Decision

Decision for Elite Tippers & Grabs Ltd (OH2071653)

Published 31 July 2024

0.1 In the Western Traffic Area

1. Written Decision of the Traffic Commissioner

2. Public Inquiry held on 6 June 2024 at Bristol

2.1 Operator: Elite Tippers & Grabs Ltd (OH2071653)

3. BACKGROUND

This is an application for a standard national goods vehicle operator’s licence seeking to authorise the use of five vehicles from an operating centre at James Callaghan Drive, Portsmouth. It was submitted on 2 February 2024. The sole director declared on the application was Lisa Waterhouse but routine searches identified David Waterhouse as a second director. Lisa Waterhouse is the nominated transport manager.

David Waterhouse appears as director of Havant Plant Hire Ltd, holder of a standard national licence authorising the use of six vehicles from James Callaghan Drive, Portsmouth. The transport manager is Lisa Waterhouse. No previous licences were declared on the application although it was declared that David Waterhouse had attended a public inquiry with Havant Plant Hire Ltd.

Financial standing was met largely through a single large transaction. The caseworker questioned that. Lisa Waterhouse explained by email on 25 March that it was “a loan from Inert recycling who we have worked for in our previous company Havant Plant Hire Ltd to help us make sure we have the financial standing for Elite Tippers”. The loan agreement showed that repayment in full was due by June 2024. Ms Waterhouse further explained that the licence of Havant Plant Hire Ltd would be surrendered and that the company was going in to voluntary liquidation. Money was owed to HMRC VAT and PAYE, HSBC bounce-back loan, HSBC overdraft and Marshalls Truck & Van.

The case was referred to me in April and I proposed to refuse the application on two counts. The first was that financial standing appeared not to be demonstrated on an ongoing basis as the loan had to be repaid within just two months. The second was that I was concerned as to good repute as it seemed almost everyone had been paid bar the public purse. The applicant requested a public inquiry.

4. PUBLIC INQUIRY

Lisa Waterhouse and David Waterhouse attended represented by Laura Newton, solicitor. A statement from David Waterhouse and supporting evidence had been uploaded to the case in advance. I noted that the figure for financial standing had been met but was not assured that the finances were truly available.

Proceedings were recorded and I do not repeat it all here. In writing this decision, I have reviewed my notes and listened to the recording.

In opening submissions, Ms Newton explained that the vehicles had been operated by the applicant unlawfully using the Havant licence for a period. I referred to my concern that the statement of affairs suggested that trade creditors had been preferred, that there were numerous false statements on the application and that the financial situation of Havant had not been notified.

4.1 The evidence of Lisa Waterhouse

Ms Waterhouse told me that she had completed the application without assistance. She had not declared the previous history because Havant Plant Hire was not her company but was her husband’s. Reading the question again now, she noticed that it did refer to the transport manager and accepted it had been answered incorrectly. She thought this application was for a completely new company so the history of Havant did not seem relevant. She now realised that she had completely filled the form in wrongly. She just had not read it properly but she could be trusted to read documents in the future and apologised.

A recent refresher course had made her more aware of her responsibilities as a transport manager and the need to notify the traffic commissioner of relevant events. I was assured that there would be honest communication in the future.

It was accepted that the vehicles had been operated after Havant entered insolvency proceedings. They thought that they could just keep going, get past all the bad things and carry on. She had realised that the authority would lapse. They thought they could still run for a month. That’s what they had been told. Ms Waterhouse had been told that by Mr Waterhouse.

They stopped operating as soon as they were told by their lawyer that they had to. The vehicles were still stood down. That was about 3 weeks ago. She emailed my office that day.

The loan money was pre-payment from Inert. Normally they get paid about 45 days in arrears. Inert was happy to move to a pre-payment which would be restored over the months of April, May and June. There was no separate payment to Inert; it took the form of a set-off against the amount due from them. The money that had been put in at the time of the application had been removed from the account but put back in for the hearing. Ms Waterhouse was confident that the funds would remain there. There were other customers as well as Inert. Ms Waterhouse was confident that the company would be profitable going forward.

I noted an apparent disconnect in the evidence. In relation to the failure to declare the previous history of Havant, that had been because it was a completely new business. Yet they had felt they could continue to operate on the old company’s licence. Ms Waterhouse told me that had been on advice from the liquidator.

I noted that there were payments into the Elite account on 15 April from Inert which, from the oral evidence I had heard, would have been for February work. I was told that it was actually for March. The terms with Inert used to be a month and a half after the end of a month worked. As Elite, the terms were now 15 days after the month end. That was a temporary arrangement. The payment on 15 April was for work done by Elite from 1 March. I noted that meant that there were at least ten weeks of illegal operation. I asked for evidence that the vehicles had ceased operating on the date I was told. There was tachograph evidence in the bundle but there had been no download since that date so that did not assist. I was told that tracker data could be provided.

