Obviously, only part of the VRM was entered or registered. As they could not match that up with the ANPR image, then they simply default to "not paid". However, if you can say that the receipt is what ws portioned, then it would be up to (not so) Smart to prove their equipment was functioning properly.
As their Notice to Keeper (NtK) is not PoFA compliant, they cannot pursue the registered keeper unless the Keeper blabbed that they were also the driver.
Has the driver been identified in any correspondence such as an appeal? Typically, simply admitting "I was the driver" rather than referring to the driver in the third person is how you shoot yourself in the foot and ruin a perfectly good "Golden Ticket".
I am going to assume that the claim has been issued by DCB Legal. What exactly did you put in as the defence? You have not shown us the Particulars of Claim (PoC).