Decision

Decision for Cheshire Tarmacadum & Driveways Ltd

Published 8 July 2022

0.1 IN THE NORTH WEST OF ENGLAND TRAFFIC AREA

1. CHESHIRE TARMACADUM & DRIVEWAYS LTD OG1112861

2. DECISION OF THE TRAFFIC COMMISSIONER

2.1 In the matter of the Goods Vehicle (Licensing of Operators) Act 1995

3. Public Inquiry held at Golborne on 28 June 2022

4. Background

Cheshire Tarmacadum & Driveways Limited (“the operator”) has held a restricted goods vehicle operator’s licence, OG1112861, since 12 November 2012 authorising the use of two vehicles and two trailers.

The operator has submitted an application to vary the licence to allow the operation of 3 vehicles. The variation was previously granted as an interim direction for 6 months from July 2021 but that lapsed without being extended.

The operator’s sole director as recorded on the operator licensing system since grant has been Emma Nicholson. It is now understood that there has been a second director named Mark Spindler recorded on the Companies House register for several years. Ms Nicholson and Mr Spindler are married, and Ms Nicholson recently updated her name on the Companies House register to Emma Spindler. She asked at the Public Inquiry to be referred to as Ms Nicholson.

The notification of directorship changes is one of the matters considered below.

The operator first came under scrutiny after one of its vehicles was stopped by the DVSA in September 2020. The driver was found not to have a valid licence, and this prompted further investigation in the form of a desk-based assessment.

The DVSA claimed the operator failed to produce tachograph and driver card data promptly as requested. Some evidence was eventually obtained by a DVSA officer downloading the data. It appeared that the operator’s systems for analysis of the tachographs was deficient.

All of these matters prompted the call to the Public Inquiry.

Neither the operator nor its directors had previously been called to a Public Inquiry or been the subject of regulatory action.

5. The Call to Public Inquiry

The operator was initially called up to a Public Inquiry in the Wales Traffic Area by letter dated 23 December 2021. The original date of the Public Inquiry was set for 1 February 2022.

The call up letter gave notice that the grounds for regulatory action in Sections 26(1)(b), 26(1)(c), 26(1)(e) 26(1)(f) and 26(1)(h) of the Goods Vehicles (Licensing of Operators) Act 1995 (“The Act”). Notice was also given that the variation application would be considered in accordance with the requirements set out in Sections 13B, 13C and 13D of the Act.

The previous attempts to hear the case were ineffective for reasons that I do not consider relevant to the matters under scrutiny at this Public Inquiry. I have previously recorded in a case management decision that I do not ascribe any blame or responsibility to the operator and its representatives for the past ineffective Hearings. I have been designated by the Senior Traffic Commissioner to hear the case in the North West of England Traffic Area. I am satisfied that no prejudice has been caused to the operator by the listing of this matter at Golborne rather than Caernarfon.

6. The Public Inquiry

The Public Inquiry was heard at Golborne on 28 June 2022. The operator was represented by its directors Emma Nicholson and Mark Spindler. The operator and the directors were legally represented by David Pojur of counsel.

7. The Directors

Mr Spindler was previously a director of Cheshire County Tarmac Ltd (“CCT”) that held a restricted goods vehicle operator’s licence OG1009415 issued in 2003. Ms Nicholson was CCT’s company secretary. A winding up petition was issued to that company in May 2011. Cheshire Tarmacadum & Driveways Ltd was incorporated within less than a month later in June 2011.

The insolvency proceedings against CCT were not reported to the Office of the Traffic Commissioner as required. The licence OG1009415 was terminated in August 2013 after its continuation was not sought. CCT was finally dissolved in 2015. The Liquidators report confirms that as part of the process, legal action was taken to recover an overdrawn director’s loan account with settlement in the sum of £70,000 eventually agreed. Mr Spindler confirmed that fact in his evidence at the Public Inquiry.

I asked Mr Spindler for an explanation why, as director of CCT, he had not notified the Office of the Traffic Commissioner as required of its insolvency. Mr Spindler deferred to Ms Nicholson who he said was responsible for the paperwork. Ms Nicholson said she had not notified the insolvency as she believed the liquidators would do so.

