Neutral Citation Number: [2013] UKUT 012 (AAC) 		    Appeal No.  T/2012/54

IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of Joan Aitken 
TRAFFIC COMMISSIONER for the Scottish Traffic Area 
Dated 15 August 2012

Before:
H. H. Michael Brodrick, 	Judge of the Upper Tribunal
Leslie Milliken,			Member of the Upper Tribunal
John Robinson,		Member of the Upper Tribunal

Appellant:
RON McCAMBRIDGE t/a FUNCTIONS ‘R’ US

	 
Attendances:
For the Appellant: Mr McCambridge appeared in person

Heard at:	George House, 126 George Street, Edinburgh.
Date of hearing:	5 December 2012
Date of decision:	7 January 2013

DECISION OF THE UPPER TRIBUNAL
IT IS HEREBY ORDERED that this appeal be DISMISSED.

SUBJECT MATTER:-	 Financial resources	

CASES REFERRED TO:- None

REASONS FOR DECISION

1.	This is an appeal from the decision of the Traffic Commissioner for the Scottish Traffic Area to refuse the Appellant’s application for a restricted goods vehicle operator’s licence, on the ground that the Appellant had failed to show that the facilities and arrangements for maintaining vehicles in a fit and serviceable condition would not be prejudiced by reason of the Appellant having insufficient financial resources for that purpose.
2.	The factual background to this appeal appears from the documents and the Traffic Commissioner’s decision and is as follows:-
(i)	On 24 November 2011 the Appellant applied for a restricted goods vehicle operator’s licence authorising two vehicles.  The Application stated that the Appellant was a sole trader, that the nature of his business was catering and that he used the trading name “Functions ‘R’ Us”.  In the ‘Checklist’ at paragraph 18 of the application the Appellant stated that he had provided original financial evidence in support of the application. 
(ii)	An analysis of the financial information by the Office of the Traffic Commissioner, (“OTC”), showed that the amount required was £3,100 but that the average in the account, for which statements were provided, over a 28 day period fell short of that requirement.
(iii)	On 16 December 2011 the OTC wrote to the Appellant pointing out that the application could only be submitted to the Traffic Commissioner once it was complete and that further material was required.  That included confirmation of the number of vehicles for which the Appellant required authorisation, and financial evidence to make up the shortfall required to reach a total of £3,100.  A Financial Guidance Note was enclosed, which gave details of the types of evidence, which the Traffic Commissioner required.
(iv)	On 1 February 2012 the OTC wrote to the Appellant, sending the letter by First Class Post and Recorded Delivery.  The letter stated that documentation remained outstanding and that the letter was intended as a ‘final attempt to resolve these issues by correspondence’.  The Appellant was warned that if he did not respond, with all the required information, by 8 February 2012 and the application remained incomplete on that date, it would be refused.  The Appellant was encouraged, if he was uncertain about the information required, to telephone or email the caseworker at the OTC.
(v)	It would appear that the Appellant took up this offer, though there is no record in the appeal papers as to what was said.  On 14 February 2012 the Appellant wrote to the OTC.  He confirmed that the application was for one vehicle.  He enclosed various statements from banks and credit cards “confirming overdraft limits and available credit card limits in addition to what you already have”.  The additional material consisted of three letters.  The first, dated 2 March 2011, confirmed that there was an overdraft of £1,400 on the current account, in other words the account for which statements had already been provided.  The second, dated 3 February 2012 simply confirmed that the overdraft facility on “your account with RBS is set at” … .  The third, dated 2 February 2012 confirmed that the credit limit on the Appellant’s Post Office credit card was … .
(vi)	On 7 March 2012 the OTC wrote another ‘final attempt’ letter in identical terms to that dated 1 February 2012, save that the deadline was moved to 14 March 2012 and the request for supporting documentation pointed out that it was not possible to take the RBS overdraft or the credit limit on the Post Office credit card into account in the absence of supporting statements showing the balances available.  It appears that this letter was sent by First Class post, Recorded Delivery and also by email.
(vii)	On the same day the Appellant replied by email complaining in strong terms that he believed that he had provided what was required.  He went on to say: “I insist that you specify EXACTLY what I need to send to you to resolve this issue”.  The email went on to put the same point in even more emphatic terms as well as expressing disillusionment with the OTC.
(viii)	Despite the tone of the Appellant’s email the response from the OTC, again on 7 March 2012, was a calm, clear and measured attempt to explain what was needed.  It began by reminding the Appellant that the average balance on the bank statements, which he had provided, fell short of the required figure by the amount specified.  It went on to say this:
“We are unable to accept an overdraft facility without the benefit of bank statements to support it, as this would not demonstrate how much of the overdraft has been used, nor would it show what funds are available in the account.  Similarly a letter stating you have a credit card facility is also of no value unless we can see how much has been spent, and how much is available to you”.
