Mr K McDonald trading as River Tay Executive Travel: [2016] UKUT 539 (AAC) [2016] UKUT 539 (AAC)

UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

[2016] UKUT 539 (AAC)

Case No T/2016/27

Between

Mr K McDonald trading as River Tay Executive TravelAppellant

Before

Mr E. Mitchell

Judge of the Upper Tribunal

Mr D Rawsthorn Member of the Upper Tribunal

Mr J Robinson Member of the Upper Tribunal

Date 2 December 2016

Category: Transport traffic commissioner and doe ni appeals

Subcategory: Transport traffic commissioner and doe ni appeals disqualification

[1]In 2003, Mr McDonald was granted a standard international public service vehicle (PSV) operator’s licence. The operator’s licence specified Ms I Armstrong as transport manager for the PSV operation.

[2]By notification dated 1 July 2014 (although receipt-stamped 7 August 2014), Ms Armstrong notified the Office of the Traffic Commissioner (OTC) that she wished to be removed as transport manager from the licence.

[3]Ms Armstrong’s resignation was preceded by a Driver & Vehicle Standards Agency (DVSA) investigation which led DVSA to conclude there had been a number of breaches of drivers hours rules by the operation’s drivers.

[4]In November 2015, Mr McDonald informed the OTC that he wished to nominate a Mr William Spiers as his transport manager. However, in Mr McDonald’s subsequent public inquiry evidence he said that Mr Spiers later decided that he did not want to be the operation’s transport manager.

[5]The Scottish Traffic Commissioner (hereafter “Commissioner”) conducted two public inquiries on 3 December 2015 and 6 January 2016. At the second inquiry, Mr McDonald produced new evidence as to his financial standing (pp. 971 to 1067 of the OTC file).

[6]The Traffic Commissioner was dealing with a complex multi-faceted case. Not only did it concern Mr McDonald’s operator’s licence, the Commissioner also had to address the professional competence and good repute of Ms Armstrong as a transport manager, whether to revoke an operator’s licence granted to another PSV operator (a partnership trading as Nevis Coach Hire) and driver conduct matters for four PSV T/2016/27 3 drivers. We should note that the Commissioner decided that Ms Armstrong had lost neither her repute nor her professional competence and decided not to revoke Nevis Coach Hire’s operator’s licence.

[7]Mr McDonald does not dispute the Traffic Commissioner’s findings of fact concerning events in the period between Ms Armstrong’s resignation and the Commissioners’ public inquiries.

[8]The Commissioner’s findings included:(a) On 23 August 2014, Mr McDonald wrote to the OTC stating that he was in the process of hiring a new transport manager and would produce further information in four weeks. In the meantime, the previous transport manager (Ms Armstrong) was “coming in weekly to check tachographs and operations”;

(b) During her tenure as transport manager, Ms Armstrong worked part-time carrying out her duties at weekends;

(c) “latterly the expansion of the business to 5 vehicles, with Ms Armstrong’s full-time employment prevented her from engaging with the drivers and an absence of robust written procedures resulted in vulnerability in the effectiveness of the transport manager”;

(d) Ms Armstrong “detected infringements on the [tachograph] charts and…alerted Mr McDonald to the deficiencies in relation to feeder journeys and neglect of the mode switch. She fully trusted Mr McDonald to raise these matters with the drivers and he assured her that he would do so. Her trust and confidence in Mr McDonald to tackle the adverse matters which she drew to his attention in her role as transport manager was misplaced and breached by him. Whilst he may from time to time have spoken to drivers, he did not implement robust measures to ensure that he scheduled duties compliantly and that a true record of drivers hours was kept”;

(e) Ms Armstrong had only wanted to act as transport manager for a temporary period to help him establish his business and she told Mr McDonald “years ago” that he needed to make alternative arrangements;

(f) Mr McDonald presented as a “nice guy, a genial chap…who wanted to be on friendly terms and would not present as being resistant to advice or authority”;

