Neutral Citation Number [2010] UKUT 337 (AAC)
Appeal No. T/2010/35
IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
Miles Dorrington Deputy Traffic Commissioner for the 
South Eastern and Metropolitan Traffic Area Dated 15 April 2010

Before:
Hugh Carlisle QC	Judge of the Upper Tribunal
Leslie Milliken		Member of the Upper Tribunal
Stuart James		Member of the Upper Tribunal

Appellants:
STEVEN ALAN CURTIS
T/a S & A CURTIS TRANSPORT
and
ALAN FREDERICK CURTIS

Attendances:
For the Appellants: Tim Nesbitt, counsel, instructed by Jeremy Fear and Co, solicitors for the Appellants

Heard at:	Victory House. 30-34 Kingsway, London, WC2B 6EX
Date of hearing:	12 August 2010
Date of decision:	1 September 2010

DECISION OF THE UPPER TRIBUNAL

IT IS HEREBY ORDERED that the appeal be DISMISSED and that the orders of revocation, disqualification and loss of repute take effect at 2359 hours on 1 October 2010.

SUBJECT MATTER:		Loss of repute

CASES REFERRED TO:	2007/459 KDL European Limited

REASONS FOR DECISION

1.	This was an appeal from the decision of the Deputy Traffic Commissioner for the South Eastern and Metropolitan Traffic Area on 15 April 2010 when he revoked the First Appellant’s licence under s.27(1)(a) (repute) and ss.26(1)(b), (c)(iii), (f) and (h) (breach of conditions, prohibitions, breach of undertakings and material change) of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”) and disqualified him for three years under s.28 of the Act.  The Second Appellant was also found to have lost his repute under the provisions of Schedule 3 of the Act. 

