HM Revenue and Customs v Jones and another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Moore-Bick,Lord Justice Jackson |
| Judgment Date | 18 July 2011 |
| Neutral Citation | [2011] EWCA Civ 824 |
| Docket Number | Case No: C3/2010/1383 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 July 2011 |
[2011] EWCA Civ 824
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TIER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
MR MICHAEL TILDESLEY OBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Mummery
Lord Justice Moore-Bick
and
Lord Justice Jackson
Case No: C3/2010/1383
FTC/15/2009
MR NICHOLAS PAINES QC and MR MARIO ANGIOLINI (instructed by the Solicitor's Office of HMRC) for the Appellants
The Respondents did not appear and were not represented
Hearing date: 27 th January 2011
Introduction
When Her Majesty's Commissioners of Revenue and Customs (HMRC) seize goods on the ground that they have been illegally imported two procedures are available under the Customs and Excise Management Act 1979 (the 1979 Act) for resolving legal disputes about whether the owner can get his goods back:—
(a) Original proceedings by HMRC, to whom notice of claim has been given by the owner of the goods. Those proceedings are brought in a magistrates' court or in the High Court for the condemnation and forfeiture of the goods.
(b) Appellate proceedings in the First–tier Tribunal (the FTT), formerly the VAT and Duties Tribunal, by the owner of the imported goods. An appeal to the FTT lies against a review decision of HMRC refusing the owner's application to restore the seized goods.
In April 2008 HMRC seized substantial quantities of tobacco and liquor together with the car used by Mr & Mrs Jones, the respondents, for importing those goods. The respondents gave notice of claim to HMRC in respect of the goods. They were seeking to challenge the legality of the seizure on the ground that the goods were for their own use. The respondents' solicitors later withdrew that notice. No condemnation proceedings were brought. HMRC then made a review decision refusing the respondents' application for restoration of their car and the goods. The respondents appealed to the FTT against the refusal. They succeeded on the ground that the importation of the goods had not been illegal, the FTT finding as a fact that the respondents were importing the goods for their own use. HMRC appealed to the Upper Tier Tribunal (UTT) where they also failed.
HMRC now appeal to this court. Jacob LJ granted permission on 20 August 2010 for a second appeal. He was satisfied that the appeal (a) raises an important point of principle and practice and (b) had not become academic in consequence of HMRC's subsequent restoration of the car to the respondents and the destruction of the imported goods. The legal position is that HMRC remain subject to the order of the FTT, which was affirmed on appeal, requiring them to carry out a new review of their original decision not to restore the seized excise goods and to take into account the FTT's findings of fact, in particular the FTT's finding that, contrary to the contention of HMRC, the respondents were not importing the goods for commercial use.
On the wider front HMRC press this court with their concern that, if left unappealed, the decisions of the FTT and the UTT, which they say are wrong in law, may stand as flawed precedents in the tribunals for the principles of procedure and practice in this active vital area of HMRC's operations.
The issue on the appeal
The question for this court is: did the FTT err in law in allowing the respondents' appeal from the HMRC review decision on the basis of its finding that the respondents were importing the goods for their own use? At the first level of appeal the UTT found that there was no error of law in the FTT decision on that point or at all.
HMRC's case is that the FTT made a fundamental legal error on the limits of its appellate jurisdiction. They rely principally on deeming provisions in the 1979 Act (schedule 3 paragraph 5) as taking effect in the absence of a subsisting notice of claim by the respondents in respect of the goods. HMRC say that, on the proper interpretation of the statutory provisions and their application to the facts of this case, the goods and the vehicle in question were, following the respondents' withdrawal of their notice of claim, deemed by statute to have been duly condemned and forfeited as illegal imports for commercial use. In consequence the FTT had no power to treat them as legal imports on the basis of its factual finding of importation for own use. The FTT's finding flatly contradicted what the 1979 Act deemed to be illegal importation for commercial use following the withdrawal of the respondents' notice of claim.
