Neutral Citation Number: [2013] UKUT 0621 (AAC)                              Appeal No: T/2013/61

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

ON APPEAL FROM THE DECISION OF FIONA HARRINGTON, 
DEPUTY TRAFFIC COMMISSIONER for the WEST OF ENGLAND TRAFFIC AREA, 
DATED 11 JULY 2013

Before:
Judge M Hinchliffe, Deputy Chamber President (HESC); Judge of the Upper Tribunal.
Mr L Milliken, Member of the Upper Tribunal.
Mr D Rawsthorn, Member of the Upper Tribunal.

Appellant:
ALAN MICHAEL KNIGHT

Respondent:
VEHICLE & OPERATOR SERVICES AGENCY (VOSA)

Attendance:
For the Appellant: 	 Mr Locke
For the Respondent:  Miss Evans

Appeal heard at: 	Field House, Breams Buildings, London
Date of hearing: 	15 November 2013
Date of decision: 	6 December 2013

DECISION OF THE UPPER TRIBUNAL:

IT IS HEREBY ORDERED that the appeal be dismissed

Subject matter:	
Impounding

Cases referred to:
None

REASONS FOR DECISION:

1)	This was an appeal from the decision of the Deputy Traffic Commissioner for the West of England Traffic Area made on 11/7/2013 when she found that the Appellant had not discharged the burden of proving, on the balance of probability, that he did not know that, at the time of its detention, vehicle BT-RB-47 was being or had been operated in contravention of Section 2 Goods Vehicles (Licensing of Operators) Act 1995 - “the Act”.

