Parks Haulage Ltd, Re

The appeal is ALLOWED. The decision of the Traffic Commissioner to revoke the Appellant’s operator’s standard licence involved an error of law and is set aside. We make no further order. REASONS FOR DECISION Cases referred to: Arnold Transport & Sons Ltd v DOENI , NT/2013/82, at paragraph 11. Bradley Fold Travel Ltd & Peter Wright –v- Secretary of State for Transport [2010] EWCA Civ 695 . Michael Hazell (No. 2) [UKUT] 0221 (AAC) 2012/2017 NCF (Leicester) Ltd NT/2013/52 & 53 Fergal Hughes v DOENI & Perry McKee Homes Ltd v DOENI, Priority Freight T/2009/225 Thandi Coaches (Red) Ltd [2021] UKUT 198 (AAC) Introduction

1. This is an appeal from the decision of the Traffic Commissioner (“TC”) for the North East Traffic Area revoking the operator’s licence OB2027286 on the ground of lack of financial standing, with effect from 23.45 on 28 November 2024. The Appellant was informed of the decision by letter dated 15 November 2024 (page 9). (Unless stated otherwise, all page references are to the electronic bundle page numbers.)

2. The Appellant applied to the TC for a stay of the decision. In granting a stay, in his decision (pages 13-22), the TC stated: - “Counsel has identified scope to argue the admissibility of the unaudited company accounts by reference to the decision in 2017/7 [2017] UKUT 0221 (AAC) . Michael Hazell. It is on that point alone where I am persuaded to allow a stay of this decision to revoke and recognise the authority of the Upper Tribunal to determine that argument.”

3. The Statutory Document referred to is the Senior Traffic Commissioner’s (“STC”) guidance on finance and financial standing issued under section 4 C(1) of the Public Passenger Vehicles Act 1981 and section 1(2) of the Goods Vehicles (Licensing of Operators) Act 1995 to provide information as to the way in which the STC believes that traffic commissioners should interpret the law in relation to the requirements for financial standing. Legal Framework

4. Section 2 of the Goods Vehicles (Licensing of Operators) Act 1995 provides that no person shall use a goods vehicle on a road for the carriage of goods, for hire or reward, or in connection with any trade or business carried on by him, except under a licence issued under the Act .

5. There is a requirement that the holder of a standard licence must have appropriate financial standing. This is set out in mandatory terms in Articles 3 and 7 of EU Regulation 1071/2009 (“the 2009 Regulation”) and sections 13 and 13A of the 1995 Act . “Financial standing” is determined in accordance with paragraph 6A of Schedule 3 to the Act . Insofar as relevant to this appeal, paragraph 6A provides: - “(1) An operator has appropriate financial standing under section 13 A(2)(c) if the operator is able to demonstrate that it has at its disposal at all times capital and reserves— (a) for goods vehicles authorised to be used under a heavy goods vehicle licence, of— (i) £8,000 for the first heavy goods vehicle, (ii) £4,500 for each additional heavy goods vehicle and ….. (2) The operator must demonstrate appropriate financial standing— (a) on the basis of the operator’s annual accounts if certified by a qualified auditor, or (b) by producing other evidence to the satisfaction of a traffic commissioner that the operator has, in the name of the operator, the necessary capital and reserves, such as— (i) a bank guarantee, (ii) a document issued by a financial institution establishing access to credit, or (iii) any other binding document. (3) In this paragraph— • “operator” means an applicant for, or a holder of, an operator’s licence in relation to which appropriate financial standing is required under section 13 A(2)(c); • “qualified auditor” means a person who is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006 . ] ”

6. Article 7 of the 2009 Regulation provides: - “In order to satisfy the requirements laid down in Article 3(1)(c), an undertaking shall at all times be able to meet its financial obligations in the course of the annual accounting year. To this end, the undertaking shall demonstrate, on the basis of annual accounts certified by an auditor or a duly accredited person, that, every year, it has at its disposal capital and reserves totalling at least EUR 9 000 when only one vehicle is used and EUR 5 000 for each additional vehicle used. For the purposes of this Regulation, the value of the euro in the currencies of Member States which do not participate in the third stage of the economic and monetary union shall be fixed every year. …

7. Once a licence has been granted the requirements of sections 13 and 13A, among other conditions, are continuing obligations that require to be met throughout the lifetime of the licence Arnold Transport & Sons Ltd v DOENI , NT/2013/82, at paragraph 11. .

