Decision

Decision for James Kilpatrick

Published 31 January 2022

0.1 IN THE SCOTTISH TRAFFIC AREA

1. DECISION OF THE TRAFFIC COMMISSIONER FOR SCOTLAND

1.1 In the matter of the

2. James Kilpatrick PM2041858

2.1 Public Inquiry held at Edinburgh on 31 August 2021

3. Background

Mr James Kilpatrick (hereinafter referred to as ‘the applicant’) has a lengthy adverse history in operator licensing.

In 1998, he held an operator’s licence which was called to public inquiry. That licence was allowed to lapse before the inquiry was held. The applicant applied for, and was granted, a standard national licence in December 2003. A public inquiry was held in 2004, following which the applicant was issued with a warning in relation to his repute. A condition was attached to the licence preventing any increase in vehicle authorisation.

A further public inquiry was convened in April 2008 following more concerns having being raised in relation to maintenance of vehicles and the management of drivers’ hours in the applicant’s transport operation. The applicant was found to have repeatedly breached his licence undertakings, failed to cooperate with DVSA officers and to have lied to them and the Commissioner. He was found to have lost his repute. His licence was revoked and he was disqualified for a period of five years from holding an operator licence.

In 2011, following another public inquiry, the former Traffic Commissioner for Scotland found that an operator, Jacqueline Mason and James Thomson t/a Access Coach Hire (PM1084146), was a front for the applicant enabling him to continue operating whilst disqualified. She also considered the applicant’s conduct as a vocational driver at that time and found him unfit to hold his vocational PCV driving entitlement on account of drivers’ hours infringements which he had committed. His vocational driving entitlement was suspended for four months.

In December 2014, the Deputy Traffic Commissioner considered an application made by the applicant for a restricted public service vehicle operator’s licence. The Deputy Traffic Commissioner refused the application having concluded that the applicant did not have the required repute to be granted an operator’s licence. He also found that the applicant was not of appropriate financial standing and that the ‘main occupation’ criteria for a restricted licence in terms of section 13(3)(b)(ii) of the Act was not met.

Given the applicant’s history, I directed that his application for a licence be considered at public inquiry.

The applicant lodged documents in relation to maintenance and financial standing in advance of the inquiry. He also submitted an email from a transport consultant who advised that he would assist him should the licence be granted. I had regard to all of those, and to the brief of papers produced (which contained full copies of the written decisions referred to herein) for the inquiry in reaching my decision.

After the conclusion of the public inquiry the applicant advised that he wished more time to submit information and documentation in relation to a bounce back loan which he had applied for and been given by the Royal Bank of Scotland. I allowed additional time for that information to be lodged. The applicant lodged copies of correspondence between him and the bank together with copies of his bounce back loan application and contract. I took account of all of the additional documentation submitted by Mr Kilpatrick in reaching my decision.

I had asked that a transcript of the evidence in this case be prepared. I was advised that the recording equipment had malfunctioned during the hearing and a transcript could not be obtained. I have relied, therefore, solely on my own notes and those of my clerk, in writing this decision.

4. Evidence

The public inquiry called before me at Edinburgh on 31 August 2021. The applicant was in attendance. He was unrepresented. I explained to the applicant at the outset of the hearing that the onus was on him to satisfy me that he met all of the criteria for the licence.

The applicant told me that he desperately wanted to get back in the coach business as an operator. He had been excluded from the industry for many years now and had been operating an Ebay business, but that was not as lucrative as it once was.

He told me that he also had a business called Phoenix Travel. He described that business as an independent travel tour company and advised that it had been in existence for around 15 years. He advised that the business used to do work abroad but that had ceased many years ago. The Scottish side of the operation was mainly focussed on small tours and golf trips etc. The operator licence would allow him to supply transport for the Phoenix Travel business.

The Phoenix Travel website states that the business has at its disposal ‘every class of vehicle you can imagine from chauffeur driven cars to luxury mini vans to executive coaches’. The applicant was asked to explain how vehicles were provided to service Phoenix Travel’s requirements. He advised that he hired vehicles in from other operators. When asked when he had last done so, he said it had been around five years ago. His answer, when asked what Phoenix Travel had actually been doing since then, was ‘not very much’. He told me he had been stabbed in the back by a former colleague and things had been difficult since then.

The applicant produced bank statements in the name of James Kilpatrick t/a Kilpatrick Coach Hire covering the period 10 February 2021 to August 2021 in support of his application. He also produced a mini statement showing the account balance at 24 August 2021. Several large deposits from Phoenix Travel were shown thereon: [REDACTED]. There were also number of payments to a fuel card company, payments to another entity called TJS Travel, and direct debit payments referred to as ‘BBLS loan’.

