Decision

Decision for EME Trading Ltd t/a Oxford Pallets

Published 17 June 2022

1. EME TRADING LTD t/a OXFORD PALLETS OH2003427

2. PUBLIC INQUIRY IN BRISTOL

2.1 4 JANUARY 2022

3. CONFIRMATION OF ORAL DECISION – COMPANY

4. DECISION – DIRECTOR DISQUALIFICATION

This inquiry arises out of my decision in relation to Fifth Zone Ltd as follows:

Pursuant to each individual finding under Section 27(1)(a) of loss of good repute, financial standing and stable establishment, and under each finding under Sections 26(1)(c) and (f), the licences are revoked with immediate effect.

EME Trading Ltd is to be called to a public inquiry to consider its good repute, financial standing, stable establishment and professional competence.

Neil Lyon is called to a conjoined public inquiry to consider his disqualification.

Nothing in this decision should be considered as an adverse finding in relation to Paul Cookson and future applications involving him need not be referred for that reason alone.

5. Confirmation of Oral Decision with Reasons

At the inquiry, I issued an oral decision to revoke licence OH2003427 with effect from 23:59 hours, 5 February 2022. I did that because the operator failed to demonstrate financial standing and I did not consider it appropriate to grant a period of grace. I made that finding because:

1. This is a standard licence for 8 vehicles requiring the operator to show access to £39,500

2. Bank statements were provided for the months of October, November and December 2021. The average availability over the period is only £XXXX.

3. There are a number of payments in from “Oxford City Sport” and “Oxford Football”. Some refer to invoices. Others do not. The latter total £XXXX. I am told these are informal loans from Paul Lyon to support the business.

4. There are a number of payments in from The Road Transport Consultancy. These total £XXXX. I am told these are informal loans from Paul Lyon to support the business.

5. I do not know how much in total is owed to Paul Lyon via companies with which he is associated. I was told that there is no loan agreement. I cannot consider that money as available as it could be recalled at any time.

6. On 24 November 2021, there is a transfer in from Jayson Lyon of £XXX. Following that, the end of day balance is just £XX. On 20 October the end of day balance is £XX. Many end-of-day balances are just a few hundred pounds. I remind myself that this is an operator which should have access to £39,500.

7. There are numerous reversed payments:

   1. Salary payment on 1 October 2021,

   2. XXXXXXXX Insurance, £XXXX and £XXXX on 1 October, £XXXX and £XXXX on 13 October,

   3. XXXXXXXX Finance £XXXX on 5 October, £XXXX on 6 December

   4. XXXXXXXX Vehicle Hire/Finance, £XXXX on 8 October, £XXXX on 27 October, £XXXX on 28 October, £XXXX on 5 November, £XXXX on 6 December,

   5. XXXXXXXX Vehicle Hire, £XXXX on 7 October, £XXXX and £XXXX on 5 November, £XXXX and £XXXX on 7 December

   6. XXXXXXXX Tools, £XXXX on 1 November,

   7. XXXXXXXX Bank, £XXXX on 19 October,

   8. XXXXXXXX Finance, £XXXX on 4 November,

   9. XXXXXXXX energy, £XXXX on 9 November, £XXXX on 19 December,

   10. XXXXXXXX Finance, £XXXX on 19 November,

   11. XXXXXXXX Consultancy £XXXX on 25 November,

   12. XXXXXXXX Insurance, £XXXX on 6 December,

   13. XXXXXXXX Software, £XXXX on 16 December

Mr Lyon told me that he had reversed the direct debit payments to XXXXXXXX Vehicle Hire on 7 December as the invoice was disputed. On 7 December, the account goes to £XXXX overdrawn. There is no overdraft. There are a few small payments in but the account is brought back in to the black by an injection of £XXXX from Oxford City Sport and the reversal of those two XXXXXXXX Vehicle Hire payments. They are marked UNP for unpaid, not REV for reversed, which I know from experience of hundreds of bank statements to be Barclays convention (and can be confirmed on their website).

This is a business built on sand. Bounced payments are seemingly the norm. EU Regulation 1071/2009 states the purpose of financial standing in the following way: “It is necessary for road transport undertakings to have a minimum financial standing to ensure their proper launching and administration”. Failed payments is not proper administration. There is no improving trend. I am told that there are new customers and that they are on 90-day terms. But the business has not just started to operate. There were previous customers and those payments can be seen coming in to the account.

Despite being on notice of the public inquiry for three months, action was only taken to start to protect money by placing in a separate account on 20 December. Despite assurances from Mr Lyon that the money will stay there, having accepted that he lied to me at the previous hearing, I can attach little weight to what he says. In any case, I do not understand the premise that money be kept safely in a deposit account when payments continue to fail. The purpose of financial standing is “proper administration”, not keeping money ring-fenced in an account never to be used.

