Decision

Decision for S&K Car Transportation Ltd and Julie Anne Charles

Published 18 November 2024

0.1 IN THE WELSH TRAFFIC AREA

1. DECISION OF THE TRAFFIC COMMISSIONER FOR WALES

2. PUBLIC INQUIRY HELD AT PONTYPRIDD ON 23 OCTOBER 2024

3. S&K Car Transportation Ltd OG2038526 &

4. Transport Manager Julie Anne Charles

5. Background

The operator, S&K Car Transportation Ltd, holds a Standard National Goods Vehicle Operator’s Licence authorising 2 vehicles and 2 trailers. The operator is based in Carmarthen, West Wales, and its business is car transportation, both for salvage and of new vehicles. The company directors are Shaun Andrew Charles and his stepfather, Timothy Thompson. The operator’s first application for a licence was considered at Public Inquiry in September 2020 but was refused by the presiding Traffic Commissioner who was not satisfied that the statutory requirements were met as to good repute and professional competence. A new application was made in 2021 with transport consultant Rick Nugent as the nominated Transport Manager and it was granted on 4 February 2021. Julie Charles, Shaun Charles’ mother, replaced Rick Nugent as external transport manager on the licence on 16 December 2021.

A Driver and Vehicle Standards Agency (“DVSA”) traffic examiner (“TE”) visit to the operator’s premises on 30 June 2023 resulted in an unsatisfactory report to my office in respect of shortcomings as to driver licence checking, drivers’ hours, disciplinary procedures and compliance with working time directive requirements.  I noted the explanations given by the operator for the shortcomings and assurances given and decided to issue a warning letter to the operator.  

On 25 January 2024 vehicle N20GLY was encountered by the DVSA in Wiltshire.  Apparent drivers’ hours offences were detected at the roadside, and it was apparent that the driver had driven vehicle N30SKT after the vehicle had been removed from the operator’s licence and replaced with another vehicle, and no margin was available for the use of that vehicle. The driver, Gordon Charles (Shaun Charles’ father) was issued with a fixed penalty notice for driving a vehicle in a dangerous condition due to insecure load and an immediate prohibition notice was issued to the vehicle for that and two other defects.

The encounter triggered a DVSA maintenance investigation and another DVSA traffic investigation.  Vehicle Examiner (“VE”) Mark Davies visited the operator on 13 April 2024 and found a number of serious and significant failings in the operator’s maintenance systems.  TE Chelsea Williams also visited the operator on that date and her report also found shortcomings, some of which had been a feature of the previous unsatisfactory DVSA TE report in 2023, but her report also highlighted concerns about using more vehicles than were authorised on the licence. By a call up letter dated 17 September 2024, the operator was called to public inquiry. By a call up letter of the same date the transport manager, Julie Charles, was also called to the inquiry to explore the shortcomings identified in the reports.

6. Hearing

The Public Inquiry was listed for 23 October 2024 at the Office of the Traffic Commissioner for Wales in Pontypridd. It commenced and concluded on that date.  Shaun Charles, director, attended on behalf of the operator and Julie Charles attended as transport manager.  Both gave oral evidence and were represented by Aled Owen of HCR Law who made representations on their behalf.  At the conclusion of the hearing, I indicated that I was reserving my decision and would issue a written decision as soon as possible.

7. Issues

The public inquiry was called for me to consider whether there were grounds for me to intervene in respect of the licence held by S&K Car Transportation Ltd, specifically by reference to the following sections of the Act:  6, 26(1)(c)(iii), 26(1)(e), 26(1)(f), 27(1) and 28.

Julie Charles was called as Transport Manager to consider whether I should make a finding against her repute and prevent her from relying on her Certificate of Professional Competence - Schedule 3 to the Act.   

