Decision

Decision for Enero Logistics Ltd

Published 30 June 2022

0.1 IN THE EASTERN TRAFFIC AREA

1. ENERO LOGISTICS LTD – OF1120295

2. CONFIRMATION OF THE TRAFFIC COMMISSIONER’S DECISION

2.1 REDACTED VERSION

3. Background

Enero Logistics Ltd holds a Standard International Goods Vehicle Operator’s Licence authorising 20 vehicles and 20 trailers. The Directors are Leszek Robert Lembicz and his daughter, Joanna Lembicz. She was appointed on 6 October 2021, but that appointment was not notified. Krzystzof Wajrak has been named as Transport Manager since 2 May 2022. He gained his CPC in 2016 and attended a two-day CPC refresher course with the RHA on 14 and 15 March 2022 (page 45).

There is one Operating Centre at Orchard House, Gosberton Road, Surfleet, Spalding PE11 4BG. Preventative Maintenance Inspections are said to be carried out by Truckrent Ltd, Ford & Slater, Cars2Trucks, Gee Commercials Ltd, at 6-weekly intervals.

This licence commenced on 28 June 2013, initially authorising 2 vehicles and 2 trailers but increased in June 2015, again in June 2017 and in September 2018. The operator attended Public Inquiry on 21 November 2019 following opposition to an application to increase authority at the Operating Centre. The application was granted with a list of conditions and upon the presiding Commissioner accepting various undertakings.

The former Director and Transport Manager, Sylvia Lembicz (Mr Lembicz’s sister) is connected to a new application (OF2049724) by LEMN Haulage Ltd. That application proposes use of the same site as an Operating Centre. On 28 March 2022 correspondence was received from Ms Lembicz suggesting that this operator had been given notice to vacate the Operating Centre by 28 April 2022 (page 65). This has not been notified and there is no application to use an alternative site.

4. Hearing

The Public Inquiry was listed for today, 22 June 2022, in Tribunal Room 1 of the Office of the Traffic Commissioner in Cambridge. The operator was present in the form of Directors Leszek Lembicz and Joanna Lembicz, accompanied by Krzystzof Wajrak, the current Transport Manager, and former Director Sylvia Lembicz. The tribunal was assisted by Mariusz Kaminski, a Polish interpreter.

5. Issues

The public inquiry was called at the request of the operators and following notice that I was considering grounds to intervene in respect of this licence and specifically by reference to the following sections of the Goods Vehicle (Licensing of Operators) Act:

• 26(1)(b) – condition to notify within 28 days matters going to stable and effective establishment, repute, financial standing and professional competence

• 26(1)(e) – statement of intent as to where vehicles would normally be kept, who would be responsible for exercising effective and continuous management, to abide by the licence conditions

• 26(1)(h) – material change:

• 27(1)(a) – stable and effective establishment, good repute, financial standing, professional competence.

• 28 – disqualification of directors and operator to be considered

Sylvia Lembizc was put on notice that adverse finding above might impact on her future involvement with an operator’s licence and the ability to rely on her Certificate of Professional Competence. She was called to attend in her own right.

The operator was directed to lodge evidence in support by 8 June 2022, including financial, maintenance and other compliance documentation. Bank statements covering the period 9 February to 9 May 2022 show insufficient funds [REDACTED]. Information regarding a factoring agreement covers a different period: 31 March to 31 May 2022. That evidence also shows insufficient funds [REDACTED] against the prescribed sum of £93,000. I refer to Statutory Document No. 2 on Finance. The operator’s suggestion that I take the value of operational vehicles into account was obviously unacceptable and in any case there was no independent valuation or indication of how quickly the funds might be realised. The bank statements suggest that drivers are being paid via service companies.

6. Summary of Evidence

The Office of the Traffic Commissioner was notified by email on 10 December 2021 (page 55) that the then Transport Manager, Sylvia Lembicz, had resigned her position.