Financial standing is not satisfied even for one vehicle. The closing balance is achieved through a £XXXX payment from M3 Timber Ltd. Neil Lyon was a director of that company from 10 June 2021 to 31 August 2021, resigning from it prior to the public inquiry for Fifth Zone because the company was considering applying for an operator’s licence and it was felt his association was unhelpful. The £XXXX was for the transport of Christmas trees and an invoice could be produced. Whether that invoice would be genuine or not, and I do not make any finding on that, it comes too late in the day to be helpful and, whilst it shows a temporary spike in availability, a single spike cannot show a trend.

There is a history of failed payments that shows no signs of improving. There are outstanding loans to associated companies which could be recalled at any time. The situation has been dire throughout the three-month period. It would be grossly unfair on all those law-abiding operators who work hard to stay within their means to grant a period of grace now and to do so would, in my finding, simply put off the fateful day. There is no light at the end of the tunnel, merely hope and aspiration. That is not enough. The licence is revoked with effect from 23:59 hours, 5 February 2022.

6. Consideration of disqualification of Mr Neil Lyon, sole director Fifth Zone Ltd, director of EME Trading Ltd

Disqualification is not automatic but neither does it require an additional adverse finding. As the Upper Tribunal said in T/2010/029 David Finch Haulage,

“The principles that derive from these and other cases on the point can be simply stated. The imposition of a period of disqualification following revocation is not a step to be taken routinely, but nor is it a step to be shirked if the circumstances render disqualification necessary in pursuit of the objectives of the operator licensing system. Although no additional feature is required over and above the grounds leading up to revocation, an operator is entitled to know why the circumstances of the case are such as to make a period of disqualification necessary. Additionally, periods of disqualification can range from comparatively short periods to an indefinite period, and can be confined to one traffic area or be extended to more than one.”

Operator licencing depends on trust between the regulator and the regulated entity. In T/2018/48 BKG Transport Ltd (and others), the Upper Tribunal commented:

We have no hesitation in finding that the TC’s determinations on the issue of loss of good repute and the inevitable revocation of the licences flowing from are not open to criticism, neither is the implicit rejection of the re-structuring proposals put forward by BKG. It is difficult to envisage any circumstances in which the good repute of company directors and transport managers will be retained once it is accepted that lies have been told to the TC (or indeed to DVSA enforcement officers). The regulatory position of transport operations is based upon trust and the premeditated fabrication of an account to avoid adverse findings involving directors and a transport manager so fundamentally undermines that trust that it is inevitable that a significant and serious regulatory response will result. It is suggested in the grounds of appeal that the TC erred in failing to consider any alternative regulatory action short of revocation. We disagree. Loss of repute was inevitable and the TC answered the Priority Freight and the Bryan Haulage questions in the only way he could 16 in the circumstances. The period of disqualification of two years also cannot be categorised as disproportionate.

In his written submissions, Neil Lyon now admits fabricating a warning letter to a driver. In the September hearing, I specifically asked him the question in relation to the error made both by him and by the Vehicle Examiner in ascribing two load security prohibitions to the same driver when two drivers had been involved. Neil Lyon lied to my face. He now accepts that “the warning letter of the 1st April 2021 was produced after the maintenance investigation in order to give the impression that this warning had been the subject of a formal written disciplinary process when it had not”. That warning letter was false, used to attempt to assuage the concerns of a DVSA officer and then produced to me as genuine even when I put the question to Mr Lyon in as straightforward a way as I possibly could.

Mr Lyon included in his bundle for the September hearing an incomplete draft of a Statement of Affairs for Fifth Zone Ltd. This is what I said about it in my written decision:

There is something far more serious about Mr Lyon that I need to consider now. He provided a bundle of evidence prior to the hearing. In that was a statement of affairs for the company dated - but not signed - 1 September 2021. It showed a deficit to HMRC of £21,509 and an overall deficiency of £186,000. Prior to the hearing, I downloaded the signed version from Companies House. It showed a deficit to HMRC of £376,000 and overall deficiency of £863,000. Mr Lyon told me that he had simply forwarded the wrong version to his solicitor. In the most positive light, that was a reckless act that put erroneous evidence before me. When set in the context of an individual, in effect, offering up a licence for revocation whilst seeking to maintain a linked licence, it was deeply in Mr Lyon’s interest for me to consider that the failure was relatively modest and there was no inappropriate Crown loss. I find at best Mr Lyon was delinquent in not checking his evidence with the greatest of care but I also find more likely than not that it was a deliberate act to throw me off the track of a director who has left the taxpayer over a third of a million pounds worse off at a time when national borrowing is at its highest level post-wartime.

I refer to the five levels of knowledge often referred to by Traffic Commissioners when considering applications for the return of detained vehicles. This is most helpfully provided at para 14 of the decision in T/2013/21 Societe Generale Equipment Finance Limited

In the present case the Deputy Traffic Commissioner concluded that this was a case of category (iii) knowledge. Unfortunately, for reasons, which will appear in due course, he did not make all the findings required to justify that conclusion. With a view to avoiding such a situation in the future we suggest that Traffic Commissioners will find it helpful to assess the evidence in a way which seeks to answer these questions:

What inquiries would an honest and reasonable person have made in the circumstances faced by the person claiming the return of the vehicle, (“the claimant”)?