8. Section 27 provides that a TC must direct revocation of a standard licence if it appears to him that the licence holder no longer satisfies one or more of the requirements of section 13 A. This would include financial standing. Background

9. The factual background to this appeal appears from the documents in the appeal bundle and the respective decisions of TC Blackmore and TC Turfitt. The Appellant company has issued share capital of £100 all of which is owned by Mr Keith Parks. The operator is a “small company” and exempt from audit under the Companies Act 2006 Page 255. . The sole director is currently Ms Abbie Parks. The Appellant was granted a heavy goods vehicle operator’s licence on 28 October 2019 with authorisation for four vehicles and 6 trailers. The requisite financial standing for that authorisation was, at all material times, £21,500.

10. The Appellant was called to public inquiry (“PI”) on 25 October 2022 following an unsatisfactory maintenance investigation and an unsatisfactory examiner visit report. At the PI, the Deputy Traffic Commissioner (“DTC”) issued a formal warning to the licence on the basis that the then sole director, Keith Parks, would resign by 6 December 2022 and be replaced by Abbie Parks. The then transport manager (“TM”) Keith Parks lost his good repute and was disqualified from acting as TM. In addition, the following statement of intent was recorded on the licence: Abbie Parks and Brian Colman will use their best endeavours to seek to ensure that on any objective view of this business (including its operator’s licence), it will be led by Abbie Parks as its guiding mind and senior manager, and plainly not by Keith Parks.

11. The operator was called again to PI on 24 April 2024 for consideration of regulatory action in view of concerns regarding prohibition notices issued, the apparent failure to fulfil statements of intent, the apparent failure to fulfil licence undertakings, material change, good repute, professional competence and financial standing Call up letter dated 19 March 2024, page 373. . Abbie Parks and Brian Colman were called to the same PI for consideration of their respective good repute and professional competence as transport managers.

12. The call up letter from the Office of the Traffic Commissioner (“OTC”) warned the Appellant that if the TC found that the operator was not complying with the laws relating to goods vehicle operator licences, then certain regulatory action could be taken, including revocation of the licence. As regards financial standing, the letter stated that the Appellant should provide evidence on financial standing such as the following original documents: - a) (if available) the latest certified profit and loss account and balance sheet that have been prepared for the business; b) original bank statements for the last three months; c) details of any overdraft facility or other loan arrangement.

13. TC Blackmore presided at the PI. Ms Parks attended the PI on behalf of the operator and as TM. Mr Colman was also in attendance. The operator was professionally represented at the PI.

14. Bank statements for the three months preceding the PI are not within the appeal bundle. However, it would seem from the transcript of the PI that certain financial information about the operator had been produced at the PI (page 519 at 00:09:30). This evidence included the operator’s Financial Statements for the year ending 31 March 2023 (page 522 at 00:19:30) which showed shareholder funds of £135,646.

15. TC Blackmore’s decision is at page 26. The TC curtailed the licence to three vehicles for 7 days pursuant to findings under section 26(1)(c)(iii), (e), (f) and (h) of the 1995 Act . The TC found that the requisite financial standing was not met. He granted an initial period of grace (“PoG”) for four weeks, with extension of this to 4 months to be considered on the production of: • Reconciliation of all cheque payments made from the business account. To include transactions with Close Brothers and payment of drivers. • Evidence of the payments of Mr Colman as transport manager including a contract and details of the last 3 payments. • Contract of employment for Mr Keith Parks.

