Egertons Recovery Group Limited

This is an appeal from the decision of the Traffic Commissioner for the North West of England (“the TC”) dated 29^th July 2021 when he revoked the Appellant’s standard international operator’s licence with immediate effect under s.27(1)(a) of the Goods Vehicles (Licensing of Operators) Act 1995 (“the 1995 Act”).

The background to this appeal can be found in the appeal bundle and is as follows. The Appellant (“Egertons”) is a specialist vehicle recovery operator with depots throughout the UK. The licence with which this appeal is concerned had an operating centre in Manchester with an authorisation of five vehicles and four trailers. Richard Iddon was the nominated transport manager.

On 18^th January 2021, Mr Iddon used the VOL on-line facility to remove his name as transport manager from the licence. His action caused a letter of the same date to be automatically generated in the name of Jan Harney of the Office of the Traffic Commissioner (“OTC”) which was sent for the attention of Mr Iddon. The letter informed Mr Iddon that it had come to the traffic commissioner’s attention that there was no transport manager specified on the licence nor a period of grace in place and that accordingly, the Appellant was no longer professionally competent. The letter went on:

At 17.07 on the same date, Les Brooke, Financial Director for Egertons sent an email to Christopher Tucker of the OTC in the following terms:

By way of a letter dated 5^th March 2021, Egertons was informed that the TC had decided to allow the operator’s licence to remain in force until 16^th May 2021 without a specified replacement transport manager. This was felt to be sufficient time for Egertons to regain its professional competence. The letter continued:

On 17^th May 2021 (a day after the PofG expired), Mr Brooke emailed Mr Stephenson of the OTC requesting an extension of the PofG to 11^th June 2021. The email averred that Nicola Egerton (director), the operator’s “Transport Manager designate”, had only recently had her CPC examination confirmed for 11^th June 2021. In the circumstances, Mr Brooke asked for an extension of time to 11^th June 2021. By a letter dated 25^th May 2021, the directors of Egertons were informed that the TC had decided to allow the licence to remain in force until 16^th July 2021 (the decision was in fact made by DTC Evans). The TC wished to impress upon the operator that:

Nothing further was heard from Egertons and on 26^th July 2021, the TC made the following determination:

The above emailed letter prompted a response on the same day from Steve Rothwell, the Regional Operations Manager of the Mansfield Group which informed the OTC that Egertons was the sister company of DH Mansfield Ltd, both being owned by Egerton Holdings Ltd. The email went on:

The TC refused both requests. He had not seen any evidence that the purported appointment of Mr Rothwell dated 14^th July 2021 had been submitted to the OTC prior to the expiry of the PofG on 16^th July 2021. He referred to the Tribunal decision of 2014/040 & 041 C G Cargo Ltd & Sukhwinder Singh Sandhu in which it was determined that an operator will not meet the requirements of Article 4 of Regulation (EC) No 1071/2009 (“the 2009 Regulation”) unless and until the appointment is approved by the traffic commissioner. He took account of the fact that Egertons had been called to a public inquiry in April 2019 and had been given a formal and final warning at that stage and that the operator had then been called to a further inquiry in January 2020, although no further action had been taken at that stage. It was reasonable to expect that an operator with such a recent history should have been more careful to ensure prompt compliance with warnings from the TC. He was satisfied that the terms of sections 27 and 29 of the 1995 Act had been complied with. The order of revocation was the completion of the process that had started with the removal of Mr Iddon on 16^th January 2021 along with the formal notices contained in the letter of 18^th January 2021.

By a Notice of Appeal dated 10^th August 2021, Egertons appealed the order of revocation. A stay of the order was granted by Judge Hemmingway on 25^th August 2021.

At the hearing of this appeal, Mr Backhouse appeared on behalf of Egertons having previously filed a skeleton argument and a bundle of authorities and legislation for which we were grateful. Mr Backhouse helpfully summarised the grounds of appeal as follows:

The obligation to designate a Transport Manager on an operator’s licence is contained in Articles 3(c) and 4(1) of the 2009 Regulation. Article 3 reads:

have an effective and stable establishment in the United Kingdom;

be of good repute;

have appropriate financial standing; and

have the requisite professional competence.”