8. Evidence

In addition to the papers in the public inquiry brief, the DVSA produced Public Inquiry Supplementary Statements for the purpose of the hearing which were provided to me and the parties’ legal representative in advance of the hearing.  These statements were produced following receipt of updated maintenance and drivers’ hours documents that the operator was required to send to the DVSA shortly before the hearing date. These were a statement from VE Mark Davies, dated 16 October 2024; statement from TE Alec Thomas, dated 14 October 2024; and statement from Christine Hutchins, civil servant, authorised user of the National Automatic Number Plate Recognition (“ANPR”) Service, dated 10 October 2024.

The call up letter asked the operator to submit financial evidence in advance of the hearing due to concern that the operator may not be of the appropriate financial standing to hold an operator’s licence for the number of vehicles authorised. It was required to show access to an average of £12,500 over the last three months by way of financial evidence. It was unable to do so by the deadline in the call up letter, or by the date of the inquiry. The financial calculation produced by OTC staff on the bank statements provided by the operator showed an average balance which fell very far short of the amount required, even for one vehicle.  I was invited by Mr Owen to make an adverse finding that the operator did not meet the financial standing requirement in s13A of the Act and to consider granting it a Period of Grace for a period of 2 months.  There was evidence during the hearing about financial difficulties faced by the company. Mr Owen submitted that he had hoped to be in possession of evidence to demonstrate an imminent large transfer of cash into the business from a pension fund held by director Timothy Thompson.  His instructions were that the money was held by Lloyds Bank and that Mr Thompson (who did not attend and whose written statement produced for the inquiry did not mention this) was content to place that money into the operator’s business account with no caveat and no undertakings attached. However, he was unable to produce any evidence before or at the hearing to substantiate this.

 Also received in advance of the hearing were statements from Shaun Charles, Julie Charles and Timothy Thompson; submissions from Aled Owen on behalf of operator and transport manager and an audit report prepared by Neil Thomas, transport consultant, NRT Consultancy (Pembs) Ltd.   

The DVSA evidence was not contested by the operator or transport manager and both parties fully accepted the failings set out in those reports and statements included in the public inquiry brief and supplementary statements.  Mr Owen did, however, wish to clarify that criticisms made by TE Thomas in his supplementary statement of 14 October 2024 which referred to incorrect explanations of driver infringements written in red pen were not made by transport manger, Julie Charles, but by Neil Thomas, transport consultant. Mr Owen wanted to place on record that the fault of “misinterpretation” was accepted by Mr Thomas and asked me to accept that it was not down to Julie Charles. 

I do not set out all of the evidence in this decision because it is a matter of record within the bundle and transcript of proceedings.

9. Findings of fact

It is undisputed that the operator has operated more vehicles than the maximum number on its licence, contrary to section 6 of the Act. That is clear from TE Williams’ Public Inquiry report which describes evidence from tachograph data and ANPR sources that both Shaun and Gordon Charles operated three vehicles on dates in January 2024. TE Thomas’ statement of 14 October 2024 and Christine Hutchins’ statement of 10 October 2024 confirm that on 20 separate days the operator has used three vehicles when only authorised for two – the most recent date was 8 October 2024, only two weeks before the public inquiry hearing.  In his written statement for the inquiry Shaun Charles accepted that unauthorised use of a third vehicle but suggested that an additional vehicle had been incorrectly used for vintage shows.  However, in oral evidence he accepted that it was deliberately used on more than the “odd occasion” because of financial difficulties experienced by the company due to people not paying on time.  He explained that he was just “trying to keep the wolves from the door” by using an additional vehicle and acknowledged that doing so for financial gain was likely to be considered an aggravating feature by the regulator.

 It is undisputed that the operator’s vehicles have been issued with prohibition notices by the DVSA in the past five years. Accordingly, I find that section 26(1)(c)(iii) of the Act is made out.

