request and for the convenience of Mr Huke.

[33]As for the alternative application to allow Mr Huke to represent the company, however, the tribunal itself agreed with the submission that the commissioner had in this respect erred. To this extent, therefore, Mr Nesbitt has no need of further persuasion of this court; and in any event, I would agree with the tribunal’s reaction. The probability is that Mr Huke, who had obviously taken a decision to ignore Mr Newell’s advice to obtain professional help, went to the public inquiry to do whatever he could for the company: and the probability is that the company, whether one thinks of it as effectively his company in terms of its directors, was looking to him to represent it, as he requested the commissioner to be permitted to do.

[34]The issue then becomes whether there is any further assistance that in such circumstances the company itself, as formally distinct from Mr Huke, could have provided to the commissioner which would have made any difference to the commissioner’s reserved decisions. The tribunal was plainly of the opinion that there was nothing.

[35]To answer that question needs further consideration concerning Mr Nesbitt’s submissions as to the commissioner’s findings of fact on the reserved issue of good repute, to which I turn below.

The commissioner’s findings of fact on good repute

[36]The commissioner’s findings of fact on the reserved issue of good repute primarily concern Mr Huke: and there is no appeal from Mr Huke as to his own good repute. Nevertheless, it is submitted that those findings did not justify findings of loss of good repute against the company, as distinct from Mr Huke. It is said indeed that the only finding of loss of good repute against the company, as distinct from Mr Huke personally, is that derived from the commissioner’s erroneous placing on the company of the burden of proving its own good repute coupled with his conclusion that the company had failed to meet that burden solely by reason of its absence from the hearing. It was because of that error that the commissioner never stopped to carry out a proper balancing exercise to consider whether it was proportionate to any misdemeanours to be placed at the door of the company itself that, by being found to have lost its good repute and therefore its licence, it should lose its business as a whole.

[37]For these purposes Mr Nesbitt drew attention to the following jurisprudence.

[38]In Crompton t/a David Crompton Haulage v. Department of Transport North Western Area

[2003] EWCA Civ 64

(unreported, 31 January 2003) this court, in the judgment of Kennedy LJ with which Mantell and Mance LJJ agreed, held that an operator’s licence is a possession for the purposes of article 1 of the First Protocol of the European Convention on Human Rights (the “ECHR”) and that, since the transport commissioner and transport tribunal are public authorities, their decisions revoking a licence must be proportionate. This court approved a submission on behalf of the licence holder in that case in these terms (at para 19):

“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.”

[39]Moreover, in In the matter of Angloram Trans (UK) Limited

[2004] EWCA Civ 998

(unreported, 30 July 2004), this court (in the judgment of Laddie J, with whom Pill and Jonathan Parker LJJ agreed) approved the following passage from the decision of the transport tribunal in Bryan Haulage Limited v. Vehicle Inspectorate (No 1) [TT 1 of 2002] as to the correct approach to findings involving revocation of a licence (or disqualification):

“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…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.”

[40]Laddie J also emphasised the need to consider the positions of operator and transport manager separately in the following passage (at para 37):

“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 not mean 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.”

[41]Thirdly, Mr Nesbitt referred to a passage from the transport tribunal’s decision in Bryan Haulage Ltd v Vehicle Inspectorate (No2) [Appeal 217/2002] at para 11 as follows:

“In applying the Crompton case it seems to us that the traffic commissioners and the Tribunal have to reconsider their approach. In cases involving mandatory revocation it has been common for findings to have been made along the lines of “I find your conduct to be so serious that I have had to conclude that you have lost your repute: accordingly, I have also to revoke your licence because the statute gives me no discretion.”

The effect of the Court of Appeal’s judgment is that this two-stage approach is incorrect and that the sanction has to be considered at the earlier stage. Thus the question is not whether the conduct is so serious as to amount to a loss of repute but whether it is so serious as to require revocation. Put simply, the question becomes “is the conduct such that the operator ought to be put out of business?” On appeal, the Tribunal must consider not only the details of cases but the overall result.”

