Neutral Citation Number: [2010] UKUT 66 (AAC)

Appeal No.  2009/516
IN THE UPPER TRIBUNAL		
ADMINISTRATIVE APPEALS CHAMBER
TRAFFIC COMMISSIONER APPEALS

ON APPEAL from the DECISION of
James Astle Deputy Traffic Commissioner for the 
West Midland Traffic Area Dated 9 October 2009

Before:
Hugh Carlisle QC	Judge of the Upper Tribunal
Leslie Milliken		Member of the Upper Tribunal
Stuart James		Member of the Upper Tribunal

Appellant:
FAROOQ AHMED & HAROON AHMED

	 
Attendances:
For the Appellant: Christopher Harris, transport consultant

Heard at:	Victory House, 30-34 Kingsway, London, WC2B 6EX
Date of hearing:	4 February 2010
Date of decision:	23 February 2010

DECISION OF THE UPPER TRIBUNAL
IT IS HEREBY ORDERED that this appeal be ALLOWED.

REASONS FOR DECISION

1.	This was an appeal from the decision of the Deputy Traffic Commissioner for the West Midland Traffic Area on 9 October 2009 when he disqualified the Appellants for three years and two years respectively under s.28(1) of the Goods Vehicles (Licensing of Operators) Act 1995.

2.	The factual background to the appeal appears from the documents and the transcript of the public inquiry and is as follows:
(i)	This case involves two companies: Slumber Dream Limited (“Slumber Dream”), of which the Appellants were directors from 23 March 2009 to 10 July 2009 (F Ahmed) and to 20 June 2009 (H Ahmed); and Elkdale Limited (“Elkdale”) of which they were directors from 11 May 2009 to 10 July 2009 ( F Ahmed) and to 25 June 2009 (H Ahmed).
(ii)	Slumber Dream was originally the holder of a restricted operator’s licence for ten vehicles and was called-up to a public inquiry on 29 April 2009.  Concerns had been raised about convictions, prohibitions, maintenance and financial resources.  At the end of the public inquiry the Deputy Traffic Commissioner curtailed the licence to seven vehicles and issued a final warning about conduct; numerous undertakings were given, including the requirement to submit financial evidence by 31 July 2009.  The Company agreed to notify the Traffic Area Office without delay if it was unable to comply with any of the undertakings.
(iii)	On 12 May 2009 notice of appointment of an administrator was given in respect of Slumber Dream.  On 1 June 2009 an application for a restricted operator’s licence was made by Elkdale, with the application form being signed by the First Appellant.  Vehicles specified on Slumber Dream’s licence were nominated for use on Elkdale’s licence; the same operating centre was to be used; the company secretary for the two companies, Mr Sharez Hussain, was the same, as were the two directors.  On 21 July 2009 the administrator notified the Traffic Area Office that Slumber Dream had been sold to Elkdale, “who are trading from the same address”.
(iv)	On 1 September 2009 both companies were called-up to a public inquiry.  The same concerns as before were raised against Slumber Dream, together with the “apparent connection” with Elkdale, as set out above.  It was pointed out that “the Act allows the Traffic Commissioner ….. to disqualify any director of that company” and that “directors who think they may be affected ….. are invited to attend the public inquiry so that they may give evidence on their own behalf”.  The letter continued:-	
	“Directors ….. who do not take advantage of this opportunity may find themselves disqualified from holding or obtaining an operator’s licence without having had the opportunity to present reasons why they should not be disqualified.”

