Decision

Decision for Dynamic Storage Limited (OH1142176)

Published 26 April 2021

0.1 DYNAMIC STORAGE LIMITED

0.2 OH1142176

1. PUBLIC INQUIRY IN BRISTOL

1.1 12 OCTOBER 2020

2. BACKGROUND

Dynamic Storage Limited is the holder of a standard international goods vehicle operator licence authorising the use of twenty six vehicles and twenty trailers from a site in Yate, near Bristol. Thirteen vehicles are currently recorded as in possession.

On 15 October 2019, I was notified by Network Rail that one of the operator’s vehicles had struck a bridge at Hatchet Road, Stoke Gifford, Bristol. As has become standard practice, the company was asked for an explanation and called to a hearing with the driver, Mr Gabor Lomas. Whilst this matter was dealt with at the hearing, I made no adverse finding in relation to the company in relation to it and the driver decision has been given elsewhere. It has no impact on my decision in relation to the operator and I do not consider it further here.

On 16 January 2020, directors Julie Annette Barratt and Steven John Barratt were removed from the licence to be replaced by a sole new director, Paul Willis. Mr Willis declared the following matters:

Personal Bankruptcy arising from accumulated credit card and other debts following deception by former business partners 12.01.2012 Automatic discharge (no certificate 12.01.2013) Bristol. No Operator’s Licence affected

Date of conviction	29 Aug 2013
Offence	Theft
Offence details	Between 2003 and 2008 I held a Power of Attorney through my Chartered Accountancy practice. During that period I withdrew monies to cover fees and disbursements related to my work in managing the funds under my control. Subsequently in 2013 I pleaded guilty to the charge of theft as the amounts of money withdrawn were excessive and were not permitted under Trust Law. I thoroughly regret these actions and have worked steadily after release in November 2014 to rebuild my reputation of trust. I have been given the opportunity to become a director of Dynamic Storage Ltd which is now owned by members of my family.
Court	Bristol
Penalty	38 months imprisonment

The change in control was referred to me and I called the operator to public inquiry on the following grounds:

under Section 26(1)(h) of the Act, that there had been a material change in the circumstances of the licence holder in that the holder was no longer fit to be the holder of a licence.

under Section 27(1)(a) of the Act, that the operator was not of sufficient financial standing

Ms Julie Barratt was invited, but not called, to the inquiry to give evidence of how she exerted continuous and effective control over the transport operation. Driver Gabor Lovas was called to consider his conduct as the holder of a vocational driving licence.

3. THE PUBLIC INQUIRY

Paul Willis and William Mortimer attended for the operator, represented by Elizabeth Caple, solicitor. Driver Gabor Lovas duly attended for his driver conduct hearing.

Proceedings were recorded and a transcript can be produced as required. I do not record all the evidence here, only that which is necessary to come to a decision.

3.1 Preliminary matters

Mr Lovas’ driver conduct was considered first with no adverse findings in relation to the operator.

I had been provided with a statement on behalf of the company in advance. From that, it became apparent that the listed transport manager, Julie Barratt, had ceased acting as such in January 2020 and I had not been notified. Copies of maintenance records and other documentation were provided in advance in line with the standard Covid directions.

I indicated that, apart from some driving without a card, I had no general compliance concerns. The issues were the conviction, the transport manager situation and financial standing.

Financial standing was discussed within the hearing and considered at Appendix 1.

3.2 The evidence of Paul Nigel Willis

Mr Willis adopted his statement. He told me that he had acted with enduring power of attorney for a lady in a personal capacity and believed he could charge a fee but it had become apparent later on that he could not. He had discussed charging with the lady concerned but could not recall whether an amount had been agreed. Had he been unable to charge, he would not have taken on the role. It was only during the criminal case that he had become aware that he could not charge for a personal appointment. The lady’s solicitor had been involved but he could not recall whether they knew about the charge. He believed that the figure of £120 per hour was reasonable. He had discussed that with the lady at the start but not in later years when she was in a care home.

His role was greater in the earlier years and covered all sorts of things not necessarily financial and included shopping and other activities. He felt a responsibility to do them and to charge for them. It was only after the lady passed away that her daughter raised a complaint. The daughter also had power of attorney and he believed she knew what he was charging although he could not remember that conversation in any detail so did not know whether she knew he was charging for the other activities.

The lady’s daughter then referred the matter to the police. In total he had taken around £150,000 from the lady’s estate over a 5-year period. He pleaded guilty and cooperated with the police. He was given a lengthy sentence of 3 years and 2 months. There was also a confiscation order but he had no funds at that point. He was released on licence and tag quite early. He was remorseful. On release, he took a job in Weston but was made redundant after 6 months. He was then contacted by Steven Barratt at Dynamic Storage and was offered a position as finance manager.