4.2 The evidence of David Waterhouse

Mr Waterhouse told me he had not been involved with the application form.

The liquidator had given advice. He had been told to apply for a new licence and not to put any more money into Havant. He accepted that there was a duty to notify as soon as it was apparent that the financial situation was unsustainable and had not done so. Because Havant was still alive until the company entered administration, they thought they could use the licence. The administrator led him to believe that the licence was still valid. Now, having had recent training, he understood what he should have done.

In 2023, there was an ongoing arrangement with HMRC, and with Avantis, on HMRC’s behalf. I was talked through the relevant statements. There had been a £10,000 a month agreement which should have repaid VAT by April 2024. There were separate arrangements with Avantis.

The original terms were £10,000 a month direct with HMRC and about four separate arrangements with Avantis. The repayments had become unaffordable. He had sought a repayment over five years but HMRC had said eighteen months was the maximum. HMRC had provided a three-month payment holiday but would not lengthen the overall repayment term. At that point the insolvency practitioner’s advice had been to enter liquidation. It wasn’t that the company had not wanted to make the repayments but that they could not afford to do it in the eighteen months. He had been on the phone to them all the time. If they had agreed five years, we wouldn’t be sitting here now.

In terms of creditors, there was an overdraft which was not on the statement of affairs because it was personally guaranteed. All debts were paid every month so there were no other creditors other than the Crown and Marshalls, who had declined to take a direct payment. Finance was novated across. After they entered liquidation, they had contacted Marshalls, the Mercedes dealer, and attempted to make a payment but their accounts person had declined it. Marshalls said they could not take payments that had not gone through the liquidator.

Most of their suppliers were now only allowing them a cash account. There weren’t many account suppliers anyway. No-one had been given any preference. The debt was being paid to HMRC at the end of 2023, but they could not afford to repay it under eighteen months. They just acted on the liquidator’s advice.

They now owned three of five vehicles. It had been a hard and frightening three or four months. They had learned a lot. They had borrowed family money and paid it in to the old company trying to keep it running.

If the licence was refused, they would have to sell their house. He was guarantor for the two remaining vehicles and far more was owed than the vehicles were now worth. He was guarantor on the previous overdraft. It would be about six months before the liquidator’s report would be available. There was no suggestion of any wrongdoing.

4.3 Closing submissions

Ms Newton confirmed that I would be sent tracking data. Decisions made during stressful events were not always the best. I had seen the individuals previously and found them to be very competent. It was unfortunate that the company had ended as it had. Many people in the construction industry had suffered similarly. This wasn’t a case where directors had taken money out of the business. They had tried to service the debts as long as possible. I should take account of their actions over the past five years, not six months. The correspondence on 25 March showed how open the operator had been about the situation. There had been no attempt to cover things up. A positive decision would realistically be an interim licence until the liquidator’s report was available. There was a sustainable business going forward.

I closed the hearing, reserving my decision and said I would try to produce it within two weeks.

5. POST-HEARING EVIDENCE

Ms Newton provided tracker evidence showing that the authorised vehicles had minimal movements after 10 May and those movements were consistent with maintenance.

6. FINDINGS OF FACT

The application submitted on 5 February 2024 had a number of serious false statements:

a. The applicant answered “no” to the question “has anyone you’ve named in this application (including partners, directors, and Transport Managers) ever been involved with a company or business that has gone (or is going into) liquidation. It was the clear evidence of David Waterhouse that the application was made on advice from the insolvency practitioner and I find that both he and Lisa Whitehouse knowingly made a false statement. Whilst David sought to distance himself from the submission of the application, as a statutory director he had a duty to ensure that statements made by the company were factually correct.

b. The applicant answered “no” to the question “does anyone you’ve named in this application (including partners, director and Transport Managers) currently hold a goods or PSV operator’s licence. David Waterhouse was director and Lisa Transport Manager of Havant Plant Hire Ltd which held a standard national licence at that time.

c. Similar untrue responses were made about previous revoked licences, previous applications, and the purchase of assets.

d. David Waterhouse was not declared as a director on the application when he ought to have been.

Lisa Waterhouse sought to explain this away as being her personally completing the form so David’s history was not relevant. I do not believe that evidence. I do believe David Waterhouse when he told me that they just thought they would get through what I am sure were very unpleasant times. More likely than not, and by a very wide margin, I find that the intention was for Elite to be up and running with a licence prior to the formal entry to liquidation of Havant. That was why David Waterhouse was not declared as a director in February. Unfortunately, it became apparent that would not be the case and the truth came out in an email to the caseworker on 25 March as Havant neared entry to formal insolvency proceedings.

