Neutral Citation Number: [2014] UKUT 0405 (AAC)                            Appeal No: T/2014/39

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

ON APPEAL FROM THE DECISION OF NICK JONES, 
TRAFFIC COMMISSIONER for the WEST MIDLANDS TRAFFIC AREA, 
DATED 12 MAY 2014

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:
VIP CONTRACTS LTD

Attendance:
For the Appellant: 	Mr James Backhouse, Solicitor

Appeal heard at: 	Field House, Breams Buildings, London
Date of hearing: 	3 September 2014
Date of decision: 	10 September 2014

DECISION OF THE UPPER TRIBUNAL:

IT IS HEREBY ORDERED that the appeal be allowed.
The finding of loss of repute is set aside.
All other findings and orders stand, as directed by the Traffic Commissioner.

Subject matter:	
Loss of repute. Proportionality.

Cases referred to:
None

REASONS FOR DECISION:

1)	This was an appeal from the decision of the Traffic Commissioner for the West Midlands Traffic Area made on 12 May 2014 when he found that the operator no longer satisfied the requirement under section 17(1)(a) and section 14ZA(2)(b) of the Public Passenger Vehicles Act 1981 (“the Act”) to be of good repute, and no longer satisfied the requirement under section 17(1)(a) and section 14ZA(2)(d) of the Act to be professionally competent. The Traffic Commissioner also made adverse findings under section 17(3) of the Act in relation to breach of statements of fact/intention, breach of undertakings, breach of conditions and the issue of roadworthiness prohibitions. Amongst other things, he suspended the operator’s licence for a period of three months and directed that, on the licence resuming, the authorisation will be for four vehicles only.

