Neutral Citation Number: [2014] UKUT 0404 (AAC)                       Appeal No: 	T/2014/25
											T/2014/26		
IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
(TRAFFIC COMMISSIONER APPEALS)

ON APPEAL FROM THE DECISION OF NICK DENTON, TRAFFIC COMMISSIONER
for the SOUTH EASTERN & METROPOLITAN TRAFFIC AREA, 
DATED 31 MARCH 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.

Appellants:
H. SIVYER (TRANSPORT) LTD (Operator)

SIMON SIVYER (Transport Manager)

Attendance:
For the Appellants: 	Mr A Kinnier, Counsel.

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

DECISIONS OF THE UPPER TRIBUNAL:

IT IS HEREBY ORDERED that the appeal of H. Sivyer (Transport) Ltd is dismissed. 

The curtailment of vehicle authorisation to 80 vehicles for three calendar months will commence at 00:01 hours on Sunday 26 October 2014.

The appeal of Simon Sivyer is allowed. The finding of loss of professional competence and the order for disqualification are set aside.

Subject matter:	
Tachograph records and drivers’ hours irregularities. Consequences of curtailment. Proportionality. Transport Managers’ Repute and Professional Competence.

Cases referred to:
T/2012/71 Silvertree Transport Ltd

REASONS FOR DECISIONS:

1)	This was an appeal from the decision of the Traffic Commissioner for the South Eastern & Metropolitan Traffic Area made on 31 March 2014 when he:
•	curtailed the operator’s authorisation from 103 vehicles to 80 vehicles for a period of three months, under sections 26(1)(c)(iii) [prohibitions]; 26(1)(ca) [fixed penalty notices] and 26(1)(f) [breach of undertakings] of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”);
•	found that Mr S Sivyer (together with Mr Lynch, another transport manager) had lost his professional competence;
•	disqualified the transport managers from acting as such for a period of three months, during which time it was said that they must undertake a two-day CPC refresher course; and
•	granted the operator a period of grace of one month in which to appoint a new transport manager or managers.

