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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
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[2006] CSIH 32
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Lord Macfadyen
Lord Kingarth
Lord Marnoch
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XA100/04
OPINION OF THE COURT
delivered by LORD MACFADYEN
in
APPEAL
under the Transport Act 1985, Schedule 4, paragraph
14(1)
by
(FIRST) J. J. McCAFFREY, trading as MONTANA FREIGHT
SERVICES, and
(SECOND) SYLVIA PALLAS, trading as PALLAS TRANSPORT,
Appellants;
against
a decision of the Transport Tribunal dated 2 July 2004
_______
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For the appellants: Clancy Q.C.; Burness LLP.
2
June 2006
Introduction
[1] The Goods Vehicles (Licensing of Operators) Act 1995 ("the
1995 Act") consolidated the legislation regulating the licensing of the
operators of goods vehicles. In terms of
section 3(1) an operator's licence may be either a standard licence or a
restricted licence. Each of the
appellants is the holder of a standard operator's licence. The first appellant (Mr McCaffrey) trades
under the name Montana Freight Services.
His licence authorises the operation of six vehicles and six
trailers. The second appellant (Mrs
Pallas) trades under the name Pallas Transport.
Her licence authorises the operation of sixteen vehicles and six
trailers. Although the appellants hold
separate operator's licences, they operate their vehicles from the same
operating centre, sharing the facilities there.
[2] Following an inquiry held under section 29(1) of the 1995
Act, the Traffic Commissioner for the North Eastern Traffic Area issued a
decision dated 27 October 2003 by which he revoked the appellants' licences
under section 27(1)(a) and (b) of the 1995 Act.
The appellants appealed to the Transport Tribunal which, by a decision
dated 2 July 2004, dismissed the appeals and ordered that the Traffic
Commissioner's decision should take effect on 31
July 2004. The appellants appealed to this
court under paragraph 14(1) of Schedule 4 to the Transport Act 1985 ("the 1985
Act") against the decision of the Transport Tribunal. On 30 July 2004 this court granted interim suspension of both the decision
of the Transport Tribunal of 2 July 2004 and the decision of the
Traffic Commissioner of 27 October 2003. The result is that, pending this appeal, the
appellants' operator's licences remain in effect.
[3] We should record that at the hearing of the appeal we raised
with the appellants' counsel a preliminary question as to the competency of the
appeal to this court. The appellants'
shared operating centre is in County Durham. It might be thought that, that being so, the appeal
should have been brought in the Court of Appeal. We were informed that the Transport Tribunal
sat in Edinburgh to hear this case, in order
to accommodate the convenience of the person then representing the appellants,
and that it was for that reason that the paragraph 14(1) appeal was brought in
this court. It was, of course, within
the discretion of the Transport Tribunal to sit in Scotland (paragraph 13(1)), although
this is not a case in which it was obliged to do so by virtue of paragraph
13(2). Paragraph 14(1) allows appeal to
the Court of Appeal or to this court without making any express provision
allocating jurisdiction. Although
paragraph 14(1) refers to rules made by the Secretary of State, we understand
that there are none. There is therefore
no question of allocation of jurisdiction by subordinate legislation. In these circumstances we think it
appropriate, in the absence of any argument to the contrary, and given the
length of time the appeal has been before the court, to proceed on the basis
that it is competent that this appeal should be heard in this court.
[4] We should further record that, although we had the benefit of
full submissions by counsel for the appellants on the merits of the appeal,
there was no contradictor (cf Coakley v
Secretary of State for Transport 2003
SC 455, 2004 SC 398).
The legislation
[5] It is convenient to note first certain aspects of the
criteria for granting an application for an operator's licence. Section 13 of the 1995 Act provides inter alia as follows:
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"(1)
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Subject to sections 11 and
45(2), on an application for a standard licence a traffic commissioner shall
consider ―
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(a)
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whether the requirements
of subsections (3) and (5) are satisfied ...
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(3)
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For the requirements of
this subsection to be satisfied the traffic commissioner must be satisfied
that the applicant fulfils the following requirements, namely ―
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(a)
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that he is of good repute,
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(b)
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that he is of the
appropriate financial standing, and
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(c)
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that he is professionally
competent;
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and the traffic
commissioner shall determine whether or not that is the case in accordance
with Schedule 3.
