Neutral Citation Number - [2010] UKUT 473 (AAC) .                                           

Appeal No.  T/2010/62
IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
Joan Aitken Traffic Commissioner for
Scotland Dated 23 July 2010

Before:			Hugh Carlisle QC  	Judge of the Upper Tribunal
				Patricia Steel	Member of the Upper Tribunal
				David Yeomans 	Member of the Upper Tribunal

Appellant:
RODERICK & CLAIRE MUNRO
T/a MUNRO MIDLANDS

Attendances:
For the Appellant: Laurence Kennedy, counsel, instructed by NAC Commercial, solicitors for the 	Appellants

Heard at:	The Eagle Building, 215 Bothwell Street, Glasgow.  G2 7EZ
Date of hearing:	25 November 2010
Date of decision:       17 December 2010	

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeal be DISMISSED.

SUBJECT MATTER:  Loss of repute: fronting

CASES REFERRED TO:  
	2008/26 EPI Coaches Limited
	2009/502 Innes Transport Limited

REASONS FOR DECISION

1.	This was an appeal from the decision of the Traffic Commissioner for Scotland on 23 July 2010 when she refused an application by the Appellants for a standard national goods vehicle operator’s licence.

2.	The factual background appears from the documents and the transcript of the public inquiry and is as follows:
(i)	The Appellants are husband and wife who run a consultancy service named Munro Midlands and who on 24 December 2009 applied for a licence for six vehicles and six trailers.  
(ii)	The Appellant Roderick Munro is the son of Mr William Munro who had been a director of Munro & Sons (Highland) Limited, together with his brother David and his daughter Pamela.  This Company had operated 16 vehicles and 11 trailers and had had its licence revoked on 14 May 2009 when the Company and the two male directors were each disqualified for seven years; Pamela Munro was disqualified for two years.  An appeal to the Transport Tribunal was dismissed on 3 September 2009 (see 2009/369 Munro & Sons (Highland) Limited, available on line from the Tribunal’s website).
(iii)	In its decision the Tribunal described it as a “bad case”.  The background was a road accident when a Michigan wheeled bucket loader being carried by a low-loader became detached and rolled off backwards into a car, killing one of the occupants and seriously injuring the other.  The handbrake on the Michigan had been defective and the securing chains were inadequate to take the weight.  The Company had been prosecuted under the Health and Safety at Work etc. Act 1974 and its case was that it had been in the process of testing the Michigan with a view to purchase and that it had been unaware of the defective brake.  It argued that this constituted a “time bomb”, which submission found some favour with the sentencing judge.  The prosecution appealed and the fine was substantially increased.  The Court of Session found that reliance should not have been placed on the parking brake and that the inadequacy of the chains was due to systemic failure by management, with catastrophic consequences.
(iv)	In addition, there were two later accidents.  In the first, a skip vehicle had overturned and its skip container had become detached: no injuries had resulted.  In the second, a trailer had become detached when being towed by one of the Company’s vehicles.  The cause was that the towing draw-bar had a defective trailer coupling safety locking device.  The detached trailer had moved across the road and collided with a car whose driver was severely injured.
(v)	VOSA had carried out an unannounced investigation at the Company’s premises and had issued an immediate prohibition in respect of one of the two vehicles then seen.  Since 2005 there had been 18 prohibition notices issued, with seven of these being immediate.  
(vi)	Despite the comments made by the Court of Session the Company had still maintained at the public inquiry that the defective hand brake had constituted a “time bomb” for which it was not culpable.  It was said that the Company’s problems had been “just drivers apparently not paying attention”.  In her decision the Traffic Commissioner said that she was particularly worried by the fact that “the operator just does not get it”.  The Company’s position was continued before the Tribunal because the submissions made were inconsistent with the Court of Session’s findings; the only fault which was accepted was that the Company had been “soft with its drivers”.  There had been no acceptance at any time that the background revealed serious systemic failures by in particular Mr William Munro.
(vii)	The orders for revocation and disqualification came into force on 24 July 2009.  The application by the Appellants was brought to the attention of the Traffic Commissioner and she referred it to a public inquiry.  A call-up letter was sent out on 19 May 2010 and the public inquiry to place on 8 July.  Financial standing was not in issue.
(viii)	Prior to the hearing a mass of additional documents was submitted to the Traffic Commissioner.  These consisted of Mr Roderick Munro’s CV, his many certificates of membership of trade bodies and of training, numerous codes of practice and policy statements, and various driver information packs.  In addition, the CV of the proposed transport manager, Mr Samuel Eddie, was included, with supporting documents.  We have to say that all this material appears to have been impeccably prepared and that if it had stood by itself it is likely to have gone a long way in support of the application.
(ix)	It was recognised from the beginning that the issue was whether the Appellants as operators would be independent of Mr William Munro: his brother David and his daughter Pamela had already retired.  The Appellant Roderick Munro (dob: 7 November 1977) gave evidence and told the Traffic Commissioner that he had never been involved with Munro & Sons (Highland) Limited.  He had worked for its parent company, William Munro Construction (Highland) Limited from 1997-2000 and had then moved to Derbyshire.  He had worked for Tarmac as a manager in various capacities.  He had been identified as suitable for fast-track management training and went on numerous courses in preparation for a senior position.  He left Tarmac in 2007 and set up Munro Midlands in partnership with his wife.  This provided a consultancy service at senior management level, with expertise in a wide range of health and safety and management systems.  Mrs Munro worked in the office but Mr Munro was out and about.  He gave details of the work done.
