Decision

Impounding: Written decision regarding an impounding by the Traffic Commissioner for the North Eastern Traffic Area for S C Cubital Forest SRL with regards vehicle VL35LIA

Published 19 July 2023

0.1 In the North Eastern Traffic Area

1. Written Decision of the Traffic Commissioner

1.1 Impounding Hearing: In respect of the application by S C Cubital Forest SRL (“the applicant company”) for the return of VEHICLE REGISTRATION NUMBER: VL35LIA

2. Background

On 13 March 2023 Romanian registered vehicle VL35LIA (towing trailer XA076GR, owned by and liveried as Italian operator D’Agostino SRL) was stopped by DVSA officials at Manby Road, Immingham, North Lincolnshire. The DVSA Traffic Examiner (TE), Janice Skelton, determined that there had been a breach of Section 2 of the Goods Vehicle Operators Licensing Act (1995) and Regulation (EC) 1072/2009 and she subsequently impounded the vehicle.

The TE informed the driver, that impounding action would be taken and that arrangements would need to put in place to collect the driver and trailer/load. This could not happen until the next day and permission was granted for the driver to remain with the vehicle overnight. At 14.45 hours on 14 March 2023, Alin Alexandru Petrescu (Director of S C Cubital Forest SRL) entered the site in another Romanian vehicle to collect the driver and remove his belongings, as well as the load/trailer. Subsequently notice of the impounding was published in the London Gazette on 20 March 2023.

2.1 Application for return of the vehicle

On 29 March 2023 a completed application for the return of the vehicle was received from solicitor Simon Clarke of Smith Bowyer Clarke. A hearing was requested to consider the application for return of the vehicle.

3. Hearing

The hearing was held in Leeds on 2 May 2023. This date was delayed from 24 April 2023 due to availability of legal representation for the respondent, DVSA. The applicant was represented by Ms Fitzgerald, instructed by Smith Bowyer Clarke Solicitors; Mr Simon Clarke had provided legal submissions prior to the hearing. The Respondent was represented by Counsel, Mr Toby Sasse. Traffic Examiner Janice Skelton who had impounded the vehicle was also in attendance.

In proceedings of this type that are adversarial in nature it is for:

a. A claimant to prove on the balance of probabilities that it owned the detained vehicle at the material time;

b. DVSA to prove on the balance of probabilities they had reasonable grounds to detain the vehicle in question;

c. A claimant to prove on the balance of probabilities that one of the grounds for its return applies.

3.1 Ownership of the vehicle

In advance of the hearing I was provided with evidence of ownership of vehicle VL35LIA with the following documentation produced:

a. Vehicle identity card, issued by the Romanian government.

b. Vehicle Registration Certificate issued by the Romanian government.

c. Purchase and delivery receipt, naming S C Cubital Forest SRL as the purchaser.

d. Certificate of insurance in the name of S C Cubital Forest SRL.

e. Loan agreement for the balance of the funds used to purchase the vehicle.

There were no other claimants to the vehicle, and I was satisfied that the applicant was the legal owner. This was not disputed by the respondent. I went on to consider the legality of impounding.

3.2 Lawful detention of the vehicle

Prior to the hearing I referred extensively to the Senior Traffic Commissioner Statutory Document Number 7: Impounding. I reminded myself of the provisions of Regulation (EC) 1072/2009. Article 8(2) entitles the holder of a community licence to carry out cabotage under the conditions set out in the Regulation. It states that the tractor unit of a tractor/trailer combination may carry out up to 2 cabotage operations during the 7 days following an incoming (laden) international journey.

Article 8(3) states that “national road haulage services carried out in the host member state by a non-resident haulier shall only be deemed to conform to this regulation if the haulier can produce clear evidence of the incoming international carriage and of each consecutive cabotage operation carried out”. Obligatory evidence is specified as the name, address and signature of the sender, carriers (hauliers) and consignee for each cabotage journey, together with the registration numbers of both vehicle and trailer. This is in addition to the Community licence/authorisation in the name of the operating entity issued by the appropriate national authority.

The DVSA evidence from TE Skelton accounted for the period during which vehicle had entered the UK on 6 March 2023 (corroborated through the vehicle tachograph), and CMRs produced by the driver for 6, 7, 10, 13 and 14th of March 2023. This showed that the vehicle was embarked on a 4th cabotage journey following the initial international drop off of goods. The CMRs produced were all stamped by an Italian haulier D’Agostino SRL as well the applicant entity, S C Cubital Forest SRL, however, the Community licence produced was issued by the Romanian Authority in the name of the applicant. The DVSA examiner confirmed the intention to impound the vehicle through her enforcement supervisor who also confirmed that the apparent operator S C Cubital Forest SRL were on a list of foreign operators who had previously breached cabotage regulations and had been warned that any further breach of the regulations would lead to the impounding action. S C Cubital Forest SRL had been on the list since 24 June 2021; there had been 2 previous cabotage breaches on 21 May 2021 and 1 June 2022.

