[2024] UKUT 226 (AAC)

The DTC accepted at the outset that the arrangement between the Appellant and Forth & Clyde Logistics was a genuine sub-contracting arrangement and determined that there was no issue of fronting in that regard. The issue to be determined was therefore the nature of the business relationship between Mr Bett and Mr Strachan.

The DTC firstly considered the issue of who was the “user” of the vehicles. Mr Bett’s written statement suggested that he sourced work through his contacts and then sub-contracted that work out but this was contradicted by the evidence of the Appellant, who attended the PI, and who stated that he provided the work contracts for Mr Bett. The DTC preferred the “straightforward” evidence of the Appellant on this issue. The Appellant had accepted that he paid the drivers and financed the fuel and maintenance of the vehicles. The DTC concluded that the Appellant was the “user” of the vehicles on Mr Bett’s licence and was therefore using the vehicles (his vehicles) unlawfully, contrary to s.2 of the Act, as he was not the authorised “user” under the terms of the operator’s licence. The DTC was unclear as to what part Mr Bett had to play in the arrangement at all. The finding that the Appellant was unlawfully using the vehicles on Mr Bett’s licence thereby meant that the Appellant was using more vehicles than he was authorised to under his own licence, in contravention of s.6 of the Act.

The DTC concluded that the Appellant had been using the vehicles unlawfully for over three years. This was based on an inference drawn from the DVSA evidence, that the vehicles must have been used before and after the key dates (outlined at paragraph 19 above), from around 2018 when the Appellant’s licence was originally curtailed, until 2021 when the roadside encounter took place.

Moving to the nature of the arrangement, the DTC accepted that:

“…there was nothing to prevent [the Appellant] from entering into subcontracting arrangements to carry out work that he could not do because he did not have enough authorised vehicles providing it was a genuine subcontracting arrangement. [The Appellant] could have leased vehicles to Mr Bett and then subcontracted work to Mr Bett. I accept that the arrangement with Forth and Clyde Logistics was a genuine subcontracting arrangement”

[paragraph 46 of the DTC’s written decision]

The DTC compared the relevant dates. The Appellant’s PI, following which his licence was curtailed, took place on 21 August 2018. This decision was appealed by the Appellant, and he was granted a stay of the curtailment decision. On 12 September 2018, Mr Bett obtained an operator’s licence, but he did not specify any vehicles on the licence at this point. On 12 September 2019 (one year later), the Appellant’s appeal was dismissed by the Upper Tribunal, who determined that the curtailment of his operator’s licence would run from 24 October 2019. Just ten days before the curtailment took effect, Mr Bett specified the vehicles for his licence, and they were all registered to the Appellant’s haulage business.

The DTC concluded that these dates were not a coincidence. He believed that there was no genuine desire on the part of Mr Bett to start a haulage business but rather, he applied for a licence with a view to helping the Appellant get beyond the problems created by the curtailment of the Appellant’s operator’s licence. He reasoned that although the intention to set up a sub-contracting arrangement may have initially been a genuine one, the Appellant knew that the intention had not materialised; he was paying for drivers wages, maintenance, fuel etc, yet no money was moving into or out of Mr Bett’s hands. The DTC did not believe the Appellant’s account that he was paying for Mr Bett’s maintenance, wages etc to help set Mr Bett up in business. He concluded that this arrangement was a deliberate attempt to circumvent the regulations, by Mr Bett obtaining a licence, and then lending discs to the Appellant so that the Appellant could operate more vehicles than he was authorised to under his own licence.

“42…The fact remains that Mr Strachan was the “user” of the vehicles on Mr Bett’s licence, not Mr Bett.

43.

The difficulty for Mr Strachan is that was not authorised to use these vehicles under s.2(1) – Mr Bett was. The difficulty for Mr Bett was that he was not using these vehicles – Mr Strachan was. I am satisfied that Mr Bett lent his operator discs to Mr Strachan so that Mr Strachan could use more vehicles than he was authorised to. On any view of the evidence Mr Strachan was using vehicles in excess of the maximum number on his operator’s licence in contravention of s.6 of the Goods Vehicles (Licensing of Operators) Act 1995.”

[paragraphs 42 and 43 of the DTC’s decision]

These findings brought the Appellant’s repute, both as an operator and as a transport manager, into question. The Appellant’s solicitor submitted, at the PI, that his repute was not affected as this was a genuine sub-contracting arrangement that had gone wrong through no fault of the Appellant’s. In light of the DTC’s findings and conclusion that this was a deliberate, unlawful attempt to circumvent the curtailment of the Appellant’s operator’s licence, he determined that the Appellant had lost his good repute as an operator and therefore also as a transport manager. The DTC made the orders set out in paragraph 1 above.