Bolle Transport BV v Secretary of State for the Home Department [2016] EWCA Civ 783

[2016] EWCA Civ 783Case No B2/2014/2045
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CAMBRIDGE COUNTY COURT
HIS HONOUR JUDGE YELTON
AOO CB 090
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 27/07/2016
Before
LADY JUSTICE GLOSTERLADY JUSTICE KINGLORD JUSTICE SIMON
Between
BOLLE TRANSPORT BVAppellantSECRETARY OF STATE FOR THE HOME DEPARTMENTRespondent
Mr Richard Barraclough QC and Mr Simon Clarke (instructed by Tinkler Solicitors) for AppellantMr Toby Riley-Smith QC and Ms Abigail Cohen (instructed by Government Legal Department) for RespondentHearing Hearing dates : Thursday 17 March 2016.
Judgment Approved

Introduction

[1]This is an appeal by the appellant, Bolle Transport BV (“the appellant”), a company incorporated under the law of the Netherlands, against an order of His Honour Judge Yelton made on 29 May 2014 in the Cambridge County Court upholding the imposition of a civil penalty on the appellant by the Secretary of State for the Home Department (“the respondent”) pursuant to the provisions of the Immigration and Asylum Act 1999 (“the 1999 Act”) on the grounds that, upon arrival of one its vehicles at the international Royal Mail depot at Langley, Berkshire, six “clandestine entrants” (as per the relevant statutory language, but in the vernacular, illegal immigrants) were discovered hiding in the appellant’s trailer.[2]The appeal raises issues as to the construction and application of Part II of the 1999 Act and the extent of the statutory defence available to carriers to avoid liability as “a responsible person” to a penalty for the entry of clandestine entrants into the United Kingdom.[3]We were told that the case raised important issues for the transportation industry and that a number of other cases were awaiting the outcome of this appeal. The appeal was listed to come on before the same constitution as, and immediately after, another appeal also raising issues under the 1999 Act, namely ICS Car Srl v Fanel Toia [2016] EWCA Civ 394. Although the court envisaged the possibility that one composite judgment might be given in both appeals, in the event the issues raised in the respective appeals were very different, and accordingly two separate judgments have been given.[4]On the appeal Mr Richard Barraclough QC and Mr Simon Clarke appeared on behalf of the appellant; Mr Toby Riley-Smith QC and Miss Abigail Cohen appeared on behalf of the respondent. Mr Clarke and Miss Cohen also appeared below.