There was no suggestion by the applicant that DVSA had failed to properly follow the procedure for detaining vehicles set out in the Regulations; indeed, the statement by the director Mr Petrescu and the legal submissions by Mr Clarke acknowledge that that there had been a clear breach of cabotage rules. I determined that the vehicle had been lawfully impounded. However, at the hearing I did ask TE Skelton to review the circumstances surrounding the impounding with a focus on her interaction with the driver and applicant entity. This was in order to set the context for further evidence to be considered. I went on to consider the single ground for return of the vehicle with the supporting evidence provided.

3.3 Ground for Return

The owner of such a detained vehicle is entitled to apply to DVSA and subsequently to the Traffic Commissioner for the release and return of the vehicle. Application may be made on four grounds, set out at Regulation 4(3) of the Goods Vehicles (Enforcement Powers) Regulations 2001 (as amended) that at the time the vehicle was detained:

a. The vehicle was being used at the time under the authority of a valid operator’s licence (whether or not authorising the use of the vehicle);

b. The use to which the vehicle was being put to at the time, or to which it had been put, was not of a sort that contravened Section 2 of the Act;

c. Although the use of the vehicle was in contravention of Section 2 of the Act that the owner did not know that it was being or had been so used;

d. Although it was known that the use of the vehicle was in contravention of Section 2 of the Act, that the owner had both taken steps to prevent that use and to prevent such further use.

The ground for the return of the vehicle submitted by the applicant was that the Company did not know of the operation of the vehicle without an operator’s licence, 4(3)(c).

I am grateful that both parties shared all submissions/statements in advance of the hearing which allowed the focussed use of tribunal time.

3.4 Applicant Evidence

Prior to the hearing I received a supporting statement by Mr Alin Petrescu, company director at S C Cubital Forest Ltd (in attendance) which outlined proof of ownership, lawfulness of the detention and the ground for the return of the vehicle. This was later backed up by legal submissions from Mr Clarke that reviewed the case law and focussed on the issue of ‘knowledge’ as the sole ground for the return of the vehicle. Director Mr Petrescu’s evidence is summarised as follows:

a. On 31 October 2022 the applicant S C Cubital Forest SRL entered into a so-called ‘wet hire’ arrangement with a large, well known Italian haulage firm, D’Agostino SRL. The outline contract agreed to the provision of 2 vehicles (with drivers) for a 6-month period. During this time vehicles were allocated to work solely for D’Agostino SRL in return for payment in accordance with terms set out in the contractual agreement. A translated copy of the contract was provided.

b. These 2 entities had undertaken work together previously and D’Agostino SRL was an established Italian company and holder of a Road Transport Licence issued by the Italian Transport Regulation Authority.

c. During the stop on 13 March 2023 the DVSA officials stopped the vehicle whilst it was being operated under the terms of the lease.

d. Therefore, knowledge of breach of cabotage rules was denied as it was submitted that the vehicle was under the sole operation and control of the then lessee D’Agostino SRL.

e. The Operator submitted that CMRs produced for the journeys stipulated the carrier as D’Agostino SRL and documents were stamped accordingly.

Mr Clarke’s legal submissions reinforced the points on ownership and legal impounding before focussing on the ground for return of the vehicle, namely knowledge. In summary:

a. The case for ownership was made (and accepted).

b. The legality of the impounding was not challenged.

c. Again, the case for lack of knowledge of the cabotage breach was made around the assertion that D’Agostino SRL were the operator based on the existence of a so-called ‘wet hire’ agreement, which was submitted identified the lessee as the operator, and the CMR paperwork that stipulated D’Agostino SRL as the carrier or successive carrier.

d. Mr Clarke kindly reviewed the case law for impounding. He concluded that there was no evidence on which the traffic commissioner could conclude that the applicant had been placed on notice that the operator of the vehicle may be, or was, in breach of the legislation. It was submitted that the applicant is guilty of mere negligence, but nothing more.

3.5 DVSA evidence

The advance submissions from the respondent, Mr Sasse, are summarised as follows:

a. TE Skelton identified that the impounded vehicle was on its 4th cabotage journey after completion of the inbound journey. The driver, Mr Stocheci produced the applicant’s community licence, not that of D’Agostino SRL. No other authorisation was produced to or identified by the Officer as being displayed in the vehicle. The driver is understood to be an employee or directly engaged agent of the applicant.

b. When seeking removal of the driver and decouple trailer for the impounding site, the TE spoke to a person (unidentified) at the applicant company, not D’Agostino SRL. Subsequently, it was Mr Petrescu, director of the applicant company who collected by the trailer/load and driver.

c. The applicant company has previously committed cabotage offences in May 2021 and June 2022 and had been served with a pre-impounding letter by DVSA on 10 June 2021.

d. It was noted that the statement of the director is silent on previous transgressions.

e. The contract produced by the applicant was unclear as to whether it was a translated document or the original. It was not the kind of document usually associated with the letting of a vehicle for use by another party. It does not state that during the course of the contract vehicles would be operated under the sole direction of the hirer as stated in the Director’s statement. On the contrary provisions relating to lessor liabilities and requirement for handling of CMR paperwork, “for goods carried on the [the hire’s behalf]” convey the opposite interpretation.