(g) Mr McDonald had complied with Traffic Examiner requests for information and to see him. He had been co-operative; T/2016/27 4 (h) “Mr McDonald would have presented himself to Ms Armstrong as one who was listening to her, giving her the assurances she needed to hear, being at the operating centre when she needed him to be there and so on. I am sure he would have disliked any confrontation with drivers”; (i) “Ms Armstrong would not have known the extent of non-compliance [with drivers’ hours and tachograph rules] because she trusted Mr McDonald implicitly. He was the operator and ultimately he was responsible for his own licence and speaking to his own drivers. He knew that Ms Armstrong did not have the availability to see the drivers and that the onus was on him to tackle the infringing behaviour which she had drawn to his attention”; (j) Mr McDonald “breached the licence undertakings in relation to the drivers hours rules and tachograph regulations”; (k) Mr McDonald “has not had in place proper systems to ensure that journeys were properly recorded; that drivers were taking breaks and rest when required to do so on all occasions; that he allowed prevalent failure to use the mode switch both in his own driving and that of his employees”; (l) The Commissioner found it “incredulous” that Mr McDonald had not himself read a tachograph analysis report of his operations produced by Penkridge Group, a transport consultant, and supplied to him prior to the public inquiry held on 3 December 2015; (m) The Commissioner had doubts as to whether Mr McDonald had the required financial standing; (n) Of itself, the absence of a transport manager called for revocation of Mr McDonald’s licence because, without a transport manager, Mr McDonald’s operation could not meet the requirement for professional competence. In addition, the Commissioner found that Mr McDonald had lost his good repute due to his own actions or inactions, and could not be trusted with an operator’s licence, because he failed to follow the advice of his former transport manager and a DVSA Traffic Examiner; (o) Mr McDonald tried to rely on his “genial nature” to circumvent attempts made to ensure his operation complied with PSV regulatory rules and he had never paid enough attention to the rules; (p) Mr McDonald’s attempts to rectify matters were “last minute” and “too little, too late”; T/2016/27 5 (q) There were no documented roadworthiness failings for Mr McDonald’s operation;

[9]After the final public inquiry, but before the Commissioner had made her decisions, Mr McDonald notified the OTC on 28 April 2016 that he wished to vary his operator’s licence to add a new transport manager. The proposed transport manager was Mr C Boyce who resided in St Leonards-on-Sea. There is no evidence in the OTC file that the Commissioner was expressly requested to take this matter into account in making her decision. In fact, the Commissioner, in refusing Mr McDonald’s subsequent application for a stay of her decision said she was unaware of this application when she made her decision.

[10]On 19 May 2016 the Commissioner made the following decisions:(a) she revoked Mr McDonald’s operator’s licence with effect from 23.59 on 31 May 2016;

(b) under section 28(1) of the Transport Act 1985, she made an order disqualifying Mr McDonald from holding or obtaining a PSV operator’s licence together with a direction under section 28(4) that the traffic commissioners’ powers in section 17(2) of the 1981 Act would be exercisable in relation to a PSV licence held by a company or partnership with which Mr McDonald was involved as described in section 28(4). The order and direction had effect for two years from 23.59 on 31 May 2016.

[11]On 26 May 2016, Mr McDonald applied for the Traffic Commissioners’ decisions to be stayed pending his appeal to the Upper Tribunal. The Scottish Traffic Commissioner was on leave and could not deal with the application herself. In her absence, another Traffic Commissioner made a decision that the Scottish Traffic Commissioner’s decisions were not to take effect until 7 June 2016 by which time she would be able to consider the stay application herself.

[12]On 1 June 2016, the Scottish Traffic Commissioner refused Mr McDonald’s application for a stay. By this time, she had been made aware of the application for Mr Boyce to be specified as transport manager on Mr McDonald’s licence. The Commissioner’s stay refusal decision records that, in her view, the proposal for Mr Boyce to be the designated transport manager did not require her to re-open the public inquiry or change her decision.

