Decision

Decision for Kirkham Box NW Ltd (OC2063608)

Published 29 August 2023

0.1 In the North Western Traffic Area

1. Decision of the Traffic Commissioner

1.1 Kirkham Box NW Ltd (OC2063608)

2. Introduction

Kirkham Box NW Ltd (“the applicant company”) applied on 20 February 2023 for a new restricted goods vehicle operator’s licence authorising the use of 1 vehicle.

The applicant company was incorporated in September 2020 with Mark Anthony Urwin as the sole director and person with significant control.

The applicant company has not previously held an operator’s licence. However, Mr Urwin was previously the sole director of Kirkham Box Company Ltd which held a restricted goods vehicle operator’s licence OC1068763 since 2007 authorising the use of one vehicle.

Kirkham Box Company Ltd.’s licence was revoked on 15 June 2023 as a consequence of the company having entered liquidation on 9 February 2023. The initial liquidator’s statement of affairs stated it had a deficiency of £113,000 with £62,000 owed to HMRC.

Mr Urwin did not notify my office of any change in Kirkham Box Company’s financial situation, nor did he notify my office of the liquidation prior to making the new application for the applicant company.

On submitting the application for the applicant compnay, Mr Urwin disclosed the previous licence held by Kirkham Box Company Ltd and indicated that would be surrendered if the new licence was granted. He also disclosed the liquidation explaining Kirkham Box Company Ltd had become insolvent because of the pandemic and other trading issues.

In subsequent correspondence, Mr Urwin claimed he had not notified my office of the liquidation as the liquidators had not advised him to do so. He said the goods vehicle was his private property and no listed as an asset of Kirkham Box Company Ltd. It was claimed that the other assets and goodwill of Kirkham Box Company Ltd had been brought by the applicant company for £14,000. Invoices were supplied to show that amount had been paid but not itemising the assets. The liquidator’s statement of affairs said that Kirkham Box Company Ltd.’s plant and machinery had a book value of £70,000.

Mr Urwin had not previously been called to public inquiry whilst director of the licence holder Kirkham Box Company Ltd.

3. The Call to Public Inquiry

The applicant company was called up to public inquiry by letter dated 4 July 2023.

The call up letter gave notice that the requirements of Sections 13B, 13C and 13D of the Goods Vehicles (Licensing of Operators) Act 1995 (“the Act”) were to be considered.

4. The Public Inquiry

On Monday 7 August 2023 my office received a letter from Mr Urwin saying he would not be attending the hearing as he was abroad on a family holiday and was shortly to be married. Mr Urwin says he had a “fixed schedule” that he cannot change, and he invited me to deal with the matter in his absence. No evidence has been provided to support the existence of these travel arrangements.

The call up letter was issued to the applicant on 4 July 2023, and I have no reason to question the presumption it was delivered in the ordinary course of posting a few days later. Mr Urwin therefore had 5 to 6 weeks’ notice of the hearing and his letter infers his travel plans have been known for some time. His letter contains no explanation of why he appears to have waited until 1 week prior to the hearing before informing me of his inability to attend.

The letter did not address the circumstances of Kirkham Box Company Ltd.’s liquidation or the question of links between that licence ending and this new application being made. This is despite the opening paragraph of the call up letter making it clear that was the principal area of concern for the public inquiry.

I considered the guidance offered in Statutory Document Number 9: Case Management. The applicant has clearly been given proper notice of the hearing and has not sought an adjournment. It has waited until the eleventh hour before flagging up any difficulty in attending. This is a new application, and the burden is on the applicant to prove that it meets the requirements of the Act. I have therefore determined that it is appropriate for me to reach a decision in the absence of the applicant on the basis of the evidence in the brief and that provided by the applicant under cover of its letter received on 7 August 2023.

The evidence provided by the applicant company included vehicle maintenance records for the previous licence of Kirkham Box Company Ltd. I was also provided with Mr Urwin’s photocard driving licence and a USB memory stick. The covering letter suggested the memory stick contained driver tachograph downloads. This has not been accessed due to IT security policy.

