Decision

Decision for Rapid Transport Essex Ltd (OF2031089)

Published 23 October 2020

In the Eastern Traffic Area.

Confirmation of the Traffic Commissioner’s decision.

1. Background

Rapid Transport Essex Ltd seeks a Standard National Goods Vehicle Operator’s Licence authorising 10 vehicles and no trailers. In written representations this was reduced to 5 vehicles and 0 trailers. The Director is Karen Christine Barrett, who is also nominated as the holder of a Certificate of Professional Competence.

There is one proposed Operating Centre at DX Freight, Wollaston Way, Basilsdon SS13 1DJ. The proposed contractor is S&A Transport Engineering Ltd, to undertake Preventative Maintenance Inspections of vehicles at 6 weekly intervals.

The applicant was incorporated on 25 November 2019 when Michael Barrett and Karen Barrett were the joint directors. Only Mrs Barrett appeared on the application. Mr Barrett held over 75% of shares and voting rights. On 15 April 2020 the OTC sent a letter putting the applicant on notice that I remained to be satisfied that the statutory criteria were met and informing of the proposal to refuse the application. Companies House records indicate that Mr Barrett was removed as director on 15 April 2020 after the application was lodged.

In representations I was told a little of how Mrs Barrett came to meet Mr Barrett, when she was working as a Traffic Manager. Mrs Barrett returned to work last year and then gained her Transport Manager CPC qualification on the 24th July 2019. They were married in August.

2. Hearing

The Application was lodged in February 2020 but the Public Inquiry could not be listed due to the pandemic. It was relisted for today, 28 July 2020, in Tribunal Room 1 of the Office of the Traffic Commissioner in Cambridge. The operator was present in the form of Karen Barrett, represented by Carolyn Evans, a solicitor, of CE Transport Law.

3. Issues

The public inquiry was called to give the applicant further opportunity to satisfy me of the statutory criteria and specifically by reference to the following sections of the Goods Vehicle (Licensing of Operators) Act 1995:

• 13A(2)(b) – good repute
• 13A(2)(c) – financial standing by reference to 13D
• 13A(2)(d) – professional competence by reference to the nominated CPC holder’s repute, under 13A(3)(a) and Article 4 of Regulation (EC) 1071/2009
• and by reference to the systems required, in order to meet 13C

In submissions Ms Evans sought to persuade me that, on a balance of probabilities, it is more likely than not that the applicant can be trusted to operate compliantly and independently of the Director’s husband.

4. Summary of Evidence

I am aware from OTC records that Mr Barrett was connected to the following operations:

• OK1017679 Linda Maureen Barrett & Michael T Barrett, granted on 23 June 2003 and surrendered on 9 April 2013.

This licence was considered at public inquiry on 11 April 2012 when it was found to have poor maintenance. Additional undertakings were accepted so the licence was curtailed from 6 to 5 vehicles for 2 days and a strongly worded warning was issued regarding future compliance. The licence was surrendered on 9 April 2013.

• OF1109200 (Michael Terrence Barrett); granted 17 April 2010 and revoked on 10 July 2014

This licence was granted at Public Inquiry on the basis of specific undertakings. The licence was revoked at Public Inquiry on 4 June 2014 for breaching its undertakings. An attempt to appeal was withdrawn.

• OK1124444 (Linda Maureen Barrett & Michael T Barrett); application lodged on 2 October 2013

This application was refused at a conjoined Public Inquiry with OF1109200 on 4 June 2014.

• OF1116129 (Linda Maureen Barrett & Michael T Barrett); granted 13 February 2013 and revoked on 30 September 2015

This licence was curtailed from 6 to 5 vehicles for two weeks at Public Inquiry on 12 August 2014 after breaches of undertakings and a material change. The presiding commissioner was narrowly persuaded by the appointment of a new transport manger. Mr Summers notified his resignation on 15 December 2014. Applications for a period of grace and subsequently surrender were both refused and a Public Inquiry ensued on 29 September 2015. The licence was revoked. The partners gave Mr Denton an undertaking not to apply for another operator licence within the next 5 years.

The Office of the Traffic Commissioner legitimately queried why Michael Barrett was not named on the application as he was at Companies House.

Mrs Barrett stated that she knew that Mr Barrett had lost his own operator’s licence but was unaware of the detail of the decisions until those were disclosed as part of this bundle. Representations submitted on behalf of the applicants included comments around those previous hearings and interventions, which I can presume were obtained from Mr Barrett.

That gives no explanation for the response to OTC from Mrs Barrett claiming that Michael Barrett had no ties to the company beyond providing a start-up loan. Mrs Barrett added that the intention had been to remove Michael Barrett as director once that money had been repaid.