[13]Mr McDonald made a renewed application for a stay to the Upper Tribunal. This was refused by Upper Tribunal Judge Levenson on 9 June 2016. T/2016/27 6 The public inquiries

[14]In the light of Mr McDonald’s grounds of appeal, we have analysed the inquiry transcripts to see what they reveal about Mr McDonald’s plan to nominate a new transport manager and to enter into new contracts. The inquiry hearing on 3 December 2015

[15]At this hearing: - p.783H of the OTC file – the Commissioner was informed a transport manager application had been made but the Commissioner was “astonished that he [the proposed manager] has not been brought as a witness”; - p.785B – the Commissioner, speaking to a solicitor appearing for Mr McDonald, said it was “extraordinary” that his preparation for the inquiry did not include presenting as a witness his proposed transport manager - p.785H – the Commissioner notes she was dealing with an operator with a “very precarious licence”; - p.799H – Mr McDonald’s solicitor requested an adjournment because the Commissioner’s observations caused him a “degree of concern”. From the Commissioner’s final decision, it is clear that the reason for the adjournment was a potential conflict of interest on the part of the solicitor who appeared for Mr McDonald at the inquiry.

[16]The Commissioner agreed to the request for an adjournment. The inquiry hearing on 6 January 2016

[17]At this hearing, Mr McDonald was represented by Mr Docherty (who represented him before the Upper Tribunal): - p.873G – Mr McDonald accepted in evidence that he had not had a transport manager since Ms Armstrong departed in 2014; - p.875H – in response to the Commissioner’s questions, Mr McDonald accepted it was a “serious matter” for an operator with a standard licence to operate without a transport manager; T/2016/27 7 - p.877A – Mr McDonald informed the Commissioner that, following Ms Armstrong’s departure, he placed advertisements for a new manager without success and so he thought “well, I’ll just carry on”; - p.877F – Mr McDonald said he can “only wholeheartedly apologise” for carrying on his operation without a transport manager…I’ve been sticking my head in the sand”; - p.879B – Mr McDonald informed the Commissioner that Mr Spiers, his proposed transport manager, was “quite a quiet man” who was “a bit scared to come up to the PI”. Mr McDonald added that “once I mentioned the public inquiry to him, he declined”; - p.879B – Mr McDonald said an organisation called the Penkridge Group had tried to locate a transport manager for him but candidates in England were not willing to travel to Scotland; - p.879F – more recently, an organisation called IFTS located a potential transport manager who lived in Glasgow and he would be willing to attend the inquiry; - p.881C – despite the above evidence, Mr McDonald told the Commissioner he did not know the name of the potential transport manager identified by IFTS and, furthermore, he had withdrawn his interest. IFTS continued to search for a transport manager; - p.883A – Mr McDonald said he felt let down by the organisations he had paid to try and find a transport manager for him; - p.883D – Mr McDonald informed the Commissioner that, if his licence were revoked, the business would be finished, staff laid off and vehicles repossessed; - p.925F – in closing submissions, Mr McDonald’s solicitor said “Mr McDonald’s licence is in extreme danger given what you have heard”;

[18]Given the way in which this appeal has developed, we set out in full the Commissioner’s reasons for making a disqualification

[19]Section 12(1) of the Public Passenger Vehicles Act 1981 (“the 1981 Act”) prevents a public service vehicle from being used on a road for carrying passengers for hire or reward “except under a PSV operators' licence granted in accordance with the following provisions of this Part of this Act”.

[20]The requirements for granting a standard PSV operators’ licence are contained in sections 14ZA and 14ZC of the 1981 Act (section 14).