2)	The factual background to this appeal appears from the documents, the transcript and the Deputy Traffic Commissioner’s decision and is as follows:
(i)	On 3 July 2012 a Dutch-registered vehicle, BT-RB-47, was impounded by VOSA on the A34 in Berkshire.
(ii)	The vehicle (originally registered in the UK, and then exported) belonged to Mr Alan Michael Knight, and it was on hire to Alan Knight Transport BV, a Dutch company owned by Mr Knight.
(iii)	Alan Knight Transport BV is not the current holder of a UK goods vehicle operator’s licence.
(iv)	Since 14/5/2010 the company has been issued with 29 prohibitions for improper use of goods vehicles on the UK roads involving numerous breaches of EC cabotage regulations. Because of this history of unlawful use VOSA had sent a warning letter to Alan Knight Transport BV stating that, if they carried on operating in breach of the cabotage legislation then VOSA would consider impounding. This letter had been sent a few months before this impounding took place.
(v)	When the vehicle BT-RB-47 was stopped, it was established that it was on a journey from Poole in Dorset to Hinckley and was carrying food for delivery to Tesco Supermarket.
(vi)	When questioned, the driver stated that he was employed by Alan Knight Transport BV. He produced Dutch paperwork, a delivery note, and some tachograph records. It was noted that, according to the paperwork produced, the last time the vehicle had been outside the UK was between the 15th and 16th of June 2012, although this turned out to be incorrect.
(vii)	The driver claimed that the vehicle had left the UK the previous weekend, driven by another person. However, given the company’s history and the absence of supportive documentation, the VOSA Traffic Examiner insisted on persuasive evidence. He then received a telephone call from the Transport Manager of Alan Knight Transport Ltd, Mr Knight’s UK company that had subcontracted the work to Mr Knight’s Dutch company. He also claimed that the vehicle had left the UK at the weekend to collect bananas from Antwerp. The Traffic Examiner continued to insist on documentary proof and he asked that the relevant documents be faxed to the VOSA office without delay.
(viii)	Subsequently the Traffic Examiner received a further phone call, this time from Mr Knight himself, who said that the documents were with another driver and could not be immediately produced.
(ix)	The Traffic Examiner made further enquiries – this time of the UK Seaport Database. The result showed that the last time the vehicle had actually left the UK was 23/6/2012. Consequently, under the cabotage rules, the vehicle could not be lawfully used for the commercial haulage of goods on UK roads more than a week later, on 3/7/2012.
(x)	A further telephone conversation took place with Mr Knight - who then admitted that the vehicle had not left the UK when claimed. However, he suggested that this was down to an administrative error by the office. Given the history of repeated contraventions and a previous warning letter, the vehicle was impounded.
(xi)	Mr Knight was then interviewed but, after caution, he said that - although he did not wish to consult a solicitor immediately - he was not willing to be interviewed until he had taken legal advice, which he would do in due course.
(xii)	Subsequently, Mr Knight applied to the Traffic Commissioner for the return of his vehicle.
(xiii)	A public inquiry took place on 25/6/2013. A Senior Traffic Examiner attended to give evidence, but VOSA was not represented at the public inquiry.
(xiv)	The first part of the public inquiry concerned establishing ownership, which is not in dispute in this appeal.  It was also accepted on behalf of Mr Knight that there is no issue with regard to the lawfulness of the impounding itself. The vehicle was being operated in breach of the requirements of the legislation and regulations, and VOSA officers were entitled to impound it.
(xv)	Mr Knight gave evidence at the public inquiry with regard to his alleged lack of knowledge. He said that he was the owner of Alan Knight Transport BV, but he employed a Transport Manager, Mr Grieve, who was based in Holland and whose job it was to oversee the operation of the company’s vehicles - including vehicles hired from Mr Knight personally.
(xvi)	Mr Knight said that upon receipt of the warning letter from VOSA he had decided to become more involved in the day-to-day business of the Dutch company, particularly in making sure that the vehicles did not commit offences. Mr Knight explained that work and journeys are planned by employees of the company known as planners, and Mr Knight claimed to have spent a lot of time overseeing the planners to make sure that no vehicles were impounded. Mr Knight asserted that his oversight had recently resulted in fewer incidents of unlawful cabotage.
(xvii)	In relation to the impounding, Mr Knight said that one planner, on the Friday, had arranged for the vehicle to go to Holland to deliver perishable foodstuff that had been picked up in the UK. Unfortunately, on its way to the ferry, the driver received a call that his wife had been taken ill. The driver contacted base, and advised them of his difficulty. The foodstuff had to be in Holland on the Saturday so, given the situation, a different vehicle was sent over to bring the goods back to Holland - leaving the original vehicle in the UK. The driver left this vehicle (to be collected by a new driver) in an agreed location.
(xviii)	A new planner took over on the Sunday. The previous planner, who had been aware of the changes in arrangements, allegedly failed to leave a note for the new planner, who therefore assumed that the original vehicle and driver had left the country, been to Holland, and then returned to the UK. He did not know that a different driver and different vehicle had taken the goods out of the UK and he did not realise that the impounded vehicle had never left the UK. This meant that, unbeknown to the new planner, the journey to Tesco was in breach of the cabotage regulations because the vehicle had not, in fact, left the UK on the previous weekend.
(xix)	In the absence of representation by VOSA, it fell to the Deputy Traffic Commissioner to judicially examine Mr Knight and test his evidence.
(xx)	In answer to questions from the Deputy Traffic Commissioner, Mr Knight said that he was aware of some of the prohibitions that had been issued in relation to the previous incidents of unlawful cabotage, and he was aware of the VOSA warning letter. As a consequence of his personal involvement following receipt of the warning letter, the planners were more closely supervised and Mr Knight had made sure that they understood how important it was to avoid incidents of unlawful cabotage.
(xxi)	When pressed as to detail, Mr Knight said that the driver who received the call concerning the illness of his wife had left the vehicle in the lorry park in Petersfield and had placed the keys under the grill of the vehicle so that the vehicle could be collected by a different driver. This driver was then told to collect the vehicle from Petersfield and take it to Poole in Dorset where it was then loaded for its journey to Tesco.
(xxii)	The Deputy Traffic Commissioner asked how it could be that the planners and the new driver could arrange to have the vehicle picked up in Petersfield without realising that it had not been abroad. Why would it be at Petersfield? Where was the legally required documentation demonstrating that it had been abroad? Why had a second vehicle, and a different driver, been sent to the UK if not to take the load to Holland? What did the planners understand to be the position of the original driver? These were clear anomalies or unanswered questions, evident at the time.
(xxiii)	When asked to explain the anomalies, Mr Knight replied:
“No, no, that’s it, but the guy who finishes on the Saturday, because this wasn’t dealt with on the Sunday, they picked the vehicle up on the Sunday. On the Monday I believe, no Monday, Monday, I’m sorry, I’m confused on the date, it was the Monday it got stopped, wasn’t it, Monday the… And the vehicle as far as we were concerned had been, the planner was concerned had been out of the country. To be quite honest with the keys we have got a set, sort of, spot where they can put a hook to, to put the keys so that when vehicles are left they are accessible.”
(xxiv)	Mr Knight went on to say that the company holding the haulage contract for this UK journey was Alan Knight Transport Ltd, another of his companies, but this company had then subcontracted the work to Alan Knight Transport BV – which was expected to use its lawful cabotage allowance to carry out the journey. It then emerged that Mr Knight also owned the agency employing the drivers of the Dutch vehicles in the UK. This meant, therefore, that there were four entities to be considered: Mr Knight as a sole trader, the UK Ltd company, the Dutch company (BV), and the drivers’ agency. All were Mr Knight’s businesses. In relation to the current impounding, Mr Knight as an individual owned the vehicle, which he leased to the Dutch company. Alan Knight Transport Ltd, a UK company, obtained the contract to carry goods in the UK but then subcontracted this to the Dutch company. The UK drivers were provided via Mr Knight’s drivers’ agency. And the Dutch company would rely on cabotage arrangements to cover this commercial work in the UK. 
(xxv)	In a lengthy written decision the Deputy Traffic Commissioner dealt, firstly, with ownership and found that Mr Knight as an individual had demonstrated, on balance, that he was the owner of the impounded vehicle. The Deputy Traffic Commissioner referred to the cabotage rules and noted that the last unloading in the UK in the course of the incoming international carriage had taken place more than seven days before the impounding, which meant that the cabotage provisions did not apply. 
(xxvi)	The Deputy Traffic Commissioner found, on balance, that the vehicle had been lawfully detained by VOSA officers, using their legal authority to impound vehicles operating in breach of section 2 of the Act.
(xxvii)	The Deputy Traffic Commissioner then turn to the question of knowledge and, in particular, considered whether Mr Knight had established, on balance, that he did not know that the vehicle was being, or had been, used in contravention of section 2 of the Act.
(xxviii)	The Deputy Traffic Commissioner considered whether she was able to accept, on balance, the account that Mr Knight had given. She concluded, having had an opportunity of watching and listening to Mr Knight give his evidence, that she could not attach much weight to his evidence for a number of reasons which, individually and taken together, reduced his credibility, and the cogency of his evidence.
(xxix)	The Deputy Traffic Commissioner referred to the five categories of knowledge that needed to be considered:

