Decision

Decision for UCS Scaffolding And Safety Systems Ltd (OH2053661)

Published 29 August 2023

0.1 In the Western Traffic Area

1. Written Decision of the Traffic Commissioner

1.1 UCS Scaffolding And Safety Systems Ltd (OH2053661)

2. BACKGROUND

UCS Scaffolding and Safety Systems Ltd (“UCS”) is the holder of a restricted goods vehicle operator’s licence currently authorising the use of three vehicles from an operating centre at Hallen Industrial Estate, near Bristol. The licence was granted on 11 April 2022 with the sole director being Samantha Kendall.

On 23 November 2022, vehicle WU12YYT, an 18-tonne rigid, was the subject of a DVSA roadside encounter with Traffic Examiner Gavin Arnold. TE Arnold found that the driver, Tom Hearn, had apparently committed the following offences:

• Failure to notify change of address on driving licence;

• Driver CPC – no evidence of training or exemption;

• Exceed 4 ½ hours driving by more than 2 hours; and

• No paper in the tachograph printer.

Examination of the tachograph unit revealed that the head had not been locked in to the current operator and had not been downloaded for 635 days, since 26 February 2021. Mr Hearn declined to be interviewed at the roadside.

A three-axle rigid vehicle, YX09HYA, was encountered by DVSA on 6 March 2023. Traffic Examiner Amy Comer found that driver Josh Cashman was apparently:

• Using a vehicle with a defective tachograph;

• Failing to use a driver card; and

• Failed to produce driver card or printout.

This second encounter led to a follow-up investigation conducted by TE Comer on 22 March. I do not list all the deficiencies she found here; in summary, almost none of the normal compliance management systems could be found. However, TE Comer found some positive features. There was investment in remote downloading, the vehicles were suited to the use to which they were put and there was insurance in place. TE Comer made a cursory assessment of the preventative maintenance systems in place. There were none. There was no forward planning and vehicles had not undergone safety inspections since the licence was granted. In the positive, there were invoices for work done.

TE Comer was told that the director, Samantha Kendall, was aware of the issues but had returned to other work and her husband, Michael Kendall, was running the business. TE Comer noted that the shortcomings found this time were very similar to those she found with Mr Kendall when she conducted an investigation on his former company, Scaffolds by Elite Ltd (“SbyE”), in 2019.

SbyE had attended public inquiry in June 2019 when I curtailed the licence due to “a near total lack of any of the systems expected of a licensed operator of heavy goods vehicles”. SbyE was renamed “United Contract Scaffolding Ltd” on 24 August 2020. On 23 May 2022, the company resolved to be wound up. The Statement of Affairs showed a deficit of £440,988 with £158,000 identified as owing to the Crown. The liquidator’s progress report twelve months on recorded the following comment:

“This initial assessment revealed matters that the Joint Liquidators considered merited further investigation. Following investigations, the Joint Liquidators questioned transactions made to the directors in the period leading up to the appointment of the Joint Liquidators. I am currently liaising with the directors and the company’s accountant to establish the position. The matter is currently ongoing.”

The quantum and timing of any dividend to the creditors was said to depend on the recovery of funds from the claims against the directors. The reference to “directors” in the plural appears to refer also to Ms Wendy Robbins who resigned in 2017.

Troubled by the total absence of compliance systems and that Michael Kendall appeared to be the de facto director, I called the company to public inquiry.

3. THE PUBLIC INQUIRY

Michael Kendall and Samantha Kendall attended the public inquiry represented by Jeremy Woodcraft, solicitor and supported by transport consultant Ian Dodd. Traffic Examiner Amy Comer attended for DVSA. Mr Woodcraft told me that Michael Kendall had now been appointed as a director.

The operator had provided in advance written submissions. Immediately ahead of the hearing, I and the operator had been provided with registered keeper checks that showed that the operator’s vehicles had been transferred into its keepership only the previous week and had previously been registered to SAS Windows & Conservatories Ltd (of which Michael Kendall is secretary and was a director until September 2021) and one to SbyE.

