Eastenders Cash & Carry Plc & Ors v HM Revenue & Customs [2012] EWCA Civ 15

Case No C4//2010/2740[2012] EWCA Civ 15
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
THE HON MR JUSTICE SALES
CO/15215/2009
CO/1142/2010
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Date: 20 /01/2012
Before
LORD JUSTICE MUMMERYLORD JUSTICE ELIASLORD JUSTICE DAVIS
Between
EASTENDERS CASH & CARRY PLC & ORSAppellantsTHE COMMISSIONERS OF HER MAJESTY’S REVENUE & CUSTOMSRespondent
MR GERAINT JONES QC and MR MARC GLOVER (instructed by Rainer Hughes) for AppellantMR JONATHAN SWIFT QC and MR NEIL SHELDON (instructed by HMRC Solicitors) for RespondentHearing Hearing date : 5 th October 2011
Judgment

The issue

[1]This case is about the lawfulness of the exercise of the power claimed by the Commissioners of Her Majesty’s Customs & Excise (HMRC) to detain goods temporarily for the purpose of investigating their status. It turns on the contested interpretation of s. 139(1) of the Customs & Excise Management Act 1979 (the 1979 Act) in the context of other provisions in that Act and its application to the facts of this case.[2]The issue on the appeal is whether the decision of Sales J, on the hearing of an application for judicial review against HMRC, was wrong. He accepted HMRC’s submissions on quite a narrow, but nevertheless important, legal point, which impinges on the rights of the subject and affects the investigatory and enforcement powers of HMRC. As the differences of judicial opinion might indicate, the answer is not obvious. I have reached a clear conclusion, but only after wavering on the way. I have read the judgments of Elias and Davis LJJ in draft. I recognise their force and respect their conclusions, but I remain unpersuaded that Sales J was wrong to dismiss the application for judicial review against HMRC.[3]Eastenders Cash & Carry PLC and related companies (the Claimants) relied on their interpretation of the 1979 Act as the basis for their application for judicial review of a decision of HMRC to detain quantities of the Claimants’ alcoholic goods pending HMRC’s enquiries whether the goods had been improperly imported. HMRC never went to the lengths of seizing the goods in question or forfeiting them: they detained them for a limited period while they carried out investigations into their status. The inquiries about whether or not duty had been paid on the goods were inconclusive. HMRC released the detained goods to the Claimants, who then sought an order from the court that HMRC’s detention of them was unlawful and for damages to be assessed.

The power to detain

[4]I agree with Sales J that seizure and detention of goods, which are only two of HMRC’s many intrusive powers, are distinct in nature, purpose and scope, though contained within the same single short sub-section of s.139 of the 1979 Act (“Provisions as to detention, seizure and condemnation of goods, etc”):-. “(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.”[5]This case is not about seizing or forfeiting goods. It is only concerned with the less drastic option of detaining goods for a reasonable time for the purpose of investigation. Detention of the suspect goods in this case was anterior to HMRC’s possible use of wider powers to seize and forfeit them. Detention was used as a temporary and precautionary measure enabling HMRC to protect and preserve the goods in question while undertaking inquiries into their status. HMRC then had to make a decision whether(a) to seize the goods and take proceedings for their forfeiture, or(b) to restore them to the Claimants.[6]Nothing is expressly spelt out in the subsection, either in relation to the seizure or the detention of goods, about the need for the actual existence of facts, or about the need for a reasonable belief on the part of HMRC in the existence of facts, such as non-payment of duty on imported goods, which would actually justify the forfeiture of goods described as “liable to forfeiture.” Nor is anything said about the length of time, such as “for a reasonable period”, or about the specific purpose, such as “for the purpose of further inquiries” or “for the purpose of investigation”, for which HMRC may lawfully detain goods.[7]Although HMRC’s power to detain goods is, on the face of s.139(1), an unqualified one, it is, like all public powers, liable to judicial review for excess or abuse on grounds that its exercise was flawed by error of law, or by procedural irregularity, or was irrational or disproportionate. On this appeal the only challenge to the lawfulness of HMRC’s exercise of the power to detain the Claimants’ goods is based on the description in s.139(1) of the things in question as being “liable to forfeiture.” The Claimants’ case is that HMRC’s interpretation of s.139(1), which the judge accepted, is wrong.[8]The Claimants argue that the legal effect of the description in s.139(1) of things as “liable to forfeiture” is to subject HMRC’s discretionary power to detain suspect goods to a condition precedent of the existence of facts that justify forfeiture of the goods. In other words, the exercise of the power to detain goods temporarily for investigatory purposes can only be justified in law, if the forfeiture of those goods still under investigation would be justified in fact. According to the Claimants it is not sufficient that the goods may be liable to forfeiture if and when the true facts are established by the investigation, or that HMRC are able to show reasonable grounds for believing that they may be liable to forfeiture on the ground, for instance, that the correct duty on them has not been paid.

The appeal

[9]The appeal is from the order made by Sales J on 4 November 2010. He dismissed the Claimants’ application:[2010] EWHC 2797 (Admin)). He granted permission to appeal. The main ground of appeal is that the judge was wrong in law to interpret s.139 (1) as making it lawful for HMRC to detain the Claimants’ goods in circumstances when they actually turned out not to be liable to forfeiture.

Background facts

[10]On 16 October and 4 December 2009 HMRC visited the Claimants’ warehouses in Coventry and Birmingham respectively. They detained quantities of alcoholic goods. The Claimants were unable to provide documentary evidence that duty had been paid on them. Inspection of the documents produced by the Claimants revealed significant discrepancies and indicated that duty may not have been paid, either in full or at all, on the goods contained in the consignments.[11]The goods in question consisted of pallets of beer and cases of wine and spirits. If the goods had not been detained by HMRC pending further enquiries, there would have been nothing to stop the Claimants from selling the goods on to their customers before HMRC could conclude their enquiries about the lawfulness of the imports.[12]HMRC detained the goods at the Claimants’ premises pending further enquiries. It was common ground before the judge that in the present case HMRC had reasonable grounds for suspecting that duty had not been paid on the goods and that it was reasonable for HMRC to make further enquiries in that regard.[13]HMRC set about making enquiries as to the supply chains of the detained goods. The purpose of the enquiries was to determine whether duty had in fact been paid. The goods had passed through a number of suppliers before reaching the Claimants. The investigation whether duty had been properly paid was difficult and time-consuming.[14]The enquiries revealed that duty had not been paid on a large majority of the goods making up the two detained consignments. As a result some of the goods were then seized by HMRC as “liable to forfeiture” and they became subject to condemnation proceedings pursuant to Schedule 3 to the 1979 Act (“Provisions relating to Forfeiture”). Some goods were returned to the Claimants, as HMRC concluded that they would be unable to complete their enquiries within what they considered to be a reasonable time. The decision to return those goods did not constitute acceptance by HMRC that duty had in fact been paid on them.[15]The claims advanced against HMRC only concern the detained goods that were later returned to the Claimants. The Claimants contended that s.139(1) did not provide HMRC with lawful authority to detain the goods pending their enquiries and that, if HMRC had such a power, they had detained the goods for an unreasonably lengthy period such that their continued detention became unlawful at some point prior to their return. The latter point was rejected by the judge and has not been pursued by the Claimants on appeal.

