Decision

Decision for C K Removals Limited (OF2028418) & Transport Manager: Paul Kelly

Published 14 May 2024

0.1 In the Eastern Traffic Area

1. Written Decision of the Deputy Traffic Commissioner

2. Public Inquiry held on 18 April 2024 at Cambridge

3. Operator: C K Removals Limited (OF2028418) & Transport Manager: Paul Kelly

4. Background

C K Removals Limited, the “operator company”,  holds a Standard Operator’s Licence, granted in December 2019, to operate three vehicles.

Paul Kelly is the sole director and transport manager.

Following the issue of an Immediate S-marked prohibition in June 2023 in respect of faulty brakes and wheel security, DVSA conducted an unannounced Maintenance Investigation Visit Report (MIVR), in August 2023.

The investigation raised concerns regarding:

• Late PMI safety inspections;

• Missing PMI records for vehicle CN08 AEF;

• Maintenance documentation not being correctly completed, with mileages missing, no brake tests, tyre pressures and ages not recorded,

• Incorrect/incomplete sign off of PMI sheets,

• Deficiencies in driver defect reporting systems, missing reports, wrong booklets;

• MOT failure rate (33%) above National average (11%) and operator’s vehicle failed MOT on safety critical defects (brake, pressure/vacuum warning, exhaust/emissions);

• Ineffective wheel torquing arrangements

• Change of maintenance provider not notified;

• No safety recall notification system in place.

• Prohibition (delayed) issued at fleet investigation for emissions warning light;

The DVSA Vehicle Examiner noted that the vehicle subject to the prohibition on the 30th June 2023 in respect of safety-critical defects was used by Paul Kelly on the 6th July whilst still under the prohibition.
“I am concerned that Mr Kelly as the CPC holder and Transport Manager should be aware that the use of vehicle on a public road on the 6th July 2023 with an active road worthiness prohibition constitutes a serious offence. As a CPC holder, Mr Kelly should be aware that an active road worthiness prohibition meant he could no longer drive the vehicle to his maintenance provider and that the vehicle had to be recovered”.

The operator stated in response to the investigation report that he was en-route to his repairer but the VE stated:
“the evidence before me suggest otherwise, as there was multiple ANPR hit on the vehicle in Hampshire, which is miles away from the maintenance provider’s address on the day in question.”

On 18th December 2023, the Traffic Commissioner issued a “Propose to Revoke” letter in respect of the substantial failings in the maintenance investigation. The operator company requested a Public Inquiry.

5. The Public Inquiry

At the public inquiry, the operator company attended through sole director Paul Kelly who is, effectively, the operator. The operator company and Paul Kelly were represented by Ms Angelica Rokad, Counsel.

DVSA Vehicle Examiner, Christian Jones , was not requested to attend by the operator company, and his evidence was accepted at the inquiry.

Prior to the inquiry, I received a full brief containing the DVSA evidence and the operator’s response to the DVSA investigation and the proposal to revoke letter. I also received an Addendum Report from VE Jones.

On the morning of the inquiry I received from the operator company Bank of Scotland bank statements in the name of “Careful Kelly Removals Limited”, a separate legal entity.

I heard evidence from the director/transport manager and representations from Counsel.

6. Findings on the Evidence

I find grounds for action against the licence under the following provisions of the Act:

i. Breach of undertakings (Sec. 26(1)(f)) – there is a breach of the undertakings on an operator’s licence in respect of; - keeping vehicles fit and serviceable – Immediate “S-marked”   prohibition issued/prohibition at annual Test.

• Keeping complete and correct records of maintenance safety inspections – incomplete and late inspection reports.

• Driver defect reporting system – Driver detectable prohibitions and defect reporting/rectification records incomplete.

ii. Breach of Condition - Failing to notify material changes (Sec. 26(1)(b))– finances, trading account for different entity, change in maintenance provider.

iii. Failing to meet statement of expectations (Sec. 26(1)(e)), in respect of maintenance intervals and arrangements.

iv. Prohibitions issued against vehicles/drivers (Sec. 26(1)(c)(iii)).

With regard to the use of the vehicle subject to a safety-critical prohibition on the 6th July, the evidence of the DVSA Examiner is clear. Having received the explanation from the operator/transport manager that he was driving the vehicle to his maintenance provider on Oxford Road on the 6th July, he then checked ANPR camera evidence and identified use of the vehicle in the Hampshire area on other occasions on the 6th July.

The operator was advised in the call-up letter that any challenge to the DVSA evidence requiring the attendance of the Examiner must be notified in advance of the hearing. He had not disputed the ANPR evidence in September 2023 or on receipt of the brief, and he decided against asking me to adjourn when I raised the issue with his counsel at the hearing. His oral evidence at the hearing that it may have been the maintenance provider using the vehicle in Hampshire is simply not believable. The VE was clearly checking the veracity of the operator/TM’s statement that he was on his way to the maintenance provider, so the ANPR hits were before the vehicle had even been received by the provider.