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 is the holder of a standard national goods vehicle operator’s licence authorising 103 vehicles (with 98 vehicles in possession). There are three authorised operating centres and, at the time of the public inquiry, there were two transport managers, Mr S Sivyer and Mr P Lynch.
(ii)	In June 2013 Ms Read, a DVSA traffic examiner, commenced a drivers’ hours investigation into the operator. She requested tachograph records relating to the entire fleet for the period 1/3/2013 to 30/4/2013. When analysing the data received, she noted that the vehicle unit downloads showed drivers in respect of whom driver card data had not been produced. A further request for data was made but the traffic examiner’s analysis showed that the operator provided data for only 50 vehicles altogether - at a time when (later analysis revealed) 77 vehicles had been specified on the licence.
(iii)	Whilst this investigation was going on, a number of the company’s vehicles were stopped at the roadside, and a number of serious driver’s hours and tachograph infringements were detected. These included one driver using another driver’s digital tachograph card, work not being recorded, excessive driving without a valid card, several vehicles driven without a card inserted at all, defective tachograph, and failure to produce tachograph charts and driver card when required to do so.
(iv)	In addition, over a period of about two years, the company had received 16 roadworthiness prohibitions (from 42 encounters) principally due to seriously under-inflated tyres, insecure loads and loose wheel nuts, all of which are safety critical and avoidable.
(v)	Prior to the public inquiry taking place, the operator made written submissions summarising the history of the business, explaining the specialist nature of its current work (meeting the needs of the construction industry and large utility companies) and explaining company policies and procedures in relation to vehicle maintenance, driver training, tachographs, and compliance. It was said on behalf of the operator that the company went through a period of expansion culminating in the recruitment of a second transport manager in April 2013, and a successful application to increase authorisation from 80 vehicles to 103 vehicles which was granted by the Traffic Commissioner in September 2013. It was further said that, by November 2013, concerns regarding tachograph analysis had arisen and by January 2014 Mr Sivyer held a meeting with Mr Lynch as a result of which it was decided that “changes would be made”. Shortly thereafter notice was received from the Traffic Commissioner concerning the public inquiry.
(vi)	The submission addressed the likely commercial implications of any restrictions upon the operator’s licence. The operator undertakes work under contract on behalf of a number of large and prestigious organisations. These contracts require the operator to provide a certain number of vehicles day and night, often six or seven days per week. Without setting out, in this public document, the precise nature of the contracts, the three key contracts referred to, and taken together, appeared to have a minimum peak vehicle requirement of 72 vehicles. This figure does not take account of the need for maintenance and any other reasons why a vehicle may have to be off the road, or non-key contracts.
(vii)	Prior to the public inquiry the operator had also commissioned an analysis by the Freight Transport Association (FTA).
(viii)	The public inquiry took place on 4/3/2014. The Traffic Commissioner heard evidence from Ms Read, DVSA Traffic Examiner; Mr Sivyer (director and transport manager); Mr Lynch; and other company officers. Both the operator and Mr Sivyer were represented by Mr Kinnier, of Counsel.
(ix)	Towards the end of the public inquiry Mr Kinnier asked the Traffic Commissioner if he could give an indication as to what regulatory sanction, in broad terms, he had in mind. The Traffic Commissioner responded:
“I think the answer is that I am probably not going to decide today, because there is a lot of material here and I want to read through my notes of the evidence that has been given. I am very unlikely to content myself just with the undertakings. I will accept the undertakings but I am likely to take some form of regulatory action, the reason being that this is a large operator, according to the general standards of the industry, in a sensitive sector, and for too long it has had a dysfunctional tachograph drivers’ hours oversight system – it basically has not functioned – and we do not know the full extent of the level of non-compliance because the full set of records has not been provided, which again says something in itself.
The little that we do know, from the VOSA and police stops, paints a potentially disturbing picture, which might be mitigated somewhat by the fact that some of this driving may have been accounted for by driving within the site, but again it is impossible to quantify. There have been substantial failings here and I think they have carried on for too long. The operator is now, perhaps, getting on top of that, although this is inconclusive because it has not yet downloaded vehicle units and, therefore, we still do not know what the picture is today.
My thoughts are turning towards that this looks like a classic case of an operator that has grown too fast too quickly, and that the compliance systems have not kept pace with the economic and business growth of the company; so that may point to going back to the situation that the company was in last summer. So substantial curtailment – but I have not finally decided. That is a possibility in my mind …
… I am thinking in terms of a curtailment or a suspension; but at the moment I’m thinking a curtailment might fit the bill better because it would return the operator to position it was in less than four/five months ago, and then I would like to see a period of six months or so of good compliance in drivers’ hours before entertaining, at all favourably, a request for an increase.”
(x)	Mr Kinnier submitted to the Traffic Commissioner that the operator had a previous good record, and had given frank evidence. Without wishing to downplay the tachograph failings, Mr Kinnier argued that this case did not fall at the serious end of the spectrum. The Traffic Commissioner’s attention was drawn to the company’s contractual obligations and it was asserted that if the Traffic Commissioner were to curtail the licence back to its pre-September 2013 levels, the practical effect would be that the company would not be able to discharge its contractual obligations. That would have an immediate and substantial adverse financial impact on the viability and reputation of the company.