f. It is the respondent’s view that the arrangement indicated is more of a fixed price umbrella agreement for sub-contracting the commercial carriage of goods on behalf of another.

g. The CMR paperwork rather that just being stamped by D’Agostino SRL as the carrier or successive carrier also identifies the applicant entity as a carrier. The legal submissions from Mr Clarke are silent on this.

h. The statement from Mr Petrescu does not include reference to procedures for monitoring the use of its vehicles and drivers whilst on hire, any investigation as to the circumstances of this instance of cabotage breach, and any account sought from the alleged hirer.

i. In view of the above the respondent suggested the following observations that will feed into an assessment of knowledge of the applicant as to the breach in cabotage regulations:

1). The appearance of the contract and CMR documentation invite an inference of direct involvement of the applicant company in the conduct of the carriage of the goods for D’Agostino’s customers for reward.

2). The only evidence of authorisation displayed in the vehicle and produced by the driver, employed by the applicant, was the applicant’s authorisation. This was not a case of mere incidental presence of such authorisation it was produced by the driver. No further explanation of this is offered.

3). The applicant and its driver knew or ought to have known of the legal requirement for displaying the operator licence/authorisation. The driver does not suggest at the time of the impounding that D’Agostino SRL was the operator.

4). The applicant was on notice that its use of vehicles in the UK was under scrutiny for illegal cabotage and would be reasonably be expected:

• To have established procedures regularly to check on legal use and authorisation if genuinely hiring out the vehicle (to precisely avoid this scenario if let down by the hirer through intent or mistake).

• To have means to exchange information with its driver about his hours and monitor the legal the use of the vehicle.

5). The driver as much as the applicant should have known about the rules of cabotage and should have identified that he was being tasked to operate illegally at risk to his employer.

6). The applicant was commercially interested in the maximum usage of its vehicle.

At the hearing I heard further evidence from both applicant and respondent. At the outset I stated that I wish to be clear on the issues relating to the veracity of the contract in place with D’Agostino SRL, associated operator responsibilities, previous breaches of cabotage and future measures for prevention (including driver and director training), the adherence to EU regulations regarding the CMR paperwork, and the legal requirement for a community licence for the purpose of cabotage journeys. I heard from the applicant before Mr Sasse cross-examined Applicant director, Mr Petrescu, on these issues

3.6 Applicant evidence

Ms Fitzgerald invited the applicant director, Mr Petrescu, to adopt the statement issued in advance, which he duly did. In addition, the following was brought out in evidence:

a. D’Agostino SRL had created the hire agreement. It was accepted by the applicant without challenge or legal scrutiny. It was very much presented as a condition for doing business with D’Agostino SRL.

b. It was confirmed that the agreement in the bundle was a translated copy. The Romanian language copy was provided at the hearing but had not been provided in the applicant’s bundle of evidence.

c. It was confirmed that the agreement set out the requirement to provide 2 vehicles with drivers on a continuous availability basis for a 6-month period from 31 October 2023 to 30 April 2023; a fixed daily cost and cross billing for other overheard costs was set out.

d. It was confirmed that the applicant entity retained the responsibility for insurance of the vehicle.

e. The contract simply stated that cabotage rules would be followed. The applicant assumed that this referred to D’Agostino SRL.

f. The applicant company had worked with D’Agostino SRL for a 2-year period, although there were no prior similar agreements provided to corroborate this.

g. The agreement was silent on which entity’s Community authorisation the vehicles would be operated.

3.7 Respondent cross-examination

a. Mr Sasse’s cross examination very much built on his written submissions provided in advance of the hearing (at para 17):

b. It was confirmed that Mr Petrescu had been a HGV driver for 12 years, 7 of which were in the UK. He had driven for his own company for 5 years and he is the director and owner of the Company.

c. He owns 2 vehicles, and his father owns a further 2. All 4 are used for the purposes of his business under community authorisation issued under Romanian government authority.

d. There are 4 drivers in total and this includes director Mr Petrescu. Mr Petrescu’s father drives for the applicant.

e. The applicant company had worked with D’Agostino for 2 years. It was confirmed that the contract was put to the applicant without legal scrutiny on a ‘take it or leave it’ basis, without negotiation or clarification on any issue. Mr Petrescu stated that he could not afford to decline the work given financial pressures on the business.

f. The contract did not explicitly state who was the operating entity.

g. It was Mr Petrescu’s perspective that the control of the drivers lay with D’Agostino SRL who would message through the work to be undertaken with load details directly to the driver. The driver did have the authority to refuse a load if the trailer was unroadworthy, in which case Mr Petrescu would be contacted by D’Agostino SRL.

h. It was the applicant company, not D’Agostino SRL that had the responsibility for downloading driver card and vehicle unit tachograph data for analysis and ensuring adherence to drivers’ hours regulations.

