365 NI Group Ltd: [2016] UKUT 377 (AAC) [2016] UKUT 0377 (AAC)

‘Operator licence number: ON ******* As you were unable to provide financial evidence for the one month immediately preceding your application we are seeking your agreement to provide a full 28 days worth of original bank statements and other financial details (such as overdraft facility agreements or credit card statements) that show the licence holder has access to the required financial facilities and funds. These details are to be provided by 31 March 2016 and cover the month of February 2016. Operator name: 365 NI Group Ltd Signature: Position in business: Date: Please sign above to confirm that you agree to submit the financial documentation requested.’ (x) Several items of documentation were attached to the annotated and signed ‘Supporting Documentation required’ document but that documentation did not include anything further related to the financial evidence requirement. (xi) In the file of papers which is before the Upper Tribunal is a lengthy document titled ‘New Application Referral’

‘FINANCIAL STANDING/PREVIOUS FINANCIAL HISTORY This application requires financial standing of £81,100. The applicant has agreed to a financial review. However, although the applicant has submitted a bank statement, the account currently holds no funds. … 365 NI Group ltd was incorporated on 17 August 2015. The applicant has provided evidence of a bank account in the name of the limited company. However, the limited company currently holds no funds. The applicant agreed to a financial review and was requested to submit a further statement showing an opening/closing balance to the required funds. No further evidence has been provided. Therefore, I must recommend the application is refused under section 12(5) of the 2010 NI act as the applicant has failed to meet the requirements of section 12A(1)(c) - sufficient financial standing.’ (xi) The second section of the ‘New Application Referral’ document is a recommendation from the ‘Senior Team Leader’

‘Given that the applicant has failed to provide appropriate financial evidence even after the information required was set out in our final letter, the Department cannot be satisfied that the financial standing requirement has been met and I therefore agree with the recommendation to refuse the application under section 12(5) of the 2010 Act.’ (xii) Before continuing with the remaining sections of the ‘New Application Referral’ document it is appropriate to refer to an e-mail exchange which took place within the Department and copies of which are included in the file of papers which is before the Upper Tribunal. In an e-mail dated 30 November 2015, a TRU caseworker forwarded an e-mail to a Senior Team Leader which included the following: ‘The recommendation made by … and you (and me, in fairness) was to refuse the application on the basis that the applicant had failed to satisfy the requirements of Section 12A(1)(c) to be of sufficient financial standing. While I am aware that, as noted in the submission, the applicant has failed to provide requested documentation (opening and closing balance?). DHTRU has asked me why, given that the applicant has agreed to a financial review and provided what is described in OLBS as ‘other financial evidence’ as an indicator that there is a working bank account, it was still felt that the applicant had failed to satisfy financial standing at this stage.’ (xiii) In her reply dated 2 December 2015, the Senior Team Leader replied as follows: ‘Section 3 of Annex 5 to Practice Guidance No. 02 states the following with respect to finances: 5 a. If an applicant for a new licence has provided an opening balance or only the closing balance demonstrates access to sufficient funds the evidence can be accepted provided that a finance condition is accepted which requires the applicant to provide a further set of bank statements covering month 3 from the anniversary of the granting of the licence by the end of month 4. This is required so that the Department can be satisfied that they will meet the financial test required of licence holders and the test at 2 above will be applied. The first two pages of other financial evidence provided do not show the account holder name, although I note that account number matches that on the statement provided in the name of the company. The third page, whilst there is a suggestion that the account is linked to the director, it is only a copy and it does not confirm that the account is held by the company, nor is there an account number to link it to the company’s account. Even taking the other evidence into account it still appears to fall short of the requirements as the company is required to demonstrate access to £81,100 yet the other evidence shows only one balance and that is £68,150 if I read it correctly. The company does not therefore “demonstrate access to sufficient funds” based on the evidence provided. An alternative would be to grant the application in part for 15 vehicles, which would require finances of £65,500. There are currently only 3 vehicles specified at present, although the company has stated that additional vehicle registrations will follow. (xiv) The fourth section of the ‘New Application Referral’ document is headed ‘Deputy Head of TRU’s decision’

