Neutral Citation Number: [2013 UKUT 0590	(AAC)		Appeal No.  T/2013/40

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
John Baker, Deputy Traffic Commissioner for the 
London and the South East of England Traffic Area dated 3 June 2013

Before:
Her Honour Judge J Beech, Judge of the Upper Tribunal
Stuart James, Member of the Upper Tribunal
Michael Farmer, Member of the Upper Tribunal

Appellants:

SOUTHWATERSTREET LIMITED trading as
S W TRANSPORT
and
THOMAS McKINNEY

	 
Attendances:
For the Appellant:  Thomas McKinney appearing and represented by Tim Nesbitt of Counsel, instructed by AMD Solicitors

Heard at: Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ
Date of hearing: 22 October 2013
Date of decision:   25 November 2013

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that this appeal be DISMISSED and that the order of revocation of company’s licence shall take effect at 23.59 on 23 December 2013

SUBJECT MATTER:-  Refusal of application for director disqualification to be cancelled; revocation of operator’s licence held by limited company whose sole director and transport manager is disqualified under s.28(1) & (4) of the Goods Vehicles (Licensing of Operators) Act 1995

CASES REFERRED TO:-  2008/593 Martin John Graves; Smith v Parole Board (2003) EWCA Civ 1269; T/2011/25 Asset 2 Asset Ltd; T/2009/25 Priority Freight Ltd & Paul Williams

REASONS FOR DECISION

1.	This was an appeal from the decision of the Deputy Traffic Commissioner (“DTC”) for the London and South East of England Traffic Area made on 3 June 2013 when he refused to cancel the order disqualifying Thomas McKinney for an indefinite period under s.28(1) & (4) of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”) and revoked the standard international operator’s licence held by Southwaterstreet Limited (“the company”) under s.26(1)(i) of the Act.

