Director of Border Revenue v OM Cash and Carry Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Mrs Justice Yip |
| Judgment Date | 08 February 2024 |
| Neutral Citation | [2024] EWHC 265 (Admin) |
| Court | King's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/1342/2023 |
[2024] EWHC 265 (Admin)
Lord Justice Coulson
Mrs Justice Yip
Case No: CO/1342/2023
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
DIVISIONAL COURT
(On Appeal from Ipswich Magistrates' Court)
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Newbold (instructed by Government Legal Department) for the Appellant
Rajiv Sharma (instructed by Callistes Solicitors) for the Respondent
Hearing Date: 8 February 2024
Approved Judgment
Introduction
This is an appeal by way of case stated from a decision of Ipswich Magistrates' Court dated 30 November 2022, in which they accepted the respondent's submission that the appellant had failed to prove that a notice of seizure had been properly served, and that therefore the goods had been unlawfully seized and could not be condemned. Although the Magistrates' Court accepted that there had been reasonable grounds for the initial seizure of the goods, they awarded costs to the respondent because, in consequence of the service point, the respondent had successfully challenged the condemnation.
The Background Facts
On about 16 December 2021, 3,969 kgs of Gutka, a product containing tobacco (“the goods”) were imported into the UK at the port of Harwich. The consignee of the goods was the respondent. When the goods were inspected, Border Force officers considered that VAT and Excise duty on the goods had been significantly underpaid. The goods were seized on 20 December 2021. The respondent was informed of the seizure, and immediately instructed a City firm of solicitors, RPC. RPC first wrote to the appellant in connection with the seizure the following day, 21 December 2021.
The Case prepared by the Magistrates' Court referred to a notice of seizure provided by the appellant on 6 January 2022. Other documents indicate that this notice was served on the respondent's solicitors, but was not separately served on the respondent. The notice of seizure was not included in our bundles, and we requested a copy. It was addressed to the respondent in these terms:
“ Notice of Seizure
Dear Sir / Madam
Pursuant to Section 139(6) of the Customs and Excise Management Act 1979 and paragraph 1 of the Schedule thereto, the Directors of the Border Force hereby give notice that by virtue of the powers contained in the Customs and Excise Acts, certain goods, namely:
3969 Kg Vimal Gutkha Chewing Tobacco New, unsealed
have been seized as liable to forfeiture by force of the following provisions, namely:
Section 49(1) of the Customs and Excise Management Act 1979 because the appropriate paperwork was not produced at the time of importation:-
Please read the accompanying ‘Notice 12A’ which explains your legal rights in respect of the seizure of the aforementioned goods and the appeals procedures in accordance with paragraphs 3 and 4 of Schedule 3 to the Customs and Excise Management Act 1979.”
The respondent objected to the seizure. RPC served a notice of claim on their behalf on 21 January 2022. This was again provided to us at our request. It is an extremely long document, running to 9 closely typed pages. Its contents are dealt with in greater detail below. Subsequently, condemnation proceedings were commenced by the appellant before the Magistrates' Court in accordance with the relevant legislation. The matter came before the Magistrates' Court for hearing on 30 November 2022.
Attached at Appendix 1 is the Case Stated, summarising the findings of the Magistrates' Court and the four questions arising out of them. As noted at paragraph 7a, the Magistrates' Court was of the opinion that the appellant had “failed at the first hurdle — on a balance of probability and that it was more likely than not, that the notice [of seizure] had not been served properly in accordance with schedule 3 part 2 of Customs and Excise Management Act 1979” (“CEMA”). There is no further explanation of this finding: no indication as to why the notice of 6 January was found not to have been properly served. We return to that point below.
We propose to identify the relevant law, and then set out the questions asked by the court and our answers to them.
The Law
Section 139 of CEMA provides:
“(1) Anything liable to forfeiture under the Customs and Excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard…
(6) Schedule 3 to the Act shall have effect for the purpose of forfeitures, and proceedings for the condemnation of anything as being forfeited, under the Customs and Excise Act.”
Goods are “liable to forfeiture” where, amongst other things, they are imported without the proper payment of duty (see s.49 of CEMA).