Legislation and internal guidance

[16]I begin with s.49(1) of the 1979 Act (“Forfeiture of goods improperly imported”). It specifies the conditions that must be satisfied for the forfeiture of goods improperly imported. It provides that imported goods chargeable on their importation with customs or excise duty shall be “liable to forfeiture” if specified acts, such as unshipping them in any port, or unloading them from any aircraft in the United Kingdom, are done without payment of that duty. As Sales J correctly observed, s. 49 is not a definition section. It does not define the meaning of the expression “liable to forfeiture” either as used in that section or as used in s.139(1). It specifies the circumstances in which goods improperly imported are liable to forfeiture.[17]Section 138(1) makes provision for the detention of persons. Although this case is concerned with the detention of goods, not persons, that sub-section has been cited in argument as showing that, in contrast to s.139 (1), it refers to detention under the legislation of any person “who has committed, or whom there are reasonable grounds to suspect of having committed, any offence for which he is liable to be detained” under the legislation.[18]Section 139(1) is quoted above. It is about detention and seizure of goods. It is not about their forfeiture. Sub-sections (2) and (3) provide for what is to be done with goods in circumstances in which any thing is seized or detained “as liable to forfeiture” under the legislation. Subsection (6) provides that Schedule 3 to the Act shall have effect for the purposes of forfeiture, and of proceedings for the condemnation of any thing as being forfeited under the legislation. Nothing is said in Schedule 3 about the detention of any thing liable to forfeiture.[19]Finally, both sides have made submissions on the interpretation and relevance of s.144 (“Protection of officers, etc. in relation to seizure and detention of goods, etc.”) to the interpretation of s.139(1). Its purpose was to provide for the protection of officers and others in relation to both the seizure and the detention of goods under the customs and excise Acts in cases where there were reasonable grounds for the seizure or detention of the goods:- “(1) Where, in any proceedings for the condemnation of any thing seized as liable to forfeiture under the customs and excise Acts, judgment is given for the claimant, the court may, if it sees fit, certify that there were reasonable grounds for the seizure.(2) Where any proceedings, whether civil or criminal, are brought against the Commissioners, a law officer of the Crown or any 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, 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.(3) Nothing in subsection (2) above shall affect any right of any person to the return of the thing seized or detained or to compensation in respect of any damage to the thing or in respect of the destruction thereof.” (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,[20]As this case is concerned with detention of goods and not with their seizure, forfeiture or condemnation, only subsection (2) (b) of s. 144 is potentially relevant. Even then the protection against legal liability is not total. The only protection is against the recoverability of damages or costs and against liability to any punishment. It does not, for instance, provide any protection against a mandatory order against HMRC for the recovery of goods detained or seized, if, for example, the conditions for their forfeiture are not met.[21]The judge summarised HMRC’s internal guidance on s. 139(1). The guidance refers to the reasons for the detention of things, such as pending inquiries where there are reasonable grounds for suspicion about the status of things and investigative action is necessary to establish whether the goods are liable to forfeiture, and to time limits for detention before they are either released or the detention is converted to seizure. The guidance cannot, of course, determine or alter the meaning of s.139(1), or enlarge the scope of the power of detention conferred by it. Its value is in the information it contains about HMRC’s everyday operations in the course of which they may decide to exercise the power to detain goods.

The judgment

[22]In his judgment [2010] EWHC 2797 (Admin) Sales J succinctly stated his conclusion, having clearly and cogently set out his detailed reasons for it :- “37. In the particular context in which section 139(1) applies, I do not think that it is an abuse of language to describe goods detained where there are reasonable grounds for suspecting that duty might not have been paid on them as goods “liable to forfeiture”, in the sense that they are liable to forfeiture if, at the end of the process of examination contemplated by the Act as set out in Schedule 3(first by HMRC, then by a court), that suspicion proves to be correct … 41. …I conclude that the power of detention contained in section 139(1) is not limited to cases in which the goods in question are goods on which duty has in fact not been paid, but also covers cases in which there are reasonable grounds for suspecting that duty might not have been paid on the goods.”

The judge arrived at his firm conclusion by the following route.

[24]In the first place, although there is no binding authority on the construction of s.139(1), the judgments of the Court of Appeal in Gora v. Customs & Excise Commissioners [2003] EWCA Civ 525; [2004] QB 93 at paragraphs [50]-[52] contain obiter dicta that are persuasive. Pill LJ, with whom Chadwick LJ agreed, said that the power of detention in s.139(1) was intended to allow for a reasonable investigation to be carried out where it was uncertain whether duty had been paid or not; but Longmore LJ said at paragraph [68] that it was “…at least, arguable that detention of goods not in fact liable to forfeiture is an unlawful interference with goods…” (2). Indications of legislative intention[25]In the second place, while taking account of the presumption that Parliament does not authorise interference with private property without clear indication to that effect and of the provisions in s.138(1) and s.144(2), Sales J said that there are- “27. …clear indications from the scheme of [the legislation] that Parliament intended that HMRC should have a power to detain goods where there is doubt whether duty has been paid on them, to allow for investigation of that question.”[26]Sales J identified two separate and distinct powers in the scheme of s. 139(1): a power to seize goods and a distinct power to detain goods. He considered the reasons for the creation of a distinct power to detain, the ambit of the power to seize and the forfeiture procedure set out in the legislation (Schedule 3). In the case of seizure the owner is given an opportunity to have the matter brought before a court. The ambit of the power to detain is not set out in a schedule or anywhere else in the 1979 Act.[27]Sales J regarded the difference between the power to detain and the power to seize as “a strong indicator that Parliament did not intend the availability of the power of detention to depend upon duty not having been paid on the goods in question.” He concluded that it was plain from the context that there was a “clear reason why Parliament wished to create a distinct power of detention, namely to allow the goods to be held where there is uncertainty whether duty has been paid on them or not, to allow for investigations to be carried out before HMRC decide whether to seize the goods or return them.” It was difficult to identify any other sensible reason for providing for the distinct power to detain. (See paragraphs [29]-[31]).[28]The judge referred to the old law on the subject drawing a distinction between seizure and detention of goods in the context of the law of trespass. Whereas seizure of goods would be a trespass to them, detaining them for the purpose of examining whether they should be seized or not would not be a trespass: Jacobsohn v. Blake and Compton (1844) 6 Man & G 919.[29]Sales J rejected the Claimants’ submissions that other sections of the 1979 Act, such as s. 138(1) and s. 144(2), provided clear indications in favour of the construction of s.139(1) proposed by the Claimants. The Commissioners’ construction of s. 139(1) did not, in his view, render s. 144(2) otiose in the scheme of the 1979 Act.