16. Both TMs received formal warnings; their respective repute was held to be tarnished but not lost. In addition, the following undertakings were added to the licence Page 31, paragraph 23. :- (i) Mr Parks’ only involvement with the business is to be formally employed as a driver. (ii) Ms Parks will be removed as transport manager within 14 days to allow her to concentrate on director responsibilities. (iii) The operator will provide evidence in 3 months’ time that all drivers are employed under PAYE/NIC arrangements with appropriate contracts of employment. (iv) An independent audit of the Operator’s systems for maintenance and drivers’ hours and the effectiveness with which those systems are implemented by consultant (named consultant) by 30 September 2024. A copy of the audit report, together with the operator’s detailed proposals for implementing the report’s recommendations, must be sent to the Office of the Traffic Commissioner in Leeds within 14 days of the date the operator receives it from the auditor. (v) The operator will undertake professional training for the drivers in driver walk round checks and drivers’ hours compliance by 31 July 2024. Evidence of attendance to be sent to the OTC.

17. The undertakings were subsequently complied with and are not the subject matter of the appeal.

18. The operator submitted further evidence to the OTC to comply with the conditions imposed in the TC’s decision and the undertakings. The evidence included further bank statements.

19. On 3 June 2024 the OTC wrote to the operator (page 104) in the following terms: - “Thank you for submitting this additional evidence. The Traffic Commissioner has considered the evidence and has decided, on this occasion, to extend the Period of Grace for a total of 4 months. The Period of Grace will now expire on 25 August 2024. This should allow time for the financial standing requirement to be met on a 3-month average, providing that the requirement is met at all times going forward.”

20. The Appellant was required to submit three months of bank statements showing that the average amount in the account over the 3-month period was at least £21,500.

21. On 21 May 2024, Ms Parks made a payment of £10,000 into the operator’s bank account, described as a “Director’s investment”. The requested bank statements were submitted to the OTC, albeit late, and a further PoG was requested on behalf of the Appellant. A PoG until 24 September 2024 was granted.

22. There was a delay in the bank providing bank statements and so the PoG was extended again, this time to 14 October 2024. A financial calculation carried out by the OTC on 14 October 2024 stated that financial standing was not met (page 250).

23. A further, and final, PoG was granted on 29 October 2024, expiring on 12 November 2024 (page 229).

24. On 1 November 2024, Ms Parks paid £10,000 into the operator’s bank account, described as a “Loan Director” (page 266).

25. On 11 November 2024, the Appellant’s representative wrote to the OTC Page 251. arguing that financial standing was met and making reference to the Appellant’s Filleted Unaudited Financial Statements lodged at Companies House. These were the financial statements that had been available to the TC at the PI and which showed shareholder funds of £135,646.

26. On 15 November 2024, TC Turfitt considered the case and decided, in the absence of acceptable evidence which demonstrated financial standing and with no legal basis to extend a PoG beyond the 6 months permitted by law, to revoke the licence with effect from 2345h on 28 November 2024 Decision dated 15 November 2024, pages 9-12. .

27. The financial calculation underpinning the decision is based on the average amount in the Appellant’s bank account over the period 3 August 2024 to 1 November 2024 Page 274. . This brought out an average of £11,667, a shortfall of £9883.

28. As noted above, a stay has been granted pending the outcome of this appeal.

29. The operator was called to PI on 31 July 2025 principally to consider Ms Parks’ nomination as TM. Other issues were also considered, including financial standing of the operator. Deputy Traffic Commissioner Mr Hinchliffe presided at the PI. His decision was as follows The decision letter of 31 July 2025 was emailed to the Upper Tribunal and provided to the members hearing the appeal before the appeal hearing; however it has not been added to the appeal bundle. : “Having regard to the financial evidence submitted, particularly the accounts and Lloyds Bank Instant Access Account (account number ending 268) I am satisfied as of the date of this decision with regard to financial standing for the current authorisation. The operator must bear in mind at all times that the requirement for financial standing is a continuing one, and if the operator’s financial circumstances or arrangements change so as to materially affect financial standing for more than a short time (say, 14 days) the operator must notify the Traffic Commissioner’s Office and, if necessary, seek a new period of grace to allow restoration of financial standing within a reasonable period of time. Having carefully read all the evidence, particularly the operator’s large bundle (for which I am grateful), and having had an opportunity of seeing and hearing from Ms Abbie Parks at the public inquiry, I am satisfied that she has professional competence, retains her repute (albeit tarnished as a consequence of a previous decision dated 25/4/2024), and that she is able to manage effectively and continuously the operator's transport service. I therefore approve her nomination as transport manager. I accept one undertaking: All authorised vehicles and trailers will have brake performance assessed at (or in the week leading up to) the 6-weekly safety inspection by way of roller brake test - with trailers laden to at least 65%. I make no regulatory or other orders.” The revocation and stay decisions of the TC