(ix)	Further email exchanges took place concerning the nature of the information required and the time limit for providing it.  At one stage the OTC pointed out that it would be able to accept evidence of financial resources from several different accounts, provided that the evidence for each covered the same 28 day period.
(x)	On 22 March 2012 the Appellant replied by letter.  He attached a print-out of his personal bank account with RBS, his most recent invoice from the Post Office relating to the Post Office credit card and a document relating to a Saga Visa card.  The document from RBS consisted of a single page ‘Mini-Statement’ covering 12-19 March.  It gave the account number but no account name.  The letter from RBS confirming the overdraft was addressed to the Appellant but gave neither the account number nor the account name.  The document from the Post Office showed that the Appellant was the account holder and it gave the account number but the only detail provided was that the outstanding balance was the sum specified.  The document from Saga gave an account number, but the account holder is not named on the document.  The detail on this document  specified a credit limit and an outstanding balance, which showed a slight reduction on the previous balance. 
(xi)	On 28 March 2012 the caseworker prepared a ‘New Application Referral’.  The main focus of the document was to set out the requests for financial information and the responses received from the Appellant, which we have summarised above.  The recommendation was that the Appellant should be informed that the Traffic Commissioner “is minded to refuse the application” but that the Appellant should be given 14 days in which to provide: (i) confirmation of the account number and the name of the account holder of the RBS account, (ii) confirmation that the overdraft and the bank statements relate to this account, (iii) an original up to date bank statement for this account and (iv) original bank statements for both the Clydesdale and RBS accounts for the period 1 February 2012 to 1 March 2012.  The Traffic Commissioner supported this recommendation though she requested that the matter should be dealt with by telephone, by the Team Leader, to avoid further protracted correspondence.
(xii)	On 17 April 2012, following a telephone conversation, the Team Leader sent the Appellant a long email setting out the effect of the discussion.  The email set out in clear terms why much of the material submitted to establish that financial resources were available could not be taken into account.  It went on to explain what the Appellant needed to provide.  In early May 2012 the date for production of this material was extended because the Appellant had been unwell.
(xiii)	On 25 May 2012 the Appellant wrote to the OTC.  He said that rather than waiting until the end of the month for his bank statement he was enclosing confirmation, certified by the bank, that he was the account holder and that there was a specified amount in the account.
(xiv)	On 15 June 2012 the case-worker prepared a revised version of the New Application Referral.  In addition to the original contents a summary of the further events was added.  The problem identified by the caseworker was that while there was evidence of sufficient money in an account in the name of the Appellant on 25 May 2012 there was no evidence as to how long the money had been there.  The Traffic Commissioner’s decision was in these terms:
“I was about to say yes to Public Inquiry but this is all too tedious and time consuming.  I think that the best thing is for Mr McCambridge to come to the Edinburgh office with his finance and for one of the Public Inquiry clerks experienced in this to go over it all.  If the evidence is not satisfactory to the Public Inquiry clerk then we can move to a formal Public Inquiry”.
(xv)	On 3 July 2012 the Appellant attended the Edinburgh office.  He provided a mini-statement for the Clydesdale bank account showing that a sum had been credited to the account on the same day, leaving a credit balance sufficient to meet the requirement.  The Appellant also brought various pages of bank statements from the RBS account.  These appeared to show that the credit to the Clydesdale account had come from the RBS account but the RBS statements were not continuous and did not show that the requirement for financial resources was met over a sustained period.  The Appellant was advised to keep the money in the Clydesdale account and to return once it was shown on a formal bank statement.  He returned on 17 July 2012 with another mini-statement for the Clydesdale account.  This showed that a sum had been withdrawn on 4 July 2012, was deposited once more on 6 July, was again withdrawn on 9 July and was then deposited again on 13 July 2012.  The member of staff who saw the Appellant was concerned that this amount was the working capital which he used to run a cash business.  He concluded that the Appellant failed to meet the requirement for financial resources because of the frequent withdrawals and deposits.
(xvi)	On 14 August 2012 the Traffic Commissioner considered the original referral and the additional material summarised above.  She said this:
“This is a refusal without offer of a Public Inquiry – I cannot see how a Public Inquiry could achieve what has not been achieved by inviting Mr McCambridge to OTC Scotland and he has not satisfied financial standing”.
(xvii)	On 15 August 2012 the Appellant was informed that the application had been refused because he had failed to provide the supporting documentation, which had been required. He was advised of his right to appeal.