The relevant provisions of the 1999 Act

[5]Part II of the 1999 Act sets out the scheme for the imposition of penalties on those found to be carrying clandestine entrants in their vehicles (and other modes of transport) upon entry to the United Kingdom.[6]Section 32 so far as relevant provides: “(1) A person is a clandestine entrant if -(a) he arrives in the United Kingdom concealed in a vehicle, ship or aircraft, ….(b) he passes, or attempts to pass, through immigration control concealed in a vehicle, or … (2) The Secretary of State may require a person who is responsible for a clandestine entrant to pay - (a) a penalty in respect of the clandestine entrant, (b) a penalty in respect of any person who was concealed with the clandestine entrant in the same transporter …… (6) In the case of a clandestine entrant to whom subsection (1)(b) … applies, each of the following is a responsible person - (a) if the transporter is a detached trailer, the owner, hirer or operator of the trailer; (b) if it is not, the owner, hirer or driver of the vehicle. … (7) Subject to any defence provided for by section 34, it is immaterial whether a responsible person knew or suspected - (a) that the clandestine entrant was concealed in the transporter, or (b) that there was one or more other person concealed with the clandestine entrant in the same transporter. … (10) 'Immigration Control' means the United Kingdom immigration control and includes any United Kingdom immigration control operated in a prescribed control zone outside the United Kingdom.” (a) he arrives in the United Kingdom concealed in a vehicle, ship or aircraft, …. (b) he passes, or attempts to pass, through immigration control concealed in a vehicle, or (b) a penalty in respect of any person who was concealed with the clandestine entrant in the same transporter (a) if the transporter is a detached trailer, the owner, hirer or operator of the trailer; (a) that the clandestine entrant was concealed in the transporter, or (b) that there was one or more other person concealed with the clandestine entrant in the same transporter.[7]Section 32A of the 1999 Act provides for the Secretary of State to issue a code of practice specifying matters to be considered in determining the amount of the penalty under section 32. So far as material it provides as follows:
“(1) The Secretary of State shall issue a code of practice specifying matters to be considered in determining the amount of a penalty under section 32. (2) The Secretary of State shall have regard to the code (in addition to any other matters he thinks relevant)- (a) when imposing a penalty under section 32, and (b) when considering a notice of objection under section 35 (4). ….. ” (b) when considering a notice of objection under section 35 (4). ….. ”
[8]Section 33 of the 1999 Act provides for the Secretary of State to issue a code of practice to be followed by any person operating a system for preventing the carriage of clandestine entrants.[9]Section 34 of the 1999 Act sets out the statutory defences to the imposition of penalties: “(1) A person (“the carrier”) shall not be liable to the imposition of a penalty under section 32(2) if he has a defence under this section. (2) It is a defence for the carrier to show that he, or an employee of his who was directly responsible for allowing the clandestine entrant to be concealed, was acting under duress. (3) It is also a defence for the carrier to show that -(a) he did not know, and had no reasonable grounds for suspecting, that a clandestine entrant was, or might be, concealed in the transporter,(b) an effective system for preventing the carriage of clandestine entrants was in operation in relation to the transporter; and(c) that on the occasion in question the person or persons responsible for operating that system did so properly. … (4) In determining, for the purposes of this section, whether a particular system is effective, regard is to be had to the code of practice issued by the Secretary of State under section 33.” (a) he did not know, and had no reasonable grounds for suspecting, that a clandestine entrant was, or might be, concealed in the transporter, (b) an effective system for preventing the carriage of clandestine entrants was in operation in relation to the transporter; and (c) that on the occasion in question the person or persons responsible for operating that system did so properly.[10]Section 35A provides for an appeal to the county court against the imposition of a penalty on the grounds that the carrier is not liable to the penalty or the amount of the penalty is too high. Section 35A so far as relevant provides as follows: “(1) A person may appeal to the court against a penalty imposed on him under section 32 on the ground that –(a) he is not liable to the imposition of a penalty; or(b) the amount of the penalty is too high. (2) On an appeal under this section the court may— (a) allow the appeal and cancel the penalty, (b) allow the appeal and reduce the penalty, or(c) dismiss the appeal. (3) An appeal under this section shall be a re-hearing of the Secretary of State's decision to impose a penalty and shall be determined having regard to— (a) any code of practice under section 32A which has effect at the time of the appeal, (b) the code of practice under section 33 which had effect at the time of the events to which the penalty relates, and (c) any other matters which the court thinks relevant (which may include matters of which the Secretary of State was unaware). (4) Subsection (3) has effect despite any provision of Civil Procedure Rules. ……” (a) allow the appeal and cancel the penalty, (b) allow the appeal and reduce the penalty, or (c) dismiss the appeal. (a) any code of practice under section 32A which has effect at the time of the appeal, (b) the code of practice under section 33 which had effect at the time of the events to which the penalty relates, and (c) any other matters which the court thinks relevant (which may include matters of which the Secretary of State was unaware).[11]As to the level of a penalty, section 32A provides that:
“(1) The Secretary of State shall issue a code of practice specifying matters to be considered in determining the amount of a penalty under section 32. (2) The Secretary of State shall have regard to the code (in addition to any other matters he thinks relevant) — (a) when imposing a penalty under section 32, and (b) when considering a notice of objection under section 35(4).” (a) when imposing a penalty under section 32, and (b) when considering a notice of objection under section 35(4).”