In any event, the driving of the vehicle by the director/transport manager on the 6th July was wholly unacceptable as the driving was more than 5 days after the prohibition was issued and any responsible operator/driver should have arranged for the vehicle to be taken to the maintenance provider at the earliest opportunity by recovery vehicle. Having regard to the nature and severity of the prohibition defects, the operator/transport manager has shown a culpable disregard for road safety.

7. Considerations and Decision

The operator company has failed to demonstrate financial standing for the 3 vehicles authorised, (or even the single vehicle in possession) and therefore the licence must be revoked under sectiion 27(1)(a) for failing to satisfy the mandatory requirement under section 13A(2)(c).

In November 2023 the operator company produced a Barclay Business Saver Account showing £(REDACTED). The evidence of financial standing for the period 1st January 2024 – 31st March 2024, requested in the call-up letter, elicited 3 zero balance monthly statements from Metro Bank.

Financial standing is a “continuing requirement which must be met throughout the life of the licence” (2013/048 Jane Townsend).

Counsel mentioned a “period of grace” but I cannot grant a period of grace to an entity that has not applied for an operator’s licence (Careful Kelly Removals Ltd) and I have been presented with no evidential basis for the operator company being able to satisfy the “Duncan McKee” test, (Upper Tribunal 2014/008). As stated in that case; “In our view, when considering whether or not to grant a period of grace, Traffic Commissioners will need some tangible evidence, beyond mere hope and aspiration, that granting a period of grace will be worthwhile, and that there are reasonable prospects for a good outcome”

I note that the financial statements for Careful Kelly Removals Ltd cover the period 1st January 2024 – 31st March 2024 and the company has been consistently overdrawn to a sum close to £(REDACTED). I do not know the level of authorised overdraft, but it would seem that this entity would not be able to transfer funds to the operaror company or establish financial standing in its own right.

In holding an operator’s licence in the name of C K Removals Ltd whilst trading under the name of a separate legal entity, Careful Kelly Removals Ltd, the operator has acted illegally.

It would appear that the action was not inadvertent, as an application had been made in October 2018 in the name of Careful Kelly Removals Ltd, but it was withdrawn before consideration by the Traffic Commissioner.

It is noted that even the PMI invoice from the operator company’s maintenance provider (page 75 of the brief) specifies “Bill to Careful Revovals” rather than the operator company.

The explanation given by Mr Kelly that he needed to keep trading in the name of Careful Kelly Removals Ltd for the sake of a “bounce-back loan” raises questions about the leigitimacy of that loan, but that is a matter for HMRC.

In considering the good repute of the operator company, I firstly address the Priority Freight (T/2009/225) question; “how likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime?”

I have regard to;

• the poor compliance history, a good indicator of likely future compliance;

• the poor behaviour of the operator/transport manager in incurring a “Serious/Immediate” prohibition in respect of brakes;

• the aggravation of that prohibition by driving the vehicle on a public road with the prohibition still in place, 6 days after it was imposed;

• the operator/transport manager’s explanation that he was taking the vehicle to his repairers being contradicted by ANPR evidence;

• the failure to update PMI documentation and brake test arrangements after the unsatisfactory DVSA investigation;

• the tardy instruction of solicitors and transport consultants;

• the presentation of financial standing evidence in a similar, but differerent, company name, on the morning of the hearing, despite that evidence having been requested by the OTC “at least 14 days in advance of the hearing”, in the call-up letter issued on 13th March 2024;

• I also note that the financial evidence was requested in chase-up emails to the operator’s solicitors by my clerk on the 15th April. The response on the 16th April stated “the current account for the operator does not historically show funds in place”. That is a massive understatement. In fact, the Metro current account for the operator company showed zero balance and zero trading for the period of 3 months submitted. There was no attempt before the hearing to explain the reasons for the statements not being produced and the bank statements in the name of Careful Kelly Removals Limited were presented to my clerk on the morning of the inquiry without any qualification/proviso;

• the wholly unconvincing evidence of the operator/transport manager in relation to the “bounce-back loan”, the use of the vehicle subject to a prohibition, and the missing driver defect reports.

In the case of Arnold Transport and Sons Ltd. v. DOENI [2013]NT082, the Upper Tribunal stated;

“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.”

