Decision

Decision for DR Freight Ltd

Published 26 February 2024

0.1 EAST OF ENGLAND TRAFFIC AREA

1. DECISION OF THE DEPUTY TRAFFIC COMMISSIONER

2. PUBLIC INQUIRY HELD IN CAMBRIDGE ON 15 JANUARY 2024

3. OPERATOR: DR FREIGHT LTD

3.1 LICENCE OF2060759

4. Background

DR Freight Ltd holds a standard national goods vehicle operator’s licence (OF2060759) for three vehicles and three trailers. Three vehicles are currently specified on the licence, which was granted in October 2022. The sole director of the company is Dovile Vilcinskiene. The nominated transport manager on the licence until he was dismissed in October 2023 was Mark Connor. Since then, the operator has been accorded a period of grace in which to find a new transport manager. Prospective new transport manager Gheorghe Dinculescu attended the public inquiry on 15 January 2024.

5. 2022 Public inquiry

The company’s original application on 2022 was for ten vehicles and ten trailers. The application was considered at a public inquiry in October 2022 by deputy traffic commissioner Gillian Ekins. DTC Ekins was sufficiently concerned by Dovile Vilcinskiene’s inexperience in the industry to grant the licence only with a reduced authority of three vehicles and three trailers, after having secured undertakings from the company that i) an independent compliance audit would be carried out and ii) evidence of continuing financial standing would be provided, both by 1 June 2023. In her written decision, DTC Ekins expressed concern that the company’s plan was to start with agency drivers, which did not seem “the optimum way to start the business”. She also commented that “Mrs Vilcinskiene appeared not to understand the requirement for her company to operate the fleet and control the drivers”: the concern was that “she might be inclined to allow a contractor to control the routes and give instructions to its drivers”.

6. Audit

1 June 2023 came and went without the audit (or evidence of finances) having been received. After some chasing from the office of the traffic commissioner in Cambridge, transport manager Mark Connor emailed on 20 June with the necessary evidence of financial standing. He added that he had previously posted the audit on 18 May 2023 (it had not been received) and would email it the next day (21 June) as the file size was so big. On 22 June he emailed again to say he would try to split the audit into two smaller files and email them. He would also send it by recorded delivery. Neither email(s) nor recorded delivery letter were received, so the caseworker emailed Mr Connor again on 3 July. Mr Connor responded the same day to say that he would hand deliver it to the Cambridge office when in the area on 6 July. He did not. The caseworker emailed again on 10 July, chasing. Mr Connor replied on 17 July, saying that he would hand it in to the Cambridge office personally on 19 July. He did not. After yet more chasing, he emailed again on 25 July to say he would deliver it by hand on 29 July. In the event, he emailed it on 26 July, almost two months after it was due.

The email attached the audit but did not contain the operator’s proposals for implementing the audit’s recommendations (the requirement to make such proposals was set out in the undertaking). Reminded of this requirement, Mr Connor responded that “our action plan is to address shortcomings and use a HR company to draw up policies”. This was amongst the most concise action plans that I have ever come across.

One of the compliance team was made suspicious by Mr Connor’s prevarications in submitting the audit. He emailed the audit company asking for confirmation that they had carried it out and on which date. The audit company replied that it had not carried out the audit and had no dealings with DR Freight Ltd or Mark Connor.

7. DVSA investigation

In October 2023, DVSA carried out a joint drivers’ hours and vehicle maintenance investigation into the company. The traffic examiner concluded that the operator “has minimum procedures and policies in place” to ensure compliance with drivers’ hours rules. The operator had been unable to produce tachograph data prior to his visit on 11 October, despite having been given two weeks advance notice. The transport manager Mark Connor had “limited knowledge” of the regulations for drivers’ hours and working time. Worse, he had made up the audit himself and tried to pass it off as the work of an established auditor, to make it look as though the operator was compliant. The director Dovile Vilcinskiene stated that she was unaware of this. The traffic examiner commented that the director appeared to take people’s word that compliance was being achieved and was failing to do any due diligence.