I Karen Barrett, did not include my husband’s name, Mr Michael Barrett on the O Licence application for Rapid Transport Essex Limited as this is an application for my business only. The only ‘tie-in’ that he has with myself is the fact that he has been the monetary provider/loan to set up my business. My husband, Michael has no & will not have nothing to do with my company or business as he has his own career away from the transport industry.

On the same day, Karen Barrett notified of Michael Barrett’s formal removal as director. In an email dated 25 February 2020, Mrs Barrett indicated that “my husband will be removing himself from the company as company director”. At the time he held 90% of the shares but she now has 100% control of the company. The applicant provided financial statements in support of the application covering the period between 20 January 2020 and 2 March 2020. These documents show that all the funds result from deposits from Michael Barrett on 20 January 2020, 12 February 2020, and 2 March 2020.

I was told that Mrs Barrett has been encouraged by a former manager to pursue her studies and to take on work as a sub-contractor for DX Freight. Mrs Barrett then borrowed £85,000 to cover the finance for the 10 vehicles from Michael Barrett and made him the majority shareholder. It was Mr Barrett’s accountant who apparently insisted that he become the majority shareholder and director ‘in order to protect his investment’.

I found that evidence to be inconsistent with her response to the question why she has not specified his name of the application, under ‘People’. If he was important enough to be appointed a Director and to hold a significant proportion of the shareholding, surely that equated to involvement with the business? I was told that, because Mr Barrett ‘would have nothing to do with the running and management of the business’, they did not appreciate this would place Michael Barrett in breach of the undertaking.

The law requires any Director to be involved in the running and management of that busines, regardless of the length of appointment. The point about the application form referring to people, is not well made as he was not only a Director but also the majority shareholder, which is why the application form is drafted in those terms. That claim does not assist the applicant as it either indicates a worrying approach to the licence obligations or a degree of ignorance as to the requirements.

As a result of my concerns, Mr Barrett no longer has any financial interest in the business. A loan has now been made by Mrs Barrett’s parents of £27,000. There is a family loan agreement in place. The downturn in work as a result of the pandemic means that the applicant intends to service 3 regular routes for DX Freight. The applicant intends to utilise hired 7.5 tonne vehicles. They will be hired from S & J Hire Ltd but the applicant intends to maintain them herself as per the arrangements described above.

5. Determination

I have heard how Mrs Barrett intends to balance her wider responsibilities and those in respect of this business. I am told that Mr Barrett is not currently well enough to drive professionally and has recently been engaged with the hospitality industry prior to the lock down. I was therefore unclear what point was being made about the expiry of the undertaking given to Mr Denton. Mrs Barrett intends to rely on consultancy support from TAC Assist. She will be attending an OLAC on 7 September 2020. Confirmation of those arrangements has been seen.

I have been through the papers lodged in advance of the hearing, including:

• The maintenance contract and sample PMI form;
• example of a laden roller brake check
• the proposed forward planner and maintenance plan;
• driver defect report book with rectification record;
• a Vehicle Check Sheet;
• the proposal for external analysis
• Copies of the Company Card, driver agreement and employment contract;
• ‘Legal Compliance for drivers’, in effect a handbook;
• Business Projection

I have treated the content of those policies and procedures as a statement of intent.

Vehicles will be parked at the customer’s address for loading each night. The drivers will undertake multi drops within a 25 km radius of the Operating Centre of the base.

As indicated above, the applicant will engage the services of a transport consultant for not less than 4 hours per week.

Ms Evans refers me to the Tribunal decision in 2009/264 Alistair Ronald Brown which refers to “taking all matters in to account, including her demeanour as a witness”. That phrase was prefaced with “an assessment of whether the Appellant would be independent of his family if granted an operator’s licence”. As the preceding paragraph in the decision makes clear, this is more than just a tick box exercise.

As was accepted on behalf of the applicant and as the Tribunal made clear in Aspey Trucks Ltd 2010/49: a traffic commissioner in 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”?

A number of errors were made in the completion of the application. I accept that the provision of a joint bank account referring to Mr Barrett does not equate to a sophisticated attempt to mislead. However, the failure to declare the appointment of Mr Barrett was misleading but soon identified. I am told that this resulted in other information being brought to Mrs Barrett’s attention pertaining to his licence history. My concerns regarding her inexperience and connections with Mr Barrett were made clear during the hearing.

On the application of this company I have been persuaded to grant a time limited interim under section 24(6) allowing 7 months of operation during which time the operator will need to obtain a full compliance audit (in the usual terms to be set out by the OTC) 6 months from the commencement. On that basis I will decide whether I can proceed with substantive grant. I may require a further finance review.

That grant is subject to a condition that Michael Terrence Barrett will have no involvement with the management or operation of this transport undertaking. The risks from this course were explained to Mrs Barrett.

RT/TC/28/7/20