Neutral Citation Number: [2011] UKUT 359 (AAC)

                                               Appeal No: T/2011/33

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

ON APPEAL FROM THE DECISION OF BEVERLEY BELL, 
TRAFFIC COMMISSIONER for the NORTH WESTERN TRAFFIC AREA, 
DATED 19 APRIL 2011

Before:
	
Judge Mark Hinchliffe,  Deputy Chamber President (HESC); Judge of the Upper Tribunal.
John Robinson, Member of the Upper Tribunal.
David Yeomans, Member of the Upper Tribunal.

Appellant:
PAUL COLEMAN T/A COACH UK TRAVEL

Attendance:

For the Appellant: 	Mr S Newman, Solicitor.

Appeal heard at: 	Victory House, London.
Date of hearing: 	29 July 2011
Date of decision: 	12 August 2011

DECISION OF THE UPPER TRIBUNAL:

IT IS ORDERED that the appeal be allowed to the extent that the order for disqualification and all findings except those in relation to financial standing and material change of circumstances are set aside.

Subject Matter:	

The need for a fair hearing and a proper balancing of all salient features.
Disqualification.

Cases referred to:

Priority Freight Ltd [2009/225]
David Finch t/a David Finch Haulage [2010/29]

REASONS FOR DECISION:

1)	This was an appeal from the decision of the Traffic Commissioner for the North Western Traffic Area made on 19 April 2011, following a Public Inquiry on the 15 April 2011, when she revoked the operator’s standard national public service vehicle (PSV) operator’s licence with effect from 12.00hrs on 15 April 2011 (the date of the public inquiry). The order for revocation was announced at the hearing, when the Traffic Commissioner said that she was revoking the licence “under all of the Section 17(1) and Section 17(3) provisions that were set out in the call-up letter”. Accordingly, it may be deduced that the licence was revoked under Section 17(1) [repute, financial standing and professional competence], Section 17(3)(aa) [breach of undertakings], Section 17(3)(c) [prohibitions], and Section 17(3)(e) [material change]. At the same time, the Traffic Commissioner also found that Mr Coleman, as his own Transport Manager, had lost his good repute. Finally, having reserved her decision in relation to disqualification, the Traffic Commissioner also disqualified the operator for three years, under Section 28 of the Transport Act 1985, as amended.

