Horn (t/a LR Horn & Canalside UK Ltd), Re [2010] UKUT 283 (AAC)

IN THE UPPER TRIBUNAL
ADMINISTRATIVE APPEALS CHAMBER
[2010] UKUT 283 (AAC)Venue (TRAFFIC COMMISSIONER APPEALS), ON APPEAL FROM THE DECISION OF BEVERLEY BELL,, TRAFFIC COMMISSIONER for the NORTH WESTERN TRAFFIC AREA,
Between
Horn (t/a LR Horn & Canalside UK Ltd), Re
Date 23 March 2010
For the Appellant s: Stephen Horn (Director, Canalside UK Ltd); Lewis Horn.

Appeal heard at: Victory House on 14 July 2010

Date of decision: 22 July 2010

DECISION OF THE UPPER TRIBUNAL :The appeals are dismissed.Cases referred to:

Alison Jones t/a Jones Motors: (1999 L56)

Marilyn Williams (5/2000)

BKG Transport Ltd (39/2001)

Reasons:1) These appeals are against the decisions of the Traffic Commissioner for the North Western Traffic Area made on 23/3/2010 when she revoked the operator’s standard international operator’s license held by Canalside UK Ltd, under sections 26 and 27 of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”), and refused the application for a standard international licence made by Lewis Robley Horn under section 13 of the Act.2) The factual background to this appeal appears from the documents, the transcript and the Traffic Commissioner’s decision and is as follows:(i) Canalside UK Ltd is the holder of a standard international licence authorising 1 vehicle and 1 trailer. The licence was granted on 8/2/2008 following a public inquiry - which was called because the company appeared to be a successor to Canalside Ltd, which had been placed in compulsory liquidation in September 2007.(ii) At the time of the application, the sole director of Canalside UK Ltd was Lewis Horn. The nominated Transport Manager was Robert Tait who, it was said, would work as the operator’s transport manager for 8 hours every week. Lewis Horn co-signed Mr Tait’s nomination form (TM1G). Stephen Horn (Lewis Horn’s son) was named on the company’s application form as a person responsible for undertaking the maintenance of any authorised vehicles, along with ‘Truck Smart’ at Cabus Garage, Lancaster. At some point, Stephen Horn became a director of Canalside UK Ltd.(iii) On 29/4/2009, Lewis Horn applied in his own name for a Standard International operator’s licence authorising 1 vehicle and 1 trailer. The nominated Transport Manager was Damien Richard Morey. Question 9 of his nomination form (TM1G) asks:
“List ALL other permanent or regular employment (include self-employment and non operator licensing related employment)”
. No other employments were stated. Lewis Horn again co-signed this form.(iv) In relation to Canalside UK Ltd, a maintenance investigation was carried out on 2 June 2009. The outcome was unsatisfactory for a number of reasons, including the stretching of the time gaps between safety inspections, incomplete records and lack of detail/continuity, no rectification following driver defect reporting, and prohibitions.(v) Additionally, it transpired that Mr Tait had had no recent involvement with the operation or company and the Vehicle Examiner was told that this situation had gone on for approximately 12 months.(vi) On 20/9/2009, Lewis Horn resigned as a director of Canalside UK Ltd.(vii) The Traffic Commissioner decided to hold a public inquiry to consider regulatory action against Canalside UK Ltd and, at the same time, to consider whether to grant Lewis Horn’s application. The joint public inquiry was listed to take place on 28/1/2010. In the meantime, interim authority to Lewis Horn was not granted. Call-up letters dated 23/12/09 were sent by First Class post to the company at its correspondence address and registered office, and to Lewis Horn at his correspondence address. Mr Tait and Mr Morey were also asked to attend, and the requirements in relation to financial standing were spelled out (£6,200 for each licence).