2.	The factual background appears from the documents and the transcript of the public inquiry and is as follows:
(i)	Since 1993 the First Appellant (“the Operator”) has been the holder of a standard national goods vehicle operator’s licence authorising six vehicles, with three vehicles in possession.  The Operator was engaged in the delivery of concrete and has a long-term contract with Hanson.  
(ii)	On 17 January 2006 a prohibition notice was issued to one of the Operator’s vehicles by reason of a defective service brake.
(iii)	On 23 September 2009 a vehicle examiner, Mr Zinzan, made an unannounced visit to the Operator’s premises at Tunbridge Wells, Kent.  All three of the Operator’s vehicles were inspected and each was found to be in a less than satisfactory condition.  The first had a steered tyre below the legal limit in patches round the circumference and had another tyre with a deep cut with damaged body cords in the tread area: this vehicle was issued with an immediate prohibition.  The second vehicle had a side-guard damaged with jagged edges and was also issued with an immediate prohibition, with an inspection notice being issued for advisory defects.  The third vehicle was issued with an advisory notice in respect of three advisory defects.  
(iv)	Mr Zinzan started a maintenance investigation.  Records were not available on site and the Operator asked for time in which to produce these.  When Mr Zinzan returned on 2 October he was accompanied by a traffic examiner, Mr Lakeland, who carried out a check on in particular tachograph charts.  It was found that although the three vehicles had been specified on the Operator’s licence for 15 months the maintenance records only related back to January 2009.  The Operator said that no older records were available.  The detail of the records produced was found to contain numerous discrepancies relating to recorded mileage.  When asked about them the Operator explained that the originals had been destroyed and that “he had tried to recreate them the night before” the second VOSA visit.  He was unable to produce any other evidence of the checks having been carried out and stated that this was unlikely as he received no invoices from his fitter.  
(v)	The investigation also revealed that the annual MOT test initial pass rate was 35% (corrected to 39% at the public inquiry) whereas the equivalent national average rate was 68%.  Mr Zinzan stated that he regarded the condition of vehicles at their first MOT visit as being indicative of how they are maintained throughout the year: put the other way, “if the operator cannot get his vehicles to the required minimum standard for a pre-booked inspection once a year it raises doubts as to whether they would meet this standard throughout the rest of the year”.  It was also noted that inspection records had not been signed to declare that vehicles were roadworthy.  The maintenance contractors as named to the Traffic Commissioner had no contract on file: the Operator said that he was using two other contractors but again there were no contracts available.  The maintenance sheets provided did not show who had carried out the work and the Operator was unable to produce any invoices to show who had done so.  The declared maintenance provider was a mobile fitter but it was not known what level of equipment was provided or what he possessed by way of qualifications or experience: there were no facilities for inspection on the site other than hard standing.  
(vi)	Although there was a written drivers’ defects’ reporting system in place none of the defects was endorsed as repaired.  Some of these did match up to diary entries but there were no supporting invoices.  There was no forward planning system in place.
(vii)	Mr Zinzan’s conclusion was that the Operator was not complying with the maintenance undertakings made at the time of applying for his licence.  In addition to the prohibition notices, the MOT test history and lack of maintenance invoices gave cause for concern; and the record-keeping itself was unsatisfactory, with fabrication being admitted.  These failings were summarised in a letter sent to the Operator on 15 October 2009.  On 26 October 2009 the Operator replied that he had already carried out many improvements.
(viii)	As a result of Mr Lakeland’s investigation a prohibition notice was issued in respect of a defective tachograph.
(ix)	Both Appellants were called-up to a public inquiry which took place on 15 March 2010 before the Deputy Traffic Commissioner.  Prior to the hearing the Appellants’ solicitors had sent in written submissions and evidence of financial standing: this issue was dealt with in camera at the start of the hearing and was resolved in the Operator’s favour.  The solicitors’ submissions explain that the Operator runs a family business with his father as transport manager.  The steps taken by the Operator since the investigation were set out, with responses given to the points raised in the call-up letter.  It was stated that the Operator had separated from his wife and had had to leave the matrimonial home: his wife had thrown out his possessions, including the maintenance records.  Since that time husband and wife had become reconciled.  The submissions also referred to the position of the Second Appellant as transport manager and it was accepted that he had not spent sufficient time on his duties.  However, changes had been implemented.  A report from the Freight Transport Association was submitted, with other documents.  
(x)	At the hearing the Appellants were both represented by counsel, Mr Ghulan Hussain.  Mr Zinzan gave evidence as per his report.  In answer to Mr Hussain he said that the Operator had been co-operative throughout.  The Operator had admitted the fabrication of the records after the errors had been pointed out to him; but this admission had followed a half-hearted denial.  The Deputy Traffic Commissioner asked in detail about the failings in maintenance.
(xi)	The Operator then gave evidence and adopted the submissions sent in by his solicitors.  In answer to Mr Hussain he said that he had not yet signed up with the FTA as stated in the submissions, and this was corrected.  He told the Deputy Traffic Commissioner about the improvements which were being carried out.  He was asked why he did not have records to support maintenance inspections and he said that this was because “they were done cash in hand”.  He had been told by the FTA that this was “not the way forward”.  The duties of the Second Appellant were reviewed and the Operator said that he was intending himself to obtain a CPC; he had paid for the course “yesterday”.
(xii)	In answer to the Deputy Traffic Commissioner the Operator said that he did not know the undertakings which he had given when he had obtained his licence.  He accepted that he had not informed the Traffic Commissioner of changes in his maintenance and safety inspection arrangements.  He also accepted that he had failed to keep his vehicles in a fit and serviceable condition.  If Mr Zinzan had not visited, he agreed that he would have carried on as before.  He had not possessed many inspection records since January 2009 and accepted that when he had made up the documents he was not recreating something which had previously existed but that he was starting from nothing.  As the Deputy Traffic Commissioner said, “they were a truly falsified document, because they couldn’t be recreating something that never existed”.  He had never monitored his MOT test first time pass rate.  He said that the maintenance had been carried out by a mobile fitter who came to the operating centre.  This work was done cash in hand because this made it cheaper.  The inspections were not always carried out at the stated six-weekly intervals.  He did not have any receipts for the cash payments made and these were not going through his books.  He accepted that this was “dishonest conduct” and that it gave him ”a commercial advantage” over those who did the work properly and put it through their books.
(xiii)	The Second Appellant gave evidence.  He had been in the transport business for 45 years or so.  He had gone on a refresher course for operator’s licence awareness the previous Thursday.  The FTA had advised him to do this in order for him to be reminded of his duties as a transport manager.  He had not got round to checking the maintenance records because of the problems between his son and daughter-in-law.  He accepted that he had previously left too much to the Operator.  He was determined now to get things run properly.  He had known of the cash-in-hand payments but had not told his son not to do this.  
(xiv)	Mr Zinzan was recalled and the Deputy Traffic Commissioner asked him about the improvements which the Operator had submitted were being made.  Mr Zinzan answered that if every proposal were carried out it would be a “much more satisfactory picture …..  But at this present time I haven’t got any evidence to sort of show that it’s working”.
(xv)	Mr Hussain then made submissions.  He reviewed the evidence and said that “the realisation has come, albeit late in the day”.  He submitted that the Appellants should be trusted and that the licence should be permitted to continue.
(xvi)	The Deputy Traffic Commissioner reserved his decision and gave this in writing on 15 April 2010.  After setting out the background and the issues he reviewed the evidence and the submissions made by Mr Hussain.  The Deputy Traffic Commissioner then made his findings.  First, he found that the Operator had deliberately falsified maintenance inspection records with a deliberate intent to mislead the vehicle examiner.  Second, that the Operator had behaved dishonestly in the way he paid for his maintenance.  Third, that the payments made cash-in-hand gave a commercial advantage.  Fourth, that he had failed to inform the Traffic Commissioner about changes in his maintenance provider.  The Deputy Traffic Commissioner also found that the Operator had failed to comply with the undertakings in his licence and that the condition of the vehicles at the time of Mr Zinzan’s visit were a true reflection of the roadworthiness of his vehicles.  There was some evidence of improvements but much was still to be done: essentially it was a case of too little, too late.
(xvii)	In the result the Deputy Traffic Commissioner concluded that this was a bad case and that the Operator deserved to be put out of business.  He found that the Operator had lost his repute.  In addition, he made orders for revocation under s.26 of the Act as set out in paragraph 1 above.  
(xviii)	The Deputy Traffic Commissioner considered the position of the Second Appellant as transport manager and found that he had made no protest over the cash-in-hand payments and that he knew that no proper maintenance records were being kept.  The Second Appellant had failed properly to carry out his duties and the Deputy Traffic Commissioner concluded that he also had lost his repute.
(xix)	Lastly, the Deputy Traffic Commissioner ordered that the Operator be disqualified for three years.  