2)	The factual background to this appeal appears from the documents, the transcript and the Traffic Commissioner’s decision and is as follows:
(i)	The Appellant was the holder of a standard national PSV operator’s licence, granted in 2004, authorising the use of 4 vehicles. Mr Coleman holds a National Certificate of Professional Competence and was his own nominated Transport Manager.
(ii)	On 30 September 2009, Traffic Examiner Hanharren visited the operator’s operating centre. Amongst other things, the Traffic Examiner found that the insurance policy for the operator’s public service vehicles was held in the name of Starcruiser Bussing Ltd, of which Mr Coleman was sole director. The business was aimed at providing luxury coach transport for pop groups/bands, musicians, and crew, on tour. Some of the vehicles were sleeper vehicles, with 10 to 14 berths, kitchen facilities and showers etc. The Traffic Examiner also found a return ferry-crossing invoice for Dover to Calais in July 2009.
(iii)	When questioned about this, Mr Coleman said that he had not yet applied for an operator’s licence in the name of the limited company, and he also admitted frankly that he had taken a vehicle abroad on international journeys for hire and reward on two occasions. The Traffic Examiner advised Mr Coleman that he needed to ensure that the operator’s licence was held by the correct entity, and that he needed a standard international operator’s licence if taking his buses to Europe.
(iv)	On 5 October 2009 the operator wrote to the Office of the Traffic Commissioner to explain that he had identified an opening in the market for pop group tours and so he had purchased the right type of vehicles to convert into tour buses, which meant that his business had effectively been “put on hold” for twelve months. He now had three high-specification buses, and he added that: “I also recognise that some of the work requires the vehicles to go abroad and we need to upgrade our operator’s licence to an international one”. In relation to the change of entity, Mr Coleman said that the limited company, of which he was sole director, was “under the same umbrella” as his previous trading entity (i.e. Paul Coleman t/a Coach UK Travel) and any work obtained was part of the same company.
(v)	Call-up letters dated 23 December 2010 were sent to the operator and to Mr Coleman as Transport Manager. They raised as issues a list of prohibitions (although, apart from an external rear view mirror missing in 2010, there had been no prohibitions since one in 2008 for loss of air in braking system); drivers hours infringements in 2007 and again in 2009 (leading to a conviction sustained by the operator on 7 January 2010 for failing to produce tachograph records, and the imposition of a fine of £200) and the issues referred to above relating to change of entity and the unauthorised journeys to Europe. The public inquiry was fixed for 9 February 2011, and the operator - on page 7 of the 15-page call-up letter - was told to bring to the inquiry all documentary evidence relating to the vehicle maintenance system for the last 3 months, and to provide tachograph records and driver licence records to the Traffic Examiner by 2 February 2011.
(vi)	Meanwhile, because the issues raised were comparatively old, the Traffic Commissioner directed that the Traffic Examiner and Vehicle Examiner undertake further investigations to check the current compliance.
(vii)	On 4 February 2011, Mr Cook, a Vehicle Examiner, attended at the operating centre. Mr Coleman was present and was said to have been “very accommodating throughout”. The operating centre was well equipped and one vehicle was subject to a full inspection and was found to be free of any mechanical defect. Safety inspection and driver walk-round nil-defect records were of an appropriate type, and were properly completed. Safety inspections were pre-planned on a chart, along with brake tests, MOT and tachograph calibration dates. 26 safety inspections were looked at, and the time gaps between them had, in a minority of cases, become stretched from 6 weeks to 6.5 weeks, with two instances of a 7 week gap and one of 9.5 weeks – although, in relation to this gap, Mr Coleman did produce a job sheet/list, suggesting that the safety inspection had been undertaken between these dates, but had not been properly recorded. There had never been a public inquiry before, although Mr Coleman had received a warning in 2006. Traffic Area Office records showed an expected inspection frequency of five weeks, but Mr Coleman clearly thought it was, or should be, six weeks, and this discrepancy had not been previously picked-up by VOSA. Nor was there any suggestion that six weeks would be inappropriate. A previous maintenance investigation in 2009 had involved three vehicles being examined, again with no defects found – although some shortcomings had been identified in relation to the documentation. By the time of Mr Cook’s inspection, these documentary problems had been remedied.
(viii)	Traffic Examiner Hanharren’s visit was not so positive. Tachograph records from July 2010 to December 2010 showed missing mileage of 5,006 km (subsequently reduced by other records to about 3,000km). A number of relatively minor tachograph irregularities were found, with two matters worthy of prosecution – namely: 1 x exceed 4½ hours driving and 1 x weekly rest offence. Moreover, the operator had not applied for an operator’s licence in the name of his limited company, or for international authorisation, but had nevertheless undertaken a further international journey – 2 days in Dublin in January 2011. The Traffic Examiner concluded her report by saying:
“I have found Mr Coleman very open, honest and truthful throughout the investigation. He has produced whatever I asked for, bar the missing records. In this instance I am of the opinion that it is system error rather than an attempt to mask anything. When I asked about the international work he was candid and admitted that he had been to Ireland. I had not found any international work in the 6 months I checked, and he openly admitted this occasion for January 2011. He was however unsure whether it was international or not. It is clear, though, that he has been operating illegally both abroad and with the company status for some time, despite it being pointed out to him in 2009.”