On the roadworthiness and maintenance side, the vehicle examiner recorded an “unsatisfactory” marking, finding that:

• the frequency of the preventative maintenance inspections (PMIs) was very unsatisfactory, with large gaps between inspections. One vehicle had not been inspected since April 2023; another not since June 2023 – the examiner visited on 16 October 2023 and inspections were supposed to take place every six weeks.

• very few roller brake tests had been carried out. The vehicles had been tested unladen on the few occasions they had had roller brake tests.

• driver defect reporting was ineffective. Drivers were carrying out small repairs such as bulb replacements, but these were not being recorded in writing as defects.

• a tyre management policy was lacking  (it was left to drivers and the safety inspections); the company’s torque wrench was out of calibration.

• transport manager Mark Connor had fraudulently created an audit under the letterhead of an established audit company.

8. Public inquiry

Given the above, it was inevitable that a public inquiry would be held into the company and transport manager. Call-up letters were sent on 6 December 2023. The letters cited Section 26(1)(b), (e), (f) and (h) and Section 27(1) of the 1995 Act.

8.1 DVSA updates

Shortly before the inquiry I received updated reports from DVSA based on the records submitted by the company for the inquiry. DVSA traffic examiner Raymond Hawkins stated that drivers had no contracts of employment (they were “limited company” self-employed drivers) and their drivers’ hours infringement reports, although now available, had not been signed by the drivers and no explanation of the infringements had been given.  However, he reported that, on the whole, improvements had been made since his visit in October 2023.

DVSA vehicle examiner James King reported that vehicles were now being given safety inspections every six weeks but that not all vehicles had had roller brake tests carried out. Since his October visit there had been one clear roadside encounter with a vehicle operated by the company and another encounter had resulted in an  immediate prohibition for a loose wheel arch likely to rub on a tyre. The operator had improved since the October 2023 visit but “still has some way to go before they reach full compliance”.

8.2 Public inquiry

The public inquiry took place in Cambridge on 15 January 2024. Present were director Dovile Vilcinskiene and the proposed new transport manager Gheorghe Dinculescu. The company was represented by transport consultant Jason Baxter. Vehicle examiner James King and traffic examiner Raymond Hawkins also attended.

Former transport manager Mark Connor did not attend. Half an hour before the inquiry’s allotted start time, he emailed to say he had been planning to attend but owing to a medical condition was unable to drive. He acknowledged that the hearing would go ahead without him and stated that he no longer wished to hold a transport manager CPC owing to the stress and personal loss holding one had caused to himself and his family.

8.3 Evidence of Dovile Vilcinskiene

I asked Dovile Vilcinskiene how she could have been unaware that Mark Connor had fraudulently created an audit. Given that it was she who had given the undertaking to have an audit, surely she must have followed up on that and arranged one with a suitable provider? Ms Vilcinskiene made the following points:

• she had left it to Mark Connor to arrange an audit after he had assured her that he knew just the company to carry one out. She had continued to ask him what was happening and when she had finally seen the audit had assumed it was genuine.

• she had not thought it odd that she had never received a visit from the auditors as Mr Connor had kept all the drivers’ hours and other records at his premises.

• asked about the arrangements with the maintenance provider for roller brake tests, she said that she had left brake testing to Mr Connor. She had assumed that he would be doing everything properly because of the forthcoming audit.

• she had been unaware of the failure to present vehicles for PMIs for extended periods of time. She had not noticed any drop off in the invoices form the maintenance provider. Mark Connor had had the maintenance planner. She had not had access to the R2C maintenance IT platform on which she might have seen that PMIs were not taking place.

• she had been using “limited company” self-employed drivers, although there were plans to move them over to PAYE after January 2024.

