Good and inevitable result. But strange reasoning.
I cannot find any evidence from the authority (their NOR) or any reference in the adjudicator's decision to the authority cancelling the first PCN. This might be implicit(as in if an authority send the same person a fresh notice that person should assume that one or more prior notices must have been cancelled!) but it's equally possible that they didn't formally cancel the first PCN in which case a win on 'collateral' grounds seems odd when the statutory grounds of 'penalty [as in the second penalty] exceeded.... circumstances of the case' surely must succeed.
Adjudication never ceases to amaze.