Neutral Citation Number: [2015] UKUT 0313 (AAC)		Appeal No.  T/2015/04
IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
Anthony Seculer, Deputy Traffic Commissioner 
for Wales dated 15 December 2015

Before:
Her Honour Judge J Beech, Judge of the Upper Tribunal
Leslie Milliken, Member of the Upper Tribunal
Stuart James, Member of the Upper Tribunal

Appellant:

Gwenlais Yvonne Thomas

Attendances:
For the Appellant: 

Heard at: Field House, 15-25 Bream’s Buildings, London, EC4A 1DZ
Date of hearing: 2 June 2015
Date of decision:   5 June 2015

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeal be DISMISSED with immediate effect

SUBJECT MATTER:-  Failure to notify disqualification as a director and a limited company going into administration; disc lending; good repute and financial standing.  Whether disqualification proportionate.

CASES REFERRED TO:-  Bradley Fold Travel Ltd & Peter Wright v Secretary of State for Transport (2010) EWCA Civ. 695; Priority Freight (2009/225); Bryan Haulage (No.2) (2002/217).

REASONS FOR DECISION

1.	This is an appeal from the decision of the Deputy Traffic Commissioner of Wales (“DTC”) made on 15 December 2015 when he revoked the standard national operator’s licence of the Appellant (“Mrs Thomas”), found that she was no longer of good repute and that she had failed to demonstrate the requisite financial standing.  The DTC disqualified Mrs Thomas from holding or obtaining an operator’s licence for a period of 12 months from 1 February 2015.  

2.	The factual background to the appeal appears from the documents, the transcript and the DTC’s written decision and is as follows.  Mrs Thomas was the sole director of Ascus Plant Limited (“APL”).  Her son, Bedwyr Thomas was the company secretary. In December 2006, the company was granted a standard national operator’s licence authorising sixteen vehicles.  The company went into administration on 13 July 2010 as a result of action taken by Bibby Financial Services (“Bibby”), which had a factoring agreement with the company.  Mrs Thomas failed to notify the Traffic Commissioner of the demise of the company.  Letters were sent to her by the Office of the Traffic Commissioner (“OTC”) on 8 October and 5 November 2010 asking for an explanation.  She eventually responded on 20 November 2010 (the letter is not contained in the appeal papers) and the licence was revoked on 20 December 2010.  

3.	In the meantime, on 10 July 2008, Mrs Thomas was granted an operator’s licence in her own name authorising two vehicles and six trailers.  The designated operating centre was in Llanelli and she had one vehicle in possession, which was a cement pumping/mixing vehicle.  Her Transport Manager was Bedwyr Thomas.  

4.	On 31 March 2011, Mrs Thomas was called to a public inquiry for the Traffic Commissioner to consider possible links between Mrs Thomas (as a former director of APL) and a new application by Ascus Ready Mix Limited.  Ascus Ready Mix Limited is a company controlled by Bedwyr Thomas and/or his wife. No adverse findings were made in relation to Mrs Thomas.

5.	Mrs Thomas had also been a director of Boxfast Limited which went into liquidation in late 2013.  Mrs Thomas did not inform the Traffic Commissioner of the company’s demise.

6.	In the early part of 2014, the Insolvency Service informed the Traffic Commissioner that Mrs Thomas had been disqualified from being a company director for a period of six and half years with effect from 17 March 2014.  An extract from the disqualification undertaking given by Mrs Thomas reads as follows:

“On 6 May 2010, I caused Ascus Plant Limited (“APL”) to sell an asset for £74,000 although subject to finance, without the knowledge or consent of the lender ..
i.	On 12 June 2009, a concrete pump, the subject of an asset purchase agreement with a connected company, was assigned to APL.  The agreement was signed by me.
•	The purchase agreement contained the requirement that the assets should not be sold or otherwise disposed of.
•	On 6 May 2010 this concrete pump was sold to a foreign company for £74,000 and this sum was credited to APL’s bank account.
•	APL did not repay the sales proceeds to the lender in respect of this vehicle.  Company bank statements show that the funds were expended between 6 May 2010 and 13 July 2010 and used for general trading purposes.
•	The lender confirmed that no permission was given to APL to dispose of the asset and that they only became aware of the sale when they attempted to take possession of all vehicles.
•	A claim has been entered in the proceedings for £221,816 by the lender which includes an outstanding amount in respect of the vehicles sold for at least £53,000.
ii.	Between 11 August 2008 and 1 December 2009 I caused APL to dispose of assets totalling £101,500 to connected parties for no consideration.  In particular:
•	Three of these items are identified as sold for £13,000 to my husband in August 2008.  Five of the items are identified as sold for £88,500 to an associated company. (We note that the associated company was Ascus Ready Mix Limited).
•	I have stated that the funds were received but to date have failed to explain what has happened to the proceeds of the sale of these items.
•	Additionally, the machines sold to the associated company were each the subject of two separate invoices on two different dates.  In each case the second invoice differed from the first in that there was no mention of Value Added Tax, however all invoices were annotated “paid in full”.

7.	On 19 August 2014, Mrs Thomas was sent a “reminded to revoke” letter due to her failure to notify the Traffic Commissioner of matters which would affect her good repute and possibly financial standing.  In response, David Williams of Redkite Solicitors made the following representations:  

•	Four years had elapsed between APL going into administration and the undertaking given by Mrs Thomas.  Upon the order of administration being made, Mrs Thomas left the employment of APL.
•	She had not since that date, been employed as the director of a limited company (which we note was incorrect bearing in mind her directorship of Boxfast Limited).
•	Mrs Thomas’ failure to notify the Traffic Commissioner of the undertaking was not intentional.  She had not realised that was obliged to do so.
•	She had held an operator’s licence in her name since 4 July 2008 and operates as a sole trader, operating one ready mix concrete lorry. 
•	Throughout the period of the licence, she had not been the subject of any adverse findings by the Traffic Commissioner.  
•	The licence was Mrs Thomas’ sole source of income.  
•	In the circumstances, Mrs Thomas continued to be of good repute.

8.	On 11 December 2014, a public inquiry was held to consider whether Mrs Thomas had failed to fulfil a statement of expectation to notify changes (s.26(1)(e) of the Goods Vehicle (Licensing of Operators) Act 1995 (“the Act”); whether Mrs Thomas remained of good repute and was of the requisite financial standing (s.26(1)(f) and s.27(1)(a) of the Act).  Mrs Thomas was in attendance and was represented by Mr Williams.

9.	The DTC first dealt with the issue of finance.  It was clear that up until a very recent and large deposit which had been made into Mrs Thomas’ account, she could not show financial standing.  She was asked where the large deposit had come from.  She stated that it represented money that was owed to her by BTH (Cardiff) Limited (“BTH”), a company owned by her  husband, Keith Thomas.  Mrs Thomas’ operator’s licence was for the vehicle operated by BTH.  That company did not hold its own operator’s licence “because it’s a fairly new company and the accounts will be going in in January and then I think we have to, you know, that company has to have accounts before they can apply for an operator’s licence”.  Mrs Thomas was asked about her use of the words “we have to” and she stated that it was just the way she spoke.  She had nothing to do with BTH.  She was asked about the fact that she had been appointed as a director of BTH for a brief period in November 2013 when the company was first incorporated.  She attributed her appointment as a mistake on the part of Companies House.  It was she who had registered the company on her husband’s behalf and it may have been that the forms had been completed incorrectly by her husband and the position was then rectified.  

10.	It became clear during the course of Mrs Thomas’ evidence, that BTH employed the driver of the vehicle, the vehicle was kept at the BTH yard in Cardiff along with all of the vehicle’s records and Bedwyr Thomas would discharge his functions as Mrs Thomas’ Transport Manager by visiting the Cardiff yard.  The payment into Mrs Thomas’ bank account was for the use of her operator’s licence by BTH.  The DTC highlighted his concern that the issue of “lending” the operator’s licence to BTH had not been included in the call up letter because it was not a fact known to the Traffic Commissioner.  Mr Williams informed the DTC that once he knew of the situation, he had advised Mrs Thomas to be open and honest about the situation and that he was in a position to deal with the issue.  