i. The applicant company would raise bills to D’Agostino SRL by reference to order numbers, not by day. Payment was only received for the days worked.

j. Insurance of the vehicle was the responsibility of the applicant entity, but equally the terms of the agreement set out liability of the applicant entity for the condition of D’Agostino’s trailers and load.

k. It was the understanding of Mr Petrescu that the statement in the agreement that stated cabotage rules would be obeyed meant that it was solely the responsibility for D’Agostino SRL to ensure that the applicant’s drivers were not in a position where the cabotage regulations were breached. Nothing was challenged or at no point was clarification sought on this point.

l. The driver at the time of the impounding, Mr Stocheci, had driven for the applicant company for a couple of years. He had received no formal training on the cabotage rules but as an experienced driver it was assumed he knew the rules. There was no follow up with the driver which included further training and/or discipline. Indeed, the driver remains employed by the applicant company.

m. Mr Petrescu stated that there was no role for the applicant company in reviewing the work allocated to the applicant’s drivers.

n. Mr Sasse reviewed the previous cabotage breaches by the applicant company in 2021 and 2022. For the June 2022 encounter, director Mr Petrescu was the driver and again on that occasion a trailer owned by D’Agostino SRL was being hauled. The vehicle was not impounded by the DVSA on this occasion, but the incident is a matter of record and has not been disputed by the applicant. The applicant was on notice of the potential for the impounding of the vehicle in the event of further cabotage breach, via a pre-impounding letter sent on 10 June 2021. Indeed, as the driver on that occasion, Mr Petrescu had personal knowledge of the breach.

o. Mr Petrescu stated that he didn’t recall receiving a letter from DVSA; he confirmed that his correspondence address had not changed during the period of the previous cabotage breaches.

p. It was conceded that the CMRs produced bore the stamp of both entities, S C Cubital Forest SRL and D’Agostino SRL. Indeed, Mr Petrescu stated that the driver had a stamp for the applicant company and had the authority and task of stamping CMR documentation before sending it to D’Agostino SRL. The submission of such stamped documentation was a condition of payment. Mr Sasse pointed out the legal standing for CMR paperwork and the fact that a company stamp as a carrier or subsequent carrier recorded legal responsibility for the load for that segment of the journey. Mr Sasse highlighted that submissions for the applicant entity were silent on the inclusion of the S C Cubital Forest SRL stamp on CMR paperwork.

q. Mr Petrsecu was questioned on why the community authority of his company was produced by the driver if D’Agostino SRL were the operator. He stated that he asked D’Agostino SRL for them to utilise their authorisation but had received the response that he had his own authority and that was to be used. Mr Petrescu had not challenged this as he needed the work with D’Agostino SRL.

r. Following the incident D’Agostino SRL had refused to accept any responsibility for the cabotage breach including financial liability for the direct and indirect costs of the impounding, but no evidence was received of any correspondence with D’Agostino SRL. Mr Petrescu stated that he no longer worked with D’Agostino SRL although again no evidence of a termination of the working arrangement was provided to corroborate this.

3.8 TC Clarification

I sought clarification from both parties as to the following:

a. The initial application for the return of the vehicle stated that there was a wet hire agreement whereby the applicant provided the vehicle, driver and permits etc. I sought clarification as to the reference to permits as I could only surmise this referred to a community licence. Ms Fitzgerald was not able to clarify this.

b. The applicant had provided an invoice with the agreement, not explicitly referred to in submissions. I sought clarification as to what it showed as it did not appear to align with anything in the agreement. Mr Petrescu stated that it was actually an invoice from D’Agostino SRL billing the applicant entity for the role of the transport administrator employed by D’Agostino SRL passing on instructions to the drivers. It was confirmed that this arrangement was not in the agreement.

c. I questioned whether the applicant entity had sought assurances from D’Agostino SRL that there had been no previous cabotage breaches, noting the impounding decision for a D’Agostino SRL vehicle in the Welsh Traffic Area at the end of 2022. Previous non-compliance by D’Agostino SRL was also highlighted in this decision. Mr Petrescu stated that he had not made such enquiries; he trusted that the entity was a reputable operator.

4. Assessment of Evidence

The applicant relies on the existence of a contract with D’Agostino SRL, the stamp of D’Agostino SRL on CMRs and the fact that the Community licence was in the vehicle as incidental to back up the assertion that D’Agostino SRL was operating the vehicle and in all respects had control of the vehicle at the time of the cabotage breach. In order to form a view on the balance of probability which entity was operating the vehicle at the time of the impounding, I make the following findings in assessing the evidence presented at the hearing.

4.1 ‘Wet-hire’ agreement.

I find that the so called ‘wet hire/lease’ agreement does not amount to the hire of vehicles (specified by registration number) for exclusive use of D’Agostino SRL during the 6-month period 31 October 2022 to 30 April 2023, retaining all operator responsibilities. Moreover, on balance the agreement is at best an umbrella/framework contract for the guarantee of the availability of road transport capacity for a 6-month period on a sub-contract basis. I make this finding based on the following findings regarding the agreement and circumstances surrounding the impounding:

• The agreement is a translation and not an original that is not ratified legally by a third party. Indeed, the applicant confirmed that the document was produced in entirety by D’Agostino SRL and was not checked by company lawyers or challenged by the applicant. Rather, it was accepted out of commercial imperative as a condition for doing business with D’Agostino SRL.