Article 4(1) of the Regulation reads: “An undertaking which engages in the occupation of road transport operator shall designate at least one natural person, the transport manager, who satisfies the requirements set out in Article 3(1)(b) and (d) and who:

Mr Backhouse submitted that it was apparent that Article 4 prescribes two steps for an operator to take:

He then turned to s.13A(2) of the 1995 Act which sets out the requirements in domestic legislation about which a TC needs to be satisfied upon an application for a licence. Section 13A(2) reads:

is not prohibited from being so designated by a traffic commissioner, and

Mr Backhouse submitted that it was clear that Parliament’s approach in the Act is in all material respects the same as that prescribed in the Regulation: (1) the designation step, and (2) the administrative (notification) step (although we note that there is no equivalent provision to Article 4(4) in s.13A). Mr Backhouse continued: it is not the case that the TC has any power at all to ‘approve’ or ‘reject’ the notification of that designation. The TC can explore whether the designation in fact complies with the conditions and if it does not then the TC can determine that the operator is not professionally competent.

If, as in this case, the designated person meets the criteria of Article 8 and is not restricted by Article 4(3), (Article 4(3) relating to the appointment of External Transport Managers who are restricted by the number of vehicles/operators licences they can be responsible for), then the TC has no discretion to ‘refuse’ a notification of designation.

Consequentially, the Traffic Commissioner is entitled to examine, where an operator has designated a transport manager, that the designated person meets the regulatory criteria. However, assuming that he or she does meet those criteria, then that operator is professionally competent from the point in time that the person was designated to that role. The question as to whether an operator is professionally competent is purely a question of fact determined retrospectively and is based on evidence as to whether the operator has designated a suitably qualified person who meets the regulatory criteria.

Failure to notify the appointment of a transport manager is a breach of a licence condition and therefore a criminal offence which also gives rise to discretionary action pursuant to section 26 of the Act. However, a failure to notify does not, of itself, determine whether the operator is, professionally competent. If there is evidence of the designation of a suitably qualified person in the role at all material times, the operator remains professionally competent.

Mr Backhouse submitted that the Traffic Commissioner erred in both fact and law in ordering revocation on 26^th July 2021 as Egertons had in fact designated their replacement Transport Manager, Mr Steve Rothwell, on 14^th July 2021, before the expiry of the PofG granted by the TC. The step which Egertons had not taken at the date of the Traffic Commissioner’s determination, was the administrative step of notifying the TC that it had designated Mr Rothwell as transport manager on its licence . No determination was made by the TC whether Mr Rothwell fulfilled the requirements set out above and so it follows, no determination as to whether Egertons fulfilled the professional competence criteria irrespective of the failure of the operator to notify the TC within the PofG. In essence, the TC erred in law in conflating the designation of a transport manger to meet professional competence, with the separate requirement to notify him of that designation.

In addition to the above, Mr Backhouse relied upon the provisions of s.22(2)(a) and (b) of the 1995 Act which reads as follows:

Indeed even if the Traffic Commissioner was entitled to revoke a licence without offering a public inquiry, which is not accepted by Mr Backhouse (see below), on the basis that the mandatory requirement of professional competence was not met, he was not enabled on the facts to do so before the expiry of the notification period of 28 days set out above. This is because until the expiry of that time period, from the last date of the period of grace, the Traffic Commissioner could not rationally make a finding of fact on the balance of probabilities that professional competence, was not being complied with.

The only other way that a decision to revoke could be made at the end of the PofG (without waiting for the 28 day period to expire) would have been to ask if the operator had designated a qualified transport manager). This request of the operator was not made.

Section 27 which reads:

Revocation of standard licences.

the licence-holder no longer satisfies the requirements of section 13A(2), or

the transport manager designated in accordance with Article 4 of the 2009 Regulation no longer satisfies the requirements of section 13A(3).

shall invite the licence-holder to make written representations with respect to those grounds, and

Mr Backhouse submitted that there were four procedural steps to be taken prior to the revocation of a licence:

Section 29 reads:

A traffic commissioner shall not—

make an order under section 26(6) in respect of any vehicle, or

Apart from the letter of 18^th January 2021, the correspondence from the OTC made it clear that the right to a public inquiry was no longer available to Egertons and that revocation was automatic at the end of the period of grace. This approach amounted to an error in law as it was not consistent with any reading of s27(4) or s29 of the Act.