30. In her letter to the OTC dated 11 November 2024, the Appellant’s representative argued that in considering financial standing, the TC must take into account, in addition to the bank statements lodged, the financial statements. The letter included a link to the latest financial statements lodged with Companies House which show shareholder funds of £135,646. She referred to Statutory Document 2, paragraph 70 Paragraph 73 in the current version of Statutory Document 2. , which deals with matters on which a traffic commissioner may wish to be satisfied on an application for a PoG. The matters listed are that the operator is not insolvent; that there are no outstanding maintenance or other issues, which might impact on road safety; and, that this was not an attempted device to avoid responsibility for alleged failures in compliance. She continued: - It is clear that none of these criteria apply and that the company is successfully trading, is solvent, has share capital (sic) This is probably intended to be a reference to shareholder funds. of £135,646 and working capital, as shown in the bank statements, to make the day-to-day operations and obligations of the business. The operator is paying for its maintenance and there are no outstanding aged debtors. There is clearly no attempt to avoid responsibility for any compliance failings as the Traffic Commissioner found, at the recent hearing, that the operator is compliant. The table in Annex 1 – sources of financial evidence, at page 21, makes it clear, that annual accounts or a statement of opening balance (provided they are certified by a properly accredited person) is an acceptable source of financial evidence. For these reasons we submit that the operator does satisfy the financial standing requirement.

31. The representative concluded by stating that if the TC was against the Appellant and considered that the licence must be revoked then the letter was to be treated as a request for a PI.

32. The decision letter sent by the OTC Pages 9-12. makes reference to the Upper Tribunal decision in Morgan J Ltd [2024] UKUT 337 (AAC) and stated: - “…the Upper Tribunal considered the acceptable forms of financial evidence and the status of Statutory Document Number 2, so that where a traffic commissioner determines the matter in conformity with the Senior Traffic Commissioner’s general directions, it is not open to the Upper Tribunal on appeal to hold that the commissioner’s determination involved an error on a point of law unless the Senior Traffic Commissioner’s directions where themselves unlawful and it explains why.”

33. The TC then referred to the Statutory Document, paragraph 72 (paragraph 75 in the current version) that operators need to understand that, if upon expiry of a period of grace, financial standing has still not been demonstrated then the licence will have to be revoked. As regards how financial standing may be demonstrated, the letter referred to the Upper Tribunal decision in 2012/2017 NCF (Leicester) Ltd which states: - “11. Being of appropriate financial standing has always been considered to be a continuing requirement. In other words it is a requirement that the operator must satisfy for the duration of the licence. In our view this is now made crystal clear in Article 7(1) of Regulation (EC) No 1071/2009 of the European Parliament and of the Council, (“Regulation 1071/2009”), which provides: “In order to satisfy the requirement laid down in Article 3(1)(c), an undertaking shall at all times be able to meet its financial obligations in the course of the annual accounting year”. 12.The purpose of the requirement to be of appropriate financial standing is spelt out, in general terms, in recital 10 to Regulation 1071/2009, which provides: “It is necessary for road transport undertakings to have a minimum financial standing to ensure their proper launching and administration”. In our view ‘administration’, for the purposes of this Regulation, means the organisation and running of a haulage business which holds an operator’s licence. In particular the requirement is intended to ensure that vehicles can be operated safely because the operator can afford to maintain them promptly and properly.”

