Decision

Decision for Blacks Truck and Plant Limited

Published 21 July 2021

0.1 IN THE NORTH WEST OF ENGLAND

1. BLACKS TRUCK & PLANT LTD OC2036224

2. Public Inquiry 15 June 2021

3. Decision of the Traffic Commissioner

4. Introduction and Background

This public inquiry was requested by Blacks Truck and Plant Limited (“the operator”) after a proposal was sent to revoke its restricted goods vehicle licence as it appeared it lacked the required level of financial standing.

The hearing was conducted virtually by consent of all the participants who appeared by remote video link using Microsoft Teams. I am satisfied all parties were able to participate as fully as they would have done in a traditional face to face hearing.

The operator was represented at the inquiry by its sole director Billy Black. The operator and its director were legally represented by Charles Stansfield, solicitor.

Licence OC2036224 was issued to the operator on 2 November 2020 authorising the use of 2 vehicles. Mr Black signed an undertaking on grant agreeing to provide financial evidence in the name of the operator for the period of October to December 2020. The terms of the undertaking also required the operator to show that the required level of financial standing (£4,800) had been maintained throughout that period.

The operator provided financial evidence as required but the average balance throughout the period was calculated to be £redacted and therefore short of the amount required for the size of authorisation (although sufficient for a single vehicle). This finding prompted the issue of the “propose to revoke” letter and consequently this public inquiry.

5. Evidence and representations

In advance of the hearing, Mr Black supplied further financial evidence for the period from March 2021 to May 2021. This again fell short of the required level of financial standing with an average balance of £redacted.

If not for a payment of £redacted from HMRC in relation to a PAYE refund in May 2021, the level for even a single vehicle would not have been shown. The operator has operated two vehicles since April 2021.

The financial evidence and other information provided by Mr Black has raised another concern about the compliance of this licence.

It is apparent that the sole source of income for the operator are payments made by redacted company name, itself the holder of a restricted goods vehicle licence (redacted licence number). These payments relate to the hire of vehicles and drivers by the operator to redacted company name.

Mr Black’s account was that he was previously employed by redacted company name and that the company had supported him to establish his own business. I noted that the operator was incorporated 3 days only before redacted company name appeared at a public inquiry in relation to its own licence. Mr Black insisted that was coincidental.

The close relationship between Mr Black and redacted company name is also evident in the history of the vehicle redacted vehicle registration. Mr Black at the public inquiry said he had first acquired the vehicle in September 2019 at around the time that redacted company name first acquired its own operator’s licence. In subsequent correspondence he amended the date to December 2019 and has provided some evidence of the transaction with the dealer at the time.

This was a year before Mr Black incorporated the operator as a company and whilst he was still an employee of redacted company name. Mr Black said he initially allowed redacted company name to use the vehicle (apparently without payment) and this became a formal hire arrangement after he established his company. The vehicle was registered on redacted company name licence between February 2020 and 2 November 2020, when it was transferred to the operator’s newly issued licence.

Mr Stansfield submitted the work undertaken for redacted company name was a sub-contracting situation. redacted company name hold a contract with a national power company to remove old lampposts and use their own vehicle to do this with additional work sub-contracted to the operator.

Mr Black explained that prior to his obtaining his own licence he was employed by redacted company name (and its predecessor redacted) to undertake the lamppost removal work. This involved going to the site where the lampposts were located and carefully removing them from their position using the vehicle mounted HIAB crane. They were then loaded on the vehicle and returned to redacted company name premises.

Since the operator licence has been issued, Mr Black has effectively continued working in the same way. He attends redacted company name’s premises with his vehicle each day and is given a list of jobs to do by an employee of redacted company name. When he returns to redacted company name’s premises, he strips the lampposts of any metal of value. The salvaged metal is stored up until he has enough to sell to a scrap metal merchant.

The remaining unsalvageable parts of the lampposts are collected from the site by a waste contractor. The waste contractor is paid by redacted company name.

Mr Black admitted he had only sold one consignment of salvaged metal in the last six months for the sum of £redacted. When I asked what why did not appear on the bank statements provided for the operator, Mr Black said the proceeds had been paid into his personal account.

Mr Black provided me with invoices that the operator had issued to redacted company name for the work over the last few months. This detail a charge for “Hire of Hiab lorry and man” at a daily rate of £redacted. Mr Black confirmed that meant the vehicle and its driver. The invoices also detailed charges for the hire of plant equipment by the operator to redacted company name and the hire of an “operative”, this being another employee of the operator who assisted the driver. The driver was mainly Mr Black himself although he is training his other employee to drive the second vehicle which has now been obtained.