Claimants’ submissions

[30]The Claimants’ case on construction is short and simple: upon the true and proper construction of s 139(1), goods can only be lawfully seized and/or detained if they are actually “liable to forfeiture”. Alcoholic liquor is only liable to forfeiture, if duty has not in fact been paid on it in circumstances in which duty should have been paid on it. That circumstance is a pre-condition of the lawful exercise of both the power to seize the goods and the power to detain them.[31]The Claimants complain that, instead of construing the language of s.139 (1) correctly, the judge made a policy decision for Parliament by proceeding on the basis that Parliament would have wanted to give HMRC a power to detain goods, if they reasonably believed that duty was not paid. He pre-supposed that the objective of the detention can only be achieved by providing a different trigger for detention to take place.[32]The judge failed to appreciate that exactly the same trigger applies to both powers, notwithstanding that, on his analysis, seizure and detention have separate functions. In each situation, if the goods are in fact duty paid, HMRC is protected by s. 144 against the legal consequences of seizure or detention of goods that are not actually “liable to forfeiture.” That section gives statutory protection to HMRC against a civil claim where goods, not actually liable to detention or seizure, have been detained or seized, provided that HMRC reasonably believed that they were liable to forfeiture. That defence assumes that, without the benefit of that express provision for their protection, HMRC would have acted without lawful justification in seizing or detaining goods that were not in fact liable to forfeiture.[33]The judge did not explain why there should be any “irresistible inference” from the scheme of the 1979 Act why HMRC should have the power to detain goods, if they had reasonable grounds to believe that duty had not been paid on those goods. It was no answer to say that HMRC needed the power to detain in order to undertake an investigation into the goods.

Discussion and conclusion

[34]In the light of the submissions of the parties and the judgments of my Lords, I will concentrate the discussion on certain aspects of the legislation, starting with the overall context of the HMRC’s power to detain suspect goods for the purposes of investigating their status and preventing disposal of them pending completion of inquiries. (1). General context[35]There is nothing particularly surprising in the assertion, or in the conclusion, that HMRC have power to detain suspect goods as a temporary measure for investigatory and protective purposes. Reference to the 1979 Act shows that HMRC possess a wider range of intrusive investigatory and enforcement powers than almost any other public body. They include entry into premises, the furnishing of information and the imposition of penalties, as well as widely worded powers of detention, seizure and forfeiture. The powers conferred are not, and are not claimed by HMRC to be, without any legal limit or control. Like all statutory powers they can only be properly exercised for the purpose for which they were conferred. The lawfulness of their exercise is subject to judicial review. (2). Purpose[36]The purpose of exercising the power to detain goods in this case was to preserve the goods in question and to prevent them from being disposed of before HMRC had completed their inquiries into the facts of the case, ascertained so far as possible the status of the goods and decided whether to seize them and have them condemned as forfeited, or to restore the goods to the Claimants.[37]If possible, the provision conferring the power to detain goods should be interpreted to promote the purpose for which that power was conferred. If challenged on the lawfulness of the detention HMRC would have to justify it as being for a permitted purpose.[38]The difficulty that I have in accepting the Claimants’ submissions is quite a basic one: why, in order to justify the lawfulness of the temporary detention of suspect goods for the purpose of investigating the facts relevant to their status, is it incumbent on HMRC to establish the pre-existence of facts justifying the forfeiture of the detained goods under investigation? Temporary detention of suspect goods to establish their status and forfeiture of unlawfully imported goods are two very different things. In principle, one would expect it to be possible to justify the former without having to satisfy the conditions for the latter.[39]Of course, I appreciate that the answer to my rhetorical question may be that, on the interpretation contended for by the Claimants and accepted by my Lords, s.139 (1) limits the power to detain goods to those cases in which the conditions for the forfeiture of goods are in fact satisfied, rather than the goods being under investigation on a reasonable suspicion that they are “liable to forfeiture”. As I will try to show, I do not believe that the power to detain is limited in the way suggested by the Claimants. (3). Structure[40]The focus of the Claimants’ case is on the description of goods as “liable to forfeiture”, as they appear in s.139(1) in the context of detention and seizure, and their appearance in s.49(1) in the different context of conditions for forfeiture of the goods and s.144 in the different context of protection against legal liability for seizure and detention.[41]As already noted s.49(1) performs a different function from s.139(1). It does not relate to powers of detention or seizure. Its function is to specify the detailed conditions to be satisfied in fact for the actual forfeiture of goods: that the goods are imported, that they are liable to duty and that the duty on them has not been paid. It is not a definition section. The expression “liable to forfeiture” does not appear in the definition section of the 1979 Act nor is it defined elsewhere. Further s. 49(1) does not expressly cross refer on to s.139(1), which does not expressly refer back to s.49(1).[42]Yet, according to the Claimants, the expression “liable to forfeiture” in s.139(1) has the same effect as when it is used in s. 49(1). It is true that, in general, the same expressions in an Act bear the same meaning unless the context indicates otherwise. The Claimants’ interpretation of “liable to forfeiture” as having the same effect in s.139(1) as it has in s. 49(1) might be thought to produce a surprising result. If it is correct, it would follow that HMRC could only validly exercise the power to detain goods temporarily for the purposes of investigation into the goods, if they establish the very facts about the goods under investigation that would justify their ultimate forfeiture. If that is correct, the power to detain goods for investigation would be so circumscribed that there would be no real point in conferring it at all. On the one hand, if HMRC were in a position to prove that the conditions for forfeiture were in fact met, they might as well proceed immediately to seizure and forfeiture. Why bother with temporary detention? On the other hand, if they were not in a position to prove that the forfeiture conditions were met, they would be acting outside their powers in s139(1) to detain or seize the goods and would then be dependent on the limited protection available under s.144.[43]As for s.144 itself, the Claimants say that it supports their interpretation of s. 139(1), because, if HMRC’s interpretation is correct, it would be unnecessary for Parliament to provide the protection available under s.144. Like Sales J I am unable to accept this analysis. In my view, the limited protection under s.144 does not operate to limit the scope of the power to detain conferred by s.139(1). The protection provided by s. 144 is not specifically linked to the exercise of the power to detain under s.139(1) for a limited time for preservation and investigation. Nor, as already noted, is the statutory protection comprehensive, being unavailable as protection against a claim for the return of the goods or an application for judicial review of the decision to detain them. In my judgment, as explained below in discussion of the language of the various provisions, the key to interpretation of s.139(1) lies in the proper understanding of the different contexts in which the same expression “liable to forfeiture” functions in s.49(1), s.139(1) and s.144. On HMRC’s interpretation of the power to detain under s. 139(1), there will be cases in which there is scope for the application of the protective provisions in s.144. Putting it another way, HMRC’s interpretation of s.139(1) does not, as the Claimants contend, render s.144 otiose. I refer to the possibility that the goods detained are not chargeable with duty and therefore could never be described as “liable to forfeiture.” (4). Wording[44]As for the detailed drafting of the relevant provisions, I make the following points.[45]First, as the expression “liable to forfeiture”, on which the Claimants have fastened, is not a defined term in the 1979 Act, it should be understood in its ordinary and natural meaning, coloured, of course, by the particular context in which it is used.[46]Secondly, in ordinary English usage, the description of things as “liable to forfeiture” is, subject to its context, capable of a meaning wider than just the actual satisfaction of a set of specific pre-existing conditions for forfeiture. It would be an accurate use of English to describe a thing as being “liable to” certain consequences, such as an unwanted sanction or obligation, in specified circumstances, even where those circumstances have not yet been established as fact. “Liable to” is capable of covering a more general state of affairs of exposure or susceptibility to the possibility or risk of unwanted consequences. There is an instance of that kind of use (negatively) in the concluding words of s.144(2) (see above) – “shall not be liable to any punishment.” In my view, goods may be accurately described as “liable to” seizure by order of the court, even if it turns out on investigation by the court that nothing has in fact been established that would justify the making of such an order.[47]Thirdly, in the context of s. 139(1), I am of the view that “liable to forfeiture” bears that more generous meaning. It is apt to describe, in a more general way than the Claimants concede, the kind of things that HMRC have power to forfeit (dutiable imports on which duty has not been paid) and therefore power to detain for investigatory and protective purposes. Beer and spirits which may have been imported and on which the duty due may not have been paid may be accurately described as “liable to forfeiture” in ordinary usage.[48]There are other things that cannot be accurately described in that way: for instance, goods which have been imported, but which are not chargeable with duty. HMRC would not have the power to detain those goods under s.139(1), being goods that could not under any circumstances be forfeited. In such cases, however, there would be scope for HMRC to invoke protection under s.144, which would not be an otiose provision, as the Claimants contend.[49]In brief, the words “liable to forfeiture” in s.139(1) are not confined to cases of proof of actual satisfaction of the pre-existing conditions for the forfeiture of the detained goods.[50]In my judgment, the Claimants’ case on s.139(1) is open to objections in its whole approach to interpretation. It begins by removing an undefined expression “liable to forfeiture” from its context in that particular section concerning powers to seize and detain. It then seeks to define it, not on the basis of its ordinary meaning, but by reference to its meaning in a different context, as in s. 49(1), where it is used in relation to the conditions for actual forfeiture, and in s.144, where it is used in relation to limited relief from liability.[51]The result of that approach is that you may finish up with a meaning that is more restrictive than is justified by the particular context from which the expression has been removed.[52]As the Claimants object to the judge’s approach, I will explain a little more fully the position as I see it. The judge’s approach, with which I agree, is based(a) on the ordinary words “liable to forfeiture” being given their ordinary meaning, and(b) on taking due account of the controlling or clarifying effects of the particular context.[53]As the late Professor Simpson observed with characteristic wit, the message communicated in the expression “pass the cat” is one thing when said by a vet in his surgery and quite a different thing when spoken by Captain Bligh on The Bounty. It is always necessary to consider the context to catch the meaning. The very same expression can be used accurately to describe different things or different states of affairs. Expressions can have different shades of meaning, even when used in proximity. It is not helpful, and may even be perplexing, to ask the bald question: what does “liable to forfeiture” mean in the 1979 Act? The sensible use of ordinary language makes it necessary to consider why the question is being asked at all and for what purpose. Stripped of the particular circumstances that prompt it, an open ended question can be of little use in resolving a contested interpretation in the circumstances of a particular case.[54]If the expression “liable to forfeiture” is not defined (and it is not), it can be used in an open textured way capable of having different shades of meaning according to context. It can refer to an existing state of affairs and whether the conditions necessary for the forfeiture of the goods are in fact satisfied now. It can also refer to a state of affairs in which it can be said now that the goods may be forfeited in the future, depending on whether or not the conditions for their forfeiture are eventually established. In my view, the latter function is performed by the expression “liable to forfeiture” in the context of the power to detain and seize goods in s. 139(1). The context of the exercise of the power to detain is that of looking at an existing state of affairs with an eye on the future.[55]In contrast, in the context of conditions for actual forfeiture specified in s. 49(1), a more restricted meaning is apt, focusing attention on the actual existence of the necessary conditions for forfeiture now.[56]On that approach s. 144 is not an unnecessary provision. There may be cases in which goods are detained or seized by HMRC on reasonable grounds, but which turn out to be goods which could never be forfeited under s.49(1) because, for example, they are goods which, even if imported, are not chargeable with duty. Such goods could not be “liable to forfeiture” actually or contingently. The s.144 defence might be available to HMRC as a defence to liability for acting outside the powers in s.139(1).