[42]In this connection, Mr Nesbitt submits that none of the vehicles involved in the February/April 2003 fly-tipping incidents had been owned or operated by Muck It itself. Thus J940 KRY had been on County’s licence but had been acquired by Bradshaw in November 2002; H28 YOU had not been on Muck It’s licence since July 2002 and was thereafter on County’s licence, but was also shown by DVLA records as having been acquired by Bradshaw at the same time as J940 KRY; and P111 ECT was on County’s licence and, although shown on DVLA records as having been acquired by Muck It in October 2002 was also shown by those records as having been sold to County on 4 March 2003, even if the transfer form had not been signed until 10 April 2003.

[43]In my judgment, however, the connections with Muck It were well established. At the bottom of all these matters was the fact, accepted by Mr Huke himself, that Muck It had the waste disposal contract from the building site concerned, albeit his case was that that contract had been sub-contracted to Bradshaw and that Bradshaw had been previously sold to Gary Sharp. The commissioner, however, found in effect even if not in terms that Mr Sharp either did not exist as a purchaser of Mr Huke’s businesses or was a mere cipher and explicitly that it was Mr Huke who was in control of all these companies, including Muck It, Bradshaw, and County. He found explicitly that transfers of vehicles by Muck It, viz to County, were without substance. He had good reason to come to those findings, and they not challengeable in this court. That fully establishes the connections with Muck It through Mr Huke, Muck It’s transport manager and the husband of its owner and one of its directors, at the very centre of affairs. Bradshaw was obviously a creature of Mr Huke through the unidentifiable Mr Sharp, as was County, which nominally had his brother and father as its directors. So was Muck It, which nominally had his wife and mother-in-law as its directors.

[44]Thus the connections with Muck It are fully established. Of course the theoretical and in most cases practical distinction between a transport manager, a mere employee, and the company itself has to be kept well in mind. The traffic commissioner was clearly aware of that distinction. Where, however, the traffic manager is in practical terms the true controller of the company, as the commissioner found, the distinction disappears, and the loss of Mr Huke’s good repute (as to which there is no longer any dispute) becomes the loss of Muck It’s good repute. That is the end of Mr Nesbitt’s point. This is irrespective of whether the company’s directors were or were not aware of what their transport manager was up to. If they were aware, they were fully complicit. But if they were not aware, they were nevertheless fully complaisant with abdicating their responsibilities as directors to Mr Huke. The commissioner found that they “have stood aside while John Huke has manipulated the company, its vehicles and its operator’s licence”, and in my judgment he was fully entitled to take that view. Indeed, the fact that the company and its directors had chosen not to appear separately represented at the public inquiry, but to leave it to Mr Huke to appear by himself, was all of a piece with the real truth of the matter, as found by the commissioner, that Mr Huke was the company. In such a situation it was inevitable for the commissioner to conclude that what had been proved against Mr Huke, as the controller of Muck It, had been proved against the company itself. And the transport tribunal was fully entitled to conclude, therefore, that nothing turned on the commissioner’s refusal to allow Mr Huke formally to represent the company at the public inquiry. As it said:

“Mr Huke was ready and able to meet the case against him on repute, which case was identical to that against the Company. Indeed, as the Traffic Commissioner expressly found, Mr Huke controlled the activities of the Company.”

[45]In these circumstances it is irrelevant that the commissioner (and the transport tribunal as well) may have thought, in reliance on an earlier decision of the transport tribunal in A M Richardson t/a D J Travel Consultants v. Department of the Environment, Transport and the Regions (11 May 2001, Appeal 65/2000) to which each referred, that the burden of proof for the purpose of a section 27 revocation issue is on the licence holder to prove its continuing good repute. By finding the facts concerning Muck It’s and the other companies’ operations and by finding, expressly, “on the balance of probabilities” that Mr Huke was controlling the companies, the commissioner fully met any burden that may have rested on him, as the commissioner in charge of the public inquiry, to be satisfied as to the loss of good repute of Mr Huke and therefore also of the companies which he controlled.

[46]As for questions of balance and proportionality, the commissioner expressly had in mind, and cited, Bryan Haulage (No 2) which itself had considered Crompton. In my judgment, the conclusion of the commissioner that the circumstances established, in the absence of any explanation from the company, that it deserved to lose its business at the same time as its good repute, was balanced, proportionate and amply justified.