a)	actual knowledge;
b)	knowledge that the person would have acquired if he had not wilfully shut his eyes to the obvious;
c)	knowledge that the person would have acquired if he had not wilfully and recklessly failed to make such inquiries as an honest and reasonable person would make;
d)	knowledge of circumstances that would indicate the facts to an honest and reasonable person;
e)	knowledge of circumstances that would put an honest and reasonable person on inquiry.
(xxx)	Amongst other things, the Deputy Traffic Commissioner found as fact that:
•	Mr Knight was a director with the inherent duties of that office, and was the ultimate owner of Alan Knight Transport BV - which was an integral part of his overall business network - which included regular transport within the UK carried out by the Dutch (BV) company using sub-contract and other commercial arrangements with Mr Knight’s UK businesses.
•	Drivers of the BV vehicles in the UK were supplied by an agency owned and controlled by Mr Knight; they lived in the UK and worked out of the same UK operating centre as other UK business owned by Mr Knight.
•	If, as he claimed, Mr Knight had taken a hands-on role in the BV company following the VOSA warning letter, he could not then credibly rely on being ‘hands-off’ and detached from the day to day operations of that company.
•	The 29 incidents of unlawful cabotage were representative of a course of conduct over a period of time that continued without elimination right up to the moment of impounding and were of a scale indicative of systematic abuse of the cabotage rules, for the financial benefit of Mr Knight - who was well aware of the history of unlawful cabotage operations.
•	The recent reduction in the rate of infringements was of little persuasive value given the variable pattern and the short period covered, relative to the history as a whole;
•	There was no detailed and coherent explanation as to why the claimed changes in planning were not picked up, given the obvious anomalies in relation to the urgent dispatch to the UK of a second driver with a vehicle to take the foodstuff to Holland, numerous changes in the duties and hours of the UK driver, and (most tellingly) changes in vehicle position (of which a new driver would need to be advised) prior to vehicle collection and the start of the unlawful journey. There were many unanswered questions. Mr Knight’s answers (see example above) were not illuminating.
•	If a vehicle had undertaken the international journey that previous weekend as assumed, then clear documentary evidence of this should have been available at the outset of that vehicle’s journey, and it was not. This failing would have been apparent immediately. The absence of a paper trail in the vehicle to comply with Article 8.3 was inconsistent with Mr Knight’s evidence that he had taken steps to avoid further illegal operations, and would have provided an immediate warning to the new driver that he could not prove compliance with the cabotage rules. The driver, therefore, could be expected to notify the company – at least if the company was interested in being a complaint operation, or had taken serious steps to have appropriate systems in place. 
•	The evidence given by Mr Knight was uncorroborated by any statements from the third parties implicated in his account;
(xxxi)	All in all, the Deputy Traffic Commissioner found (amongst other things) that Mr Knight had not demonstrated on balance that he was not deliberately and wilfully – and with a high degree of fault - using the various delegations and company arrangements as a device to distance himself personally from the unlawful activities of the BV company, thereby wilfully shutting his eyes to the obvious - particularly once he had become aware of prohibitions issued, repeated transgressions, and the VOSA warning.
(xxxii)	The Deputy Traffic Commissioner also found that Mr Knight had also failed to demonstrate, on balance, that he had not wilfully and recklessly failed to make the sort of enquiries that an honest and reasonable person would make in order to ensure that proper arrangements were in place to prevent breaches of the regulations.

