Muck It Ltd v Merritt & Ors

For revocation of an existing goods-vehicle operator’s licence under sections 26 and 27 of the Goods Vehicles (Licensing of Operators) Act 1995, the traffic commissioner must be satisfied that a statutory ground exists or that a fundamental requirement is no longer met. The licence-holder bears no legal burden to prove the contrary, although absence of evidence may create an evidential basis for an adverse conclusion.

Good repute is assessed separately for a company and its transport manager in ordinary cases. Where the transport manager is the practical controller, the distinction may disappear and his loss of repute may establish the company’s loss of repute. Revocation must remain proportionate. Directors facing personal disqualification must have a fair opportunity to make representations.

Muck It Ltd and its directors appealed from the Transport Tribunal’s decision dated 7 December 2004, which upheld the traffic commissioner’s revocation of the company’s standard operator’s licence and five-year disqualification of the company and its directors. The underlying public inquiry concerned alleged manipulation of interrelated haulage companies, vehicles and licences in connection with fly-tipping.

The commissioner proceeded in the company’s absence after finding proper notice. He refused an adjournment and refused to allow the transport manager, Mr Huke, to represent the company, although he heard him on his own good repute. The appeal raised procedural fairness, the basis for loss of good repute, the burden of proof under sections 26 and 27, proportionality, professional competence after loss of the transport manager’s repute, and personal disqualification. The central issues were whether the company’s licence could be revoked on the commissioner’s findings and whether the directors should personally remain disqualified.

Disposition

The appeal was dismissed except that the directors’ personal disqualifications were quashed. The question of their disqualification was remitted to the traffic commissioner for reconsideration in the light of any representations they wished to make.

1. Procedure. The commissioner was entitled to proceed in the company’s absence. Proper notice had been sent to its nominated correspondence address and forwarded to its operating centre. A further adjournment was unjustified. The Tribunal correctly concluded that the commissioner should have allowed Mr Huke to represent the company, but the error caused no difference to the result because he controlled Muck It and had addressed the same repute allegations.
2. Good repute. The responsibilities and liabilities of a company and its transport manager should ordinarily be kept separate. Where the transport manager is in practical terms the true controller, however, that distinction disappears. Mr Huke controlled Muck It and the associated companies, and the purported vehicle transfers lacked substance. The conduct proved against him as controller therefore established Muck It’s loss of good repute. The directors were either complicit or had abdicated their responsibilities by leaving everything to him. Paragraph 1(2) of Schedule 3 permitted the commissioner to consider the previous conduct of the company’s officers, servants, agents and directors where it related to the company’s fitness to hold a licence.
3. Proportionality. An operator’s licence is a possession for the purposes of article 1 of the First Protocol to the ECHR. The relationship between the conduct found and the sanction must be proportionate. The commissioner had regard to the seriousness of the conduct and was entitled to conclude that the company deserved to lose its business.
4. Burden of proof. The court disagreed with Richardson. The language of sections 26 and 27 differs from the application language in section 13. For revocation, the commissioner bears the legal burden of being satisfied that a ground exists or that a fundamental requirement is no longer met. The holder’s failure to provide evidence may create an evidential basis for an adverse conclusion, but does not impose a legal burden on the holder. This conclusion was unnecessary to the result because the company’s loss of good repute was independently established.
5. Other grounds. The summary revocation decisions based on material change and financial standing could not safely be upheld because they depended on the mistaken burden of proof. Loss of the transport manager’s good repute did not provide an independent immediate ground for revocation, because paragraph 10 of Schedule 3 allowed up to 18 months to appoint a replacement manager. The loss of the company’s own good repute nevertheless required revocation.
6. Directors. The directors’ personal position differed from that of the company. If they were merely complaisant or ignorant rather than complicit, they might have representations capable of affecting personal disqualification. They should therefore have the opportunity to be heard before any order against them was made.

• Court of Appeal (Civil Division): in [2005] EWCA Civ 1124, dismissed the appeal except in relation to the directors’ personal disqualifications, which were quashed and remitted.
• Transport Tribunal: on 7 December 2004, upheld the traffic commissioner’s decisions.
• Traffic commissioner for the eastern traffic area: on 19 August 2004, revoked Muck It’s operator’s licence and disqualified the company and its directors for five years.