The applicant was asked to explain the reason for the deposits from Phoenix Travel and how such large sums had come to be at its disposal given the fact that had not been trading for some considerable time. He told me that there were grants going around for businesses because of COVID. He advised that Phoenix Travel had been awarded a COVID related grant from Fife Council because he had business premises in that Council area. He had received [REDACTED] in grant funding for that business to keep it afloat.

When asked if there were conditions attached to the local authority grant funding he had received, the applicant replied that he had been ‘operating and actively seeking work’. He was asked if he had actually managed to obtain any tour or tourist work in the last five years, given his earlier evidence. He did not answer that question, stating instead that he had ‘done nothing wrong’. The applicant had transferred the sums from the Phoenix Travel account to the James Kilpatrick t/a J Kilpatrick Coach Hire account to ensure that he continued to meet the required financial standing for the operator’s licence application he had made.

The applicant’s evidence at inquiry was that he had opened the James Kilpatrick t/a Kilpatrick Coach Hire business account around June 2020 when the country was still in lockdown. Within a few months of so doing, he had applied for a bounce back loan under that business name. He advised in his correspondence following the inquiry that he had, in fact, only opened the account ‘a matter of days’ before applying for the bounce back loan. No evidence that ‘J Kilpatrick Coach Hire’ existed prior to that date was produced.

The applicant advised that he had been given a bounce back loan [REDACTED]. With the money, he had bought the one coach he was applying for a licence to operate. When asked how he had managed to show that he met the turnover criteria, he advised that he had estimated his turnover at [REDACTED]. That was based on the turnover he expected to generate with his operator’s licence authorising one vehicle notwithstanding the fact that he had not, at that time he applied for the loan, applied for an operator’s licence.

The applicant told me that the sums paid to TJS Travel, [REDACTED], were for maintenance of the coach he had purchase. That was despite the that fact that it was not in use. There was also an element of rental in the payments, as the coach was sitting at their yard until he could operate. He told me he had completed a transport manager CPC refresher course, and that he intended to use a consultant to assist him with compliance in the business. There was, however, no evidence produced in relation to how he intended to manage drivers’ hours.

When asked about his adverse history in operator licensing, he advised that he could accept some of it. He could never understand why the previous Traffic Commissioner had found him to be involved in fronting, but he had to accept that he had been guilty of misdemeanours in the past. He accepted that he had been found to have been dishonest in his behaviour but that was also in the past. He became emotional when he told me that he had lost his mother to dementia six years ago and explained that things had been difficult at that time. He had lost his partner, suffered from [REDACTED] lost his house and been sequestrated for a second time.

He now had money behind him. He repeatedly asserted that what he had done in obtaining the grants and loans was above board. He had done it to keep himself afloat. He was also due a refund from HMRC. He had a new high quality coach and was willing to engage a transport consultant. Despite the fact that he had been guilty of tachograph and drivers’ hours offences in the past, vehicles now had digital tachographs so there could be no misunderstandings. He assured me that I would able to trust him to operate compliantly in the future.

5. Consideration of the evidence and balancing

The applicant in this case has a long and adverse history in operator licensing. I noted that he had been found by the former Traffic Commissioner to have behaved dishonestly and to have been involved in deliberate obfuscation during a DVSA investigation. At paragraph 60 of her 2008 decision (page 104 of the brief of inquiry papers) she states:

“…On the negative side there is the breach of the licence undertakings in relation to drivers’ hours and tachograph charts and I regard these as extremely serious. There is the lying to both myself and to the Traffic Examiners. There are the deliberate ‘misunderstandings’ and failing to co-operate with the Examiners. I am in no doubt that the failure to supply the tachograph records was to obscure drivers’ hours offences…”

She continues at paragraph 61:

“…He has shown himself to be an unreformed character who cannot be trusted by me to operate compliantly within my jurisdiction…I have put into the balance the whole experience of his since I granted him the licence in 2003 and gave him the chance to operate compliantly which he did not. He simply cannot be trusted to be a straightforward compliant operator. “

In 2014, the Deputy Traffic Commissioner found that the applicant did not have the requisite repute to be granted a licence. He based those findings on an absence of evidence of compliant business operation since the applicant’s disqualification, his involvement in fronting whilst disqualified, and his claims that he had never previously been advised by a Traffic Commissioner that he had lost his repute despite that being clearly stated in the written decision which had been issued.

At paragraph 77 of his decision (page 138 of the brief of inquiry papers) the Deputy Traffic Commissioner said:

“I adopt wholeheartedly the TCS’s characterisation of the Applicant at paragraph 78 of the 2006 decision: “Mr Kilpatrick is certainly a great man for excuses, there is always an angle, always a story.”