Moreover, the TC erred in law in granting a PofG in March 2021 and then granting an extension in May 2021 when such orders were not part of a s.27(2) notice as required as part of ss.3A (which would have included the mandatory requirements contained in s.27(3)), thereby failing to afford Egertons the right to make further written representations. As a result, the TC in turn failed to consider any written representations prior to the decision to revoke and failed to inform Egertons of its right to a public inquiry which supersedes the s27(3A) PofG. The earlier notice set out in the letter of 18^th March 2021 did not extinguish the TC’s obligation to comply with his obligations under ss.27(2) and (3) notice on any subsequent proposal to revoke, even if the issue giving rise to the proposal to revoke is the same mandatory criteria not being met at that time. Mr Backhouse submitted that this point was important because having decided not to revoke following a response from an operator to the initial notice, the TC restarted the process as if he was considering whether to make a revocation order at some future point. It is likely that the factual basis will have changed and the point of the s.27(2) notice was to give the TC an opportunity to receive an updated position and representations to protect a licence at risk of being revoked.

Mr Backhouse described the TC’s decision to grant a PofG (such decision being conveyed in the letter of 5^th March 2021) as a decision “not to revoke” and at that stage the process under section 27 was concluded. Automatic revocation did not follow upon the expiry of the PofG. In July 2021, when the PofG expired, the TC was again required to comply with s.27(2) and s.29 of 1995 Act. In a case such as this, the TC was required to follow the s.27(2) procedure on three separate occasions in order to revoke a licence which has been allowed to continue by virtue of a PofG.

Had the TC followed the correct procedure, the operator would have been offered an opportunity to make further written representations or request a public inquiry before the TC made the determination he did under s.27(1) on 26^th July 2021. The failure to do so deprived Egertons of the right to a fair trial (Ground 3).

In order to successfully apply for a standard operator’s licence, the operator shall satisfy the four requirements set out in Article 3(1) of the 2009 Regulation and s.13(A)(2) of the 1995 Act and a licence will not be granted unless the TC is so satisfied.

With regard to professional competence, Article 4(1) requires the operator to designate one or more persons as transport manager who satisfy the requirements set out in Article 3(1)(b) and (d) i.e. individuals who are of good repute and of the requisite professional competence and who “effectively and continuously manages the transport activities of the undertaking .. has a genuine link to the undertaking … and is resident in the United Kingdom or a Member State”. In his submissions, Mr Backhouse did not refer to Article 4(2) which sets out the additional matters about which the TC needs to be satisfied with regard to external transport managers. Nor did he refer to Article 4(3). They read:

In addition to the requirement that the TC must be satisfied that a designated transport manager fulfils the requirements of Article 4, Section 13A(3) makes it clear that an operator’s licence will not be granted unless in addition, the TC is satisfied that the transport manager is not designated to act as a transport manager for a greater number of undertakings or in respect of a greater number of vehicles than the TC considers appropriate, having regard to the limits in Article 4.2(c), or some smaller number as the TC considers appropriate.

It is clear that there are considerable matters about which the TC must be satisfied with regard to transport managers before the application to nominate a transport manager will be accepted and no doubt, that is the reason why the form “TM1: Application to add a Transport Manager to a licence” contains 14 sections which require considerable detail about the transport manager which, if answered correctly and if accompanied by the required documentation, will assist a TC in determining whether the transport manager fulfils the requirements of Article 4 and s.13A(3). Moreover, section 14a of the form contains ten declarations that an internal transport manager must sign and eleven declarations that an external transport manager must sign. As for the applicant for a licence or an existing licence holder, the TM1 form contains two declarations that they must sign. It is clear and obvious, that without this form being properly completed and signed, a TC would be unable to be satisfied of all the matters concerning professional competence and the suitability of a designated transport manager, all of which amount to preconditions to a transport manager being accepted by the TC.