11.	The DTC then asked why Mr Thomas did not have an operator’s licence in his name.  Mrs Thomas accepted that she had “shrugged” in response to the question.  She then denied that she had “shrugged and smiled” and apologised.  She repeated that her husband did not think that he could apply for a licence until he had one year’s trading to show the Traffic Commissioner and a credit balance on his account.  

12.	The DTC then asked about Bedwyr Thomas.  He was not employed by BTH and in fact had a company called Ascus Screeding Limited from which he was paid.  Mrs Thomas then said that she paid him £600 per month for his Transport Manager duties but was unable to show regular payments to him from her account.  There was a lump sum which she described as an amalgamation of money owed for his services and repayment for an item he had bought for her.  Mrs Thomas accepted that in keeping the vehicle in Cardiff she was in breach of her operator’s licence.

13.	As for Mrs Thomas’ disqualification, she stated that she had accepted the disqualification because she did not have the “stomach” at her age to fight it or the finances.  She did not accept that she was guilty of such serious wrongdoing as set out in the disqualification undertaking.  It did not occur to her to inform the Traffic Commissioner of the disqualification and she apologised.  She did not think that it had any relevance to her as a sole trader.  She denied that there had been any other “controlling mind” of APL.  She considered that the administrators had not acted morally when undertaking their work.  They had left £171,721 of “good debt” uncollected.  APL was not insolvent when it was put into administration by Bibby.  She accepted that she had sold a vehicle whilst subject to finance but the problem was with the finance company as they would not give her a settlement figure.  She had, on numerous occasions, written to the finance company and telephoned them in order to obtain a redemption value from them, but the relevant person in the finance department was based in France at the time.  The finance company had never been paid.  Mrs Thomas refuted the detail of her undertaking, that assets had been disposed of without the proceeds of sale being accounted for.  She had identified all of the proceeds of sale in the accounts but the Insolvency Service did not want to analyse it.  

14.	Mrs Thomas was asked about Boxfast Limited.  That had gone into liquidation owing about £60,000 in VAT.  She was asked about another two companies which had gone into liquidation when she had either been a director or company secretary.

15.	Mrs Thomas became very distressed towards the end of giving evidence.  She told the DTC that her operator’s licence was her only source of income apart from her state pension and that she would comply with any condition or undertaking imposed by the DTC if he were to allow her to continue to operate.

16.	In his closing submissions, Mr Williams informed the DTC that the operation of Mrs Thomas’ one vehicle was the only source of income for both herself and her husband, apart from her state pension.  That was the motivation for Mrs Thomas to continue operating the vehicle.  He recognised that Mrs Thomas could not re-visit the disqualification because of lack of finance and energy.  Whilst this was the second occasion when Mrs Thomas had failed to notify the Traffic Commissioner of material changes, she operated only one vehicle and there was no reason why she could not be compliant in the future.  If the DTC determined that revocation was inevitable, Mr Williams asked for time to allow Mr Thomas to apply for an operator’s licence.  He asked the DTC to consider suspension of the licence as an alternative sanction.

17.	In his written decision dated 15 December 2015, the DTC found that a breach of the condition/undertaking to notify material changes was clearly made out.  Quite apart from the clear undertakings made when applying for an operator’s licence, the correspondence in 2010 regarding the liquidation of APL would have made it obvious to Mrs Thomas that a disqualification as a director would be relevant to her repute.  He found that Mrs Thomas was an unconvincing witness.  Her firm assertion that she had had nothing to do with the start up of BTH was contradicted by the Companies House records.  Her licence was clearly used for the sole benefit of BTH and the use of the word “we” was probably telling in the way that Mrs Thomas and her husband conducted their affairs.  Even after the enquiry from the OTC about the liquidation of APL in 2010, she still failed to notify the OTC of the liquidation of Boxfast Limited in 2013.

18.	The disqualification undertaking admitted a course of serious misconduct as a company director.  The seriousness was evidenced by the length of the disqualification and the failure to notify must remove the good repute of Mrs Thomas.  In failing to allow the OTC to consider the impact of the disqualification on the operator’s licence, Mrs Thomas had operated at an unfair advantage over more open operators.  