(viii) The papers contain a letter dated 24/1/2010 from Stephen Horn on behalf of Canalside UK Ltd stating that he had only received the information relating to the public inquiry on 23/1/2010 and the report from the Vehicle Examiner and the list of prohibitions were missing. He said he would attend on 28/1/2010 and would be “requesting the information”. He also submitted certain financial information for the Traffic Commissioner’s consideration.(ix) Both Lewis Horn and Stephen Horn attended at the public inquiry but they were not professionally represented. Mr Morey also appeared, but Mr Tait did not attend. Mr Smith, the VOSA Vehicle Examiner was also present.(x) The Traffic Commissioner began by raising the issue of papers. Stephen Horn told the Traffic Commissioner that he had only received the brief on the previous day, and he did not have the prohibition notices referred to. He agreed, however, that he should have had the prohibitions when they were issued. The details of the prohibitions were then gone through. Stephen Horn subsequently told the Traffic Commissioner that he had moved to Oxfordshire in November 2009 and he did not notify the Traffic Commissioner’s office of the move until he made contact over not having his public inquiry paperwork. The Traffic Commissioner asked him:TC: So how would we know you’d moved?A: You wouldn’t.(xi) No applications for an adjournment were made and, after sorting out the documentation, no adjournment was offered. The Traffic Commissioner also checked documentation with Mr Morey and put to him that his application form stated that he would be working “two hours on a Monday and two hours on a Thursday”. Neither Mr Morey, nor Lewis Horn, disagreed.(xii) The Traffic Commissioner decided to hear both matters together although she made it clear that she would “look at each case on its own facts”. Neither Lewis Horn nor Stephen Horn objected to this approach.(xiii) Some financial matters were then discussed (without, it seems, going in camera ) and Mr Smith adopted his statement with a minor amendment in relation to a registration number.(xiv) After confirming his statement, Mr Smith added that Canalside UK Ltd no longer appeared to use any commercial contactor for maintenance and, when he had visited the company’s correspondence address and registered office on 30/12/2009, he found the property empty. Stephen Horn then told the Traffic Commissioner that he was quite happy with the Vehicle Examiner’s evidence.(xv) Stephen Horn went on to explain to the Traffic Commissioner that he had, in fact, moved out of Home Farm, Lancaster (the company’s correspondence address and registered office) in November 2009 and was now living in Banbury, Oxfordshire. The truck, however, was presently in Kendal.(xvi) Later during the public inquiry the Traffic Commissioner was looking at records from November 2009 and noted that, for vehicle Y443 the operator was noted as ‘L Horn, Canalside Ltd’. Stephen Horn said his father’s name appeared because he was driving it. Questioning of Stephen Horn then continued:TC: ‘Operator L Horn’. So your father was driving it, why weren’t you driving?A. I’d taken another job down Gloucester for a couple of months.TC: And what were you driving?A. Nothing at the time.TC: What sort of job had you taken in Gloucester?A. Had to take a farm manager’s job.TC: When did you have this farm manager’s job?A: 16 th … end of October, 16 October.TC: Are you still doing it?A. No.TC: When was that until?