2.	The factual background appears from the documents and the DTC’s decision and is as follows:

(i)	Mr McKinney formerly held an operator’s licence in his own name in the Eastern Traffic Area. In 2006, he was investigated as part of “Operation Cluedo”, an investigation into fraudulent applications for operators’ licences submitted on behalf of operators by John Plumridge, a Transport Consultant.   It transpired that Mr McKinney’s licence had been obtained as part of this fraud.  After a public inquiry held on 2 October 2006 (at which Mr McKinney failed to appear), his licence was revoked, the grounds being that convictions had not been declared, false bank statements and a false CPC certificate had been submitted in support of the application for a licence.  Mr McKinney was disqualified from holding or being involved with any operator’s licence for an indefinite period under s.28(1) & (4) of the Act.
(ii)	In the interim, McKinney & Son Limited applied for a restricted licence to authorise nine vehicles in the South Eastern and Metropolitan Traffic Area (“SEMTA”).  The application was signed by Aiden Kelly and was dated 26 July 2006 although it was not received by SEMTA until 21 August 2006.  The sole director of that company on 26 July 2006 was Mr Kelly.    An interim licence was granted on 4 September 2006.  
(iii)	A statutory objection to the application was made by Sir Ian Blair, the Metropolitan Police Commissioner which informed the Traffic Commissioner for SEMTA that Mr Kelly had a criminal record and that McKinney and Son Ltd might be associated with Mr McKinney.   A search of the Companies Register revealed that Mr McKinney was the sole shareholder of McKinney & Son Ltd and that he had resigned as a director of the company on 25 July 2006, the day before the application for a licence was signed.  However, he continued to hold 100% of the shares in the company.  
(iv)	In the result, a public inquiry was held on 6 November 2006.  By that date, Mr Kelly had been replaced by Mr Murphy as the sole director of McKinney & Son Ltd.  At the hearing, Rory Cropper, a Transport Consultant, appeared for the company but was not accompanied by Mr Murphy (or indeed any other representative of the company).  Mr Cropper informed the Traffic Commissioner (Mr Christopher Heaps) that he had never met either Mr Kelly or Mr Murphy but he had received instructions from Mr McKinney.  Mr Cropper thought that McKinney & Son Ltd had however, been “purchased” by Mr Murphy.  That could not have been the case bearing in mind that Mr McKinney continued to be the sole shareholder.
(v)	The Traffic Commissioner accepted the evidence given by Detective Sergeant Andrew Rose on behalf of the Metropolitan Police concerning Operation Cluedo.  Mr McKinney had been arrested as a result of the false information provided in support of his revoked licence.  Further, vehicles specified on the interim licence granted to McKinney & Son Ltd had been specified on a number of previously revoked licences including the following: Leisurenotice Ltd; John Elliot Ltd; London Skips Ltd; James Linton; Jeremy Fear; Thomas McKinney.  The registration numbers of some of the vehicles had been changed following applications to the DVLA.  Fines incurred by some of those operators had been paid by Rhino Haulage Ltd, of which Mr McKinney was the sole director.  The Traffic Commissioner found that:
“by reference to the evidence of the Metropolitan Police relating to the specified vehicles and the links with Rhino Haulage Ltd, that the Company (Thomas McKinney & Son Ltd) has been operating HGVs as a “front” for Mr McKinney”.
The Traffic Commissioner revoked the interim licence under sections 26(1)(h) and (i) of the Act with effect from 2359 that evening and refused the application for a restricted licence.  There was no appeal against that decision.
(vi)	Two days later on 8 November 2006, two vehicles in the livery of Thomas McKinney and Son Ltd were impounded.  Mr McKinney applied to the Traffic Commissioner for SEMTA for return of the vehicles on behalf of McKinney & Son Ltd and that application was heard at a public inquiry which took place on 15 January 2007.  At that stage there were no nominated directors of the company but Mr McKinney continued to own 100% of the shares.
(vii)	At the outset of the public inquiry with which this present appeal is concerned, Mr Brown, the solicitor representing Mr McKinney, accepted that it was he who had heard and determined the application made by Mr McKinney for the return of the vehicles (being the Senior Traffic Commissioner with responsibility for SEMTA at the time).  
(viii)	The Transport Tribunal decision (Appeal 2007/62 Thomas McKinney & Son Limited) sets out Mr McKinney’s case.  In short, he had purchased the impounded vehicles in 2004 and that “following the revocation of his licence and disqualification”, he had started to hire the vehicles out on a “self drive” basis.  Whilst the vehicles at that stage were owned by McKinney & Son Ltd, Mr McKinney had never understood the distinction between the company and himself.  However, the two impounded vehicles were on hire to Gerard McDonagh when they were impounded. Mr McDonagh gave evidence in support of Mr McKinney’s application stating that it was he who had been operating the vehicles.  The Traffic Commissioner rejected their evidence and found that either Mr McKinney personally or McKinney and Son Ltd were operating the vehicles and that as neither held an operator’s licence and that Mr McKinney both personally and as majority shareholder in the company knew that licences were not held, there were no grounds for the return of the vehicles under the regulations.
(ix)	The Transport Tribunal dismissed an appeal from that decision on 19 June 2007 (Appeal 2007/62 supra).  The Tribunal set out Mr McKinney’s history and that of McKinney & Son Ltd.  Paragraph 2(i) spelt out the fact that Mr McKinney had been disqualified under s.28(1) & (4) of the Act for an indefinite period and concluded: “this was a bad case of illegal operation of vehicles and the narrative leading up to the Traffic Commissioner’s decision so overwhelmingly points to a sham agreement entered into to enable the Appellant to continue operating vehicles following revocation of its licence ..”.  
The Tribunal observes at this stage, that neither the grounds of appeal as set out in the notice of appeal or those advanced before the Tribunal involved any criticism of the Traffic Commissioner’s finding that at the date of the impounding, Mr McKinney had knowledge that his licence and that of McKinney & Son Ltd had been revoked in October 2006.
(x)	On 30 October 2012, the Office of the Traffic Commissioner (“OTC”) received a letter from Mr McKinney notifying a change of details of Southwaterstreet Ltd with effect from 22 October 2012.  In particular, the sole director of the company was being replaced by Mr McKinney.  Then on 10 December 2012, the OTC received a completed form entitled “Partner/Director to be added to an Operator’s Licence” (“the director details form”).  The form was signed by Mr McKinney.  In respect of the question: “During the last three years have you or your partners/directors been disqualified from acting as a director of a company or from taking part in the management of the company” the answer was “no”.  That answer was clearly incorrect.  In respect of the question of whether the company, partners/directors or any named person on the operator’s licence had any convictions which should be notified to the Traffic Commissioner, the answer was as follows: 
“20.10.09 Driving whilst disqualified; drink driving; using mobile phone – London Westminster.
24.11.07 Pecuniary advantage.  Fraudulent use of licence – Southend Crown Court.”
In respect of the 2007 convictions, Mr McKinney had in fact pleaded guilty to the following:
a)	three counts of obtaining a pecuniary advantage with intent to deceive contrary to s.16(1) of the Theft Act 1968;
b)	four counts of using an operator’s licence with intent to deceive contrary to s.38(1) of the Theft Act 1968;
c)	three counts of using a goods vehicle without a valid operator’s licence contrary to s.2 of the Act.  