When Cheshire Tarmacadum & Driveways Ltd was first incorporated in June 2011, Mr Spindler was initially the sole director. He resigned a week later to be replaced by an Andrew Mark Titley.

Ms Nicholson was appointed as director of the operator in August 2011 shortly before Mr Titley was removed.

Ms Nicholson said that the appointment of Mr Spindler as director initially was an error by their accountant. She claimed that Cheshire Tarmacadum & Driveways Ltd was a new business she had established, and that Mr Spindler was only to be an employee. Ms Nicholson could not explain to me, if so, why she was not appointed as a director until August 2011. She again pointed to the accountant as being responsible.

Ms Nicholson said that Mr Titley was appointed as a director as he was offering her guidance. Mr Titley did not have financial stake in the business. By September 2011 she felt she no longer needed his help and he was removed as director.

Mr Spindler and Ms Nicholson confirmed that CCT was their family business and their sole source of income. The intention with Cheshire Tarmacadum & Driveways Ltd was to replace that income. The company undertook similar work to CCT and in the same area although it did not retain any of the previous company’s staff or assets.

Ms Nicholson at the Hearing gave evidence that Mr Spindler was not appointed as a director [REDACTED] following the failure of CCT. I reminded her that in her written statement submitted by her solicitors she had said that Mr Spindler was “not allowed” to be a director. Ms Nicholson confirmed that her understanding was that Mr Spindler was indeed not allowed to be a director because of his involvement in the insolvency of CCT.

Mr Spindler was re-appointed as a director in March 2012. The operator’s application for a restricted goods vehicle licence was submitted on 16 August 2012 with the GV79 declaration being signed by Ms Nicholson. Only Ms Nicholson’s name was given as a director and there was no mention made of Mr Spindler (who was registered as a director of the company at the time), CCT or the latter’s operator’s licence. Another GV79 was submitted on 1 October 2012 which again failed to mention these matters.

Ms Nicholson insisted that when she completed the application forms for the operator’s licence she was unaware that Mr Spindler was recorded as a director. She did not disclose CCT’s previous licence or its insolvency as she thought that was only relevant if Mr Spindler was a director of the new company.

Ms Nicholson again blamed the accountant for making these changes in directorships and failing to inform Mr Spindler and her. She could not explain why the accountant would make these changes without instruction.

Mr Spindler was again briefly removed as a director in March 2013 but was reappointed in April 2013. According to the Companies House register he has remained a director since that date. Ms Nicholson said those changes were prompted by her discovery of the previous issues with Mr Spindler’s appointment. She confirmed that from that date she was aware Mr Spindler was a director.

Ms Nicholson claimed she had contacted the Office of the Traffic Commissioner to inform them of Mr Spindler’s appointment and spoke by telephone to a member of staff. I was not directed to any other tangible evidence of such contact. She claimed she was unaware of how to make changes online but could not provide me with a clear answer why she had simply not written to notify the change.

In September 2017 Ms Nicholson submitted the checklist on the 5-year continuation of the operator’s licence. This again only named her as director. As Ms Nicholson had conceded that by then she knew Mr Spindler was a director, I asked why she did not amend the form. Ms Nicholson said she found the form confusing. I pointed out that she had made a handwritten amendment further in the checklist form in relation to details of a maintenance provider, but Ms Nicholson again insisted she had not understood how to correct the director details.

Mr Spindler confirmed he had taken the Transport Manager’s CPC examination in 2021. However he also confirmed that he focused more on undertaking the work of the business with Ms Nicholson taking primary responsibility for management. This was reflected in that the evidence presented by Mr Spindler was much more limited than that of Ms Nicholson.

8. Driver [REDACTED]

Ms Nicholson confirmed she now accepted the DVSA evidence that [REDACTED] did not hold a valid vocational licence that entitled him to drive the operator’s goods vehicle on 8 September 2020. It appears that he may have been disqualified many years ago and failed to apply for renewal of his licence when the disqualification ended in 1989.

