R (Hoverspeed Ltd) v Commissioners of Customs and Excise; R (on the application of Andrews) v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance,the Master of the Rolls |
| Judgment Date | 10 December 2002 |
| Neutral Citation | [2002] EWCA Civ 1804 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 December 2002 |
| Docket Number | Case No: C/2002/1743 |
[2002] EWCA Civ 1804
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE DIVISIONAL COURT
(BROOKE LJ & BELL J.)
Royal Courts of Justice
Strand,
London, WC2A 2LL
The Master of the Rolls
Lord Justice Mance and
Lord Justice Latham
Case No: C/2002/1743
Mr Gerald Barling QC, Mr David Anderson QC and Mr Andrew Bird (instructed by the Solicitor to Customs and Excise) for the Appellant
Mr Rabinder Singh QC & Miss Jessica Simor (instructed by Richards Butler) for the Respondent
Introduction
This is the judgment of the court in an appeal by the Commissioners of Customs and Excise ("the Commissioners") against relatively limited aspects of a judgment of the Divisional Court (Brooke LJ and Bell J) dated 31st July 2002: [2002] EWHC 1630 (Admin); reported at [2002] 3 WLR 1219. The respondents are Hoverspeed Limited ("Hoverspeed") and four individuals, Mr and Mrs Andrews, Mr Wilkinson and Miss Andrews (Mr Andrews' sister). The first three individuals had on 22 nd August 2001 used a car borrowed from the fourth together with Hoverspeed's cross-Channel services for a day-trip from Cheshire to France, during which they bought cigarettes, tobacco and alcohol. On their return to England at Dover, they were the subject of Customs' checks and Customs then seized the cigarettes, tobacco and alcohol, as well as the car.
In the course of its wide-ranging judgment given by Brooke LJ, the Divisional Court concluded that the Excise Duty (Personal Reliefs) Order 1992 ( SI 1992 No. 3155) (the "PRO") is incompatible with Council Directive 92/12/EEC of 25 February 1992 ("the 1992 Directive") and article 28 of the EC Treaty in two respects. These were, specifically, in so far as:
(i) it makes excise goods imported from another member state (where excise duty has been paid) additionally chargeable to UK excise duty without it being established that the goods are imported into the UK for commercial purposes; and
(ii) it places a persuasive burden of proof on the individual to prove that the goods are not held for commercial purposes, where such goods are held in excess of the minimum indicative levels laid down in the 1992 Directive and in the Schedule in the PRO.
There is no appeal in either regard.
The present appeal is against further decisions made quashing Customs' decisions on 22 nd August 2001 (a) to carry out checks on the three individuals (by stopping them and searching goods they had with them and the car they were in), (b) to seize the goods they had bought in France and (c) to seize the car. A respondents' notice has been served seeking if necessary to uphold the Divisional Court's decisions in these respects on additional grounds. One ground relates to the erroneous approach to dutiability said to have been applied by Customs as a consequence of the PRO's failure to comply with the 1992 Directive in the respects identified in paragraph 2. A second relates to a further error said to have been made by Customs with regard to the scope of the concept of "commercial purposes". Although it is, as the Commissioners submit, difficult on the facts of this case to see the relevance of the second point, even if there was such an error, both sides are agreed that it would assist if we consider it as a matter of principle.
The process of reasoning by which the Divisional Court quashed Customs' decision to check was that it was for the Commissioners to justify their conduct:
"192. In our judgment they have failed to do so. We do not know why they stopped the car which Mr Andrews was driving and required its three occupants to explain themselves. Mr Smith (Customs' "anti-smuggling manager" who explained Customs' practices and the position, so far as it could be recalled, in relation to the stopping of the individuals on 22 nd August 2001) merely states that they were stopped. He does not explain why they were stopped. In his fourth statement he explains Customs' general policy, which is to refrain from giving passengers the reasons why they are stopping them. He suggests, however, that the reasons "might include testing smuggling risk, or that the route you have travelled matches a known smuggling profile
193. Mr Anderson (leading counsel for the Commissioners) appeared to have some difficulty in explaining to us what this language meant, or how his clients could rely on these reasons for stopping individual passengers where there were no reasonable grounds for suspecting them as individuals. It seems to us that the mindset of those who were responsible for determining these policies has not embraced the world of an internal market where excise goods can move freely across internal frontiers subject only to checks made when there are reasonable grounds for suspecting that an individual traveller holds alcohol or tobacco for a commercial purpose, and not for his own use"
The Commissioners challenge this reasoning and conclusion.