Summing up, Jason Baxter said he had been contacted by the company on 13 October 2023 after the company had found out from DVSA that Mark Connor had falsified the audit. He (Mr Baxter) had supplied the operator with the necessary policies and procedures. The company had been let down by its initial consultants and tachograph analysis providers, Logico NE. Former transport manager Mark Connor had compounded the problems by seriously misleading Ms Vilcinskiene. The prospective transport manager Mr Dinculescu had the right ideas and could be trusted to manage a compliant operation. The company could survive a curtailment  from three vehicles to two vehicles and could survive a short period of suspension. Any suspension of more than 21 days would break the company as it would lose vital contracts.

9. Findings

After considering all the evidence, I make the following findings:

• the company lacks stable and effective establishment in that has not fulfilled the requirement of having drivers in proportion to the fleet (Section 27(1)(a) and Schedule 3 paragraph A1(2)(c)(ii) of the 1995 Act refer). No divers were employed: the use of so-called “limited company” drivers is not in conformity with HMRC advice that to all intents and purposes, lorry drivers cannot be self-employed when they are driving a lorry, unless they are owner/drivers with a licence to operate. DTC Ekins cautioned against the use of drivers not employed by the company, so it is dispiriting to find that that advice was ignored.

• the company has failed to fulfil its undertakings (Section 26(1)(f)) refers –

• to ensure that rules relating to drivers’ hours and tachographs are observed. Minimal systems were in place when TE Hawkins visited in October 2023. There has been some improvement since, but as drivers are still not signing infringement reports and there is no evidence that infringements are being brought to drivers’ attention. Part of the problem of using “limited company” drivers is that there is no direct employer/employee relationship and control and discipline are much harder to exercise.

• to have an independent compliance audit carried out by 1 June 2023. In the event no audit was carried out at all; the transport manager Mark Connor instead choosing to manufacture an audit report fraudulently in an attempt to disguise his failure to arrange one and to give the impression of a good degree of compliance.

• to ensure that drivers report defects in writing. Drivers appear to have identified and rectified defects without recording this.

• the company has failed to fulfil the promise, given on application, that its vehicles and trailers would be given safety inspections every six weeks (Section 26(1)(e) refers). Gaps of up to six months were found by DVSA.

• former transport manager Mark Connor is not of good repute (Schedule 3 and Section 27(1)(b) of the 1995 Act refer). He has clearly failed to exercise the required continuous and effective management of the transport activities of the business. On his watch PMIs have not been carried out at six week intervals, brake tests have not been carried out, and drivers have failed to record defects in writing. He had almost no systems in place to ensure the observance of drivers’ hours rules. He attempted to deceive both operator and the traffic commissioner by using an audit provider’s letterhead to pass off as genuine an audit which he himself had written to make the operation appear compliant. This is a breathtaking act of dishonesty and deception and wholly unworthy of a supposedly professional and reputable transport manager: Mr Connor’s good repute cannot possibly survive deliberate misconduct  of this kind.

10. Consideration

I gained the very strong impression at the public inquiry that director Dovile Vilcinskiene was completely at sea. According to her own account, she appears to have relied on her transport manager for everything and never sought information on how compliance was being managed or whether the audit was being done. Given that she never met the auditors (for the simple reason that they never came) and was never invoiced by the audit company (which had not in fact ever been engaged to carry out an audit), alarm bells should have rung. Such reliance on Mr Connor is all the more inexplicable in the light of DTC Ekins’s adverse comments (expressed in her decision letter following the October 2022 public inquiry) about Mr Connor’s lack of preparedness for that inquiry and poor degree of knowledge he exhibited. These comments should have put the director on warning that her transport manager could not be left unchecked to do his work.

The replies given by Ms Vilcinskiene to my questions did not inspire me with confidence that she could be relied upon to manage a compliant operation in the future. Many of her answers consisted simply of the phrase “I don’t know”. While Mr Baxter has provided her with the right policies and procedures and has introduced improvements, and while Mr Dinculescu appears to have a reasonable understanding of the responsibilities and duties of a transport manager, I remain unconvinced that Ms Vilcinskiene has the necessary drive and determination to assume her responsibilities as a director and ensure that others are carrying out their duties and tasks.