The evidence is clear that statements made when the operator applied for the licence have not been fulfilled, namely that vehicles would be inspected at six weekly intervals and that safety inspections, maintenance and repair work would be carried out by Gary Rees or M J Male. VE Davies’ report identified that 33% of the safety inspections were carried out late and he found that inspections were being carried out by Shaun Charles at the operating centre, which was inadequate for that purpose.  The VE had serious concerns about maintenance standards which he found to be very poor, resulting in safety critical defects.  Accordingly, I find that section 26(1)(e) of the Act is made out.

The evidence is clear and accepted by the operator that it failed to comply with the undertaking on the licence that vehicles and trailers would not be overloaded as evidenced by prohibition notices and fixed penalty notices issued to all three drivers, including both directors, for load security and excess weight.  

It also failed to comply with the undertaking on the licence that its vehicles and trailers would be kept fit and serviceable as evidenced by the prohibition notices issued and poor initial MOT fail rate.

The undertaking that the operator would observe the rules on drivers’ hours and tachographs and keep proper records has not been complied with.  I make that finding on the basis of the DVSA evidence included in the Brief – initial TE Visit report from 2023 which resulted in a warning letter and subsequent TE Inquiry report of 21 August 2024 – and on the more recent evidence produced by the DVSA for the inquiry hearing.  The most recent DVSA statement identifies that assurances given by the operator and transport manager in response to the TE visit report have not been followed through, particularly as regards producing infringement reports, checking of digital and analogue charts and actioning these with drivers concerned.  It also identifies that a vehicle used by the operator has been repeatedly used whilst under prohibition for a defective tachograph.   

The operator failed to comply with the undertaking that it would keep proper safety inspection and driver defect reports.  The DVSA evidence at the time of their visit in April was that there were missing and incomplete records, including a lack of brake assessments. Those failures have persisted up to the date of the inquiry.  VE Davies’ evidence prepared for the inquiry hearing was that there were still missing inspection records and, on those that were provided, some still had no brake tests included. The evidence from the operator’s own transport consultant also referred to a missing inspection and lack of brake testing at inspections and incomplete inspection records. The update statement from the DVSA referred to 48 missing driver defect reports where there was evidence of vehicles having been used. 

The operator failed to comply with the undertaking that drivers would promptly report defects that could prevent the safe operation of vehicles and/or trailers and that defects would be promptly recorded in writing. VE Davies highlighted a number of defects found at the roadside which should have been identified by drivers, including by Shaun Charles, director, who was driving a vehicle that was stopped, and prohibitions issued. There were numerous instances of defects which should have been identified by drivers found on PMI sheets and the VE found the system of walkaround checks being used by drivers ineffective.  Those failings have persisted up to the date of the inquiry on the evidence of the DVSA and Neil Thomas, the operator’s transport consultant.  Accordingly, I find that section 26(1)(f) of the Act is made out.

I find on the financial evidence presented that the operator no longer meets the requirement in section13A(2)(c) of the Act to be of appropriate financial standing.  Submissions were made by Mr Owen inviting me to make such a finding so that I might grant a period of grace by notice under section 27(3A) for the operator to rectify the situation.

I find that there have been persistent operator licence failures, particularly in relation to checking drivers’ hours and downloading data with many of the same failures found by the DVSA in 2023 still present this year.  Those same failures persisted as at the date of this public inquiry, and I find that there has been a wholly inadequate response by the operator.  There have been insufficient changes made to ensure future compliance, with the supplementary statements prepared by the DVSA examiners for this public inquiry presenting a very poor picture of current compliance and both examiners stating in their evidence that there had been little to no improvement between the investigation visit reports and the inquiry. There was ineffective management control and insufficient procedures in place to prevent the operator licence compliance failings found. The operator was aware that it should not use more vehicles than the maximum number authorised.  This was picked up by the TE in her investigation and advice was given.  Yet, despite this, and fully aware that this was a serious breach of trust, the operator continued to use more vehicles for maximum economic gain as recently as 8 October 2024. There were ineffective analysis procedures in place to detect drivers’ hours and working time infringements.  There was ineffective or insufficient driver training with insufficient monitoring and disciplinary procedures in place, particularly as regards driver walkaround checking, completion of driver defect reports and load security. The operator’s mechanical prohibition rate is 41.38%, nearly double the HGV national average, and it has a poor MOT pass rate – its initial fail rate at MOT is 37.50%, which is three times the national average. All of these findings, but particularly the absence of any evidence to show, even by the date of the inquiry, that proper brake testing was being carried out and that drivers were properly carrying out walkaround checks leads me to find that road safety and fair competition have been significantly compromised by the operator’s actions.