34. The case goes on to set out five points that flow from the general effect of the Regulation: (i) The requirement to be of appropriate financial standing cannot be satisfied by evidence of a ‘snapshot’ of the financial position on a particular day. What is required is evidence that enough money is consistently available to satisfy the requirement, (see paragraph 14). Traffic Commissioners have recognised that this causes difficulty for new operators, they have devised appropriate ways to solve this problem. (ii) It is not necessary to show that the requirement is met 365 days each year throughout the duration of the licence. What matters is the overall average and the speed with which the balance available returns to a level which satisfies or exceeds the amount required, (see paragraph 15). (iii) The requirement to be of appropriate financial standing can only be met from assets which are available to pay bills as and when they fall due, hence the guidance that, for example, an account requiring more than 30 days’ notice should not be taken into account, (see paragraph 16). (iv) With specific and limited exceptions assets, (using the term widely), put forward to meet the requirement to be of appropriate financial standing must be owned by and in the name of the operator, (see paragraph 17). (v) While it might appear possible, in theory, to put forward physical assets in order to meet the requirement to be of appropriate financial standing the practical difficulties are such that it is unlikely to prove possible in practice, (see paragraphs 18-22) Summary taken from The Digest of Traffic Commissioner Appeals. .

35. The TC decided that there was no requirement to repeat the offer of a PI, it was for the operator to ensure that it complied with the PoG by providing the TC with the information required to ensure the TC was in a position to determine whether the operator is compliant “ by the end of the period ”. (Emphasis in the decision letter.)

36. Further explanation of the decision to revoke is to be found in the TC’s stay decision Pages 13-22. . The stay decision states: - “15. The content of that letter (dated 11 November 2024) confirmed that she (the Appellant’s) representative was aware of the difficulties of her position, apparently pivoting to rely on company accounts dated 31 March 2023 and relying on ‘shareholder funds’ . In a novel legal argument, the letter claimed that share capital is a means of demonstrating financial standing and selectively quoted from paragraph 70 of the Statutory Document. … … “21. I recorded that this is an existing operator’s licence which had been at Public Inquiry, so it was reasonable for the Traffic Commissioner to seek original or verified statements over a three-month period, the average of which must meet the prescribed sum. The operator failed to show financial standing. I did not follow or accept novel arguments regarding the value of share capital as there was no appellate case law in support. I was satisfied that, in addition to published guidance, the correspondence alerted the operator to what was required, and the responses demonstrate that. Mr Blackmore properly applied the Statutory Document as required under the law, as I was required to do. In the absence of acceptable evidence which demonstrates financial standing, and with no legal basis to extend a period of grace beyond the 6 months permitted in law, I was required to revoke the licence by reference to section 27(1)(a). However, I allowed a period of 14 days for a safe run down.” (Emphasis in the stay decision.) Grounds of appeal

37. T he grounds of appeal are at page 6 of the bundle. The Appellant initially appealed on three grounds: -

1. The Traffic Commissioner erred in failing to take into account the contents of the Appellant’s representative’s letter of 11 November 2024, and particularly the reference to the Appellant’s filed accounts, when reaching a decision on the Appellant’s compliance with the mandatory requirements of section 13 A(2)(c) of the Goods Vehicles (Licensing of Operators) Act 1995 .

2. Further or in the alternative, it was plainly wrong and an error of law not to provide the Appellant with the opportunity to have the potential revocation of its licence OB 2027286 (“the Licence”) considered at a public inquiry, as requested by the Appellant’s representative, such an obligation stemming from the principles of natural justice as explained in Atbus [2019] UKUT 0032 (AAC) .

3. Further or in the alternative, the Appellant contends that in all the circumstances the decision was, where it could demonstrate financial standing for at least part of its authorisation, disproportionate and an unreasonable interference with its rights under Article 1 of the First Protocol I (as per Part II, Schedule 1 of the Human Rights Act 1998 ). Shortly before the hearing of the appeal, the Appellant sought to add and argue a fourth ground of appeal, as follows: -

4. The delay in the hearing of this appeal represents a breach of the Appellant’s rights under article 6 of the European Convention on Human Rights and it is, as such, unlawful pursuant to section 6(1) of the HRA 1998 such that the appeal should be allowed.

38. In addition to the grounds of appeal, Mr Davies provided the Upper Tribunal with a Skeleton Argument, for which we are grateful. The Appellant’s submissions

39. Under reference to Bradley Fold Travel Ltd & Peter Wright –v- Secretary of State for Transport Mr Davies accepted that it was for the Appellant to show that the decision of the TC was “plainly wrong”. Ground 1

40. Mr Davies submitted that while the unaudited accounts had been available to the OTC and to the TC who made the decision to revoke, they had not been taken into account in the financial calculation dated 12 November 2024 Page 274. which underpinned the decision to revoke.