• The applicant stated that his Company had worked with D’Agostino SRL for the last 2 years. No similar contracts were produced for the period prior to this.

• The agreement does not explicitly state which entity is the operator of the vehicles.

• The agreement states the requirement for cabotage rules to be obeyed, but rather than ‘we’ (inferring D’Agostino SRL) or ‘you’ (the applicant entity), used elsewhere in the document, it is silent on the entity directly responsible.

• There is no requirement for either party to disclose previous cabotage breaches.

• The document does not designate the responsibility for the deployment a Community licence with loads that were transported in D’Agostino SRL trailers with loads for its customers. This would be expected to be in the name of D’Agostino SRL, the purported operator.

• The agreement places conditions of reparations for direct and indirect costs in the event of trailer or load damage on the applicant entity, stating “by your drivers” meaning employees of the applicant entity. It is also noted that the applicant has retained responsibility for the insurance of the vehicle, not D’Agostino SRL.

• The agreement states that it is mandatory for CMRs for every single loading/unloading made of the behalf of D’Agostino SRL to be emailed to D’Agostino SRL, with the provision of an email address. This infers the direct involvement of the applicant entity as a carrier in the movement of loads for D’Agostino SRL customers, with a S C Cubital Forest SRL stamp issued to the driver for this purpose.

• There was no evidence of a follow up post impounding with D’Agostino SRL. In this regard it is not clear whether the contract was terminated for an apparent breach of its terms; this was stated by the applicant to be the case, but submissions are silent on this with no supporting evidence.

4.2 CMRs.

The Applicant states that CMRs bare the stamp of D’Agostino SRL as carrier and this is evidence that the applicant was not the operator or in control of vehicle use. However, as highlighted by the respondent the applicant company stamp is also present on the CMRs as a carrier or successive carrier. The statement by Company director and legal representations are silent on this issue. I find that the CMRs and the requirement in the agreement for the applicant to produce them to D’Agostino SRL demonstrate direct involvement of the applicant company in the control of the journeys undertaken for the benefit of D’Agostino SRL customers. This is borne out by the presence of the applicant’s stamp on the CMR paperwork with the driver being charged with the responsibility of stamping the CMRs on behalf of the applicant. These stamps confer a legal responsibility as a carrier of the goods with associated legal liability. The use of their stamp by the driver was done out of commercial imperative as D’Agostino SRL had made it a condition for payment.

4.3 Community Licence.

The community licence produced by the driver was in the name of the applicant entity. Mr Clarke in submissions states this is unsurprising given that the operator holds a community licence; it is therefore purely incidental. However, Mr Petrescu stated under cross-examination that he had asked D’Agostino SRL to use their community authority, but this was refused, stating that he should deploy his own community authorisation for the work undertaken on behalf of D’Agostino SRL. Mr Petrescu stated that in the circumstances he had little choice but to acquiesce to this, regardless of the fact he knew that the authorisation of D’Agostino SRL should be used. In this regard he had placed commercial imperative ahead of lawful operation. Furthermore, this is a change in account from the submissions received which state that the presence of the community licence in the vehicle was incidental. Therefore, on the contrary, the use of its community licence was deliberate and intentional, and the applicant has not been totally honest on this issue until pressured under cross-examination.

4.4 Control/Instruction/Management of Drivers.

The applicant states that the driver (an employee of the applicant) was under the control of D’Agostino SRL at all times. However, other than this assertion (and an invoice from D’Agostino SRL supposedly for a transport administration support) I have not been presented with any evidence of this; indeed, the agreement is silent on the responsibility of D’Agostino SRL, inferring that driver management responsibilities rested with the applicant entity. I would expect the Operator to:

• Ensure that drivers are correctly trained for the role with the required licences.

• Ensure that all times drivers are within legal drivers’ hours limits.

• Ensure that the drivers are aware of cabotage responsibilities and the requirement for CMR paperwork and production of a community licence if requested by a national authority.

• Ensure that there were robust communication channels with the driver to monitor journeys and identify and resolve issues as they arise.

The circumstances of the impounding were such that:

• The driver remained an employee of the applicant throughout.

• The driver produced the community licence of the applicant company. The driver at no point stated that he was working on behalf of D’Agostino SRL or indeed any involvement with this entity.

• I am told that the driver received instructions regarding the assignment of loads from D’Agostino SRL, however, I have been provided with any explicit evidence of this.

• It was Mr Petrescu, not representatives of D’Agostino SRL, that recovered the driver and load from the impounding site.

• I have not been presented with any evidence from the applicant that the driver was under the control of D’Agostino SRL for driver management functions such as tachograph downloads. Indeed, Mr Petrescu retained responsibility for the downloading and analysis of tachograph data and control/discipline of the driver in the event of drivers’ hours rules breaches.