[21]The requirements in section 14ZA include that a traffic commissioner is satisfied:(a) an applicant for a licence is of good repute (section 14ZA(2)((b)). Under Schedule 3(1) determinations as to good repute must have regard to all the relevant evidence including, in particular, information a commissioner has as to a person’s previous conduct in operating vehicles in the course of a business;

(b) an applicant is professionally competent (section 14ZA(2)(d)). Questions as to professional competence are to be determined in accordance with Schedule 3(4), (5) and (6) to the 1981 Act. Schedule 3(4) provides that, where an individual is not himself professionally competent, the requirement for professional competence is satisfied “if, and so long as, he has a transport manager of his road passenger transport business who is of good repute and professionally competent”;

(c) an applicant has designated a transport manager in accordance with Article 4 of the 2009 Regulation (Regulation (EC) no 1071/2009) who is of good repute (as determined in accordance with Schedule 3(1) to the Act) and professionally competent (as determined in accordance with Schedule 3(6) to the Act) (section 14ZA(3)(a) and (b)). T/2016/27 9

[22]The requirement for professional competence is a qualifications-based requirement. Schedule 3(6) to the 1981 Act provides:

“An individual shall be regarded as professionally competent for the purpose of Part II of this Act if, and only if,— (a)he has demonstrated that he possesses the requisite skills by passing a written examination organised by an approved body and is the holder of a certificate to that effect issued by that body; or (b) he is the holder of any other certificate of competence, diploma or other qualification recognised for the purposes of this paragraph by the Secretary of State.”

[23]Since Mr McDonald did not claim personally to meet the qualifications-based requirement for professional competence, the only way in which he could meet the requirement for professional competence was by having a transport manager who was professionally competent and of good repute.

[24]The requirements in section 14ZC include that a traffic commissioner is satisfied there will be adequate arrangements for securing compliance with the requirements of the law relating to the driving and operation of the vehicles proposed to be used under the licence.

[25]On issuing a standard licence, section 16A of the 1981 Act requires a traffic commissioner to attach certain conditions, including a condition requiring the licenceholder to inform a traffic commissioner of:(a) any event which could affect the fulfilment by the licence-holder of any of the requirements of section 14ZA(2) of this Act, and to do so within 28 days of the event; and

(b) any event which could affect the fulfilment by a transport manager of the requirements mentioned in section 14ZA(3)(a) and (b) of the 1981 Act, and to do so within 28 days of the event coming to the licence-holder's knowledge.

[26]A failure to comply with a section 16A condition is a criminal offence (section 16A(3)) and is also a ground on which a traffic commissioner may revoke an operator’s licence.

[27]Section 17(1) of the 1981 Act requires a traffic commissioner to revoke an operator’s standard licence in certain cases, including where; T/2016/27 10 (a) the licence-holder no longer satisfies the requirements of section 14ZA(2), including, that is, the requirement for good repute and professional competence; (b) the designated transport manager no longer satisfies the requirements of section 14ZA(3).

[28]Section 17(2) and (3) of the 1981 Act permits a traffic commissioner to revoke an operator’s licence in certain cases, including where there has been a contravention of any condition attached to a licence and where, since the licence was granted, there has been a material change of circumstances.

[29]Section 50 confers a right of appeal to the Upper Tribunal against certain traffic commissioner decisions including a decision to revoke a licence and a decision to disqualify a PSV operator by order or direction under section 28 of the Transport Act 1985.

[30]Section 84(1) of the 1981 Act provides:

“It is hereby declared that nothing in this Act is to be treated as conferring on the holder of a licence granted thererunder any right to the continuance of any benefits arising from, or from a licence granted under, this Act, or from any conditions attached to any such licence.”

[31]Section 28(1) of the Transport Act 1985 gives a traffic commissioner power, upon revoking an operator’s licence, to order the former holder of the licence “to be disqualified, indefinitely or for such period as he thinks fit, from holding or obtaining a PSV operator's licence”.

