[2024] UKUT 226 (AAC)

With the findings of unlawful use of vehicles and use in excess of authorisation having been made, the DTC moved to consider the disposal of the case. Section 26 of the Act provides that a traffic commissioner may direct that an operator’s licence be revoked, suspended or curtailed on any of the grounds listed within s.26(1). Section 27 provides specific grounds under which an operator’s licence can be revoked: if the licence holder no longer satisfies one of the requirements to hold a licence under s.13A of the Act (s.27(1)(a)); and/or if the designated transport manager no longer satisfies one of the requirements to act as transport manager, as set out in paragraph 14A(1) and (2), or (1) and (3) of Schedule 3 to the Act. A traffic commissioner must give written notice to an operator that he is considering a direction to revoke the operator’s licence (s.27(2)), and must state the grounds under which he is considering such a direction (s.27(3)). He must invite written representations regarding revocation from the operator (s.27(3)(a)) which must, unless expressly provided for otherwise, be received within 21 days of the date of notice (s.27(3)(b)).

The power to revoke an operator’s licence should be exercised so as “to achieve the objectives of the system” depending on the seriousness of the case before the traffic commissioner, rather than as punishment for regulatory infringements (Thomas Muir Haulage Ltd v Secretary of State 1998 SLT 666). It is therefore a matter of fact and degree for the DTC to determine according to the facts of the case before him. The decision to revoke a licence first requires consideration of the question, “Is the conduct such that the operator ought to be put out of business?” (Bryan Haulage (No.2) (T2002/217)). A preliminary question to this is “How likely is it that this operator will, in the future, operate in compliance with the operator’s licensing regime?” (2009/225 Priority Freight Ltd & Paul Williams). The less likely an operator is considered to be to comply with the regulations in the future, the more likely a revocation (and disqualification) are to follow. If a traffic commissioner answers these questions appropriately, then he need not explain why another option was unavailable, as revocation may be inevitable from that reasoning (2016/046 R & M Vehicles Ltd, Graham Holgate and Michael Holgate).

In the present case, the DTC revoked the Appellant’s licence due to a number of consequential adverse findings: that the Appellant had breached the licence condition not to transfer a licence between operators (s.26(1)(b)); that the operator was no longer of good repute, due to the unlawful and use of vehicles in excess of authorisation (s.27(1)(a)); and that the transport manager (also the Appellant) was no longer of good repute, for knowingly allowing the unlawful use and use in excess of authorisation to persist (s.27(1)(b)). The notice requirements within s.27 were met within the call up letter dated 26 January 2023. Written representations and evidence in support of the Appellant’s case, was provided prior to the PI, by way of a document and enclosures prepared by the Appellant’s solicitor, Mr Dunbar, and sent by email dated 26 February 2023. This document included representations on the possible disposals in the case.

The DTC, in his decision, explained how his findings relating to the unlawful use of the vehicles on Mr Bett’s licence lead to a determination that the Appellant’s repute both as operator and as transport manager was lost. The Appellant did not take issue with these findings, or that he had breached a condition of his licence. It was submitted that the DTC was plainly wrong to revoke the licence, as he had focussed on circumvention of a licence curtailment as being unlawful when this is not necessarily the case. Had he not done so, he would have realised that revocation of the licence was not the inevitable outcome in this case (see paragraphs 31 and 32 above).

It was agreed by all parties, including the DTC, that sub-contracting is a lawful circumvention of a curtailment on an operator’s licence, however, the DTC did not accept the Appellant’s evidence that he had genuinely intended a subcontracting arrangement with Mr Bett from the outset. This was based on the facts of the case, as found by the DTC, coupled with the coincidence of key dates:

“I do not accept that Mr Strachan had a genuine intention to subcontract work to Mr Bett. Mr Bett’s licence was granted on 5 December 2018 shortly after Mr Strachan was at his first PI on 21 August 2018. No vehicles were specified on Mr Bett’s licence until 14 October 2-019. I do not accept that it is a coincidence that shortly after Mr Stachan learned that his appeal against the curtailment of his licence on or about 12 September 2019 and that his licence would be severely curtailed to 3 vehicles and 4 trailers from 24 October 2019, vehicles owned by Mr Strachan were specified on Mr Bett’s licence.”

