Transport Regulation Unit v RJ Rutledge Ltd

Background

On 2 July 2021 the Appellant made an application for a restricted goods vehicle operator’s licence. The application sought authorisation for three vehicles and three trailers and was made as a result of a change of legal entity.

As the application was not yet out of its objection period the operator requested interim authority. On 30 July 2021 the Deputy Head of TRU granted that application for interim authority, noting that, as a consequence of a very low first time pass rate (being 25%), further consideration would need to be given to the application for the full licence. A request was made for the Driver Vehicle Agency (DVA) to conduct a Compliance Audit and provide a report to the TRU for its consideration. The request was made on 13 August 2021 but DVA advised that the audit would unlikely take place before the interim authority was due to expire. The interim licence was therefore extended until 15 December 2021.

The DVA audit was received by TRU on 22 October 2021. The Head of the TRU has stated that ‘this audit was detailed and concluded with an "Unsatisfactory" rating with respect to maintenance; daily walk-round checks; safety inspections; and drivers' hours. It showed satisfactory ratings in respect of vehicle weights and establishment. The first time pass rate was reported as 29%.’

The audit included a letter from the operator, which is referred to within the appeal papers, and an email from the DVA Traffic Examiner in response to the issues raised by the operator. The Head of the TRU has stated that ‘both pieces of correspondence were considered as part of the decision making process’.

By way of correspondence dated 26 October 2021, the Appellant was informed that the application was refused.

An appeal against the decision of 26 October 2021 was subsequently received in the office of the Administrative Appeals Chamber (‘AAC’) of the Upper Tribunal.

In the notice of appeal, the Appellant’s representative ticked a box to indicate that no application had been made to the Department for a stay of the decision of 26 October 2021 and wished to apply to the Upper Tribunal for a stay. In the papers which are before us, is a copy of a determination on a stay, made by the Head of the TRU on 12 November 2021. In that determination, the Head of the TRU noted an anomaly in the notice of appeal in that while a box had been ticked to indicate that no stay application had been made to the Department when, in fact, such an application had been submitted to the TRU on 12 November 2021. In any event, the application for a stay was refused by the Head of the TRU on 12 November 2021.

The renewed application for a stay before the Upper Tribunal was refused by Upper Tribunal Judge Hemingway on 17 January 2022.

Grounds of appeal

‘Our adherence to drivers’ hours and operation of our small fleet is to a high standard. We have never been stopped or prosecuted for any infringement of hours’ offences and we are prepared to submit ourselves to an audit in this regard. Our tachograph analysis is conducted by a third party provider who provides advice and assistance if, and when necessary. Relevant training and updated CPC training occurs.

Walk round checks; walk round checks are conducted and when identified defects are noted. We conduct weekly walk round checks which is sufficient and adequate for fulfilment of legal obligations.

Regular safety inspection/testing; all vehicles are maintained to a high standard. We appreciate the necessity of this for any vehicle and would again stipulate that we have a high pass rate in regard to testing.

Finally please note our correspondence dated 21/10/21 which we are unsure was considered at the time of the decision dated 26/10/21.’

Relevant legislative provisions

“Standard” and “restricted” licences

On an application for a restricted licence the Department must consider—

Subsections (1) and (2) are subject to sections 10 (publication of application) and 47(2) (payment of application fee).

In considering whether any of the requirements of sections 12A to 12D are satisfied, the Department must have regard to any objection duly made under section 11(1)(a) in respect of the application.

If the Department determines that any of the requirements that it has taken into consideration in accordance with subsection (1) or (2) are not satisfied, it must refuse the application.