[32]Alongside an order under section 28(1) of the 1985 Act, a traffic commissioner may also under section 28(4) direct that, if a disqualified person is a director of, or holds a controlling interest, in a company which holds a PSV licence or operates a PSV vehicle in partnership with a person who holds a PSV licence, that the powers under section 17(2) of the 1981 Act (revocation and suspension of operators’ licences) are exercisable in relation to that licence.

[33]Section 28(6A) gives a traffic commissioner power to cancel a disqualification order and any direction given under section 28(4). Grounds of appeal

[34]Mr McDonald relied on the following written grounds in his appeal to the Upper Tribunal: T/2016/27 11

[1]The Traffic Commissioner erred in fact and law in finding that Mr McDonald had been involved in “a knowing pattern of not having professional competence on the Operator licence”. The Commissioner’s error was her failure to take into account that a new transport manager had been nominated before she gave her decision.

[2]The Traffic Commissioner erred in fact and law in applying the Priority Freight Test without taking into account the nomination of a new transport manager.

[3]During the period starting with the second (and final) public inquiry – 6 January 2016 - and the date of the Traffic Commissioner’s decision – 16 May 2016 – DVSA Vehicle and Traffic Examiner inspections concluded “the Operator’s vehicles and records were found to have been in good order and issue free”. In the light of those findings, the Commissioner’s decision to revoke Mr McDonald’s licence was disproportionate.

[4]During the period referred to in ground 3, in reliance on the positive DVSA inspections Mr McDonald entered into new contractual obligations. His obligations under those contracts persisted after the date on which his licence was revoked. As a result, the decision to revoke was disproportionate.

[5]The Traffic Commissioner’s decision to revoke Mr McDonald’s licence was wrong because none of the features which led to the decision in CG Cargo Ltd, which the Commissioner relied on in her decision, were present in this case.

[35]At the hearing before the Upper Tribunal, Mr McDonald’s solicitor informed the Tribunal that he no longer challenged the Commissioner’s decision to revoke his licence. He only wished to challenge the disqualification order, in particular whether the period of disqualification was disproportionate. In support of his case that the 2 year period of disqualification was disproportionate, Mr McDonald argued:

[1]the delay of some four months between the conclusion of the second public inquiry and the Commissioner’s decision was too long and, as Mr Docherty’s skeleton argument put it, “impacts upon the credibility of the regulatory regime”;

[2]as time elapses following a public inquiry without a decision having been given, the operator could ‘perhaps be forgiven’ for taking the view that revocation of a licence was not inevitable. Further, the PSV industry itself would expect swift and severe action when that was called for;

[3]according to the skeleton argument, the Commissioner seemed to concede during the 6 January 2016 inquiry “that had matters been otherwise she may T/2016/27 12 have been prepared to take into account the nomination of the Transport Manager made after the conclusion of the evidence” (Mr McDonald’s solicitor relied on p.31 of the transcript / p. 887 of the OTC file). Given this ‘concession’ and the evidence as a whole, the disqualification order and in particular its length were disproportionate.

[36]At the hearing, we asked Mr Docherty what order he submitted the Upper Tribunal should make in the event that it found a disqualification order was justified but that the period of disqualification was disproportionate. He had no submissions to make and we informed him that, if his client wished to makes submissions, these were to be received by the Upper Tribunal within two weeks. To date, no such submissions have been received. Conclusions

[37]We do not accept any of the arguments put forward by Mr Docherty on behalf of Mr McDonald.

[38]There is no justification for the argument that the period of time taken to issue a decision permits an operator to assume a licence will not be revoked. That is correct as a matter of principle and, moreover, in this case Mr McDonald conceded at the public inquiry that his licence was at risk.

[39]In any event, we do not accept that the time taken by the Commissioner to produce her decision in this case was unreasonable. As we noted above, the public inquiries were concerned with a number of regulatory matters and, for Mr McDonald’s case alone, the OTC file contained over 1,000 pages of evidence including some 200 pages of financial evidence that were not supplied until the day of the second inquiry.