(xviii)	On 10 September 2012 the Appellant filed a Notice of Appeal.  In his grounds of appeal he maintained that he had provided sufficient information, that he had the funds available, that he should have been advised to leave the money in an account for 28 days and that he still had more than enough available.  He said that the amount was withdrawn on 4 July 2012 because he intended to buy a car and that it was re-deposited when he was unable to do so.  He explained that he was currently using a 3.5 tonne truck, (use of which does not require an operator’s licence), but that he was concerned that, at times, it might be overloaded, hence the application for an operator’s licence.  He attached his latest bank statement. 
3.	At the hearing of the appeal the Appellant appeared in person.  He repeated the explanation for applying for an operator’s licence, stressing his desire to avoid the risk of overloading his 3.5 tonne vehicle and his wish to operate lawfully.  He also stressed that he believed that he had provided all the required information.
4.	This was an application for a restricted goods vehicle operator’s licence.  The starting point is therefore s.13 of the Goods Vehicles (Licensing of Operators) Act 1995, ["the 1995 Act"] which provides:-
“13(2) on an application for a restricted licence a traffic commissioner must consider-
(a) whether the requirements of sections 13B and 13C are satisfied, and
(b) if the traffic commissioner thinks fit, whether the requirement of section 13D is satisfied”.
5.	It is always the responsibility of a person applying for an operator’s licence to satisfy the Traffic Commissioner that the statutory requirements are met.  When the Traffic Commissioner begins to consider whether or not the applicant has satisfied the statutory requirements, in the case of a restricted licence there is an important distinction between s. 13(2)(a) and s. 13(2)(b) of the 1995 Act.  In the case of s. 13(2)(a) the Traffic Commissioner has a mandatory obligation, in the case of every application, to consider whether the requirements of s. 13B and s. 13C have been satisfied.  In the case of s. 13(2)(b) there is a mandatory obligation, in the case of every application, to consider this paragraph, but the terms of the paragraph must not be overlooked.  The applicant for a licence is only under an obligation to satisfy the requirement of s. 13D if the Traffic Commissioner “thinks fit”.  In other words the obligation only arises if and when the Traffic Commissioner has exercised discretion to require the applicant to satisfy the requirement.  That, in turn, means that Traffic Commissioners must explain, in each case, why they ‘think fit’ to insist that the applicant satisfies the requirement of s. 13D.  In our view a blanket insistence that the requirement has to be satisfied in every case may well be unlawful.  The reason is that by granting discretion as to whether or not this requirement has to be satisfied Parliament clearly contemplated that it would not be necessary to satisfy the requirement in every case.  This view is reinforced by the contrast with the legislation in relation to restricted PSV operator’s licences.  The terms of s. 14ZB(b) of the Public Passenger Vehicles Act 1981, (“the 1981 Act”), impose a mandatory requirement that the Traffic Commissioner must be satisfied that the applicant is of appropriate financial standing, (albeit to be determined in accordance with paragraph 2 of schedule 3 to the 1981 Act, rather than the more exacting standard of Article 7 of Regulation 1971/2009, which is required for a standard licence).
6.	We recognise that if the Traffic Commissioner must give reasons for ‘thinking fit’ to impose an obligation to have financial resources at a level which meets the requirement of s.13D certain practical difficulties are likely to arise.  It seems to us that unless and until the Traffic Commissioner knows how the applicant intends to operate it will be very difficult to decide whether or not there are sound reasons for insisting that the requirement of s. 13D must be met.  It may be that Section 13 of the application form requires re-drafting to require that those applying for restricted licences explain how they intend to operate, thus enabling the Traffic Commissioner, once the application is received, to assess the position and to give a reasoned decision as to whether or not the requirement of s. 13D has to be met.
7.	In the present case it is unclear whether the Traffic Commissioner ‘thought fit’ to insist that the Appellant satisfied the requirement of s. 13D or whether it was treated as a mandatory requirement to be met in every case.  If the Traffic Commissioner did ‘think fit’ to insist on this requirement being met no reasons are recoded on the appeal file.  If satisfying the requirement of s 13D was treated as a mandatory obligation that was plainly wrong.  Whichever it is we have had to consider what to do.  In our view it would not be appropriate to remit this matter for rehearing and determination after the Traffic Commissioner had undertaken the exercise required by s. 13(2) of the 1981 Act.  The reason is that we have enough information to make our own decision on this point.  It is clear that the Appellant intends, if granted an operator’s licence, to be an owner operator.  It is also clear, from a ‘Safety Inspection and Maintenance Agreement’ dated 1 March 2012, that the Appellant does not intend to maintain the vehicle himself but has entered into an agreement for inspection and maintenance to be undertaken by a commercial company.  We are quite satisfied that in that situation it would be appropriate for a Traffic Commissioner to ‘think fit’ to insist on the requirement in s. 13D being met.  In that situation the arrangements for maintaining the vehicle in a fit and serviceable condition are likely to be prejudiced if the operator is unable to pay the contractor’s bills as and when they fall due.  For the avoidance of doubt we should make it clear that we mean both regular bills for inspection and maintenance and also bills for any additional repairs, which may be necessary.  It follows that had this point been raised as a ground of appeal we would have dismissed it and we would have determined that this was a proper case in which to insist that the requirement of s. 13D was met.