41. The unaudited accounts had been provided to the TC at the PI by the Appellant’s representative. The Appellant’s representative had submitted at the PI that the accounts showed retained earnings of £135,646 and that that should be taken into consideration when looking at financial standing. The TC stated at the PI that financial standing was not met Page 574. . Mr Davies stated that this oral decision at the PI was the precursor to TC Blackmore’s written decision dated 25 April 2024 Page 26. . Mr Davies noted that there was no reference to shareholder funds in the TC’s written decision.

42. A letter from the OTC dated 3 June 2024 Page 104. , makes it clear that only bank statements would be taken into account when considering financial standing. That letter states: - “ On or before 25 August 2024 , the Company must submit 3-months of bank statements showing that the average amount in the account over the 3-month period is at least £21,500. …”

43. Over the following months, the Appellant remained in frequent communication with the OTC. In particular, the undertakings added to the licence were complied with, bank statements were submitted and cash injections were made into the operator’s bank account.

44. The OTC did a financial calculation for financial standing on 14 October 2024 Page 250. . Mr Davies submitted that it is clear from the financial calculation produced that only bank statements had been considered. The section of the pro forma headed “AUDITED/UNAUDITED ACCOUNTS” is blank. The fact that such a section exists in the pro forma makes it clear, he submitted, that such accounts can be considered in the financial standing calculation. The calculation performed on 12 November 2024 Page 274. also omitted to consider the accounts.

45. Similarly, the unaudited accounts were not considered by TC Turfitt when reaching his decision to revoke the licence. This, submitted Mr Davies, is confirmed in TC Turfitt’s Stay Decision Page 13. in which he stated, “I did not follow or accept novel arguments regarding the value of share capital as there was no appellate case law in support.” Page 19 This statement by TC Turfitt is also seen in an internal memorandum of the OTC dated 14 November 2024 Page 326. . Mr Davies submitted that it can be inferred from this that TC Turfitt did not look at the accounts.

46. Further, Mr Turfitt refers to “share capital”. The issued share capital of the operator was £100. By contrast, the shareholder funds amounted to £135,646 and would include retained profits and assets. He submitted that the distinction was important and that the law required that some analysis should have been made and weighed. When asked if he required to demonstrate that had the TC considered the accounts this would have made a material difference to the decision, he submitted that he did not. The essential point was that the analysis should have been done.

47. Mr Davies submitted that the TC was plainly wrong in failing to consider the contents of the unaudited accounts. He referred to the Upper Tribunal decision in Michael Hazell (No. 2) in which the Upper Tribunal gave a broad interpretation as to how financial standing may be met: - “15. Our starting point is that financial standing can be demonstrated in a variety of ways and the total figure in any given case can be made up by a portfolio of different sources. The willingness of Traffic Commissioners to accept a particular source of funds which are said to be available will depend upon the facts of each individual case, the nature of the source of funds and the amount relied upon from that source. The most reliable evidence of available funds will be cash in either bank accounts or reserves which have been held over a period of time; the least reliable is undrawn credit card balances. There are other sources of available funding which fall in between those extremes. For example, factoring arrangements (or invoice finance agreements) may appear on their face to be a suitable source of financial standing but much will depend upon the detailed terms of the arrangement. The reasons why Traffic Commissioners are rightly sceptical of an operator’s reliance upon undrawn credit card balances are that the high interest rates charged on balances are not compatible or consistent with a viable business model and may place an unacceptable financial burden on the business. Further, because of those high interest rates, in all likelihood, the higher the dependence on credit cards to show financial standing, the less likely it will be that an operator will in fact use the facilities if required to do so because of the high cost of that borrowing. So, whilst credit card facilities may be “available” to an operator, Traffic Commissioners may also make an assessment of whether they are truly “available” in the sense that they will in fact be used. There is of course the issue of fair competition. To allow an operator to rely on a large credit card facility without having prudently built up a working reserve which can be relied upon to establish financial standing places that operator at an unfair advantage over those who have prudently built up their reserves and their operation over time.

