Traffic Commissioner addresses question of phoenix companies, administration and repute.

The case was Heard in the Transport Tribunal and we have summarised the transcript below:-

Transport Tribunal Appeal between Brian Hill Waste Management Ltd ("the Appellant") and the Secretary of State for Transport

("The Respondent")

In 1999 Brian Hill Haulage and Plant Limited (Haulage) was granted a Standard National Operators Licence. In 2007 a new company, Brian Hill Waste Management Limited (Waste) was incorporated. At the time the purpose of this was said to be the separation of the business so that some tipper lorries remained with haulage whilst the waste management vehicles were transferred to waste.

In 2007, Waste applied for a Standard National Operators Licence authorising 25 vehicles and one trailer. 20 of the vehicles, which were to be specified on the waste licence, were already specified on the licence held by Haulage.

By 2007 the directors of Haulage were in negotiations with the Inland Revenue to make monthly payments to reduce the amount of PAYE owed by the company. They were also in negotiations with Customs and Excise in relation to unpaid VAT. Customs and Excise however would not except monthly payments and forced Waste to pay back the money in full. Whilst it was known in September that there was a considerable amount of debt it was not considered that the company would go into administration. The TC was not informed about the appointment of the administrator.

The administrator entered into a licence agreement with Waste, the Agreement defined the assets of Haulage as including the Operators Licence. The Agreement provided that Haulage was to allow Waste to use the assets for the business of haulage and plant hire. Whilst this agreement was in place it was agreed that Waste pay a licence fee to Haulage for this privilege. Waste acknowledged that it did not acquire title to any of the assets of Haulage and it undertook to use them and to represent that it was carrying on the business of Haulage in a proper and business like manner and that it would comply with the directions of the administrator.

It was argued the agreement was to permit Waste to use the vehicle's specified on the Operators Licence held by Haulage to carry on the business of haulage subject to the terms of the agreement. Waste took on responsibility for paying the wages of the drivers and the costs of maintaining the vehicles. It was Waste who invoiced customers for the material transported and ultimately it was Waste who had the benefit of any profit once the licence fee and other bills had been paid.

At no point was an application made by the administrator to the Traffic Commissioner for a direction that the administrator should be treated for the purposes of the operators licence as if he were the holder of the licence.

Waste's application for an interim licence was refused and at the same time was reminded that they should not operate until granted authority to do so. Following the refusal of the interim Waste wrote to the TC saying that the vehicles are currently being operated by us on behalf of Haulage, and he asked the TC to reconsider the decision to refuse the interim licence. Traffic Area Office replied by indicating that the request for an interim was again refused and reiterated the point that the vehicles should not be operated.

In 2008 a vehicle specified on the Haulage licence was stopped, the driver of that vehicle was in possession of a delivery note which was issued by Waste relating to the journey in question.

Due to this breach both Haulage and Waste were called to a Public Inquiry. At the start of that Inquiry it appeared to be conceded that the licence held by Haulage would have to be revoked. The solicitor acting for the administrator submitted that the Deputy Traffic Commissioner could only hold a Public Inquiry in relation to Haulage with the consent of the administrator or the permission of the Court, neither of which had been obtained. The Deputy TC went on to revoke the licence held by Haulage on dual grounds of lack of repute and lack of appropriate financial standing.

In a written decision the Deputy TC concluded that Waste was specifically created to continue the business of Haulage and that the directors of Haulage deliberately failed to inform the Traffic Commissioner of the material change in the financial circumstances of the company. He concluded that the arrangements between Haulage and Waste were unlawful because in reality it was Waste and not Haulage which was trading and Waste did not have an Operators Licence. The Deputy Traffic Commissioner decided that the arrangement had all the hallmarks of Waste being a Phoenix company, with obvious implications for fair competition. He concluded that Waste had not established that it was of good repute and accordingly refused to grant it an Operators Licence.