Result

[57]I would dismiss the appeal.[58]In my judgment, the Claimants have not established to my satisfaction that Sales J wrongly interpreted the legislation or misapplied it to the facts of this case. I agree with his careful legal reasoning and with the sensible practical outcome of his excellent judgment.[59]I am grateful to Lord Justice Mummery for setting out the facts and the material statutory provisions. However, whilst recognising the force of the arguments accepted by my Lord and by Sales J below in their lucid judgments, I am ultimately unpersuaded by them. I have reached a different view as to the proper construction of this legislation and, for my part, I would uphold the appeal.[60]The issue in this case is whether the power to detain goods under section 139 of the Customs and Excise Management Act was lawfully exercised on the facts. The power to seize or detain goods is succinctly set out in section 139(1) which provides:
“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.”
[61]At the heart of this appeal is a short but difficult issue: what is the meaning of the phrase “liable to forfeiture” within the meaning of that section? Sales J held that goods may be detained as being “liable to forfeiture” whenever the HMRC has reasonable grounds for suspecting that duty may not have been paid on the goods; they are liable to forfeiture in the sense that they are at risk of forfeiture and will be forfeited if the suspicions prove to be true.[62]The appellants submit that this analysis is wrong and that the detention of goods is lawful only if the relevant facts empowering the court to order forfeiture actually exist; it is not enough that the relevant officer reasonably suspects that they might. Since in this case the alcoholic goods were returned to the appellants because HMRC was not sure whether or not duty had been paid, that demonstrates that in fact the goods could not have been forfeited. HMRC would not have been able to satisfy a court that the goods should be subject to an order of forfeiture. Accordingly, there never was any lawful power to detain them.[63]I shall first analyse the judgment of Sales J. As I read his judgment, the reasoning was as follows. The starting point is that there is a distinction between seizure and detention. The power to seize arises where HMRC believe that duty has not been paid on goods. Seizure then sets in train the procedure set out in Schedule 3 to the Act which enables the owner of the goods, if he so wishes, to have a court determine whether they should be forfeited for non-payment of duty or not. By contrast, the power to detain does not bring in its wake the Schedule 3 procedure. This suggests that the purpose of that power is different and is to be exercised in circumstances where the power to seize is not available. He described the purpose as follows (para.30):
“ …..there is a clear reason why Parliament wished to create a distinct power of detention, namely to allow for the goods to be held where there is uncertainty whether duty has been paid on them or not, to allow for investigations to be carried out before HMRC decide whether to seize the goods or return them.”
[64]In adopting that analysis of the purpose of the section, the judge was following certain observations to the same effect of Pill LJ (with whose judgment Chadwick LJ agreed) in Gora v Customs and Excise Commissioners [2003] EWCA Civ 525; [2004] QB 93 paras 50-52.[65]This analysis therefore perceives the power to detain as a potential precursor to the exercise of the power to seize. It will be exercised in circumstances where the power of seizure is not available. The judge considered that if this power did not exist, it would unduly hamper HMRC from taking effective action to prevent dishonest taxpayers from avoiding their obligations.[66]The judge was also influenced by the fact that the appellants could identify no other sensible purpose for which the power to detain might have been conferred. Two purposes for the power were suggested before him, both of which the judge rejected. Those purposes have not been relied upon before us. I can see that if the only sensible purpose appears to be that relied on by the judge, it will necessarily strongly influence the approach to the legislation. However, for reasons I develop below, there is in my view another cogent reason why Parliament might have thought it appropriate to confer this power. If this had been drawn to the attention of the judge, it may well have caused him to analyse the case differently.[67]Sales J accepted that in many contexts where the phrase “liable to forfeiture” is used in the Act, it means that the goods are actually liable to forfeiture as an objective fact. However, he did not consider that this was the proper construction of that phrase in the context of section 139. In particular, he was influenced by the fact that section 139(5) makes provision as to how any item seized or detained may be dealt with pending a determination as to its forfeiture or disposal. This, he said, showed that goods may be seized or detained at a stage where they are merely at risk of forfeiture and where the question whether they are in fact liable to forfeiture has yet to be determined.