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(11)
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If the traffic
commissioner determines that any of the requirements that he has taken into
consideration in accordance with subsection (1) or (2) are not satisfied he
shall refuse the application, but in any other case he shall, subject to
sections 14 and 45(2), grant the application.
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[6] Revocation of a standard licence is provided for in section
27. That section provides inter alia as follows:
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"(1)
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The traffic commissioner
by whom a standard licence was issued shall direct that it be revoked if at
any time it appears to him that the licence-holder is no longer ―
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(a)
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of good repute,
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(b)
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of the appropriate
financial standing, or
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(c)
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professionally competent;
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and the traffic
commissioner shall determine whether or not that is the case in accordance
with Schedule 3.
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Subsections (2) and (3)
provide that before giving such a direction the traffic commissioner must give
the licence-holder notice that, and notice of the grounds on which, he is
considering doing so, and invite and consider representations from the
holder. Section 27 has effect subject to
section 29. In particular, section 29(1)
provides that the traffic commissioner shall not revoke a licence under section
27(1) without first holding an inquiry, if the holder requests him to do so.
The revocation proceedings
[7] On 5 February 2003, a traffic examiner, Mr
Barnes, police officers and officers of H.M. Customs and Excise attended at the
appellant's operating centre. Fuel
samples were taken from seventeen vehicles on the premises, as well as from a
22,000 litre fuel tank which belonged to Mrs Pallas, and from which Mr
McCaffrey's vehicles also drew fuel.
Field tests indicated that there was untaxed fuel (kerosene) present in
the large fuel tank, in three of the four vehicles operated by Mr McCaffrey
that were tested and in ten of the thirteen vehicles operated by Mrs Pallas
that were tested. The appellants were
told the result of the field tests.
Samples were taken by the customs officers for laboratory analysis. The relevant appellant was given part of each
sample.
[8] Thereafter the traffic commissioner gave notice to the
appellants that he was considering revocation of their operator's
licences. He convened an inquiry, which
took place on 19 September 2003. Evidence relating to the alleged presence of
kerosene in the large fuel tank and in the fuel tanks of the appellants'
vehicles was given by Mr Barnes, and explanations were offered by the
appellants. Counsel maintained before us
that the inquiry proceeded on a mutual assumption that there was kerosene in
the tanks from which the samples which yielded a positive field test were
taken. There was, however, no formal
admission to that effect by the appellants.
In his decision dated 27 October 2003 the traffic commissioner
summarised Mr Barnes' evidence as being to the effect that:
"the
results were that 3 of 4 vehicles held by Montana Freight Services and 10 of 13
vehicles held by Pallas Transport were found to contain significant amounts of
kerosene in their fuel tanks.
Significant amounts of kerosene were also found in the main fuel tank
held on the premises shared by both operators."
In summarising Mrs Pallas's
evidence the traffic commissioner said:
"When
questioned, Mrs Pallas recollected that in the summer of 2002 fuel had been
purchased from a cheap source at a cost of around 54p per litre. She recollected that this was a visiting
tanker with some spare fuel, possibly on a Saturday morning. This may have been the source of the
contamination, she speculated."
Mr McCaffrey gave evidence
of 4000 litres of unusually cheap fuel purchased at the weekend immediately
preceding the "raid". Counsel submitted
that it was clear from the transcript of the proceedings (a) that Mr Barnes had
little understanding of the subject matter of his evidence, and (b) that on a
fair reading of her evidence as a whole Mrs Pallas, although she had mentioned
a purchase of fuel in the summer of 2002, had also given evidence which was in
line with Mr McCaffrey's about a purchase a few days before the raid. The traffic commissioner's conclusion that
Mrs Pallas was dissembling and attempting to deceive him thus proceeded on an
unfairly incomplete summary of her evidence.
There is, in our view, some force in these criticisms of the
traffic commissioner's discussion of the evidence on the fuel issue at the
inquiry. However, the traffic
commissioner took the view that the use of kerosene showed that the appellants
were no longer of good repute. It is not
suggested in the grounds of appeal that he was not entitled to take that view
on the material before him.