(xi)	On 6/3/2014 the operator wrote to the Traffic Commissioner accepting that the FTA tachograph audit still contained a number of recommendations for improvement although it also contained important omissions/inaccuracies. Mr Sivyer said that he would be taking personal responsibility for making the necessary improvements, with the assistance of his compliance monitoring team and the FTA. The Traffic Commissioner also received a printout from Ms Read showing that, in relation to one vehicle, there was evidence that it had travelled 281 km without a drivers card inserted.
(xii)	On 7/3/2014 the operator’s solicitors submitted a further written submission, which addressed the question of sanction. A spreadsheet from the company’s accountants showed that the financial loss caused by a reduction in “trucking capacity” was estimated at £5,800 per truck, per month. It was submitted that curtailment of the licence by, for example, 10 trucks for more than one month would likely result in the redundancies of 10 drivers and the possible redundancy of three support staff. A greater curtailment would likely result in greater redundancies.
(xiii)	The Traffic Commissioner’s written decision is dated 31/3/2014. Having summarised the evidence, the Traffic Commissioner noted that the FTA reports, provided just before the public inquiry, showed analysis of data from driver’s cards only. There appeared to be no data from the vehicle units. All the FTA reports had numerous days for each driver where no data was available, and the days were too numerous to cover weekends or days off. If these days related to days on which the drivers worked solely within the operator’s large site, then (assuming it was taking place during a week when the drivers were also driving under EU rules) this should have been recorded as “other work”.
(xiv)	The Traffic Commissioner found that the operator had failed to fulfil its undertaking to ensure that drivers hours and tachograph rules would be observed. He said, at paragraph 26(i) that:
“The operator has provided tachograph data for only 50 of the 77 vehicles which were on its licence between 1 March and 30 April 2013, which amounts to a failure to produce. It appears to have thought that the data, which it provided, was complete. There is no evidence that the operator has compared driver card data against vehicle unit data to detect instances of driving without a card.”
(xv)	The Traffic Commissioner found that the operator had failed to fulfil its undertaking to keep vehicles in a fit and serviceable condition, had sustained roadworthiness prohibitions, and there had also been fixed penalties imposed.
(xvi)	The Traffic Commissioner found that Mr Sivyer had adopted “an overly relaxed and hands off approach to compliance”. Although Mr Sivyer had concluded that drivers hours oversight needed to be improved, he had failed to get the necessary grip on the issue and had not provided continuous and effective management and control over this important aspect of the transport operation. He should have taken a much closer interest in the rescue plan and should have been more involved in responding to the traffic examiner’s request for tachograph data.
(xvii)	The Traffic Commissioner conducted a balancing exercise and found that, for a considerable period of time, the company had failed to operate a functioning drivers’ hours oversight system. Action to redress the situation was far too slow and was not effective. Data from vehicle units still appeared to be escaping analysis (even at the time of the public inquiry) and, in addition, there were a large number of roadworthiness prohibitions.
(xviii)	At Paragraph 31(ii) of his decision, the Traffic Commissioner said: “the company did not provide the required tachograph data for 50 of its (then) 77 vehicles. This is an astonishing failure for an operator of this size and sophistication, and is a measure of the scale of the gaps in its systems.”
(xix)	On the positive side the Traffic Commissioner noted that the FTA had now been engaged, the FTA analysis of the driver cards showed no infringements of the drivers’ hours rules although, without the vehicle unit data, the picture was incomplete. The FTA had audited the operator but the results were still being debated and were not yet available. The Traffic Commissioner accepted that “at last” the operator seemed to have realised the serious nature of the situation and the transport managers (and other colleagues) had agreed to participate in a two-day transport CPC refresher course (which had taken place by the time of the Traffic Commissioner’s written decision).
(xx)	The Traffic Commissioner went on to say:
“If, in September 2013, I had known when I granted the company’s application for an increase from 80 vehicles to 103, the true state of affairs appertaining to drivers hours, I would have refused the application. In my view, the company’s size (in terms of vehicles) has grown at a faster pace than the ability of its compliance systems to cope. For that reason, I have decided that the company must return, temporarily at least, to the former number of 80 vehicles, to prove to me first that it is capable of properly managing that number. Even at 80 vehicles the company was not, in the first half of 2013, complying properly with the drivers hours requirements. I am more hopeful now that, with the benefit of the FTA’s analysis, affairs will be better managed.”
(xxi)	The Traffic Commissioner considered proportionality and decided that a three month curtailment down to 80 vehicles from 103 (with 98 in possession). He considered that the operator should not have applied to increase the number of authorised vehicles in March 2013 at a time when the company’s oversight of drivers hours was so clearly unsatisfactory. The Traffic Commissioner acknowledged that according to the accountancy information, the loss of profit caused by a three-month curtailment to 80 vehicles could be in six figures and that there could be reputational damage and penalties if non-performance of contracts occurred. However, the Traffic Commissioner considered that tough regulatory action, falling short of revocation, was necessary and a clear marker was needed.
(xxii)	In relation to the transport managers, the Traffic Commissioner decided:
“The degree of detachment of both transport managers from their core duties was so great over such a lengthy period of time, and the duties that they neglected was so pressing, that I have concluded that they have lost their professional competence (paragraph 13 of Schedule 3 to the 1995 act refers). I have not taken away their repute, because I concluded that there was no deliberate intent (on their part at least – I cannot say the same for some of the drivers) to evade the rules.”
(xxiii)	The Traffic Commissioner disqualified both transport managers from acting as such for a period of three months and he allowed a period of grace one month for the operator to apply to add a new transport manager (or managers) to the licence.