The judge summarised his conclusion as follows:

“In the particular context in which section 139(1) applies, I do not think that it is an abuse of language to describe goods detained where there are reasonable grounds for suspecting that duty might not have been paid on them as goods "liable to forfeiture", in the sense that they are liable to forfeiture if, at the end of the process of examination contemplated by the Act as set out in Schedule 3 (first by HMRC, then by a court), that suspicion proves to be correct.”
[69]In this case it was not disputed that HMRC had reasonable grounds to suspect that the duty had not been paid and therefore the judge held that the detention of the goods was lawful.[70]The appellants submit that the judge erred in his analysis. Put succinctly, their argument is as follows. The statute should be construed strictly, since it permits interference with property rights. Section 139(1) empowers the relevant authority to seize or detain goods which are “liable to forfeiture.” The various Customs Acts and the regulations made thereunder define the circumstances where goods are liable to forfeiture. Whether those circumstances are satisfied is an objective question of fact. If goods are seized or detained when in fact they are not liable to forfeiture, because the state of affairs empowering a court to forfeit them does not in fact exist, the power has been unlawfully exercised. There is no justification for rewriting the statute so as to hold that the power to seize or detain is lawfully exercised whenever the Commissioners have a reasonable belief or reasonable suspicion that the goods are liable to forfeiture. That is not what the section says.[71]Moreover, where Parliament wanted to confer a power to act on reasonable suspicion alone, it said so. For example, section 138 empowers various persons to arrest someone whom they have reasonable grounds to suspect has committed a customs offence. There is the additional problem that if words have to be read in to the section, what they should be? On what basis can the courts decide that it should be where HMRC has reasonable grounds for suspecting, as opposed to a reason to suspect, or even an honest belief?[72]Mr Jones QC, counsel for the appellants, submits that this does not leave the power of detention bereft of any sensible purpose, as the judge thought. He points out that goods are liable to forfeiture in a wide range of circumstances and not merely (as the judge appeared to think) where duty has not been paid on the specific goods. For example, section 100J provides that registered excise dealers and shippers must comply with conditions or restrictions imposed upon them under section 100G or under certain regulations and expressly provides that goods in respect of which there has been a contravention of the conditions or restrictions shall be liable to forfeiture.[73]There will therefore be circumstances where some obligation is infringed, such as relevant paperwork not being in place, which strictly could justify seizure of the goods. But in such cases it may be disproportionate to seize them because this necessarily sets in motion the forfeiture provisions under Schedule 3, yet the defaulter might readily be able to correct matters speedily. He may be able to demonstrate that any breach has been technical or inadvertent and, where this is in issue, that the relevant duty has in fact been paid. The power of detention fulfils a valuable function in such circumstances in allowing HMRC to take a measured and proportional response to the breach.[74]Mr Jones also emphasises that his construction does not leave the Commissioners or other officers discharging their duties facing serious liabilities whenever a court concludes that their suspicions or beliefs were unfounded. Provided they have acted reasonably in detaining or seizing as the case may be, they will be fully protected from any claim for damages or costs by section 144(2). Indeed, he submits that the construction of section 139 adopted by the judge below effectively renders that provision otiose.[75]Mr Swift QC, counsel for HMRC, submitted that the judge’s analysis is correct and he relied principally upon the judge’s reasoning. He further contended that it would be strange if the lawfulness of the detention could only be determined retrospectively once a court had determined that as a matter of fact the conditions justifying an order of forfeiture had been satisfied. The better approach is to read sections 144 and 139 together. If that were done, it justified the reading of section 139 adopted by the judge.[76]In my judgment, the judge’s analysis cannot be sustained essentially for the reasons advanced by the appellants. The judge makes an assumption about the purpose of the power to detain and adopts an analysis of the legislation which will achieve that purpose. In my view that is putting the cart before the horse. The starting point should be the legislation itself, and it is only if a natural construction yields an irrational or unworkable or apparently purposeless scheme that it is permissible to assume that Parliament could not have intended the scheme to operate in that way.[77]The premise of the judge’s analysis, and of Mr Swift’s submissions, is that the power to detain can be exercised where the power to seize is unavailable; the conditions which justify its lawful exercise are therefore different and less onerous. This necessarily involves accepting that although on the face of section 139 the conditions for exercising both powers are the same, namely where goods are liable to forfeiture, in fact the section must be read differently depending upon which power is being exercised. In the case of seizure, which sets in train the forfeiture provisions, it would plainly not be enough merely to suspect that the goods were liable to be forfeit. Accordingly the analysis must be that seizure can occur only when there is a reasonable belief that goods are liable to forfeiture. By contrast, goods can be detained when there is a reasonable suspicion that they may be liable to forfeiture. In effect, therefore, section 139 has to be rewritten along the following lines:
“Any thing liable to forfeiture under the customs Acts may be seized .. by an officer.. whenever he has reasonable grounds to believe that they are liable to forfeiture and may be detained ..by an officer…whenever he has reasonable grounds to suspect that they may be liable to forfeiture.”
[78]In my judgment, this goes well beyond the legitimate approach to statutory construction. I find it impossible to accept that when Parliament in section 139(1) used the same formula for determining when the powers of detention and seizure could be exercised, it intended this formula to have a different meaning depending upon which power was being exercised. The inevitable inference from the way the section is drafted is that the conditions precedent to the lawful exercise of the power of detention must be precisely the same as those which will justify the lawful exercise of the power of seizure.[79]This does not lead to the consequence that the concepts of detention and seizure are identical, as Mr Swift submitted. It merely means that the conditions for their exercise are the same. In my view there is a perfectly cogent reason why Parliament might have chosen to confer these two powers as alternative options available in the same set of circumstances, as Mr Jones submitted. Once goods are seized this is the first stage in the route to forfeiture. Indeed the scheme of Schedule 3 is such that following seizure, forfeiture is automatic unless the tax payer puts in a notice within one month contesting the seizure. If a notice is lodged, the Revenue must then set in train a hearing where the court will determine whether the goods are liable to be seized or not. If the court is satisfied that the goods are liable to be seized then the court must order forfeiture; paragraph 6 makes it clear that there is no discretion to exercise (although there is a power for customs to return the goods if satisfied that the appropriate duty has been paid). Conversely, if the court concludes that the goods are not liable to forfeiture, they must be returned.[80]By contrast, where goods are detained the forfeiture procedures are not set in motion. The effect is simply to prevent the taxpayer dealing with the goods. Indeed, during detention the goods are often left with the taxpayer, as were some of the goods in this case. They are effectively frozen in his hands. This may be a sensible step to take where there has been a breach of the customs regulations which strictly are capable of justifying seizure but where the Revenue believes that the tax may have been paid and allows further time for it to be established whether this is so or not. In my judgment there is nothing surprising in HMRC having two distinct powers available to deal with the same situation where the consequence of employing one is significantly more draconian than the consequence of employing the other.