A. 11 th … 11 th December

…

TC: So you weren’t operating the vehicle at all then, your father was?A. Well yes, he was operating it on my behalf.

Stephen Horn went on to say that he was still living in Banbury

TC: So what are you doing, have you got another job at the moment?A. No, not at the moment.TC: So what are you doing?A. Unemployed at the moment, Ma’am.TC: So what’s been happening to your vehicle since 11 th December, who’s been driving it?A: My Dad’s been driving.TC: Why haven’t you?A: Because my Dad was driving and I’ve been trying to find another job elsewhere.TC: But why don’t you operate the vehicle and let your father find his own work?A: I’ve no idea, probably because he just … because he’s just been helping me out as well.

…

TC: So you’re living at this address in Lower Brailes in Banbury?A: Yes.TC: And you’re claiming dole money, are you?A: At the moment, yes.Subsequently, when the Traffic Commissioner was looking at Lewis Horn’s personal bank statements she noticed that he appeared to be paying for Canalside UK Ltd’s vehicle. She asked Lewis Horn:TC: Why are you paying Close asset Finance?A: Well it’s just convenient, that’s all, for me to pay while the money’s coming into my account.

…

TC: You’re operating the vehicle aren’t you?A: Yes, yes.TC: Yes. And your son’s not, is he?A: Not when you look at it from that point of view, no.(xvii) With regard to Canalside UK Ltd’s Transport Manager, Mr Tait, Stephen Horn told the Traffic Commissioner that although he had paid him twice:
“I’ve never seen him … I made various attempts to contact him and get him to come and see us and make a meeting and get things sorted, but he just wouldn’t turn up”
. Stephen Horn said that Mr Tait stopped coming in June 2008.(xviii) The Traffic Commissioner explored standards of maintenance in relation to the company’s vehicle, especially since it appeared that, until he left the area, maintenance had been undertaken by Stephen Horn, resulting in the vehicle having “an absolute catalogue of defects”. Stephen Horn agreed that, in August 2009, the vehicle was “in a dreadful condition”.(xix) In due course, Mr Morey (Lewis Horn’s proposed Transport Manager) was questioned. He said that he’d make a minimum of four visits to Lewis Horn every year. He said that he also worked 40 hours a week for Montgomery Transport and, on top of that, he did a bit of driving for McAdam’s Recovery. Mr Morey went on to say that he had worked for Montgomery’s for two years and then, when pressed, that he had started with them, on an agency basis, doing two or three nights per week, from about February 2009.(xx) Despite promising to issue her written decision within two weeks, the Traffic Commissioner did not issue her decision until 23/3/2010. She took a dim view of Canalside UK Ltd’s maintenance arrangements, of the condition of the authorised vehicle when checked over by an outside contractor, of Stephen Horn’s maintenance abilities (or lack of them), of the failure to keep her informed about a variety of crucial matters, and of the failure to respond properly to advice from VOSA.(xxi) The Traffic Commissioner also took a dim of view of Lewis Horn’s conduct, particularly that:· despite being notified that no interim authority was in existence he effectively operated the vehicle on Canalside UK Ltd’s licence, and· Mr Morey had not disclosed his employment with Montgomery’s on the TM1G nomination form, and 4 visits a year was wholly insufficient.(xxii) The Traffic Commissioner also concluded that neither Canalside UK Ltd, nor Lewis Horn, had demonstrated financial standing.3) At the hearing of this appeal, Stephen Horn said that he would represent his father, and the company. There are grounds of appeal in relation to Lewis Horn but none in relation to the company because, according to Stephen Horn, he had not received the Traffic Commissioner’s written reasons, even though, on 24/3/2010, they were sent by Recorded Delivery to the address in Banbury that he had previously given. We therefore permitted him to raise his grounds of appeal, orally, at the hearing.4) The first general point made was that the Traffic Commissioner was wrong to hold the two inquiries together, which (it was claimed) led to chaos and confusion. In these circumstances, the tribunal resolved to deal with each appeal separately, but as we progressed through Stephen Horn’s points in relation to the company and in relation to his father, it became clear that this was artificial and practically impossible. This is why, in the end, we have felt constrained to issue a joint decision, as the Traffic Commissioner did.5) In concluding that the Traffic Commissioner was right to adopt the procedure permitted by section 35(2) of the Act, we noted that Lewis Horn had been a director of the company at the time of the maintenance investigation, and then until 20 th September 2009. The Traffic Commissioner had concluded that he then took over operation of Canalside UK Ltd’s vehicle in Stephen Horn’s absence. Canalside UK Ltd’s financial standing depended upon an offer of a loan from Lewis Horn, whilst Lewis Horn’s own financial standing depended on the same funds: an alleged but unproved equity in his dwelling house and unused balances on a number of credit cards. We asked for examples of where it appeared in the transcript or decision that the Traffic Commissioner had become