3)	At the hearing of this appeal, the Appellants were represented by Mr Kinnier, who submitted a skeleton argument. The outline written submissions were supplemented by oral submissions.  We were very grateful for Mr Kinnier’s assistance.

4)	In relation to the operator, Mr Kinnier’s main point was that, having regard to the long-standing good reputation of both the company and Mr Sivyer personally, the absence of evidence that the operator had “deliberately flouted” its obligations, the absence of suggestion that the business was unsafe, and the steps being taken to achieve effective and consistent compliance - the damage to the business flowing from the regulatory action ordered was disproportionate. Mr Kinnier submitted that: “this is not a case where the company’s failings warranted the risk of its business ending as a result of regulatory action”.

5)	Nr Kinnier also pointed out that, in paragraph 31(ii) of his decision, the Traffic Commissioner had incorrectly stated that the company did not provide the required tachograph data for 50 of its (then) 77 vehicles. In fact, it had provided the data for 50 vehicles and had not provided the data for 27 vehicles.

6)	In relation to his substantive analysis concerning the operator, the tribunal does not consider that the Traffic Commissioner fell into error. This was a bad case. In the second half of 2013 a range of serious drivers hours and tachograph infringements were detected whilst, at much the same time, evidence emerged of missing data that was vital to any proper analysis of drivers’ hours compliance.

7)	The actual infringements illustrate the road safety implications of missing data. The purposes of the drivers’ hours regulations and tachograph requirements include road safety, driver protection and fair competition. This operator, relying as it does in these proceedings upon its long history, good reputation and prestigious contracts should have been an example to others. Instead, for too long, there was a significant and serious failure to manage an aspect of its transport operation that goes to the heart of road and public safety, and fair competition within a highly competitive industry where prestigious contracts are hard fought over. In the circumstances, we do not think that the Traffic Commissioner had any realistic alternative but to take significant regulatory action.

8)	It is clear that the Traffic Commissioner took account of the FTA evidence which, to a degree, was equivocal and incomplete, and also had regard to the company’s contractual obligations and we note that the peak vehicle requirement needed to service the three key contracts identified at section 5 of the operator’s written submission would not be substantially undermined by the limited curtailment ordered in this case.

9)	Whilst recognising that a time-limited inability to operate every truck in possession would involve financial consequences, the fact remains that, for a relatively modest period, this curtailment simply returned the operator to the authorisation it had prior to the increase in September 2013. The Traffic Commissioner said that, had he known the true picture at that time, the increase would not have been granted – which we think is fair comment. Moreover, we think the industry as a whole would be surprised at a submission that an operator would struggle to continue, or make a viable profit, with an authorisation of 80 vehicles - especially whilst a party to a number of profitable contracts and with a curtailment limited to a period of three months.

10)	It is established law that this tribunal will not likely interfere with a Traffic Commissioners’ conclusions as to regulatory action on grounds of disproportionality unless law and reason impel us to do so. In our view, the Traffic Commissioner’s reasoning and conclusions were sensible and struck the right balance. A marker was required in a case such as this, and the holding of prestigious contracts cannot provide a shield against appropriate regulatory action. If anything, the holding of such contracts should make an operator all the more diligent in relation to its monitoring of tachograph/drivers hours compliance and maintenance standards.

11)	We consider that the Traffic Commissioner made an inadvertent error at paragraph 31(ii). We do not think, however, the Traffic Commissioner’s decision was made in the mistaken belief that the operator only provided data for 27 vehicles. At paragraph 3 the Traffic Commissioner correctly states that the operator had provided data “for only 50 vehicles”. And again, at paragraph 26(i), the Traffic Commissioner correctly stated that the operator has provided tachograph data for only 50 of the 77 vehicles that were on its licence between 1 March and 30 April 2013.