The interrelationship of the condemnation procedure and the restoration procedure has been judicially considered and criticised in recent years. It was examined by this court in obiter observations in two cases: Gora v. CCE [2003] EWCA Civ 525; [2004] QB 93 ( Gora) at paragraphs 54–58 per Pill LJ, and Gascoyne v CCE [2004] EWCA Civ 1162; [2005] Ch 215 ( Gascoyne) at paragraphs 46–56 per Buxton LJ. Unsuccessful efforts were made by HMRC after the hearing to track down the transcript of an earlier judgment in the Gascoyne proceedings on 3 February 2004 when the appeal in that case was adjourned for further consideration of the correctness of the obiter dicta in Gora on the forfeiture of imported goods and for assistance from an advocate to the court.
Since Gascoyne the tribunals and the courts have followed an "abuse of process" approach indicated by Buxton LJ in connection with the exercise of the appellate jurisdiction of the tribunal. That approach takes account of Article 6 and Article 1 of the First Protocol of the European Convention on Human Rights (the Convention), which were not specifically addressed in the Gora obiter dicta. That approach also involves the potential application of the doctrine of abuse of process. The main debate on this appeal has been about the extent, if any, to which the observations in Gascoyne on the Convention and the abuse of process doctrine affected the FTT's jurisdiction in this case to find facts about the legality of the seizure, such as whether the respondents were importing the goods for commercial use or own use.
Gora and Gascoyne
At this point an overview of Gora and Gascoyne will show the practical importance of this appeal to HMRC. Those cases and other authorities will receive more detailed treatment when HMRC's legal submissions are considered in more detail.
According to Gora legality of seizure issues fall exclusively within the jurisdiction of the ordinary courts in condemnation proceedings. On an appeal against HMRC's refusal to restore the goods to the owner, the FTT has no power to reopen either the factual basis on which the goods were condemned as forfeit in the ordinary courts or the legal consequences that are deemed by the 1979 Act to follow when the owner of the goods has not taken the opportunity to challenge the legality of seizure in the ordinary courts. Where the deeming provisions apply the goods are treated as forfeited. Following the failure of the owner to give the requisite notice of claim, or on the owner's withdrawal of a notice that has been given, the deeming provisions apply and the goods are treated as duly condemned as illegal imports. HMRC submit that the tribunal's inability to reopen that issue is not a breach of the Convention, as the owner of the goods had the option of recourse to the ordinary courts to challenge the legality of seizure in condemnation proceedings and chose not to make that challenge.
In Gascoyne Buxton LJ drew attention to the impact of the Convention on the tribunal's jurisdiction. In particular, he said that the potential impact of Article 1 of the First Protocol protecting rights of property is that the deeming provisions of the 1979 Act may not adequately enable the owner to assert his Convention rights. The deeming consequences may not therefore be paramount in every case. They may not necessarily prevent any further consideration by the FTT of the issues of fact relating to the purpose of the importation and the legality of the seizure. The FTT may allow those issues to be re-opened on hearing a restoration appeal, but must also bear in mind general considerations of, or similar to, abuse of process. That doctrine is generally applicable when one party seeks to re-open an issue that has been concluded between the parties in the same or other legal proceedings.
HMRC submit that this court should revisit the statutory provisions and the obiter observations in Gora and Gascoyne and that the FTT and the UTT misinterpreted and misapplied the relevant law. It was necessary to correct a wrong turn that has occurred in the handling of restoration appeals. As the discharge of their statutory functions in this area is affected, HMRC would welcome clarity from this court about the principles governing the allocation of issues to the two jurisdictions and procedures under the 1979 Act.
Legal representation
A possible logistical obstacle in the way of HMRC's ambitions for this appeal is that the respondents have decided not to take any part in it. They have not agreed to the appeal being allowed. That course would, in any case, be for the court to decide, not for an agreement between the parties.
In the initial stages of their dealings with HMRC the respondents successively instructed two firms of solicitors to correspond about the seizure of their goods and the car. In the tribunals below they appeared in person. In this court they have made no written or oral submissions. They have neither appeared nor...
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