Neutral Citation Number: [2013] UKUT 0387 (AAC)		Appeal No.  T/2013/27

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
Sarah Bell, Traffic Commissioner for the 
Western Traffic Area dated 27 March 2013

Before:
Her Honour Judge J Beech, Judge of the Upper Tribunal
Leslie Milliken, Member of the Upper Tribunal
George Inch, Member of the Upper Tribunal

Appellant:

SOUTHERN DRIVES LIMITED

Attendances:
For the Appellant: Paul Carless Senior, of S.P.C. Transport Consultancy Services

Heard at: Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ
Date of hearing: 29 July 2013
Date of decision:  7 August 2013

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be ALLOWED and that the order of revocation be substituted by the following order and undertakings:

Order
a)	The Appellant’s operator’s licence will be suspended for a period of 28 days commencing (4 weeks after the date of the decision).  In that period, the Appellant’s vehicles are not to be used or specified under another licence;

Undertakings
b)	Two external audits of the Appellant’s maintenance systems to be undertaken by the Freight Transport Association.  The first audit to take place by the end of (third week of suspension).  The second audit to take place six months thereafter.  Copies to be made available to both VOSA and OTC.
c)	Christopher Clark and his eldest son are to attend an Operator’s Licence Awareness Training Course held by the Freight Transport Association or similar approved organisation by 1 December 2013;

d)	The Appellant’s preventative maintenance inspections and preparation for annual tests to be undertaken by a main dealership, the identity of which is to be notified to the OTC within twenty one days.

SUBJECT MATTER:-  Maintenance and fitness to hold a restricted licence; proportionality.

CASES REFERRED TO:-  T2009/225 Priority Freight Ltd & Paul Williams and T2002/217 Bryan Haulage No.2;

REASONS FOR DECISION

1.	This was an appeal from the decision of the Traffic Commissioner for the Western Traffic Area made on 27 March 2013 when she revoked the Appellant’s restricted licence with effect from 23.59 on 25 May 2013, having found breaches of s.26 of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”) and having made a finding that the Appellant was not fit to hold a restricted operator’s licence.  
 