Ms Nicholson insisted that she had seen a copy of [REDACTED] licence and genuinely believed he had an entitlement to drive. She referred to having seen him drive goods vehicles for other operators. She also claimed that a scan of his licence had been taken and stored on the operator’s computer system. However when the system was updated in around January 2020 (9 months before the encounter with [REDACTED]), the records were lost.

It was conceded that the operator did not previously have a process to check the entitlements of drivers using the DVLA online system. Ms Nicholson claimed to have been unaware of that facility.

Ms Nicholson insisted that she was now making those checks every 6 months. She remained unaware that best practice is to do the checks every 3 months. Further, there was no evidence of the online checks in the documents submitted by the operator for the Hearing. Only copies of driving licences were supplied. Ms Nicholson conceded at the Hearing that she did not know how to save or print a record of the online checks.

9. DVSA Investigation

Following the encounter with [REDACTED], the DVSA decided to undertake an investigation initially in the form of desk based assessment. The formal notice to produce documents and the questionnaire was sent to the operator on 21 January 2021. The operator through Ms Nicholson submitted a response on 27 January 2021 but a number of questions were either unanswered or it was indicated that further documents would be provided in due course. Most significantly the questions about frequency of driver card and tachograph downloads were left unanswered. Ms Nicholson in an email to the Traffic Examiner the same day said she not “ran off the tacho before”, as confirmed in her evidence at the Public Inquiry. Ms Nicholson said that she would obtain a downloader to produce the evidence.

There then followed an exchange of emails between Ms Nicholson and DVSA through February and March 2022. Whilst it seems there was some delay attributable to a hand over of examiner responsibilities, Ms Nicholson was also repeatedly asking for more time. Ms Nicholson told me she found it difficult to cope with the DVSA requests given her responsibilities as a mother as well as running the business.

It is evident from emails sent by Ms Nicholson to the DVLA (and which are reproduced in the operator’s own bundle) that up to 7 April 2021 she was continuing to promise to sort out the tachograph downloads for vehicle RX07 AEN. Other than the availability of the downloader, there was no mention of any other issue.

Matters culminated in the DVSA asking for the vehicle to be presented so they could undertake the download themselves. Ms Nicholson asked the initial date proposed to be delayed and the examination finally took place on 26 April 2021. At that point the DVSA identified that the tachograph head had been replaced on 3 March 2021.

The operator’s bundle contained a letter from the maintenance provider giving a date of diagnosis as 23 February 2021 and stating that water ingress into the vehicle cab had damaged the tachograph. A “certificate of undownloadability” was subsequently issued on 3 March 2021. Neither of these documents were provided to the DVSA until after the investigation was closed.

Ms Nicholson, in her evidence, accepted that she had not downloaded the tachograph head prior to 2021. She claimed the vehicle was not out every day and did not do work in scope of driver’s rules. Ms Nicholson maintained that the delays in responding to the DVSA were because she was overwhelmed. The damage to the tachograph unit was unexpected.

In closing submissions, Mr Pojur asked me to consider dealing with the matter by way of a warning and undertakings. He argued that it would be draconian to revoke the licence and disqualify Mr Spindler and Ms Nicholson. Any interruption in their ability to operate goods vehicles would have far reaching implications for their business and family. It was accepted that errors had happened in the past due to a lack of knowledge, but it was submitted this was an operator in whom I could have confidence going forward.

10. Findings of fact

I find that the insolvency of CCT and the fact that action had to be taken to recover funds wrongly withdrawn from that company is a matter relevant to the fitness of Mr Spindler as a director of a company holding an operator’s licence. The failure of Mr Spindler and Ms Nicholson, as officers of CCT, to notify the Office of the Traffic Commissioner of its insolvency is also relevant to the consideration of their fitness to hold a licence. I do not accept Ms Nicholson’s explanation that she believed it was the responsibility of the Liquidators as she would have been reminded of the officers’ responsibility when completing the subsequent application for the operator and answering the specific insolvency related questions on the application form.

I find that Cheshire Tarmacadum and Driveways Ltd was effectively a “phoenix” company in so far as I am satisfied it was an attempt to re-establish and continue the family business which had failed in the guise of CCT.