[81]I therefore reject the judge’s fundamental premise that the purpose for which the power of detention has been conferred on HMRC dictates that the conditions justifying the lawful exercise of that power must necessarily be different to those which would justify a lawful seizure. However, even on the assumption that the conditions necessary for the lawful exercise of the two powers are the same, the question still arises: what are those conditions?[82]I accept that the phrase “liable to forfeiture” may, depending on the context, mean no more than “at risk of forfeiture by the courts” as Sales J, and indeed Mummery LJ in his judgment, suggest. On that analysis it would be possible to construe section 139 as applying whenever there is a reasonable belief that goods are liable to seizure or detention, although that would not of course achieve the objective of permitting detention on suspicion alone. The powers could not be exercised on reasonable suspicion since in my judgment Parliament could not possibly have intended to permit goods to be seized on suspicion alone where this leads to automatic forfeiture of the goods unless challenged by their owner.[83]If the officials were to be held liable for unlawful seizure or detention whenever it was subsequently established that their beliefs were unfounded, there would be much to be said for implying a limitation of this kind into section 139. But that is not the case.Section 144, which Mummery LJ has set out in paragraph 19 above, provides an immunity to the Commissioners or any officers acting on their behalf in circumstances arising out of the seizure or detention of goods. The immunity applies to any criminal or civil proceedings and relieves the Commissioners or officers from having to meet any claim for damages or costs or from being subject to any punishment whenever a court is satisfied that there were reasonable grounds for the seizure or detention.[84]In my view this section would have no purpose if a seizure or detention on reasonable grounds were lawful. Section 144 is directed specifically to the exercise of the powers of seizure and detention and is premised on the assumption that the seizure or detention, even if based on reasonable grounds, is unlawful. Hence the reason why the immunities are granted.[85]In my judgment, the premise underlying section 144 is entirely consistent with, and reinforces what I consider to be the more natural reading of, section 139. The lawful exercise of the power to seize or detain goods requires that the goods are “liable to forfeiture”. Parliament has provided for goods to be so liable in a wide range of circumstances. That is the language which Parliament has chosen to describe the sanction available to HMRC once a relevant breach of the customs obligations is established. For example, section 49(1)(a) renders goods liable to forfeiture where they are imported without payment of duty. But as I have observed, there are other provisions which render goods liable to forfeiture for failing to keep appropriate documents or records which might provide proof of payment of duty. In these statutory contexts it is plain that liable to forfeiture means that there must in fact be a breach of the relevant obligation. A court could not order forfeiture just because an official of the HMRC reasonably believed that there had been a breach.[86]Moreover, HMRC’s approach requires the phrase “liable to forfeiture” to be given a different meaning in section 139 than it has in Schedule 3. Paragraph 6 of that Schedule provides that “if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited.” Plainly in that context the phrase “liable to forfeiture” must mean that the court has found that the factual conditions which have to be satisfied before the goods can be forfeited actually exist. It is section 139(6) which provides that Schedule 3 is to have effect with respect to forfeitures. I consider it unlikely that it was intended that the phrase should have a different meaning in the schedule than it has in the section to which it is linked.[87]Nor do I think that section 139(5) militates against this construction, as the judge thought. It is not surprising that provision is made for how goods can be dealt with pending the court’s determination whether they should be forfeited. This subsection merely recognises the reality that after seizure or detention the goods are as a practical matter in the hands of HMRC; it tells us nothing about the legality of the detention or seizure.[88]There are three further reasons why I reject the judge’s analysis that the power of detention could lawfully be exercised on reasonable suspicion. First, since we are dealing with a power to interfere with property rights, that power should not be construed more widely than is reasonably necessary. The judge’s approach involves reading words into section 139 in order to give HMRC a power which he believes Parliament must have intended them to have. In my judgment before any such implication is made to widen the power of the state to interfere with private property rights, it must be very clear that Parliament intended to confer it. I do not accept that that such intention is manifest here; it cannot be enough that the court considers it desirable that the power should exist.[89]Second, if Parliament had intended that the section should be interpreted so as to empower detention on reasonable suspicion alone, it would have been very easy to have said so in terms. This is what Parliament did in section 138 when conferring the power to arrest someone whom the relevant officials have reasonable grounds to suspect has committed a customs’ offence. Sales J correctly pointed out that in section 138 Parliament is simply using a well-established formula typically employed when powers of arrest are granted. Nonetheless it provides a very simple and obvious formula for Parliament to use if it had wished to make reasonable suspicion the touchstone of legality for detention of goods in section 139. The difference in the language of the two adjoining sections is striking.[90]A final, if less significant, point is that once one departs from the literal approach, it is not obvious why the test for determining whether goods can lawfully be detained should be the reasonable suspicion of the relevant official as opposed to, say, an honest suspicion. Indeed, the latter might be thought to render more effective the objective of preventing taxpayers avoiding their obligations.[91]It may be that this analysis deprives HMRC of a power which it is desirable that they should have. I accept that there may be cases where HMRC suspects that duty may not have been paid but is not in a position to be sufficiently sure to justify seizure. The lack of the power could prejudice them in that situation. However, these consequences may be mitigated by the fact that there appear to be various circumstances, not simply limited to the non-payment of duty, which justify seizure leading to forfeiture, and these may often justify detention even where there is uncertainty about whether duty has been paid. But even if there is real prejudice to HMRC, I do not think that it is for the courts to fill any lacuna created by the legislation.[92]I accept that the effect of this analysis is that the Revenue will not know for sure until a determination by the court whether the seizure or detention was lawful or not. Legality is determined with hindsight. On the face of it, it is a surprising way to draft the legislation. But the potential difficulties are largely catered for by section 144. I accept that that section does not provide a full immunity from all potential legal consequences. As the judge pointed out, it does not for example prevent injunctions being sought. As to that, the only relevant injunction would be a mandatory interlocutory injunction requiring return of the goods (since if, following a trial, it was found by a court that goods were not liable to forfeiture, they would have to be returned in any event.) However, if HMRC satisfies a court that it has a reasonable grounds for believing that the law may be broken, and that restoring the goods pending trial may undermine its ability in the public interest to enforce payment of taxes due, it is difficult to think that the balance of convenience will lie with the taxpayer, unless at least he pays money into court equivalent to the disputed tax.[93]I should add that my construction of section 139 may have certain advantages to HMRC. If reasonable suspicion that goods are liable for forfeiture is the test for determining the legality of detention, HMRC may be liable on the basis that any suspicions are not reasonable even though it turns out that the goods are in fact liable to forfeiture. Conversely, if the test is whether goods are in fact liable to forfeiture, detention will be lawful even if it was not in fact reasonable for HMRC to suspect that they were at the time of detention, and indeed even if HMRC justifies forfeiture on some basis not known at the time of detention.[94]For these reasons, which are broadly similar to those relied on by Davis LJ, with whose judgment I agree, I would uphold the appeals. Strictly, the detention of these goods was unlawful. Whether anything of significance flows from that conclusion is another question. We were told that it is common ground that HMRC acted reasonably in detaining these goods. If that is right, then in view of the defence in section 144(2) I do not see that any remedy is appropriate other than a bare declaration that the detention of these goods was unlawful.