11. Balancing act

I weighed up the negative against the positive issues. On the negative side were the above findings. On the positive side were the recent improvements introduced by Mr Baxter, noted by the traffic and vehicle examiners. But I concluded that the negatives heavily outweighed the positive factors. This operator was seriously non-compliant right from the start of its licence. The necessary drivers’ hours monitoring system simply was not there, while vehicles were going for as much as six months without a PMI. The director abrogated her responsibility to ensure that the undertaking she gave to DTC Ekins about the independent audit was fulfilled. If it had not been for a vigilant caseworker, the forgery of the audit by Mark Connor might never have been detected. Whilst I accept that Ms Vilcinskiene was deceived by Mr Connor, in the end responsibility for a fraudulent audit lies with her as the director. An act of deception on this scale is sufficient in itself to cause the operator to lose its good repute (Section 27(1)(a) of the 1995 Act refers).

11.1 Priority Freight and Bryan Haulage questions

I asked myself if I could trust this operator to be compliant in the future (the Priority Freight question). The answer is an emphatic no. DTC Ekins expressed concern at the October 2022 public inquiry about the operator’s ability to operate compliantly – that was why she only granted the application in the much reduced form of three vehicles and trailers (the application had been for ten). She specifically warned the company that the director needed to be more involved and that the transport manager appeared to lack knowledge and preparation. Despite that, the director took a completely “hands-off” approach and relied on her transport manager’s assurances that all was well, despite no evidence to that effect being available. She turned a blind eye to the obvious indications that all was not at all well – lack of invoices for PMIs, lack of contact with auditors or invoice from them. While Ms Vilcinskiene came across to me at the public inquiry as a pleasant and decent person, nothing about her answers or state of knowledge suggested that she is capable of assuming the responsibilities of the director of a road haulage company.

A negative answer to the Priority Freight question tends to suggest an affirmative answer to the Bryan Haulage question of whether the operator deserves to go out of business. Because of the serious failure to abide by the stated six week maintenance interval and because of the active deception of the forged audit, I conclude that it does.

12. Decisions

12.1 Operator licence

I have concluded that the operator lacks good repute and lacks stable and effective establishment. Revocation of the licence is therefore mandatory under Section 27(1)(a) of the 1995 Act. I am also revoking it under Section 26(1)(e) and (f) of the 1995 Act. I am allowing 28 days for the operator to wind down its business: the  revocation will take effect from 0001 hours on 10 March 2024.

12.2 Disqualification – operator

For the reasons outlined above, and having performed the same balancing act, I conclude that both the company and director Dovile Vilcinskiene should be disqualified under Section 28 from holding or obtaining an operator’s licence in the future and (in Ms Vilcinskiene’s case) from being the director of any company holding or obtaining such a licence. In deciding upon the length of the disqualification, I have taken account of paragraph 108 of the Senior Traffic Commissioner’s Statutory Guidance Document 10. This states that for a first inquiry a disqualification of between one and three years could be appropriate and that in severe cases where, for example, the operator allows drivers to falsify records, an indefinite period of disqualification may be merited. This is the operator’s second inquiry (although the first was held to consider the application); although drivers have not falsified records, the transport manager certainly has and the director was negligent in not picking this up. I conclude that the company and Dovile Vilcinskiene should serve a two year period of disqualification, which I consider strikes the right balance between the seriousness of what has happened and the fact that the falsification was carried out unbeknownst to the director (although had she been carrying out her director’s responsibilities properly, she would have known).

12.3 Disqualification – transport manager

Having removed his good repute, I must also disqualify Mark Connor from acting as transport manager on any operator’s licence (paragraph 16 of Schedule 3 refers). His actions have been so serious as to make an indefinite disqualification appropriate, particularly as he has sought to evade questioning by failing to appear at the public inquiry.

12.4 Nicholas Denton

Deputy Traffic Commissioner

7 February 2024