0.1 IN THE SCOTTISH TRAFFIC AREA
1. DECISION OF THE TRAFFIC COMMISSIONER FOR SCOTLAND
1.1 In the matter of ANNYA INTERNATIONAL OM1116000
1.2 and Transport Manager Derek Cook
1.3 Conjoined with Driver Conduct Hearings in respect of Driver William Tottenham, Driver Martin Thomson and Driver Charles McAughey,
1.4 Held at Edinburgh on 20 April 2021
2. Background
The operator was called to public inquiry in connection with concerns in relation to its transport operation. Most significant, was the concern that the operator company was being used as a front for Mr Thomas Malcolm and Mr John McCormack.
In November 2018, Mr Malcolm and Mr McCormack were disqualified from holding an operator’s licence by the previous Traffic Commissioner for Scotland. Mr Malcolm was disqualified for life. Mr McCormack was disqualified for five years and was also disqualified from acting as a transport manager for the same period. The Traffic Commissioner found that the operator company in question, J A Dickie Truckin Ltd, was a front for Mr Malcolm. Mr Malcolm was a previously disqualified operator and had also been disqualified as a company director.
The inquiry was scheduled to take place on 21 January 2021. The previous director and transport manager, Derek Cook, had already indicated that he would not attend the inquiry. Mr Darren Malone, the then sole director of the operator company, sought an adjournment on the basis that he had been unable to secure legal representation because of the impact of the pandemic. I granted an adjournment on that basis and a fresh date for inquiry was fixed for 20 April 2021.
On 9 April 2021, Mr Malone sought a further adjournment of the inquiry. He did so under explanation that he had not been unable to meet face to face with the operator’s legal representative. He also advised that the new proposed transport manager, who had been invited to attend inquiry, could not attend because he was shielding.
I considered the request carefully. However, I noted that the company had been on notice of its call to inquiry since 17 December 2020. I had already granted an adjournment at operator’s request to allow them to obtain legal representation. I am aware that despite the current restrictions legal consultations are often able to be carried out remotely, and I did not consider there to be any good reason for the operator’s delay in engaging with their legal representative.
Moreover, despite Mr Malone’s assertions, no contact from any solicitor acting on his behalf was received by my office. My office also advised that arrangements could be made for the proposed transport manager to attend the inquiry via remote meeting facility, but no response was received from the operator on this matter.
The allegations in this case were serious. The licence had been without professional competence since April 2020 and I was concerned, given the allegations of fronting and the history of those allegedly involved, that the adjournment requests were simply a stalling tactic. I considered that the potential risks to road safety were high. For those reasons, I refused the second adjournment request. The operator was advised that the inquiry would proceed on 20 April 2021.
On the morning of the inquiry, Mr Malone contacted my office to say that he would not attend the inquiry without legal representation. He advised that his proposed transport manager would not attend given his shielding status, but that his drivers, who were called to conjoined driver conduct hearings, would attend. I decided to proceed with the inquiry in Mr Malone’s absence.
3. Evidence
I heard evidence at inquiry from Traffic Examiner (TE) Wardrop, and three drivers, Mr William Tottenham, Mr Martin Thomson, and Mr Charles McAughey.
TE Wardrop’s lengthy and detailed report is adopted and held to be incorporated herein brevitatis causa. At inquiry, he referred me to the evidence he had uncovered which indicated that Mr Malcolm and Mr McCormack were operating using Annya International Ltd operator’s licence. I have summarised the key issues in following paragraphs.
TE Wardrop’s investigation began in early 2019 when Mr Malcolm’s involvement with Annya International was first suspected as a result of links with other operators and vehicles which had been stopped at the roadside. Intelligence had also been received advising that the Annya International licence was being used as a front for Mr Malcolm.
TE Wardrop explained that drivers used by Annya International had, when stopped by DVSA, advised that Mr Malcolm was the owner of Annya International. Fuel cards in Mr Malcolm’s name, or the names of companies of which he was a director, were regularly found being used in Annya International’s vehicles.
Individuals and other companies who had contracts with Annya International advised that the contact details they had for the company included Mr Thomas Malcolm and Mr John McCormack. A vehicle specified on the Annya International licence between May and September 2019 was registered to company with an almost identical name to a company of which Mr Malcolm was a director. Requests for information sent to the company by TE Wardrop in April 2020 were answered by Mr McCormack.
TE Wardrop had significant difficulty getting information from the operator in the course of his investigation. It was noted that company had numerous and frequent changes of director. In February 2019 Mr Derek Cook resigned as a director and several other individuals followed in quick succession. Mr Cook was reappointed as a director in May 2019 followed in April 2020 by a Mr Allan Haddow. Mr Cook resigned as a director and transport manager in April 2020, with Mr Haddow following suit in August 2020, whereupon Mr Darren Malone was appointed as sole director.