The application to add a transport manager to a licence using the TM1 Form is not an administrative step as described by Mr Backhouse. It is a step that is necessary to enable TCs to discharge their regulatory functions so as to be satisfied of all matters referred to above before an application for a licence will be granted and before the TC can be satisfied that an existing operator is/will be professionally competent and has nominated a suitable replacement transport manager. Our determination is supported by the Tribunal case of T/2011/036 LWB Limited (which considered the wording of paragraph 3 of Schedule 3 and s.82(1) of the 1981 Act):

We have also considered the use of the words “designate” and “designated” in the 2009 Regulation and s.13A. It is of note, that the On-Line Edition of the Oxford English Dictionary (March 2022) defines “designate” as:

We reject the proposition that an operator can simply designate a new transport manager and acquire professional competence from that moment without reference to a TC (the something else to be done). Operators will not be professionally competent unless the proposed transport manager is formally nominated and a TC is satisfied of all the required matters whether at the outset when an application for a licence is applied for or when the operator is proposing to replace or add a transport manager or has lost professional competence and is given a period of grace to rectify the position within the period given (see below).

The requirements set out in s.13A are mandatory requirements which must be complied with at all times during the life of a licence and every licence has attached to it, conditions requiring the operator:

Section 27 makes the position clear: if at any time it appears to a TC that a licence holder no longer satisfies the requirements of s.13A(2) or that the transport manager no longer satisfies the requirements of s.13A(3): the TC “shall direct that a standard licence be revoked” (our emphasis). Before such an order can be made, a s.27(2) notice must be sent, stating the grounds upon which the TC is considering an order of revocation and inviting the operator to make representations in respect of those grounds which must be received by the OTC within 21 days of the notice. Moreover, the right of an operator to request a public inquiry when a TC is considering an order of revocation (as enshrined in s.29 of the 1995 Act) is highlighted by s.27(4). The s.27(2) notice in this case, fully complied with the requirements of that section. Furthermore, the operator was notified of the TC’s power to grant a PofG and invited to consider making such a request. It is for the operator to determine within the period allowed whether to request a public inquiry or make representations (including the nomination of a new transport manager) and/or request a PofG. A request for a PofG is an admission on the part of the operator that they no longer satisfy one or more of the statutory requirements.

With regard to the PofG, Article 13.1 clearly envisages a two-step process. The first is that when a TC establishes that an operator “runs the risk” of no longer fulfilling the requirements laid down in Article 3, it shall notify the undertaking thereof. We consider this first step to be the s.27(2) notice. The second step is when a TC “establishes that one or more of the requirements is no longer satisfied” at which point the TC may set a time limit (or PofG) and that will be separately conveyed at a later date to the s.27(2) notice.

It is clear that a finding that an operator no longer meets one of the requirements is necessary before a PofG can be considered and this is how the TC approached the operator’s position in this case as evidenced by the wording of the TC’s letter of 5^th March 2021 and in particular: “.. On your application the traffic commissioner has made a finding that you no longer meet the requirement of professional competence so as to allow you the requested Period of Grace”.

The TCs discretion to grant a PofG is dealt with in an unsatisfactory way by s.27(3A). “Unsatisfactory” because the section states that the s.27(2) notice “may set a time limit”, without reference to any other circumstances in which a PofG could be set and granted. However, by reason of the use of the word “may” in the subsection, we do not accept that a PofG can only be granted in a s.27(2) notice. If that was the intention of Parliament, we would have expected more restrictive language to be used, making clear that a PofG can only be granted in a s.27(2) notice. We are satisfied that Mr Backhouse’s submission, wrongly restricts the terms of the subsection. Moreover, we consider that such a restrictive interpretation (if that was the intention) would represent a misunderstanding on the part of those who drafted the sub-section or represents a misinterpretation of Article 13. The reasons for that determination are:

In rejecting Mr Backhouse’s submission we are further satisfied that to require a second s.27(2) notice would be nonsensical against the background of the regulatory framework. The operator will have already been offered the opportunity to make representations (and in the case of professional competence, to nominate a transport manager), to request a public inquiry and/or a PofG. The granting of a PofG will inevitably have flowed from representations and a request for such an order (which amounts to an admission that a mandatory requirement is no longer satisfied) and in those circumstances, the operator will have satisfied the TC that their discretion should be exercised in favour of a PofG (as occurred in this case). The contents of a s.27(2) notice do not need to be repeated. Quoting the words in paragraph 24 of the Tribunal decision of T/2020/72 Cambridge Removals & Storage Ltd at that stage, “nothing remained to be said” save for granting the PofG and spelling out the consequences of failing to comply with its terms. We are satisfied that the s.27(2) notice and the letter granting a period of grace, when taken together reflect the process set out in Article 13.1 of the 2009 Regulation and constitute compliance with s.27(3A). The letter notifying the decision to grant a PofG is not required to be in the form of a second s.27(2) notice. Neither is there a requirement to repeat the offer of a public inquiry. The first offer in the s.27(2) letter complies with s.27(4) and s.29.