[9] The only evidence about the use of kerosene at the traffic
commissioner's inquiry related to the field tests conducted on 5 February 2003. The
appellants maintain (and maintained before the commissioner) that the customs officers told them
that the results of laboratory analysis of the samples would be intimated to
them. That was not done. Shortly before the inquiry Mrs Pallas wrote
to the traffic commissioner asking whether it was possible for the inquiry to
be postponed, because the customs inquiries (generally, not merely the laboratory
analyses) were not complete, but the inquiry proceeded. Later, while the appeal to the Transport
Tribunal was pending, the appellants claim to have received information to the
effect that the sample taken from one of the vehicles which had tested positive
in the field test had shown negative results on laboratory analysis. Reference was made to a letter from Hindle
Campbell, solicitors, dated 17 June 2004, which we have not
seen. Whether prompted by that
information or not (the dates are difficult to reconcile) the appellants
obtained a report from Clyde Analytical Ltd in which the view was expressed
that a sample submitted to that company for testing did not contain
kerosene. The report gives the
provenance of the sample tested as merely "From Fuel Tank", but it was
suggested to us that the sample was indeed one provided by Customs officers to
the appellants at the conclusion of the "raid".
[10] The appellant's representative at the appeal before the
Transport Tribunal applied to have admitted new evidence in the form of inter alia the Clyde Analytical Ltd
report and the letter from Hindle Campbell.
The matter is recorded in paragraphs 5 to 7 of the Tribunal's
decision. In identifying the new
evidence tendered, the tribunal observed in paragraph 5(i):
"Although
the source of the sample [analysed by Clyde Analytical Ltd] was stated to be
'fuel tank' no further details of provenance are given."
In paragraph 6 the Tribunal
observed:
"The
position before the Traffic Commissioner was that the findings of Customs and
Excise were undisputed. Apart from the
adjustment concerning one vehicle there had never been previous challenge,
neither by the appellants nor by Mr Hindle nor by Mr Lawtie at the public
inquiry."
In paragraph 7 the Tribunal
said:
"In
considering this application we took all aspects into account including in
particular the history and the acceptance of the findings by Customs &
Excise. The raid took place on 5 February 2003 and the public inquiry was over 7 months later, on 19 September 2003. On any view,
evidence relating to the samples of kerosene could have been obtained for use
at that time. ... We refused the application.
The Tribunal's power to admit new evidence
[11] The Transport Tribunal Rules 2000 (as amended), as they stood
at the date of the hearing of the appeal before the Tribunal, contained the
following provision:
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"32(2)
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Subject to paragraph 9(2)
of Schedule 4 to the 1985 Act (tribunal not to consider new circumstances),
the Tribunal may allow:
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(b)
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evidence not given before
the traffic commissioner to be admitted."
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It was not suggested that
paragraph 9(2) of Schedule 4 has any bearing on the material which the
appellants sought to have admitted. It
was submitted, and we accept, that rule 32(2) confers on the Tribunal a discretion
to admit new evidence, without imposing any particular requirements which must
be satisfied before the discretion can be exercised.
The grounds of appeal
[12] The first four grounds of appeal advanced on the appellants'
behalf relate to the Transport Tribunal's refusal to admit the additional
evidence relating to the fuel samples.
Ground 1 is a general assertion that the Tribunal erred in law in
refusing to admit evidence tendered by the appellants "to the effect that fuel
samples obtained by Customs and Excise Officers from vehicles and a storage
tank at the appellants (sic) premises
on 5 February were not contaminated by kerosene and were not therefore 'untaxed
fuel'". That ground serves as little
more than a preamble to the more specific grounds that follow. Ground 2 is also in general terms. It asserts that the Transport Tribunal had a
discretion to admit the fresh evidence under rule 32(2), but failed to
recognise and exercise that discretion.
In his submissions to us, counsel recognised that that ground overstated
the appellants' position. Although it
did not expressly refer to rule 32(2), it was evident from paragraph 7 that the
Tribunal did recognise that the decision it was being called upon to make was a
discretionary one. The question
therefore came to be whether the Tribunal had exercised its discretion in a way
in which it was entitled to do. Grounds
3 and 4 set out particular respects in which the appellants maintain that the
Tribunal erred in the exercise of its discretion.