• The driver had not received formal training regarding the rules for cabotage. Indeed, I note form the hearing that Mr Petrescu was not aware of the change in cabotage rules reducing the number of subsequent journeys after the international drop off from 3 to 2 journeys in a 7-day period, from 1 January 2021. The impounded vehicle was actually on its 4th such journey. Therefore, the so-called informal discussions on the rules that Mr Petrescu supposedly had with the driver were founded on his own lack of knowledge. Mr Petrescu accepted that he had no formal training of the rules for international carriage of goods.

4.5 Previous Impounding.

Previous cabotage breaches by the applicant entity and a pre-impounding letter put the applicant on notice of the potential for future impounding of its vehicles if in breach of the cabotage regulations. The previous impounding in June 2022 also involved a D’Agostino SRL trailer and load and Mr Petrescu as the driver; Mr Petrescu was therefore on personal as well as corporate notice of the requirement and risk. In such circumstances a reputable law-abiding company would ensure all possible measures were taken to mitigate this risk. This should include:

• Requirement to ensure the carriage of required paperwork, not least accurate CMRs reflecting the actual legal responsibility for the carriage of the goods and community authorisation of the operator. In this regard there were no appropriate measures, as already covered above. The training and knowledge of cabotage rules of all drivers and the Director are key to ensuring this.

• The applicant did not make enquiries as to previous breaches by D’Agostino SRL trusting them as a reputable company despite having actual knowledge (on the part of the director) of previous issues where there had been a breach in cabotage rules. There was evidence in the case bundle there is an impounding decision refusing the return of a vehicle in November 2022 to D’Agostino SRL. Indeed, that written decision highlighted a number of previous cabotage breaches by D’Agostino SRL. The work with D’Agostino therefore carried a heightened risk of impounding.

• The applicant had no oversight of the work overtaken on its behalf trusting D’Agostino SRL to allocate work in accordance with cabotage rules. The driver at the time of the impounding clearly was either lacking knowledge and understanding of the cabotage rules with no instructions as what action to take in the event of a breach or chose to blindly follow the delivery instructions he received.

5. Submissions on Knowledge

Ms Fitzgerald addressed the issue of knowledge stating that the cabotage breach was accidental and inadvertent rather than deliberate and intentional. The applicant had worked with D’Agostino SRL for some time and trusted them to ensure compliance with the regulations. The applicant was under the belief that the agreement with D’Agostino SRL designated as them as operator as it was D’Agostino SRL that messaged the instructions to drivers with the details of their load. In this regard it was submitted that the breach in the cabotage rules was neither wilful nor reckless. It was a case of placing too much trust in D’Agostino SRL and in this regard the applicant was merely negligent.

Mr Sasse offered his assessment of the evidence and made a case for the presence of the 3 categories of knowledge; actual, imputed and constructive knowledge. I subsequently indicated my intention to reserve my decision, in order that I could consider the issue of knowledge as the single ground for return of the vehicle to the applicant, having assessed all of the evidence.

6. Consideration and Conclusions

6.1 Operator

Following an assessment of the available evidence, and prior to an assessment of knowledge, I considered the preliminary issue of which entity was on balance of probability operating the vehicle. I judge that on balance S C Cubital Forest SRL was the operator of the vehicle at the time of the impounding for the following reasons:

a. I am of the view that the contract wasn’t anything more than a document that sought to confer a veil of legitimacy to the arrangement between the 2 entities. The reality was that S C Cubital Forest SRL were operating the vehicle and the agreement constituted an overarching agreement guaranteeing haulage services to D’Agostino SRL and not hire of the vehicle by D’Agostino.

b. The impounded vehicle was not formally hired to D’Agostino SRL for use on its community licence.

c. It was the Community licence of S C Cubital Forest SRL that was intentionally produced to support cabotage journeys and not that of the purported operator, D’Agostino SRL.

d. The S C Cubital Forest SRL stamp was used by the driver on the CMR paperwork as well as the stamp of D’Agostino SRL. This infers acceptance of direct S C Cubital Forest SRL legal responsibility for the carriage of the goods as the operator for at least part of the journey.

e. S C Cubital Forest SRL retained responsibility for:

1) Driver management functions including payment of drivers and monitoring/policing of drivers’ hours.

2). The maintenance/roadworthiness of the vehicle.

3). Payment of fuel.

4). Insurance of the vehicle.

5). Insurance/liability of the load and D’Agostino SRL trailers.

f. At no point until post impounding was there any suggestion that any other entity than S C Cubital SRL was the operator of the vehicle. It was at this point that the contract was produced in an attempt to legitimise the arrangement and shift the blame to D’Agostino SRL as the purported operator to support the application for the return of the vehicle.