3)	At the hearing of this appeal, the Appellant was represented by Mr Locke who submitted a skeleton argument. VOSA applied to the tribunal to be named as Respondents to the appeal. Mr Locke did not object, and the tribunal agreed. Miss Evans, who also submitted a skeleton argument and a chronology, represented VOSA. We were grateful for the assistance of both representatives.

4)	Mr Locke submitted that the Deputy Traffic Commissioner had failed to have sufficient regard to the improvements made and the reduction in the rate of transgression following Mr Knight’s personal involvement, and she had failed to make sufficient distinction between Mr Knight as an individual and Mr Knight as a director. Mr Locke submitted that the Deputy Traffic Commissioner had placed undue emphasis on the history of unlawful cabotage by the BV company and had unreasonably discounted the evidence of Mr Knight, which she should have accepted.

5)	Ms Evans said that there was a contradiction in relation to Mr Knight’s involvement. On the one hand he claimed to have become more involved and ‘hands-on’ and yet, in relation to the impounding, he claimed to be separate and distant from the events. It was not accepted by VOSA that there had been any long-term reduction in contraventions and it was not accepted that there had been no further incidents since the impounding. Miss Evans stressed that when the impounded vehicle took to the road carrying its load, there was no paper trail demonstrating that it was permitted to undertake haulage in the UK on the basis of cabotage. Ms Evans submitted that the illness of a member of a driver’s family was not an extraordinary event that should derail a robust system. Like the sickness of an employee, it was a routine event. Had Mr Knight genuinely attempted to address the clear systemic problems that had led to repeated contraventions in the past, the business would have had effective systems in place to deal with routine changes in plan.