The conviction for these offences was a direct result of Operation Cluedo and the use by Mr McKinney of an operator’s licence which had been obtained by fraud.  Mr McKinney was fined £22,000 and was made the subject of a forfeiture order in the sum of £65,000.  The answer to the question concerning convictions was therefore incorrect.
(xi)	By a letter dated 15 April 2013, the company was called to a public inquiry to be held on 13 May 2013.  Repute, change of circumstances and financial standing were the main grounds for concern.  The public inquiry brief included a copy of this Tribunal’s decision in Thomas McKinney & Son Ltd (Appeal 2007/62) which set out the background circumstances behind the revocation and refusal of an application for a licence by Thomas McKinney & Son Ltd and in particular the evidence of DS Rose in relation to Operation Cluedo.
(xii)	On the morning of the public inquiry,  Mr Brown who represented Mr McKinney and the company provided the DTC with the following documents:
a)	a statement signed by Mr McKinney and dated 13 May 2013;
b)	a company document entitled “Essential Procedures (Goods Vehicle Operator Licensing)” signed by Mr McKinney and Paul Shea and dated 8 May 2013; 
c)	a company document entitled “Advisory Audit conducted on 8 May 2013” and signed by Joe Owen on 9 May 2013; 
d)	details of a Compliance and Standards Seminar to be facilitated by Mr Brown on 14 and 15 June 2013;
e)	bank statements demonstrating that the company fulfilled the financial standing requirements.  
(xiii)	Mr McKinney’s statement confirmed that he had been convicted (as set out in paragraph 2(ix)(a) to (c) above) as a result of Operation Cluedo.  He had been persuaded by John Plumridge, who was one of the main instigators of the illegal activity, to apply for an operator’s licence using false documents.  Whilst three other operators were also convicted of offences, “there were several hundred business who were involved .. but those other businesses were not prosecuted”.  As a result of Operation Cluedo, Mr McKinney was informed that his operator’s licence was to be revoked.  He was not however informed that a public inquiry was to take place and as a result, he was unaware that he was disqualified from holding or being involved in an operator’s licence until he had received the call up letter dated 15 April 2013.  As for the convictions recorded against him in 2009, he had at the time, many family issues which had driven him to drink.  
(xiv)	As for his involvement with the company, when he completed the change of details form, he had declared his convictions and he was duly registered as a director and transport manager.  He then received a visit from a Vehicle Examiner and a Traffic Examiner whose reports were marked as satisfactory.  The letter of 15 April 2013 came out of the blue.  
(xv)	As for Rhino Haulage (see paragraph 2 (v) above), that company did not hold an operator’s licence, being concerned in sub-contracting haulage work.  That company went into liquidation in April 2013 following the non-payment of a debt by a creditor in the sum of £38,000.  Mr McKinney had taken advice from Joe Owen and Paul Shea (transport consultants) in order to rehabilitate himself and regain his good repute and fitness to be an operator, director and transport manager.  In view of Mr McKinney having taken advice and his stated intention of doing so in the future, together with the fact that he would attend an operator awareness seminar, and that he was committed to compliance in the future (being older and wiser) and that he had demonstrated appropriate financial standing, he requested that the DTC remove the order of disqualification from him.  Mr McKinney maintained that he did not receive any correspondence concerning the public inquiry in 2006 or the decision letter notifying him of his disqualification.  Had he known that he was disqualified,  he would not have applied to become a director of a transport company.
(xvi)	In respect of the effect of regulatory action, Mr McKinney stated that the company could survive the downgrading of its licence to a standard national licence (which was necessary in any event as a result of Mr McKinney’s application to be the nominated transport manager).  Because of the nature of the business undertaken by the company, revocation or curtailment of the number of authorised vehicles would put the company out of business.  The company could however, survive a suspension for a limited period.  The DTC was asked to take account of the fact that between October 2012, when Mr McKinney became the director of the company and the date of the public inquiry, there had been no regulatory issues (apart from the fact that Mr McKinney was disqualified).  Mr McKinney asked the DTC to find that on balance, he had regained his good repute and professional competence through the rehabilitation measures undertaken to date and those to be taken in the future.  
(xvii)	The public inquiry was attended by Mr McKinney, Joe Owen and Paul Shea.  Mr McKinney and the company were represented by Mr Brown.  Having had an opportunity of reading Mr McKinney’s statement, the DTC spoke to Mr Brown about his position as the Traffic Commissioner who had confirmed the impounding of Mr McKinney’s vehicles in 2007 and his present position as Mr McKinney’s legal representative.  The DTC was concerned that there may be a possible professional conflict between Mr McKinney and Mr Brown in view of the fact that it was Mr McKinney’s case that he was not aware that he was disqualified until he received the call up letter of 15 April 2013.  As has already been noted, Mr Brown confirmed that he was the Traffic Commissioner who had refused to return the impounded vehicles to Mr McKinney and further confirmed that the subject of Mr McKinney’s disqualification would have been raised during the course of that hearing; Mr McKinney “must have known” at that stage that he was disqualified.  However, the impounding hearing was a long time ago and memories fade.  It would be for Mr McKinney to give evidence as to why it did not occur to him that he could not be a director.  Having taken instructions, Mr Brown stated that he was satisfied that he was not professionally embarrassed in the light of his client’s instructions.  
(xviii)	Mr McKinney then gave evidence.  He adopted the contents of his statement.  He told the DTC that when the order of disqualification was made in October 2006 he had not attended the hearing and that he was, as a result, unaware that he had been disqualified.  His business address at the time was Rockware Avenue, Greenford and the notification letter was addressed to an address in Northolt.  As for the passage in the Transport Tribunal’s decision (see paragraph 2(xiii) above) which summarises Mr McKinney’s evidence to Mr Brown and in particular the phrase “he had purchased the impounded vehicles in 2004 and that following the revocation of his licence and disqualification he had started to hire the vehicles out”,  Mr McKinney told the DTC that he was not sure and could not remember whether at that stage, in February 2007, he was aware that he had been disqualified.  He was however aware that his licence had been revoked.  Despite further questioning, Mr McKinney then backtracked and averred that he did not know and had not known that he had been disqualified from holding or being involved in a company with an operator’s licence.  He claimed to have learnt of the revocation of the licence in Commercial Motor (he did not say when).  
(xix)	As for the completion of the director details form, Mr McKinney stated: “I didn’t hold anything back.  I told them everything.  I did not know I was disqualified”.  He was asked about his involvement with Operation Cluedo to which Mr McKinney stated “Well, my involvement was, Mr Plumridge approached me and told me “It’s getting very serious now because you haven’t got an O licence”, that he could obtain an O licence; pay him, give him the money and two months later, he landed me with an O licence”.  The 2007 convictions were as a result of Mr McKinney obtaining the licence and dishonestly holding himself out as a licensed operator.