	The letter also stated that Elkdale’s application for a licence would be heard at the same time.
(v)	On 24 September 2009 the administrator applied to surrender Slumber Dream’s licence.  On 29 September he wrote that the business had been sold to Elkdale “as a going concern”: he hoped that the surrender of Slumber Dream’s licence would not take effect until Elkdale’s application had been resolved.  On 7 October the administrator informed the Traffic Area Office that he did not wish to attend or to make any representations at the public inquiry.
(vi)	The public inquiry took place before the same Deputy Traffic Commissioner on 9 October 2009.  Mr Harris appeared for Elkdale.  Slumber Dream was not represented.  Mr Harris referred to a letter from the administrator who had indicated that he hoped Elkdale “could take over” Slumber Dream’s licence.  The Deputy Traffic Commissioner stated that he regarded Slumber Dream as having continued in being until the hearing.  Mr Harris then stated that Mr Sharez Hussain was attending as the director of Elkdale and that he had “no locus” to speak for Slumber Dream: only the administrator could do this and he had chosen not to appear or to make representations.  Mr Harris said “my hands are therefore tied”.  The Deputy Traffic Commissioner referred to the application by Elkdale and said:-
	“The Traffic Commissioner is concerned that a company, the directors of which were Mr Farooq Ahmed and Mr Haroon Ahmed, applies for an application, or makes an application, applies for a licence, those gentlemen having been directors of a previous company having a licence, which had recently been subject of disciplinary proceedings, which had had what I may describe as a raft of undertakings imposed upon it, no mention is made of their connection within the application.  And shortly after the application they resign, other directors are appointed.  I need an explanation of that.”
(vii)	Mr Hussain then gave evidence on behalf of Elkdale.  He explained the history of the changeover from Slumber Dream and why it had gone into administration.  The Deputy Traffic Commissioner was concerned that Elkdale was effectively the same company as Slumber Dream and that the undertakings given in April 2009 had not been met.  During the course of questioning the Deputy Traffic Commissioner put the terms of Elkdale’s application form to Mr Hussain.  The form had been signed by the first Appellant and contained denials that any director involved had ever had a licence curtailed or that nominated vehicles had been specified on any other licence.  It was Mr Hussain’s case that he had not been aware of the terms of the application form and that he did not become a director or company secretary of Elkdale until 5 June 2009.  The two Appellants had been employees of his family business and it had been their idea to combine the companies.  He said that they were still working for Elkdale: the first Appellant was a general worker and the second Appellant was a driver.  Both he and Mr Harris distanced themselves from the two Appellants in seeking to persuade the Deputy Traffic Commissioner to grant Elkdale’s application and in particular to be satisfied of its good repute.

(viii)	During the course of Mr Harris’s submissions there was discussion with the Deputy Traffic Commissioner about the likelihood that the administrator had misunderstood the position about continuance of Slumber Dream’s licence and that he had given Elkdale incorrect advice.  Mr Harris submitted that there were “no identifiable acts or omissions of the new directors”,  He continued:-	
	“Sir, it is submitted that this is an arms length takeover with new and independent management.  Sir, it is submitted that the facts demonstrate that the new company has not lost its good repute and proper analysis of the evidence suggests strongly that they have done all they could or they have done all that could be done to operate the vehicles in a lawful manner under very difficult circumstances.”
	Mr Harris later said:-	
	“Sir, can I say, you’ve heard an awful lot of evidence here this morning and I think it is well within your discretion to consider perhaps reserving your judgment on this matter.
	“THE DEPUTY TRAFFIC COMMISSIONER:   Well, that’s an option which I may adopt, Mr Harris, but I haven’t yet made up my mind about that.”
(ix)	The Deputy Traffic Commissioner did not reserve his decision but gave it orally after a short adjournment:-	
	“I will give first my decision in relation to Slumber Dream Ltd.  My decision in relation to Slumber Dream Ltd is that the company licence is revoked and that is on the basis that the company was in administration on 12th May 2009, failed to inform the Traffic Commissioner, there was therefore a material change in circumstances of the licence holder, which was relevant to the issue of the licence, namely licence holder no longer has sufficient financial resources to be the holder of a licence and has failed to comply with the licence condition requiring notification of change of ownership to the Traffic Commissioner within 28 days, and that’s in accordance with Section 26(1)(b) and (1)(h) of that Act.
	“And secondly Farooq Ahmed and Haroon Ahmed are disqualified from holding a vehicle operator’s licence for three years and two years respectively.  And I make a further direction concerning both under Section 28(4), namely that if they were to become the directors/director of any other company, that company’s licence would be liable to revocation.  The basis for that decision is that Farooq Ahmed failed to disclose that he and Haroon Ahmed had been directors of Slumber Dream Ltd when its licence was curtailed on 29th April 2009 when applying for a new licence to Elkdale Ltd on 1st June, and that Haroon Ahmed had collective responsibility as a co-director for this failure, and that’s in accordance with Section 28(1) and (4) of the Act.”
(x)	The Deputy Traffic Commissioner went on to take a series of undertakings from Elkdale and to grant its application for a licence.  Later he addressed Mr Hussain:-     
	“Now, I have set out my reasons, whilst I am satisfied that Sharez Hussain was aware that Farooq Ahmed submitted the application on 1st June, he, Sharez Hussain, was not a director or company secretary at that time and I’m not satisfied that he deliberately participated in a failure to disclose or turned a blind eye, but I am bound to say, Mr Hussain, it stretches credibility somewhat to accept that you had no knowledge, right.”
	Nevertheless, although he did not say so, in order to grant the appplication the Deputy Traffic Commissioner must have been satisfied that Elkdale was of good repute.