2.	The factual background appears from the documents and the Traffic Commissioner’s written decision and is as follows:

(i)	The Appellant company has held a restricted operator’s licence since 1 September 2009, authorising four vehicles, with four in possession.  The Directors of the company are Christopher Clark and his wife, Janet Clark.  The company undertakes road re-instatement work for local authorities as well as domestic and commercial groundwork.  Prior to the incorporation of the company, Mr Clark had held a restricted licence (trading as Southern Drives) since about 1998.  That restricted licence had no adverse compliance history. 
(ii)	In April 2010, a maintenance investigation was marked as unsatisfactory for the following reasons: the preventative maintenance inspection (“PMI”) intervals of ten weeks/seventy days were being exceeded and the then operating centre was unable to accommodate all of the vehicles in possession resulting in two vehicles being parked in a depot belonging to Totton Council.  A letter in response to the investigation was submitted by Mr Clark on behalf of the Appellant (not within the appeal papers) and as a result, the Appellant was advised that no further action would be taken although the investigation findings may be taken into account should disciplinary action be considered in the future.  A change in the specified operating centre subsequently took place.
(iii)	On 21 August 2012, a further announced maintenance inspection took place by VE Collins.  This was prompted by intelligence that the Appellant was parking 7.5 tonne and 3.5 tonne vehicles outside residential properties.  In the event, there was no evidence that this was taking place although it was accepted by Mr Clark that vehicles were being left “on the job” overnight to save time and fuel.  He stated that he would continue with this practice but would ensure that the vehicles were kept at his customers’ premises over night. 
(iv)	Two vehicles were examined with nil defects found.  VE Collins recorded that in the case of two vehicles, the seventy day PMI intervals had been exceeded.  One vehicle had intervals of 84, 85 140, 173 days between inspections; another had 85, 104 and 140 days between inspections.  A driver defect system was in use but the drivers tended to verbally report defects to Mr Clark who would then rectify the defects from a stock of spares he kept at the operating centre.  The forward planner only projected to the end of 2012 although Mr Clarke assured VE Collins that a new system of forward planning would be implemented.  The MOT failure rate was 25% over the previous five years but 40% over the previous two years.  One vehicle failed at annual test for a brake related item on 7 September 2011.  When maximum pressure had been applied for the brake test, the brake hose failed. 
(v)	In response to VE Collins’ findings, Mr Clark wrote to the Office of the Traffic Commissioner (“OTC”) to inform that a new forward planning wall chart had been put into use to ensure that PMI intervals would not be exceeded and a reminder system had been implemented; drivers had received a memo informing them that they must record all defects observed and that the reports would be checked weekly; if working away from base and the customer had a secure yard, vehicles would be left in that yard saving time and fuel costs; Mr Clark had spoken to his maintenance provider in relation to the brake related MOT failure and had been informed that the brakes of the vehicle had been checked prior to the annual test whilst unloaded but when tested at the testing station with a load, there had been an increase in pressure on the hose causing it to fail. 
(vi)	The Appellant was called to a public inquiry which took place on 26 March 2013.  Mr Clark appeared as a Director with authority to speak for his wife and the Appellant was represented by Paul Carless Senior of S.P.C. Transport Consultancy.  
(vii)	The evidence of VE Collins was not in dispute.  As for the up to date position, there had been no road side encounters and no prohibitions issued.  Four annual tests had taken place since the maintenance investigation.  There had been two passes, one had been marked PRS for headlight aim and one had failed for a torn seatbelt (which had been recorded on two previous PMI’s) and for lamps.  One PMI interval in relation to that vehicle had been exceeded by ten days.  Further, three PMI records advised that a nearside rear outer tyre was close to its limit, being 3mm in depth (1mm being the minimum).  VE Collins would have expected this to be reported by the drivers during the driver defect walk round.  There were also three driver defect reports which mentioned a defective mirror.  There was no evidence of rectification save for the annotation “phoned Chris”.  Another vehicle recently purchased had four PMI records.  One interval had been exceeded by 30 days.  Another vehicle had one interval exceeded by six days and another by eleven and five days.  Finally, whilst the PMI records indicated that brakes were satisfactory, there were no records of figures indicating that brake tests had taken place, save in respect of one record when the vehicle failed on its secondary performance.  It was agreed that the first time pass rate at annual test over the previous two years was now 25%.  
(viii)	In cross examination, VE Collins agreed that the PMI intervals of ten weeks were acceptable in view of the mileage being covered by the vehicles and that roller brake testing every ten weeks and prior to annual test was also acceptable.  He agreed that the Appellant’s maintenance providers did have access to roller brake testing equipment.  Further a new forward planner produced at the hearing was acceptable. As for the brake related test failure, it would have been at the discretion of the person testing the vehicle as to whether an immediate PG9 was issued.  No prohibition was issued.
(ix)	Mr Clark informed the Traffic Commissioner that he had operated vehicles with an operator’s licence for ten to fifteen years and that this was the first public inquiry he had been required to attend.  The Appellant undertook a lot of work for Hampshire Council with jobs taking as long as two to three months.  Whilst undertaking this work, Arres fencing was used to create a compound for machinery, debris and the lorries.  The vehicles would then be parked within the compound overnight.  Mr Clark accepted that the PMI intervals had been exceeded and that drivers were either not reporting defects or when they did, Mr Clark did not sign the reports off as rectified.  Steps had been taken to address the deficiencies in the Appellant’s maintenance systems.  Roller brake testing was now undertaken on each inspection and all driver defect sheets were signed off.  Mr Clark offered an undertaking that all vehicles would be prepared for annual test by a large maintenance contractor and whilst he had attended a VOSA course for new operators in December 2010, he offered an undertaking that he and his eldest son, who was also a driver, would attend the Freight Transport Operator’s Licence Awareness Course.  