[12]In accordance with section 33 of the 1999 Act the Secretary of State issued a code entitled “Civil Penalty, Prevention of clandestine entrants: Code of Practice” (“the Operating Code”). In accordance with section 32A of the 1999 Act the Secretary of State also issued a code entitled “Level of Penalty: Code of Practice”, which was revised in 2004, in relation to the level of penalties (“the Level of Penalty Code”).[13]The Operating Code sets out measures to be taken and steps to be followed by persons operating a system for preventing the carriage of clandestine entrants to the United Kingdom. Part 1 of the 1999 Operating Code applies to road haulage. The relevant provisions for present purposes are: “1.1 Measures to be taken to secure vehicles against unauthorised entry1.1.1 Before final loading takes place, all existing cuts or tears in the outer shell or fabric of the vehicle, which exceed 25 centimetres in length, must be repaired and sealed so as to prevent unauthorised entry.1.1.2 If present at the time of final loading, the owner, hirer or driver of the vehicle must check it to ensure that no persons have gained entry and are concealed within. It must then be locked, sealed, or otherwise made secure to prevent unauthorised entry. If not present at the time of final loading the owner, hirer or driver must, where possible, ensure that such checks are conducted at that point by reputable persons and then obtain written confirmation from those persons that these checks were properly conducted and that the vehicle did not contain concealed persons at the time of final loading and securing.1.1.3 When the final loading has been completed, the load space must be secured immediately by lock, seal or other security device, which prevents unauthorised entry. …… 1.1.8 Where a sealed container (except a container sealed by Customs) is loaded onto a vehicle, the owner, hirer or driver must, where possible, check to ensure that it does not contain unauthorised persons. It must then be resealed and made secure in accordance with the above requirements. These actions and the number of the new seal used must be recorded in documentation accompanying the vehicle.” (My emphasis.)[14]Part 1 of the 2004 Level of Penalty Code sets out matters to be taken into consideration by the Secretary of State when determining the level of any penalty be imposed against a vehicle’s owner and/or driver. In relation to vehicle owners, the 2004 Level of Penalty Code provides as follows:
“ROAD HAULAGE AND OTHER COMMERCIAL VEHICLES The following matters will be considered by the Secretary of State in determining the amount of penalty he may require to be paid by a person who is responsible for a clandestine entrant: - 1. Owner/Hirer (i) The extent to which steps have been taken to instruct and train drivers, sub-contractors and other persons with operational control over the vehicle, and monitor their compliance in the operation of a system designed to prevent the carriage of clandestine entrants that complies with the code of practice for vehicles issued under section 33 of the Act. (ii) The extent to which: (a) the standard and maintenance of the integral security features of the vehicle prevent unauthorised access; (b) the outer shell or fabric of the vehicle is maintained in good order; (c) additional security devices (e.g. locks, seals, tilt cords) that prevent unauthorised access to the vehicle are made available and are maintained in good order. (iii) Where the owner or hirer is not also the driver but is present during any or all parts of the vehicle’s journey to the United Kingdom, the extent to which he has acted to ensure that any system in place that complies with the code of practice for vehicles issued under section 33 of the Act is properly operated. (iv) The owner or hirer’s record of liability to penalties. (v) The level of the owner or hirer’s operational control over the vehicle. Where the owner or hirer is remote from the day to day operation of the vehicle (for example a finance or leasing company or, in the case of a hirer, has hired the vehicle to another person on a long-term basis) the terms under which the vehicle is leased/hired/hired-on particularly where this hinders or otherwise the use of adequate security devices. (vi) The level of co-operation in bringing clandestine entrants to the notice of the United Kingdom authorities where the owner or hirer knows or suspects, after the vehicle has passed through the United Kingdom immigration control, that a clandestine entrant is concealed in the vehicle. (vii) The extent to which the owner or hirer knew, or had reasonable grounds for suspecting, that a clandestine entrant was, or might have been, concealed in the vehicle prior to boarding the ship or train to the United Kingdom, or before arrival at a UK immigration control operated in a prescribed control zone outside the United Kingdom.” (i) The extent to which steps have been taken to instruct and train drivers, sub-contractors and other persons with operational control over the vehicle, and monitor their compliance in the operation of a system designed to prevent the carriage of clandestine entrants that complies with the code of practice for vehicles issued under section 33 of the Act. (a) the standard and maintenance of the integral security features of the vehicle prevent unauthorised access; (b) the outer shell or fabric of the vehicle is maintained in good order; (c) additional security devices (e.g. locks, seals, tilt cords) that prevent unauthorised access to the vehicle are made available and are maintained in good order. (iii) Where the owner or hirer is not also the driver but is present during any or all parts of the vehicle’s journey to the United Kingdom, the extent to which he has acted to ensure that any system in place that complies with the code of practice for vehicles issued under section 33 of the Act is properly operated. (v) The level of the owner or hirer’s operational control over the vehicle. Where the owner or hirer is remote from the day to day operation of the vehicle (for example a finance or leasing company or, in the case of a hirer, has hired the vehicle to another person on a long-term basis) the terms under which the vehicle is leased/hired/hired-on particularly where this hinders or otherwise the use of adequate security devices. (vi) The level of co-operation in bringing clandestine entrants to the notice of the United Kingdom authorities where the owner or hirer knows or suspects, after the vehicle has passed through the United Kingdom immigration control, that a clandestine entrant is concealed in the vehicle. (vii) The extent to which the owner or hirer knew, or had reasonable grounds for suspecting, that a clandestine entrant was, or might have been, concealed in the vehicle prior to boarding the ship or train to the United Kingdom, or before arrival at a UK immigration control operated in a prescribed control zone outside the United Kingdom.”