[95]My initial (and very preliminary) reaction on first looking at the papers was that one would expect HMRC to have the power, under s. 139, to detain goods pending further enquiries and that s.139 was to be so construed.[96]This was essentially because: i. On any view HMRC are given remarkably wide powers under the legislation in a variety of contexts. That is an acknowledgement of the prospective dishonesty, deceit and criminality prevalent in some quarters with a view to the evasion of duties properly payable. It is unsurprising that HMRC would be equipped with robust powers to counter that. ii. Reflecting the first point, the courts had long recognised that it is legitimate for customs officers in the execution of their duty to take possession of goods with a view to examining them to assess if they were liable to duty or forfeiture: see Jacobsohn. That case in my view has little direct bearing on the present question of the interpretation of s.139. But the views there expressed are put in general terms and the problems of smuggling and evasion of duty have never gone away. They may not now be confined to the coves of West Wales as Mr Geraint Jones for the appellants colourfully put it (or, I add, to much of the coast of England for that matter): but they continue to exist and sometimes with increasing sophistication, as the carousel fraud cases illustrate. One would not necessarily expect a departure, in 1979 and in the predecessor litigation, from an approach long approved, in general terms, by the courts. iii. Again reflecting the first point, preservation of goods which may be liable to duty is potentially very important. If goods cannot be detained (and thereby preserved) they may speedily be disposed of: and the perpetrators may themselves disappear. Even if the perpetrators do not disappear a monetary claim for unpaid duty may be in practice difficult or worthless, as assertions of lack of any meaningful assets can be anticipated. So the availability of an in rem interim preservation power pending investigation, bolstering the separate power of seizure, makes sense. iv. Section 138 makes provision for the arrest of persons. That gives power to arrest, among others, a person “whom there are reasonable grounds to suspect of having committed an offence for which he is liable to be arrested”. The claimants naturally draw attention to the fact that this section is drafted in a way conspicuously different from that deployed in the immediately following s.139. That is a point to which I will return. But the more immediate thought is that if that is the power conferred on HMRC with regard to the arrest of persons then one would not necessarily expect a more limited power with regard to the detention of goods.[97]However, I must remind myself that the intention of Parliament is ultimately to be derived from the language which it has chosen to use in the statute. Mr Jones is also entitled to emphasise the point that, since the deprivation of goods ostensibly belonging to another is involved, appropriately clear words are needed to justify the claimed ambit of the power. It is to be borne in mind in this context that detention of goods, even if limited in point of time, is capable of causing real damage and disruption to a bona fide trader. In consequence, Mr Jones’ argument tended towards what may be styled a narrower and more literal interpretation; Mr Swift’s tended towards what may be styled a broader and more purposive interpretation.[98]Mr Jones hopefully submitted that deployment of any canons of construction was not needed here because, as he said, the meaning of s.139 was “plain beyond doubt”. That was an ambitious submission, if only because Sales J, in a most carefully reasoned judgment, has actually found against the claimants’ case at first instance. Moreover, the question of interpretation has attracted differing preliminary or obiter views of differing judges: most notably, perhaps, that of Pill LJ in the case of Gora (op. cit) at paragraph 51, a view shared by Kenneth Parker J as expressed in Demand & Supply Cash & Carry Limited v. HMRC [2009] EWHC 3321. Reservations or differing preliminary views, on the other hand, have been expressed by Longmore LJ in the Gora case and by Mitting J in Millennium Cash & Carry Limitedv. HMRC [2010] EWHC 1308 Admin. Mr Jones, in subsequent written submissions, referred to the Law of Entry, Search and Seizure (4th ed.) edited by Richard Stone: in particular to Chapter 7-25 and 7-94. He did so in order to rely on the view there expressed, with regard to the meaning of s.139, that “the more natural meaning of the words used is that the thing must actually be liable to duty”. But that view is qualified by the immediately preceding observation that the section is “ambiguous as to whether it is enough that the officer reasonably suspects that what is seized is liable to forfeiture”. In short, the meaning of s.139 is not plain.[99]As it seems to me, the phrase “liable to forfeiture”, taken on its own, has two potential meanings. It may mean, putting it summarily, being in fact to be given up on account of unpaid duty (or some other breach): or it may mean, although perhaps it is a little more elusive of simple definition, at risk of being so given up. The use of the word “as”, as contained in s.139 (2) and (3), is also capable of supporting either approach. All the same, it is perhaps a point of comment that Mr Swift, whilst disclaiming any argument that words such as “reasonably suspected to be” were to be notionally written into s.139 (1) prior to the words “liable to forfeiture”, then had a degree of difficulty in formulating what “liable to forfeiture” did connote as used in s.139 (1). Mr Jones had no such difficulty.[100]There is no definition of such phrase in the 1979 Act. (There are, in fact, many provisions both in this Act and in related legislation rendering goods liable to forfeiture on many grounds.) It is nevertheless clear that in s.49, relating to forfeiture of goods improperly imported without payment of duty, the phrase has the first meaning. Mr Swift accepted as much. Our attention was not drawn to any provision in the 1979 Act where the phrase “liable for forfeiture” clearly has the second meaning. But in my view it is particularly telling that, in Schedule 3, the phrase “liable to forfeiture” does clearly have the first meaning: see, for instance, paragraphs 3, 6 and 17 of Schedule 3. That is telling because Schedule 3 - even if it only applies to forfeiture - is expressly incorporated by s.139 itself (by sub-section (6)); and is not the less telling because s.139 applies to the Customs and Excise Acts generally (as defined) and not simply to the 1979 Act.[101]It is also, I think, telling – because it is in the same Part of the statute and relates to the same subject-matter – that in s.144 the phrases “liable to forfeiture” and “as liable to forfeiture” also clearly have the first meaning: just because judgment could only be given in favour of the claimant or plaintiff in condemnation or other proceedings if the court has found that the goods in question were not (in fact) liable to forfeiture.[102]It may be said that the 1979 Act, reflecting its various origins as being a consolidating Act with amendments, contains a mish-mash of provisions and total consistency is not to be expected. But the contrast in approach between the immediately preceding s.138 (which expressly gives the power of arrest not only of a person who has in fact committed an offence but also of a person whom there are reasonable grounds of suspecting of having committed an offence) and s.139 (which does not adopt such wording) has to be noted.[103]In my view, s.144 is important on the issue of interpretation arising in this case. Parliament has chosen by the language used in s.139 to empower HMRC to seize or detain anything “liable to forfeiture”. It would be an unacceptable result if HMRC were exposed to civil penalty for damages or criminal liability for prosecution where they seized or detained goods in good faith and on entirely reasonable grounds and thereafter it transpired that in the event the goods were not dutiable or that duty had been paid. Section 144, however, as I see it, provides the protection Parliament has thought fit to confer. While s.144(1) cannot apply to goods detained – it only applies to goods seized – s.144(2) can apply to goods detained, as well as to goods seized. That provides protection to HMRC, in circumstances where it transpires that the detained (or seized) goods were not in fact liable to forfeiture, from paying any damages or costs or from any criminal sanction. Even if not exhaustive protection, that is important and valuable protection; and is entirely consistent with the words “liable to forfeiture” meaning – as (and in my view significantly) at various places elsewhere in the statute they clearly mean – that the goods were in fact liable to be forfeited.