Mr Stansfield’s submission was this “sub-contracting” arrangement was valid and complied with the terms of a restricted licence as the goods being carried were the property of the operator.

At the conclusion of the hearing, I invited Mr Black to submit further documentary evidence in relation to the sub-contract arrangements and other matters.

Mr Black has since provided me with the following documents:

• The V5 document for redacted vehicle registration confirming Mr Black (as an individual) has been the registered keeper of the vehicle since 29 September 2020. It had one previous keeper. Although the details of that previous keeper have not been provided, I am satisfied it was an unrelated company on whose operator’s licence the vehicle was registered from new in 2006 until October 2019 (around the same time Mr Black said he acquired the vehicle). I have not been provided with an explanation why there was a delay in registering the vehicle in Mr Black’s name.

• Mr Black was unable to provide a receipt for the vehicle’s purchase but has provided copies of bank transactions relating to the same. I am content to accept that Mr Black paid for the vehicle.

• The operator’s vehicle insurance policy. This confirms that the carriage of goods for hie and reward is excluded from the cover (as would be expected with a policy for a restricted licence holder)

• Two undated letters from Thomas Masterson, director of redacted company name. The first assets that a verbal agreement was reached with Mr Black for the hire of “1 wagon and an operative” at the sum of £redacted per day. The letter also claimed that redacted company name had agreed that the operator “would take ownership of the street lighting columns and anything of value on the columns i.e. scrap, once the columns had been removed from the ground”.

• The second letter confirmed that tools belonging to the operator had been stolen from redacted company name’s yard and the matter was in the hands of loss adjustors. The claim was apparently taking longer than usual but Mr Masterson asserted the operator would be reimbursed for its loss. A crime reference number was also supplied.

6. Consideration

Mr Black’s working routine as director of the operator appears to be little different to that as an employee of redacted company name. The only difference is that instead of being paid as an employee to drive a vehicle owned by redacted company name, he now invoices redacted company name for the hire of the operator’s vehicle and his own services as a driver. It is clear that his work is undertaken at the direction of redacted company name’s managers and controlled by that company.

Applying the balance of probabilities, I find it is more likely than not that the lampposts are the property of a person other than the operator after they have been removed from their site. Clearly prior to removal, they are the property of the power company. After removal, I cannot say whether they remain the property of the power company or if ownership passes to redacted company name as I have not seen the terms of the agreement for their removal between those two companies. I am however satisfied that there is insufficient evidence that ownership passes at any point to this operator.

Although there appears to be some arrangement for Mr Black to salvage metal from the lampposts, it is clear this is of incidental value. Further the only payment received for such salvage to date was paid to Mr Black in person and not the operator, which again indicates its peripheral and nominal nature. I also consider it is highly significant that it is redacted company name that meets the cost of disposal of the unsalvageable material. This is a further indication that ownership of the removed lampposts does not pass to the operator.

These findings also mean I reject the assertion made in Mr Masterson’s letter than there has been some agreement that ownership of the posts passed to the operator once removed from the ground. This is simply not consistent with the other evidence I have heard, most significantly Mr Black’s admission that it is redacted company name who shoulder the financial burden of disposing of the bulk of the posts after collection.

I have reminded myself of the provisions of Section 3(3) of the Act which provides

“A restricted licence is an operator’s licence under which a goods vehicle may be used on a road for the carriage of goods for or in connection with any trade or business carried on by the holder of the licence, other than that of carrying goods for hire or reward”

The importance of having the correct category of licence is also underlined by Section 3(6) of the Act which makes it a criminal offence to carry goods for hire or reward under a restricted licence.

I have also considered the recent guidance provided on this matter by the Upper Tribunal’s decision in 2020/020 Parker Body Repairs Ltd that the overall business model should be considered and the extent of the transport activity.

I do not accept the submission made on behalf of the operator that because the work of removing the posts can be conducted lawfully by a restricted licence holder (redacted company name), it is also lawful for the operator to undertake that work as redacted company name’s sub-contractor. Firstly, I would observe that it is an assumption that redacted company name themselves have the right to do the work as restricted licence holders. I have not seen any evidence of the agreement between redacted company name and the power company commissioning the work and cannot comment on its terms. I accept however that it is commonplace in such arrangements that property in the collected material passes to the operator contracted to undertake that collection. Indeed if the operator had directly contracted with the power company for the removal of the posts, my view may well have been different.

However if that contractor engages another operator to collect that material on its behalf, the precise nature of the sub-contract arrangement needs to be considered to determine the ownership of the goods carried and if the sub-contractor is undertaking haulage for hire or reward or not.