Julie Charles took over as transport manager on the licence in December 2021, but her evidence was conflicting as to the circumstances.  In her written statement produced for the inquiry dated 16 October 2024 she states at paragraph 6 that her son Shaun asked her to become his Transport Manager towards the end of 2021 but “she was not keen to do so” and “agreed to help him for a limited period of time”.  However, in her oral evidence she initially stated that she had “badgered” Sean, asking to become his Transport Manager.  Upon further questioning she accepted that she couldn’t really remember the circumstances.  She was aware that Rick Nugent had resigned as Transport Manager. Shaun Charles’ evidence was that resignation was because Mr Nugent considered it risky to carry on as Transport Manager for the business because the operator was frequently stopped by the DVSA and was classed as a “red operator” by that agency.  Mrs Charles explained in her evidence that she receives no payment for fulfilling transport manager duties and, although she is an “external” transport manager on the licence, there is no contract in place between her and S&K Car Transportation Ltd.  Her evidence was that Shaun Charles looks after her car for her, although she accepted that is something he has always done, and it was not specifically because of her transport management role. If she was ever short of money, Shaun would help her financially, but that was “favour money” and not payment for services.  She lives in Taunton and, initially, she attended the operating centre in Carmarthen every weekend to babysit for her grandson, spend time with her family and spend time in the office to help her son with transport management side of the business.  Within the last 18 months, visits dropped down to twice a month and then to only once a month.  From September 2022 until March 2023, she was employed full time as a multi drop van driver for a delivery company in Devon, then from August 2023 until August 2024 she was employed full time as a van driver for a pharmaceutical company in Bristol.  When asked how she believed she could continuously and effectively manage the transport operations of S&K Car Transportation Ltd whilst working full time in England and living in Taunton, her evidence was that she did not always work a full 13-hour day on the transit vans and she felt able to do so. One of the drivers, Gordon Charles, is her ex-husband and she “delegated” all transport manager responsibilities in respect of him to her son, Shaun. The reason she gave for that was due to personal relationship difficulties.  However, he is one of only three drivers (the others being the two directors) and management of him is clearly a key responsibility.  Mrs Charles accepted that she had failed to follow through on assurances given to the DVSA following their initial visit in 2023 and again this year, particularly in respect of tachograph record checking and drivers’ hours compliance either personally, or by effectively monitoring what Shaun was doing in that regard. Mrs Charles has recently started work as an HGV driver again and been offered a full-time role which will take her all over the country and which she intends to take up.  She does not wish to continue working as Transport Manager for the operator, although indicated that she would do so for a time if the licence is allowed to continue and until a replacement can be found.

The concerns set out above are equally apposite to Julie Charles as transport manager, although I did accept her evidence that she was not aware of the unauthorised use of a third vehicle on numerous occasions. Had she been exercising her transport manager duties effectively by monitoring drivers and the tachograph data, of course, she would have been aware.  In her evidence she candidly and completely accepted the failings and accepted that she must take full responsibility for these.  Accordingly, I find on the evidence and on the balance of probabilities that Julie Charles failed effectively and continuously to manage the operator’s transport activities, as required by legislation.