I set out that my review of the public inquiry brief suggested that the current entity had been a “front” for Michael Kendall to continue his scaffold operation. I noted that, at the time of application, Samantha Kendall’s email address had been given as Mike@UCSGroup and the bank statements had carried the name Mike Kendall. I had only been provided two safety inspection reports, one for one vehicle dating from January and from another from June.

Proceedings were recorded and a transcript can be made available. In writing this decision, I have both referred to my written note and listened to the recording.

3.1 The evidence of Amy Comer, DVSA Traffic Examiner

Ms Comer had provided an updated report based on recent tachograph card data from the operator. She had not been provided with the vehicle unit data as had been requested by my office. From the incomplete data, it was not practical to establish compliance.

3.2 The evidence of Michael Kendall

Mr Kendall told me that the current company had been formed in June 2020 with his son Ashley as director and was dormant for the first year. It had been intended that Ashley would set up a new company and allow him to take a backward step. Samantha had taken over as sole director in 2021 as Ashley did not want to run the business. SbyE had been set up by another business associate with his wife named as director as the associate was disqualified. Mr Kendall had worked alongside him. The associate owned about £120,000 worth of kit. After two years, the associate wanted to take all his kit, keep all his money and he put a “£250,000 flip” on the company leaving it in debt. SbyE then had to take out fresh finance for more kit leaving it in further debt. The company carried on for a while to service the debt as it was secured against his property. Covid had hit and he had been burgled. They were getting further and further into debt.

In relation to the debt to Amicus in the Statement of Affairs, that had transferred to the new company and still had to be serviced as had and did the debt to Lodge (Downend) Associates Ltd. The liquidation was ongoing, and Mr Kendall could personally fall liable for it.

Mr Kendall had turned first to his accountant and then to the liquidators. The advice was to take voluntary liquidation. The application for the o-licence was to continue to service the work ongoing and to be able to repay the debts (to Amicus and Lodge). He had been advised by his accountant not to put his name forward as a statutory director. He had not asked why. He did not know why he hadn’t put his name on the application. He had been thinking about the financial implications on his family not his operator licence obligations.

Under advice, he had now been named as a director. Samantha had no involvement in the business. She worked for an engineering company. The third director, Paul Gatehouse, was his accountant.

The vehicles were transferred to SAS as SAS was owed a lot of money by SbyE. His partner in SAS had decided he wanted the vehicles transferred out as he was tired of getting parking tickets. There was evidence of lease payments to SAS for use of the vehicles. That one vehicle was still registered to SbyE was a mistake and he hadn’t known about that. The liquidator was not aware that the vehicle had still been owned by SbyE.

Mr Kendall had tried everything he could to carry on trading. He had been open to Ms Comer about his role and that of his wife. There had not been a deliberate attempt to circumvent the licensing process.

Mr Kendall told me that had around £300,000 of scaffold which was mainly leased. It had not come from SbyE. The debts which transferred to the new business did not include the HMRC money nor did the £57,000 to banks and institutions, of which £50,000 was a bounce-back loan. The VAT bill had arisen because his partner wanted to get his own money first and had been party to the generation of £120,000 of it.

I asked why Paul Gatehouse was not present when he appeared to be the person behind Samantha having been put forward as a director. I noted that he was named in the call-up letter and was told that he had not seen it. Mr Woodhouse confirmed that his instruction was with the company, not individual directors.

Mr Kendall confirmed that vehicle BV57WSL was VOR. The company only had two drivers. YX09HYA was in the garage and had been for a week for inspection and repairs. A PMI from February had been submitted. WU12YYT was in service and would be inspected in the next couple of weeks. The DVSA inspection had happened in March. Mr Kendall at that time couldn’t see a way out so hadn’t taken action then. It was about six weeks later that he started to do something about it. He was responsible for everything in the business apart from actual erecting the scaffolding.

The R2C system might as well have been Chinese, and he didn’t understand how it worked. Remote downloading equipment had been installed which cost a lot of money and was up and running from about two weeks ago. The remote downloading went on and Ian (Dodd) was going to help out sorting the analysis. There was now a proper contract with the maintenance provider. There were holes in the maintenance arrangements. With assistance he could get on top of it. The two safety inspection reports were all there was.