12B Requirements for restricted licences

The requirement of this section is that the applicant is not unfit to hold an operator's licence by reason of—

‘Some General Principles

An operator’s licence can only be granted if the applicant satisfies the Department that the relevant requirements, set out in s. 12 of the 2010 Act as amended, have been met. [The expression Department is used in the legislation but for the purposes of the decisions required to be taken under the legislation it is the Head of the TRU who takes them]. The relevant requirements are now set out in Paragraph 17(5) of the Goods Vehicles (Qualifications of Operators) Regulations (Northern Ireland) 2012, (“the Qualifications Regulations), which substitutes a new s.12 and adds ss. 12A-12E to the 2010 Act. The Qualifications Regulations also contain important provisions in relation to Good Repute, Professional Competence and Transport Managers.

The grant of an operator’s licence does not mean that an operator can then proceed on the basis that the requirements that must be met in order to obtain a licence can thereafter be disregarded. In our view it is clear both from the terms of the 2010 Act and from Regulation 1071/2009 that these are continuing obligations, which an operator is expected to meet throughout the life of the licence. It is implicit in the terms of s. 23, which gives the Department power to revoke, suspend or curtail an operator’s licence, that this can take place at any time and for any reasonable cause, including matters covered by the requirements of s. 12 as amended. It is explicit in s. 24, which provides that a standard licence shall be revoked if at any time it appears that the licence-holder is no longer (i) of good repute, (ii) of appropriate financial standing or, (iii) professionally competent. The underlining, in each case is ours. First, we wish to stress that once it appears that the licence-holder is no longer of good repute, or of appropriate financial standing or professionally competent the licence must be revoked because the Act makes it clear that there is no room for any exercise of discretion. Second, the use of the expression ‘at any time’ makes the continuing nature of the obligations crystal clear.

The Tribunal has stated on many occasions that operator’s licensing is based on trust. Since it is impossible to police every operator and every vehicle at all times the Department in Northern Ireland, (and Traffic Commissioners in GB), must feel able to trust operators to comply with all relevant parts of the operator’s licensing regime. In addition other operators must be able to trust their competitors to comply, otherwise they will no longer compete on a level playing field. In our view this reflects the general public interest in ensuring that Heavy Goods Vehicles are properly maintained and safely driven. Unfair competition is against the public interest because it encourages operators to cut corners in order to remain in business. Cutting corners all too easily leads to compromising safe operation.

It is important that operators understand that if their actions cast doubt on whether they can be trusted to comply with the regulatory regime they are likely to be called to a Public Inquiry at which their fitness to hold an operator’s licence will be called into question. It will become clear, in due course, that fitness to hold an operator’s licence is an essential element of good repute. It is also important for operators to understand that the Head of the TRU is clearly alive to the old saying that: “actions speak louder than words”, (see paragraph 2(xxix) above). We agree that this is a helpful and appropriate approach. The attitude of an operator when something goes wrong can be very instructive. Some recognise the problem at once and take immediate and effective steps to put matters right. Others only recognise the problem when it is set out in a call-up letter and begin to put matters right in the period before the Public Inquiry takes place. A third group leave it even later and come to the Public Inquiry with promises of action in the future. A fourth group bury their heads in the sand and wait to be told what to do during the Public Inquiry. It will be for the Head of the TRU to assess the position on the facts of each individual case. However it seems clear that prompt and effective action is likely to be given greater weight than untested promises to put matters right in the future.’

‘There is a right of appeal to the Upper Tribunal against decisions by the Head of the TRU in the circumstances set out in s. 35 of the 2010 Act. Leave to appeal is not required. At the hearing of an appeal the Tribunal is entitled to hear and determine matters of both fact and law. However it is important to remember that the appeal is not the equivalent of a Crown Court hearing an appeal against conviction from a Magistrates Court, where the case, effectively, begins all over again. Instead an appeal hearing will take the form of a review of the material placed before the Head of the TRU, together with a transcript of any public inquiry, which has taken place. For a detailed explanation of the role of the Tribunal when hearing this type of appeal see paragraphs 34-40 of the decision of the Court of Appeal (Civil Division) in Bradley Fold Travel Ltd & Peter Wright v Secretary of State for Transport [2010] EWCA Civ. 695. Two other points emerge from these paragraphs. First, the Appellant assumes the burden of showing that the decision under appeal is wrong. Second, in order to succeed the Appellant must show that: “the process of reasoning and the application of the relevant law require the Tribunal to adopt a different view”. The Tribunal sometimes uses the expression “plainly wrong” as a shorthand description of this test.’