(ix)	The public inquiry was adjourned due to the illness of the Traffic Examiner and the hearing eventually took place on 15 April 2011. Mr Cook’s statement detailing the maintenance investigation, which had taken place on 4 February 2011, was emailed to Mr Coleman on 14 April 2011.
(x)	At the public inquiry, Ms Henharen attended, but Mr Cook did not. Mr Coleman attended, and was not represented. The Traffic Commissioner described the late service of the Vehicle Examiner’s statement as “regrettable” and she asked Mr Coleman if he accepted the evidence or wanted an adjournment. Mr Coleman said that he accepted the evidence. There was some initial confusion over the number of international journeys, but it transpired that a suggested journey to the Isle of Man was, in fact, a journey to the Isle of Wight. The trip to Dublin had been with some members of the crew on the JLS tour. Mr Coleman explained the failure to seek a new licence in the name of his limited company with international authorisation by saying that he had wanted to pass his international CPC first, and he wanted to be his own Transport Manager:
Traffic Commissioner: Yes, but you were still a limited company?
Operator: Well it was run under the umbrella of Coach UK, sort of thing.
TC: No. Rubbish. Rubbish.
(xi)	The company’s accounts for y/e 31 August 2010 showed a modest but healthy profit (more than four times the profit of the previous year), but bank statements failed to show the requisite financial standing.
(xii)	Mr Coleman had not brought maintenance documents with him to the public inquiry because, he said, he had shown them all to Mr Cook, and the Vehicle Examiner’s report stated that they were satisfactory apart from the slightly stretched gaps between some safety inspections. He did not realise he had to bring them to the public inquiry as well.
(xiii)	In relation to tachograph irregularities, some records had been accidentally destroyed following the death of Mr Coleman’s mother, the ‘exceed 4½ hours’ happened when there had been a snowstorm creating adverse road conditions, and the weekly rest offence happened when JLS altered their tour itinerary.
(xiv)	Having heard all the evidence, the Traffic Commissioner said:
TC. You seem to me to have done precious little about it and if I take your licence off you and disqualify you from holding one in the future what are you going to do for a living? Are you going to drive vehicles?
No audible response.
TC. When I say what’s the investment, I can see what the investment is from your accounts. Have you got any dependants? Have you got any children?
Mr Coleman then described his family circumstances in detail.
TC. Well if I take your licence off you, you will have to get a job as a driver won’t you? Sell your vehicles and get a job as a driver. All that business that you built up will just be for nothing, won’t it?
Mr Coleman then became upset, and the Traffic Commissioner decided to adjourn for fifteen  minutes. On resuming, the Traffic Commissioner said:
TC. Now we’re at the stage where I would ask for representations. All right? That’s where normally I would hear from you about what is the way forward. Now I have made it clear to you, Mr Coleman, that this is a case where revocation is probably the only outcome on this case. All right?
No audible response.
TC. In other words I have to take your licence off you because I have to follow the law. Do you understand?
No audible response.
TC. The real question for me to determine is whether or not to disqualify you from holding or obtaining an Operator’s Licence in the future, either as an individual or as a director of a limited company. Now what do you want to say to me about that?
A. About losing my licence or …
TC. Well about both.
A. It’s just heartbreaking. It’s everything I’ve worked for all my life and it’s just been took away from me.
TC. But do you understand why?
A. Yes.
TC. Is there anything else you want to say to me?
A. No.
(xv)	The Traffic Commissioner then announced that she was revoking the licence with immediate effect under all of the Section 17(1) and Section 17(3) provisions that were set out in the call-up letter, and that she was “going to take away your repute as a Transport Manager”. She then said:
TC. But the next question for me to consider, and as I say I will need to consider this carefully, is whether to disqualify you – and it is likely that I will – but for how long a period of time? Do you understand?
A. No audible response.
(xvi)	In her written decision dated 19 April 2011 the Traffic Commissioner recognised that disqualification should only be used where the operator’s conduct was “so serious that it strikes at the very heart of the legislation”. She considered that this was such a case:
“My reasons for making an order for disqualification are the scale and extent and serious nature of the breaches together with the fact that Paul Coleman continued to operate in the way he did despite having been told by a VOSA Traffic Examiner that this illegal activity had to stop and that he had to take immediate action to remedy matters. Paul Coleman completely disregarded this advice and knowingly continued to operate illegally. I can think of no better reason for disqualification. In view of his blatant disregard for authority and his blatant disregard for compliance with the legislation I consider it appropriate, proportionate and purposive to make an order for disqualification that has the effect of keeping this individual out of the industry for a period of 3 years. I am mindful of his representations that the operation of his vehicles is his whole life but other than his mere assurance that he is doing everything I have nothing to put into the positive balance”.