At that time, she remained as a Director, but on 17 December 2021 there was an attempt to remove her as a Director using the self-service function of the Vehicle Operator Licensing system. Searches on Companies House indicated she was still a Director of the company. It was then noticed that Joanna Marie Lembicz had been appointed on 6 October 2021 (page 46) but that had not been notified.

On 22 December 2021 my Office received correspondence dated 21 December 2021 (page 58), requesting a Period of Grace. That letter was signed by Leszek Lembicz. He indicated that a Director was due to sit the CPC examination on 11 March 2022.

I was concerned to note the attempts to remove Sylvia Lembizc from the licensing record. I was unclear as to his authority to bind the entity and other Director(s). I was therefore obliged to put the operator on notice of the potential consequences if these issues were not resolved (page 62). Mr Lembicz confirmed that Sylvia Lembicz is the landowner. There was no request for a Period of Grace.

In evidence I heard about a dispute between brother and sister which had arisen because of a decision taken to develop the site at Orchard House, which includes the yard, office, and Ms Lembicz’s home. This apparently resulted in Enero Properties Ltd serving notice on the operator to quit. The operator remains at the Operating Centre and continues to pay rent to Enero Properties Ltd. However, I was concerned that the operator had failed to notify me of these changes.

I was concerned to note that driver infringement reports, which were signed by the driver and on behalf of the operator, continued to refer to “Sylvie” during the months of January, February, April, and May 2022, despite the suggestion that Ms Lembicz stood down in December 2021. I was told that this is a Ms Kita who is responsible for administration and was delegated to deal with all driver matters, including tachographs, despite having no relevant qualification. This arrangement was in place under the previous Transport Manager.

I referred to a dip sampling of the maintenance records. In evidence I was told that Truckrent Ltd and Ford & Slater are no longer used. Autotruck has only just been notified although has been used since December. That any other changes have not been notified promptly, despite the condition on the operator’s licence. That cannot continue.

GF62 EZA

• 4 May 2022 – inspection by Autotruck Ltd, apparently tested on a rolling road but no secondary brake reading, and no printout, service brake efficiency recorded as 29% and parking at 16%. It refers to an oil leak (again) and to a rotting dust cover for the shock absorbers (monitored).

• 4 April 2022 – inspection (7+ weeks since the previous) by Autotruck Ltd, apparently tested on a rolling road but no secondary brake reading and printout suggests only 34% of the GVW, service brake efficiency recorded as 28% and parking at 14%. It refers to defective front lamps and nearside front marker light and an oil leak (again). Mr Lembicz was unable to identify the relevant driver or a defect report.

• 8 February 2022 - inspection by Autotruck Ltd, apparently tested on a rolling road but no secondary brake reading, and no printout service brake efficiency recorded as 32% and parking at 17%. It refers to an oil leak (again).

• 4 January 2022 - inspection by Autotruck Ltd, apparently tested on a rolling road but no secondary brake reading and no printout, service brake efficiency recorded as 28% and parking at 12%. It refers to an oil leak (again).

• 14 December 2021 – inspection by Autotruck Ltd, apparently tested on a rolling road but no printout, service brake efficiency recorded as 51%, secondary at 35% and parking at 24%, after brake discs were changed and ABS sensors reset. It refers to insecure stub axles and wheel bearings (noisy) and a cut to the offside front tyre to the cords and an oil leak (seals replaced).

PJ63 JRX

• 8 April 2022 - inspection (12 weeks from the previous and 35713 km) by Autotruck Ltd, but no brake test recorded, despite new brake pads having been fitted to the front axle.

• 24 February 2022 – roller brake printout: 44%, 34%, 19%, insufficient load on axles 2 and 3, at 59% of the GVW.

• 14 January 2022 - inspection by Autotruck Ltd, apparently tested on a rolling road with a printout at 36% of the GVW, service brake efficiency recorded as 27%, and parking at 13%. It refers to an oil leak (monitored).

