Brokaw v Seatrain U.K. Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS,LORD JUSTICE PHILLIMORE |
| Judgment Date | 12 February 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0212-4 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 1971 |
[1971] EWCA Civ J0212-4
The Master of The Rolls (Lord Denning)
Lord Justice Salmon and
Lord Justice Phillimore.
In The Supreme Court of Judicature
Court of Appeal
Appeal by claimants from order of Master Lubbock on 21st December, 1970
Mr. JOHN HALL, Q. C., and Mr. DAVID CALCUTT (instructed by Messrs Rowe & Maw) appeared on behalf of the Appellant Claimants.
Mr. ALEC GRANT (instructed by Messrs. Joynson-Hicks & Co.) appeared on behalf of the Respondent Plaintiffs.
Mr. N. LEIGH-JONES (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Respondent Defendants.
On the 2nd September of last year a vessel called the "Transoregon" was at Baltimore in the United States. She was owned by a United States company - Seatrain Lines Ino. She was registered in the United States and flew the United States flag. On board there were loaded, amongst other things, two containers and two vans, each said to contain household effects. The shippers were Dean International Ltd. The consignees were Interdean Ltd. of Fenchurch Street, here in London. The port of discharge was London via Southampton. The household effects were for delivery to a Mr. Brokaw. He is the son-in-law of a Mr. and Mrs. Shaheen, who are United States citizens and live in the United States.
The ship set sail with the goods on board. On the 13th September, when she was on the high seas, some one on behalf of the United States Treasury served a notice of levy on the of the vessel in the United States. By this notice, the United States Government demanded that all the property belonging to Mr. and Mrs. Shaheen which was in the possession of the shipowners should be surrendered to the Secretary of the Treasury. That notice was served on the shipowners, but not, so far as we know, communicated to the Master of the vessel.
The vessel docked in Southampton on the 19th September. The United States Government claimed possession of the two containers and two vans of household effects. They said that Mr. and Mrs. Shaheen owed the United States Treasury money for taxes and that they were enabled by United States law to levy upon all the property of Mr. and Mrs. Shaheen, and that those goods belonged to Mr. and Mrs. Shaheen and were covered by the notice of levy. In consequence the shipowners did not deliver the goods to the consignees or to Mr. Brokaw but retained them.
Thereupon Mr. Brokaw (who was living in England), and Mrs. Shaheen (who was in the United States), brought an action against the ship owners, claiming the delivery of the goods or their value. It was an ordinary action in detinue. The ship owners took out an inter pleader summons bringing in the Government of the United States of America as claimants. That inter pleader summons came before the Master under Order 17, Rule which enables the Court, when the question at issue is a question of law, summarily to determine it. The Master held the view that that claim of the Government of the United States was un maintainable. It was an attempt to enforce the Revenue laws of another country, which we never do. So he made an order that the United States Government be barred from the claim. The United States Government appeal to this Court.
We have before us an affidavit on behalf of the United States Government which sets out the basis of their claim. They rely on an internal Revenue law of the United States, Section 6331, under the heading "Levy and Distraint", which says that:
"(1) If any person liable to pay any tax neglects or refuses to pay the same within ten days after notice and demand, it shall be lawful for the Secretary or his delegates to collect such tax…. by levy upon all property and rights to property…. belonging to such person"
"(2) The term 'levy' as used in this title includes the power of distraint and seizure by any means."
In a later section it says that the ten days' notice may be dispensed with in case of jeopardy. We were told that it was dispensed with in this case. So the notice of levy took effect forthwith.
The United States Government say that these goods were in the possession of the shipowners, who were legally obligated underAmerican law to surrender the goods to the United States Government: that they were encumbered by a Federal tax lien and were in the possession of the United States Government who had a possessory interest in them: and that the Government were, therefore, in the constructive possession of the goods.
It is well established in English law that our Courts will not give their aid to enforce, directly or indirectly, the Revenue law of another country. That was decided in the times of Lord Mansfield; but it was restated recently in Government of India v, Taylor (1955) A. C. 491, to which I would addRossano v, Manufacturers' Life Insurance Co. (1963) 2 Q. B. 352, at pages 376/7 by Mr. Justice McNair. The United States Government submit that that rule only applies to actions in the Courts of law by which a foreign Government is seeking to collect taxes, and that it does not apply to this procedure by notice of levy, which does not have recourse to the Courts. I cannot accept this submission. If this notice of levy had been effective to reduce the goods into the possession of the United States Government, it would, I think, have been enforced by these Courts, because we would then be enforcing an actual possessory title. There would be no need for the United States Government to have recourse to their Revenue law. I would apply to this situation some words of the United States Supreme Court in " The Naveman". 303 U. S. page 681 in an analogous case:
"……since the decree was in invitum, actual possession by some act of physical dominion or control in behalf of the Spanish Government, was needful".
If the United States Government had taken these goods into their actual possession, say in a warehouse in Baltimore, or may be by attornment of the Master to an officer of the United StatesGovernment, that might have been sufficient to enable them to claim the goods. But there is nothing of that kind here. The United States Government simply rely on this notice of levy given to the shipowners, and that is not, in my view, sufficient to reduce the goods into their possession.
Apart from this point, it appears to me that the United States Government are seeking the aid of these Courts. They come as claimants in these interpleader proceedings. By so doing they are seeking the aid of our Courts to collect tax. It is not a direct enforcement (as it would be by action for tax in a Court of law), but it is certainly indirect enforcement by seizure of goods. It comes within the prohibition of our law whereby we do not enforce directly or indirectly the Revenue law of another country. If the position were reversed, I do not think that the United States Courts would enforce our Revenue laws. For no country enforces the Revenue laws of another.
I think the United States Government has no valid claim in England to these goods, and I would dismiss the appeal.
LORD JUSTICE SALMONS I agree.
I also agree.
Appeal dismissed with costs. Defendants Seatrain U. K. Ltd. ordered to deliver up the goods to the plaintiffs on their costs and charges being paid. Leave to appeal refused. Stay of execution pending application to House of Lords for leave to appeal. Meanwhile independent valuer to value the goods. Goods to remain in possession of defendants until further order or until plaintiffs bring into Court the value of the goods to be certified by independent valuer to be appointed by the Master indefault of agreement. Upon money being brought into Court, defendants to have their costs and charges paid out of the money in Court, and to be discharged from the action. Plaintiffs to be indemnified, if successful ultimately, by the claimants.
Mr GRANT: My Lord, I ask that the appeal be dismissed with costs, and in addition that it may now be convenient to deal with the remainder of the action, in view of the position of my learned friend, Mr. Leigh-Jones, who, I understand, has no objection to an order being made against them now for the delivery up of the goods.
That must follow. Mr. Hall wants to say something.
Mr Hall: My application to your Lordships is for leave to appeal in...
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