It is relevant to note that Mr Spindler and Ms Nicholson were experienced company officers and operator licence holders. CCT had been in existence for over 10 years and had held an operator’s licence for most of that time. It is also clear that litigation was involved following the failure of CCT and that the couple did have legal representation at the time. I find it is likely they were well aware of the significance of the insolvency and the obligations on directors. This is further supported by the fact that Ms Nicholson clearly thought that naming Mr Spindler as a director of the new company was not allowed.

The Senior Traffic Commissioner’s Statutory Document Number 1 provides the guidance that, “A phoenix company may be a legitimate business, but traffic commissioners will wish to satisfy themselves as to any application which has the characteristics of a phoenix application”

I find it is more likely than not that Ms Nicholson was aware that Mr Spindler was a director of Cheshire Tarmadadum & Driveways Ltd when she submitted the application forms for its operator’s licence. I further find that the failure to make that disclosure (and the consequential failure to disclose CCT’s licence and insolvency) was a deliberate act to conceal the involvement of Mr Spindler in the new company.

This is consistent with the Companies House history of the directorships. I do not accept that the accountant would have made those changes without some instruction from Ms Nicholson and Mr Spindler or without informing them of the changes made. I find that the most likely explanation for Mr Spindler’s initial appointment as sole director is that the new company was seen as the recreation of CCT. I also consider it is likely that the reason for Mr Spindler’s swift removal in June 2011 was that he became aware of the pending legal action by the Liquidators of CCT.

I am also not persuaded by the explanation for the appointment of Mr Titley as sole director for an initial 2-month period. The evidence of any active involvement by him in the company was tenuous. I find it is more likely than not that Mr Titley was a director in name only and was put forward to avoid naming Mr Spindler or Ms Nicholson at that stage and thereby conceal Cheshire Tarmacadum & Driveways Ltd’s link to CCT.

If Ms Nicholson’s evidence is accepted, that the changes in directorship in 2011 were made by the accountant without authority and corrected, it renders it highly implausible that the accountant would have made the further change in March 2012 without consulting Ms Nicholson and Mr Spindler. They should also have been far more vigilant if they truly believed such unauthorised changes had previously been made.

On Mrs Nicholson’s own admission, she was aware Mr Spindler was re-appointed as director in April 2013. I find her failure to take any meaningful steps to inform my office of his appointment after that date is again consistent with a deliberate attempt to conceal his involvement. The responsibility on Ms Nicholson was all the greater given she should have realised by then that incorrect information had been given on the original application form.

There was a clear opportunity to correct the record at the 2017 continuation when the checklist was returned. I reject Ms Nicholson’s claim that she was confused by the form. I find that the only explanation for her failure to name Mr Spindler at that stage was that it was part of a continuing and deliberate decision to conceal his involvement.

I further record a finding that it is more likely than not that the original application would have been refused in 2012, if the true facts about Mr Spindler and the insolvency of CCT had been disclosed. The failure to disclose CCT’s insolvency in relation to its own licence taken with the fact that the liquidators sought to hold Mr Spindler personally liable for monies withdrawn from that company make it likely in my view that a traffic commissioner appraised of those matters would not have considered that the application by Cheshire Tarmacadum and Driveways Ltd met the requirement not to be unfit.

These findings lead to my determination that the grounds for regulatory action in section 26(1)(e) of the Act are met in that a false statement of fact was made for the purposes of the original application. I also find the grounds in section 26(1)(b) are met in relation to the failure to comply with the condition to notify director changes promptly.

In relation to [REDACTED] driving licence, I am willing to give Ms Nicholson the benefit of the doubt that she genuinely believed that [REDACTED] had a valid entitlement. However I find there was a failure to adopt an effective system to verify the licence entitlement of drivers. I find that failure is persisting in the absence of any evidence to support Ms Nicholson’s claim that the online system is now being checked. This amounts to a material change to the fitness of the operator for the purposes of Section 26(1)(h) of the Act.

I find that the operator has failed to record tachograph data for the vehicle RX09 AEN. The operator has accepted it had no means to download the vehicle’s tachograph unit between its first use in July 2018 and at some point in early 2021. I am satisfied that it is likely that during that period there were occasions when the vehicle was driven within scope of the drivers’ hours rules. I also find the operator is responsible for the subsequent failure to retrieve that data after the original tachograph unit was damaged in late February 2021.