[13] Ground 3(a) asserts that the Tribunal called into question the
veracity of the additional evidence without hearing it or giving it proper
consideration. That is, as we understand
it, a reference to the fact that in paragraph 5(i) of its decision the Tribunal
comments that the source of the sample analysed by Clyde Analytical Ltd is
given in their report as "fuel tank", without further details of its
provenance. That was, in our view, a
perfectly legitimate comment for the Tribunal to make. Particularly when appellants' representative,
in tendering the new evidence, appeared to proceed on the assumption that the
report would speak for itself, the absence of clear evidence of the provenance
of the sample analysed had an obvious bearing on the value of the evidence
tendered. It was not a matter of calling
the veracity of the evidence in question.
Rather it was the identification of an obvious limitation on the scope
of the evidence tendered. We were told,
however, that the appellant's representative made some reference before the
Tribunal to the circumstances in which the sample was conveyed to Clyde
Analytical Ltd. In these circumstances,
it can perhaps be said that the Tribunal ought to have explored that matter
further before making the observation about the lack of clarity as to the
provenance of the sample. We note, too,
that the point is not followed up by the Tribunal in paragraph 7, and it is
therefore difficult to be sure what weight it accorded to it.
[14] Ground 3(b) maintains that the Tribunal placed too much
emphasis on the appellants' "acceptance"
of the evidence about contamination before the traffic commissioner. That is certainly a factor which is
specifically mentioned in paragraph 7 of the Tribunal's decision as having been
taken into account. In general, however,
the weight to be attached to a relevant factor in reaching a discretionary
decision is a matter for the decision-maker.
It would only be if it were an error to regard the appellants as having
accepted the field tests as pointing to contamination with kerosene that the
Tribunal could be said to have gone beyond the proper exercise of its
discretion. While counsel sought to
distinguish between "acceptance" on the one hand and a mutual assumption on the
other, we do not consider that the Tribunal can be said to have fallen into
error by wrongly regarding the appellants as having, before the traffic
commissioner, "accepted" that the field tests were indicative of the presence
of kerosene in the samples subjected to those tests.
[15] In ground 3(c) it is asserted that the Tribunal "incorrectly
concluded that the fresh evidence ... could have been available for the inquiry
in September 2003". We do not consider
that that point is well founded (at least in relation to the report by Clyde
Analytical Ltd). The fact is that the
appellants were given a part of each sample taken for laboratory analysis by
the Customs officers. The appellants
could, if they had chosen to do so, have had their parts of the samples
subjected to laboratory analysis at any time after February 2003, and certainly
before September 2003. It seems to us,
however, that the point is not whether the appellants could have had the samples subjected to laboratory analysis before
the traffic commissioner's inquiry, but whether there is a reasonable
explanation for their not having done so which the decision-maker ought to have
weighed in the balance. The Tribunal
appears not to have taken into account the fact that, although the appellants
did not have the samples analysed before the inquiry, nor did H.M. Customs and
Excise. According to the submissions
made to us (and evidence given to the commissioner), the Customs officers had
held out to the appellants the prospect that they (Customs) would have the
samples analysed. In our view that is a
factor which casts light on the fact that the appellants did not earlier take
independent action to have their parts of the samples analysed. Further, it is not clear that the information
in the Hindle Campbell letter could have been obtained earlier; indeed we were informed that this had been a
factor in prompting the appellants to have their analysis done, and that the
Tribunal were given some information to that effect. Be that as it may, we think that there is
some force in counsel's submission that the Tribunal did not appear, in terms,
to consider the question of whether there was, or could be, a reasonable
explanation for the relevant documents being tendered when they were.
