R (Eastenders Cash & Carry Plc and another) v Revenue and Customs Comrs (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Elias,Lord Justice Davis |
| Judgment Date | 22 May 2012 |
| Neutral Citation | [2012] EWCA Civ 689 |
| Docket Number | Case No: C4/2010/2740 CO/1142/2010 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 May 2012 |
[2012] EWCA Civ 689
Lord Justice Mummery
Lord Justice Elias
and
Lord Justice Davis
Case No: C4/2010/2740
CO/15215/2009
CO/1142/2010
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
THE HON MR JUSTICE SALES
Royal Courts of Justice
Strand, London, WC2A 2LL
MR GERAINT JONES QC and MR MARC GLOVER (instructed by Rainer Hughes Solicitors) for the Appellants
MR JONATHAN SWIFT QC and MR NEIL SHELDON (instructed by HMRC Solicitors) for the Respondents
Hearing date: 15 th March 2012
Post-judgment issues
It was apparent, even before the court formally handed down judgment on 20 January 2012 and allowed the Claimants' appeal, that there was an issue about the court's power to make the normal costs order against the unsuccessful party. When the Claimants, as successful appellants, submitted that the court should order HMRC to pay their costs of the appeal and of the case heard by Sales J below, HMRC pointed to s.144 of the Customs & Excise Management Act 1979 (the 1979 Act), which provides:—
"(2) Where any proceedings, whether civil or criminal, are brought against the Commissioners, a law officer of the Crown or a person authorised by or under the Customs and Excise Act 1979 to seize or detain any thing liable to forfeiture under the customs and excise Acts on account of the seizure or detention of any thing, and judgment is given for the plaintiff or prosecutor, then if either—
(a) a certificate relating to the seizure has been granted under subsection (1) above; or
(b) the court is satisfied that there were reasonable grounds for seizing or detaining that thing under the customs and excise Acts,
the plaintiff or prosecutor shall not be entitled to recover any damages or costs and the defendant shall not be liable to any punishment."
The problem facing the Claimants is that, as Sales J stated in his judgment, there was no serious dispute that there were reasonable grounds for HMRC to believe that there was a real possibility that duty might not have been paid on the goods in question, having regard to the discrepancies in the available documentation in relation to those goods: see [43] of the judgment. HMRC did not detain the goods simply because they wished to investigate whether duty had been paid. That there were reasonable grounds for temporary detention of the goods in question was not challenged by the Claimants before Sales J or on the appeal. The evidence of reasonable grounds on which HMRC based their decision to detain the goods was not disputed. The issue in the litigation was the criterion for detention pursuant to s.139 of the 1979 Act, not the absence of reasonable grounds.
The "costs shield" question was not argued below, because HMRC won. They obtained an order for their costs against the Claimants, who now submit that, because they have won the appeal, they should be granted an order for costs against HMRC. Costs normally follow the event. The "goose and gander" principle would usually apply, so that if HMRC got a costs order when they won, the Claimants could reasonably expect to get a costs order when they won.
Counsel for the Claimants submitted a draft order providing that HMRC should be ordered to pay the Claimants' costs here and below to be subject to a detailed assessment, if not agreed. The draft proposed an interim payment of £50,000. The Claimants initially sought an order that their claim for damages should be transferred to the Queen's Bench Division, but they no longer pursue the damages claim.
Counsel for HMRC submitted a draft order simply allowing the appeal with a declaration that the detention of the Claimants' goods was unlawful. There was no mention of costs. Each side would pay their own. HMRC applied for permission to appeal to the Supreme Court, which was opposed.
The court directed that an inter partes hearing was necessary to determine the costs issue and whether permission to appeal should be granted. Skeleton arguments were submitted. A hearing took place on 15 March 2012. That was not the end of the matter, as the court received "Additional Submissions on Disposal" in writing from the Claimants dated 28 March 2012 followed by further submissions in writing from HMRC on 10 April 2012, just before the Easter Vacation.