8.	The main point which the Appellant sought to make was that he had provided sufficient information to satisfy the Traffic Commissioner that the requirement of s. 13D was met.  We are unable to accept this submission.  It seems to us that despite the full, careful and patient explanations given by the OTC the Appellant has still not grasped what is required.  The purpose of S.13D is clear from the words of the section itself.  In simple terms it means that the Appellant must show that he possesses financial resources sufficient to meet the bills for regular inspections and maintenance and sufficient, in addition, to meet bills for any other repairs which may be needed to keep the vehicle in a fit and serviceable condition.  It seems to us that nothing less will suffice to avoid the conclusion that the arrangements for maintaining the vehicle in a fit and serviceable condition will be prejudiced by reason of the Appellant having insufficient financial resources for that purpose.
9.	Once the purpose of the requirement in s. 13D is understood a number of other points become clear.  First, it is a continuing obligation throughout the life of the licence.  Second, it cannot be satisfied by a ‘snapshot’ of the financial position on a particular day, instead the Traffic Commissioner is entitled to insist on seeing a broader picture.  In the present case, which was an application, the request was for financial evidence over a period of 28 days.  In the case of an existing licence-holder the period is generally one of three or four months.  In our view Traffic Commissioners are fully entitled to require financial information over such periods when they need to ensure that the statutory requirement is met.  Third, we have underlined ‘Appellant’ in the preceding paragraph to stress that this is an obligation to be met by the operator personally, which means that it can only be done by bank accounts or other assets, which are clearly shown to belong to the operator.  Fourth, Traffic Commissioners have made it clear, (rightly in our view), that they must be shown original bank statements or properly certified copies which set out the position, continuously, over the period specified.  Fifth, it was made clear to the Appellant, (again correctly in our view), that if he sought to rely on more than one bank account he must provide statements from each account relied on all of which cover the same period of time.  In our view this is essential because the Traffic Commissioner is entitled to see the overall picture.  Sixth, it was also made clear to the Appellant, (again correctly in our view), that the mere fact that he had been granted an overdraft or that he had a particular limit on his credit card, or a specific amount of available credit on one day, was insufficient on its own to satisfy the requirement of s. 13D.  Instead what is needed is a full statement for the relevant bank account or credit card to enable the Traffic Commissioner to obtain a clear picture of the average amount available over the course of a month or whatever other reasonable period the Traffic Commissioner decides to specify.
10.	In the present case the Appellant provided original bank statements, for his account at the Clydesdale bank, covering 29 days in November 2011.  They did not satisfy the requirement because the average balance fell short of the required £3,100.  The first attempt to make up this shortfall failed for three reasons.  First, the Appellant provided confirmation of an overdraft on his account at the Clydesdale bank by way of a document dated 2 March 2011.  However the overdraft had already been taken into account in calculating that there was a shortfall.  Second, a letter addressed to the Appellant from RBS confirmed an overdraft facility on his account.  However the account number was not stated nor were any bank statements provided to enable the OTC to calculate the average amount available to be drawn over at least a 28 day period.  Third, the Appellant provided a letter showing that the credit limit on his Post Office credit card.  Once again no statements were provided which would have enabled the OTC to calculate the average amount of credit available on that card.  In the case of the second and third points the Appellant was told why the OTC could not take the RBS overdraft or the credit card facility into account because of the absence of statements providing a wider picture, (see paragraphs 2(viii) and 2(xii) above).