I noted that £150,000 at £120 per hour over 5 years equated to 5 hours a week and asked what that related to. Mr Willis said that it was managing investments and visiting the lady in the care home. I put it to him bluntly that charging £120 per hour to visit someone in a care home seemed unreasonable. Mr Willis told me that he had served a long sentence.

Ms Caple moved Mr Willis to the matter of the transport manager. He told me that, in January, he had notified himself as director and made full disclosures. The plan was to have Mr Mortimer to replace Ms Barratt. His understanding was that Ms Barratt should stay on the licence until the new application to add Mr Mortimer was granted. There was a problem because Mr Mortimer could not find his CPC. It then moved in to March and everything stopped. In June, they were told that Mr Mortimer would need to attend a refresher course and the licence would need to be downgraded to national in line with Mr Mortimer’s qualification. Meanwhile, the company had recruited Declan McKeigue who held a recent international CPC so an application was made to add him on to the licence and Mr Mortimer’s application was withdrawn. Mr McKeigue resigned after 2-3 months and his application was to be considered at this hearing. Mr Willis’ understanding from what he had read was that, if you remove a transport manager without a new transport manager in place, then TC agreement had to be sought but, as an application had been made, he thought he could keep Ms Barratt on the licence. He now understood that to be wrong but hadn’t done it to conceal anything. Mr Mortimer had been undertaking the role since January. There had been two CPC holders in the business at all times.

The current position is that Mr McKeigue had left the business and his application has been withdrawn. Ms Barratt had been removed as transport manager. An application had been made to downgrade to national and to add Mr Mortimer. A further new transport manager would be starting at the end of October.

I asked Mr Willis what legal advice he took when he bought the business. It had been from a corporate solicitor. He had not taken advice in relation to the operator’s licence. I asked again why he had left Ms Barratt as transport manager. It was because the new application had been made immediately. I clarified “immediately” and Mr Willis said within a couple of weeks.

I put it to Mr Willis that the account given now in relation to his conviction appeared to differ from that given at his application to be added as a director. At application, he had said that he had been appointed enduring power of attorney “through my accountancy practice”. Mr Willis explained that he had used those words because he had been a chartered accountant at the time.

I asked why he was not a shareholder of either Dynamic Storage Ltd nor the company he set up to buy it, Stonelea Holdings Ltd. He told me that he had discussed it with his family and they felt a separation of ownership and management was important. It also meant that family members could draw a dividend in a tax advantageous position because they would not pay national insurance. His wife played no part in the business. Despite being a person of significant control by virtue of holding 60% of the shares, she never sought to exert that control.

I moved to the personal bankruptcy. Mr Willis told me that a partner in the chartered accountancy practice drew funds which generated a tax debt which bankrupted him. The debt was about £15,000 and he didn’t have funds to repay that in 2010 or 2012. I asked where all the money had gone – he had worked as an accountant and had recently taken £150,000 from the lady for whom he held enduring power of attorney. Mr Willis couldn’t answer.

3.3 Closing submissions

Ms Caple reminded me that I was dealing with the company. It was just one offence albeit a serious one. It was a long time ago. The conviction tarnished Mr Willis’ repute but did not affect his ability to run the business. The company had never come to my attention previously. It had an excellent compliance history and had cooperated with the public inquiry process.

Mr Willis had given a very open response for keeping Ms Barratt as transport manager. Had he fully understood the situation, the transport manager applications would have been pursued with more speed. The change in director had been notified and he had given full disclosure.

There had been discussion about him being joined on the Board by another director to improve repute. The offence was over seven years ago. Mr Willis had admitted guilt early on. He had maintained a compliant business and attended an operator licence awareness course. He was building competence within the business.

Mr Mortimer had attended a two-day refresher course. He will still be involved in the management of the transport.

In terms of financial standing, the operator requests more time and the likelihood of a positive outcome was good with indications from the bank that the overdraft would be granted. The international licence was not utilised currently and a reduction to national was offered. A licence of 14 or 15 vehicles would be adequate.

If the licence was revoked, the storage part of the business would be unlikely to be able to survive. It was a haulage company through and through.

If the licence was to be revoked, a significant run-off period would be necessary. Whilst confirming that I had not made a decision, I made it clear that, if the reason for revocation was the loss of repute through the loss of repute of the sole director, then a new application would struggle if he was still involved. Ms Caple requested the opportunity to come back with a proposal to allow the business to continue and to ensure that there was no fronting.

4. CONSIDERATION AND FINDINGS OF FACT

Finances are considered in Appendix 1. Financial standing fails to be satisfied. Section 27(1)(a) is made out. Revocation is mandatory.