10. Considerations and Decisions in respect of the operator

 I have weighed up the adverse findings set out above with the positive features in this case in considering regulatory action.  On the positive side, the operator co-operated with the enforcement investigation. It has now engaged external transport consultants, but that action has come too little and too late to show any tangible evidence of any improvement in compliance.    Having regard to the Senior Traffic Commissioner’s Statutory Document 10, Annex 4, and having considered all the evidence, I agree with the operator’s legal representative that this case is in the “severe to serious” category.  In determining whether the operator continues to satisfy the mandatory and continuing requirement to be of good repute in section 13A(2) of the Act I have had regard to Schedule 3 to that Act and to the Senior Traffic Commissioner’s Statutory Document No. 2 on good repute and fitness.

Shaun Charles was fully aware of the commercial advantages that he was obtaining by operating more vehicles than were authorised on the licence.  He deliberately did so, knowing it was unlawful and in an effort to try to get out of financial difficulties – in his words “to keep the wolves away from the door”.  The operator obtained a competitive advantage in doing so and was not operating on a level playing field with its competitors.

Even when balancing the positives, I find that I am no longer able to trust the operator.  I simply do not believe the assurances given that it will operator compliantly in future. Despite being given an opportunity to demonstrate that it could operate compliantly following the first DVSA visit in 2023, the operator was not doing so at the time of the DVSA visits this year and was still not doing so at the time of this inquiry hearing.  In Arnold Transport & Sons Ltd v DOENI (NT/2013/82) the Upper Tribunal said:

“The Tribunal has stated on many occasions that operator licensing is based on trust.  Since it is impossible to police every operator and every vehicle at all times the Department in Northern Ireland (and Traffic Commissioners in GB), must feel able to trust operators to comply with all relevant parts of the operator licensing regime. In addition, other operators must be able to trust their competitors to comply, otherwise they will no longer compete on a level playing field…cutting corners all too easily leads to compromising safe operation.  It is important that operators understand that if their actions cast doubt on whether they can be trusted to comply with the regulatory regime they are likely to be called to a Public Inquiry at which their fitness to hold an operator’s licence will be called into question.  It will become clear, in due course, that fitness to hold an operator’s licence is an essential element of good repute.” 

In considering the Priority Freight (2009/225) question, “how likely is it that this operator will, in future, operate in compliance with the operator’s licensing regime?” I have had regard to the failures I have found proved which were serious, but also the lack of any evidence to demonstrate future compliance. On balance, therefore, I find the answer to be “unlikely”.

In considering the Bryan Haulage (no.2) (2002/217) question, “is the conduct such that the operator ought to be put out of business?” in reaching my decision, I have had regard to the positive and negative features set out in the Senior Traffic Commissioner’s Statutory Document 10, Annex 4, and discussed above. This is a case where the starting point for regulatory action is severe to serious. I also take the view that other operators who carry out their businesses in a compliant manner would be shocked if another operator were permitted to operate vehicles against this background. I have considered the evidence from Shaun Charles and submissions made by Mr Owen as to the effect of revocation on the business. Mr Owen acknowledged that revocation would be very much in my mind but invited me to accept that the operator had shown enough in terms of candour at inquiry, intent and steps taken to persuade me to move away from revocation.  However, I consider it appropriate and proportionate to answer the Bryan Haulage question in the affirmative.  I find that the operator has lost its good repute and I direct that the licence is revoked pursuant to adverse findings in terms of sections 26(1)(c)(iii), 26(1)(e), 26(1)(f), 27(1)(a) (with reference to sections 13A(b)(good repute) and 13A(c)(financial standing)) and 27(1)(b).  To allow for an orderly running down of the business I direct that revocation of the licence shall take effect from 23:45 hours on 22 November 2024.