I am deeply troubled by the payment into Elite’s bank account on 15 April for work carried out for Inert during March. Havant did not enter liquidation until 12 April. No working bank account was submitted with the application, only a savings account holding just the required amount for financial standing. There is a maintenance contract dated 1 March. There are two scenarios. One is that March was operated by Havant and the 15 April payment was due to the liquidation account. That is a matter I will bring to the attention of the liquidator. The second is that the applicant company began operating as early as 1 March with no authority to do so. That is the version I am asked to believe.

If I do accept the second version, then I am also told that David Waterhouse was advised by the liquidator that they could operate for 30 days on the Havant licence. Whether the liquidator give such advice or not is not relevant. In the same way that I wouldn’t consult a plumber when my TV doesn’t work, the Waterhouses should not have relied on advice from an insolvency practitioner on operator licensing. Each disc is clearly marked as “not transferable”. Not to have sought professional advice from someone with commercial transport expertise was reckless and demonstrates a high degree of fault. Had the most basic of questions been asked of an appropriate person, the advice would have been clear – stop. That is the advice they eventually received from their legal advisors on 10 May. By that time, the new entity had been operating for ten weeks.

If I were to accept the first version, then I would find that financial standing is not met because the company is relying on money which is not theirs. I would also find that to have been a fraudulent action. On balance, having heard the rather confused oral evidence, I find that the second option is more likely. This means that I find the applicant has been operating illegally for ten weeks.

The final matter of concern is the make-up of the list of creditors at time of entry to liquidation. Mr Waterhouse was almost proud of the fact that day-to-day suppliers had been paid each month when the taxpayer had not. He told me that he had tried to pay the Mercedes dealership but that they had - quite rightly in my view - said that they would have nothing to do with such a payment. Any money available should have been paid in to the liquidation account. I was told that tyres were supplied as part of the Inert contract and that other suppliers were paid off each month. It is a common trait amongst businesses entering insolvency that they will want to keep on-side businesses they will need to rely on in the future. I find on the balance of probabilities that to have happened here.

So I have an application that is full of false statements, that is timed to seek to allow a seamless continuation of operations following the write-down of a significant crown debt and where there has been illegal operation of four or five vehicles over a ten-week period. The applicants did not disclose the financial position of the previous company until their position became untenable and formal appointment of an insolvency practitioner was imminent.

There are positives to the application. This is not a case where no attempt was made to pay the Crown debt. Payments had been made over a number of months although the expectation of what would, in effect, be a Crown loan over a period of five years does seem naïve at best. There were plausible explanations for how the company got in to the condition it was. From a general compliance perspective, there are no concerns. The evidence of David Waterhouse seemed genuine and honest.

7. DETERMINATION AND DECISION

In Aspey Trucks Ltd, T/2010/049, the Upper Tribunal comments on the difference between finding a loss of repute in an existing haulier and whether or not a new applicant to the industry met the standard to be of good repute. The same principle applies to fitness in the case of a restricted applicant:

 “In a case such as this, the Deputy Traffic Commissioner was not looking at putting someone out of business. Rather, he was deciding whether or not to give his official seal of approval to a person seeking to join an industry where those licensed to operate on a Standard National or Standard International basis must, by virtue of S.13(3), prove upon entry to it that they are of good repute. In this respect, Traffic Commissioners are the gatekeepers to the industry - and the public, other operators, and customers and competitors alike, all expect that those permitted to join the industry will not blemish or undermine its good name, or abuse the privileges that it bestows. What does “Repute” mean if it does not refer to the reasonable opinions of other properly interested right-thinking people, be they members of the public or law-abiding participants in the industry?”

We are in a period of high levels of insolvencies in transport companies. Many facing that predicament are coming to traffic commissioners at the first sign of trouble and being open and honest about the position they are in, how it arose and the possibilities for the future. Such new applicants will face significant scrutiny but a positive outcome is possible.

In this case, this application is a pre-emptive phoenix where the truth was sought to be withheld until the last possible minute. There has been inexcusable illegal operation. There have been multiple false statements. In T/2010/83 PF Boomer t/a Carousel, the Transport Tribunal found that “The Traffic Commissioner’s trust in operators’ ethical business practices was essential to effective and compliant regulation”. No right-thinking person would consider the conduct here as ethical nor as establishing good repute. I find that the mandatory criterion of good repute is not satisfied. The application is refused.

Kevin Rooney
Traffic Commissioner

21 June 2024