• 14 December 2021 - inspection by Autotruck Ltd, apparently tested on a rolling road with a printout at 33% of the GVW, service brake efficiency recorded as 26%, and parking at 13%.

• 27 October 2021 - inspection by Gee Commercials, apparently Tapley tested: service brake efficiency recorded as 51%, and parking at 16%, after drive axle brake pads were replaced.

• 14 September 2021 - inspection by Gee Commercials, apparently Tapley tested: service brake efficiency recorded as 51%, and parking at 15%.

• 18 August 2021 - inspection by South Lincs Commercials, with no brake test. It refers to drag link fixed end being replaced.

I was satisfied that these records are representative of the operator’s approach to maintenance. The driver defect report sheets appear to cover a week with a table for the vehicle and one for the multiple of trailers operated in that period. There did not appear to be a single instance of a driver reporting a defect.

Mr Wajrak communicated his view that the policies and processes which he inherited were in a mess. He had concentrated on improving the retorquing arrangements. I was concerned that he had not seen the Preventative Maintenance Inspections after the date he commenced his appointment. Neither of the two CPC holders who were present appeared able to read a brake test report or to tell me about the percentage of the GVW for laden roller brake tests. It emerged during evidence that the operator is involved in hauling trailers on behalf of FreshLinc, Fowler Welch and Gist. I could take some reassurance from the fact that those customers also hold operator’s licences and should be aware of the need to maintain the trailers. However, the operator had no means of demonstrating compliance in respect of its third-party trailer operations. Indeed, Mr Lembicz appeared to be unaware of any responsibility despite the requirements on this operator’s licence. Mr Wajrak had not yet understood the operations. As a result, neither were meeting their legal obligations.

7. Determination

On the basis of the evidence summarised above, I was satisfied that I should make adverse findings: 26(1)(b) – condition to notify within 28 days matters going to stable and effective establishment, repute, financial standing and professional competence, section 26(1)(e) – statement of intent as to who would be responsible for exercising effective and continuous management, to abide by the licence conditions, 26(1)(h) – material change in the availability of finance and to exercise continuous and effective management.

In 2019/54 Bridgestep Ltd & Tom Bridge, the Upper Tribunal referred to the practice of drivers classify themselves as self-employed. The UT commented that the legitimacy or otherwise of a driver’s self-employment status is fact specific and as the Factsheet produced by the RHA on self-employment contained within the bundle makes clear: “Unless they are an owner-driver, it is very rare for a lorry driver to be legally “self-employed”. There was nothing before the Tribunal to confirm that the arrangement between the company and its drivers was compliant with the HMRC guidelines. The Upper Tribunal referred to a conscious decision to enter into an arrangement with the company’s drivers which was highly questionable if not a sham. The reasons for doing so were anti-competitive being as they were, concerned solely with the cost of employing the drivers and by reducing that cost, gaining a competitive advantage over other compliant operators. The Tribunal went on to describe the vast majority of operators making the right decision to employ their drivers, paying national insurance, pension contributions, holiday and sickness entitlement. The consequence was that the company and Transport Manager felt unable to give any instruction to drivers whether it be in relation to route planning or otherwise and consequently, were unable to have continuous and effective management of the transport operation.

Mr Wajrak accepted the impact on his ability to exercise effective and continuous management. The operator gave a formal undertaking:

• That all permanent drivers would be made employees of the operator, subject to PAYE and National Insurance contributions, within 3 months of the date of the hearing.

The Guide to Maintain Roadworthiness acknowledges the challenge but, for the avoidance of doubt, operators providing traction-only services to third-party trailers are responsible in law for the condition of that trailer when in use. Transport managers are also required by law to manage the transport operation continuously and effectively. The operator’s licence requires “satisfactory facilities and arrangements for maintaining the vehicles used under the licence in a fit and serviceable condition.” In that context, “vehicles” includes any trailer (including those from abroad) being drawn. An operator providing traction-only services must have trailer authority on that licence and must specify an inspection period. The trailer provider is likely to have its own inspection periods, which should be based in part on the age and characteristics of the trailers and work involved. The operator needs to satisfy themselves that it is appropriate. The operator must ensure that any trailer it operates meets the stated frequency for inspection. If the operator cannot satisfy themselves that a suitable assessment has taken place, then the operator must make their own assessment, as per the declared intervals.