This operator comes between the second and third group in the Arnold categorisation. Some positive steps have been taken and I weigh these in the balance. They include:

i. The instruction of legal representatives shortly before the public inquiry;

ii. Entering into a Compliance Service Agreement with Plumwood Transport Consultants on the 2nd April 2024;

iii. Producing infringement and missing mileage reports for the period 1.1.24-31.3.24;

iv. The absence of infringements/missing mileage concerns;

v. Completion of Transport Manager Refresher Training on 22nd March 2024.

DVSA refer to a “slight improvement” between the compliance documentation as at the date of the DVSA investigation and the records produced shortly before the public inquiry. Having looked at the documentation produced, and having regard to the absence of driver defect reporting records for January, February, and all but a few dates in March, I find that improvement to be far too slight and insignificant. He is still using PMI sheets which do not conform to the DVSA Guide to Maintaining Roadworthiness. Brake test records are unsatisfactory despite this being one cause of the “S – marked”, Immediate prohibition on the 30th June 2023. Similarly, tyre inspection records are incomplete. Even allowing for the low statistical base, a 33% MOT failure rate before investigation, rising to 50% at the date of the inquiry, is wholly unacceptable. DVSA Examiner Jones states “it appears like there continues to be a trend of the Operators vehicle failing MOT on Safety Critical defects”. I note that MOT is the minimum standard for vehicles on the public road.

It is often said that trust is a key element of the operator licensing regime (Arnold and, Fenlon 2006/277) and I do not trust this operator/transport manager to keep to any promises he may make. He had the opportunity to accept the “Propose to Revoke” letter in December 2023 and make an application for a new licence which would at least have demonstrated a recognition of his previous failings and a commitment to getting matters in order. Instead, he has requested a public inquiry, producing a savings account for the (non-trading) operator company, thereby prolonging the unlawful operations for the maximum period.

In doing so, the operator has gained an unfair commercial advantage over other operators striving to operate correctly within the financial and other terms of their entitlement.

I also note that the 2024 records demonstrate that specific promises and assurances given in response to the unsatisfactory maintenance investigation in August 2023 have not been sufficiently adhered to.

I determine that the operator company has lost its good repute and, as sole director, Paul Kelly loses his good repute.

I place the operator company’s failings in the “Severe”/“Severe to Serious”  category in Annex 4, Senior Traffic Commissioner’s Statutory Document No 10, Starting Points for Regulatory Action.  I have regard to the period of trading under an unlicensed entity, the failure to rectify even up to the date of the public inquiry and the persistent operator licence failures and inadequate response.

I have considered the operator/transport manager’s personal mitigation which I was asked to receive “in camera”, (REDACTED) but this offers little explanation/mitigation as (REDACTED) had no specified role in the maintenance of the vehicles and, at all times, Paul Kelly had statutory responsibility as Transport Manager.

In considering the matter of good repute of Paul Kelly as the transport manager, he is, effectively, operator as well as transport manager. All the above issues relating to his repute as an operator are relevant, with the additional factor, that the professional qualification is supposed to provide continuous and effective management of the transport operations for the benefit of the operator company and to provide re-assurance to the Traffic Commissioner. Paul Kelly has patently failed to do this and his good repute as a transport manager is forfeited.

At the conclusion of the inquiry I revoked the licence immediately under section 27(1)(a) relating to the lack of the mandatory requirement of financial standing under section 13A and the trading under a different legal entity issue.

Having made the above determination in respect of repute of the operator company and the repute of the transport manager I now further revoke the licence under the mandatory grounds in section 27(1)(a) – loss of good repute(section 13A); and, Schedule 3, paragraph 14A(1)(b) – loss of transport manager good repute.

The licence is also revoked under the discretionary grounds under section 26 of the Act as cited in paragraph 13 above. Having answered the “Priority Freight” question in the negative, the Bryan Haulage (No. 2) question; “is the conduct such that the operator ought to be put out of business?”, is answered in the affirmative.

Disqualification as a director/operator is not automatic following revocation of a licence but in this case it is appropriate, proportionate and necessary. The operator company is disqualified from holding or obtaining an operator’s licence for 2 years, and, Paul Kelly, as sole director, is disqualified from holding or obtaining an operator’s licence, or from being concerned in the management of a transport undertaking, for 2 years.

Under paragraph 17B(2) of Schedule 3 (as amended by the Road Transport

Operator Regulations 2011), where a traffic commissioner determines that a transport manager has lost their good repute, the traffic commissioner must order the person to be disqualified from acting as a transport manager.

On loss of good repute, Paul Kelly is disqualified from acting as a transport manager on any licence for a period of 2 years.

I make a formal rehabilitation order that, in order to regain his good repute, Paul Kelly will need to retake the Transport Manager CPC. There were far too many issues at the Public Inquiry where he attributed his failings to lack of knowledge.

Anthony Seculer
Deputy Traffic Commissioner, 

23rd April 2024.