2)	The factual background to this appeal appears from the documents, the transcript and the Traffic Commissioner’s decision and is as follows:
(i)	The Appellant (a limited company) was the holder of a standard international public service vehicle operator’s licence authorising the use of 16 vehicles. There is a linked operators licence (Sarbjit Singh Raju t/a VIP Contracts), and the Traffic Commissioner dealt with both together, but there is no appeal from Mr Raju before us.
(ii)	A report from vehicle examiner Mr A Male dated 4/12/2013 in relation to VIP Contracts Ltd (PD0001724) states that, in October 2013, a DVSA maintenance investigation involved the examination of 11 buses. Prohibitable items were found on all of these, 9 of which were immediate. The vehicle examiner said that he had grave concerns over this operator’s ability and willingness to operate roadworthy buses and coaches. The history showed numerous safety-critical prohibitions, including “S” marked prohibitions, indicative of a significant failure in the maintenance systems. The operator had also proved unable to prepare and present a bus in roadworthy condition for prohibition clearance. Additionally, one bus had been presented with the original defects still present. There appeared to be some significant exchange of vehicles, vehicle parts, and documents between the limited company and Mr Raju’s personal business.
(iii)	The vehicle examiner considered that the operator’s transport manager had not had complete and proper control over the maintenance systems. In fact, he considered that those systems had failed to function altogether. Many of the buses and coaches operated had fallen into a state of disrepair and had been cannibalised for parts to keep other buses running. The vehicle examiner considered that, by the time of his investigation, there were insufficient roadworthy buses to meet service requirements.
(iv)	It was noted that some of the roadside encounters had led officials to believe that any bus that was driveable was likely to be pressed into service regardless of whether it had a valid MOT certificate or had been inspected. For example, there was evidence of an unroadworthy bus with no valid MOT certificate being used in service. Because there was no MOT, the operator had swapped registration plates to avoid detection. Amongst other things, reports of “cloning” by swapping plates had triggered this investigation.
(v)	The vehicle examiner concluded that the director of the company had deliberately attempted to impede his investigation and deceive officers. Amongst deceptions were claims that a vehicle was off the road when the ticket machine and tickets showed that it had been in service. On another occasion, the vehicle examiner had been told that one bus could not be brought back to the yard for inspection because it had failed on the road and could not be moved. Subsequently, however, it was established that there had been no such occurrence. The bus was found to have no valid MOT certificate. Claims were also made to the vehicle examiner that MOT certificates and registration documents were at Swansea being processed but this, in all likelihood, was untrue.
(vi)	A public inquiry was called before the Traffic Commissioner. Both the limited company and Sarbjit Singh Raju t/a VIP Contracts were called up. The public inquiry began on 31/3/2014. The operator was represented by Mr Marsh, a transport consultant. After nearly 5 hours, the case was adjourned and resumed on 12/5/2014, when it concluded nearly 6 hours later. The total transcript runs to 253 pages.
(vii)	The transcript of the resumed hearing concludes with a 10 page interchange headed “Decision” although it is more an exchange between the Traffic Commissioner and Mr Marsh, with the company director and unidentified speakers chipping in from time to time. No formal ex tempore decision with reasons was given although, as the exchanges continued, it is possible to identify some decisions, interrupted with further discussion.
(viii)	Having found loss of good repute and loss of professional competence, and having made adverse findings under section 17(3) of the Act, the Traffic Commissioner said:
“The EU regulations that came into law in December 2011 reverse the Bryan Haulage question and after loss of repute/professional competence, I consider proportionality. It is proportional in this case that I allow the limited company to continue.”
(ix)	There is no subsequent written decision. Following receipt of the Notice of Appeal and an application for a stay, a document headed “Record of oral decisions given 12 May 2014” has been issued by the Traffic Commissioner’s office, and we take this to represent a summary of the Traffic Commissioners conclusions.
(x)	Despite finding loss of good repute and loss of professional competence, the Traffic Commissioner held that it would be disproportionate to revoke the licence and, instead, he suspended the operator’s licence “for a period of at least three months from 1 June 2014”. The Traffic Commissioner decided that the suspension would be for longer if there is not a transport manager appointed whom he (the Traffic Commissioner) decided was suitable. The Traffic Commissioner said that he would be prepared to personally see any prospective transport manager and expected that he or she would have a contract to work at least 20 hours per week and be paid at least £15,000 per annum for 20 hours work (or more pro rata) per week. On the licence resuming after the period of suspension, the Traffic Commissioner decided that its authorisation would be reduced to 4 vehicles.
(xi)	Pending appeal, a stay was granted, with Mr Ronald George Brown nominated as transport manager (with the Traffic Commissioner’s approval).
(xii)	In dealing with the question of a stay the tribunal raised the issue of the Traffic Commissioner finding of loss of good repute followed by an order for suspension rather than revocation. The Traffic Commissioner responded:
“I did not consider it proportionate to revoke the limited company licence and refer to my acceptance that there wasn’t inherent dishonesty. The full impact of EU regulation 1071/2009 Article 6(2) and its relationship with existing case law has yet to be fully litigated and it is manifest that I expressed myself badly when referring to it. My reference to a finding of loss of repute was therefore a clear error.”

3)	At the hearing of this appeal, the Appellants were represented by Mr Backhouse.

4)	Mr Backhouse immediately accepted that the Traffic Commissioner had been merciful in the face of a difficult case. During the course of the public inquiry the operator’s principal director had given the Traffic Commissioner an indication that he understood the implications of a suspension for three months and there was an impression that he did not oppose such a step. Generously, Mr Backhouse described the Traffic Commissioner’s approach to reaching conclusions in this case as a “consensual process”.

5)	However, Mr Backhouse said that, in the event, the suspension generated two problems. First, the timing of the suspension as originally ordered impacted upon the operator’s business at its busiest time. Second, had the Traffic Commissioner taken some time to reflect upon his decision, either in Chambers prior to giving an ex tempore decision on the day, or subsequently by way of written decision, he may have been able to identify a more purposive approach. Mr Backhouse tentatively suggested that, possibly, had such an approach been taken, it may be that the Traffic Commissioner’s objectives could have been achieved with a different type of order.

6)	The tribunal put to Mr Backhouse that, on the facts as found (and not seriously disputed), this was manifestly a case for revocation. Mr Backhouse did not disagree and accepted that, had the Traffic Commissioner decided to revoke this licence, such a decision would have been unassailable (subject, of course, to procedural propriety and the giving of cogent reasons).

