Neutral Citation Number: [2015] UKUT 0291 (AAC)                                       Appeal No: T/2015/22

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

ON APPEAL FROM THE DECISION OF RICHARD TURFITT, 
TRAFFIC COMMISSIONER for the EASTERN TRAFFIC AREA, 
DATED 20 MARCH 2015

Before:
Judge M Hinchliffe, Deputy Chamber President (HESC); Judge of the Upper Tribunal.
Mr J Robinson, Member of the Upper Tribunal.
Mr S James, Member of the Upper Tribunal.

Appellant:
EUROMAR LTD

Attendance:
For the Appellant: 	Mr M Orzechowski, assisted by his wife, Ms L Mark-Urbanek

Appeal heard at: 	Field House, Breams Buildings, London
Date of hearing: 	19 May 2015
Date of decision: 	28 May 2015

DECISION OF THE UPPER TRIBUNAL:

IT IS HEREBY ORDERED that the appeal be dismissed.

Subject matter:	
Financial Standing

Cases referred to:
None

REASONS FOR DECISION:

1)	This is an appeal from the decision of the Traffic Commissioner for the Eastern Traffic Area made on 20 March 2015, when he refused to grant a standard international public service vehicle (PSV) operator’s licence authorising the use of one vehicle. The Traffic Commissioner found that the applicant company had failed to establish, by reliable and acceptable evidence, that it was of the necessary financial standing.

2)	The requirement for financial standing in a case such as this is laid down in Article 7 of the EC Regulation 1071/2009 and section 14ZA(2)(c) of the Public Passenger Vehicles Act 1981. As of 1/1/2015 the sum required to be available for one PSV is £7,000. Prior to that, due to the fluctuating exchange rates of the Euro/UK Pound, the figure had been £7,400.

3)	The key test in relation to financial standing is whether the applicant or operator has available capital and reserves of an amount equal to the sum specified. “Available” is defined as: “capable of being used, at one’s disposal, within one’s reach, obtainable or easy to get”. Generally, Traffic Commissioners expect the sum to be available over a reasonable period of time, over and above the “everyday ins and outs”. The value of authorised vehicles cannot be considered because an operator cannot take into account, at the same time, the double benefit of vehicles for use on the licence, and also their value as disposable assets.

4)	An operator may prove the availability of financial resources or capital and reserves if he has money in the bank, which is capable of being used, (i.e. it is not already needed for the payment of debts such as a VAT or tax bill in the ordinary course of the business) or an overdraft at his disposal in the sense that there is a balance un-drawn before the limit is reached, or he is owed money which is obtainable because the debts to the operator are due and likely to be easy to collect, or he has assets from which money is easy to realise in the sense that the assets are items which can be readily sold without any adverse effect on the ability of the business to generate money, should it be needed. 

5)	However, the requirement cannot be satisfied by evidence that simply provides a ‘snapshot’ of the operator’s financial position. The requirement will not be satisfied by showing that, on a particular day or during a particular month, enough money was available. Instead what is needed is evidence that the operator is consistently able to have enough money available for the requirement to be satisfied. The Senior Traffic Commissioner has approved the practice of requesting statements covering a period of time, usually 3 months, and working out an average over the 3-month period. For a new business, there is (to a degree) discretion to be flexible, so long as a fair and consistent approach is taken.

6)	Statutory Guidance from the Senior Traffic Commissioner makes it plain that due to difficulties with authenticating documents, bank or building society accounts statements must be originals (not copies) – and where internet statements are relied upon, the operator/applicant will need to have them endorsed by the relevant bank. Traffic Commissioners will accept a stamp and signature from the relevant bank or building society.

7)	The financial evidence provided by the appellant to the Traffic Commissioner comprised copy bank statements for 1/10/2013 to 27/2/2014, and 30/1/2015 to 9/3/2015. Without disclosing private information in this public decision, the tribunal limits itself to noting that, throughout the first period, the only day when the balance exceeded £7,000 was on 7/2/2014. Throughout the second period, the only days when the balance exceeded £7,000 were 23/2/2015 to 9/3/2015.

8)	A public inquiry took place on 19/3/2015. The Traffic Commissioner noted that the company did not have a vehicle. Ms Mark-Urbanek explained that they intended to acquire a vehicle on finance, with a 10% deposit of £28,000. There was no explanation as to where this money would come from, except that it would come from “company money”.

9)	The Traffic Commissioner also noted that he did not have original statements, merely copies, He asked if there were original statements, and he was told: “We have in the office. I don’t know, I forgot.”

10)	The Traffic Commissioner did not afford the appellant an opportunity to produce the originals, presumably because the requirement for originals had been clearly spelled out in correspondence on several occasions and, even if originals had been produced, the statements did not show adequate funds over a sufficient period of time, especially bearing in mind the current lack of a vehicle, and the likely cost of its acquisition. Instead, the Traffic Commissioner indicated that he would have to refuse the application, but would welcome a fresh application, properly supported by original statements demonstrating sufficient funds to get the transport business going with a vehicle, and a balance thereafter that satisfied the requirement for adequate financial standing, and which was held over a reasonable period of time, over and above the usual everyday business transactions.

11)	In the Grounds of Appeal, the appellant admits that the required financial documentation was not produced, although “I had it in my hand on the day of the hearing”. There is also mention of a tax return, which was said to show a turnover of £107,203.

12)	The tribunal does not accept that the original statements had been brought to the public inquiry – given the statement made at the public inquiry that the originals were in the office and “I forgot”. Nor does the tribunal consider it right to allow the originals to be produced at the appeal, given that there is no good reason why they could not have been produced to the Traffic Commissioner. Even the copy statements fail to show an adequate balance for a sufficient period, and as soon as a vehicle is acquired, the balance will go into the red, unless some other unknown funding becomes available. The business accounts for y/e 31/8/2014 actually show sales of £104,283 but costs of £100,159 - leading to a net profit of just £4,124.

13)	In all the circumstances, the tribunal finds that the Traffic Commissioner reached a reasonable conclusion that was open to him on the evidence, and that there was no procedural irregularity. There is therefore no reason to interfere with his decision, and the appeal is dismissed.

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Judge M Hinchliffe, DCP
28 May 2015