Gora & Ors v Commissioners of Customs And Excise & Ors [2003] EWCA Civ 525

“(1) Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty’s armed forces or coastguard. (2) Where any thing is seized or detained as liable to forfeiture under the customs and excise Acts by a person other than an officer, that person shall, subject to subsection (3) below either— (a) deliver that thing to the nearest convenient office of customs and excise; or (b) if such delivery is not practicable, give to the Commissioners at the nearest convenient office of customs and excise notice in writing of the seizure or detention with full particulars of the thing seized or detained. (3) Where the person seizing or detaining any thing as liable to forfeiture under the customs and excise Acts is a constable and that thing is or may be required for use in connection with any proceedings to be brought otherwise than under those Acts it may, subject to subsection (4) below, be retained in the custody of the police until either those proceedings are completed or it is decided that no such proceedings shall be brought. (4) The following provisions apply in relation to things retained in the custody of the police by virtue of subsection (3) above, that is to say— (a) notice in writing of the seizure or detention and of the intention to retain the thing in question in the custody of the police, together with full particulars as to that thing, shall be given to the Commissioners at the nearest convenient office of customs and excise; (b) any officer shall be permitted to examine that thing and take account thereof at any time while it remains in the custody of the police; (c) nothing in the Police (Property) Act 1897 shall apply in relation to that thing. (5) Subject to subsections (3) and (4) above and to Schedule 3 to this Act, any thing seized or detained under the customs and excise Acts shall, pending the determination as to its forfeiture or disposal, be dealt with, and, if condemned or deemed to have been condemned or forfeited, shall be disposed of in such manner as the Commissioners may direct. (6) Schedule 3 to this Act shall have effect for the purpose of forfeitures, and of proceedings for the condemnation of any thing as being forfeited, under the customs and excise Acts. (7) If any person, not being an officer, by whom any thing is seized or detained or who has custody thereof after its seizure or detention, fails to comply with any requirement of this section or with any direction of the Commissioners given thereunder, he shall be liable on summary conviction to a penalty of [level 2 on the standard scale]. (8) Subsections (2) to (7) above shall apply in relation to any dutiable goods seized or detained by any person other than an officer notwithstanding that they were not so seized as liable to forfeiture under the customs and excise Acts.”

“The Commissioners may, as they see fit- (a) … (b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those [customs and excise] Acts; … (c) after judgment, mitigate or remit any pecuniary penalty imposed under those Acts.”

“In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say— (a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct; (b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and (c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.” (a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct; (b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and (c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.”

“First, the domestic classification of the proceedings (effectively determinative if the classification is criminal but no more than a starting point if, as here, it is civil); second, the essential nature of the ‘offence’ (I would prefer the more neutral term ‘liability’, which can be either criminal or civil); third, the nature and degree of severity of the potential penalty.”

“Where the revenue and legitimate trade are threatened by failure to pay excise duty, it is the Commissioners’ policy to refuse restoration. The objectives of such a policy of non-restoration of seized goods are: • maximising the deterrent value of seizure • ensuring that excise goods not normally available in the UK from legitimate outlets are not made commercially available in the UK • demonstrate that even ‘innocent’ failures to pay excise duty cannot be condoned (because of the potential severe effect on legitimate trade) and that it is every citizen’s duty to comply with the law • demonstrate that smuggling is a very serious matter and must not be allowed to become socially acceptable • deterring the development of a ‘smuggling culture’ • protection of both UK revenues and legitimate trade.” • maximising the deterrent value of seizure • ensuring that excise goods not normally available in the UK from legitimate outlets are not made commercially available in the UK • demonstrate that even ‘innocent’ failures to pay excise duty cannot be condoned (because of the potential severe effect on legitimate trade) and that it is every citizen’s duty to comply with the law • demonstrate that smuggling is a very serious matter and must not be allowed to become socially acceptable • deterring the development of a ‘smuggling culture’ • protection of both UK revenues and legitimate trade.”

“33. Drawing the threads together so far, it is clear from the extracts set out above that the Commissioners have taken a policy decision not to restore properly seized goods. There are no exceptions to this. Even innocent failures to pay excise duty will not qualify as exceptions to the policy. The Commissioners regard themselves as exercising that power to deter illegal activities and to stamp out smuggling.”

“When a vehicle is seized and the owner is not present at the time of interception, Customs will interview the owners in order to establish whether they are culpable, negligent or innocent. Where Customs believe that the owner is party to the offence, the vehicle will not be restored. Where owners are deemed as negligent they will get the vehicle back only after payment of a sum equivalent to 50% of the revenue evaded. The policy was originally to charge 25% of the revenue evaded on the first occasion. If the vehicle belonging to a third party is used to smuggle and transport illicit alcohol and tobacco for the second and subsequent time it may not be restored.”