7)	Consequently, should we decide not to interfere with the suspension, Mr Backhouse merely invited the tribunal to draw the Traffic Commissioner’s attention to the provisions of section 17(5)(b) of the Act, as an application for the suspension to be cancelled or varied might be made.

8)	Article 6(2) of Regulation (EC) No 1071/2009 of the European Parliament and of the Council provides that where the transport manager, or the transport undertaking itself, has in one or more Member States been convicted of a serious criminal offence or incurred a penalty for one of the most serious infringements of Community rules (as set out in Annex IV), the competent authority of the Member State (i.e. in Great Britain, the Traffic Commissioner) shall carry out, in an appropriate and timely manner, a duly completed administrative procedure, which shall determine whether the loss of good repute would constitute a disproportionate response. Any such finding of disproportionality must be duly reasoned and justified. If the Traffic Commissioner finds that the loss of good repute would constitute a disproportionate response, he or she may decide that good repute is unaffected. In such case, the reasons must be recorded in the national register. On the other hand, if the Traffic Commissioner finds that the loss of good repute would not be a disproportionate response, the conviction or penalty will lead to the loss of good repute.

9)	In the present case, so far as we are aware, the Traffic Commissioner did not have evidence of a conviction for a serious criminal offence, or of penalties for one of the most serious infringements. In any event, the Traffic Commissioner did find loss of good repute. It follows that proportionality cannot explain the failure to revoke following such a finding.

10)	Article 13(1) provides that where the Traffic Commissioner establishes that an undertaking runs the risk of no longer fulfilling the requirements laid down in Article 3 (which include good repute and professional competence) it shall notify the undertaking thereof. Where a competent authority establishes that one or more of those requirements is no longer satisfied, it may set a time limit for the undertaking to rectify the situation.

11)	Section 17 of the Act has been amended to incorporate this provision into the Act. Thus, although section 17(1) imposes a mandatory requirement on the Traffic Commissioner to revoke that licence if he finds that the licence holder no longer meets the requirements to be of good repute or to have professional competence, this is subject to Section 17(1A). This provides that, before revoking a standard licence under subsection (1), the Traffic Commissioner may serve on the holder a notice setting a time limit for the holder to rectify the situation. If the holder rectifies the situation within the time limit then the Traffic Commissioner must not revoke the licence.

12)	The Traffic Commissioner does not appear to have issued such a notice, and does not appear to have set a time limit. Moreover, we cannot imagine that the Traffic Commissioner thought that loss of good repute, on these facts, could be rectified by the appointment of a transport manager on suitably generous terms of employment. So, in relation to repute, we do not think that this provision was engaged – although we can see that such a measure could, potentially, rectify the loss of professional competence, and we assume this is what the Traffic Commissioner intended.

13)	In all the circumstances, whilst we consider that a suspension of three months appears to be a surprisingly lenient outcome, we are bound to conclude that, in imposing such a sanction, the Traffic Commissioner could not have found loss of repute – something that he fairly acknowledged in his response when a stay was being considered.

14)	We must therefore set aside the finding of loss of repute, but we do not interfere with the three-month suspension. One month of that suspension has already taken place (before the stay was granted). We direct that the remaining suspension of two months commence at 00:01 hours on Monday 13 October and end at 00:01 hours on Saturday 13 December. Following the period of suspension, Mr Brown will remain the nominated transport manager and the maximum number of vehicles that can be used under the licence at any one time will be limited to four vehicles.

15)	Mr Backhouse asks us to refer to section 17(5)(b) of the Act. This provides that a Traffic Commissioner who has suspended a licence under section 17 may at any time cancel the suspension or, with the consent of the licence holder, may vary the period for which it is suspended. In referring to this provision, we would not wish any inference to be drawn as to the tribunal’s views on the likely outcome of any request that may be made to the Traffic Commissioner for such cancellation or variation.

Judge Mark Hinchliffe, DCP
10 September 2014