An operator should, therefore, expect access to information which indicates the annual test expiry, the date of the last Preventative Maintenance Inspection, for trailers not fitted with electronic brake performance monitoring, date of last roller brake test and confirm that this was laden, contact details for reporting of defects. Drivers will require appropriate training on conducting an effective walk-around check including noting the trailer’s annual test expiry and confirming that it has been inspected and brake tested within the stated period. That training should be documented. Operators should refer to the current DVSA Guide to Maintaining Roadworthiness, the link to brake testing guidance and may be further assisted by reference to the IRTE publication: Roadworthiness: Industry Best Practice for third party trailer operators, Appendix VII includes a suggested “Co-operation request letter to trailer owner.”

The Guide to Maintaining Roadworthiness and accompanying brake testing guidance also set the standard for regular brake performance testing of vehicles. I have included relevant extracts from the DVSA Guidance: Heavy vehicle brake test: best practice:

Locked wheels and the brake test

Vehicles must be fully loaded before being roller-brake tested because the grip between the tyre and the rollers is more effective that way. The wheels keep turning for longer, and a higher brake force will be achieved.

If your vehicle is empty or only lightly loaded, the grip between tyre and the road (or the rollers on a roller- brake tester or ’RBT’) will be lower, and a relatively small brake force will cause the wheels to lock (stop turning).

Once locked, no matter how much more the brakes are applied, the recorded brake force won’t increase. This means that if the vehicle’s load is too light, the wheels may lock before achieving the required brake efficiency.

If a vehicle is properly loaded, there are two concessions in the HGV inspection manual that Driver and Vehicle Standards Agency (DVSA) inspectors can make:

• front wheel lock allowance (FWA): this takes into account the weight transfer to the front axle(s) that occurs when the vehicle is on the road

• passing on locks (locked wheels): if more than half the wheels on a system lock, then the vehicle will pass on locks, unless there’s another reason for failure

You shouldn’t rely on either condition during test preparations. If the wheels don’t lock in the actual test, the vehicle will have to meet the required efficiency.

Remember: a locked wheel does not always mean a good brake

8. Preparing your vehicle for the brake test

Authorised Test Facilities (ATFs) are responsible for making sure that vehicles are properly loaded before the MOT starts. This normally means at least 65% of the vehicle design axle weight (DAW).

You can do this in a number of ways:

• by arranging to load the vehicle or trailer yourself

• by asking the ATF to provide load simulation - a loading fee may apply

• in the case of a tractor unit, using ballasted trailers - ask your local ATF if they have one for hire

Where load simulators can’t be placed above the rear axles, vehicles or trailers - unless exempt by design - must be loaded when tested. This includes:

• any multi-axle vehicle or trailer (excluding tri-axle semi-trailers) with a bogie weight exceeding 10,000kg

• tri-axle tractor units that are fitted with air suspension on any of the rear axles: to provide sufficient load these must be coupled to a loaded semi-trailer, so that the drive axle is loaded at or very close to the plated weight shown in column 2 of the plate and plating certificate

When loading a vehicle for brake test:

• place loads close to the rear axles

• aim to apply at least 65% - and not less than 50% - of the design axle weight to each axle

• if possible, use similar loads to add weight to the vehicle: this will help in placing the loads correctly, and achieve consistency between tests

• where load simulators can’t be placed above the axles - unless exempted by design - the vehicle or trailer must be presented laden