(x)	It was at this point that the Traffic Commissioner asked why she should accept what Mr Clark was saying and why he should be given another chance when “his history since 2010 is a shocker”.  Whilst the Appellant’s vehicles had not attracted any PG9’s, that was only as a result of the good grace of the testing station.  Against the background of PMI intervals being exceeded and the absence of road side checks, the Traffic Commissioner could not say what condition the vehicles were in when on the road.  She took the view that Mr Clark had ignored VE Collins’ advice twice following maintenance investigations and had continued as before, including the parking of vehicles otherwise than at the operating centre.  Mr Clark then interjected and stated that in 2010, two vehicles were being parked in the yard of Totten Council and were off the road.  The Traffic Commissioner then retired for ten minutes advising Mr Carless that he needed to revise his strategy as her starting point was revocation.
(xi)	When the hearing resumed, Mr Clark repeated his offer of undertakings and undertook to involve his older son more in the running of the business and in order to help with the paperwork.  Mr Clark later described himself as “a little bit illiterate”.  He would change his maintenance contractor to a main dealer and ensure that the vehicles were presented to the contractor a week before annual test for preparation.  He would ensure that the driver defect system was more robust, undertaking daily checks himself.  He undertook to return the vehicles to the operating centre every evening and at weekends.  
(xii)	Mr Clark stated that if his licence was revoked, sixteen men would be made redundant.  The Traffic Commissioner interjected “can I make it clear for those who might be in the gallery, if I revoke this licence and sixteen men are made redundant, it is not my fault”.  
(xiii)	Mr Clark continued that the Appellant could cope with a curtailment to three vehicles, although it would be a struggle.  A suspension for a period in the region of one month would have a big effect on the business.  
(xiv)	In answer to questions put by the Traffic Commissioner, Mr Clark accepted that it was a commercial decision to leave vehicles at the site of major road works and that the reason for the PMI intervals being exceeded was because the vehicles were on site and not returning to base.  He accepted that in saving costs by not bringing vehicles back to the operating centre he was gaining a competitive advantage.  The Traffic Commissioner reiterated that her starting point was revocation of the licence.  She described Mr Clark as a man who did not take advice and that she was “not getting” that she could trust him.  She took him through the various aspects of unfair competitive advantage and as Mr Carless was taking instructions from Mr Clark’s eldest son, the Traffic Commissioner left the hearing for a second time.
(xv)	Once the hearing had resumed, Mr Carless informed the Traffic Commissioner that a further undertaking was being offered of an external audit by the Freight Transport Association every three months for a period to be determined by the Traffic Commissioner.  The Traffic Commissioner’s response was “first of all, I have got to decide whether I think they should be kept in business”.   Mr Carless suggested that such audits could be submitted to VOSA and to the OTC.  The Traffic Commissioner asked “why should I form part of an Operator’s monitoring service?”  Neither would she delegate the task as it was a judicial decision.  She considered that Mr Clark was saying “anything” because he had been “caught” and nothing was going to change.  She did not consider her approach to be harsh.  She considered that the previous three years operation “wiped away” the previous years of blemish free operation.  She considered that Mr Clark had acted for commercial gain and was not  ignorant of the regulatory requirements. The Traffic Commissioner then asked for further details about the effect of suspension.  Mr Clark reluctantly agreed that the Appellant could survive a suspension of two months but it would make continued operation “very hard”.  When asked to consider that revocation in this case would not be proportionate, the Traffic Commissioner replied “I fundamentally disagree”.
(xvi)	   In her written decision the Traffic Commissioner took account of the positive aspects of the Appellant’s case: the absence of a compliance history when Mr Clark operated as a sole trader; that Mr Clark now fully appreciated the importance of undertakings given pursuant to an application for a licence; that a number of undertakings had been offered and that it was the Appellant’s first public inquiry.  She concluded that the Appellant’s failings since 2010 far outweighed previous “potential” compliance; Mr Clark had ignored advice given by VE Collins for commercial reasons which was unacceptable; the offer of education did not assist as there was no evidence that Mr Clark was receptive to education and advice and that revocation was appropriate at a first public inquiry if matters were sufficiently serious.  She adopted the questions posed in T2009/225 Priority Freight Ltd & Paul Williams and T2002/217 Bryan Haulage No.2 and concluded that it was unlikely that the Appellant would be compliant in the future because Mr Clark would not change.  She remained concerned for safety and fair competition.  Then in answer to the question “is the conduct .. such that the operator ought to be put out of business”, her answer was “absolutely”.  A line had to be drawn at some stage.  The Traffic Commissioner concluded that the Appellant had been given a number of chances to demonstrate compliance and had not taken them.  The undertakings were suggested “at the final hour”.  The risk to road safety was too great and there had been unfair competition.  For these reasons, the Appellant was not fit to hold a licence.