(x)	The Appellants decided to move back to Scotland in 2009.  There had been a downturn in work and they felt that opportunities both for themselves and for their two young daughters were better in Scotland.  Mr Roderick Munro thought that there was a vacancy in the Alness area for a quality haulage contractor, carrying out refuse collection and skip hire.  The proposed operating centre had been used by Munro & Son (Highland) Limited.  It is a family owned property which is now vacant: it has large workshops and covered parking.  He had not yet bought vehicles but had made arrangements to enter into a full maintenance contract lease with Volvo Truck and Bus (Scotland).  The business would be run by himself and Mr Eddie; neither his father nor his uncle nor his sister would be involved.  He had approached an agency for drivers and would not be employing any driver with previous involvement with his family.  
(xi)	The majority of the work would come from William Munro Construction (Highland) Limited but he hoped to get government work once he had started.  Munro Construction undertook demolition, asbestos removal and waste disposal.  His father was the current managing director but he was intending to retire from all his companies at the years end: he was 67 and had health concerns.  His father intended to carry on running his farm as a retirement hobby and still worked very long hours:-	
	“Q.   I think you told me yesterday that as well as running this company he also runs the farm in a “hands on” way?
	“A.   He does, that’s correct.  My father works extremely long hours seven days a week and I can only imagine that these hours have taken their toll on his medical health over years.
	“Q.   I think you told me yesterday that he generally leaves home at 5 in the morning?
	“A.   Yes, that’s correct but the offices (inaudible) open up before 6 o’clock in the morning and father is still at work at 7 o’clock at night.  As I said, he works every weekend and all weekend on the family farm.”
(xii)	Mr Roderick Munro said that since January 2010 he had been providing management systems for the two family companies.  Munro Midlands was engaged on a consultancy basis to provide the same services that it had been providing to companies in England, “to supply and install management and Health  Safety procedures”.  He was paid monthly.  He was expecting to become a director of the companies by the end of the year and to be in charge of their work.  He referred to his father:-	
	“There will obviously be a short period where he is providing information for the handover but then his retirement will be complete.  He will have no involvement with the companies whatsoever with the exception of the family farm which he is to run as a hobby”.
	At present the two companies were using haulage sub-contractors but Mr Roderick Munro was intending that Munro Midlands would carry out this work.  He had a good knowledge of what being an operator involved and was intending to take his CPC qualification in September 2010.  He had recently become a member of the RHA and he explained that his drivers would receive computerised written instructions and would be fully trained.  The Traffic Commissioner was referred to the Appellants’ bundle of documents.  Mr Roderick Munro said that he would be hands on and that he wanted to create a blue chip firm.  
(xiii)	The Traffic Commissioner asked the first Appellant about his reaction to the comments about his father in the previous decision.  The first Appellant said that he was a different breed, having been trained by Tarmac in England.  He did not want to express a view about his father’s conduct but said that he was ashamed of his uncle.  He was disappointed in his sister: “there was sufficient warning for them to prevent [the accident] happening in my opinion”. The Traffic Commissioner asked him about the shareholdings in the family business but he said that he did not know, although he thought that his father was the majority shareholder in Munro Construction.  His mother also had a shareholding.  He was expecting soon to be the only director.  He could not say whether his father and mother expected to continue to own the Company: he said that they might choose to give him their shares.  He had four other siblings but it was not intended that “they would come on board”.  Although his father still worked very long hours he was not sure how productive he was.  While in England he had spoken to his father every Sunday but his father had never asked for advice about health and safety.  
(xiv)	The proposed transport manager, Mr Eddie (dob: 6 May 1951), then gave evidence.  His CV stated that he had started off as a general operative and driver but that over the years he had worked his way up and that he was now the “live waste manager” for Munro Construction.  He told the Traffic Commissioner about his work history.  He had discussed the future with the first Appellant and would not accept any interference from the Munro family.  He thought that he could continue to work both for Munro Construction and for the Appellants.  He had also been transport manager for 80-20 Procurement Services but had given this up.  
(xv)	The transport manager’s appointment form (TM1) did not mention Mr Eddie’s role at 80-20 Procurement Services.  The Traffic Commissioner asked him why he had said “NO” in answer to the question whether he was acting as a transport manager for any other operator.  Mr Eddie said that this had been a failure on his part: it was “pure oversight”.  He explained how he had carried out his duties during the weekend.  He did not know either David or Pamela Munro but at present Mr William Munro was his boss.  
(xvi)	Closing submissions were made and the Traffic Commissioner reserved her decision.
(xvii)	The Traffic Commissioner’s written decision is dated 23 July 2010.  After reviewing the history and the evidence she stated:-	
	“…..  If I were to grant this application for all practical purposes my revocation and disqualification orders would have no effect.  Thus, I would be leaving Mr William Munro in a position yet again to control a haulage operation through the family relationship.  There would be no way of enforcing any condition which required his non involvement.  In any event, I cannot trust Mr William Munro and I do not trust him not to have a continuing material influence in the direction of the Munro group of companies.”
	In view of Mr Eddie’s evidence, which she found unsatisfactory, she decided that she could not be satisfied as to professional competence.  As to repute, she concluded that this had not been made out.  She did not consider that she could trust Mr Roderick Munro.  She continued:-
	“I am in no doubt that the family connections and the context in which this application is made, goes to the fitness of the applicant.  But for him being Mr William Munro’s son, this application would not be being made.  The father has put the son in place.”
	The application was refused.