(xx)	Mr Brown then provided a summary of how Operation Cluedo came about and the criminality involved.  He stated “I suspect that because Mr McKinney was convicted, he must have had knowledge of what was happening”.  Many licences were revoked summarily but few operators were charged.  It was then asserted by Mr McKinney and then confirmed by Mr Brown that Mr McKinney’s licence was one of those licences which was revoked without a hearing.  That was incorrect.  It is clear from paragraph 2(i) of this Tribunal’s decision (Appeal 2007/62) that Mr McKinney’s licence was revoked following a public inquiry held on 2 October 2006.  
(xxi)	The DTC asked Mr McKinney about the completion of the director details form and the failure to disclose the full details of Mr McKinney’s convictions.  He stated that the form had been filled in by Joe Owen upon the basis of information given by Mr McKinney (it was however signed by Mr McKinney).  Mr Owen then interrupted Mr McKinney’s evidence and stated that he had spoken to the OTC and that he had then provided “enough information to alert somebody because something had happened, something quite serious, so it wasn’t just going to sail through the Traffic Office at Leeds and it didn’t, so there must have been enough there to alert people.  I mean, consultants don’t have access to criminal records”.  
(xxii)	As for the 2009 convictions, Mr McKinney stated that he and his partner had hit a “bit of a bad patch” and so he was having “the odd drink”.  He had consumed three or four pints and was pulled over.  He thought he might have already been disqualified from driving at that stage, although he was not sure.  He did however then recall that he was a disqualified driver at the time having been convicted of a previous drink/drive offence and as a result he was disqualified for three years in 2009 and had been sentenced to a term of imprisonment.  When asked the length of that sentence, Mr McKinney replied “I done six weeks”.  In fact he was sentenced to a term of imprisonment of six months.  
(xxiii)	Mr McKinney confirmed that he had applied to be the transport manager of the company and that he held a national CPC, hence his desire for the company’s licence to be downgraded to a standard national licence.  The main bulk of the company’s work was hauling “muck” away from sites and general haulage.  He had recruited his own drivers since he had purchased the company.  
(xxiv)	Joe Owen was then called.  He had been consulted by Mr McKinney prior to Mr McKinney’s appointment as a director of the company.  His role was to undertake audits and provide guidance.  He considered Mr McKinney to be “a pretty honest individual .. not a smart aleck .. or a .. con merchant”.  Mr Owen had gained the impression that Mr McKinney had been led on by the wrong people (Mr Owen was not asked for his opinion as to who it was who had led Mr McKinney on in respect of unlawfully operating vehicles two days after an interim licence was revoked and then concocting a “sham” agreement and giving untruthful evidence at a public inquiry in 2007).  Mr Owen did however state that all of the company’s procedures were now in place and he was confident that the company would “sail through” the next VOSA inspection.  He had completed the director details form with the precise information he had been given by Mr McKinney.  Mr Owen was sure that Mr McKinney had told him the truth “as he saw it”.  He considered that Mr McKinney would continue to seek advice and guidance if the company’s licence was allowed to continue.
(xxv)	Moving onto Paul Shea, he had worked for the company as a consultant analysing tachographs for eighteen months.  It was he who had drafted the document mentioned at paragraph 2(xi)(b) above.  The first time pass rate of the company’s vehicles at annual test was very good and the operation was compliant.
(xxvi)	The DTC then asked Mr Brown for his submissions on the issues arising out of the application to revoke Mr McKinney’s disqualification and the action that should be taken against the company’s licence if any.  Mr Brown reminded the DTC that irrespective of whether Mr McKinney’s disqualification had “slipped his mind or not”, he had nevertheless been disqualified for six years.  Having realised now that he was disqualified and having “put his house in order” by applying for the cancellation of the disqualification order, it should now be removed.  Mr McKinney had done more “than many other operators ever do in their entire operator licensing careers to rehabilitate himself”.  Mr McKinney had put his cards on the table, providing sufficient information on the director details form to cause questions to be raised.  If he had known that he was disqualified as a director, he would have applied for that order to be cancelled prior to becoming a director of the company.  Despite the seriousness of the matters in 2006 and 2007, Mr McKinney should now be allowed to be a director of the company.  
(xxvii)	Mr Brown was asked to make submissions as to whether Mr McKinney could be trusted in the light of his past, including the impounding proceedings which raised an issue about Mr McKinney’s honesty and the fact that he did not disclose his disqualification to the OTC.  Mr Brown submitted that the Transport Tribunal’s reference to Mr McKinney’s knowledge that he was disqualified at the time his vehicles were impounded should not be treated as conclusive evidence that he did have such knowledge.  In any event, being disqualified would not have been upper most in Mr McKinney’s mind but rather that he did not have an operator’s licence “and he was not allowed to operate a licence”.   The DTC was asked not to hold the failure to disclose the disqualification to the OTC against Mr McKinney.  He was not trying to “pull the wool over your eyes”.  He had nothing to hide.  As for the issue of Mr McKinney’s honesty arising out of the impounding proceedings, that was partly dependent upon the legal advice he received at that stage, if any (the Tribunal notes that Mr McKinney was at that stage represented by Mr Doughty, a transport consultant, Mr Nesbitt at the public inquiry and Patrick Sadd of Counsel on the appeal).  Mr Brown continued that it was clear from the decision of the Traffic Commissioner that he found that it was Mr McKinney who was operating the vehicles and that this was part of the aftermath of Operation Cluedo (the Tribunal observes at this stage that this summary of Mr Brown’s findings is incorrect.  Mr Brown found that the vehicles were being operated either by Mr McKinney or Thomas McKinney & Son Ltd and that he knew that neither he or the company had a licence – see paragraph 2(vii) above).   
(xxviii)	Mr Brown described Mr McKinney as older and wiser with an ability to run a business as demonstrated by him having successfully operated Rhino Haulage for a number of years.  He had the advice and assistance of Mr Owen and Mr Shea and the company had no compliance issues.  Despite being requested to do so, Mr Brown did not add to the written submissions made by Mr McKinney about the likely effect upon the company if the DTC were minded to take regulatory action against the licence.
(xxix)	By a letter dated 14 May 2013, the OTC forwarded to Mr Brown a copy of the decision of Mr Heaps in respect of the interim licence and application of Thomas McKinney & Son Ltd.  Mr McKinney was asked to comment upon paragraph 6 of the decision in which Mr Heaps refers to Mr McKinney’s disqualification.  It was also highlighted that the decision of Mr Heaps itself was sent to Unit 8 Rockware Business Centre when it was first published in 2006.  This was the business address of  Mr McKinney at that time.
(xxx)	In response, Mr Brown repeated Mr McKinney’s case that he did not receive the call up letter relating to the public inquiry which resulted in him being disqualified and did not receive the decision.  Neither was he given any notice of the public inquiry concerning the interim licence of Thomas McKinney & Son Ltd because Mr McKinney was “no longer associated” with the company in his capacity as a director.  And whilst the documentation and decision relating to the McKinney & Son Ltd was sent to Unit 8 Rockware Business Centre, that was in fact an office block containing many unlocked post office boxes.  Letters were simply placed in a pile on a table.  Mr McKinney was not in any event, “involved with the company” at the date of the public inquiry and was not in a position to receive notification of the result of the public inquiry.  He denied seeing a copy of the decision of Mr Heaps until it was forwarded by the OTC (as set out in paragraph 2(xxviii) above).  Mr McKinney remained adamant that had he known that he was disqualified, he would not have involved himself with Southwaterstreet Ltd.  Mr McKinney accepted that he had “acted wrongly and had been badly misled”, he was unaware of the decisions of the Traffic Commissioners for Eastern Traffic Area and SEMTA in October and December 2006.  Mr McKinney had spoken “from his own knowledge” at the hearing before the DTC and had no intention of misleading the DTC.  If the DTC felt it necessary to reconvene the hearing to question Mr McKinney further, then Mr McKinney would attend.