As to the quashing of the decisions to seize, the Divisional Court said simply (para. 194):
"We would therefore hold that because the Commissioners have not proved that there were reasonable grounds for stopping this car and questioning its occupants, the goods in it should not have been seized. Nor should the car."
The Commissioners submit that, even if the Divisional Court was right to quash the decisions to check, it does not follow that the decisions to seize were invalid or fell to be quashed. This is, we were told, a point of general importance both in relation to other outstanding cases and for Hoverspeed, because of the impact on its customers and trade. It may have diminished practical significance for Mr and Mrs Andrews, since the Customs have, after further internal deliberation, paid to them a monetary sum in lieu of delivery up of their goods.
For completeness, we mention that the Divisional Court also quashed Customs' further decisions on 18 th October and 22 nd November 2001 to refuse to return her car to Miss Andrews. It said:
"Furthermore, and quite independently, we consider that the Commissioners' refusal to return the car to Miss Andrews, without even considering whether it might be restored to her on payment of an appropriately proportionate sum (given all the circumstances of the case), represented a response which was just as disproportionate as their similar response in the case of Mr Lindsay (see the principles set out in National and Provincial Building Society v. UK (1998) 25 EHRR 127 at [80]). To equate her position with the position of a car owner who incurs a parking fine when his car, borrowed by a third party, is found illegally parked is to rely on an utterly untenable analogy."
There is no appeal against that aspect of the Divisional Court's reasoning and conclusions. Miss Andrews' car has accordingly been returned to her.
The legal framework
We turn to the relevant legal framework. This is examined in depth in the Divisional Court's judgment at paragraphs 72 to 129, and elsewhere (particularly for present purposes 159–161 and 174–183). Only certain aspects are of present relevance. We start with a fundamental principle of the modern common market, identified in the EC Treaty in Part One, Principles, in both articles 2 and 14 (ex 7A). The latter article provides that the Community "shall adopt measures with the aim of progressively establishing the internal market over a period expiring on 31 December 1992" which
"shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty".
This enshrines an objective; it does not itself have direct effect in creating an internal market: see e.g. Echirolles Distribution SA v. Association de Dauphiné [2000] ECR I-8207, per Advocate General Alber, paragraphs 30–34 and also paragraph 40 in Wisjenbeek [1999] I-6207, analysed below (paragraph 33).
Part Two, Citizenship of the Union, article 18 (ex 8a) also provides for the free movement of persons:
"Every citizen of the Union [that is every person holding the nationality of a member state] shall have the right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in this Treaty and the measures adopted to give effect to it".
Two important early Council Directives, 64/221/EEC and 73/148/EEC, were identified by the Divisional Court as giving specific effect to these provisions. Both were considered in this court in Gough v Chief Constable of Derbyshire Constabulary [2002] EWCA Civ 351; QB 1213. Directive 73/148/EEC, which had as its forerunner an earlier Directive 64/220/EEC, abolishes restrictions on the movement and residence within the Community of "(a) nationals of member states who are established or wish to establish themselves in another member state in order to pursue activities as self-employed persons, or who wish to provide services in that state; (b) nationals of members states wishing to go to another member state as recipients of services". It grants such persons the right to leave member states, exercisable "simply on production of a valid identity card or passport". Article 46 of the EC Treaty contemplates specifically that member states may nonetheless introduce provisions for special treatment for foreign nationals on grounds of public policy, public security or public health. Directive 64/221/EEC provides in this context that "Measures taken on grounds of public policy or of public security shall be based exclusively on...
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