‘There are a number of concerns with this application including: … Financial standing On the basis of the application as it stands it must be refused under Section 12(5) of the Act 2010 as the operator has not demonstrated compliance with Section 12A(2)(c) – financial standing. The one-off balance is £68,150 which is £12,950 short of the required £81,100 required for 20 vehicles. Even if the amount in the account met with the required opening balance there would still be questions surrounding where the finance came from etc. Therefore, the applicant does not satisfy the Department that he complies with Section 12A(2)(c) as set out above and the licence should be refused.’ (xv) On 11 December 2015 correspondence was forwarded to the Appellant from the Department. The substantive aspect of this correspondence is as follows: ‘I refer to your application for an operator’s licence and the supporting documentation that has been submitted with the application. The Deputy Head of the Department has reviewed the application and I can confirm that your application has been refused under Section 12(5) of the above Act as you have not demonstrated compliance with Section 12A(2)(c) – financial standing. The one-off balance shown in 6 the submitted verified bank statement of £68,150 is £12,950 short of the required £81,100 that is required for the authorisation for 20 vehicles.’

‘I have considered the submission. 356 NI Group has sought a review of the decision in respect of this application. Section 34(10 provides that the Department may review a decision if it is satisfied that a procedural requirement has not been complied with. … In his email of 28 Dec 15 the applicant states that he was led to believe in a telephone call that all documents had been supplied. I can find no record of such clarification in a telephone call. However in all letters from the Department it states that financial standing has not been demonstrated and that for a financial review to be considered an original bank statement showing either an opening or closing balance to the required amount must be forwarded. A date for receipt of documentation was clearly stated in all letters. I have therefore considered the procedural aspects of this application process. I am satisfied that there have been no procedural requirements that have not been complied with in respect of this application. The applicant should be informed that a review of the decision will not be undertaken as the Department is not satisfied that there were any procedural errors made in coming to the decision. … The applicant has sought a stay of the decision. Section 28(2) provides for consideration of requests for a ‘stay’ of a decision. However this relates to decision made under Sections 23(1), (2) of (5), 24(1) or 25(1) or (3). This decision was made under Section 12(5) and therefore, the Department has no vires to consider a request for a stay.’

‘This guidance note includes the requirement for submission of original bank or building society statements covering the last 28 days, the last date of which must not be more than 2 months from the date of receipt of the application which must be submitted with the application. It does however outline the discretion that, if a new business does not have statements for 28 days, an opening balance meeting the requirements can be accepted, but that it may be the subject of a requirement to submit further evidence within a specified period after the date of grant.’

‘…There is a discretion, when the company is new and therefore may not be able to demonstrate access to the resources over the full 28 day period, that if an opening or closing balance can be demonstrated to the required amount prior to the application being determined then the Respondent can consider attaching a financial review to the licence. The Respondent submits that a review cannot be attached to the licence, as the application must fail if the applicant has not 10 demonstrated at least the appropriate balance within the account prior to the application being determined.’

‘The attachment to that letter also clearly set out the supporting documentation required i.e. financial evidence to demonstrate sufficient resources to support your application. As previously the attachment further advised that as the statements showed access to insufficient funds the Department could consider a financial review but that statements to demonstrate either an opening or closing balance and the review would require bank statements covering the month of February 2016, which were to be forwarded by no later than 31st March 2016. Similarly the Respondent submits that the applicant’s submission of the agreement to a financial review to be attached to the licence was therefore separate to the statutory requirement to provide evidence of appropriate finance by 17th November 2015.’