11.	When the Appellant attended the Edinburgh office of the OTC he provided original bank statements for the Clydesdale account for May, June and very early July 2012.  In our view it is clear, even allowing for the overdraft, that the average available in that account over that period fell far short of the £3,100 required.  In addition to these statements the Appellant provided a mini-statement for the Clydesdale account showing a deposit on 3 July 2012.  As we have indicated this left a credit balance sufficient to meet the requirement, in addition to the overdraft of.  In our view this was rightly rejected as insufficient, (a) because a mini-statement is not the type of bank statement that the Traffic Commissioner is entitled to require and (b) because showing that the requirement is met on one day is a mere snapshot which is insufficient to satisfy the requirement that the Appellant will be able to pay the relevant bills as and when they fall due.  In addition the Appellant provided a statement for an account in the name of ‘Cumbernauld Carriers’ covering the period 14 May 2012 to 2 July 2012.  Two mini-statements relating to the same account appear to duplicate the detail in the full bank statement.  This was rejected, rightly in our view, on the ground that it did not show any sustained period of credit sufficient to show that, on average, £3,100 was available or that that figure could be met in combination with another account.  It seems to us that the OTC would have been entitled to reject this account on another ground, namely that it was not in the name of the applicant for the licence.
12.	At this stage the Appellant was advised to keep the credit balance in the Clydesdale account and to return once a formal bank statement had been issued to confirm that this amount was held in the account.  The Appellant returned on 17 July 2012 and provided a mini-bank statement for the Clydesdale account.  This showed that a sum had been withdrawn on 4 July 2012, that an identical sum had been credited to the account on 6 July 2012, that the same amount was withdrawn on 9 July 2012 and then credited to the account on 13 July 2012.  The OTC suspected that the money was being used as ‘working capital’.  The Appellant told the OTC that if granted a licence it would be used to purchase a vehicle.
13.	It is against this background that the Traffic Commissioner concluded that the Appellant had failed to satisfy her he had the financial resources to meet the requirement of s.13D.  She also concluded that the Appellant had been given ample opportunity to provide the necessary evidence, including two visits to the OTC in Edinburgh, with the result that calling him to a Public Inquiry would be unlikely to add to the sum total of available information.  We are not persuaded that the Appellant has been able to show that the Traffic Commissioner was plainly wrong on either point.  With a view to assisting the Appellant, should he decide to make a fresh application, we have sought to explain why the material he provided was insufficient to establish that he had the necessary financial resources.  His response to being advised to retain the money in the Clydesdale account was to withdraw most of it the following day and then to move it back into and out of the account on the dates set out in the preceding paragraph.  His explanation to us was that he intended to buy a car but was unsuccessful.  His explanation to the OTC was that if granted a licence he would use it to buy a vehicle.  If either of these explanations was correct the Traffic Commissioner was entitled to conclude that the money would not be available, on an on-going basis, to satisfy the requirement of s. 13D.  In any event the Appellant ignored the advice that he should return with a formal bank statement and, instead, presented another mini-statement. 
14.	One of the grounds of appeal is that the Appellant was never told to keep £3,100 in an account for a period of 28 days.  We cannot agree.  In the first email from the OTC dated 7 March 2012 the Appellant was advised that the type and size of the licence applied for “requires a sum of £3,100 to have been available during the last 28 days”.  In the second email, after his insistence that the OTC specify exactly what they wanted, he was advised that the requirement was “for £3,100 to have been available for the 28 days preceding the application”.  In our view the requirement was made perfectly clear but the Appellant chose to ignore it.  It follows that this ground of appeal fails.
15.	For these reasons the appeal fails and must be dismissed with immediate effect.
16.	By way of postscript we add this.  If the Appellant decides to make a fresh application he would be well-advised to take into account the following points:
(i)	The financial resources put forward to satisfy the requirement of s. 13D must be held in the name of the operator.  Once the Appellant has decided the name of the person, partnership or company which is to apply for an operator’s licence he should open a bank account, in that name, in which the hold the money put forward to meet the requirement of s. 13D.
(ii)	He should keep at least £3,100 in that account for at least 28 days before making the application and he should be prepared to satisfy the Traffic Commissioner that the money is still in the account on the date at which the application is to be determined.  The purpose of this sum is to ensure that any vehicle authorised under the licence will be maintained in a fit and serviceable condition; it is not to enable to Appellant to purchase the vehicle to be authorised under the licence.
(iii)	Evidence that an account in the name of the operator has been in credit for 28 days or more in the sum of at least £3,100 should be by way of a formal bank statement.  Mini-statements are not sufficient because they lack much of the detail of a formal bank statement and it is not always as clear that they are genuine. 

			

His Hon. Michael Brodrick, Judge of the Upper Tribunal, 
Principal Judge for Traffic Commissioner Appeals, President of the Transport Tribunal.
7 January 2013