I accept that the payment made by redacted company name to the operator for the hire of the vehicle and the “operative” includes the work of removing the posts and subsequently stripping them at redacted company name’s premises. However a substantial part of the work (and therefore the payment) also involves the transportation of the lampposts from their original location to redacted company name’s premises. As I have set out above, I find that the ownership of the posts is not vested in the operator, so it follows that such transport activity is of goods belonging to another.

For the reasons given above, I am satisfied in this case that the operator’s involvement goes beyond what is permitted by a restricted licence. Clearly the operator’s vehicles are being used to carry goods and for the purpose of another business.

Given the close relationship between this operator and redacted company name I have considered whether this licence is indeed a front for the latter company. I have noted above the coincidence of timing between the operator’s establishment and redacted company name’s own call to a public inquiry to consider action on its operator’s licence. However without hearing evidence from redacted company name, I do not consider I can appropriately reach a conclusion on that issue. For the purposes of the decision that follows, I have treated redacted company name and the operator as two independent and separate entities.

7. Decision

I formally record a finding that that the operator does have sufficient available financial resources to meet the level required for the number of vehicles authorised standing and has not done so in the 8 months since the licence was issued. This means the operator is at risk of failing to continue to meet the requirement of sections 13C(4) and 13D of the Act that there be satisfactory facilities and arrangements for maintaining vehicles.

I am not prepared to defer a decision due to the length of time that the lack of available finances has persisted. The operator’s prospect of achieving financial standing is also entirely predicated on it continuing to undertake transport work for redacted company name. That activity is not permissible on a restricted licence and cannot be accepted as evidence of income to achieve financial standing. In the absence of any other evidence and applying the McKee test (as I would if considering a period of grace for a standard licence), I do not consider there is any realistic prospect of financial standing being achieved if I allow more time. The position in relation to the possible insurance payment is too vague as is the possibility of a future HMRC refund.

I may have considered allowing the operator to reduce its authority to a single vehicle if the only concerns about this licence had been limited to the financial issue. I am also mindful that the operator’s regular income is reliant on the sub-contract arrangement with redacted company name which cannot be allowed to continue in its current terms.

I also find that the operator has failed to fulfil the undertaking it gave in relation to financial standing and has failed to promptly notify the Traffic Commissioner of a material change in the circumstances of the licence namely its financial and trading position. The operation outside the terms of the restricted licence is also a material change. These findings engage the grounds for revocation in Section 26(1)(f) and 26(1)(h) and I apply those in my decision to revoke.

I have balanced the positive features with the negative features of the case. I give the operator credit that this is its first public inquiry although that must be seen in the context that it has fallen at the first hurdle since the licence was issued in November 2020. I also acknowledge that the evidence submitted generally indicates a compliant approach so far to vehicle maintenance (although I did have some concern that Mr Black admitted some driver defect reports were not always completed by the actual driver).

However I find the operation of the vehicles outside the terms of the restricted licence and without financial standing for such a prolonged period, amounts to a reckless act by the operator that led to undue risk to unfair commercial advantage. The work undertaken clearly called for a standard national licence to be held and the operator has unfairly benefited over the last 8 months from operating without that additional burden.

That negative outweighs any positives and calls for regulatory action in the severe bracket..

I cannot answer the Priority Freight question in the affirmative. Mr Black’s evidence showed that he still does not truly understand the significance and gravity of his approach. I cannot have confidence that the operator will be compliant in future with Mr Black at the helm.

The unfair competitive advantage the operator has derived is such that I also consider it is proportionate to put the operator out of business, addressing the Bryan Haulage question.

In conclusion, I direct that the operator’s restricted licence should be revoked. I defer the effective date of revocation to allow proper notice to be given to the operator. However, the operator is warned that during the remaining term of the licence, the vehicles must be used lawfully including in compliance with the terms of the restricted licence.

I have considered whether to disqualify the operator and Mr Black under Section 28 of the Act from holding or obtaining an operator’s licence in the future, and from being the director of a company holding or obtaining such a licence.

On balance, I step back from taking such action. Mr Black is a new and inexperienced operator. I am satisfied that he has not wilfully set out to operate on a restricted basis when he knew that he required a standard licence.

I would be prepared to consider an application by the operator or Mr Black for an operator’s licence in future if it could be demonstrated that the lessons of this licence had been learnt. This includes the possibility of the current business being revived with the grant of a standard licence. However if such an application were made, the operator and/or Mr Black would need to demonstrate the appropriate level of financial standing and I would expect to see evidence of steps taken to improve awareness of the requirements of operator’s licensing.

Gerallt Evans

Traffic Commissioner for the North West of England

30 June 2021