[16] The point discussed in the last preceding paragraph shades in
to an additional one which counsel sought, and was granted, leave to add to the
grounds of appeal in the hearing before this court. That point was that the Tribunal failed to
notice that the burden of proof under section 27 was not on the appellants, and
failed to evaluate the respective failure of the appellants and H.M. Customs
and Excise to have the samples subjected to laboratory analysis in that
context. We shall discuss the onus of proof in more detail in the
context of the part of the appeal concerned with the appellants financial
standing. We refer to what we say in
paragraph [22] below. For present
purposes, however, for the reasons given later, we accept that in a revocation
case under section 27, it is not for the appellants to satisfy the traffic
commissioner (or on appeal the Tribunal) that they are still of good
repute. Revocation can only take place
if it appears to the traffic commissioner that the appellants are no longer of good repute. It seems to us that the facts that there is
no onus on the appellants and that it
is for the commissioner (and on appeal the Tribunal) to be satisfied that the
appellants have lost the good repute which they had established at the time
when the licences were granted, make it inappropriate to place the weight that
the Tribunal did on the consideration that the appellants did not adduce
evidence of laboratory tests at the inquiry.
[17] In ground 4(a) it is submitted that the Transport Tribunal
erred in the exercise of their discretion by failing to take into account the
central importance of the contamination issue in the appeal. It is, in our view, clear that, on the good
repute issue, the alleged use by the appellants of untaxed fuel was
critical. It therefore seems to us that,
assuming that the Tribunal was entitled to find that the additional evidence
was tendered against a background of failure to challenge the evidence of
contamination at the inquiry and failure to adduce evidence of laboratory
tests, which could have been available by the time of the inquiry, at the inquiry,
those considerations adverse to the introduction of the additional evidence
required to be balanced against the critical importance of that evidence to the
case being made against the appellants.
Unfortunately, the Transport Tribunal does not make it clear that it
carried out that balancing exercise. It
said, in paragraph 7 of its decision, that it "took all aspects into account",
but it does not identify what all these aspects were. Except for the reference in paragraph 5(i) to
the incomplete information as to the provenance of the sample analysed by Clyde
Analytical Ltd, there is, in the Tribunal's reasoning, no overt evaluation of
the importance which the additional evidence would have had if admitted.
[18] In ground 4(b) reference is made to the Tribunal's failure to
take account of the reliance placed by the traffic commissioner on the
inadequate evidence of contamination before him. There is, in our view, force in that
observation. In assessing the importance
of the additional evidence it would, in our view, have been appropriate for the
Tribunal to have recognised that the tribunal's critical findings proceeded on
no more than field tests explained by a witness (Mr Barnes) with an evidently
inadequate understanding of the subject.
No doubt the traffic commissioner was better placed than we are to
interpret Mr Barnes' evidence, which we find confused and confusing. Nevertheless, we consider that the Tribunal
should have had the quality of the material on which the traffic commissioner
relied in mind when considering how to exercise their discretion whether to
admit additional evidence.
[19] Taking these matters together, we come to the conclusion that
the Tribunal was entitled to proceed on the basis that the appellants had not
disputed the contamination at the inquiry, and could have adduced evidence of
laboratory tests at that stage. On the
other hand we consider that it should also have borne in mind that the material
on which the traffic commissioner proceeded was based merely on field tests
ill-explained by the witness put up to explain them, and that H.M. Customs and
Excise had not produced or relied on any laboratory analysis such as the
appellants had been led to expect. The
significance of that fact is to be seen in the context of the appellants not
being under a burden of proof to re-establish their good repute. Moreover, the proper exercise of the
Tribunal's discretion in our opinion required it to weigh, against the failure
to adduce the relevant evidence earlier, the importance which it might have had
in determining the critical issue on which the proposition that the appellants
were no longer of good repute turned, together with any reasonable explanation
for its not having been tendered before.
In all the circumstances, we come to the conclusion that it appears from
the Tribunal's reasoning that it failed to take into account relevant
considerations in deciding to refuse to admit the new evidence.
[20] In these circumstances it would, in our view, be unsatisfactory
to remit to the Transport Tribunal to reconsider the additional evidence
tendered in June 2004. Events have moved
on since then. In particular, an
application for a new operator's licence was presented by Mr McCaffrey trading
as Montana Transport, on the basis that, if it was granted, the licence which
is the subject of this appeal would be surrendered. That application was considered by the
traffic commissioner in 2005, and refused after consideration of inter alia much fuller evidence about
the presence of untaxed fuel in February 2003.