The applicant company also provided copy bank statements that showed access to sufficient financial resources over the past 28 days. However, these were photocopies and not the original or authenticated documents requested in the call up letter and that would comply with the standards set out in Statutory Document No.2.

The applicant company did not provide any further evidence or representations relating to the circumstances of the insolvency of Kirkham Box Company Ltd and the transfer of its assets.

5. Relevant considerations

The decision of the Upper Tribunal in the case of Aspey Trucks Ltd (2010/49) makes clear the role of the Traffic Commissioner as the “gatekeeper” to the haulage industry, when considering new applications. Those who are allowed entry must satisfy the Traffic Commissioner of their good repute or fitness (as the case may be). The test is whether I am so satisfied in respect of these applications in the light of my findings that this company and its director has shown the requisite fitness.

Statutory Document No 1 provides guidance that, “the use of “Phoenix” arrangements to avoid previous liabilities may amount to unacceptable business practice. A phoenix company is where the assets of one limited company are moved to another legal entity (sometimes referred to as a ‘pre-pack’) but with no obligation to pay the failed company’s debts”.

SD1 also indicates that a history of involvement with dissolved companies without any evidence of actual wrongdoing will not of itself amount to a loss of repute. However, the use of so called “phoenix” companies may be a concern if the assets of a failing company are transferred for below their market value before insolvency and reduce the funds available to creditors when the original company is declared insolvent. Further a failure to inform the traffic commissioner of a material change, may lead to adverse conclusions being drawn against the fitness of those directors.

6. Decision

Based on the evidence that is available to me, I find this application does have features meeting the description of a “phoenix”. It is evident that that applicant company has continued the business of Kirkham Box Company Ltd after its liquidation using assets previously owned by the latter company.

I have not been provided with any evidence to reassure me that the transfer of assets was undertaken with the approval of the liquidators. at the time. I note the price paid by the applicant company for the machinery and plant falls well below the book value given in the statement of affairs. The applicant has not provided any evidence to demonstrate that the value of the transaction was appropriate. That applicant compnay has therefore failed to show that the transfer of the business activities and assets was legitimate and not a device to allow the business to continue to the detriment of the creditors of Kirkham Box Company Ltd.

I also find that Mr Urwin failed to notify my office of the financial position of Kirkham Box Company Ltd as required by the conditions of its licence. I am satisfied that he Although the company did not enter administration until 9 February 2023, I note that Mr Urwin signed the statement of truth for the administrator report two weeks earlier on 27 January 2023. The first time he mentioned the issue with the previous company to my office was on 28 February 2023 when this application was submitted. He has not shown any understanding that the financial difficulties of the previous compnay should have notified to my office far sooner and independently of any proposed new application by another entity.

I accept that the operation of the previous licence did not give rise to any concern. However, I balance this with the negative aspects described above and consider the latter far outweigh any positives.

I consider the conduct of the applicant company and its director as described above amounts to the type of behaviour that the guidance in Statutory Document No 1. describes as likely to result in an unfair competitive advantage over other operators.

I also find Mr Urwin’s failure to attend the public inquiry today to give evidence and answer proper questions about the application is further evidence of his unfitness to hold a licence.

For these reasons I do not consider that I can trust the applicant compnay in the directorship of Mr Urwin to be complaint in future if granted an operator’s licence and I find they have failed to demonstrate they are not unfit to hold a licence. The applicant company has failed to demonstrate that the requirements of Section 13B of the Act are met.

Further, I reject the financial evidence submitted as it is not in an original or authenticated form. Consequently, I find the applicant company has failed to show that the provision of the facilities and arrangements for maintaining the vehicles in a fit and serviceable condition is not prejudiced by reason of insufficient financial resources for that purpose. The applicant company has also failed to demonstrate that the requirements of Section 13D of the Act are met.

I do not exclude the possibility that a future application could be made successfully by the applicant company. However, I would expect to see evidence that the liquidation of Kirkham Box Company Ltd had been concluded without adverse findings being made against any linked entity or individual. I would also expect to see evidence that Mr Urwin had sought to improve his knowledge and awareness of the requirements of operator licensing.

Gerallt Evans

Traffic Commissioner for the North West of England

14 August 2023