Neutral Citation Number: [2011] UKUT 138 (AAC)
                                                   					       Appeal No: T/2010/87

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
(TRAFFIC COMMISSIONER APPEALS)

ON APPEAL FROM THE DECISION OF PHILLIP BROWN, TRAFFIC COMMISSIONER for the SOUTH EASTERN and METROPOLITAN TRAFFIC AREA, 
DATED 15 NOVEMBER 2010

Before:
	
Judge Mark Hinchliffe, Deputy Chamber President (HESC); Judge of the Upper Tribunal.
Patricia Steel, Member of the Upper Tribunal.
Leslie Milliken, Member of the Upper Tribunal.

Appellant:
PIT.101 LTD (FORMERLY - ETHOS RECYCLING LTD)

Attendance:

For the Appellant: 	No attendance

Appeal heard at: 	Victory House, 30-34 Kingsway, London
Date of hearing: 	18 March 2011
Date of decision: 	31 March 2011

DECISION OF THE UPPER TRIBUNAL:

IT IS HEREBY ORDERED that the appeal be dismissed

Subject Matter:	

Administration or Liquidation of Licence Holder. Operator’s licence does not pass to purchaser of “goodwill”. However, the Traffic Commissioner has power to make a direction under Paragraph 31 of The Goods Vehicles (Licensing of Operators) Regulations 1995.

Cases referred to: None

REASONS FOR DECISION:

1)	This was an appeal from the decision of the Traffic Commissioner for the South Eastern and Metropolitan Traffic Area made on 15 November 2010 when he revoked operator’s licences OF1089965 and OK0231927 under the provisions of Section 26(1)(b), (g) and (h) of the Goods Vehicles (Licensing of Operators) Act 1995. 

2)	The factual background to this appeal appears from the documents and the Traffic Commissioner’s decision and is as follows:
(i)	The Appellant was the holder of two restricted operator’s licences (OF1089965 and OK0231927). The full extent of the authorisation is not apparent from the papers provided to the tribunal by the Traffic Commissioner’s Office.
(ii)	On 14 October 2010 the Office of the Traffic Commissioner wrote to the Company Secretary advising that information had been received that the company was in administration, which gave rise to concerns as to whether the company had sufficient resources to operate its business and maintain its authorised vehicles. Furthermore, it appeared that the company had changed its name to PIT.101 Ltd. The company had not notified the Traffic Commissioner of the change in its circumstances, or its name. 
(iii)	The letter from the Traffic Commissioner’s Office required the operator to produce bank statements covering the last four months and to supply a copy of the Administrators’ report. A deadline of 4 November 2010 was given. Additionally, the operator was advised that, if specifically requested, the Traffic Commissioner would refrain from taking any action against the licence without holding a public inquiry – but if no request was received he could consider taking action without a public inquiry being convened. The deadline for such a request was 3 November 2010.
(iv)	On 2 November 2010, Mr Sweeney of Ethos Environmental Management Ltd wrote to the Office of the Traffic Commissioner confirming that Ethos Recycling Ltd had been placed in administration. However, under a “prepack” arrangement with the Administrators, the goodwill of Ethos Recycling Ltd had been sold to Ethos Environmental Management Ltd. Mr Sweeney said that he was under the impression that the Traffic Commissioner had been “informed” of the administration and transfer of the goodwill to Ethos Environmental Management Ltd by the former Director. Mr Sweeney added that Ethos Environmental Management Ltd now operated one of its own vehicles, and hired in vehicles as and when required. The company did not operate any vehicles under Operator’s Licence OK0231927.
(v)	Under separate cover, bank statements for Ethos Environmental Management Ltd and a copy of the Administrator’s report were submitted. The Administrators’ Report stated that, at a meeting of creditors held on 6 May 2010, it was decided that PIT.101 Ltd, formerly known as Ethos Recycling Ltd, would “move from Administration to Liquidation only”.
(vi)	The Traffic Commissioner considered the matter in chambers on 15 November 2010. No request for a public inquiry had been made. The bank statements related to a different company. The operator had gone into administration on 25 February 2010. It had changed its name to PIT.101 Ltd on 11 March 2010. Its estimated deficiency as regards creditors exceeded £11million. A decision had been made that the operator should move to liquidation in May 2010. The Traffic Commissioner was not informed of any of this until the letter dated 2 November 2010 was received from Ethos Environmental Management Ltd, and even this letter made no mention of liquidation.
(vii)	The Traffic Commissioner decided, therefore, to revoke both operator’s licences held by the operator company, under the provisions of Section 26(1)(b), (g) and (h) of the Goods Vehicles (Licensing of Operators) Act 1995. There had been a material change of circumstances, the company had gone into administration and then liquidation, and there had been a breach of conditions requiring proper, timely and full notification to the Traffic Commissioner.
(viii)	The Grounds of Appeal come from Ethos Environmental Management Ltd. They state that a response to the enquiries made by the Traffic Commissioner was submitted on 3 November 2010 and (even though this was not requested) a public inquiry was now desired in order that evidence and submissions from Ethos Environmental Management Ltd may be considered in full.
(ix)	No-one from Ethos Environmental Management Ltd attended at the hearing before the tribunal.