Regrettable though it is that the same ground should be gone over again,
we do not think that the current proceedings can be fairly concluded without
the same issue being examined again at inquiry.
We have therefore decided to allow the appeal on the issue of good
repute, recall that aspect of the decision of the Transport Tribunal, and remit
to the traffic commissioner to hold an inquiry into that issue, admitting such
evidence as he considers relevant. The
inquiry should be held by a traffic commissioner other than (a) the one who
heard the public inquiry on 19 September 2003 and (b) the one who heard
the inquiry into Mr McCaffrey's application for a new licence in 2005.
Financial standing
[21] The traffic commissioner revoked the appellants' licences on
the additional ground that they were no longer of appropriate financial
standing. The Transport Tribunal upheld
that aspect of the commissioner's decision.
In ground of appeal 5, the appellants set out two bases on which it is
said that the Tribunal erred in that aspect of its decision. Counsel did not abandon these grounds of
appeal, but his main submission in relation to financial standing was that both
the traffic commissioner and the Transport Tribunal had misdirected themselves
in thinking that there was an onus on the appellants to satisfy the
commissioner that they were still of appropriate financial standing.
[22] As we have noted in paragraph [6] above, section 27(1) obliges
the traffic commissioner to revoke a standard licence if it appears to him inter alia that "the licence-holder is
no longer ... of the appropriate financial standing". Counsel submitted to us that that placed no
burden of proof on the appellants. In so
submitting he cited to us the recent Court of Appeal decision in Muck It Ltd v Secretary of State for Transport [2005] EWCA Civ 1124. In that case the language of section 13 of
the 1995 Act (which admittedly does place an onus of proof on the applicant for a standard licence) was
contrasted with that of sections 26 and 27.
Reference was made to the Directive 96/26/EC,
which the 1995 Act implemented, and in particular to Article 6.2, which
provides that:
"Member
States shall see to it that the competent authorities withdraw the
authorization to pursue the occupation of road transport operator if they
establish that the conditions of Article 3(1)(a), (b) or (c) are no longer
satisfied."
It is the competent
authorities who must establish that the conditions are no longer
satisfied. The same language is carried
through into section 27. Revocation
follows if it appears to the traffic commissioner that the holder is no longer of the appropriate financial
standing.
[23] We agree with the Court of Appeal that there is no burden on
the licence holder to demonstrate that he is still of appropriate financial
standing. The reasoning based on Article
6 of the Directive is compelling. The
contrast between the language of section 13 and that of section 27 points in
the same direction. As a matter of
general principle, the burden of proof should be on the party alleging that the
state of affairs has changed, rather than on the one maintaining that it has
remained the same.
[24] Although of course their decisions were made before Muck It Ltd was decided, neither the traffic
commissioner nor the Transport Tribunal proceeded on what we hold to be the
correct view on burden of proof. The
traffic commissioner said, in the last paragraph of his decision:
"Both
operators have failed to demonstrate the necessary capital and reserves to
satisfy the requirement of appropriate financial standing."
The Transport Tribunal, in
paragraph 9 of its decision, held that the commissioner was entitled to come to
the conclusion he did, stating expressly:
"The
burden of proving 'appropriate financial standing', as required by section
27(1)(b) of the [1995] Act, is on the operator."
[25] That error as to burden of proof is sufficient to dispose of
the appeal so far as relating to the question of appropriate financial
standing. We do not need to address
grounds of appeal 5.1 and 5.2. No ground
for revocation under section 27(1)(b) has been made out. We shall accordingly allow that aspect of the
appeal, and recall that aspect of the Transport Tribunal's decision. It is not appropriate to remit this aspect of
the case to the Tribunal or the commissioner.
Result
[26] We shall accordingly allow the appeal in both its aspects,
recall the decision of the Transport Tribunal dated 2
July 2004, and remit to the traffic commissioner to hold a fresh inquiry on the
issue of the appellants' good repute. At
such inquiry, which will be held before a traffic commissioner who has not
previously dealt with matters concerning the appellants, the commissioner will
admit such evidence as he considers appropriate.