We reject Mr Backhouse’s submission that the granting of a PofG amounts to a decision “not to revoke” a licence which entitles an operator to a further s.27(2) notice rather than automatic revocation. At the stage of granting the PofG, the finding of loss of professional competence will have already been made and unless a PofG is granted and complied with, the licence will be revoked. A period of grace is a regulatory dispensation to avoid what would otherwise amount to the inevitable i.e. an order of revocation. When a PofG is granted, it will be for the operator to ensure that they comply with the terms of the PofG by providing the TC with the information required to ensure that the TC is in a position to determine whether the operator is compliant by the end of the period.

Mr Backhouse’s submission ignores the wording of Article 13.3 of the 2009 Regulation which reads as follows:

It follows from the above, that we reject Mr Backhouse’s submission that s.22 applies to the steps taken to rectify the position with regard to mandatory matters during a PofG. The relevant material change was that which triggered the s.27(2) letter (in this case, the resignation of Mr Iddon as transport manager). That material change was addressed by Egertons in acknowledging the loss of professional competence and the request and grant of a PofG, a regulatory dispensation. The failure to comply with the terms of that regulatory dispensation meant that an order of revocation was mandatory. Section 22 can play no part in the process laid down by Article 13 and s.27 and cannot be relied upon to extend the period during which an operator must rectify the position to avoid losing their licence. To argue otherwise, is an attempt to circumvent the clear process set out in the regulatory and statutory regime.

The failure of Egertons to apply to the Traffic Commissioner to appoint a transport manager who fulfilled all of the requirements set out in paragraphs 41 to 43 above, within the PofG, meant that revocation was inevitable. It follows that all grounds of appeal are rejected as we are not satisfied that there was any procedural unfairness in this case or that the TC’s decision was plainly wrong in any respect and neither the facts nor the law applicable in this case should impel the Tribunal to allow this appeal as per the test in Bradley Fold Travel & Peter Wright v Secretary of State for Transport (2010) EWCA Civ.695. The appeal is dismissed.

Mr Backhouse sought to rely upon an additional ground concerning the interpretation of Article 13(3) of the 2009 Regulation. He submitted that the wording of the Article must be read directly into domestic legislation and accordingly, s.27 must be read so as to include a power to suspend a licence in the alternative to the power of revocation. He argued that having failed to read the section in that way, the TC had deprived Egertons of the opportunity of having its operator’s licence suspended rather than revoked.

The above ground was not raised by Mr Backhouse in the request made to the TC to review his decision. Neither did it form a ground of appeal nor did it find its way into Mr Backhouse’s skeleton argument, not even in passing. There was no application for the grounds of appeal to be amended either before the hearing or at the outset of it and Article 13 was not even included in the authorities and statute bundle provided by Mr Backhouse. The Tribunal has repeatedly stated that any new grounds of appeal which a representative of an operator wishes to raise during the course of an appeal hearing must be the subject of an application in advance of the hearing or at the very least, at the outset of the hearing (although that approach is to be discouraged). In raising additional grounds of appeal without the appropriate notice being given, an Appellant denies the Tribunal the opportunity to consider the grounds to determine whether permission should be granted and if necessary to make appropriate case management directions which may include an invitation to the Secretary of State for Transport to apply to be a party to assist the Tribunal on the issue raised. The failure to make an application to amend the grounds of appeal in this case so as to include the above argument is a serious one as it questions the manner in which Article 13 has been drawn down into the 1995 Act for which there may be a good explanation. In all the circumstances, we are satisfied that the Appellant should not be permitted to rely on the additional ground.

If this matter were to be raised again, the assistance of the Secretary of State would be required. Our preliminary view is that the legislature was entitled to determine how to implement Article 13(3) as it is within the margins of appreciation which include a discretion as to whether the legislature adopt either or both suspension and revocation as the result of a TC finding that an operator no longer satisfies one or more of the mandatory requirements. Of course, the power to suspend a licence following a finding at a public inquiry that there had been a material change under s.26(1)(h) is open to a TC if an operator requests a public inquiry.