3.	At the hearing of this appeal, the Appellant was represented by Mr Carless Senior.  His only point was that the order of revocation was disproportionate against the background of a history of compliance by Mr Clark for approximately fifteen years and the absence of convictions or prohibitions.  Mr Carless questioned the Traffic Commissioner’s description of Mr Clark’s previous compliance as “potential”.  Mr Carless accepted that there was a lot wrong with the Appellant’s operation of vehicles.  However, the public inquiry had come as a great shock to Mr Clark and the proposed undertakings were unequivocal in their nature.  It was clear that Mr Clark was prepared to change the way the Appellant was operated.  The undertakings were however, “swept aside” by the Traffic Commissioner  when the Appellant should have been given an opportunity to demonstrate compliance.  Neither the maintenance issues on their own or when taken together with the issue of parking in compounds adjacent to main road works were such as to warrant revocation.

4.	We agree.  The clear impression given by the conduct of the Traffic Commissioner during the course of the public inquiry was that she had already made her mind up in relation to the revocation of the Appellant’s licence prior to the hearing commencing and that she was not prepared to listen to the evidence or submissions.  Whilst we agree that there are cases where revocation is inevitable at a first public inquiry, this was not such a case.  There were other orders and undertakings which could and should have been considered which fell short of the ultimate sanction and we note with some surprise, the Traffic Commissioner’s attitude towards undertakings offered that external audits should take place which should then be made available to VOSA and the OTC upon request.  We consider such undertakings to be a useful part of the regulatory regime and was appropriate in this case.  We agree with Mr Carless’ description of the order of revocation as being “harsh” and disproportionate and as a result, we are also satisfied that reason and law impels us to take a different view to the Traffic Commissioner in this case  (as per the test enunciated by the Court of Appeal in the case of Bradley Fold Travel Ltd and Peter Wright v Secretary of State for Transport (2010) EWCA Civ 695.  That is not to say that the Appellant’s licence is not in a perilous position.  Failure to comply with the order made by this Tribunal and the undertakings made by the Appellant which  are now accepted will no doubt result in a second public inquiry with revocation being a probable outcome. 

5.	In the result, we allow this appeal and substitute our own decision for that of the Traffic Commissioner which is as follows:

Order
a)	The Appellant’s operator’s licence will be suspended for a period of 28 days commencing (4 weeks after the date of the decision).  In that period, the Appellant’s vehicles are not to be used or specified under another licence;

Undertakings
b)	Two external audits of the Appellant’s maintenance systems to be undertaken by the Freight Transport Association.  The first audit to take place by (the end of the third week of suspension).  The second audit to take place six months thereafter.  Copies to be made available to both VOSA and OTC.
c)	Christopher Clark and his eldest son are to attend an Operator’s Licence Awareness Training Course held by the Freight Transport Association or similar approved organisation by 1 November 2013;
d)	The Appellant’s preventative maintenance inspections and preparation for annual tests to be undertaken by a main goods vehicle dealership, the identity of which is to be notified to the OTC within twenty one days.

Her Honour Judge J Beech
7 August 2013