confused, and no persuasive examples were identified. Stephen Horn then referred us to the cases of Marilyn Williams (5/2000) and BKG Transport Ltd (39/2001) , but the application of these cases would depend upon a finding by us that the conduct of this public inquiry was fatally flawed, which – for the reasons we give – we do not think it was. No objection was made at the time to the hearing of both matters together, and we are satisfied that no prejudice was caused by the Traffic Commissioner’s approach. Indeed, had she not considered matters together, a number of important evidential connections could not have been made.6) In relation to Lewis Horn, the grounds of appeal challenge the Traffic Commissioner’s finding that he operated Canalside UK Ltd’s vehicle on his own behalf. He was, it is said, merely assisting in the company’s well being. Issue was taken with some of the evidence relied upon by the Traffic Commissioner, including payments to Fuel Cards, Lancashire DAF, North West Tyres, Tyre Zone Ltd and Close Asset Finance from Lewis Horn’s bank account.7) For our part, we do not think that it can be said that this was a conclusion the Traffic Commissioner was not entitled to reach on the evidence before her. Whether or not a person is using another operator’s authorised vehicle for the carriage of goods for reward, or in connection with their own business (and is thereby taking improper advantage of another person or company’s authorisation when they have no authorisation of their own) will ultimately be a question of fact. As was stated in Alison Jones t/a Jones Motors: (1999 L56), a director of a company holding an operator’s licence has a duty to ensure that they are able to exercise constant supervision and monitoring. Stephen Horn was the sole director of the company from 20 th September 2009. Consequently where, as here, it became evident that constant supervision and monitoring was simply not possible, the Traffic Commissioner was entitled to ask who, in fact, was running things. She was entitled to look at all the evidence, including evidence in relation to who was driving the vehicle and on what basis, who was paying for the vehicle, arranging maintenance, and dealing with business. No single fact will necessarily be conclusive, but the totality may create a clear picture. Even after his job as a farm manager ceased, Stephen Horn did not return to resume control of his business. Instead he told the Traffic Commissioner that he was unemployed and was claiming unemployment benefit. We do not think that the Traffic Commissioner placed undue reliance on any one factor (e.g. the small amounts paid to keep a fuel card active) and we conclude that the Traffic Commissioner had little alternative but to find that Lewis Horn was operating Canalside UK Ltd’s vehicle, pending the hoped-for grant of his own licence.8) In relation to the Transport Manager, the Traffic Commissioner is criticised for not noting that the proposed visits by Mr Morey were for a minimum of 4 times a year, and not a maximum. We are satisfied that the Traffic Commissioner did not misunderstand the position. In any event, the key issue in relation to the Transport Manager related not just to the minimum number of visits, but also to his other commitments, and his failure to disclose the same when completing his nomination form – a form countersigned by Lewis Horn. Section 58(1) of the Act provides that, either alone or jointly with other persons, a Transport Manager must exercise “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”. On the evidence before her, the Traffic Commissioner was entitled to conclude that she was not satisfied, on balance, that Mr Morey would, or could, properly discharge the duties of Transport Manager, even for an operator running only one vehicle.9) So far as finance is concerned, Stephen Horn contended that the Traffic Commissioner had not properly analysed Lewis Horn’s circumstances. We think that this is arguably Lewis Horn’s strongest point. No in camera discussion took place, and there appears to be no specific consideration of Lewis Horn’s unused credit card allowances, although Traffic Commissioners are rightly reluctant to take account of more than one credit card, given the ease with which these can be obtained. Moreover, the question of how a credit card will be re-paid from other funds will, generally, still need to be addressed in most cases.10) Having said that, were Lewis Horn’s application solely dependant upon this aspect of the case, we would have considered remitting the case back to the Traffic Commissioner for her to look carefully at Lewis Horn’s proposals. However, we conclude that the appeal fails for a range of other reasons. Lewis Horn was a director of Canalside UK Ltd at a time when it continued operating, for a lengthy period, without a transport manager in place, when maintenance arrangements were changed, when its vehicle was in a very poor state of repair, and when the unsatisfactory maintenance investigation took place. Then, after resigning as a director, he effectively took over operation of the vehicle when the sole remaining director absented himself to take up other work in a different part of the country. He countersigned a misleading form in relation to his proposed transport manager and, when the true facts emerged, it was far from established that the