I am sceptical of the claim that it was coincidental that two different potential sources of records were unavailable due to technical mishaps, namely the loss of the driving licence due to a computer failure and the damage to the tachograph unit. However I cannot overlook the documentary evidence provided in relation to the tachograph unit and I do not make a finding that it was damaged deliberately.

Nevertheless the data should have been made available promptly after the DVSA request was received by the operator in January 2021, even if it was not available previously. It was a consequence of the operator’s prevarication that the unit was damaged before the DVSA could examine it.

I am satisfied that the delay in the DVSA being able to complete its investigation was because the operator failed to cooperate promptly as required. The information requested should have been readily available to a competent operator. I do not consider Ms Nicholson’s domestic commitments are a sufficient explanation for a delay of over 3 months in allowing the DVSA access to the tachograph data (or such as was available by then). I am satisfied the delay was because the operator knew that the DVSA was likely to reach unsatisfactory findings once the true picture was revealed.

I find that the failure to keep tachograph records means the operator has not honoured its undertaking signed up to when it applied for the licence to observe the rules on drivers’ hours and tachographs and keep proper records. This establishes the ground for revocation is Section 26(1)(f) of the Act.

Whilst I heard evidence that Mr Spindler has now attained a Transport Manger qualification, I heard little or no evidence to suggest that he is using that competence to positively influence the compliance of the operator. It was clear that Ms Nicholson is still the primary manager of the operator’s licence. She has also attended an Operator Licence Awareness Training course, but it is clear from her evidence at the Hearing that there are still large gaps in her knowledge of what is required to be compliant.

All of these matters taken together, also lead to my inexorable conclusion that there has been a material change in the fitness of the operator and its directors for the purposes of section 26(1)(h).

11. Relevant considerations

Having reached the findings of fact recorded above, I have considered the balancing exercise and have considered the positive and negative features by reference to the guidance in the Senior Traffic Commissioner’s Statutory Document Number 10.

I treat as a positive feature that prior to the encounter in September 2020 the operator had not come to attention for any previous offending history. I temper any finding that was an isolated incident however with the picture that has since merged about the lack of systems for managing drivers.

I acknowledge that no road safety critical defects or “S” marked prohibitions have been demonstrated.

On the other hand, I identify the following negative features.

• The failure to disclose the involvement of Mr Spindler and the previous licence was a deliberate act as stated above. Its effect has been that the operator has enjoyed an unfair commercial advantage by obtaining and retaining for a decade, an operator’s licence in circumstances where if another applicant who had been open and honest about a similar background would not in all likelihood have obtained a licence;

• The initial failure to disclose was then compounded by the failure to take subsequent opportunities to correct the position, most notably at the 2017 continuation. As such I consider that the operator’s conduct can be described as “persistent”;

• My findings above conclude that there was ineffective management control and insufficient systems and procedures in place to prevent operator licence compliance failings. Specifically, prior to the DVSA investigation there were no analysis procedures in place to detect falsification or drivers’ hours infringements. I also find that the operator had insufficient procedures in place to ensure appropriate use of tachograph or manual records by drivers. The operator was unable to produce any such records;

• Some changes have been made since the DVSA investigation and I give the operator credit for the fact the directors have attended training courses. However as detailed above there are still gaps in their knowledge and approach to compliance so I do not consider that sufficient effective changes have been made to ensure future compliance;

• Finally, I do find that the Operator failed to co-operate with the enforcement investigation. The delays in responding to proper and lawful requests meant that potential evidence was lost as detailed above.

The negative features far outweigh the positive features, and I am satisfied that this is a case that falls firmly in the category of “severe” for the purposes of assessing the starting point for regulatory action. I have found that the operator’s conduct amounted to deliberate acts that gave the operator a clear commercial advantage and aggravated by the attempts by the operator to conceal the failings.