(xxxi)	On 22 May 2013, the OTC wrote to Mr Brown again.  This time the DTC wished to give Mr McKinney an opportunity to comment upon a) the references made to links between Rhino Haulage Ltd and previously revoked licences; b) and in particular, that vehicles specified on the interim licence of Thomas McKinney & Son Ltd had been specified on those other licences; c) that Rhino Haulage Ltd had paid fines incurred by some of the operators whose licences had subsequently been revoked and that Mr McKinney was the sole director of Rhino Haulage Ltd.
(xxxii)	Mr Brown’s response came in a letter dated 27 May 2013.  He repeated Mr McKinney’s assertion that he was not involved in the application for a licence by Thomas McKinney & Son Ltd.  Rhino Haulage supplied vehicles to various operators and then as the owner of the vehicles, paid fines relating to the use of those vehicles.  Mr McKinney may have been naïve in accepting responsibility for the fines.  Mr Brown trusted that his replies would satisfy the DTC and allow him to determine the case without the need for a further hearing.  However, the DTC was invited to give Mr McKinney the opportunity to attend a further hearing if regulatory action against the company’s operator’s licence was being considered which would prevent Mr McKinney taking an active part in the management of the company.  
(xxxiii)	In his written decision dated 3 June 2013, the DTC rejected the invitation to give Mr McKinney a further opportunity to give evidence in the event that the DTC had any action in mind which would prevent Mr McKinney taking an active part in the company.  The DTC’s reasons for doing so were that the call up letter had clearly warned that regulatory action would be considered and that Mr McKinney had been given the opportunity of making representations through Mr Brown and did so.  The additional opportunities given to Mr McKinney to comment on the decision of Mr Heaps had been taken up.  The DTC took the view that it was not appropriate to hold another hearing which would have had the effect of going over old ground.
(xxxiv)	It was not in dispute that Mr McKinney had breached s.26(1)(i) of the Act as he remained disqualified and whilst being so disqualified, he had become a sole director and transport manager of the company.  As a consequence the company’s licence was liable to be revoked, suspended or curtailed.  The DTC stated that Mr Brown had asked him to cancel Mr McKinney’s disqualification, to allow the licence to continue and if regulatory action was to be considered, that a suspension for a limited period should be considered (in fact, Mr Brown made no representations about regulatory action or its consequences during the hearing, although those representations were made in Mr McKinney’s witness statement).
(xxxv)	The DTC’s starting point for his findings was the issue of Mr McKinney’s knowledge that he was disqualified from holding a licence or being involved with a company which held a licence.  As all of the relevant notices had been sent as required and he appeared to have accepted his disqualification during the impounding hearing in January 2007, the DTC concluded upon the balance of probabilities that Mr McKinney was aware in 2007 that he was disqualified.  The DTC then added: 
“I accept that since then he may have put the matter from his mind but if this is the case it would weigh against him.  Bearing in mind the need for operators to be scrupulous in remembering what is required of them a failure to remember something so fundamental and serious is significant”.
(xxxvi)	The second issue determined by the DTC was the extent to which Mr McKinney was involved in criminal activity leading up to his convictions in 2007.  The DTC balanced Mr McKinney’s assertion that he had been persuaded to apply for a licence by John Plumridge against Mr Heaps’ findings in November 2006 that pointed to Mr McKinney’s involvement with more extensive criminal activity and having given Mr McKinney a chance to comment on Mr Heaps’ findings as to the links between Rhino Haulage Ltd and the more widespread criminal activity, the DTC rejected Mr McKinney’s explanation for Rhino Haulage Ltd paying  the fines arising out of the operation of vehicles owned by Rhino Haulage Ltd as naivety on his part.  Mr Heaps’ finding pointed to Mr McKinney being embroiled in wider criminal activity.
(xxxvii)	The DTC took into account the following positive factors of Mr McKinney’s case: the passage of time since Mr McKinney had been disqualified and his last appearance before a Traffic Commissioner in 2007; that Mr McKinney had stated that he had learnt by his mistakes and was more mature, an assertion supported by Mr Owen who considered Mr McKinney to be essentially honest; that Mr Shea and Mr Owen were satisfied with the company’s compliance regime and that support and advice was to be on-going along with Mr McKinney’s stated intention to attend a refresher course.  Weighed against those positive factors were the following: Mr McKinney was the sole director and transport manager of the company.  If he had held the licence as an individual, he would have committed a criminal offence under. S28(2) of the Act; the need for the DTC to trust Mr McKinney and to be satisfied of future compliance was correspondingly more important as Mr McKinney was in effect the sole operator albeit within a company as a legal entity.  The DTC went on:
“At paragraphs 20 and 21 (in fact 22 and 23 – our comment) I have set out my findings in relation to Mr McKinney’s knowledge of his disqualification and his involvement in the original criminal activity.  Both of these factors weigh heavily against Mr McKinney.  I believe that either he knew of the disqualification and nevertheless became a director of the current company or he was wilful in his disregard of the disqualification.  I also believe that in Mr McKinney’s statement and evidence he tried to minimise his involvement in the criminal activity that went on in 2006/7 whereas the findings of the Traffic Commissioner on 6 November 2006 and Mr McKinney’s admission that his company paid the fines of a number of other illegal operators contradict this interpretation”.  In addition ... Mr McKinney acknowledges that he tried to mislead the Traffic Commissioner and the Upper Tribunal when he applied on the 15 January 2007 for the return of vehicles that had been impounded.  In addition to the offences directly relating to operator licensing Mr McKinney declared convictions in 2009 which resulted in imprisonment and involved non compliance with a court order of disqualification from driving”.
(xxxviii)	The DTC concluded that it was not appropriate for him to cancel the order of disqualification.  He determined:
“My findings that are adverse to Mr McKinney and the weight that I attach to them are such that I do not think he can be trusted to return to the transport industry at this time.  His previous conduct and my finding in relation to this current licence lead me to the conclusion that I am not sufficiently assured of future compliance if I ask myself that question in accordance with the decision in the case of Priority Freight Ltd & Paul Williams 2009/25.  It may be that if an application is made in the future in the normal way with further evidence of rehabilitation then the outcome will be different but this will of course be a matter for whoever considers any such application at the time.” 
The DTC determined that the company’s licence should be revoked and that this decision flowed from the DTC’s refusal to cancel Mr McKinney’s order of disqualification.  