[paragraph 49 of the DTC’s decision]

We find that, on the basis of the evidence before him, the DTC was entitled to find that the Appellant did not have the intention to create a lawful sub-contracting arrangement from the outset. Regardless of whether it was intended from the outset, we find that once the arrangement started to operate outside any intended parameters, and the Appellant knew this to be the case, then compliance with the regulatory system was at risk regardless. The DTC considered this alternative (see paragraph 47 of his decision) which indicates that he was not swayed by whether the arrangement was intended from the start or not. We therefore dismiss ground (ii) as submitted by the Appellant’s skeleton argument, for the reasons above. We note that the DTC did not make a finding that the Appellant owned “Streamlink” before Mr Bett had obtained his licence, so the second element of ground (ii) is not made out either.

The DTC applied the tests in Priority Freight and Bryan Haulage in making his decision to revoke the Appellant’s licence as a result of these findings. The compliance history of the Appellant featured in this aspect of his decision. He weighed the positives against the negatives, finding that the negatives outweighed the positives in favour of revocation. Notably, in weighing the positives and negatives, he referred to the submissions of Mr Dunbar therefore it cannot be said that the Appellant was not given the opportunity to make representations with regard to the outcome of the PI, or that those representations were not considered. The aspect of ground (iv), relating to the making of representations about the disposal in the case, is therefore dismissed.

The DTC also considered what other compliant operators may think and reasoned that they may be tempted not to bother complying with the regulations if they found out that the Appellant had not been complying. The DTC considered the effect of revocation on the Appellant and found that revocation was not a disproportionate response in the circumstances of this case; the Appellant had said to the DTC that he intended to retire after the PI. The DTC further determined that the Appellant had been unlawfully using the vehicles on Mr Bett’s licence for over three years, on inferences drawn from the proximity of the key dates(see paragraph 19 above). Traffic Commissioners are entitled to draw inferences from primary facts in this manner (see 2016/026 J Campbell t/a Vision Travel) and no criticism can be made of the inferences drawn in this case. The length of the unlawful conduct added further seriousness to the case and was an additional factor taken into account by the DTC in making his decision to revoke the Appellant’s licence.

The DTC made a finding that the Appellant had gained a commercial advantage from operating more vehicles than he should have and that he had broken the relationship of trust which lies at the heart of the licencing system, both factors which added to the decision to revoke his licence (see paragraph 56 of the DTC’s decision). It was submitted that the DTC was plainly wrong to find that the Appellant had gained any commercial advantage in this arrangement. This submission is not made out. Every useable vehicle within a haulage business has the capability of adding revenue to the business. The Appellant was using more vehicles than he was authorised to in an unlawful manner. That brings a commercial advantage, regardless of whether more revenue is actually generated. Furthermore, operating in a manner that is not compliant with the regulations also brings a commercial advantage over those operators who do comply. Ground (i) is therefore dismissed.

We find that the DTC, in deciding to revoke the Appellant’s licence, properly applied the correct legal tests and weighed the positives and negatives in the case. We find, given the facts found coupled with the Appellant’s poor compliance history, particularly with repeated failings both in relation to using more vehicles than authorised and in relation to maintenance of vehicles, that the DTC was entitled to reach the conclusion that he did, and his reasons explained why this was the case.. Revocation of an operator’s licence is not disproportionate where, in the absence of any objective justification, there have been long term, sustained, repetitive deficiencies (2009/410 Warstone Motors t/a The Green Bus Service). We do not find that any negative connotation of circumventing the licence curtailment swayed his decision. The facts speak for themselves and as was the position in  2016/046 R & M Vehicles Ltd, Graham Holgate and Michael Holgate, his conclusions in relation to the Priority Freight and Bryan Haulage questions explain why no other disposal option was suitable in this case. This was not the first or second PI, but the third. The Appellant had been subject to other options previously but had found himself at a third PI for similar allegations as the first, and had been curtailed following the second. For the reasons above, we dismiss ground (iii) as raised by Mr Backhouse in his skeleton argument.