[47]It is plain that the commissioner had already decided, summarily, even before his reserved decision concerning Mr Huke, that Muck It had lost its good repute expressly because it “has failed to appear, to discharge the burden, to satisfy the requirement…to be of good repute”, and thus must lose its licence under the mandatory provisions of section 27(1)(a) (see para 36 of the commissioner’s decision). The transport tribunal agreed with this conclusion as a matter of law, even if it thought that the commissioner should have reserved all his decisions. For the reasons which I will give below, however, the commissioner and the transport tribunal were in my judgment mistaken to place the burden of proof for the purposes of section 26 or section 27 revocations upon the licence holder. Nevertheless, the commissioner’s conclusions regarding Muck It’s loss of good repute were entirely justified, separately, on the basis which I have sought to explain above.

[48]In a critical passage (already cited above but needing repetition in the light of the above discussion) the traffic commissioner said (at para 32):

“Because of my findings that John Huke is the person controlling the activities of Muck It Ltd and that company’s directors failed to appear to satisfy me of their good repute and that of their company, they too deserve to lose their road transport business on my finding that Muck It Ltd, its directors Hayley Merritt and Hazel Merritt and its transport manager John Huke are not of good repute.”

[49]It is possible to read that passage as itself infected by the commissioner’s error as to the burden of proof. I will assume that that is the case. Even so, in my judgment his conclusion regarding Muck It is entirely justified by his underlying findings concerning Mr Huke’s loss of his good repute and his control of Muck It. Indeed, it is in any event possible in context to read this passage as saying that, given his previous findings regarding Mr Huke and the companies including Muck It which he controlled, and the absence of anything from Muck It itself, he was entitled to infer that Muck It deserved to lose its business together with its good repute and he would so find. But however this passage is to be read, it seems to me that Muck It’s loss of good repute, licence and business was, on the commissioner’s own findings, proven and justified.

[50]Such a decision would be entirely consistent with paragraph 1(2) of schedule 3 to the 1995 Act, which provides: “In determining whether a company is of good repute, a traffic commissioner shall have regard to all the material evidence including, in particular – … (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.” … (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,

[51]The resolution of this issue is enough to justify and require the revocation of Muck It’s licence under the mandatory provisions of section 27(1)(a) and to this extent to justify and require the essential failure of Muck It’s appeal. However, since the question of burden of proof under sections 26 and 27 has been fully argued, with the assistance of the intervention of the Secretary of State for Transport, represented by Mr Alan Maclean, I will go on to consider that question immediately below.

The burden of proof under sections 26 and 27

[52]The essential submission of Mr Nesbitt on behalf of Muck It is that there is a difference in statutory language between the 1995 Act’s provisions relating to applications for a licence on the one hand and revocations of an existing licence on the other hand. He submits that that distinction is to be found in the EU Directive as well. When making an application, it is the applicant who has to satisfy the authorities, here the traffic commissioner, of the three fundamental requirements. However, when revoking an existing licence, the burden is the other way round in that the commissioner now has to be satisfied that the requirements are no longer met. Mr Nesbitt also supports these submissions by reliance, in the light of Crompton, on article 1 of the First Protocol of the ECHR and section 3 of the Human Rights Act 1998 (the “HRA 1998”): since a licence is a species of property, the 1995 Act should not be construed, unless it is inevitable, as permitting its revocation and thus loss by a disproportionate imposition of a burden of proof on the licence holder.

[53]The essential submission of Mr Maclean on behalf of the Secretary of State, on the other hand, is to the opposite effect. There is a consistency of approach both in the 1995 Act and in the Directive for placing the burden at every stage on the would-be or existing licence holder. In any event, Crompton is per incuriam (there was representation in that case only on behalf of the operator) since Gudmundsson v. Iceland (1996) 21 EHRR CD 89 (not apparently cited to this court in Crompton) stresses that a licence holder cannot complain if his licence is withdrawn in accordance with provisions of the law in force when the licence was issued. In any event, a revocation of a licence under the 1995 Act is not a deprivation of property, but rather a control of its use within the second paragraph of article 1 under a proportionate and Convention compliant scheme: see Fredin v. Sweden (No 1)

(1991) EHRR 784

at paras 42/47, and Marcic v. Thames Water Utilities Ltd

[2003] UKHL 66

[2004] 2 AC 42

. In placing the burden on the licence holder to demonstrate when called on, throughout the life of the licence, compliance with the three fundamental requirements, the statutory scheme strikes a fair balance between the interests of the individual and of the community as a whole.