The conviction was a serious one consisting of the theft of £150,000 from a vulnerable lady over a sustained period of some five years. This is reflected in the 3-year, 2-month custodial sentence passed on 29 August 2013. This conviction will be considered spent 7 years after the sentence, including any period on licence, is served. That will be 29 October 2023. As it is a single offence loss of repute and therefore loss of fitness is not automatic.

Article 6 of EU Regulation 1071/2009 sets out a minimum list of the fields of convictions which are relevant as follows:

In determining whether an undertaking has satisfied that requirement [ie good repute], Member States shall consider the conduct of the undertaking, its transport managers and any other relevant person as may be determined by the Member State. Any reference in this Article to convictions, penalties or infringements shall include convictions, penalties or infringements of the undertaking itself, its transport managers and any other relevant person as may be determined by the Member State.

The conditions referred to in the first subparagraph shall include at least the following:

that there be no compelling grounds for doubting the good repute of the transport manager or the transport undertaking, such as convictions or penalties for any serious infringement of national rules in force in the fields of:

(i) commercial law;

(ii) insolvency law;

(iii) pay and employment conditions in the profession;

(iv) road traffic;

(v) professional liability;

(vi) trafficking in human beings or drugs;

Whilst it does not specifically refer to abuse of the position of an enduring power of attorney, it is clear that such a conviction is what the draftsman had in mind.

I must also consider the conduct itself. Mr Willis was dealing with a vulnerable individual who relied upon him. Whilst it is a single conviction, it relates to conduct that continued for five years.

Mr Willis’ more recent conduct should also be considered. In the positive, he notified the change in control promptly. He declared his adverse history. The operation is generally compliant.

In the negative, he mis-declared the terms of the conviction as he referred to working through his accountancy practice rather than on a frolic of his own. Whether that was an attempt to reduce the apparent seriousness of the event or not, as a minimum, more care should have been taken. He failed to declare the loss of transport manager. He said this was because a fresh application was to be made immediately. When pushed, he said immediately might mean within a couple of weeks. Ms Barratt ceased as transport manager on 15 January and the first new transport manager application was made on 26 May. Whilst other qualified people may be in the business, none is assigned as having continuous and effective control over the transport operation. Mr Willis is quite right. Had he removed Ms Barratt he would have automatically and within 48 hours have received notification of the need to take immediate action to remedy the situation. By not removing her, I was prevented from carrying out my duty to ensure that a transport operation remains compliant.

On balance, I find that there are more negatives than positives in Mr Willis’ recent conduct. I find that his good repute and fitness are forfeit. Mr Willis is sole director. Whilst there is a person of significant control, his wife, it is Mr Willis’ own evidence that she does not actually exert any control over the business. He is the controlling mind. It is therefore appropriate that I consider piercing the corporate veil such that the loss of repute of Mr Willis becomes a loss of repute of Dynamic Storage Ltd. Before doing so, I consider whether that would be proportionate. This is a large authorisation of 26 vehicles. I am told that eleven full-time drivers are employed. The transport business is predominantly part of a pallet network. Provided enough time is available, that work will continue uninterrupted but under a different operator without the criminal background, possibly even with the same drivers transferring under TUPE. There is a separate part of the business which is warehousing and storage. Whilst there doubtless are synergies, I saw no evidence that the storage business could not continue – no customer base was provided, no evidence of the proportion of interaction between the two business arms. Revocation may not necessarily mean the end of the business as a whole and I was provided with no evidence that it would do. Even if it did, the nature of the sole director’s conviction is such that I find there is no place in the industry for him. The good repute and fitness of Dynamic Storage Ltd is forfeit. Section 26(1)(h), material change is made out and I exercise my discretion to revoke the licence.

Disqualification is not automatic but this is a case where it is appropriate. The crime committed is repugnant. To allow Mr Willis into the proudly regulated transport industry would be an affront to all those decent law-abiding operators who try so hard to make ends meet without resorting to the need to steal vast amounts of money from a vulnerable lady. In T/2018/01 David King, the Tribunal approved a relationship between the period of disqualification and the point at which the conviction was spent. That is an appropriate approach here. Mr Paul Willis is disqualified from holding or obtaining an operator’s licence in any traffic area until 29 October 2023.

I find it appropriate, noting Ms Caple’s submissions and the lack of general compliance concerns, to allow an extended period for the business to be wound down.

5. DECISION

Pursuant to an adverse finding under Section 26(1)(h), the operator is no longer of good repute or fit, the licence is revoked with effect from 1 March 2021.

Pursuant to a finding of loss of financial standing under Section 27(1), the licence is revoked with effect from 1 March 2021.

Mr Paul Willis is disqualified from holding or obtaining an operator’s licence in any traffic area until 29 October 2023.

Kevin Rooney

Traffic Commissioner

1 December 2020