Schedule 3 of CEMA is entitled “Provisions relating to forfeiture”. Paragraph 1 deals with the notice of seizure:
“(1) The Commissioners shall, except as provided in sub-paragraph (2) below, give notice of the seizure of anything as liable to forfeiture and of the grounds therefor to any person who to their knowledge was at the time of the seizure the owner or one of the owners thereof.
(2) Notice need not be given under this paragraph if the seizure was made in the presence of—
(a) the person whose offence or suspected offence occasioned the seizure; or
(b) the owner or any of the owners of the thing seized or any servant or agent of his; or a person who has (or appears to have) possession or control of the thing being seized; or
(c) in the case of anything seized [on or from] 2 any ship or aircraft, the master or commander [; or]
(d) in the case of anything seized on or from a vehicle, the driver of the vehicle.”
Paragraph 2 deals with service of the notice of seizure in the following terms:
“Notice under paragraph 1 above shall be given in writing and shall be deemed to have been duly served on the person concerned—
(a) if delivered to him personally; or
(b) if addressed to him and left or forwarded by post to him at his usual or last known place of abode or business or, in the case of a body corporate, at their registered or principal office; or
(c) where he has no address within the United Kingdom [or the Isle of Man], or his address is unknown, by publication of notice of the seizure in the London, Edinburgh or Belfast Gazette.”
A challenge to the seizure is made by way of a notice of claim, as set out in paragraph 3 of Schedule 3:
“Any person claiming that anything seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise.”
Where a notice of claim is not given within the month, the goods are “deemed to have been duly condemned as forfeited” (paragraph 5 of Schedule 3). Where a notice of claim is given, the commissioners (now the appellant) “shall take proceedings for the condemnation of that thing by the court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited” (paragraph 6 of Schedule 3). Paragraph 8 onwards of Schedule 3 deals with the condemnation proceedings themselves.
The authorities have focused principally on the meaning of the term “liable to forfeiture” in s.139 and paragraph 1(1) of Schedule 3. Thus, in Eastenders Cash and Carry PLC & Ors v The Commissioners of Her Majesty's Revenue and Customs [2012] EWCA Civ 15; [2012] 1 WLR 2067 (“ Eastenders”), the Court of Appeal found, by a majority, that whether goods “were liable to forfeiture” was to be assessed objectively and with the benefit of hindsight. As Elias LJ said at [92]:
“I accept that the effect of this analysis is that the Revenue will not know for sure until a determination by the court whether the seizure or detention was lawful or not. Legality is determined with hindsight. On the face of it, it is a surprising way to draft the legislation. But the potential difficulties are largely catered for by s.144.”
In the same case, Davis LJ put the same conclusion slightly differently at [108], saying that HMRC could invoke any ground for forfeiture “whether or not suspected at the time”. The majority view in Eastenders was subsequently approved by the Supreme Court ( [2015] UKSC 34, [2015] AC 1101) at [49].
In Commissioners for Her Majesty's Revenue and Customs v First Stop Wholesale Ltd [2013] EWCA Civ 183 (“ First Stop”), the status and effect of a notice of seizure was central to the reasoning of the Court of Appeal when resolving one of three related appeals. At [27], Beatson LJ concluded that there was no requirement that, when detaining goods, the reason for the detention had to be given. Furthermore, as to seizure, he said:
“28. Secondly, during the course of the hearing, Lewison LJ observed that it was not necessary for the notice required by paragraph 1(1) of Schedule 3 to be given at the time of the seizure. It might be given later. Mr Jones accepted that this was so. That, however, is consistent with Mr Swift's submission that the purpose of notice was not as a pre-condition to legality, but as part of the process by which a decision to seize may be challenged.
…
30. There is a more fundamental difficulty. Despite the general public law arguments which persuaded the judge and to which I have referred, requiring such reasons at the time the goods are detained cuts directly across and is inconsistent with the reasoning in Eastenders No 1 that goods could be liable to forfeiture on grounds which were not advanced or even known at the point of seizure or detention. I reject the submission that the statements by Elias and Davis LJJ at [93] and [108] were obiter. This court is bound by...
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