[104]I found it a particular difficulty in Mr Swift’s argument, with regard to goods detained, that it renders s.144 (2) effectively otiose. Mr Swift was, I think, minded to acknowledge that. His riposte was that the claimants’ approach itself created an anomaly, in that, so he said, if it were right then the power to detain would itself in effect become a dead letter. If HMRC were only empowered to detain goods which (in fact) were liable to be forfeited they would not be empowered to detain in circumstances where detention was to preserve the position pending further investigation as to whether or not the goods were (in fact) liable to forfeiture.[105]But I do not think this point has anything like the force of the countervailing point arising under s.144. For one thing, detention with a view to investigation may well, in the event, establish that the goods detained were indeed liable to forfeiture. For another, even if it transpires that the goods or some of them (as apparently in the present case, although there may be an issue on this) were not in fact liable to forfeiture then HMRC have the protection of s.144 (2). It is certainly unacceptable, as I see it, that the power conferred by s.139 should or could be construed as empowering HMRC to detain without any reasonable grounds for doing so. It is not enough, as I see it, for HMRC to detain the goods solely on the ground that they want to investigate further: they must first at least have some reasonable grounds for detaining in the first place and for wanting to investigate further.[106]Clearly, then, there must be grounds: and ordinarily, of course, there will be. The test then is, if proceedings are subsequently brought, and claimants are successful, as to whether such grounds were reasonable. Mr Swift submitted that it would be surprising if protection were intended to be available to HMRC if it turned out that the detention was wrongful, in that HMRC will have had no power to detain the goods (because they were not in fact liable to forfeiture). But, as I see it, that is precisely the basis on which s.144 is drafted. That is a sufficiently coherent scheme for Parliament to have intended to have adopted, applicable both to cases of seizure and to cases of detention.[107]There was some debate before us as to whether on HMRC’s case the test, at the time of detention, is “reasonable grounds for believing” “reasonable grounds for suspecting” or “reasonable grounds”. I found this rather arid: although the very fact that there was such a debate hardly assists Mr Swift’s argument. Clearly on any view reasonableness has a crucial part to play here: and s.144 so stipulates. I find it difficult in practice to envisage a case where there are reasonable grounds for detention without there having been at the time of detention reasonable grounds for suspecting (I do not think that belief is the test, having regard to s.138 and s.144) that the goods were liable to forfeiture. If that is so then, if the goods turn out not (in fact) to have been liable to forfeiture, the power to detain them – or, for that matter, the power to seize them - will be shown not to have been there: but the protection under s.144 remains potentially available.[108]Moreover, even where goods have been returned by HMRC, they can – if proceedings are then brought against them – seek to say that the goods were in fact liable to forfeiture. Indeed, as I have said, there are wide ranging grounds for forfeiture in the legislation, not confined to non-payment of duty; and it would seem that HMRC could invoke any such ground, whether or not suspected at the time, when subsequently saying that the goods were (in fact) liable to forfeiture: quite apart from relying on the protection given in s.144.[109]The judge, while acknowledging the force of the claimants’ submissions by reference to s.144 (2), stated that s.144 (2) did not provide complete coverage for all remedies in law; and in particular would not cover the position of injunctive relief (and associated costs orders) being available to compel return of goods detained by HMRC even while they were seeking to undertake reasonable inquiries. That may be so; but I think it a point of limited weight. For one thing, that scenario would not, I think, have been perceived by Parliament as a very likely or frequent scenario for which provision needed to be made. For another, there would be no necessary entitlement to an interim injunction for return of the goods if HMRC were saying that they (reasonably) needed more time to investigate: the entitlement to a mandatory injunction, as I see it, would potentially arise, in the ordinary way, only if the claimants were at that stage in a position positively to demonstrate that the goods were not in fact liable to forfeiture. For another again, most probably an interim injunction - assuming for present purposes, and without deciding, that the word “judgment” as used in s.144 extends only to final judgments - if granted would not necessarily attract an award of costs payable, as opposed to costs reserved or in the case; and as for a final judgment in favour of claimants that would not, as Mr Jones observed, require an injunction. Not least, it can normally be predicated that the initial detention by HMRC will have been on reasonable grounds of suspecting that the goods were liable to forfeiture, even if HMRC needed to undertake further enquiries thereafter to establish the position. If there were reasonable grounds for detaining in the first place, then HMRC have their potential protection under s.144 (2). If on the other hand HMRC had no reasonable grounds for detaining in the first place then there is no obvious reason why they should deserve any mercy from the courts: and HMRC cannot be presumed to have been intended to be entitled to protection when they have detained goods without any grounds for suspicion but purely with a view to further enquiry in the blind hope that something may later turn up on that further enquiry to justify the detention.[110]Mr Swift placed some reliance on s.139 (5) as supporting his argument. But in my view such sub-section is in no way inconsistent with the interpretation advanced by the appellants.[111]Sales J in his judgment placed very great emphasis on the (objectively) perceived desirability of HMRC having a power to detain goods where there was a doubt as to whether duty had been paid on them, under the scheme of the legislation. As will be apparent from my opening remarks, I am receptive to that. But ultimately, on analysis, the wording used by Parliament, and the scheme of Part XI of the Act, tells against that. Sales J stated that the provisions of s.139 (1) were consistent with enabling HMRC to take action where there were reasonable grounds for seizing or detaining a thing. He said that if that was the policy “it is best promoted…by construing section 139 (1) as allowing detention where there are reasonable grounds to suspect that duty may not have been paid on the goods in question.” But how the perceived policy is “best promoted” is not a matter for the courts, it is a matter for Parliament: and in my view the language and scheme (taking s.139 with s.144 and Schedule 3 in particular) deployed in Part XI are against such an interpretation.[112]As may be gathered from what I have said, I do not think that the sky will fall in as a result of such a conclusion. HMRC have their power of seizure, which they can deploy as appropriate. They have their separate power of detention. They are also empowered to make restoral in the interim. If it turns out, in any subsequent proceedings, that the goods were not in fact liable to forfeiture then it will have been shown that HMRC had not had the power to detain the goods in question, (and likewise with cases of seizure). But, to repeat, HMRC then can invoke the protections provided under s.144 (2). If at the time of detention they acted on reasonable grounds they have nothing to fear in terms of liability. If they did not at the time of detention act on reasonable grounds why should they necessarily be protected? HMRC should thus be expected to have the courage of their convictions. That, in my view, on the true interpretation of the legislation, is what Parliament has designed.[113]I should perhaps mention that we were told by Mr Swift that it was common ground before Sales J that in the present case HMRC had reasonable grounds for suspecting in this case that duty had not been paid on the goods and that it was reasonable for HMRC to make further enquiries in that regard. If that is so, the continued vigorous pursuit and defence of these judicial review proceedings on this point seem surprising: just because that scenario would potentially provide a protection to HMRC for the purposes of s.144 (2). No clear explanation was given to us on this.[114]Since preparing this judgment I have had the opportunity of reading in draft the judgments of Mummery LJ and Elias LJ. I think that the reasoning of Elias LJ, albeit rather more amplified than mine, in essentials corresponds with my own approach: and I agree with it. While I acknowledge the purposive points emphasised by Mummery LJ, on the whole I think that, with respect, the language used by Parliament does not permit the conclusion which he and Sales J have reached. In the result, I would allow the appeal.

Cited in 10 later judgments

and 1 more case