It is not my view that a false statement made to obtain a licence should automatically lead to the revocation of the licence when the true facts emerge. On the other hand, neither should the passage of time be regarded as sufficient to rectify any such misconduct at the time of applying for a licence. It is necessary to look at the operator’s conduct as a whole. In this case I find that the original concealment was then maintained throughout the life of the licence with a further false statement made when signing the continuation checklist declaration in 2017. I am satisfied that it was only the DVSA intervention in 2020 that led to the operator seeking to identify Mr Spindler as director to my office. Had that encounter not happened, I am also satisfied the operator would have continued to conceal his involvement. This is consistent with the lack of driving licence checks and tachograph downloads which I am again satisfied would also have continued if not for the DVSA intervention.

I have also considered the guidance in the Senior Traffic Commissioner’s Statutory Document Number 1 and draw attention to the comment that, “any attempt to deceive a traffic commissioner is serious conduct that cannot be condoned”.

I have gone on to consider the Priority Freight and Bryan Haulage questions.

In relation to the first, I do not have any confidence that the operator in the control of Mr Spindler and Ms Nicholson can be trusted to be compliant in future. The licence was founded on a deliberate deceit. That deceit has been maintained over a number of years. Further issues have also arisen in relation to compliance, and I am not satisfied these have been fully resolved.

I have then considered the Bryan Haulage question of whether the company deserves to be put out of business. I note first that this is a restricted licence where the use of large goods vehicles supports the wider business rather than be central to it. I took note of the director’s argument that without the ability to use their own large goods vehicles, the business cannot viably function. The use of smaller vehicles alone or external contractors would not be practical. I balance this with evidence that they gave earlier in the Inquiry that the larger vehicles were not in use every day (when seeking to justify the lack of tachograph analysis).

I accept that the loss of the licence will have a significant (if not fatal) impact on the current business. However, I cannot understate the gravity of the findings I have made above. The licence was obtained by deceit and the operator consequently has enjoyed the ability to operate vehicles for 10 years as a result. I am satisfied if the true facts had been disclosed as they should have been, that the licence would not have been granted in 2012. The operator has enjoyed a competitive advantage for that extended period which is clearly unfair to the wider compliant industry. I am therefore satisfied it is proportionate to direct the revocation of the licence.

Turning to the question of disqualification, as the operator is a family concern wholly owned and controlled by Mr Spindler and Ms Nicholson, I consider it is appropriate to approach the issue as one for both the company and its individual directors.

I have applied a balancing exercise and the features identified above in relation to regulatory action are equally pertinent to the question of disqualification. The negative features outweigh the positives and I consider a period of disqualification is justified.

In deciding upon the length of the disqualification, I have taken account of paragraph 105 of the Senior Traffic Commissioner’s Statutory Document Number 10 which states that for an operator’s first Public Inquiry, consideration of a disqualification period of between 1 and 3 years may be appropriate. The guidance adds, “Serious cases …may merit disqualification of between 5 to 10 years or in certain cases for an indefinite period.”

This is indeed a serious case, but I have balanced this with the fact it is the first Public Inquiry for the operator and directors. I do not exclude the possibility of rehabilitation and a future application for an operator’s licence being allowed.

I would add that the first step in any rehabilitation process is a full acknowledgement of the extent of past misconduct and acceptance of responsibility. I also note that both directors have undergone training of some description since the DVSA investigation although I was unconvinced this has developed their knowledge to the standards required.

I consider that a period is necessary for Mr Spindler and Ms Nicholson to reflect on the events that led to the loss of the licence and to seek further education on how to run a compliant operation. Any future application would also be strengthened by evidence that they had sought independent advice and support from a specialist source such a transport consultant.

After careful consideration, I have determined that the period of disqualification for the operator and its directors can be limited to 12 months. Any return to holding an operator’s licence after that time would need to be supported by evidence of the steps I have set out above.

12. Decision

I direct the licence must be revoked on the grounds set out above. A decision on the variation application is consequently not needed. I allow a 28-day period for the operation of the large goods vehicles to be wound down in an orderly manner.

I direct that the operator is disqualified from holding or obtaining an operator’s licence for 12 months. I make the same order in relation to Mr Spindler and Ms Nicholson as individual directors.

Gerallt Evans

Traffic Commissioner for the North West of England

1 July 2022