3.	We have set out only a short summary of the facts because the issue before us is limited to disqualification of the Appellants.  In the notice of appeal and his skeleton argument, for which we are grateful, Mr Harris said that the Appellants had been advised by the administrator that Slumber Dream’s licence had already been surrendered and that there was no need for them to attend.  He submitted that the reasoning in the decision was inadequate and that the disqualification was disproportionate.

4.	We do not agree that the reasoning as such was inadequate because it is plainly, albeit succinctly, stated.  Nor do we take the view that the Appellants’ failings, if established, were trivial.  However, having considered the papers we have to say that we are troubled by the lack of notice to the Appellants of the allegations on which the orders of disqualification were based.

5.	As a starting point, it is necessary to observe that we have not been supplied with papers expressly relating to Elkdale.  However, we think that we can assume that no mention of disqualification of directors was made in its call-up letter since disqualification may only be ordered in the event of revocation (see s.28(1) of the Act) which could not arise as against Elkdale since it was being called-up only in respect of an application.  As regards Slumber Dream, revocation could, and indeed was, ordered.  We have considered the call-up letter sent to Slumber Dream (see para.2(iv) above) and have to say that although the power to disqualify is mentioned there is no reference to Elkdale’s application form and to the responsibility of the Appellants for this document.

6.	The Tribunal has recognised (see 2001/72 AR Brooks and Chapter 2 in the Tribunal’s Digest, available on its website) that new points may arise during a hearing.  It is not fatal that these have not been raised in the call-up letter as long as those affected are given the opportunity, if present, of having time to consider them, with an adjournment if appropriate.  But the situation must be viewed differently if those likely to be affected are not present.  We do not say that an adjournment must be ordered in all such cases because it may be clear that those affected, be it operator, director or transport manager, have no intention of appearing or making representations in any event; but the need for notice of allegations to have been given must always be borne in mind.

7.	Essentially the position is one of fairness.  We have to say that in the present case the way in which the evidence developed was entirely one-sided, with all fault being attributed to the Appellants.  They were not put on notice to this effect and the call-up letter to Slumber Dream put the allegations in very general terms.  No reference is made to the alleged non-disclosures in Elkdale’s application form, to which the Deputy Traffic Commissioner understandably took objection; at its highest the call-up letter merely mentions the “apparent connection” between the two companies in wording which can best be described as bland.  It is plain from his very short decision that the Deputy Traffic Commissioner took a serious view of the non-disclosures and we have to say that had he paused for more thought and opted to give a written decision he might have realised that it was necessary that the two Appellants should have been put on express notice of the position that had arisen.

8.	In the result we allow the appeal.  We have considered whether we should remit the case for re-hearing before a different traffic commissioner but have decided against this.  Mr Harris told us that the Appellants intended themselves to apply for a licence.  If so, the Traffic Commissioner will be able to decide the extent to which the matters raised in this appeal should be considered under the general heading of repute in any new application.  If the Appellants fail to mention their involvement with Slumber Dream they will have only themselves to blame.

Hugh Carlisle QC
Judge of the Upper Tribunal
23 February 2010