3.	At the hearing of this appeal, Mr Nesbitt appeared for Mr McKinney having provided to the Tribunal a skeleton argument and bundles or authorities for which we were grateful.  Mr Nesbitt began by acknowledging on behalf of Mr McKinney that his “bad record” had justified the revocation of his licence, the loss of his repute and disqualification for an extended period.  The first ground of appeal concerned the test applied by the DTC in determining whether the disqualification order should be set aside.  Mr Nesbitt referred the Tribunal to Appeal 2008/593 Martin John Graves v Secretary of State for Transport and submitted that the test to be applied when considering this issue was whether “it was appropriate or necessary in the public interest that a disqualification order be maintained”.  Mr Nesbitt argued that this test is distinct from the issue of good repute which arises when an application for a licence is made and which falls to be considered at a different and later procedural stage.  That test involves, amongst other matters, the questions posed in T/2009/25 Priority Freight Ltd & Paul Williams.  The DTC’s decision that it was “not appropriate” to cancel Mr McKinney’s order of disqualification was based upon the DTC’s assessment of whether Mr McKinney could be trusted to return to the transport industry which was an error on his part.  
4.	The Tribunal agrees that the correct test to be applied when considering whether an order of disqualification should be cancelled is that set out in Graves (supra).  We disagree that this test does not and should not involve any consideration of whether a disqualified person can be trusted to be a compliant operator in the future.  Rehabilitation and good repute are fundamental to the question of whether it is appropriate or necessary in the public interest that a disqualification order be maintained.  If at the point of an application to set aside such an order, it is clear that the applicant cannot be trusted to be open and honest in his dealings with the regulatory regime and/or cannot be trusted to run a compliant operation in the future, those findings must be relevant to the issue of whether it is either appropriate or necessary in the public interest for the order to be set aside.  It is clear in this case that the DTC did apply the correct test and that he took into account the nature of Mr McKinney’s original wrongdoing, the subsequent conduct of Mr McKinney in relation to Thomas McKinney & Son Ltd, the findings made by Mr Heaps in relation to that company and the conduct of Rhino Haulage Ltd, Mr McKinney being the sole shareholder of both companies at the material times and the subsequent unlawful operation of vehicles by Mr McKinney using a “sham” agreement, then giving untruthful evidence at a public inquiry in an attempt to have the vehicles returned to him and maintaining that dishonest stance before this Tribunal on appeal.  In addition, the DTC made adverse findings in relation to Mr McKinney’s knowledge and conduct in relation to the present Appellant company (the subject of a separate ground of appeal).  Taking all of those matters into account, it would have been surprising indeed if the DTC had not considered whether Mr McKinney was a man who could be trusted as an operator now or in the future.  The answer is an emphatic “no”.  In the circumstances, this ground of appeal cannot succeed.
5.	The second ground of appeal concerned the DTC’s findings of fact in relation to  Mr McKinney’s knowledge that he was disqualified under s.28(1) & (4) of the Act at the time that he signed the director details form.  Mr Nesbitt repeated Mr McKinney’s contention that he did not know that he was disqualified when he filled in the form.  The only formal notification of the order of disqualification itself was the letter sent to Mr McKinney on 2 October 2006, which he had not received.  And whilst Mr Brown accepted before the DTC that McKinney must have known of his disqualification at the date of the public inquiry held to consider his application for return of the impounded vehicles in 2007, Mr Brown was now unsure as to whether he was in fact the Traffic Commissioner who had dealt with the application.  Mr McKinney continued to deny that he had even read the decision of the Tribunal (Appeal 2007/62) which spelt out Mr McKinney’s circumstances in June 2007.  Mr Nesbitt submitted that the DTC’s findings on this subject were contradictory and perverse.  Initially, under the heading “Findings” the DTC found Mr McKinney was aware of his disqualification in 2007 but that he may have put it out of his mind and then under the heading “Relevant Considerations”, he found:
“I believe that either he knew of the disqualification and nevertheless became a director of the current company or he was wilful in his disregard of the disqualification”.
Whilst the latter finding was the one upon which the DTC relied in reaching his overall conclusions in respect of Mr McKinney, there was an uneasy tension between the two sets of findings.  Either Mr McKinney had forgotten about his disqualification or he had not.  If he had forgotten about the disqualification, then he could not have been wilful in his disregard of it when providing the relevant information for Mr Owen to complete the director details form and then signing it.  Further, the DTC’s findings in relation to being in “wilful disregard” of the disqualification appeared to echo the constructive knowledge test in T/2011/25 Asset 2 Asset Limited which was not the correct test.  Mr Nesbitt submitted that the DTC was in error in finding that Mr McKinney was in wilful disregard of the disqualification and that he should have proceeded upon the basis that Mr McKinney had in fact forgotten that he had been disqualified.  
6.	The first point we would like to deal with in relation to this issue is the assertion made on behalf of Mr Brown to this Tribunal during the appeal hearing, that he may not have been the Traffic Commissioner who dealt with Mr McKinney’s application for return of the impounded vehicles.  The inference to be drawn from that assertion is that the concession that he made before the DTC that the issue of Mr McKinney’s disqualification must have arisen during the impounding hearing in January 2007 could not be relied upon.   Whatever the position may be, this Tribunal is sure that the DTC’s findings that prior to October 2012 Mr McKinney must have known that he was disqualified are findings that are unimpeachable.   Whilst it is now contended that he must have “forgotten” about this important prohibition on his business activities, the Tribunal is of the view that the evidence before the DTC should have been the subject of closer analysis in order that the position was spelt out.
7.	Whilst it may be reasonable to give Mr McKinney the benefit of the doubt in respect of his knowledge of the order of disqualification when it was made in October 2006, there being some uncertainty as to the status of the address to which correspondence was being sent to by the OTC, Mr McKinney cannot have the benefit of the doubt about his knowledge thereafter for the following reasons:
a)	he was the sole shareholder of Thomas McKinney & Son Ltd and continued to be so after he resigned as sole director the day before an application for a restricted licence was made by the new director Mr Kelly;
b)	Mr Cropper accepted at the hearing before Mr Heaps in November 2006 that the only person he had taken instructions from in connection with the hearing that then took place was Mr McKinney.  Mr Cropper had not even met either Mr Kelly or Mr Murphy, the director who then replaced Mr Kelly and who apparently had “bought” the company.  No officer or representative from the company attended the public inquiry;
c)	The decision of Mr Heaps that Thomas McKinney & Son Ltd was a “front” for Mr McKinney was not appealed to this Tribunal and whilst it was argued by Mr Nesbitt that the decision of Mr Heaps is undermined by the fact that no dishonest operator intent upon using a company as a front would use their own name in the title of that company, that does not detract from the findings of Mr Heaps which were well founded on the evidence that he heard.  The company was a “front” for Mr McKinney’s business activities;