Both the former Traffic Commissioner and the Deputy Traffic Commissioner made it clear to the applicant that, given his history, he would not be pushing at an open door should he choose to apply for a licence again the in future.

Although significantly adverse, I noted that the last of the previous findings in relation to the applicant’s conduct were made over seven years ago. The events that gave rise to those findings took place before that. I had not met the applicant before. I made it clear to him that I was approaching his case with fresh eyes but, given the previous findings, he had a high threshold to meet in establishing repute.

I found the applicant to be an unconvincing and unreliable witness. He deliberately avoided answering questions where it was clear he considered honest answers may harm his case. He vacillated in his evidence and, as he had clearly done during previous inquiries, sought to rely on historic family and personal difficulties as an excuse for his behaviour.

The applicant told me that had been running an Ebay business for many years, but it was now less profitable. He claimed that Phoenix Travel was still a live business but that was contradicted by his evidence that it had done ‘not very much’ over the last five years. Despite that, he had applied for, and been given, [REDACTED] of government grant funding to keep it afloat.

There was no financial evidence relating to Phoenix Travel before me, nor any information regarding the applications for, or the terms of, the grants that Mr Kilpatrick had applied for trading under that name. I am unable, therefore, to reach a conclusion as to the propriety of the applicant’s actions in applying for those grants. Nevertheless, on the basis of evidence before me, I am able to find that it is more probable than not that Phoenix Travel had not been operating meaningfully, far less profitably, as a business for some time.

Mr Kilpatrick applied for the grants under the trading name of Phoenix Travel, but then created a new trading name under which he proceeded to apply for the bounce back loan. His evidence was that he opened the Royal Bank of Scotland account in the new trading name in June 2020. A few days later he applied for the loan. He was advanced the maximum permitted sum based on his projected turnover for his business.

The application form submitted for the bounce back loan runs in the name of ‘J Kilpatrick Coach Hire’. The applicant fully admitted that he had created this new business in the midst of a pandemic when there was virtually no work for coach operators. He could see nothing wrong in so doing.

The applicant submitted a number of documents in relation to his application for a bounce back loan following the inquiry. I decided, therefore, to remind myself of the conditions for obtaining a bounce back loan during 2020.

At the time of writing, the government guidance in relation to bounce back loans was no longer available on the GOV.uk website. However, I had regard to information in relation to the scheme published by the British Business Bank, the state owned organisation which accredited lenders taking part in it. They describe the bounce back loan scheme (BBLS) thus:

“BBLS provided financial support to businesses across the UK that:

• were losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak

• could benefit from £50,000 or less in finance.”

The FAQ section of the British Business Bank’s website relating to bounce back states:

“Am I eligible? (updated 09 November 2020)

The Scheme is open to most businesses, regardless of turnover, who meet the eligibility criteria and who were established on or before 1 March 2020. Borrowers are required to declare, amongst other things, that:

• The business is engaged in trading or commercial activity in the UK at the date of the application, was carrying on business on 1 March 2020 and has been adversely affected by coronavirus (COVID-19).”

The scheme was designed therefore, purely to help businesses which were already in existence at 1 March 2020 who had lost revenue as a result of the pandemic.

The applicant was at pains to persuade me that he had done nothing wrong in applying for the bounce back loan. He asked the bank to investigate his case and provided my office with documentation purporting to show that they had found nothing untoward in relation to his application. However, what was very obviously missing from that documentation is any evidence that the applicant told the bank that ‘J Kilpatrick Coach Hire’ had only been established a few days before applying for the loan, or that he was already trading as a sole trader in another business.

I noted that the maximum amount of bounce back loan which could be awarded was 25% of an applicant’s turnover, up to a maximum of £50,000. The applicant t/a J Kilpatrick Coach Hire was awarded [REDACTED]. The turnover figure he provided was a projected one, justified no doubt on the basis that his ‘new business’ had been established after 1 January 2019. He ticked the box on the form confirming that the amount he sought to borrow was equal to or less than 25% of his estimated turnover.

The applicant’s evidence was that his new business was intended to supply transport service to Phoenix Travel. I did not consider it a coincidence that had the applicant applied for the bounce back loan under the trading name of Phoenix Tours, that being a business established prior to 1 January 2019, he would have had to provide details of his actual turnover.

Standing my findings in relation to the probable profitability of Phoenix Travel, it is unlikely that the applicant would have been able to establish any basis upon which he would have been entitled to a bounce back loan. I find, therefore, that the applicant purported to create a new business entity solely for the purpose of applying for the bounce back loan.