16. We do not agree that financial standing is “black and white”. Neither do we agree that Traffic Commissioners do not have a discretion in relation to accepting or rejecting a particular source of funding or accepting or rejecting the level of reliance upon that source. Each case is fact sensitive and this tribunal will not give any guidance or prescribe the percentage of financial standing which can be made up by undrawn credit card balances save to say that as a general rule, large operators should not be relying upon credit card facilities at all. There may be exceptions….”

48. He submitted that the decision in Michael Hazell (No. 2) was authority for the proposition that each case will require an analysis of what is being put forward.

49. Further, he submitted, there is appellate case law in support of the need for a traffic commissioner to consider sources of financial information such as unaudited accounts, and that is the case of Thandi Coaches (Red) Ltd [2021] UKUT 198 (AAC)

50. Thandi concerned, amongst other issues, the question of the financial standing of the Appellant company. For the vehicles operated the sum of £145,950 was said to be needed. Bank statements provided for the PI for a 3-month period showed an average credit balance of £8000. Following the PI, the operator submitted to the OTC unaudited accounts provided by the operator’s accountant which indicated that the operator had a “capital and reserves figure of £262,951”. The Upper Tribunal interpreted the traffic commissioner’s decision to mean that he had decided the accounts could not be considered because they had not been audited. (Emphasis in the original decision.)

51. Mr Davies relied on paragraph 15 of the decision in Thandi where the Upper Tribunal said: - ‘15. We shall take the last point made with respect to Ground 1 first of all. The TC, on our reading as we have already said, excluded the material supplied by the accountant from his deliberations because the accounts were unaudited. The TC does not say so but it seems to us very likely that he had in mind the wording of Article 7 of the Regulation concerning the need for accounts to be “certified by an auditor or accredited person”. Now Mr Backhouse argues two things of potential relevance here. His primary position, as explained, is that the accountants have been certified by an accredited person because they have been signed by a director. But, in the alternative, he says that the accounts, even if not properly certified, have some evidential value such that it was not permissible to exclude them. As to the latter point, we note that the accounts did indicate that capital and reserves stood at £293,000 as at 31 August 2019. That was above the figure said to be needed to satisfy the financial standing requirement even though the money in the bank figure was much less than what was required. We have had regard to Senior Traffic Commissioner Statutory Document 2: Finance, which makes clear that one of the most reliable indicators of available finance is “cash or a facility being held in a bank account of the licence holder over a period of time”. But we do not detect in that Guidance or in any legislation anything which serves to shut out the possibility of successful reliance on other evidence of finance. In Michael Hazell (No 2) , cited above, the Upper Tribunal said “Our starting point is that financial standing can be demonstrated in a variety of ways and the total figure in any given case can be made up by a portfolio of different sources”. We appreciate that, in that case, the Upper Tribunal was dealing with arguments concerning reliance upon credit facilities but there is no reason to think the general statement we have quoted above was limited to a consideration of the appropriateness of reliance upon credit only. We appreciate that paragraph 2(1) of Schedule 3 to the 1981 Act requires the finance to be both sufficient and available to ensure the establishment and proper administration of the business carried on or proposed to be carried on under the relevant licence. It may have been the case that had the TC decided the accounts did not show the funds to be available, in the sense that cash could be drawn when needed to deal with the proper administration of the business including safety aspects such as vehicle maintenance and repair, then we would not have been able to detect a basis to interfere. It may be that if the TC had clearly decided that the accounts were simply unreliable evidence and so not worthy of much weight because they were not audited, then again there might not have been a basis for us to interfere. Such an approach would not be precluding the accounts from consideration at all (which is what we think the TC did) because they were unaudited but rather admitting them for consideration but then attaching little or no weight to them. The distinction might be thought a fine one, but it is not unimportant. We have concluded that the TC erred because he wrongly excluded the accounts from consideration at all (as opposed to considering them and deciding what weight should be attached to them or deciding whether or not they revealed the existence of available funds). Had he not so erred he might, for the other reasons we have touched on, reached the same outcome on finance but he has not said he would have done nor set out any alternative conclusion leading to the same result. That being so, we have decided, whilst had he chosen to have said more our position might well have been different, that his decision as to financial standing as explained by him, is not a legally sound one.’

