TC Turfitt’s revocation of licence on financial grounds quashed

Revocation of O Licence on financial grounds overturned

The revocation on financial grounds by Traffic Commissioner (TC) Richard Turfitt of the one-vehicle national O-Licence held by Loughton, Essex-based Paula Jane Morris, trading as Miss Bus, has been quashed by the Upper Tribunal because a period of grace to show the required finance was not extended. 

The Tribunal said that this was an unfortunate case that arose because of the COVID-19 pandemic, which affected the UK for much of 2020 and 2021 and continues to affect the country in unpredictable ways. 

Included in the vast mass of legislation addressing the consequences of the pandemic was legislation designed to assist the operators of PSVs that found difficulty in the conditions of the pandemic in satisfying the requirements applying to them. 

Members of the Upper Tribunal fully understood the approach taken by TC Turfitt and were in general agreement with the principles he set out. However, they parted company with him on one point as to the available powers, where they considered he made a mistake in law. 

Mrs Morris ran a minibus business and her husband acted as her Transport Manager. There was nothing to suggest any difficulties with the operation until October 2020. Not surprisingly, her business was adversely affected by the pandemic and as the time for her second five-year renewal approached, she very properly called the Office of the Traffic Commissioner (OTC) to explain that she was having difficulties in meeting the financial standing requirement. 

The OTC, also very properly, directed her to the Senior Traffic Commissioner’s Contingency Statutory Document, commencing on 31 July 2020, that set out, among other things, some changes affecting the O-Licence requirements. 

Considering that document, on 28 October 2020 Mr Morris sent the OTC an email on behalf of his wife explaining the consequences of the pandemic on her business and continued: “The only good news is that Paula’s orders for next year are improving… with the hope that these will drastically increase as the country comes out of lockdown and confidence in travel returns. 

“It is with this in mind that I respectfully request a period of grace of financial standing, for an initial period of six months, as per Article 6 of [the Contingency Statutory Document], with a review to be held at the end of April 2021. 

“However, the likelihood is that, if the country is still in lockdown, we will need to ask to increase this period of grace to the current 12-month maximum. Should this prove to be the case, I am sure further guidance and updates will be issued by your office.” 

In response, the OTC wrote on 30 October saying that the TC had agreed the request for a period of grace, and that the TC had requested the supply of bank statements for the months of January, February and March 2021 showing an average financial standing of £8,000 by 28 April 2021. 

It would be no surprise to anyone familiar with the history of the pandemic to learn that Mrs Morris’s business did not pick up as she had hoped during the first three months of 2021. 

On 17 April 2021, Mr Morris sent a further email on behalf of his wife to the OTC reading: “The TC kindly agreed to a six-month period of grace in respect of financial standing, with statements to be provided by the end of this month. 

“I am sorry to inform you that my wife’s business has continued to suffer in lockdown in the same manner as previously reported, and she will not be able to meet the average financial standing [level] of £8,000. The light at the end of the tunnel is the government’s roadmap… please apologise on our behalf to the TC and respectfully request an extension of the period of grace to the end of October 2021.” 

That led to a request from the OTC that Mrs Morris should respond with bank statements for January, February and March, and a statement that a list of forward bookings would be helpful. She duly responded later that day attaching the requested information, for which it appeared that she had a £6,000 bank overdraft with HSBC, but that her account had been overdrawn throughout the three-month period. 

Her forward bookings for the next year amounted to £7,317. In response, the OTC wrote saying that there was no legislation that allowed the TC to extend the period of grace. 

Mrs Morris and her husband then obtained the sum of £8,000 from a close friend of Mr Morris, who had recently inherited a substantial amount and had offered financial assistance to her some time previously. The offer had not been accepted because it was thought that it was possible to obtain an extension to the period of grace. 

The money was paid into Paula Morris’s account on 27 April 2021 and no terms for repayment applied to it, although her intention was that it should be repaid at the end of May 2021 from money to be received by her daughter by way of a redundancy payment. 

The effect of the payment from Mr Morris’s friend was that she had the necessary amount of £8,000 in her account at the expiration of the period of grace, but of course, she was not able to show financial standing over the previous three months. The matter was referred back to TC Turfitt, but he concluded that he was obliged to revoke the O-Licence on the grounds of failure to meet the financial standing requirement. 

An application was made for an extension to the period of grace under Regulation 2020/698. It had been passed as a response to the pandemic, and it was the pandemic that was the cause of the continuing lack of financial standing. 

When it became apparent that an extension was not forthcoming, Mrs Morris obtained additional finance which gave her the necessary amount. The Upper Tribunal fully understood that to be able to satisfy the requirement on a ‘snapshot’ basis was not sufficient. 

But the combination of the injection of funds and the fact that the business had continued, and Mrs Morris had been able to obtain some, although not many, advance bookings, combined with the expected gradual relaxation of COVID-19 restrictions at that time justified an extension to the period of grace. 

Consequently, the Tribunal took the view that in those exceptional circumstances, TC Turfitt ought to have decided that he had the power to extend the period of grace, and ought to have done so.