19.	Whilst unauthorised use of the licence was not set out in the call up letter, the circumstances had clearly been discussed by Mrs Thomas and Mr Williams and in accordance with his high standards of professional duty, Mr Williams had advised Mrs Thomas to be open.  Whilst the DTC gave Mrs Thomas credit for that degree of openness, the lending/selling of a licence disc cannot be condoned and is, in itself, grounds for taking away Mrs Thomas’ good repute.  

20.	Evidence of financial standing shows Mrs Thomas’ current account operating to the limit of its overdraft over the previous three months.  A Lloyds credit card with a limit of £1,000 was relied upon as was an American Express charge card but that could not be regarded as an extra source of funds as it had to be paid off in full at the end of each month and the source of those payments was Mrs Thomas’ bank account.  As a result of the recent payment into the account, all things being equal, the DTC would have imposed a condition on the licence to provide evidence of on-going access to £11,900 in three or four months time.  But in view of the circumstances of the deposit and the failure to show funds over the previous three months, the DTC determined that he should revoke the licence for lack of financial standing.  

21.	In considering the Priority Freight question (supra): “how likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime?” the DTC’s answer was “most unlikely”.  He took account of his findings concerning Mrs Thomas’ conduct and credibility.  She could not be trusted to use the licence in a lawful manner taking her past failings into account.  That conclusion supported an affirmative answer to the Bryan Haulage (supra) question.  The DTC considered that it was in fact Mr Thomas’ business that was likely to be at risk from revocation of Mrs Thomas’ licence and his conclusion was confirmed by the request for a delay in any order of revocation to allow BTH to make an application.  The DTC declined to give time and revoked the licence with effect from 31 January 2015.

22.	The DTC further considered it to be proportionate and appropriate in the light of the serious adverse findings to disqualify Mrs Thomas for a period of twelve months with effect from 1 February 2015.  Any future application made by BTH, Bedwyr Thomas and Mr Thomas would need to be scrutinised by the Traffic Commissioner.  

23.	At the hearing of this appeal, Mrs Thomas appeared in person.  She first of all asked the Tribunal to take account of the fact that English is her second language (Welsh being her first) and we did.  We further indicated that if Mrs Thomas had considered that she would have benefited from an interpreter before the DTC, she should have made a request for such assistance and it would have been provided to her.  Mrs Thomas went on to state that during the course of the public inquiry hearing, she had in fact been “desperately unwell” and had been “back and forwards to hospital”.  She disclosed the nature of her medical condition and we are satisfied that her privacy should be respected in that regard and no mention of it should be set out in this decision.  We do however note, that Mrs Thomas was represented during the course of the public inquiry and that if there had been any concern about Mrs Thomas’ ability to follow and participate in the public inquiry or any concern about her wellbeing, then we do not doubt that these issues would have been brought to the attention of the DTC and an application made for an adjournment.  No such application was made.

24.	Mrs Thomas then went onto criticise the DTC’s description of her director disqualification as being “by admission”.  We pointed to the extract of the undertaking she gave (see paragraph 6 above) which clearly amounted to an admission and that the disqualification itself contained an acknowledgement that prior to signing the disqualification undertaking, she had had the opportunity of obtaining legal or professional advice.  

25.	Mrs Thomas then went on to the circumstances of APL going into liquidation.  She repeated the evidence she gave (set out in paragraph 13 above).  In fact, Bibby had suffered a large reduction in the credit facility they held with Barclays Bank and as a result, Bibby was forced to reduce the credit facilities it gave to the companies who they factored for.  Many small companies “went under” as a result.  APL had been a very profitable company and if given enough time, APL could have made up the shortfall in its reduced credit facility.  Bibby did not allow the company to do that.  We pointed to the letter from Bibby to APL, which Mrs Thomas produced to the Tribunal. Whilst this was evidence that could have been produced at the public inquiry but was not, we allowed Mrs Thomas to refer to it, taking account of the fact that she was in person.  It read “We write with regard to the breach of the factoring agreement and would refer you to the standard terms and conditions section 15.1.1 a breach by you of this Agreement or any other agreement to which we are both parties or between you and any other Bibby Group Company.  We hereby advise that the early payment facility is suspended forthwith”.  This clearly referred to a breach of APL’s agreement with Bibby by APL.  Mrs Thomas denied any such breach and stated that it was just “their words”.

