HM Revenue and Customs v Berriman and another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE GAGE |
| Judgment Date | 17 May 2007 |
| Neutral Citation | [2007] EWHC 1183 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 17 May 2007 |
| Docket Number | Case No: CO/7155/2006 |
[2007] EWHC 1183 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Lord Justice Gage
mrs Justice Rafferty
Case No: CO/7155/2006
Thomas De La Mare and James Puzey (instructed by Revenue & Customs Solicitors Office (Manchester) ) for the Applicant
Jeremy White (instructed by Hassan Khan & Co) for the Respondent
Hearing dates: 26 & 27 April 2007
Introduction
This is the judgment of the court to which both members of the court have contributed.
On 7 April 2006 at the Teesside Crown Court, the court, His Honour Judge Fox QC (the Recorder of Middlesborough) and lay justices, allowed an appeal by Mr Philip Berriman (Mr Berriman) against an order made by the Hartlepool Magistrates Court condemning goods belonging to him. There are two sets of proceedings before this court which arise out of that decision. They are:
1) An appeal by Her Majesty's Commissioners For Revenue And Customs (the Commissioners) against that decision by way of case stated;
2) An application by the Commissioners for judicial review of the same decision.
The facts are common to both sets of proceedings. The purpose of the Judicial Review proceedings, which are brought with the leave of the single judge, is to give either side a right of appeal to the Court of Appeal, if so advised, it being common ground that the proceedings before the Crown Court are civil proceedings from which there can be no appeal from the decision of the Divisional Court on an appeal by way of case stated (see s.28A (4) of the Supreme Court Act 1981).
The facts found by the Crown Court
In late June/early July 2004 Philip Berriman, his business partner, Trevor Lyons, and others paid £64,000 for excise goods, principally cigarettes, spirits and tobacco, in Heligoland. These were "Third Country" not European Community goods. They were placed aboard a vessel, Rich Harvest, which sailed to the North Sea off Hartlepool just outside United Kingdom territorial waters. Leaflets distributed in and around Hartlepool advertised for sale goods said to have been purchased in a German supermarket with duty paid.
The venture came to the attention of the Commissioners who were concerned that buyers would land the excise goods in the United Kingdom without declaring them and paying duty thereon. The Commissioners warned Mr Berriman by letter dated 15 July 2004 that in future if his vessel was forced into port he would need to make arrangements for the handling of the vessel's goods in accordance with the appropriate Regulations. On 9 July 2004 bad weather forced Rich Harvest to put into Hartlepool Marina, where the goods were detained by the Commissioners but, on condition of re-export, returned to Mr Berriman on 14 August 2004. They were placed aboard another vessel, Cornish Maiden, which sailed to a point outside United Kingdom territorial waters, returning to Hartlepool on 18 August 2004 (the Court found in error that she returned on 17 August.) due to a storm at sea and for repairs which could be completed in hours.
On 17 August 2004, F. R. Simmons, a customs officer, wrote to Mr Berriman and Mr Lyons reiterating the need to comply with the 1991 Regulations and requiring the following:
"You must present goods without delay to Customs and within 24 hours of their presentation submit a summary declaration, Form C94 (copy enclosed to Mr Berriman). If the goods are removed to a customs, not excise, warehouse, they will be required to be declared for entry to that warehouse with a full customs declaration … pursuant to articles 59 to 75 of the Customs Code … Alternatively, the goods must be presented and then may be held in temporary storage pursuant to articles 50 to 53 of the Customs Code, in which case they can only be stored in places approved by Customs (pursuant to Article 51 of the Customs Code)".
The letter was delivered to Mr Lyons and explained to him and to Mr Berriman by Mr Thompson, another customs officer, who made plain that the goods must be placed in a warehouse within 24 hours of the vessel's arrival. This 24 hour deadline was repeated by a letter dated 19 August. The Commissioners e-mailed to Mr Berriman the prices of removing the goods to the nearest warehouse, which were approximately £300. A request to be allowed to store the goods in a container on the dock was not acceptable nor was sealing the goods on board the Cornish Maiden.