TE Wardrop spoke to Mr Cook on the telephone in April 2020. He advised that he found Mr Cook to know very little about the operation of the Annya International business. He did not know how many vehicles were being operated and advised that he had another full time job. He could offer no explanation for vehicles being parked away from the operating centre. Mr Cook also advised that Mr McCormack was running the Annya International business day to day, albeit on a self-employed basis.
Following TE Wardrop’s phone call, Mr Cook emailed advising that he wished to surrender his operator licence. However, a few days later, he advised that he had decided to transfer the business to Mr Haddow.
TE Wardrop interviewed Mr Cook in August 2020. Mr Cook advised that he had tried to sell the business in 2019 but the proposed deals feel through. He refused to accept responsibility for the operation of the business, notwithstanding his return as a director in May 2019. He advised that John McCormack ran the business day to day and was self-employed, but he could not say how much he was paid. He admitted that he had never met Allan Haddow. He refused to comment on the fact that someone other than himself had removed his name as a director at Companies House in April 2020. He continued to deny, nevertheless, that Mr Malcolm was involved with the operator company.
A number of drivers’ hours infringements were identified in the course of the investigation and I heard evidence from two drivers who drove for Annya International. The third driver, Mr Tottenham, was called to a hearing because of allegation that his digital driver card had been used illegally by other drivers in the course of their duties at Annya International.
Mr Tottenham advised that he was retired. He did not work for Annya International. He advised that he had lost his card and had subsequently found out that it had been used without his consent by Mr McAughey.
Mr Thomson was currently driving for Annya International and had been for two to three years. He had known Mr Malcolm as a friend for many years but did not know he was disqualified as an operator. He advised that Mr Malcolm was involved with Annya International as long as he could remember. He took his work instructions from Mr McCormack and advised that Mr McCormack was carrying out the transport manager duties for the company. Mr Thomson denied using Mr Tottenham’s driver card.
Mr McAughey advised that it was him that had used Mr Tottenham’s card on the 11 occasions that it alleged to have been used unlawfully. He held his hands up and knew that he had done wrong. He told me that Mr Thomson would never have falsified records. He had known Mr Tottenham for 40 years. He had picked up his driver card after it had been dropped in his car and used it to falsify records. Mr Tottenham and he had argued about it.
Mr McAughey had been driving for Annya since mid to end 2019. He had known Mr Malcolm for years and advised that he knew him to be involved in the Annya International business, but he did not know that he had been disqualified as an operator. John McCormack had been carrying out transport manager duties for as long as he had been there. He had never met Derek Cook. The one thing he would say in their favour is that they kept the vehicles well maintained. He advised that he had been stopped driving an Annya vehicle which had expired excise licence, but as far as he was aware that was just an oversight. He had called the depot and it had been rectified right away.
4. Consideration of the evidence and balancing
It was abundantly clear from the evidence that, as at the date of the inquiry, Thomas Malcolm and John McCormack were in control of, and directing, the transport operations of Annya International Limited. The drivers who attended inquiry had no knowledge of the company directors. They told me that they knew Thomas Malcolm was involved and that they took their instructions from John McCormack. It was evident that John McCormack directed the transport operations, gave the drivers orders and was a point of contact for Annya International’s customers. Thomas Malcolm was involved in directing the business, the provision of fuel for its vehicles, the acquisition of vehicles, and was also known as a contact for those who did business with the operator.
Mr Malone, the current director, failed to attend inquiry. There was no evidence before me, therefore, to suggest anything other than Annya International Ltd and its operator licence was being used as a front for the business interests of Thomas Malcolm and John McCormack.
Moreover, the evidence indicated that Thomas Malcolm and John McCormack had been operating under the front of the Annya International licence since Spring 2019, only a few months after they were disqualified by the previous Traffic Commissioner. It was clear that, following discovery of their involvement with J A Dickie Truckin Ltd, they had simply moved on and found another willing host in Mr Cook, who at that time, was reportedly keen to sell up and move on. Despite Mr Cook’s attempts to deflect responsibility for the operator company, he had been reappointed as a director after Thomas Malcolm and John McCormack became involved.
The evidence before me, including the operator licensing history of Thomas Malcolm and John McCormack, leads me to conclude they continue to work in partnership. The previous Traffic Commissioner, in her decision in J A Dickie Truckin Ltd, concluded:
“the overwhelming evidence is of Mr Thomas Malcolm being the instigator and driving force. This is the lead role. Mr John McCormack is the placeman or the puppet, albeit in a core operational contracts management role.”
I had no reason to believe that the arrangements between Mr Malcolm and Mr McCormack operated any differently under the front of Annya International Limited.