6.2 Knowledge

It is for the applicant to prove a negative that it did not have knowledge of the cabotage breach at the time of the Impounding. In the light of the assessment of the evidence, I considered whether on 13 March 2023 the applicant company possessed one or more of the five states of knowledge listed the Upper Tribunal decision of Société Générale Equipment Finance Ltd (T/2013/21). These are:

a. Actual knowledge;

b. Knowledge that the person would have acquired if he had not wilfully shut his eyes to the obvious;

c. Knowledge that the person would have acquired if he had not wilfully and recklessly failed to make such inquiries as an honest and reasonable person would make;

d. Knowledge of circumstances that would indicate the facts to an honest and reasonable person; and

e. Knowledge of circumstances that would put an honest and reasonable person on inquiry.

6.3 Assessment of Knowledge

I assessed the issue of knowledge with regard to the route map in the case law and Statutory Document Number 7. The start point is to identify any evidence before me that the applicant probably did not know the vehicle was being used or had been used in contravention of the Act. The applicant offered the existence of a contract with D’Agostino SRL, D’Agostino stamps on CMR paperwork, and the incidental presence of a community licence in the name of the applicant in the vehicle as evidence that it did not know. I have assessed these assertions in the preceding paragraphs and this feeds into the analysis below.

6.4 Actual Knowledge.

The Company maintain that they thought the arrangement with D’Agostino SRL was legitimate and effectively absolved them of operator responsibilities as D’Agostino SRL controlled the work assigned to the drivers. Accordingly, the applicant states that there was no knowledge of the breach until informed by the driver in the immediate aftermath of the impounding. Having established that on the balance of probability SC Cubital Forest SRL were the operator (paragraph 31), with the vehicle being operated under the Community licence of the company (despite knowing and conceding that the licence of D’Agostino SRL should be in use), and with a previous history of cabotage breaches, there is an argument that the applicant had actual knowledge of the breach in cabotage rules. In the alternative, I considered whether this knowledge was imputed.

6.5 Imputed Knowledge.

I assessed the knowledge categories for imputed knowledge (paragraphs 32. b and c. above):

6.6 Knowledge that the person would have acquired if he had not wilfully shut his eyes to the obvious.

I find that in knowingly and deliberately allowing its community licence to be utilised and deploying its Company stamp with the driver to endorse CMR paperwork the applicant has wilfully shut its eyes to the obvious, in that it had a direct involvement as an operator, regardless of its interpretation of the agreement in place with D’Agostino SRL. It is a fundamental requirement to know the law and follow the regulations. The applicant has knowingly and wilfully allowed its community licence to be used knowing it was wrong. Given previous cabotage breaches, one of which being in identical circumstances with Mr Petrescu driving, the company director had personal and corporate knowledge of the potential for impounding of a company vehicle if cabotage rules were breached. Therefore, the applicant had knowledge of a clear and obvious requirement to ensure that cabotage breaches were prevented by ensuring that arrangements with third parties were robust and provided maximum risk mitigation. In ignoring this requirement, the applicant has wilfully shut its eyes to the obvious. Therefore, the first category of imputed knowledge is made out.

I went on to consider the second type of imputed knowledge (paragraphs 32. d and e above)

6.7 Knowledge that the person would have acquired if he had not wilfully and recklessly failed to make such inquiries as an honest and reasonable person would make.

I was usefully guided by the routed procedure set out in decision of Société Générale Equipment Finance Ltd:

6.8 What inquiries would an honest and reasonable person have made in the circumstances faced by the person claiming the vehicle?

An honest and reasonable person would have made the following inquiries:

• The applicant was on notice as to the risk of impounding given previous breaches, not least the previous impounding in June 2022, where Mr Petrescu, Company director was the driver, in identical circumstances with a D’Agostino SRL trailer. Consequently, there should be inquiries as to any previous cabotage warnings (and pre-impounding letters) on the part of D’Agostino SRL, with clear assurances sought from D’Agostino SRL with associated measures to prevent future repeat breaches.

• The agreement between the 2 entities was not a traditional hire agreement that would stipulate the exclusive use of a vehicle by registration number with clear responsibilities for the lessor and lessee. Moreover, it was a more of an umbrella or framework arrangement for sub-contracting of work, stipulating the availability service requirement (2 vehicles and 2 drivers) but with fixed payment on a usage basis. There should have been appropriate due diligence as to the veracity of the agreement, including the clear articulation of responsibilities regarding use of community licence, stamping of CMRs, the requirement for insurance of vehicle and load/trailer.

• There should be inquiries as to the use of the appropriate Community licence of D’Agostino SRL. This should include the removal of the applicant company’s community licence from the vehicle where the D’Agostino SRL authority should be in use.

• The driver was an employee of the applicant entity and should have had training regarding cabotage regulations. The applicant company should have confirmed the understanding of the driver of the cabotage rules as a minimum. Equally, the sole director should have ensured that he had up to date knowledge and understanding of the cabotage rules.

6.9 Did the Claimant make such inquiries?

The claimant stated that it believed D’Agostino SRL to be a reputable Italian operator with whom they had worked with previously. They sought no assurances and made none of the inquires highlighted above other than enquiring as to whether the community licence of D’Agostino SRL would be deployed as could be expected. Regardless, the use of the applicant’s community licence was utilised when D’Agostino SRL refused to allocate its own licence to the vehicles in use.