If the answer is “None” there can be no question of imputed actual knowledge under category (iii).

If the answer is that an inquiry or some inquiries would have been made the questions that follow must be answered separately in relation to each inquiry that the honest and reasonable person would have made.

Did the claimant make such inquiries?

If the answer is “Yes” there can be no question of imputed actual knowledge under category (iii).

If the answer is “No” the next question must be answered.

Did the claimant wilfully refrain from making such inquiries? For the purposes of this question ‘wilfully’ means ‘deliberately and intentionally’ as opposed to ‘accidentally or inadvertently’.

If the answer is “No” there can be no question of imputed actual knowledge under category (iii).

If the answer is “Yes” the next question must be answered.

Did the claimant recklessly refrain from making such inquiries? For these purposes ‘recklessly’ means ‘not caring about the consequences of failing to make such inquiries’.

If the answer is “No” there can be no question of imputed actual knowledge under category (iii).

If the answer is “Yes” the next question must be answered.

Was a high degree of fault involved in wilfully failing to make such inquiries?

If the answer is “No” there can be no question of imputed actual knowledge under category (iii).

If the answer is “Yes” a finding that the vehicle owner had imputed actual knowledge under category (iii) is justified.

So did Neil Lyon have knowledge that the document he served in evidence at the public inquiry was the wrong document? Well, he was preparing his evidence bundle to establish that his good repute was intact. The circumstances leading to the liquidation of Fifth Zone Ltd were highly relevant. They were documented in the Statement of Affairs. He told me that he had forwarded to his solicitor an earlier draft because he had it on an email. I simply do not accept that explanation. He must have been aware that there had been more than one version – he was the sole director dealing with the liquidators. Neil Lyon was duty-bound in preparing evidence for the tribunal to ensure it was correct. So the answer to (i), is yes, a reasonable and honest person would have made enquiries.

Mr Lyon told me that he did not make such enquiries. The answer to (ii) is no. Why would he not when providing such a key document for his evidence to establish that his good repute remains intact. It was as simple as checking that it was the signed version. Not to do so, I find both wilful and reckless. In the circumstances, the simplest thing to do would have been to access the public Companies House record and produce the version posted there. Not to have taken such basic steps as to check for a signature or download the published version establishes a high degree of fault. So I find that Neil Lyon had imputed actual knowledge that the document put before me was the wrong version. As I said in my Fifth Zone decision “it was deeply in Mr Lyon’s interest for me to consider that the failure was relatively modest and there was no inappropriate Crown loss”.

So Mr Lyon is not someone I can trust. I find again that he lies at will. He has created a false document for a DVSA officer. He has averred to its authenticity at public inquiry only later to accept that it was manufactured post-event. He has lied to me and sought to mislead me. That is conduct which I find necessitates a period of disqualification.

In considering the effect of a disqualification order, I note that I have already revoked both licences with which Mr Lyon is associated currently. The construction of EME Trading Limited has been changed very recently such that Mr Lyon is no longer the sole director. Whilst he is still showing as a person of significant control at Companies House, he is no longer a shareholder. A new application by EME Trading Ltd could be considered following Mr Lyon’s resignation as director. Of course it will keep Mr Lyon out of the haulage industry for a period of time but that is its point. The business also does warehousing and it is possible for Mr Lyon to operate vans, although clearly not on a pallet operation.

I refer to paragraph 104 the Senior Traffic Commissioner’s Statutory Document No.10. This is the first public inquiry. I found no particular compliance concerns with the maintenance documentation for EME Trading Limited which is unsurprising as it hires new or relatively new vehicles. There were some positives at paragraph 37 of my Fifth Zone decision:

The Vehicle Examiner found evidence of a planning system for 2021 and that the operator was aware to check for recalls. Positive comments were also made in relation to site and vehicle security with Mr Lyon apparently aware of the need to minimise the terrorist risk arising potentially arising from unsecured vehicles. Some action was taken between the Examiner making his appointment and the visit itself to ensure that vehicles underwent a reasonable inspection. Mr Cookson was put in the role of transport manager. Mr Lyon invested in professional legal support for the inquiry which is a clear indication that he understands the importance of the issues.

The negatives are the failures to act on DVSA advice in relation to load security, brake testing and adequacy of inspection facilities. These are then aggravated significantly by the falsification of the warning letter, the submission of the wrong statement of affairs and repeated lying at public inquiry. On balance, I find these lead to the top end of a disqualification for a first public inquiry but not over that.

7. DECISION

Mr Neil Lyon is disqualified from holding or obtaining an operator’s licence or being involved in the transport operations of an entity that holds or obtains such a licence in any traffic area from 6 February 2022 until 5 February 2025.

Kevin Rooney

Traffic Commissioner

7 January 2022