26.	As for the sale of the concrete pump which was subject to finance, Mrs Thomas told the Tribunal that all operators within the concrete industry sell vehicles and plant which are subject to finance.  She accepted that she had not obtained the consent of the finance company and that she had used the proceeds of sale for trading purposes without paying them over to the finance company.  She had written to the finance company and telephoned them in order to obtain a redemption value from them, but the relevant person in the finance department was in France at the time. The Tribunal asked Mrs Thomas to look at the disqualification undertaking.  She continued to deny that the contents were correct and averred that she had signed it because her health was poor and she was suffering from considerable stress.  She did not consider that the disqualification undertaking was relevant to her as an operator of a single vehicle as a sole trader.  She could not afford to live on her state pension (her medical condition means that her bills are higher than average).  She had hoped for compassion.  She was not a dishonest person and would not do anyone any harm.  She had made a mistake in not informing the OTC of the disqualification undertaking.  All she wanted was to run one vehicle and derive income from it.

27.	We are satisfied that the DTC was not only entitled to take Mrs Thomas’ disqualification undertaking into account when considering repute and her failure to notify the OTC of it, but that it was plainly right to do so.  Neither the DTC or this Tribunal could or should go behind the clear terms of the admissions made by Mrs Thomas in the document.  

28.	Mrs Thomas then submitted that the DTC had wrongly categorised the arrangement she had had with BTH.  She hired the vehicle to BTH and they paid all of the bills relating to it.  However, it was she who had leased the Cardiff yard and “we” moved into it in 2014.  The Tribunal pointed out to Mrs Thomas that she had not told the DTC that she was the leaseholder of the Cardiff yard but that even if she was, she remained in breach of her operator’s licence in keeping the vehicle in Cardiff rather than in Llanelli.  Further, we are satisfied that the DTC’s categorisation of the arrangement between Mrs Thomas and BTH was correct and inevitable.  The arrangement was unlawful and the DTC was right to take it into account particularly as Mr Williams had indicated that he could deal with the matter.  

29.	Mrs Thomas made a general point about the attitude of the DTC when speaking to her: “he talked to me like a dog and treated me as a criminal.  I spoke  no more than twelve words.  He was interrupting me all of the time and I was not allowed to say very much”.  Whilst we were not present at the public inquiry hearing and therefore the tone of voice used by any individual cannot be confirmed or assessed by us, Mrs Thomas is wrong in her description of the DTC’s conduct towards her.  The transcript speaks for itself.  He was polite, he did not interrupt whilst Mrs Thomas was answering his questions.  She was allowed to finish and he did not talk over her.  The transcript does not leave any impression that the DTC’s conduct was anything more that that to be expected from a regulator discharging a judicial, regulatory function.  We pointed to the many pages of the transcript which recorded Mrs Thomas’ evidence.  To assert that she was not allowed to say very much or that she spoke no more than twelve words is simply untrue.  Further, she was legally represented.  If there had been any sense that she was not being given a full opportunity to deal with relevant issues, there is no doubt that Mr Williams would have said so.  He did not.

30.	Finally, Mrs Thomas made a number of points, for example, that the DTC was wrong in stating that a request had been made for time to allow BTH to make an application for a licence.  Her points were misconceived or based upon a misunderstanding or misinterpretation of the DTC’s findings in his written determination and we do not propose to set them out in this decision.  She was further critical of the DTC’s determination that any future application linked to her family should be scrutinised by the Traffic Commissioner, which she averred, demonstrated an adverse attitude on behalf of the DTC.  Again we disagree.  It is usual, when cases such as this one comes before a public inquiry for such directions to be made.  

31.	We are satisfied that the DTC’s findings cannot be faulted.  It is clear that Mrs Thomas has lost her good repute and that she cannot be trusted to operate in a compliant fashion.  We are not persuaded that either the law or the facts of this case impel us to come to a different view to that of the DTC either in relation to revocation or disqualification as per the test in Bradley Fold Travel Ltd & Peter Wright v Secretary of State for Transport (2010) EWCA Civ. 695.  

32.	The appeal is dismissed.

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Her Honour Judge J Beech
5 June 2015