6.10 Did the claimant wilfully refrain from making such inquiries?

• The applicant admitted that it never negotiated or challenged the terms of the agreement or inquired as to any previous impounding action. Rather, it was admitted that the agreement was accepted out of commercial imperative to secure the business.

• When the response from D’Agostino SRL stated that they were to use their own community authority this was accepted and not challenged again out of commercial self-interest. This was a wilful act. Indeed, it was only when pressured under cross-examination was this offered as an explanation. Submissions received prior to the hearing stated that the presence of the community licence in the vehicle was incidental, when this was in fact an intentional deliberate/intentional act admitted by Mr Petrescu on cross-examination. In this regard, the submissions of the applicant lack candour.

• I would assess the failure of a reputable company to act on legal obligations to be wilful; a responsible company, with appropriate directorship should have ensured that given the previous DVSA warnings and pre-impound letter. In not adhering to the regulations for international journeys it has shown a blatant disregard for its corporate responsibilities. Therefore, I judge that the Company knowingly put itself in that position knowing that a vehicle could be impounded.

6.11 Did the claimant recklessly refrain from making such inquiries?

There is clear recklessness in not exercising due diligence as to the veracity of the agreement and in not putting in place reasonable measures to prevent cabotage breaches highlighted above especially given previous warnings and the issue of a pre-impound letter. The use of its community licence and company stamp was a conscious decision and in doing so the applicant’s actions are reckless in that they done out of commercial imperative with no regard as to the consequences of its actions. Ultimately, it relies on the agreement between the parties to absolve it of operator responsibilities as it believes D’Agostino SRL to be the operator; the reality is that the applicant is the operator. In this regard, it is insightful that D’Agostino SRL have refused to take any responsibility whatsoever for the cabotage breach, indeed Mr Petrescu states that they have been uncontactable on the issue.

6.12 Was there a high degree of fault involved in wilfully failing to make such inquiries?

The Company have demonstrated a high degree of fault in the lack of due diligence in blindly accepting the terms of the agreement and the lack of appropriate measures to prevent any further cabotage breaches. It is to be expected that an entity with responsible directors would know the law and afford the requisite priority to its legal responsibilities. Equally, the applicant has deliberately used its own community licence and the company stamp for CMR paperwork: the use of its own community licence it knew to be wrong, admitted at the hearing. The applicant has placed commercial benefit ahead of transparent and lawful operation of its vehicles; this carries a high degree of fault.

Therefore, I find that the applicant possessed both types of imputed actual knowledge of the use of the vehicle in breach of cabotage regulations. For completeness, I assessed whether there was constructive knowledge of the cabotage breach.

6.13 Constructive Knowledge.

I considered the categories of constructive knowledge:

6.14 Knowledge of circumstances that would indicate the facts to an honest and reasonable person.

The applicant admits that it requested that D’Agostino SRL utilised its own community licence. This was a legal requirement on what the applicant believed to be the arrangement for the operation of its vehicles in transporting goods on behalf of D’Agostino SRL. Despite the refusal of D’Agostino SRL to allocate community licences, the applicant continued to allow its community licences to be used. This is not the action of an honest and reasonable person. Indeed, and honest and reasonable person would not have continued with such an arrangement knowing it to be illegal. Equally, the use of their Company stamp when purportedly D’Agostino SRL was operating the vehicle was not questioned by the applicant. Again, commercial benefit was the priority when an honest and reasonable person would understand the law and ensure that it fulfilled its legal obligations.

6.15 Knowledge of circumstances that would put an honest and reasonable person on inquiry

An honest and reasonable person would be on inquiry as to the veracity of any contractual agreement and when presented with the legal requirement to utilise the community licence in the name of the operator, would have insisted on the use of the D’Agostino SRL authority. An honest and reason person would have questioned the honesty and integrity of D’Agostino SRL in these circumstances, and given the previous cabotage breach in identical circumstances, and risk of impounding, it would have looked to terminate the arrangement. Instead, commercial interest prevailed.

I judge that the applicant possessed both types of constructive knowledge, namely knowledge that would indicate the facts to an honest and reasonable person and would put an honest and reasonable person on inquiry. There was commercial motive in not questioning the agreement signed with D’Agostino SRL and deliberately allowing its Company stamp to be used on CMR paperwork and its community licence to be deployed with the driver, despite stating that it knew that D’Agostino SRL should be using its own authority. Given the evidence presented at a lengthy hearing and the resulting analysis, I am clear this amounts to more than mere negligence.

In conclusion, I believe that here is a strong case that the applicant had actual knowledge of the cabotage breach. In the alternative, I find that the applicant possesses both categories of imputed and constructive knowledge.

7. Decision

The application for the return of vehicle is refused. DVSA should therefore dispose of the vehicle, once the 28-day period for appeal against this decision has elapsed.

Tim Blackmore

Traffic Commissioner

North East Traffic Area

10 May 2023