3.	On the hearing of the appeal Mr Kennedy appeared for the Appellants.  He said that no challenge was made against the finding of lack of professional competence and that Mr Eddie had now taken up different employment.  His concern was with the finding of loss of repute against the Appellants and he put his submissions under two headings: first, that there was no basis upon which the Traffic Commissioner could properly find that Mr R Munro was acting as a front for his father; and, second, that the Traffic Commissioner had been unduly influenced by Mr R Munro’s association with his family and by the perception of adverse public opinion.

4.	In developing his first point, Mr Kennedy took us through Mr Roderick Munro’s history and submitted that there was nothing sinister in the move back to Scotland.  He emphasised that Mr William Munro intended soon to retire.  

5.	Mr Kennedy referred to comments in the written decision and submitted that the issue was not what the public thought but whether the Traffic Commissioner was right in her findings.  In apparently applying a test of public opinion the Traffic Commissioner was using the wrong test.  She was not entitled to conclude that Mr Roderick Munro would be controlled by his father: she had made too much of her suspicions.  

6.	In making his submissions Mr Kennedy referred us to 2008/26 EPI Coaches Limited and to 2009/52 Innes Transport Limited.  In the first the Tribunal had warned against a suspicion as a basis for a finding; but we note that that was an existing licence holder case rather than an application.  In the second appeal the Tribunal had ordered that the case be remitted for hearing by a different traffic commissioner or deputy.  Mr Kennedy urged us to take a similar course.  

7.	We think that Mr Kennedy’s submissions must be considered together.  We start by saying that we agree that the Traffic Commissioner’s references to public opinion were misplaced since the issue was what she, rather than the public, made of the evidence.  However, in looking at the evidence, we have to say that she was entitled to come to her conclusions.  We think that the reality is that this application is premature.  We think that it is commonplace in family businesses that fathers have difficulty in letting go and that they only retire when they have actually done so.  In view of the findings previously made against Mr William Munro we have to say that we think that he is unlikely to give up control until clear water between him and the Appellants is visible.  The burden of proving that this was so was on the Appellants, which they failed to do.  The appeal is dismissed.

Hugh Carlisle QC
Judge of the Upper Tribunal
17 December 2010