company could satisfy the requirement of professional competence. In these circumstances, the Traffic Commissioner was right to refuse the application and there was, and is, little point in further investigating finance.11) In relation to Canalside UK Ltd, Stephen Horn relied upon the same points referred to above in so far as they also affected the position of the company. Additionally, however, he complained that the Traffic Commissioner had not offered him an adjournment. This argument is superficially attractive, but does not withstand analysis. The call-up letter, which on its face states that the Vehicle Examiner’s report is attached, was sent in good time to the company’s correspondence address and registered office. Stephen Horn’s departure for Oxfordshire had not been notified to the Traffic Commissioner. The prohibition history was, in any event, well known. We also noted that some of the worst features of this case emerged with clarity at the public inquiry – particularly Stephen Horn’s absence from his business, his part in allowing his father to effectively operate the vehicle in his absence, and the detail (and extent) of the failure to ensure the regular presence of a transport manager.12) Although a benevolent Traffic Commissioner may have offered an adjournment, we do not think – on the particular facts of this case – that the Traffic Commissioner was obliged to do so. We cannot see that any prejudice was caused. After the Vehicle Examiner had given evidence, Stephen Horn said that he was happy with the evidence, and no application for an adjournment was made. Although the company did not have professional representation before the Traffic Commissioner, and Stephen Horn apparently felt that the Traffic Commissioner’s manner was brusque, our view from reading the transcript and hearing from Stephen Horn ourselves is that the Traffic Commissioner went out of her way to use plain English, to engage with both Stephen Horn and Lewis Horn in a down-to-earth manner, and to ensure that they covered all the ground and that they had their say. There was no suggestion that material matters could not be properly addressed for lack of notice or lack of opportunity. Stephen Horn had no trouble confidently developing his arguments before us, and we do not believe that the company was prejudiced as a consequence of its failure to make reasonable arrangements to receive documentation properly sent to it by first class post, in good time, to its correspondence address and registered office.13) Finally, apart from repetition of points covered in the appeal of Lewis Horn, the company argued that it did satisfy the requirement of financial standing. Again, there was no in camera discussion. However, financial standing was clearly problematic. The company’s case depended on an offer from Lewis Horn, but apart from an unproved assertion of equity in his dwelling house, he did not demonstrate sufficient funds upon which his offer could be based. His own overdraft facility was, on occasion, used to the full – and he was relying on his credit cards to support his own application. Moreover, even if the company had overcome this hurdle, we do not think it would have made the slightest difference to the outcome.14) Canalside UK Ltd operated for an inordinate period of time without a Transport Manager, and the Traffic Commissioner was not informed. Its vehicle was operated in a very poor state of repair, for which Lewis Horn and Stephen Horn were both responsible, and its sole director effectively gave up control for a period. Despite advice from the Vehicle Examiner, the company failed to take timely or effective remedial steps, particularly in relation to its maintenance arrangements, systems, and Transport Manager. Right up to the point of the public inquiry, the company continued to operate without a Transport Manager, which is particularly serious given the absence, in addition, of its director.15) In all the circumstances we consider that the Traffic Commissioner’s conclusion that revocation was both appropriate and proportionate is amply justified on the evidence. She asked herself the correct questions and properly concluded that this licence, and business, should be brought to an end.16) The only criticism we have, apart from a possible failure to explore finance in greater detail (which, in the event, does not affect the outcome of these appeals), is in relation to the Traffic Commissioner’s delay in promulgating her written decision. Had the delay continued much longer it would, in itself, have rendered the Traffic Commissioner’s decisions extremely vulnerable.17) We note that no disqualification was imposed on Canalside UK Ltd. We cannot see any way in which both the company and Lewis Horn could both obtain licences in the future. But it is open to anyone who is not disqualified to put together a sensible and solid proposal in relation to maintenance arrangements, finance and professional competence. Repute can be regained in time and, given the delays in this case, and subject to the other requirements of the law being complied with, it may be possible for a future application to be considered sympathetically. We suspect, however, that any application involving either Stephen Horn or Lewis Horn will have to be considered at public inquiry.

Judge Mark Hinchliffe, DCP

22 July 2010

Cited in 1 later judgment