In the absence of many positive features, I had little hesitation in concluding that this case fell within the Serious to Severe bracket. However, a recent Upper Tribunal decision is not supportive of the need for Traffic Commissioners to take action outside the terms of the call-in letter. That is difficult to reconcile with the long-established approach described in 2001/072 Alan R Brooks, 2009/516 Farooq Ahmed & Haroon Ahmed and particularly 2011/359 Paul Coleman trading as Coach UK Travel which accepts that “In a fluid jurisdiction such as this, where operators continue to operate after the preparation of initial evidence and a call-up letter, it is entirely appropriate that there be scope for raising additional matters, subject to ensuring that an operator has proper notice”. In the circumstances of this case, it is sufficient for me to record that Preventative maintenance inspection intervals have been exceeded, that the driver defect reporting system is not functioning as it should, the operator does not have the full maintenance records required and that it cannot be said to be operating in a fit and roadworthy condition because of an absence of brake testing and access to trailer records. The operator offered the following undertakings:

• to submit evidence of laden roller brake performance testing of all operational vehicles and trailers in the possession of the operator within 1 month of the date of the Public Inquiry.

• to submit evidence that it now has arrangements in place to access information which indicates the annual test expiry, the date of the last Preventative Maintenance Inspection, (for trailers not fitted with electronic brake performance monitoring) date of last roller brake test and to confirm that this was laden, contact details for reporting of defects, for all of its third-party traction operations, within 1 month of the Public Inquiry.

The former Director and Transport Manager, Sylvia Lembicz is connected to a new application (OF2049724) by LEMN Haulage Ltd. The assessment of that application will inevitably be informed by my assessment of the processes for which she was responsible for prior to her departure in December 2021. Mr Wajrak was not called but attended in support of the operator. He can be left in little doubt that his involvement has yet to equate to effective and continuous management. He has been warned as to the likely impact if he does not meet the requirements of paragraph 14A of Schedule 3.

I proceeded to consider the question posed by the appellate Tribunal in 2009/225 Priority Freight, namely: how likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime? The fact that the Directors has not ensured oversight and that the new Transport Manager had not yet realised the deficiencies in the systems, despite being in post since 3 May 2022, did not bode well for further compliance. The previous Transport Manager/Director had not implemented compliant systems. The overall impression given by Mr Lembicz was that he did not have the knowledge or fitness, but this was tempered by the involvement of his daughter as a new Director and the potential for Mr Wajrak to ensure compliance going forward. He will need to take a less casual approach, in future. By way of further reassurance, the operator offered the following undertaking:

• to arrange an independent audit to be carried out by the RHA, Logistics UK, or other suitable independent body, to assess the compliance systems and by particular reference to the deficiencies identified above. The audit should cover at least the applicable elements in the Annex to be supplied by the Office of the Traffic Commissioner. A copy of the audit report, together with the operator’s detailed proposals for implementing the report’s recommendations, must be sent to the Office of the Traffic Commissioner (Licensing) / Office of the Traffic Commissioner in Cambridge within 6 months of the date of the hearing.

There is a clear need for deterrent action in this case so that the operator is in no doubt that operations cannot continue as before. This is in line with the Tribunal decision in 2019/025 John Stuart Strachan t/a Strachan Haulage so that both this company and operators are clear that the system is not to be fluted. In curtailing the licence to 7 vehicles from 23:45 tonight, I also accepted, an undertaking as follows:

• The operator will provide up to date original or copies (verified by the issuing bank or building society) of financial evidence in the name of the operator for the three-month period within 6 months of the date of the Public Inquiry. This must show that the operator has continued to meet the required level of available finance throughout the period by reference to an average balance, dependant on the rates applicable at that time. Rates to be found in the Senior Traffic Commissioner’s Statutory Document No. 2. Where originals are not available each statement must be stamped and authenticated by the bank/building society.

The operator has 7 days to surrender the discs and must ensure that it operates within the curtailed authority.

R Turfitt

Traffic Commissioner

22 June 2022