“The fact that measures consequential upon an act for which third parties were prosecuted affected in an adverse manner the property rights of AGOSI cannot of itself lead to the conclusion that, during the course of the procedures complained of, any ‘criminal charge’ for the purposes of Article 6, could be considered as having been brought against the applicant company.”

“… the general character of the legal provision infringed by the applicant together with the deterrent and punitive purpose of the penalty imposed on him, suffice to show that the offence in question was, in terms of Article 6 of the Convention, criminal in nature.”

“41. As regards the nature of the offence, it is noted that tax legislation lays down certain requirements, to which it attached penalties in the event of non-compliance. The penalties, which in the present case take the form of fines, are not intended as pecuniary compensation for damages but are essentially punitive and deterrent in nature. 42. As regards the classification of the proceedings under national law, the Court attaches weight to the findings of the highest court in the land, the Federal Court, in its judgment in the present case, that the fine in question was ‘penal’ in character and depended on the ‘guilt’ of the offending taxpayer. 43. Having regard to the above features, the Court considers that Article 6 is applicable under its criminal head.”

“The Court notes that criminal charges have never been brought against the applicant, nor against any other party. It is the applicant’s contention that the forfeiture of his money in reality represented a severe criminal sanction, handed down in the absence of procedural guarantees afforded to him under Article 6 of the Convention, in particular his right to be presumed innocent. The Court does not accept that view. In its opinion, the forfeiture was a preventive measure and cannot be compared to a criminal sanction, since it was designed to take out of circulation money which was presumed to be bound up with the international trade in illicit drugs. It follows that the proceedings which led to the making of the order did not involve the determination of a criminal charge.”

“22. I turn to the question of whether forfeiture proceedings are criminal. Full weight must be given to the consequence of goods being forfeited and condemned as forfeited. However, reference must also be made to the fact that the legislation categorises the proceedings as civil. Reference is also to be made to the fact that none of the usual consequences of a criminal conviction follow from condemnation and forfeiture proceedings. There is no conviction or finding of guilt. Under domestic law the person concerned is not treated as having a conviction. The person concerned is not subject to any other penalty, apart from the consequences of the forfeiture and loss of the goods.”

“But that proposition should not distract the Court from the question whether, given the three criteria, the proceedings in issue are in substance in the nature of a criminal charge. Are they an instance of the use of State power to condemn or punish individuals for wrongdoing? The Strasbourg Court and our own courts have held that condemnation proceedings are not in any such category (Air Canada, Goldsmith, McCann [2002] 3 WLR 1313 and Butler).”