The applicant repeatedly asserted that he had done nothing wrong in applying for the funding that he had. He was adamant that he had stuck to the letter of the law. However, James Kilpatrick t/a J Kilpatrick Coach Hire was not an existing business as at 1 March 2020 which had lost revenue as a result of the pandemic. It was not, therefore, entitled to receive a bounce back loan. Had he disclosed that fact, the bank ought not have loaned him any money under the scheme.

Moreover, I find the applicant’s claims that he believed he had done nothing wrong in applying for the loan to be wholly incredible. The terms and conditions upon which bounce back loans could be granted were well publicised. Rather, I suspect that the applicant, full in the knowledge that his exiting sole trader business did not have sufficient turnover to justify the grant of a bounce back loan, invented a new business and banked on no one properly checking he met the criteria in a system where estimates were accepted as vouching and little due diligence was being carried out.

Even if I am wrong in that, I note that the applicant based his projected turnover figure on the operation of a (single vehicle) business which already had the benefit of an operator’s licence. He did so well in advance of submitting any application for a licence, against a backdrop of significant adverse findings and warnings of the hurdles he would face in seeking to have any future application granted. His projected turnover figure was therefore, at best, recklessly overoptimistic and at worst deliberately and vastly overinflated. I find, in light of the applicant’s track record of deceit, dishonesty and obfuscation, that it was the latter, and that he submitted such a figure to guarantee his access to the [REDACTED] amount available.

This applicant has sought to hide behind trading names and obscure from sight his opportunistic exploitation of state backed crisis funding arrangements for personal gain. He has obtained large sums of taxpayer backed low cost funding when he was not entitled to do so. He has done so whilst responsible operators in my jurisdiction have continued to strive to comply with the rules, operating in some of the most difficult circumstances our society has ever encountered. The applicant has, however, been caught out again.

There were few positives to weigh in the balance in this case. I acknowledge, however, that the applicant is, at least thus far, repaying his bounce back loan. He has also undertaken transport manager refresher training. Nevertheless, given the gravity of my negative findings in this case, those matters cannot be afforded much weight.

Trust lies at the very heart of my jurisdiction. In NT/2013/82 Arnold Transport & Sons Ltd v DOENI the Upper Tribunal said:

“The Tribunal has stated on many occasions that operator’s licensing is based on trust. Since it is impossible to police every operator and every vehicle at all times the Department in Northern Ireland, (and Traffic Commissioners in GB), must feel able to trust operators to comply with all relevant parts of the operator’s licensing regime. In addition other operators must be able to trust their competitors to comply, otherwise they will no longer compete on a level playing field… It is important that operators understand that if their actions cast doubt on whether they can be trusted to comply with the regulatory regime they are likely to be called to a Public Inquiry at which their fitness to hold an operator’s licence will be called into question. It will become clear, in due course, that fitness to hold an operator’s licence is an essential element of good repute.”

Based on his behaviour in relation to the bounce back loan, I find that the former Traffic Commissioner’s characterisation of this applicant still holds true: He has shown himself to be an unreformed character who cannot be trusted by me to operate compliantly within my jurisdiction. He simply cannot be trusted to be a straightforward compliant operator. There is no way, given his behaviour, that other operators could trust him to comply. If I cannot trust him, I cannot find him to have repute.

It is for the applicant to satisfy me that he meets the statutory requirements for the licence he is applying for. He had failed to do so. In Aspey Trucks Ltd 2010/49 the Upper Tribunal set out the role of the Traffic Commissioner in considering an application. They said:

“In a case such as this, the Deputy Traffic Commissioner was not looking at putting someone out of business. Rather, he was deciding whether or not to give his official seal of approval to a person seeking to join an industry where those licensed to operate on a Standard National or Standard International basis must, by virtue of S.13(3), prove upon entry to it that they are of good repute. In this respect, Traffic Commissioners are the gatekeepers to the industry – and the public, other operators, and customers and competitors alike, all expect that those permitted to join the industry will not blemish or undermine its good name, or abuse the privileges that it bestows. What does “Repute” mean if it does not refer to the reasonable opinions of other properly interested right-thinking people, be they members of the public or law-abiding participants in the industry”

Given my findings in this case, I cannot countenance giving this applicant my official seal of approval. He continues to be unfit to join this industry. A formal finding in terms of Section 14ZA(2)(b) of the 1981 Act that the applicant does not have repute is made out. Having found that he does not meet one of the mandatory criteria for the licence, I need not consider his application further. His application for a licence is refused.

I direct that a copy of my decision in this case should be sent to Action Fraud for them to investigate whether there has been any impropriety on the part of Mr Kilpatrick in applying for the bounce back loan in the manner in which he did.

Claire M Gilmore

Traffic Commissioner for Scotland

22/12/2021