d)	It is inconceivable that the sole shareholder of a company would not have been provided with a copy of the very decision which deprived that business of its most important asset – its operator’s licence.  Mr McKinney confirmed to the Tribunal that he is literate.  It is further inconceivable that as the sole shareholder of the company, Mr McKinney would not have read that decision which spelt out that he was disqualified;
e)	The decision was, in any event, sent to the address from which Mr McKinney continued to operate Rhino Haulage Ltd.  In the unlikely event that Mr Cropper or Mr Murphy failed to provide a copy of the decision to Mr McKinney as sole shareholder of McKinney & Son Ltd, SEMTA sent the decision to Unit 8 Rockware Business Centre.  It is inconceivable that the decision did not find its way before Mr McKinney, not least because of the title of the company;
f)	Within two days of the public inquiry taking place which resulted in the revocation of the interim licence, Mr McKinney was operating vehicles which on his own account belonged to Thomas McKinney & Sons Ltd.  This conduct undermines Mr Brown’s submissions to the DTC, that Mr McKinney had no involvement with Thomas McKinney & Sons Ltd once he had resigned as a director and was therefore not in a position to receive a copy of the decision;
g)	Further, in Mr McKinney’s application made on behalf of McKinney & Sons Ltd for return of one of the two vehicles once it had been impounded, it was asserted that the vehicle had been purchased by Mr McKinney in September 2006 and by 8 November 2008 it was in the livery of McKinney & Sons Ltd.  This undermines submissions made by Mr Brown that Mr McKinney had no involvement with the company following his resignation as a director on 25 July 2006;
h)	During the course of the hearing which took place on 15 January 2007, Mr McKinney stated that “he had never understood the distinction between the company and himself”.  It can be inferred from this statement, that he was, in effect, the company and continued to be so in January 2007;
i)	At the time of hearing of the application, it transpired that there were no nominated directors of the company.  Who then was instructing Mr Doughty (Transport Consultant)  and Mr Nesbitt who appeared at the public inquiry?  The Tribunal is in no doubt that it was Mr McKinney and that he would have been provided with a copy of this Tribunal’s decision dismissing the appeal against the refusal to return the vehicles to him or the company.  Again, it is inconceivable that he would not have read that decision which states clearly in paragraph 2(i) that Mr McKinney was disqualified for an indefinite period in October 2006;
j)	The Tribunal is satisfied that when it summarised Mr McKinney’s evidence given at the impounding hearing,  it would not have used the words “.. that following the revocation of his licence and disqualification, he had started to hire out the vehicles ..” unless that was what Mr McKinney had stated and/or that there was evidence in the transcript or appeal bundle that Mr McKinney had knowledge of his disqualification;
k)	Finally, it is inconceivable that the issue of Mr McKinney’s revocation and disqualification would not have been raised when Mr McKinney was sentenced in 2007 for the offences arising out of Mr McKinney obtaining by deception and then using a fraudulent operator’s licence as his then status within the transport industry would have been a relevant issue.
8.	All of the above aspects of the evidence present in the appeal bundle point to Mr McKinney having knowledge that he was disqualified.  It is quite frankly, implausible and unbelievable that Mr McKinney did not have knowledge of his disqualification until April 2013.  That is of course the primary finding of the DTC.  The only proper conclusion to be drawn is that the statement submitted by Mr McKinney to the DTC was untruthful on this point.
9.	Turning now to Mr Nesbitt’s criticisms of the DTC’s findings upon the issue of Mr McKinney’s state of knowledge when the form was completed and signed, we agree that there is a contradiction in the DTC’s findings.  The findings that Mr McKinney may have put his disqualification out of his mind and that he had a wilful disregard for his disqualification are not consistent.  The Tribunal is at a loss as to why the DTC should concede the possibility of Mr McKinney having put out of his mind something as fundamental as being disqualified from being involved in the running of a transport business when transport is in itself fundamental to his professional life.  It is again, inconceivable that someone in Mr McKinney’s position could forget such a prohibition.  It is clear however, that the DTC did not then proceed upon that basis but rather upon the basis that Mr McKinney had knowledge of his disqualification in October 2012 and had nevertheless become a director being wilful in his disregard of his disqualification in doing so.  We are satisfied that this finding amounts to the same thing i.e that he became a director and caused the question as to disqualification to be completed incorrectly knowing that he was disqualified but disregarding or ignoring the existence of that disqualification.  The DTC has not applied a test akin to a “constructive knowledge” test more suited to situations envisaged by the Asset 2 Asset case.  He had no need to in the circumstances.  It is unfortunate that the DTC made any reference to Mr McKinney putting his disqualification “out of his mind”.  On a cursory reading of the decision the reference would inevitably result in confusion.  However, on a deeper reading of the decision, the basis upon which the DTC proceeded was clear and for the avoidance of doubt we repeat: Mr McKinney had knowledge of his disqualification and was wilful in his disregard of it when signing the director details form in October 2012, having provided the information to Mr Owen who then completed the form.  In the result, the second ground of appeal fails.
10.	The third ground of appeal concerns the DTC’s findings concerning Rhino Haulage Ltd and Mr McKinney being involved in “wider criminal activity” to that of fraudulently applying for, obtaining and then using an operator’s licence.  Mr Nesbitt submitted that the DTC’s findings appear to go beyond the evidence accepted by Mr Heaps (the specification of vehicles on licences later revoked, the changing of registration numbers and the payment of fines by Rhino Haulage Ltd but incurred by operators using the vehicles linked with Mr McKinney and Rhino Haulage Ltd).  Whilst Mr Nesbitt accepted that these findings by Mr Heaps do amount to “wider criminal activity”, the wording of the DTC’s decision appears to point to something more nefarious than the activity set out in the decision of Mr Heaps.  
11.	We do not agree.  It is clear from the findings of fact made by Mr Heaps which were not challenged on appeal, that Rhino Haulage Ltd had been involved with a number of operators whose licences were later revoked and that the vehicles owned by Rhino Haulage Ltd were linked with those operators.  The payment of fines by the owner of vehicles when that owner is not operating the vehicles does give rise to an overwhelming inference against the background of this case, that it was in fact Rhino Haulage Ltd that was operating the vehicles specified on the licences mentioned in the decision of Mr Heaps.  The DTC’s findings on the issue do not point to anything more nefarious.  