At paragraph 4, the Upper Tribunal had stated:

‘It is apparent that many of the provisions of the 2010 Act and the Regulations made under that Act are in identical terms to provisions found in the Goods Vehicles (Licensing of Operators) Act 1995, (“the 1995 Act”), and in the Regulations made under that Act. The 1995 Act and the Regulations made under it, govern the operation of goods vehicles in Great Britain. The provisional conclusion which we draw, (because the point has not been argued), is that this was a deliberate choice on the part of the Northern Ireland Assembly to ensure that there is a common standard for the operation of goods vehicles throughout the United Kingdom. It follows that decisions on the meaning of a section in the 1995 Act or a paragraph in the Regulations, made under that Act, are highly relevant to the interpretation of an identical provision in the Northern Ireland legislation and vice versa.’

‘Irefer to the company's application for an operator's licence and to the recent compliance audit carried out by the DVA, which has been assessed as unsatisfactory.

As a result of the findings of the audit, the Head of the Transport Regulation Unit has refused the company's application under the provisions of Section 12(5) of the 2010 Act as he could not be satisfied that the requirements of Sections 12C(2)(a), 12C(2)(b), and 12C(4) had been met. These provisions relate to the arrangements for securing that the following are complied with in the case of vehicles used under the licence:

‘The letter of 18 August 2021, which communicated the decision to the appellant relevantly indicated that the application had been refused on the basis that “The financial information provided was not acceptable because you failed to establish financial standing. Therefore, you failed to demonstrate that you meet the requirements of Section 13A(2)(c) of the above Act”. The letter offered no further explanation as to why it had been decided that the financial standing requirement had not been met (no reference to the 28 day period nor the perceived to be excessive reliance on credit) nor was anything said about professional competence and the doubted ability to manage compliance with the regulatory regime. But the letter did alert the appellant to the right of appeal. Even though it might well have been the intention of the TC that refusal was to have been based upon all of the concerns identified in his note, we have felt constrained to proceed on the basis that the refusal was on financial grounds only since no other basis for the refusal found its way into the letter communicating the decision.’

‘13. Having said the above and having reached our decision on the appeal, there are some matters with respect to the way the decision of the TC was communicated to the appellant which we think we ought to comment upon.

In our view the letter of 18 August 2021 was deficient because, whilst it communicated to the appellant in clear enough terms the result of his application for a licence, it did not set out any of the reasoning which underpinned that outcome. We make a general observation, and such observations have been made by the Upper Tribunal on previous occasions including in Wajid Bashir t/a MB Travel [2018] UKUT 0401 (AAC), in particular at paragraph 12 and Sheraz Asghar [2018] UKUT 0442 (AAC) in particular at paragraph 16, that such is not acceptable. We say that because if a prospective appellant is not provided with the reasoning underpinning a decision then he/she is in difficulty in making an informed decision as to whether there might be merit in appealing or not. That might lead to a prospective appellant appealing in circumstances where he/she might otherwise not have done (thus leading to unnecessary administrative functions having to be performed) or to a prospective appellant not appealing in circumstances in which he/she might have done had he realised (if it be the case in any given instance) that the reasoning was at least arguably defective (thus raising the possibility in some cases of a denial of justice). It might lead to a prospective appellant being unable to prepare grounds of appeal which are focused and properly directed towards the TC’s reasoning, thus leading to the necessity for later amendment or to arguments being raised at a late stage before the Upper Tribunal. None of that is satisfactory. Accordingly, we would express the hope that, in relation to decisions only expressed by letter (usually the case where there has been no public inquiry) the reasoning underpinning a negative decision will be communicated in that letter. We would also make the point that where, as here, the reasoning is evident from internal memoranda, it should be a relatively easy task to transpose and incorporate that reasoning into a decision letter.