I had regard to the decision of the Transport Tribunal in 2001/034 Utopia Traction Limited:
“In the context of vehicle operator’s licensing ‘fronting’ means that a person, partnership or company, which does not have an operator’s licence, uses the operator’s licence held by another entity to conceal the fact that they are behaving in a way which requires them to have an operator’s licence of their own. In other words it deprives the Traffic Commissioner of the right to control an ‘operator’, when Parliament has said that such an entity should be within his or her jurisdiction. ‘Fronting’ is aggravated and very much more serious where it is apparent that the entity hiding behind the legitimate ‘front’ would be unlikely to get or would be debarred from holding an operator’s licence of their own. In our view a well-founded conclusion that an operator is guilty of fronting can, on its own, provide justification for deciding that the operator being used as a ‘front’ has lost its good repute.”
Acting in concert, disqualified operators Thomas Malcolm and John McCormack have, yet again, shown a flagrant disregard for operator licensing. Their actions have seriously undermined the regulatory regime. Neither were called to this inquiry for they have no locus upon which to be called.
Mr Malcolm is already disqualified as an operator for life. There is, therefore, no additional regulatory action which I am able to take in relation to him to reflect the grave nature of his conduct in the context of operator licensing.
Mr McCormack is currently serving a five year period of disqualification as both operator and transport manager. I find there to be insufficient evidence in this case to conclude that Mr McCormack is a shadow director of Annya International Limited. However, I have already concluded that the split of duties between Mr Malcolm and Mr McCormack is likely to follow a similar pattern to those in fronting arrangements they have been involved in in the past.
Notwithstanding that, the findings in fact I have made here call into question whether Mr McCormack can ever be found fit again to hold an operator licence or to act as a transport manager. Accordingly, I direct that any application made by him for an operator licence, or to be appointed transport manager, following the expiry of his current period of disqualification must come before a Traffic Commissioner for consideration.
This is a case where the finding of fronting alone is sufficient to justify a finding that the operator has lost its repute. I identified one positive, in the evidence of Mr McAughey, who told me that the vehicles used by the operator were well maintained. However, the serious nature of the conduct in this case far outweighs that fact. The Priority Freight and Bryan Haulage questions are redundant in cases such as this. I find this operator has lost its repute and I revoke its operator licence with effect from 14 May 2021. That short delay will allow for any vehicle currently in use to make an orderly return.
The current sole director of Annya International Limited is Mr Darren Malone. He did not appear at inquiry. As sole director, Mr Malone’s actions can be equated with that of the operator company. I have already concluded that the Annya International licence was being used as a front during the time that he was sole director. However, I also find that Mr Malone’s adjournment requests were, more than likely, an attempt to sustain the fronting arrangements for as long as possible rather than as a result of any genuine inability to secure legal advice or representation. Had the latter been the case, I would have expected to see communication from an agent advising of the position.
Having regard to the Senior Traffic Commissioner’s statutory document No.10, I consider this to be a severe case. It involves fronting which seriously jeopardises the integrity of the regulatory regime, and I find Mr Malone’s attempt to prolong those sham arrangements to be an aggravating factor. I therefore disqualify Mr Malone from holding an operator’s licence for a period of twelve years. I direct that section 28(4) of the 1995 Act shall apply in relation to Mr Malone’s involvement in relation to any other entity holding an operator’s licence.
Despite being a director and nominated transport manger, Mr Derek Cook knew little of Annya International’s business when questioned by TE Wardrop. He sought to absolve himself of responsibility for the actions of an operator company of which he was a director. He failed wholeheartedly in his role as transport manager to exercise continuous and effective management over Annya International’s transport operations.
Mr Cook did not appear at inquiry, so I was unable to put questions to him in relation to his state of knowledge regarding the involvement of Mr Malcolm or the position of Mr McCormack within the company. On the basis of the evidence before me, I concluded that his assertions in relation to Mr McCormack’s ‘self employment’ and his denials of Mr Malcolm’s involvement were simply untrue. Mr Cooks intention in Spring 2019 may have been to sell up and walk away from the business, but I find that he ended up being a full party to the fronting arrangements. He was embroiled in the sham arrangements and facilitated what was a deliberate and repeat undermining of the operator licensing regime.
That is conduct most serious on the part of a transport manager and I find it proportionate to conclude that Mr Cook has lost his repute as such. I am obliged therefore, by virtue of paragraph 16(2) of Schedule 3 of the 1995 Act to disqualify him from acting as such.
Given the seriousness and nature of Mr Cook’s failings, and the dishonesty I have found on his part, I do not consider him fit to work for any undertaking as a transport manager. I have decided therefore, to disqualify him indefinitely. I was unable to think of any rehabilitative measure which would remediate a dishonest attitude, and so none is specified.
5. Decision
Operator licence OM1116000 Annya International Limited is revoked with effect from 23:59 hrs on 14 May 2021. Mr Darren Malone is disqualified from holding an operator’s licence for a period of twelve years. Mr Derek Cook is disqualified as a transport manager indefinitely.
Decisions in relation to vocational entitlement of the drivers heard at the conduct hearings conjoined with this inquiry have been issued separately.
Ms Claire Marie Gilmore
Traffic Commissioner for Scotland
12 May 2021
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