The work was new house builds, in Nailsea, Banwell, Cribbs Causeway, Lawrence Weston and Chippenham. He needed a lorry to service the contracts. If he didn’t fulfil the contracts there would be massive consequences. There were between ten and twelve employees. More work, about £500,000 worth, was ready to be signed-up ready to be done. It would take about eighteen months to clear the debts; he had paid about £150,000 and was secured against his own property.

Mr Kendall could only apologise for what had happened and could put it right with help. Revocation would impact on him, his family and his parents who lived with him.

I asked what was Plan B? Mr Kendall didn’t have an option. He might be able to upgrade to a standard licence. If the guys heard about any pending action, they would leave.

Ian Dodd introduced himself and set out his credentials. He had sorted out a maintenance contract with a known contractor. Driving licence checks were in place using the FleetCheck fleet management system. R2C was a good system for a workshop whereas FleetCheck was aimed at operators and was far more intuitive. CheckedSafe was being used for walk-round checks but again was too complex. If the licence was allowed to continue, Mr Dodds’ company would be proactively involved. He had identified several potential transport managers to work with the business.

I indicated that I would reserve my decision as I was concerned that I did not know what impact any revocation or disqualification might have on the third director Paul Gatehouse. I asked my office to write to him inviting submissions. Mr Woodcraft requested seven days to provide further written closing submissions.

4. POST-HEARING SUBMISSIONS

My office wrote the same day to the third director, Paul Gatehouse, in the following terms:

“The Traffic Commissioner has reserved his decision in relation to regulatory action for UCS Scaffolding and Safety Systems Ltd. He heard evidence today that Samantha Kendall was appointed as a director of the company on your advice and that you advised Michael Kendall not to be named as a director. Admissions were made today that Mrs Kendall played no part in the business and Mr Kendall has been the controlling mind throughout. Whilst he has not made a formal finding of fact, there are clear indications that Mrs Kendall has provided a “front” for the continuing business of Mr Kendall and that may be as a direct result of your advice.

As a statutory director of the company, the Traffic Commissioner has the power under Section 28 of the Goods Vehicles (Licensing of Operators) Act 1995 to disqualify you, for a specific period or indefinitely, from holding another operator’s licence or from being a director of a company that holds an operator’s licence. He is concerned that you may not have seen the call-up papers and have not had an opportunity to make representations with respect to any such disqualification order which may also impact any professional registration you may hold. He invites you to make any such representations by 17:00 hours, 27 July 2023”

Mr Gatehouse responded on 26 July 2023. He told me that he had no involvement when the company was initially incorporated in June 2020. When Samantha Kendall became director in 2021, he “had no personal involvement in these submissions”. When SbyE entered insolvency, it owed money to his company which it could not pay so he “was offered to become a director of UCS Scaffolding Safety Systems Limited, so that I had firsthand knowledge of the financial performance. It was a sort of security.” He had no involvement in the day-to-day management and was unaware of the public inquiry issues. I was invited to agree that it would have no impact on his professional position.

Mr Woodcraft submitted final representations for the company accepting that the case fell in the “severe” category in line with STC SD10, setting out the positives and the impact of action. I have taken full account of those submissions in reaching my findings and decision.

5. FINDINGS OF FACT

5.1 Fronting/status of Michael and Samantha Kendall

Michael Kendall was frank with both TE Comer and with me that his wife Samantha had no significant role within the business. In T2012/071 Silvertree Transport Ltd, the Upper Tribunal defined “fronting” and its effect as follows:

“Another way in which to describe the same situation would be to say that: ‘fronting’ occurs when appearances suggest that a vehicle, (or fleet), is being operated by the holder of an operators licence when the reality is that it is being operated by an entity, (i.e. an individual, partnership or company), which does not hold an operators licence and the manner in which the vehicle is being operated requires, if the operation is to be lawful, that the real operator holds an operator’s licence”.