If the above seems like harsh criticism of the OTC we do not mean it to be. We understand the difficulties of working in a busy office under pressure. We understand that the OTC might well still be having to cope with the fall-out from the coronavirus pandemic and the huge adverse impact that has had upon administrative processes in many organisations and departments. But the matter is, in our view, of such importance that not pointing it out would represent a failing on our part. In this case there was no injustice or unfairness because the appellant did understand why his application had been refused and was able to put all of his points to the Upper Tribunal on appeal. But that does not detract from the importance of the concern we have identified.’

‘The TC’s detailed reasons for revocation were set out in an internal memo (a VOL submission on 25 May 2021) that was not disclosed to the Appellant prior to revocation or its appeal. The detailed reasons were only provided to the Appellant as part of the appeal bundle. These reasons should have been provided to the Appellant at the time of revocation so that they could inform its decision as to whether to appeal and on what basis. All the Appellant received was the summary of reasons in the TC’s letter of 26 April 2021. We return to this topic below.’

‘We repeat our observations that the OTC should provide its full reasons for its decision in writing to the licensee at the time or before any revocation decision. The operator needs these reasons in order to decide whether to appeal and on what grounds. It is a fundamental requirement of natural justice and procedural fairness for full reasons to be given at the time.’

On 26 October 2021 I considered the evidence available to me. Greatest weight was given to the DVA audit. Whilst I did consider the additional correspondence from the operator and DVA and gave little weight to those documents. The letter from the operator read more as a complaint of the approach taken by the DVA, and some concerns were in turn addressed by the Traffic Examiner. On balance I found that the issues / points commented upon had already been addressed in the Audit Report itself including the reasoning for the out-of-hours visit, and the "accusation" made by the DVA officer. At that time I concluded that:

"Section 12(2) requires that, on an application for a restricted licence the Department must consider whether the requirements of section 12C (amongst others) are satisfied.

In the simplest of terms the evidence provided by the DVA allows me to conclude that the operator does not meet the requirements of Section 12C(2)(a)&(b), and does not meet the requirements of section 12C(4)

As such, and in consideration of Section 12(5) "if the Department determines that any of the requirements that it has taken into consideration in accordance with subsection (1) and (2) are not satisfied it must refuse the application" – emphasis is my own.

I therefore direct that the application is refused.

Before this business applies for an alternative licence I would ask that they consider the employment of a transport manager who is able to put appropriate systems and controls in place. I would recommend that the operator considers applying for a Standard National licence which the Department may consider supports the business by establishing a specific responsible and qualified person to effectively manage transport operations."

‘This audit was detailed and concluded with an "Unsatisfactory" rating with respect to maintenance; daily walk-round checks; safety inspections; and drivers' hours. It showed satisfactory ratings in respect of vehicle weights and establishment. The first time pass rate was reported as 29%.’

‘The decision of the Head of the TRU was that certain of the legislative provisions governing the requirements for the grant of a restricted goods vehicle operator's licence were not satisfied. For the reasons which we have set out above, we have determined that the decision was wrong and, inherent in that determination is an acceptance that the relevant legislative provisions were satisfied. We have not seen any evidence to suggest that the remaining legislative requirements for the grant of a licence are not satisfied. We remit this case to the Head of the TRU himself to re-decide the licence application. We do so in the expectation that it will be granted. We would add, however, that it is our view that in addition to the usual restricted licence undertakings it would be appropriate there should be an undertaking for (i) Mr Richard Rutledge to undertake a new operator's course within six months of grant of the licence, (ii) the relevant individual within the company to undertake a Transport Manager refresher course and (iii) that there should be a requirement for a further independent audit to be carried out within 6 months of the licence being granted. Finally, we have noted that the refusal of the licence application and the expiry of the former sole trader operator’s licence has meant that the appellant's business has been reliant on third party hauliers at a considerable cost to the company. Given that, we expect the re-determination of the application for the licence will be given priority.'