“1. The Tribunal has found that: ‘the Commissioners have taken a policy decision not to restore properly seized goods. There are no exceptions to this. Even innocent failures to pay excise duty will not qualify as exceptions to the policy. The Commissioners regard themselves as exercising that power to deter illegal activities and to stamp our smuggling.’ (Gora, para 33) 2. Whilst not material to the present case, there are in fact exceptions to this policy. The Tribunal has not yet decided on the lawfulness of this policy or its application to these cases. 3. The Commissioners accept: a. It would be open to the Appellants to contend in the Tribunal that the decision on restoration was not reasonable (within the meaning of s 16(4) of the Finance Act 1994) on the grounds that it was based upon an unreasonable policy. (For the avoidance of doubt, it is denied that the policy is unreasonable or otherwise unlawful.) b. For the purpose of deciding whether the policy was unreasonable, it is submitted that the Tribunal should not substitute its view for that of the Commissioners as to the appropriate policy in this area of administration. It should ask itself, applying judicial review principles, whether the policy was one that could reasonably be adopted. In a context where Article 1 Protocol 1 of the ECHR was engaged, the principles of judicial review would include that of proportionality. c. The Appellants contend that the policy is ‘unreasonable’ in the above sense because it fails to take account of the alleged ‘blameworthiness’ of the Appellants. The Commissioners entirely accept that the Appellants are free to raise that contention in the Tribunal. If that contention were successful, the Tribunal would remit the matter to the Commissioners and impose such directions, requirements or declarations as it thought fit pursuant to s 16(4)(a)-(c) of the 1994 Act. d. The Commissioners would then retake the decision, in compliance with the Tribunal’s ruling. If in any subsequent appeal against a further decision, an issue arose as to whether the Appellants were ‘blameworthy’, subject to the proviso referred to below, the Tribunal’s role would be as the Tribunal held in Gora: ‘[The Tribunal] satisfies itself that the primary facts upon which the Commissioners have based their decision are correct. The rules of the tribunal and procedures are designed to enable it to make a comprehensive fact-finding exercise in all appeals.’ e. Strictly speaking, it appears that under s 16(4) of the 1994 Act, the Tribunal would be limited to considering whether there was sufficient evidence to support the Commissioners’ finding of blameworthiness. However, in practice, given the power of the Tribunal to carry out a fact-finding exercise, the Tribunal could decide for itself this primary fact. The Tribunal should then go on to decide whether, in the light of its findings of fact, the decision on restoration was reasonable. The Commissioners would not challenge such an approach and would conduct a further review in accordance with the findings of the Tribunal.” ‘the Commissioners have taken a policy decision not to restore properly seized goods. There are no exceptions to this. Even innocent failures to pay excise duty will not qualify as exceptions to the policy. The Commissioners regard themselves as exercising that power to deter illegal activities and to stamp our smuggling.’ (Gora, para 33) a. It would be open to the Appellants to contend in the Tribunal that the decision on restoration was not reasonable (within the meaning of s 16(4) of the Finance Act 1994) on the grounds that it was based upon an unreasonable policy. (For the avoidance of doubt, it is denied that the policy is unreasonable or otherwise unlawful.) b. For the purpose of deciding whether the policy was unreasonable, it is submitted that the Tribunal should not substitute its view for that of the Commissioners as to the appropriate policy in this area of administration. It should ask itself, applying judicial review principles, whether the policy was one that could reasonably be adopted. In a context where Article 1 Protocol 1 of the ECHR was engaged, the principles of judicial review would include that of proportionality. c. The Appellants contend that the policy is ‘unreasonable’ in the above sense because it fails to take account of the alleged ‘blameworthiness’ of the Appellants. The Commissioners entirely accept that the Appellants are free to raise that contention in the Tribunal. If that contention were successful, the Tribunal would remit the matter to the Commissioners and impose such directions, requirements or declarations as it thought fit pursuant to s 16(4)(a)-(c) of the 1994 Act. d. The Commissioners would then retake the decision, in compliance with the Tribunal’s ruling. If in any subsequent appeal against a further decision, an issue arose as to whether the Appellants were ‘blameworthy’, subject to the proviso referred to below, the Tribunal’s role would be as the Tribunal held in Gora: ‘[The Tribunal] satisfies itself that the primary facts upon which the Commissioners have based their decision are correct. The rules of the tribunal and procedures are designed to enable it to make a comprehensive fact-finding exercise in all appeals.’ e. Strictly speaking, it appears that under s 16(4) of the 1994 Act, the Tribunal would be limited to considering whether there was sufficient evidence to support the Commissioners’ finding of blameworthiness. However, in practice, given the power of the Tribunal to carry out a fact-finding exercise, the Tribunal could decide for itself this primary fact. The Tribunal should then go on to decide whether, in the light of its findings of fact, the decision on restoration was reasonable. The Commissioners would not challenge such an approach and would conduct a further review in accordance with the findings of the Tribunal.”

“I am also of opinion there was no evidence of any act of trespass. There was no seizure whatever by the defendants. The goods were landed and taken possession of by the defendants in the discharge of their duty, for the purpose of their being examined … There was no evidence of any seizure or of any other act amounting to a trespass.”

“I am of the same opinion. There was no trespass in the first instance, or anything that could be called a seizure. The goods were taken by the plaintiff’s agent to the proper place for examination of them by the defendants in the regular discharge of their duty as custom-house officers. Upon their examination, all that the defendants did was, to detain them, till it could be ascertained whether or not they were liable to forfeiture. This is not an act of trespass.”

“33. I accept that there is a difference between the words ‘seized’ and ‘detained’ in section 139. In my view, the word ‘detained’ connotes that the person already has possession of the thing and is keeping it. I note that section 139 uses the words ‘seized or detained’ rather than ‘seized and detained’. It is not, therefore, dealing with a detention following a seizure under section 139. It is, in my judgment, dealing with a situation where the thing has already come into the appellants’ possession by some means other than a seizure under section 139. Under section 139, the thing detained must be liable to forfeiture. I am bound to say that it is not immediately clear why the alternative word of ‘detained’ has been used in section 139, but the important thing to note is that Schedule 3, which contains the provisions relating to forfeiture, makes forfeiture dependent on the concept of seizure, not on the concept of detention. If and insofar as there is simply a detention of a thing as liable to forfeiture, it cannot by itself set in motion the procedure for forfeiture in Schedule 3 because there will not have been a seizure.”

“I do not think that there is anything disproportionate about either the existence of a power to detain for a reasonable time to enable the goods to be examined and their credentials to be checked or the reasonable exercise of such a power … In the present context the Commissioners have to take reasonable steps to protect the excise. Inevitably they need to be able to check the paper work on consignments of liquor or beer which they have reason to believe have not bourn duty. The power to detain is, in essence, a necessary administrative power; and judicial review by the Administrative Court is, in all the circumstances, an adequate control.”