Fronting was not specifically referred to in the call-up letter, but the role of Michael Kendall was. I stated in my opening that the recent evidence suggested fronting was a potential issue and no application was made for an adjournment. Indeed, it seemed to be accepted. I do not consider there is any unfairness for me now to proceed to make a finding.

It is clear here that Samantha Kendall did not establish and run a scaffolding business either independently of her husband or even in some sort of collaboration. She has a full-time job elsewhere and gave no evidence at the inquiry. Michael told me that she played no part in the business. I find that she has provided a front to allow her husband to stay in business, the clear motive being the need to pay off a substantial amount of debt secured against the family home. In Silvertree, the Tribunal went on to say that fronting is a serious matter for two reasons. First, it is a deliberate act of deception. Second, it denies the opportunity for the regulator to know who is operating the vehicles and so to regulate that entity. Had Michael Kendall been named on the application in February 2022, when SbyE was still extant, it would have raised a number of questions. Why the need for a new licence? Is insolvency pending? Can the applicant be trusted to be compliant given the poor compliance history of the applicant director? The application would have been referred to me at that stage and it seems, more likely than not, that it would have fallen to be determined at a hearing. Certainly I would have been able to ask Samantha why she used the email address mike@ucs-group.uk and why the earliest bank statement had been addressed to her husband. The deceitful act of putting forward a clean-faced director deprived me of that opportunity.

I find that Samantha Kendall has provided a front to facilitate her husband Michael to continue his scaffolding business. I find that Michael has been the controlling mind throughout and a de facto director throughout.

5.2 Compliance matters

The licence was granted in April 2022 and three vehicles were specified in August 2022. I was told that one vehicle was off the road. The inspection frequency is declared as every eight weeks. For the two vehicles which have been in use, I was provided with safety inspection reports, one for each vehicle and told that was all there was. In T2022/040 RAM Logistics Ltd, the Upper Tribunal warns traffic commissioners of the dangers of becoming expert witness at a public inquiry. In determining that one inspection per vehicle over a 52-week period fails to satisfy the stated intention that vehicles would be inspected at 8-weekly intervals, I do not believe I am giving evidence, merely stating the plainly obvious.

Vehicle YX09HYA is a three-axle, 26-tonne rigid vehicle. It had its only safety inspection on 16 January 2023. The technician noted two safety-critical defects, those being that the offside front brake disc was “u/s”, which means “unserviceable”. A tyre, the only one of a single fitment, on the offside third axle is also u/s. Those are marked as safety related. Nine further defects are marked as non-safety related but include defects such as ABS sensor fault and a steering arm ball-joint u/s so it would seem that the technician is rather fluid in their categorisation. In the positive, there is a roller brake test, albeit unladen, and defects are rectified and the vehicle signed-off as roadworthy. It is clear that it was not fit and serviceable at the point of submission for inspection.

WU12YYT had its safety inspection on 1 June 2023, 44 weeks late. It is an 18-tonne, two axle rigid vehicle. Two safety-related defects were noted being that the second axle nearside brake caliper was seized and that the offside second axle inner tyre was “off the rim”, a defect one might expect a driver to notice. There are a further nine defects considered not safety related. Again, the technician’s assessment is dubious as the defects include that the driver’s seatbelt buckle will not release along with suspension and steering defects. The seized caliper is obvious in the roller brake test conducted at 10:18 and it is clearly rectified in the test conducted at 13:11 (it is pleasing to see a technician look beyond the word “Passed” at the foot of the printout to identify that there is still a problem). No-one appears to have quality checked the report as the tyre recorded as being off the rim is also recorded as having 95 psi of air pressure within it. All defects bar a damaged cab step are rectified, there is a laden roller brake test and the vehicle is declared roadworthy. It was clearly not fit and serviceable when submitted for inspection.