6)	Miss Evans submitted that, given the known facts, including a vehicle not where it should be, another vehicle being sent over to the UK, changes to drivers’ schedules, and a lack of mandatory paperwork in the cab, an effective system should easily have picked up and prevented unlawful cabotage before it happened. Mr Knight’s explanation simply did not ring true. At the very least, Mr Knight had wilfully and with a high degree of fault failed to do anything other than shut his eyes to the obvious. He had wilfully and recklessly failed to ensure that such inquiries and precautions as an honest and reasonable person would make were actually made before this vehicle took to the roads in the UK with its commercial load. Mr Knight was sufficiently well placed in all entities to take responsibility for what had happened, and all businesses were operating to his financial advantage. He could not hide behind corporate technicalities of his own making. Moreover, no independent evidence had been produced either from the planners or the drivers to support Mr Knight’s account.

7)	In our view the answer to this appeal lies in the fact that the onus was upon Mr Knight to demonstrate that he did not have any of the categories of knowledge set out above in paragraph (xxix). The case, therefore, is essentially one of fact and credibility. Mr Locke has sought to present a straightforward disagreement with the Deputy Traffic Commissioner’s findings of fact as if it amounted to an issue of law, or a challenge to the Deputy Traffic Commissioner’s approach. In our view, it is neither of these things.

8)	We agree with the Deputy Traffic Commissioner that the claimed improvement in the rate of offending is of little evidential value. Between January and May 2012 there were two contraventions. But between January 2010 and May 2010 there was only one contravention - and then, from June 2010 to December 2010, there were seven. And in 2011, there were 19 offences. There is, therefore, no regular pattern, and at the public inquiry it was too soon to say that the systematic abuse of the cabotage rules had stopped or even reduced.

9)	We think that artificial distinctions between Mr Knight as an individual trader and as a director and owner of a company are unhelpful. The effectiveness of the operator licensing system should not be derailed or undermined by an over-technical analysis that takes the decision-maker away from a proper and careful consideration of the reality. The Deputy Traffic Commissioner considered the reality, and decided that, despite the corporate complexities, Mr Knight had not demonstrated on balance that he could evade responsibility for what he actually knew, should have known, and can be taken to have known.

10)	We consider that the appalling history of repeated and clearly calculated and systemic abuse of the cabotage regulations was a highly relevant consideration, and the Deputy Traffic Commissioner was perfectly entitled to have regard to it when deciding whether or not Mr Knight had discharged the burden of demonstrating lack of knowledge.

11)	We find no basis for the argument that the Deputy Traffic Commissioner’s approach or findings were plainly wrong. Given the history and the complexity of his business arrangements (which Mr Knight had devised and in which he remains a central figure) the duty was clearly upon him to address each of the five categories of knowledge and demonstrate, with persuasive evidence, that none of the categories applied in his case. Mr Knight’s evidence was not persuasive, and he produced no compelling corroboration.

12)	For the reasons identified by the Deputy Traffic Commissioner, and for the reasons submitted by Miss Evans, we find that the Deputy Traffic Commissioner’s conclusions were entirely proper in relation to the case presented to her. It was, of course, unnecessary for her to make adverse findings in relation to all five categories – an adverse finding in relation to any one of the categories would be fatal to Mr Knight’s application.

13)	In our view, particularly in relation to categories (b) and (c), Mr Knight’s evidence fell woefully short in establishing lack of knowledge. Consequently, we do not find that the Deputy Traffic Commissioners conclusions were plainly wrong and we do not find that law or reason require us to interfere. The appeal is dismissed.

Judge M Hinchliffe, DCP
6 December 2013