R First Stop Wholesale Ltd v Commissioners for HM Revenue & Customs
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE SINGH |
| Judgment Date | 16 July 2012 |
| Neutral Citation | [2012] EWHC 2191 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 16 July 2012 |
| Docket Number | CO/7223/2011 |
[2012] EWHC 2191 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
The Strand
London
WC2A 2LL
Mr Justice Singh
CO/7223/2011
Mr Geraint Jones QC and Mr Marc Glover (instructed by Rainer Hughes) appeared on behalf of the Claimant
Mr James Puzey (instructed by Her Majesty's Revenue & Customs, Manchester) appeared on behalf of the Defendant
Monday 16 July 2012
In this case I gave judgment on the substantive claim for judicial review on 27 March 2012 and adjourned the question of the claimant's application for costs pending the decision of the Court of Appeal in Eastenders Cash & Carry Plc and Another v Commissioners of Her Majesty's Revenue & Customs [2012] EWCA Civ 689. That judgment was handed down on 22 May 2012.
The provision which causes a potential barrier to arise in the way of the application for costs is section 144(2) of the Customs and Excise Management Act 1979, which provides:
"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 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….
….
(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 defendants shall not be liable to any punishment."
The main judgment in Eastenders was given by Mummery LJ. Although he had dissented on the underlying substantive issue in the case in an earlier judgment given in January, it is clear that on the costs' issue the court was of one view: see the concurring judgment of Elias LJ (at paragraph 39), and the agreement with both judgments expressed by Davis LJ (at paragraph 47).
The principal issue before the Court of Appeal concerned the compatibility of section 144(2) with Article 1 of the First Protocol to the European Convention on Human Rights, and Articles 6 and 14 of the same Convention, which are set out in Schedule 1 to the Human Rights Act 1998. That was dealt with at length in the main judgment of Mummery LJ (paragraphs 12 to 24). The point was decided against the claimants in that case. Elias LJ also dealt with the point (at paragraphs 40 to 45). Under the heading "Belief in lawful reason for detention" Mummery LJ dealt with a separate argument (paragraphs 25 to 27). The defendant before me places particular reliance upon paragraph 27, which reads:
"I can see no basis in section 144(2) for the distinction on which claimants rely in their additional submission. The only condition stipulated by section 144(2) is the objective one that there were reasonable grounds for detaining the goods. That stipulation assumes that the detention was unlawful, as, if the detention was lawful, there would be no occasion for HMRC to invoke section 144(2). Nothing is said in the section about whether the reason relied on at the time of detention is a potentially lawful reason or a reason which is unlawful per se. In any event, it is difficult to see what difference in substance there is between the existence or non-existence of reasonable grounds for detention of the goods and the different kinds of reason for the detention of the goods. The reasonable grounds in this case were the reason for detention."
The claimant before me places particular emphasis on the last sentence in that passage. It is submitted that the facts of Eastenders were materially different from the facts of the present case. In Eastenders it was conceded that the expressed grounds for detaining the goods were ones where there were reasonable grounds. In the present case it is submitted that the express ground that was given I have held to be unlawful and that an unlawful ground cannot be a reasonable ground. It is also submitted that there has been no concession in the present case that there were reasonable grounds. They were not, as is said at the end of paragraph 27 in Eastenders, the same as the "reason for detention". It would appear therefore that that passage in the reasoning of Mummery LJ was not strictly necessary for the outcome of the decision on costs in Eastenders. It would seem that the Court of Appeal has not had to grapple in such stark terms, as I have to do in the present case, with the potential injustice to which, it is submitted, the terms of section 144(2) would lead if applied to a case like the present.
On behalf of the claimant, Mr Jones QC submits that in the present case, unlike Eastenders, the court does indeed have to grapple with whether there may be a distinction between a potentially lawful reason under the Customs and Excise Acts and a reason which is unlawful per se. He submits that there are potentially three categories of case. The first category is where the detention is lawful. It is common ground that section 144(2) is not necessary in such a case. As Mummery LJ said in paragraph 27 of Eastenders, the necessary premise for the need to invoke section 144(2) in the first place is that a detention is not lawful, otherwise there would be no need to invoke it. However, Mr Jones submits that, as well as the category of unlawful grounds, there is the middle category of potentially lawful grounds. This is where there may be, on the face of it, and in the terms which have been expressed by the detaining authority, a reason which is potentially lawful within the meaning of the relevant legislation. If, however, it turns out not to be a lawful reason on the facts of a given case, then the detention would be in fact unlawful. Nevertheless, in such a case, submits Mr Jones, section 144(2) will have room to operate because if there are, objectively considered, reasonable grounds for detaining the goods in question, then Parliament has laid down a barrier for the recovery of damages or costs.
Mr Jones did not dispute two things which at one point might have been thought to be in issue. He does not dispute them in the light of the decision of the Court of Appeal in Eastenders. First, it is common ground before me that section 144(2) is capable of applying to all civil proceedings, including proceedings for judicial review, such as the present. Secondly, it is common ground before me that the word "or" in section 144(2) is to be read disjunctively and not conjunctively. In other words, it is accepted that section 144(2) precludes a claim for costs not only where there is also a claim for damages, but where there is only an application for costs in such a case as the present. However, Mr Jones does not accept that, as a matter of correct interpretation, the provision is capable of applying to a case like the present. He emphasises that the words of section 144(2) require reasonable grounds for detention to arise "under the Customs and Excise Acts". He submits, therefore, that the reason for detaining goods in a particular case must have at least the potential of being a proper and lawful reason under those Acts. As an illustration he postulates an extreme, but hypothetical, example in order to test how far the principle extends. He poses a fanciful scenario of the Customs official who says that he will detain the goods because he does not like the appearance of the person concerned perhaps on racial grounds or for some other improper reason. He says that the court could not properly refuse a successful claimant in judicial review proceedings, an application to recover their costs having succeeded before the court. The reason given, he submits, would plainly be outside the contemplation of the Customs and Excise Acts. It could not be considered to be a reasonable one, let alone a lawful one. He submits that it would not matter in such a scenario if there was evidence which, objectively considered, would have justified on reasonable grounds the detention of the goods in question. He submits that there is no need to give such a wide interpretation to the relevant provision, interfering as it does with the ordinary principle that, in order to do justice, a successful party to litigation should normally be awarded their costs.
Mr Jones also prayed in aid the decision of Sales J in Checkprice (UK) Limited (in administration) v Commissioners for Her Majesty's Customs and Excise [2010] EWHC 682 (Admin). That case related to a claim for damages, not an application for costs. However, Mr Jones submits, rightly in my view, that it is of importance because the same provision, section 144(2) governs both claims for damages and applications for costs. He drew my attention to paragraphs 42, 43 and 52. In that case the point in issue before the court was not the same as the point before me. It concerned a reasonable time provision. Sales J had already held that the reasonable time had expired. In considering a claim for conversion of the goods in question, Sales J rejected the argument advanced by HMRC in that case by way of analogy with the law on bailment. It had been submitted on behalf of HMRC that in a bailment context the bailee will not be liable for conversion for detaining goods if the reason upon which he relies is, on analysis, an unlawful one, provided he could lawfully have detained the goods for some other reason. Sales J said this:
"43. I do not accept this argument. In the bailment example the bailee...
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