52. Mr Davies submitted that the decision in Thandi proves that alternative evidence does need to be weighted, contrary to what TC Turfitt said. His failure to apply the approach approved by the Upper Tribunal in Michael Hazell (No. 2) and as further endorsed by it in Thandi Coaches (Red) Ltd , renders the decision unsound and plainly wrong. Discussion and decision

53. The following principles (extracted from the Digest of Traffic Commissioner Appeals) as to the proper approach to an appeal in the Upper Tribunal can be found in the decision of the Court of Appeal in the case of Bradley Fold Travel Ltd & Peter Wright –v- Secretary of State for Transport [2010] EWCA Civ. 695 : “(1) The Tribunal is not required to rehear all the evidence by conducting what would, in effect, be a new first instance hearing. Instead it has the duty to hear and determine matters of both fact and law on the basis of the material before the Traffic Commissioner but without having the benefit of seeing and hearing the witnesses. (2) The Appellant ‘assumes the burden’ of showing that the decision appealed from is wrong. (3) In order to succeed the Appellant must show not merely that there are grounds for preferring a different view but that there are objective grounds upon which the Tribunal ought to conclude that the different view is the right one. Put another way it is not enough that the Tribunal might prefer a different view; the Appellant must show that the process of reasoning and the application of the relevant law require the Tribunal to adopt a different view.”

54. The Tribunal sometimes uses the phrase “plainly wrong” as a shorthand description of this test. ( NT/2013/52 & 53 Fergal Hughes v DOENI & Perry McKee Homes Ltd v DOENI, paragraph 8).

55. Turning to the first ground of appeal, having considered the decision of TC Turfitt and what he said in his decision to revoke, as further illustrated in his internal memorandum and stay decision, we infer that the Appellant company’s unaudited accounts were simply disregarded in the consideration of whether or not financial standing was met.

56. We are in agreement with the Upper Tribunal’s decisions in Michael Hazell (No. 2) and Thandi Coaches (Red) Ltd that while cash held in a bank account over a period of time may be one of the most reliable indicators of available finance, reliance on other financial evidence is not precluded by the legislation. Paragraph 6A of Schedule 3 to the 1995 Act is not an exhaustive statement of how financial standing may be demonstrated. It may be the general practice of traffic commissioners to ask for evidence of financial standing by reference to three months’ worth of bank statements, but that does not mean that other forms of financial evidence are excluded. Such evidence requires to be considered for what it is worth in the circumstances of the particular case.

57. The unaudited accounts submitted by the operator were potentially material to the question of financial standing and, in the circumstances of the present case, ought to have been analysed and considered for what they were worth in determining financial standing. As in the case of Thandi, had the TC done that, and reached the same decision, it is possible his decision would not have been open to criticism. However, that exercise not having been undertaken and the accounts having been completely disregarded, we agree that the TC was plainly wrong and his decision is unsound. Accordingly, we must set aside the TC’s revocation decision.

58. Given our decision that ground 1 is made out and that that will dispose of the appeal, it is not necessary for us to decide the other grounds advanced. In saying that, we mean no disrespect to the careful arguments presented to us by Mr Davies. Disposal

59. The decision of the TC dated 15 November 2024 revoking the Appellant’s licence is set aside.

60. In the event that we allowed the appeal, given the decision of DTC Hinchliffe on the issue of financial standing, Mr Davies invited the Upper Tribunal simply to set aside the decision because to remit it to the TC for further inquiry would be disproportionate.

61. In terms of paragraph 17(2) of Schedule 3 to the Transport Act 1985 , on appeal, the Upper Tribunal may make such order as it thinks fit.

62. We agree that is unnecessary to remit this matter to the TC for further investigation of financial standing given the recent decision of DTC Hinchliffe that financial standing for the current authorisation was made out. We make no further order. Authorised for issue Marion Caldwell KC On 29 December 2025 Judge of the Upper Tribunal