12)	At paragraph 31(ii), as it seems to us, the numbers have accidentally become inverted - but, even so, we think the comment made by the Traffic Commissioner is correct. This was, indeed, an astonishing failure for an operator of this size and sophistication. The actual missing data still represented over one third of the vehicles in the operational fleet at the relevant times – a very serious gap in the operator’s systems, and one for which it must take full responsibility.

13)	The appeal in relation to the curtailment to 80 vehicles for a period of three months is therefore dismissed.

14)	In relation to Mr Sivyer, the Traffic Commissioner found that there had been a loss of professional competence but not loss of good repute. Regrettably, we find that the Traffic Commissioner has fallen into error in regarding himself as empowered to find loss of professional competence by a transport manager, following a finding of poor professional performance falling short of loss of good repute.

15)	Regulation (EC) No 1071/2009 of the European Parliament and of the Council provides:

Article 8
Conditions relating to the requirement of professional competence

1.	In order to satisfy the requirement laid down in Article 3(1)(d), the person or persons concerned shall possess knowledge corresponding to the level provided for in Part I of Annex I in the subjects listed therein. That knowledge shall be demonstrated by means of a compulsory written examination which, if a Member State so decides, may be supplemented by an oral examination. Those examinations shall be organised in accordance with Part II of Annex I. To this end, Member States may decide to impose training prior to the examination.

Article 14
Declaration of unfitness of the transport manager
1.   Where a transport manager loses good repute in accordance with Article 6, the competent authority shall declare that transport manager unfit to manage the transport activities of an undertaking.
2.   Unless and until a rehabilitation measure is taken in accordance with the relevant provisions of national law, the certificate of professional competence, referred to in Article 8(8), of the transport manager declared to be unfit, shall no longer be valid in any Member State.

16)	The Goods Vehicles (Licensing of Operators) Act 1995 (as amended) provides:

Schedule 3

13(1) An individual shall be regarded as professionally competent if, and only if—
(a)	he has demonstrated that he possesses the requisite skills by passing a written examination organised by an approved body and is the holder of a certificate to that effect issued by that body; or
(b)	he is the holder of any other certificate of competence, diploma or other qualification recognised for the purposes of this sub-paragraph by the Secretary of State.

Determinations in respect of transport managers

16(1) In proceedings under this Act or the 2009 Regulation for determining whether a person who is a transport manager is of good repute or professionally competent, a traffic commissioner must consider whether a finding that the person was no longer of good repute or (as the case may be) professionally competent would constitute a disproportionate response.

(2) If the commissioner determines that the person is no longer of good repute or (as the case may be) professionally competent, the commissioner must order the person to be disqualified (either indefinitely or for such period as the commissioner thinks fit) from acting as a transport manager.

(3) While a disqualification under sub-paragraph (2) is in force—
(a) the person may not act as transport manager for any road transport undertaking;
(b) a certificate issued to the person under Article 8.8 of the 2009 Regulation (certificate of professional competence) is not valid.

(4) A person in respect of whom an order has been made under sub-paragraph (2) may appeal to the Upper Tribunal against the order.

Transport managers: cancellation or variation of disqualification order

17(1) The traffic commissioner by whom a disqualification order is made under paragraph 16(2) may, subject to sub-paragraph (2), at any time cancel the order or, with the consent of the disqualified person, vary the order.

(2) 	The traffic commissioner by whom a disqualification order is made under paragraph 16(2) may specify measures with which the disqualified person must comply before the order can be cancelled or varied.

(3) Measures specified under sub-paragraph (2) may be varied by the traffic commissioner—
(a)	on the application of the disqualified person, or
(b)	by the traffic commissioner.

(4) Before making a variation under sub-paragraph (3)(b), the traffic commissioner must serve a notice on the disqualified person—
(a)	stating the traffic commissioner’s intention to vary the measures specified under sub-paragraph (2);
(b)	stating that the person is entitled to make representations under sub-paragraph (5) within 28 days beginning with the date on which the notice is served on the person, and
(c)	stating that the person is entitled to request an inquiry as provided in section 35.