‘… the Respondent declined to accept the Statutory Declaration. The Respondent submits that it is a fundamental principle of company law that every company is a separate legal entity and that in the case of a limited company the funds must be held within the company. The Upper Tribunal consideration of the availability of finance in JJ Adam Haulage (1992/D4) applies and the Respondent further submits that a statutory declaration in an individual’s name is not appropriate for a 11 limited company as finance is not readily available in those circumstances.’

‘12A.— Requirements for standard licences (1) The requirements of this section are set out in subsections (2) and (3). (2) The first requirement is that the Department is satisfied that the applicant— … (c) has appropriate financial standing (as determined in accordance with regulations and Article 7 of the 2009 Regulation);’

‘There is a right of appeal to the Upper Tribunal against decisions by the Head of the TRU in the circumstances set out in s. 35 of the 2010 Act. Leave to appeal is not required. At the hearing of an appeal the Tribunal is entitled to hear and determine matters of both fact and law. However it is important to remember that the appeal is not the equivalent of a Crown Court hearing an appeal against conviction from a Magistrates Court, where the case, effectively, begins all over again. Instead an appeal hearing will take the form of a review of the material placed before the Head of the TRU, 13 together with a transcript of any public inquiry, which has taken place. For a detailed explanation of the role of the Tribunal when hearing this type of appeal see paragraphs 34-40 of the decision of the Court of Appeal (Civil Division) in Bradley Fold Travel Ltd & Peter Wright v Secretary of State for Transport [2010] EWCA Civ. 695. Two other points emerge from these paragraphs. First, the Appellant assumes the burden of showing that the decision under appeal is wrong. Second, in order to succeed the Appellant must show that: “the process of reasoning and the application of the relevant law require the Tribunal to adopt a different view”. The Tribunal sometimes uses the expression “plainly wrong” as a shorthand description of this test.’

‘It is apparent that many of the provisions of the 2010 Act and the Regulations made under that Act are in identical terms to provisions found in the Goods Vehicles (Licensing of Operators) Act 1995, (“the 1995 Act”), and in the Regulations made under that Act. The 1995 Act and the Regulations made under it, govern the operation of goods vehicles in Great Britain. The provisional conclusion which we draw, (because the point has not been argued), is that this was a deliberate choice on the part of the Northern Ireland Assembly to ensure that there is a common standard for the operation of goods vehicles throughout the United Kingdom. It follows that decisions on the meaning of a section in the 1995 Act or a paragraph in the Regulations, made under that Act, are highly relevant to the interpretation of an identical provision in the Northern Ireland legislation and vice versa.’

‘The Department must be satisfied that you have sufficient financial resources to maintain your vehicles and run your business. This requirement is not reduced in the case of contract or lease hire vehicles whose maintenance is included in the hire charge. The financial standing requirement for operators is a continuing and mandatory requirement that must be kept up to date. Existing operators will be liable to demonstrate the increased pound sterling 14 rate whenever their licences are considered by or on behalf of the Department, either at the five year review stage or where the Department considers an operator’s licence for any other reason. The Department will assess the evidence you send in against the current financial levels, which change on an annual basis based on the rate of exchange for the Euro as at 1 October each year and shall have effect from 1 January of the following calendar year. Details of the current financial levels can be found at Annex B of the application. You should ensure that you have sufficient financial evidence to show that you meet the current levels for the type of licence and number of vehicles you are applying to operate. If you are applying for a margin for future expansion, you must ensure that you can show access to sufficient funds for all the vehicles you are applying for, not just the ones you wish to operate straight away. All applicants must provide financial evidence so the DfI can assess this requirement, as follows.’

‘You should provide original bank or building society statements covering the last 28 days, the last date of which must not be more than 2 months from the date of receipt of the application. If original bank statements are not available, for instance if you have an online only account, then you may provide printouts that have been signed and stamped by the bank as verification that they show a true reflection of your account. Any such printouts must contain the account holder’s name and account number, the name of the bank, and all transactions taking place within the 28 day period.’