Mr Berriman e-mailed details of a secure container to Mr Thompson on 18 August 2004. This was not acceptable, being insufficiently detailed as to, for example, where the container was to be sited and when it could be acquired. Storage aboard also represented a substantial risk to the revenue, the Commissioners estimating a duty and VAT value of £250,000, Mr Berriman estimating it as £165,000. It was accepted by the Crown Court to be a substantial figure requiring serious consideration and attention by the Commissioners. Mr Thompson's opinion was that there was an appreciable prospect of theft of goods from the vessel and that she was not secure. On 24 August 2004 The Commissioners seized the goods and sent to Mr Berriman a notice of seizure.
Mr Berriman complained on 27 August 2004 about (a) the illegality, as he alleged, in the seizure of his goods; and (b) the manner in which his goods were handled. By letter dated 31 August 2004 the Commissioners offered to restore the goods seized on terms, the principal terms of which were that Mr Berriman should complete the requisite documentation and pay to the Commissioners the costs of transport and storage (the restoration decision) together with a further sum of £250. The letter explained that if Mr Berriman disagreed with the proposed terms he could seek a review. Mr Berriman having disputed the lawfulness of the seizure, the Commissioners initiated condemnation proceedings in the Hartlepool Magistrates' Court as required by the Customs & Excise Management Act 1979. The Magistrates' Court on 24 January 2005 condemned Mr Berriman's goods to forfeiture.
The Crown Court found no grounds for concluding that the offer for sale outside territorial waters was unlawful, but that there was a realistic prospect of revenue being lost when the goods were brought ashore by purchasers presenting to the Commissioners a task of some size for them to control.
The Court found that Mr Thompson did not entertain the proposed container idea after the evening of the 17th August 2004; that Mr Berriman had offered him one key to the container, intending to retain for himself a second; and that the 24 hour limit for storage of the goods was from the Commissioners' point of view inflexible. The vessel and the Marina were found to be secure from the risk of any person gaining entry and from theft. The Marina's security was the subject of hearsay evidence given by both parties although that evidence was not rehearsed in the judgment. Mr Berriman and Mr Lyons were found to be men of integrity and honesty and there was no possibility of them acting improperly, dishonestly or deliberately with the intention of evading revenue. The judgment reads:
"We take the view that the Cornish Maiden would have provided security of the highest order for such a period of time as Mr Berriman may have required to see whether there existed any alternative route of commercial viability out of his predicament or not."
In addition the Crown Court also found that the motivation of the Commissioners "…was in substantial part of thinking to nip the wider potential problem in the bud …." and a relevant matter for the Court. Upon Mr Berriman refusing on the 19 August 2004 to place his goods in approved temporary storage or a warehouse, they were seized as liable to forfeiture. On 19 August 2004 Mr Lyons agreed to place his goods in temporary storage.
The Crown Court's conclusions
The Commissioners' offer by letter of 31 August 2004 to restore the seized goods was relevant to the proportionality of its actions in general, but not as relevant as the act of seizure itself. Article 51(1) of the Code meant that "approval" required a reasonable opportunity for any sensible proposal by Mr Berriman for storage to be considered before it was rejected. This was relevant to the proportionality of the seizure decision. The Commissioners gave no consideration to the security of the goods on board the vessel or in a container. The Court did not know whether the latter proposal provided sufficient security, but neither did the Commissioners know nor pause to consider the same. The necessity for Hartlepool Marina to be the approved wharf for storage was not a valid reason for declining the container proposal, since it had been approved temporarily for unloading when the goods were seized and taken to the Queen's warehouse. The situation that prevailed immediately before the seizure was one which "cried out for sitting around a table and talking it through and being sensible. That might have taken some days, it might have taken somewhat longer" but the 24 hour limit was an imposition by the Commissioners who were under a duty to act proportionately and their approach was "a (sic) unilateral closed mind" not prepared to entertain storage upon the vessel. Their motivation in substantial part was to nip a wider problem in the bud. It was relevant that the Cornish Maiden entered port to seek safe haven. The approach of the Commissioners was understandable, but led them to act without proper...
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