[40]We had difficulty understanding the ground of appeal based partly on a supposed concession by the Traffic Commissioner. The portion of the transcript referred to by Mr Docherty (p.887 onwards of the OTC file) does not contain any concession of a type referred to by Mr Docherty.

[41]We do not accept that the Commissioner was plainly wrong to fail to take into account the April 2016 nomination of a new transport manager. The Commissioner was not in fact aware of this nomination when she made her decision. It if is argued that the OTC administration was at fault for failing to draw the nomination to the Commissioner’s attention, then we would disagree. Mr McDonald could and should have taken steps to ensure this was done. But, in any event, we fail to see how a nomination of a new transport manager residing at the opposite end of the country made four months after the conclusion of the inquiry could have made a difference in T/2016/27 13 a case where an operator, at the date of the inquiry, had already been without a transport manager for some eighteen months.

[42]We also do not accept that the post-inquiry DVSA investigations undermine the Commissioner’s decision. These have not been proved in evidence but, even if we accept Mr McDonald’s account, they make no difference. The Commissioner was well aware that the roadworthiness of Mr McDonald’s operation was not in issue and so further confirmation of that could not have made any difference.

[43]Mr McDonald’s decision to enter into new contractual obligations, despite his concession at the inquiry that his licence was precarious, carries no weight in his favour. There was no justification at all for him assuming that his licence would not be revoked. All he was entitled to do was proceed on the basis that his licence might be revoked.

[44]In our view, the Commissioner cannot be said to have been plainly wrong to impose a two year disqualification order. She took a very dim view of an operator who did not himself have professional competence who thought he could stop seeking a transport manager – who would supply that professional competence – once his initial attempts had come to nought and who had previously chosen to ignore the advice of a transport manager. The Commissioner was not plainly wrong to place significant weight on these features of the case. The requirement for a professionally competent transport manager is an integral part of how the regulatory scheme seeks to ensure safe public transport operations.

[45]We were perplexed by Mr Docherty’s reliance on the CG Cargo decision (

[2014] UKUT 436 (AAC)

). Mr Docherty asserted that this was referred to in the Traffic Commissioner’s decision but it was not. Moreover, in CG Cargo the Upper Tribunal referred with approval to the Senior Traffic Commissioner’s statutory guidance that:

“Traffic Commissioners may wish to use as a starting point for a first public inquiry consideration of a disqualification period of between 1 and 3 years, but serious cases, where, for example, the operator deliberately puts life at risk and/or knowingly operates unsafe vehicles or allows drivers to falsify records, may merit disqualification of between 5 to 10 years or in certain cases for an indefinite period. It is always open to a disqualified person to make application for removal or reduction of the order.”

[46]We do not see how it can properly be argued that the decision in the present case was contrary to the general principles to be found in CG Cargo.

[47]For the above reasons, Mr McDonald’s appeal against the Commissioner’s disqualification order and direction is dismissed. T/2016/27 14 Mr E. Mitchell, Judge of the Upper Tribunal, 2 December 2016 (signed on original)

order

“57. Having decided to revoke this licence I now apply myself to the question of disqualification. I am of the view that there has to be such and I have come to the view, having regard to the case law, that this is far from a case in which I have to impose a lengthy or indefinite period. It is far from being the worst T/2016/27 8 case I have seen. There was no evidence of fraud or manipulations through falsifications or such like. This was the first time at Public Inquiry and as Mr Docherty pointed out there was not a history of roadworthiness failings. However there was the knowing pattern of not having professional competence on the licence and the neglect of making sure drivers, including him, were compliant which continues given the infringement reports lodged at the inquiry. He cannot come straight back in which could be the case if I did not disqualify, for such would offend fair competition and further would not set down the necessary regulatory marker which is required to secure the purposes of the regulatory regime. A period of two years will reflect the latter and also the period during which he chose to operate without transport manager arrangements.” Legal framework