‘If the applicant has a new business and thus does not have statements for 28 days, an opening balance meeting the requirement may be accepted, with an explanation regarding the source of funds but it may be the subject of a requirement to submit further financial evidence within a specified period after the date of grant (likely to be 6 to 12 months) to provide the operator with an opportunity to then supply three months of evidence.’

‘As you were unable to provide financial evidence for the one month immediately preceding your application we are seeking your agreement to provide a full 28 days worth of original bank statements covering the month of February 2016 by no later than 31 March 2016 by completing and returning the proforma enclosed at Annex A.’

‘We have already commented on the absence of documents and information in the appeal bundle. We believe that it may be helpful if we say rather more on this topic. One of the main functions of the Tribunal is to review the way in which the Traffic Commissioner reached the decision in question. We consider that it is essential, if the Tribunal’s function is to be discharged properly and fairly and if justice is to be seen to be done, that the Tribunal should have before it all the material which was before the Traffic Commissioner at the time that the decision in question was taken. Finally we wish to add the following general points:- (i) It is normally desirable that every appeal bundle should include a copy of the application for the current operator’s licence, any earlier application, if relevant and any application for a variation if relevant. These documents provide a quick and easy way to obtain basic but important information about the operator and the operating centre. No application was included in the present appeal bundle. (ii) Every appeal bundle should contain a complete set of correspondence between the Traffic Area Office and the Appellant relating to the matters giving rise to the appeal. In the present case as we have pointed out the enclosure sent with the letter of 7th January 2000 was omitted as was the copy of that letter sent on 7th February 2000. (iii) The correspondence in the present case refers to a telephone call on 3rd March 2000. The indication from Mr. Duckworth was that Mr. Donald asserted that there was more than one call. Where possible, (and we accept that it may not always be possible), a note should be made of telephone calls with operators. Without such a note it is likely to be very difficult to resolve any dispute as to the content of the call or whether it did in fact take place. Where there is such a note of a call, relevant to the matters giving rise to the decision from which there is an appeal, it should be included in the appeal bundle. (iv) Every appeal bundle should contain a record of the decision from which there is an appeal. In the great majority of cases this presents no problem because there will either be a transcript of the Traffic Commissioner’s oral decision or a copy of a reserved decision. This case falls into a different category because it was a decision made in chambers. The appeal bundle contains no document of any description on which the decision is recorded. In our view this is simply not acceptable. Both the Tribunal and the operator are entitled to know (a) who made the decision in question, (b) on what ground the decision was made and (c) the reason for concluding that the ground was made out. Experience of chambers decisions taken in 19 other Traffic Areas suggests that this information can be adequately provided in a very few sentences. In our view nothing less will enable the Tribunal to be satisfied that the Traffic Commissioner has correctly identified the issue(s) and has correctly applied the appropriate test.’

‘The Traffic Commissioner clearly felt that the Minute dated 16 January 2008, (see paragraph 2(iii) above), ought not to have been disclosed to Mr. Cunningham. In the absence of any other document from which the reason (or lack of reason) for the refusal of the application to cancel the services at short notice can be determined we disagree with that view. In our view the Appellants were entitled to know the basis on which the application was refused and they were entitled to know whether or not the correct test had been applied. In the absence of a reasoned decision or a fully reasoned letter giving the grounds for refusal, (neither of which was provided), it seems to us that disclosure of the underlying documentation was essential. How else could the correctness of the decision be challenged? How else could the Tribunal give reasons for saying either that the decision was wrong or that it was correct?’

‘I refer to your application for an operator’s licence and the supporting documentation that has been submitted with the application. The Deputy Head of the Department has reviewed the application and I can confirm that your application has been refused under section 12(5) of the above act as you have not demonstrated compliance with section 12A(2)(c) – financial standing. The one-off balance shown in the submitted verified bank statement of £68,150 is £12,950 short of the required £81,100 that is required for the authorisation for 20 vehicles.’