[54]It is necessary to set out the essential relevant provisions of the 1995 Act.

[55]Applications for licences are dealt with by section 13, which provides: “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, and

(b) if he thinks fit, whether the requirements of subsection (6) 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, and (b) if he thinks fit, whether the requirements of subsection (6) are satisfied…

[56]The critical language for the purposes of this section is “the traffic commissioner must be satisfied that the applicant fulfils the following requirements”. It is common ground that this language places the burden of satisfying the commissioner upon the applicant.

[57]Revocation of an existing licence is dealt with in sections 26 and 27. Section 26 lists a number of “grounds” on which a commissioner “may” revoke a licence. Its provisions are not therefore mandatory but discretionary. The only section 26 ground in play in the present case is that of “material change” in section 26(1)(h).

(h) :

“26.-(1) Subject to the following provisions of this section and the provisions of section 29, the traffic commissioner by whom an operator’s licence was issued may direct that it be revoked, suspended or curtailed (within the meaning given in subsection (11)) on any of the following grounds - (a) … (b) that the licence-holder has contravened any condition attached to the licence; (c) that during the five years ending with the date on which the direction is given there has been – (i) a conviction of the licence-holder… (f) that any undertaking recorded in the licence has not been fulfilled… (h) that since the licence was issued or varied there has been a material change in any of the circumstances of the licence-holder that were relevant to the issue or variation of the licence…” (a) … (b) that the licence-holder has contravened any condition attached to the licence; (c) that during the five years ending with the date on which the direction is given there has been – (i) a conviction of the licence-holder… (f) that any undertaking recorded in the licence has not been fulfilled… (h) that since the licence was issued or varied there has been a material change in any of the circumstances of the licence-holder that were relevant to the issue or variation of the licence…”

[58]Section 26(4) provides: “Where the existence of any of the grounds mentioned in subsection (1) is brought to the notice of the traffic commissioner in the case of the holder of any licence issued by him, the commissioner shall consider whether or not to give a direction under this section in respect of that licence”, but of course, he cannot do so without first holding an inquiry if the licence holder requests him to so so (section 29(1)).

[59]Mandatory revocation under section 27 is dealt with in the following provisions, already set out in part in the opening paragraphs of this judgment but repeated here for the sake of convenience:

“27.-(1) The traffic commissioner by whom a standard licence was issued shall direct that it be revoked if at any time it appears to him that the licence-holder is no longer (a) of good repute, (b) of the appropriate financial standing, or (c) professionally competent; and the traffic commissioner shall determine whether or not that is the case in accordance with Schedule 3. (2) Before giving a direction under subsection (1) in respect of a licence, the traffic commissioner shall give to its holder notice in writing that he is considering giving such a direction. (3) A notice under subsection (2) shall state the grounds on which the traffic commissioner is considering giving a direction under subsection (1)…”

[60]It will have been observed that the critical language under section 26 is that a commissioner may direct that a licence be revoked “on any of the following grounds”; and under section 27 that a commissioner shall direct that a licence be revoked “if at any time it appears to him that” the licence holder “no longer” meets any of the three fundamental requirements. Those expressions do not replicate the language of section 13, namely that the commissioner “must be satisfied” that an applicant meets the three requirements, and the contrast has led to the current dispute between Muck It and the Secretary of State.

[61]The Secretary of State supports his contention by reference to the fact that both section 13 and section 27 state that the commissioner shall determine questions relating to the three requirements in accordance with schedule 3. Thus, as to good repute, that schedule lays down matters to which the commissioner “may” or “shall” have regard in making his determination (paragraph 1). It also requires that he shall determine that an individual is not of good repute if he has more than one conviction of a serious offence or has been repeatedly convicted of road traffic offences (paragraph 2). It is submitted that if the same provisions of schedule 3 apply to both sections 13 and 27, and the burden is on the applicant under section 13 to satisfy the commissioner, the same must be true under section 27 as well. For myself, however, I would regard these provisions of schedule 3 as being neutral to the question of burden of proof.