(5) Where a person makes representations under this sub-paragraph, the traffic commissioner must consider the representations in deciding whether to vary the measures specified under sub-paragraph (2).

(6) The traffic commissioner must hold an inquiry as provided in section 35 if the disqualified person requests one under sub-paragraph (4)(c).

(7) A notice shall be deemed for the purposes of sub-paragraph (4) to have been served on a person on the date on which it would have been delivered in the ordinary course of post if it was sent by post addressed to the person at the person’s last known address, notwithstanding that the notice was returned as undelivered or was for any other reason not received by the person

17)	In T/2012/71 Silvertree Transport Ltd the tribunal considered some of these provisions:
“In our view the terms of paragraph 16(3)(b) make it clear that a Certificate of Professional Competence is only to be treated as ‘not valid’ while the disqualification is in force.  In other words at the end of the three year period of disqualification Mr Weinstein’s original Certificate of Professional Competence will once again be valid.  Given what appears to be the purpose of section 17(2), namely to put in place a pre-condition before any application to cancel or vary an order for disqualification can be made, it seems to us that once the three year period of disqualification has expired Mr Weinstein will have no obligation to secure a new Certificate of Professional Competence, despite the fact that this is clearly what the Deputy Traffic Commissioner intended and despite the fact that, in our view, it was an appropriate and proportionate requirement.
Our provisional view, (because the point was not fully argued), is that there is a way in which the Deputy Traffic Commissioner could have achieved what we have assumed to be her intention.  She had power to disqualify Mr Weinstein indefinitely.  At first sight that is a draconian power and we can quite understand that the Deputy Traffic Commissioner may have felt that it was a power, which should be used sparingly and only in exceptionally serious cases.  However it is important to remember that the draconian nature of an indefinite disqualification is tempered by the power granted by paragraph 17(1) “at any time”, [subject to sub-paragraph (2)], to “cancel or, with the consent of the disqualified person, vary the order”.”

18)	The cumulative effect of all this is that - if an individual must be regarded as professionally competent if he or she has passed the relevant written examination or is the holder of another recognised qualification etc. - then this is not something that can be ‘lost’ in the same way that repute can be lost.

19)	Although Traffic Commissioners do have the power to find that a person is not or is no longer professionally competent, and can make a direction with the consequence that a person’s CPC is not or is no longer valid (i.e. an order for disqualification) we consider that this is a narrow power having regard to the definitions of professional competence. Moreover, If Parliament had intended Traffic Commissioners to have power to find that a person was not professionally competent (for reasons other than not having passed the examination, or not having an acceptable qualification) whilst, at the same time, retaining good repute, then we think that it would have laid down some criteria for such a finding.

20)	Instead, if a Traffic Commissioner finds that a transport manager has substantially failed in his or her duty to maintain continuous and effective control of an operator’s fleet of vehicles, the appropriate remedy is to consider (and where necessary find) loss of good repute as a transport manager.

21)	Next, where such a finding is made, the Traffic Commissioner must declare that transport manager unfit to manage the transport activities of an undertaking and shall order the person to be disqualified (either indefinitely or for such period as the commissioner thinks fit) from acting as a transport manager.

22)	The consequence of such a disqualification is that the person may not act as transport manager for any road transport undertaking and the person’s certificate of professional competence is not valid for the period of the disqualification.

23)	Next, it would appear that, unless and until a rehabilitation measure is taken, the certificate of professional competence (of the transport manager declared to be unfit) will not be valid in any Member State. An appropriate remedial measure of substance, in many cases, will be to re-sit and pass the relevant CPC written examination.

24)	The statutory power to impose a remedial measure is to be found in Paragraph 17(2) of Schedule 3 to the 1995 Act, and the practical way to enforce such a remedial measure is by way of an indefinite disqualification coupled with the power under Paragraph 17(1) to cancel or vary the disqualification following satisfactory completion of the measure.

25)	 All of the above steps are predicated upon an initial finding of loss of repute as transport manager. In the present case, the Traffic Commissioner explicitly drew back from such a finding. It follows that the finding of loss of professional competence, and the order for disqualification for a period of three months, should not stand. The appeal in this regard is therefore allowed.

Judge Mark Hinchliffe, DCP
10 September 2014