3)	At the hearing of this appeal, the Appellants were represented by Mr Newman who submitted a skeleton argument for which we were grateful.

4)	The first point made was that the service of the additional statements after the original call-up letter led to unfairness and, to achieve fairness, a fresh call-up letter was needed. We do not agree. In a fluid jurisdiction such as this, where operators continue to operate after the preparation of initial evidence and a call-up letter, it is entirely appropriate that there be scope for raising additional matters, subject to ensuring that an operator has proper notice of all relevant adverse evidence and grounds for regulatory action, and a proper opportunity to address all relevant issues before a Traffic Commissioner makes his or her final decisions. The additional evidence of the Traffic Examiner was posted some 10 days before the public inquiry (and, in any event, contained no surprises) and the Operator was offered an opportunity to seek an adjournment should he not accept the evidence of the Vehicle Examiner (which, in any event, was largely positive – the only negative feature being the occasionally stretched intervals). We see no reason why the Traffic Commissioner should have offered the operator an opportunity to question the Vehicle Examiner, when his evidence was accepted.

5)	The next point made was that the Traffic Commissioner had made adverse findings owing to the fact that the Appellant failed to produce the maintenance records that were requested in the call-up letter. However, the required documentation had been examined as a consequence of the recent investigations ordered by the Traffic Commissioner and so (it was submitted) there should be no criticism of the Appellant’s failure to produce the documentation again at the hearing.

6)	Our view is that the strength of this point lies in the Traffic Commissioner’s apparent failure to conduct a proper balancing exercise. On the one hand, the Appellant had failed to bring the required documentation with him, and there had been a gap of some 11 weeks between the maintenance investigation and the public inquiry. The Traffic Commissioner might have wanted to check, for example, that safety inspections were now taking place as promised, and without the latest records she was unable to do so. On the other hand, maintenance was not the central issue in this case. At two maintenance investigations in the recent past vehicles had been examined and no defects found. Maintenance documents were generally found to be in good order, previous problems had been addressed, and the stretching of time gaps between a minority of safety inspections did not involve significant failure and did not appear to compromise road safety. In short, there were a number of important positive matters to note, a well as the obvious negative ones, but the Traffic Commissioner focussed entirely on the negative.

7)	Mr Newman submitted that, in fact, there were a number of issues where the Traffic Commissioner either failed to take the relevant evidence into account or failed to conduct a proper balancing exercise. For example, he said, she failed to properly acknowledge that this was the Appellants first public inquiry, and that both the Vehicle Examiner and Traffic Examiner praised Mr Coleman for being cooperative and helpful. The Traffic Examiner had said that Mr Coleman was very open, honest and truthful throughout the investigation. He had produced whatever she asked for, bar the missing records, and she was of the opinion that there had been no attempt to mask anything. The Vehicle Examiner noted that the operating centre was well equipped, and that in a number of respects, the Appellant had reacted to advice given, and addressed many of the key issues raised. The tachograph offences were numerous, but relatively minor, with apparent mitigating circumstances so far as the two more serious transgressions were concerned. Had the company made an appropriate application, supported by adequate finance, there was a reasonable chance of it being granted an operator’s licence of some sort and, following advice from the Traffic Examiner in 2009, there had only been one unauthorised international journey to Dublin at a time when the Appellant hoped to pass his international CPC. Moreover, this only became known because of the honesty and frankness of Mr Coleman.
 
8)	We consider that these factors, whilst neither excusing nor providing justification for the failings, should nevertheless have been placed into the balance when considering the Appellant’s attitude to authority, and in answering the crucial repute questions as to his willingness and ability to comply in the future (see Priority Freight Ltd [2009/225]). Instead, the Traffic Commissioner said that, other than mere assurances, she had nothing to put into the positive balance. We agree with Mr Newman’s submission that there were positive matters to identify and then weigh. Of course, there will sometimes be extremely bad cases where there really is nothing of substance or relevance to put into the positive side of the balance, and we do not necessarily think that the absence of a negative thing to say in relation to an area of compliance always equates to a positive thing - but there were, here, a number of obvious factors of a truly positive nature, and the Appellant was entitled to see that they had been considered, and to be told in brief terms, and without requiring the Traffic Commissioner to be too forensic in her analysis, why the negative factor or factors outweighed the positive (again, see Priority Freight Ltd [2009/225]). In this regard, we consider the Traffic Commissioner’s considerations to be deficient.