12.	The next ground of appeal concerns the invitation made to the DTC in Mr Brown’s letter of 27 May 2013, to give Mr McKinney a further opportunity to attend a hearing if the DTC was minded to take action in respect of the company’s licence which would prevent Mr McKinney taking an active part in the management of the company.  That letter was in response to that of the OTC inviting comment upon the findings of Mr Heaps that Rhino Haulage Ltd had paid the fines of other operators and the fact that Mr McKinney was the sole director of that company.  If that invitation to the DTC had been accepted, Mr McKinney would have been able to give evidence about how it came about that vehicles owned by Rhino Haulage were linked to the list of operators which later had their licences revoked and about the payment of fines by Rhino Haulage Ltd.  Mr Nesbitt referred the Tribunal to the case of Smith v Parole Board (2003) EWCA Civ 1269 in which it was held that in the context of Parole Board determinations made without any hearing taking place at all, a hearing should be convened “where there is a disputed issue of fact which is central to the Board’s assessment and which cannot fairly be resolved without hearing oral evidence”.  In this case, the issue raised in relation to the payment of fines by Rhino Haulage Ltd was likely to be central to the DTC’s assessment of Mr McKinney, the DTC having made reference to “the wider criminal activity” of Mr McKinney and accordingly, the DTC should have arranged a further hearing.  
13.	Our starting point is this Tribunal’s decision in respect of the impounding appeal (2007/62) which set out in detail the findings which  Mr Heaps had made in respect of the interim licence of Thomas McKinney & Son Ltd.  That decision was included in the public inquiry bundle.  Mr McKinney and his advisors would have been in no doubt that the background circumstances leading to Mr Heaps’ decision and the reasons for it were before the DTC.  Mr McKinney provided a witness statement which made reference Rhino Haulage Ltd but which did not deal with the adverse findings made by Mr Heaps in relation to that company and Mr McKinney.  Of course Mr McKinney was legally represented and whilst the matter was not dealt with at the public inquiry, Mr Brown was given ample opportunity to set out Mr McKinney’s case in writing once the DTC had asked for representations about Mr Heaps’ findings, albeit that the request was made some days after the public inquiry had taken place.  The request asked for Mr McKinney’s comments about the payment of fines by Rhino Haulage Ltd when Mr McKinney had been the sole director of the company.  The representations simply averred that the fines had been paid as a result of naivety on the part of Mr McKinney.  There was nothing to suggest in Mr Brown’s letter that there was further evidence to be given on the subjects raised in the letter sent by the OTC.  The DTC should not have to speculate about what other evidence might be available if he reconvened a public inquiry.  Rather, he should be able to rely upon relevant representations being submitted by legal representatives when such requests are made.  There was nothing in the letter written by Mr Brown which should have caused the DTC to determine that in the interests of justice a further hearing should take place.  Neither was the issue of Rhino Haulage’s connections with revoked licences central to the issues to be determined.  Rather it was one of a number of matters to be considered in the round including Mr McKinney’s more recent conduct.  We reject the submission that the DTC should have reconvened the public inquiry and that a further hearing was necessary.  Neither do we accept any criticism of the DTC’s findings in respect of Mr McKinney’s wider criminal activity as evidenced by the connections of Rhino Haulage Ltd  to other operators whose licences had been revoked.  These were the findings of fact of Mr Heaps.
14.	The next ground of appeal involved a criticism of the weight (or lack of it) given by the DTC to the positive features of Mr McKinney’s case including the amount of time he had been disqualified for to date.  We reject this ground.  The DTC undertook a thorough balancing exercise in this very serious case of fraud with deceit which was on-going up to the date of the public inquiry.  
15.	Mr Nesbitt’s final ground of appeal was that the DTC had adopted the wrong legal test when considering whether regulatory action should be taken in respect of the company in that he failed to treat the company as a separate legal entity to Mr McKinney.  If he had done so he would have taken account of the fact that the company was successful and compliant and that it had thirteen employees.  Further, the DTC should have invited representations upon its proposals as to ownership and directorships in the event that Mr McKinney’s disqualification was not cancelled.  Mr Nesbitt acknowledged that any such proposals would be the subject of “detailed and anxious scrutiny” in the light of Mr McKinney’s history but representations should have been invited nonetheless.  
16.	We have already noted that the DTC did ask Mr Brown to make representations concerning regulatory action in respect of the company; he did not do so although Mr McKinney’s witness statement makes the position clear as to the likely effect of regulatory action.  The Tribunal considers that it is from this witness statement that the DTC has drawn the submissions about a short period of suspension being the most that the company could withstand if regulatory action were to be considered.  He nevertheless rejected those submissions.  The Tribunal referred Mr Nesbitt to the Tribunal’s recent case of T2013/39 Ribble Valley Coaches Ltd & John Pilkington in which it was held that a disqualified person cannot be considered to be of good repute and that in the event of a company having a disqualified person as its sole director, share holder and transport manager, then neither can the company be considered to be of good repute  It was incumbent upon Mr McKinney either in his evidence or through Mr Brown to make representations about the orders that the DTC should make in respect of the company’s licence in the event of a refusal to cancel Mr McKinney’s disqualification.  None were made.  Rather submissions were focussed on persuading the DTC to cancel the disqualification.  We see no reason for departing from the principle set out in the above case.  
17.	There are three matters arising out of the facts of this appeal which we consider should be noted for the record.  The first is that the DTC failed to spell out his findings about Mr McKinney’s conduct in relation to the takeover of the company and his evidence to the public inquiry, although his findings may be inferred.  For the avoidance of doubt, we are satisfied that when Mr McKinney signed the director details form, he did so knowing that he was disqualified and as a result, he submitted a form to the OTC which was untruthful.  Unfortunately, the OTC is unable to examine and verify every document that is sent to it and as a result, cases such as these will slip through the net.  As a result, the regulatory regime is even more reliant upon operators being truthful and candid in their dealings with the OTC and VOSA. 
18.	Secondly, Mr McKinney failed to provide full and candid disclosure of his previous convictions.  Whilst Mr Owen maintained that he disclosed just enough to put the OTC on notice that “something serious” has occurred, that stance is simply not good enough. Failures of this nature on the part of either the representatives of operators whether legally qualified or not or the operator themselves will result in adverse findings being made in respect of both the operator and the representative if appropriate.  
19.	The third matter is the concern that this Tribunal had in this case about Mr Brown’s unusual position as a former Senior Traffic Commissioner who now practices as a solicitor specialising in road transport regulation.  In view of what occurred in this case, Mr Brown must be careful to establish with each prospective client whether he has had dealings with them in his capacity as a Traffic Commissioner (Senior or otherwise).  For Mr Brown in this case to initially accept that he had had dealings with Mr McKinney in a regulatory capacity and that during those impounding proceedings, Mr McKinney must have known that he was disqualified and then later to assert through Mr Nesbitt at the hearing before this Tribunal that he did not think that he had in fact had regulatory dealings with Mr McKinney is simply not good enough.  The matter ought to have been determined long in advance of the hearing before the DTC.  
20.	In the result, this appeal is dismissed and in view of the stay granted in this case, the DTC’s order of revocation of the company’s licence shall take effect on 23.59 on 23 December 2013.

Her Honour Judge J Beech
25 November 2013