3)	Technically, it is doubtful that there is any valid appeal before the tribunal, since the operator is in liquidation and it has not, itself, appealed. However, mindful of the overriding objective as laid down in The Tribunal Procedure (Upper Tribunal) Rules 2008, particularly the requirement to deal with cases fairly and justly and to avoid unnecessary formality and seeking flexibility in the proceedings, we have nevertheless gone on to consider the merits. 

4)	Section 26(1)(g) of the Goods Vehicles (Licensing of Operators) Act 1995 provides that a Traffic Commissioner may take regulatory action in relation to an operator’s licence if the licence holder, being a company, has gone into liquidation, other than voluntary liquidation for the purpose of reconstruction. This discretionary power also arises in relation to a range of other situations, including a breach of conditions or undertakings, or a material change in circumstances. On the clearly established facts, the Traffic Commissioner was undoubtedly entitled to consider revoking the operator’s licences under the provisions of Section 26. 

5)	By Section 48 of the Goods Vehicles (Licensing of Operators) Act 1995, an operator’s licence is neither transferable nor assignable. However, regulations may make provision enabling a Traffic Commissioner in prescribed circumstances to direct that any operator’s licence issued by him or her is to be treated as held, not by the person to whom it was issued, but by such other person carrying on that person’s business, or part of that person’s business, as may be specified.

6)	The regulation that could have applied in this case is Paragraph 31 of The Goods Vehicles (Licensing of Operators) Regulations 1995, which provides:

Continuance of licence on death, bankruptcy etc

31.—(1) In this regulation, “actual holder” in relation to a licence means the person to whom the licence was issued.

(2) This regulation applies in the event …
(d) in the case of a company, of the actual holder of a licence going into liquidation or an administration order being made in relation to the actual holder; 
…

(4) After the happening of any of the events mentioned in sub-paragraph (2) the Traffic Commissioner may direct that a person carrying on the trade or business of the actual holder of the licence is to be treated for the purposes of the 1995 Act as if he were the holder thereof for such purpose and to such extent as is specified in the direction for a period not exceeding—
(a) if it appears to the Traffic Commissioner that there are special circumstances, 18 months;
(b) in any other case, 12 months,
from the date of the coming into force of that direction.

This is a very useful (albeit time-limited) provision that Administrators, and all those taking over businesses in administration or liquidation that operate goods vehicles, should bear in mind. Although not relevant to this case, it is useful to note that where another person is treated as if he were the licence-holder by virtue of a direction, then any goods vehicle which had been in the lawful possession of the actual holder of the licence shall for the purposes of the 1995 Act be treated as if it was in the lawful possession of that other person.

7)	There is no requirement that a specific request must be made for such a direction but, at the very least, Administrators and those taking over the goodwill of an operator in administration or liquidation should ensure that the Traffic Commissioner is kept fully informed. In order to preserve a business or jobs, the tribunal can envisage a situation whereby, even if no specific request is received, a Traffic Commissioner may consider making a direction under Paragraph 31(4). This may, for example, be in order to allow a company acquiring the goodwill of an operator that has hit hard times to continue the business and to maintain jobs, at least until a fresh operator’s licence can be issued to the new operator. However, the power arises at the time when an operator goes into administration or liquidation, and a Traffic Commissioner will be unable to consider such a step if s/he has been kept out of the loop, time has passed, and s/he has not had the benefit or courtesy of a timely notification of the changes taking place.

8)	There can therefore be no criticism of the Traffic Commissioner’s decision in this case. He was not informed of events as they happened, and had no timely opportunity to consider whether to make a direction under Paragraph 31(4). He was not bound to accept the ‘fait accompli’ presented to him and, in the absence of such a direction, the bank statements of Ethos Environmental Management Ltd were irrelevant. No public inquiry was requested and, in the absence of a direction, it is doubtful that Ethos Environmental Management Ltd had any standing to make such a request.

9)	The appeal is dismissed.

Judge Mark Hinchliffe, DCP
31 March 2011