9)	The tribunal had some additional concerns in relation to the conduct of the public inquiry. Although we can readily see that the licence had to be immediately revoked on the grounds that it was not being used by Mr Coleman in his individual capacity and the limited company could not be permitted to carry on using it illegally, and also on grounds of financial standing, this did not remove the need to hear submissions on the question of revocation. The reasons for any revocation are always important, and often have a knock-on effect. Where as here, the operator’s repute is at stake, or disqualification may be seriously considered, or there are other matters of qualitative judgment to be determined, then the reasons for revocation must be carefully assessed, even if the fact of revocation is unavoidable.

10)	Had the Traffic Commissioner gone through the various statutory elements in a systematic way, and invited the Appellant to address her in respect of each, and then conducted a proper balancing exercise, she might have been enabled to reach a more measured view and sustainable conclusion, without unnecessary distress being caused. Instead, because she had decided that revocation was inevitable, and disqualification likely, she failed to allow the Appellant a proper opportunity to make closing submissions on the reasons for revocation. The necessity of ensuring that the Appellant had a proper opportunity to address her in relation to these matters was particularly acute, given the fact that he was unrepresented, and clearly distressed. Nor did the Traffic Commissioner separate out the issue of repute as a Transport Manager, even though this issue required its own analysis and a separate conclusion.

11)	Second, although we recognise and accept that Traffic Commissioners will occasionally, and quite rightly, use a public inquiry as a forum to deliver a strongly-worded warning shot across the bows, and as a forum to publicly censure an operator in the hope that the experience will bring the operator swiftly back into line, we think that care needs to be taken if the Traffic Commissioner is thinking of revocation and a lengthy disqualification – which is distressing enough for any operator. It is important, where such an outcome is being contemplated, that the process leading up to it is (and is seen to be) entirely judicial, dispassionate, balanced and measured.

12)	In the event, we have no difficulty in upholding the revocation, which was inevitable on grounds of financial standing and material change. We also accept that the trip to Dublin, and the failure to address the change of entity after having been warned, inevitably had some implications for repute, both as an operator and as a Transport Manager. However, we do not think that the disqualification, or any of the Traffic commissioner’s findings except in relation to financial standing and material change, can stand. There was not a proper balancing exercise and, especially in relation to submissions, the Appellant did not receive an entirely fair hearing – with the consequence, in our view, that the Traffic Commissioner’s assessment of the operator as having shown a blatant disregard for authority and a blatant disregard for compliance appears to be based upon something other than an objective analysis of all the evidence.

13)	Whether or not a short period of disqualification was necessary in pursuit of the objectives of the operator licensing system is something a proper consideration might have profitably addressed. But a three year disqualification following a first public inquiry is, as we have said before in David Finch t/a David Finch Haulage [2010/29] towards the top end of fixed term disqualifications, allows for little light at the end of the tunnel, and effectively prevents an operator from hanging onto any aspect of their operation. We conclude that this lengthy disqualification followed on from a flawed process, and was disproportionate and plainly wrong.

14)	It is therefore open to the company to apply for a new operator’s licence as soon as it has appropriate financial standing, and is clear whether it might need international authorisation. If it seeks an international licence, it must have an appropriately qualified Transport Manager of good repute. Should an application be made, there is every likelihood that it will fall to be determined at public inquiry and, if a licence is granted, some constructive undertakings in relation to safety inspections and tachograph analysis might usefully be given and accepted. 

15)	The appeal is allowed to the extent that the order for disqualification and all findings except those in relation to financial standing and material change of circumstances are set aside.

Judge Mark Hinchliffe, DCP
12 August 2011