I have had regard to submissions made on behalf of the operator as to the effects of disqualification and to Statutory Document 10.  I have also reminded myself of the authority in David Finch Haulage (2010/29).  In that case, the Transport Tribunal said: “The imposition of a period of disqualification 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…”

The Senior Traffic Commissioner’s Directions state that serious cases may merit disqualification of between 5 to 10 years and severe cases may merit disqualification for an indefinite period.  For a first public inquiry, the suggested starting point is between 1 and 3 years.  The operator received a warning following compliance failings found by the DVSA last year.  It gave assurances that about steps that it would take to address those, yet those were not followed through and those and further failings were found by the DVSA following further visits this year, which have persisted up to the date of the inquiry.  There has been a serious breach of trust by this operator, particularly regarding the deliberate use of more vehicles than it is authorised for, and I have already set out my reasoning for determining that this is a serious to severe case, by reference to Annex 4 of Statutory Document 10.

Taking account of all the circumstances, I consider that a period of disqualification is necessary to meet the objectives of the operator licensing regime.  Acknowledging that this is a serious to severe case but giving credit for such positives that I have been able to find, I have decided to disqualify the operator and director Shaun Charles from holding or obtaining an operator licence for a period of two years.  The disqualification order shall be in the terms set out at paragraph 2 of my Decision above.

11. Considerations and Decisions in respect of transport manager Julie Charles

Julie Charles was unable to demonstrate that she had complied with her duty effectively and continuously to manage the transport activities of S&K Car Transportation Ltd, as required by legislation. There were serious failures found by the DVSA which occurred on her watch as a professionally qualified transport manager.  The role of the transport manager is a key one which Julie Charles has failed to fulfil effectively, resulting in compliance failures and a clear risk to road safety.

In considering the good repute of Julie Charles as transport manager I performed the same balancing act as set out above with reference to the negative findings and features that I have already set out, noting that Julie Charles was not complicit in the use of more vehicles than were authorised. It is accepted that a transport manager cannot do everything herself but, so far as “continuous and effective responsibility for the management of the transport operations of the business” is concerned, the duty is personal to the transport manger and non-delegable. Delegation must be appropriate, but it does not shift responsibility in the sense that the transport manager remains responsible for ensuring the delegated tasks are properly carried out. Julie Charles failed in that regard.  I have also considered the positive features to be weighed in the balance.  Julie Charles has a long career in the industry, as a driver, operator and transport manager and she has recently completed refresher training.  She has now returned to full time HGV driving and has no wish to continue as a transport manager in the immediate future. If she were to lose her transport manager qualification that would have no financial implications for her, but she would be “devastated” because of her long history in transport and the hope that, one day, she might again have her own licence and act as transport manager.

 In considering whether her good repute is lost, rather than merely tarnished, I have had regard to relevant Upper Tribunal case law, including Angus Smales trading as Angus Smales Eventing (2014/058) when the Upper Tribunal confirmed that being a transport manager is far more than just holding the qualification. I find that Julie Charles has not met the statutory duty and that continued to be the case until the inquiry hearing, as evidenced by the recent maintenance and drivers’ hours documents.  In the circumstances, and as was confirmed in Matthew Reynolds (2015/049), I must find that she has lost her repute as transport manager and no longer satisfies the requirements of paragraph 14A of Schedule 3 to the Act to be of good repute. I have considered whether such a finding would be a disproportionate response but consider that it is entirely proportionate and, indeed, inevitable on the evidence before me.

Having concluded that Julie Charles’ good repute is lost I must also disqualify her, and I am obliged to disqualify her under paragraph 16(2) of Schedule 3 to the Act from being a transport manager on any licence.  I direct that she is disqualified with effect from 23:45 hours on 22 November 2024.

Although Julie Charles is at liberty to apply to vary that direction, I am obliged to disqualify her for the minimum period of 12 months by virtue of paragraph 17(1A) of Schedule 3 to the Act. She would be well advised to undertake further transport manager refresher training and to work with an experienced CPC holder exercising transport manager duties if she is to seek to persuade a Traffic Commissioner that she is capable of meeting the statutory duty in future.

Victoria Davies

Traffic Commissioner for Wales

2 November 2024