[62]However, schedule 3’s provisions in relation to financial standing and professional competence are written in different terms. Paragraph 6 (as amended) states that – “6.-(1) An applicant for, or the holder of, a standard licence is of the appropriate financial standing if he has available to him sufficient financial resources to ensure the establishment and proper administration of the road transport undertaking carried on, or proposed to be carried on, under the licence. (2) An applicant for, or the holder of, a standard licence shall not be considered to be of the appropriate financial standing unless he has available to him capital and reserves of an amount equal to or exceeding the aggregate of –(a) 9,000 Euro for the first or only vehicle which is to be or is authorised under the licence; and

(b) 5,000 Euro for each additional vehicle which is to be or is so authorised.” (a) 9,000 Euro for the first or only vehicle which is to be or is authorised under the licence; and (b) 5,000 Euro for each additional vehicle which is to be or is so authorised.”

[63]Mr Maclean points out that those provisions apply equally to applicants and holders. However, these provisions are again, as it seems to me, neutral to the question of burden of proof under sections 13 and 27. Of course, in the absence of any evidence from the holder at all relating to financial standing, the commissioner may or very probably will be unable to avoid the conclusion, or to put it another way, may or very probably will conclude, that the holder no longer has the required financial standing. But to argue from that, that there is a legal burden of proof on the holder is to mistake the difference between a legal and evidential burden of proof.

[64]As for professional competence, the schedule’s provisions are as follows: “7. In this Schedule references to “the requirement of professional competence” are references to any requirement imposed by a provision of this Act that a person be (or continue to be) professionally competent. 8.-(1) The requirement of professional competence falls to be satisfied by an individual. (2) Accordingly, where a company is required to satisfy that requirement, it does so if and so long as -(a) it has in respect of its road transport undertaking a transport manager or managers, and such number of them as the traffic commissioner concerned may require; and

(b) that transport manager, or (as the case may be) each such manager, is – (i) of good repute, and (ii) professionally competent. 10. Where the holder of a standard licence relies on a single transport manager to satisfy the requirement of professional competence and that manager – (a) dies, (b) ceases, by reason of physical disability or mental disorder, to be capable of discharging his duties as transport manager,

(d) ceases to be of good repute, the holder of the licence shall not be treated as failing to satisfy the requirement of professional competence until the expiry of such period (not exceeding 18 months) as, in the opinion of the traffic commissioner by whom the licence was issued, is reasonably required for the appointment of a new transport manager.” (a) it has in respect of its road transport undertaking a transport manager or managers, and such number of them as the traffic commissioner concerned may require; and (b) that transport manager, or (as the case may be) each such manager, is – (i) of good repute, and (ii) professionally competent. (b) ceases, by reason of physical disability or mental disorder, to be capable of discharging his duties as transport manager,

[65]Those provisions again clearly refer to both applicants and holders of licences, and the language about satisfying the requirement of professional competence might suggest that the burden throughout remains on the applicant or holder to show that the requirement is satisfied. However, it is common ground that the requirement must be satisfied: that is the essence of a requirement. The question remains who bears the burden of showing that the requirement is satisfied.

[66]This last point is perhaps well demonstrated by reference to the language of section 13 itself, which speaks both of requirements being satisfied, and of the need that the commissioner “must be satisfied that” the applicant fulfils (or, it might be said, satisfies) the requirements. Article 3 of the Directive similarly speaks of the three requirements being satisfied.

[67]It is, however, article 6 of the Directive that is of most interest to the present issue. That provides:

“1. Decisions taken by the competent authorities of the Member States pursuant to the measures adopted on the basis of this Directive and entailing the rejection of an application for admission to the occupation of road transport operator shall state the grounds on which they are based. Member States shall ensure that the competent authorities check regularly and at least every five years that undertakings still fulfil the requirements of good repute, financial standing and professional competence. If the requirement of financial standing is not fulfilled at the time of checking the authorities may, where the undertaking’s other economic circumstances give grounds for assuming that the requirements of financial standing will again be sustainably fulfilled within the foreseeable future on the basis of a financial plan, give further notice of not more than one year. 2. Member States shall see to it that the competent authorities withdraw the authorization to pursue the occupation of road transport operator if they establish that the conditions of Article 3 (1) (a), (b) or (c) are no longer satisfied. In this case, however, they shall allow sufficient time for a substitute to be appointed.”