A. COSTS
HMRC submissions
Mr Jonathan Swift QC accepts on behalf of HMRC that costs would normally follow the event in accordance with CPR Part 44, but for the statutory bar on awarding damages or costs in s.144(2). The most that the Claimants can be granted by way of relief is a declaration that, notwithstanding that there were reasonable grounds for detaining the Claimants' goods, the detention of them was unlawful.
The meaning and effect of s.144(2) were, he said, clear: the Court had no power to make any order for costs against HMRC in the circumstances, as the Claimants' proceedings were on account of the detention of goods on reasonable grounds.
Claimants' submissions
Mr Geraint Jones QC disagreed for the following reasons.
Civil proceedings
The first point taken in the Claimants' written submissions was that s.144(2)(b) does not apply to a claim for judicial review, because it is not a civil claim. The expression "civil proceedings", as used in that section, means "ordinary" civil proceedings, such as proceedings for the return of the goods or for damages for conversion and does not extend to proceedings of a supervisory character seeking judicial review of an abuse of public power by HMRC.
I cannot accept that submission. The reference in general terms to civil or criminal proceedings indicates that the section has a broad scope. No sensible suggestion has been advanced as to why a claim for judicial review in the Administrative Court should be treated differently from tort proceedings when considering costs. The issue of the lawfulness of the detention would be the central issue in the proceedings whether they were criminal, a damages claim in tort, or a claim for judicial review.
Article 6 of the ECHR
The next point was that s. 144 (2) should be read down and given effect so as to be compatible with Article 6 of the ECHR. Articles 14 and Article 1 of the First Protocol were also mentioned in the written submissions, as was a declaration of incompatibility under s. 4 of the Human Rights Act 1998. The argument focussed on Article 6.
As stated recently in Thomas v. Bridgend County BC [2011] EWCA Civ 862 at [ 63] s. 3 of the 1998 Act requires the court to read legislation in a way that is compatible with convention rights "so far as it is possible to do so." It is not, however, a judicial power to amend legislation in a way that would depart substantially from a fundamental feature of the legislative scheme.
The submission on Article 6 starts from the point that, for there to be a fair trial, there should be a level playing field between the protagonists. Costs should not be awarded on a discriminatory basis, as would be the case if a party is given special protection from an order for costs, even if it has acted unlawfully. Section 144 (2) imposed a one-sided blanket bar on the award of costs against HMRC, irrespective of the merits. In this case there was manifestly unfair inequality of treatment on costs: HMRC were granted their costs when they won in front of Sales J, but were seeking to deny the Claimants their costs when they won their appeal. Such inequality of treatment impacts on the court as an effective tribunal for the determination of the Claimants' civil rights and affects their right to a fair hearing.
The decision of the Strasbourg Court in Stankiewicz v. Poland [2006] ECHR 360 was cited for the proposition that a legislative bar to recovering costs of civil proceedings can be a breach of Article 6 and Article 1 to the First Protocol. It was held in that case that the Polish Court's refusal to order costs against a public prosecutor, who had lost civil proceedings against the applicants, violated Article 6.
I am unable to agree with the submissions based on Article 6.
First, the Claimants have not been denied access to a court contrary to Article 6.
Secondly, Article 6 does not require Member States to have costs shifting rules, so that a successful litigant should be able to recover costs from the unsuccessful party.
Thirdly, the ruling of the Strasbourg Court in Stankiewicz is of marginal relevance and limited assistance. It is correct that the Court found that there had been a violation of Article 6.1 in relation a decision of the court of the member state (Poland) not to order a public prosecutor to reimburse the costs of civil proceedings to the successful party. However, the decision was expressly based on particular considerations and circumstances of that case that are absent from this case.
The complaint against the Republic of Poland arose from an appeal court decision refusing to re-imburse the costs that the applicants had incurred in defending a civil claim for "Unjustified Enrichment at the Expense of the State Treasury." The proceedings had been lodged against them by the District Prosecutor. The claim was made in connection with the purchase of real property by the applicants from the District Office. It was alleged that the purchase was "within the framework of a compensatory scheme for persons who had abandoned their property" in territories that had belonged to Poland before the Second World War. The prosecuting authorities claimed that the...
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