3.	On the hearing of the appeal Mr Nesbitt appeared for the Appellants.  He provided us with a skeleton argument for which we are grateful.  His submissions were, first, that the cash-in-hand payments issue had not been raised in the call-up letter and that the Deputy Traffic Commissioner had placed too much importance on the finding of dishonest conduct.  Second, that the Deputy Traffic Commissioner had not carried out a proper balancing exercise and had not taken the improvements into account.  Third, that for the same reasons the disqualification should be set aside.  Fourth, in respect of the Second Appellant, Mr Nesbitt submitted that the issues had not been properly ventilated and that loss of repute was not made out.

4.	We say at the beginning that we do not accept Mr Nesbitt’s submissions.  Because we did not receive his skeleton argument until the morning of the hearing we reserved our decision and have since reread the papers.  We do not accept that the cash-in-hand payments issue only arose at the hearing and that there was procedural unfairness in continuing without an adjournment.  In fact, the unsatisfactory lack of invoices and of detail about maintenance was set out clearly in Mr Zinzan’s report.  Only the Operator (and in fact the transport manager) knew of the method of payment and it was indeed the Operator who mentioned this at the hearing, as an explanation for the absence of invoices.  The Operator must have realised that this was a topic which would be investigated at the hearing.  It was suggested that Mr Hussain should have sought an adjournment but we do not agree.  We think that he realised, as is often the case in such circumstances, that no good would come of an adjournment and that he hoped to ride out the storm.

5.	Nor do we think that the Deputy Traffic Commissioner misdirected himself about the cash-in-hand payments.  The Operator himself admitted that they were dishonest and that they gave him a commercial advantage and we think that both admissions were properly made.  The phrase “cash-in-hand” is used to cover circumstances where the giver of the money knows that the recipient is avoiding paying tax on it, with the payment being made to get work done on the cheap, at the expense of the taxman and the public at large.  Despite Mr Nesbitt’s attempts to persuade us to the contrary, we think that this conduct is dishonest, as the Operator himself admitted.

6.	Mr Nesbitt submitted that the balancing exercise had not taken the improvements into account.  We have to say that this submission fails to heed the very poor maintenance history.  The Deputy Traffic Commissioner would have needed positive evidence of improvements before he could be satisfied that the Appellants really had turned over a new leaf.  We think that the transcript shows that the Deputy Traffic Commissioner carried out a thorough investigation into the improvements made and that these were lacking.  

7.	The same arguments apply to the submissions concerning disqualification and the Second Appellant.  As the Deputy Traffic Commissioner said, this was a bad case.  We agree.  At the end of his submission Mr Nesbitt concluded that if we were with him in any respect we could always substitute our own order.  We are certainly so empowered and have to say that we would have come to the same overall conclusions as the Deputy Traffic Commissioner.  We are reminded of the case of 2007/459 KDL European Limited in which Mr Nesbitt appeared: it was there accepted that deterrence has its place in the achievement of the purposes of the legislation.  We hope that this case will be noted by other operators and that it will have the effect of concentrating their minds.

8.	The appeal is dismissed and the orders will take effect at 2359 hours on 1 October 2010. 

Hugh Carlisle QC
Judge of the Upper Tribunal
1 September 2010