In relation to drivers hours, that still seems to be a work-in-progress. I was told that remote downloading equipment had been fitted but the operator was unable to provide vehicle unit data to Traffic Examiner Comer. I remind myself that this all started with an encounter with WU12YYT on 23 November 2022. The last tachograph download had taken place on 26 February 2021 and that was by the former owner, IJ McGill Transport Ltd when they took the vehicle off their fleet. That vehicle was specified on SbyE’s licence on 29 June 2021. On 4 January 2022, the registered keeper became SAS Windows & Conservatories Ltd of which Mr Kendall was a director. It is removed from SbyE’s licence when it is not continued on 7 August 2022 and specified on this licence on 16 August. The registered keeper remained SAS until a week before the inquiry when it transferred to the operator. One might consider that the sideways move to SAS was to take the vehicle out of the sight of the liquidator although I am told that there is appropriate documentation to support the authenticity of the transfer. That is a matter for the liquidator.

5.3 The role of Paul Gatehouse, accountant and director

Paul Gatehouse was appointed a director on 13 May 2022. He was aware of the public inquiry and he wrote to my office on 14 July 2023 setting out the impact of any regulatory action. Intriguingly, he wrote in his capacity as the accountant and not as a director. It was in his capacity as accountant that Mr Kendall told me he advised that Mrs Kendall be named as the director. I had been concerned that he had not had the opportunity to refute allegations relating to his advice and he was provided with a further opportunity to do so in writing.

In his post-inquiry submissions, Mr Gatehouse gives a carefully worded response to that allegation saying that he “had no personal involvement in these submissions”. By submissions, I take him to mean the submission of the relevant documentation to Companies House, not the decision to cite Samantha as director. Had he attended the inquiry, he may have put it differently or I could have questioned him, but he did not and I now have to make findings based on the evidence I have.

I find the timing of his appointment of considerable concern coming, as it did, ten days before SbyE resolved to be wound up. From his written evidence, the oral evidence of Mr Kendall, and the statement of affairs, it would seem that his company, Lodge (Downend) Associates Limited, was owed £23,920 by SbyE, that there has been some form of agreement that the new entity will “honour” that debt and that Mr Gatehouse would be made a director to ensure that it did.

I find, on the balance of probabilities but with considerable certainty, that the live evidence of Mr Kendall and the written evidence of Mr Gatehouse are not inconsistent. I find that it was Mr Gatehouse’s idea to put forward Samantha as a clean face and a front for Michael and that Michael had failed to consider the full implications. For that reason, I find that Mr Gatehouse is not someone I could trust to be the holder of an operator’s licence for some considerable time, if ever. His actions are such that I would report him to his governing body, but he appears to operate unlicensed. As the mind behind this deception, I find that a significant period of disqualification is in order.

His appointment as a director was not notified to my office as is required.

5.4 Summary of Findings

The operator failed to notify the appointment of Paul Gatehouse as director, s.26(1)(b) is made out.

Prohibitions do not appear to have been issued. Section 26(1)(c)(iii) is not made out.

Vehicles have patently not been inspected at 8 weekly intervals. Section 26(1)(e) is made out and I attach significant weight.

Vehicles have not been kept fit and serviceable. The rules on drivers hours, tachographs and the keeping of records have been almost entirely ignored until just before the inquiry. Driver defect reporting is non-existent. Section 26(1)(f) is made out and I again attach significant weight.

This licence has provided a front to allow Michael Kendall to continue to operate and to allow certain debts accrued by SbyE to be repaid, leaving a Crown debt of £208,000 (VAT and bounce-back loan) to be picked up by the taxpayer. Fronting alone justifies a finding of unfitness and here it is augmented by the financial irregularities and the absolute absence of compliance systems mean that I find s.26(1)(h) made out and I attach such weight that it justifies revocation in its own right.

6. DECISIONS

Pursuant to an adverse finding under Section 26(1)(e), the licence is revoked.

Pursuant to an adverse finding under Section 26(1)(f), the licence is revoked.

Pursuant to an adverse finding under Section 26(1)(h), the licence is revoked.

Pursuant to Section 28, Paul Gatehouse is disqualified from applying for or holding an operator’s licence in any traffic area for a period of three years.

To allow for an orderly wind-down, revocation will take place with effect from 8 November 2023.

A copy of this decision is to be sent to the liquidators of United Contract Scaffolding Ltd. A transcript and evidence can be made available if properly requested.

Kevin Rooney

Traffic Commissioner

8 August 2023