[68]Article6.1 clearly relates to applications and article

6.2 clearly relates to revocations. Article 6.1 is neutral as to where the burden of proof lies, but of course in the case of applications it is natural to think that it lies on the applicant. Article 6.2, however, dealing with the case of revocation, expressly states that this shall follow “if [the competent authorities] establish…” That seems to me to be language inconsistent with a conclusion that the burden of satisfying the authorities remains on the licence holder. In between the situations of application and revocation lies that of the five year review, dealt with in the second and third paragraphs of article 6.1, but not replicated in the 1995 Act, although we were informed that as a matter of practice five year reviews are carried out by the transport commissioners. There again the language of the article remains neutral.

[69]Turning back to sections 26 and 27 of the 1995 Act, I would conclude that for revocation to be possible under the former or mandatory under the latter, it is the commissioner who must be satisfied of the ground of revocation, and not the licence holder who must satisfy him to the contrary. That seems to me to be the natural way to regard both the language of those sections, and the situations contemplated in them. The context is that of a licence holder and the possible revocation of his licence. Revocation can only be done on some specified ground (section 26) or because one or other of the three fundamental requirements is no longer satisfied (section 27). Under section 26(4), the commissioner can only act if “the existence of” a ground comes to his notice. It is counter-intuitive to think of a licence holder being required to negative the existence of a ground raised against him. So with section 27. The commissioner must revoke if “it appears to him” that the licence holder is no longer of good repute or of appropriate financial standing or professionally competent. That seems to me to mean that the commissioner must be satisfied that the requirements are no longer fulfilled. If it had been intended to place the same burden on the licence holder as had been placed on the original applicant, then the same language as that found in section 13 would have been used.

[70]In Richardson the transport tribunal had decided otherwise (see para 9):

“It must be borne in mind that the burden of proving compliance with the many requirements set out in s. 17 of the 1981 Act” [the Public Passenger Vehicles Act 1981, which contains provisions in similar terms to sections 26 and 27 of the 1995 Act] “is and remains on the operator. Thus, at the time of applying for a licence, it is for the operator to satisfy the Traffic Commissioner that he meets the specified requirements (see s. 14 [the passenger vehicle equivalent of section 13 of the 1995 Act]). Thereafter the Traffic Commissioner may at any time put the requirements in issue. Once raised, it is for the operator then to satisfy the Traffic Commissioner that he continues to satisfy those requirements. The burden of proving this remains throughout on the operator…”

[71]I must state, with respect, that I do not find that reasoning compelling. The argument proceeds from the language of section 14 (the passenger vehicle equivalent of section 13 of the 1995 Act), then as now put in terms of the need for the commissioner to be satisfied, to the different language of section 17 (the passenger vehicle equivalent of sections 26/27 of the 1995 Act), without any recognition of the fact that the language is different. Nor is there any consideration of the language now contained in article 6 of the Directive.

[72]In these circumstances it is unnecessary to rule on Mr Nesbitt’s submissions based on article 1 of the First Protocol and section 3 of the HRA 1998. I would, however, tend to agree with Mr Maclean that there is unlikely to be any breach of article 1 in circumstances where a licence has been revoked under conditions which were in effect at the time of its grant, and which, as Mr Nesbitt would himself accept on the basis that his submissions regarding burden of proof succeed as they have done, were fair and proportionate.

The traffic commissioner’s decisions as to Muck It other than regarding good repute

[73]It is also unnecessary to the ultimate outcome of this appeal to deal with the traffic commissioner’s other decisions as to Muck It, namely under section 26(1)(h) and section 27(1)(b) and (c). The first two of those decisions were arrived at summarily, as a result of Muck It’s failure to appear. The last of those decisions was consequential on the loss of Mr Huke’s good repute.

[74]It is sufficient therefore briefly to say this. In as much as the two summary decisions depend on the commissioner’s mistaken view as to the burden of proof, they cannot be supported. On the other hand, because of Muck It’s failure to appear and thus to provide any information at all as to its financial standing (section 27(1)(b)), it could have been entirely appropriate for the commissioner to find, quite apart from any question of burden of proof, that “it appears to him that the licence-holder is no longer…of the appropriate financial standing”. Indeed, paragraph 6(2) of schedule 3 (cited above) provides that a licence holder “shall not be considered to be of the appropriate financial standing” unless he has available to him the stated capital and reserves per vehicle. However, it is possible that if Mr Huke had been permitted to address him on the question of financial standing on behalf of the company, particularly against the background of such previous information as the commissioner may have held, the latter would not have come, nor be bound to have come, to a conclusion negative to Muck It on that issue. If so, then he could not have been satisfied that there had been a material change for the purposes of section 26(1)(h), since the lack of financial standing was used by the commissioner as the material change in question. I do not therefore think that it would be safe, and it is in any event unnecessary, to uphold the decision to revoke Muck It’s licence on either of those grounds.

[75]As for section 27(1)(c), that is a little more complicated. The loss of Mr Huke’s good repute meant that he could no longer be recognised as Muck It’s nominated transport manager, and as a result it follows that the company’s requirement of professional competence could no longer be supported through Mr Huke (see paragraph 8(2) of schedule 3). However, as paragraph 10 of schedule 3 provides, where a licence holder relies on a single transport manager to satisfy the requirement of professional competence and that manager ceases to be of good repute, the licence holder shall not be treated as failing to satisfy the requirement of professional competence “until the expiry of such period (not exceeding 18 months) as, in the opinion of the traffic commissioner by whom the licence was issued, is reasonably required for the appointment of a new transport manager”. The commissioner did not specifically address that discretion which paragraph 10 vested in him, no doubt because the company had lost its own good repute and therefore could not avoid mandatory revocation in any event. Nevertheless, if it had been otherwise, and if the company’s own good repute had not been lost and with it its licence, then the commissioner would have had to have considered how long (up to 18 months) he would give the company to restore its professional competence through the appointment of a new, properly qualified, transport manager. Therefore, it does not seem to me that section 27(1)(c) provides a separate and independent ground of revocation.

[76]Ultimately, therefore, the loss of Muck It’s licence rests on the loss of its own good repute.

Disqualification

[77]Section 28(1) and (5) of the 1995 Act entitled the commissioner in his discretion to order Muck It and its directors to be disqualified “either indefinitely or for such period as the commissioner thinks fit” from holding or obtaining an operator’s licence. The commissioner directed Muck It and its two directors to be disqualified for five years. He said that it was a particularly bad case, since the directors had stood aside while Mr Huke manipulated the company, its vehicles and licence to evade the law relating to the disposal of waste. It was submitted to the transport tribunal that the commissioner had failed to carry out a proper balancing exercise before ordering disqualification: on the basis that if Mr Huke had been representing the company he may well have said that its directors knew nothing about its activities. The tribunal considered that this was the highest at which submissions in favour of the directors could have been put, but that even so it was satisfied that the commissioner would have made the same orders.

[78]I am a little troubled at this final conclusion so far as concerns the directors personally. There is plainly nothing here which avails Mr Huke’s creature, the company itself. As for the directors, however, it is undoubtedly true that they were either complicit or complaisant. It may be that, for the purposes of disqualification, it makes little difference which. However, what I am concerned about is that, if the directors were complaisant rather than complicit, Mr Huke may possibly have hidden from them the dangers implicit in non-attendance at the public inquiry. It may be that there is little or nothing that Mr Huke could have said on their behalf, if only because it is extremely doubtful that anything that Mr Huke said on his own bare assertion, even on oath, would have been believed by the commissioner. Nevertheless, if perchance they were ignorant about the company’s activities and possibly even kept in ignorance of the public inquiry or of the commissioner’s powers, then it might be a little harsh for them to be condemned unheard. Their position is different from that of the company itself, for it was Mr Huke who controlled the company and they allowed him to do so. I am in general sceptical as to whether, in the absence of Mr Huke, the directors have in truth any interest themselves in operating a road haulage business, and also whether there is anything that they could say on their own behalf which would make any difference on the question of disqualification: but in case there is, I would allow them the chance of saying it in their own personal defence. To this extent only, I would allow the directors’ personal appeal.

Conclusion

[79]In sum, I would dismiss this appeal, save to the extent of quashing the disqualification of the directors. I would remit this matter to the traffic commissioner for him to consider again the question of the directors’ disqualification, in the light of any representations that they may wish to make to him.

[80]I agree.

[81]I also agree.

Cited in 21 later judgments

and 12 more of the most senior