Factual background and procedural history

[15]The appellant’s haulage business was at all material times concerned in the transport of goods by large heavy goods vehicles (“LGVs”) between the Netherlands and the United Kingdom. The business has operated since 1994 and it now operates 27 trucks and one trailer. The appellant carried out a substantial amount of sub-contract work for another well-established Dutch company, Visbeen & Zonan BV (“Visbeen”), which involved the appellant transporting trailers belonging to the latter.[16]On 16 October 2013 one of the drivers employed by the appellant, a Mr Stein Schellekens (“Mr Schellekens”), was instructed by Visbeen to deliver a trailer and collect another trailer from DHL which was based at Frankfurt airport. In his witness statement (and he was not cross-examined at trial) Mr Schellekens said:
“3. On arrival at the airport I completed the security requirements and proceeded to the DHL site where I dropped my trailer and hooked up the trailer as instructed by the planning. 4. After I hooked up the trailer I reported myself at the DHL transport office where I was told that I had to take another trailer, this trailer was not completely loaded, I checked this information with the planning and the [planning] confirmed in a message on the board computer that I had to take the trailer that was awaiting the completion of the loading. 5. I unhooked my vehicle from the trailer I was originally instructed to take and hooked up on the trailer as per the latest instructions, during the period I was waiting for the trailer to be loaded the trailer was left unattended. 6. I waited for the loading to be completed and the trailer to be sealed before I returned to the traffic office to collect my paperwork to accompany the trailer. 7. Having completed the formalities I left the airport complex and made my way in the direction of Calais.”
[17]Mr Cees Bolle, a director and owner of the appellant, (who likewise was not cross-examined at trial) said in his witness statement:
“16. I am aware that at Frankfurt Airport there are Visbeen trailers that are preloaded by airport staff under the supervision of airport security. The driver has absolutely no involvement in the loading process because of health and safety and security issues. However I am aware that the load of mail would consist of letters and parcels some of which would have been palletised and other mail would be contained in sacks to the extent that all the letters and parcels sacks are loaded to the inside ceiling height of the trailer. Before the rear doors are locked and sealed the driver would be given the opportunity to inspect the load before the rear doors are closed and sealed for the purpose of equal weight distribution over the trailers axles though it is more often than not that because the load is packed so tight the driver cannot physically climb inside the trailer as such. The method of loading of the trailer is at the behest of the airport loaders. The trailer door is secured by means of a latch and bolted and then the seal is applied.”
[18]It appears that there was an “airside” section of DHL’s premises to which drivers were not allowed access, although the precise extent to which they were denied such access is not clear either from the evidence or from the judgment, since clearly they were able to hook up to the relevant trailer. Thus at paragraph 14

the judge said:

“14. As I understand it, there is no great check on people coming in but once you are in, that is a driver, you are not allowed on the airside of the system, you are not allowed in the relevant building or on the other side and, therefore, you have no part at all in the loading of the vehicle. ”
[19]The judge went on to hold, based on the written evidence of Mr Schellekens and the written and oral evidence of Mr Theodorus Duwel, an expert “in road transport provisions”, who was the only witness who was cross-examined, that drivers collecting trailers from DHL at Frankfurt had no involvement in, and were not present during, the trailer loading process, because of health and safety and security issues, and that Mr Schellekens was not able to inspect the contents of the trailer either at all or in any meaningful way before the trailer was sealed. He said at paragraphs 16 – 19 of the judgment: “16. The facts in this case, as I have understood it, were that when the driver arrived he thought he was going to take trailer A but was then told, "no, you are taking trailer B and we are loading it at the moment". It had not been finished when he got there. He [that is Mr Bolle] says the driver has absolutely no involvement in the loading process because of health and safety and security issues.17. However, I am aware that the loaded mail would consist of letters and parcels, some of which would have been palletised and other mail would be contained in sacks to the extent that all the letters and parcel sacks and pallets are loaded to the inside ceiling height of the trailer. The driver will be given the opportunity to inspect the load before the rear doors are closed and sealed for the purpose of equal weight distribution over the trailer's axle, although it is more often than not the case that because the load is packed so tight the driver cannot physically climb inside the trailer as such. [This part of the paragraph is in fact a direct quotation from Mr Bolle’s statement and perhaps should have been in inverted commas.] Then he says it is sealed. According to what Mr. Duwel and, indeed, the drivers say, they did not see that. They were not allowed near, to use the vernacular, until the seal was applied to the trailer.18. The submissions made on behalf of the company by the solicitors at page 116 assert: "3. Therefore by deduction in all the circumstances the clandestine entrants (CE's) must have gained illegal access at the secure site at Frankfurt Airport when the trailer was loaded by Royal Mail. [It is actually German mail, DHL] Whilst the driver was present during all loading of the trailer and all security provisions were at the behest of Royal Mail and airport security." 19. The driver was not present as I have understood it and the driver in fact sets that out at page 141, [the judge then quotes paragraphs 5 and 6 Mr. Schellekens’ statement as set out above.][20]Mr Schellekens then drove the vehicle via Calais to the United Kingdom. At the Cobham Services station on the M25, Mr Schellekens swapped trailers with another driver employed by the appellant, a Mr Antony Ringe (“Mr Ringe”). Mr Ringe checked that the seal of the trailer was unbroken and then drove it to the Royal Mail depot at Langley, Berkshire, a journey of some 15 to 30 minutes. Upon arrival at Langley, the intact seal of the trailer was broken in the presence of Mr Ringe and the depot manager. Whilst unloading was taking place, the six clandestine entrants were discovered at the back of the trailer. They were arrested and taken into custody by the police.[21]The judge held that nothing untoward occurred on the limb of the journey from Frankfurt airport to Langley. He said at paragraph 12 of the judgment:
“12. It is clear, it seems to me, that nothing untoward occurred on the journey from Frankfurt Airport to Cobham and then on to Langley. There were no records of the back doors being opened, nothing seen by the drivers which would indicate that anything had happened…... ”
[22]It was common ground at trial, and indeed on the appeal, that the overwhelming likelihood was that the clandestine entrants had gained access to the trailer at Frankfort airport either before, or while, the lorry was being loaded by DHL staff at DHL’s airside depot, and prior to the trailer being sealed.[23]It was also common ground that neither Mr Ringe nor Mr Schellekens was aware, or should have been aware, at any time that the clandestine entrants were in the trailer.[24]Following the discovery of the clandestine entrants, the Secretary of State for the Home Department imposed a penalty of £1,200 per entrant on the appellant, i.e. a total sum of £7,200, under the provisions of the 1999 Act. Originally, the respondent also imposed a penalty on Mr Ringe, but, given his limited participation in events, the penalty notice was subsequently withdrawn.[25]The appellant appealed to the county court pursuant to the provisions of section 35A of the 1999 Act against the imposition of the penalty, on the grounds that it was not liable to the imposition of a penalty by reason of the defence afforded to a carrier under section 34 and that, in any event, the amount of the penalty was too high. It was not in dispute at trial or on the appeal that the appellant was “the responsible person” for the purposes of section 32(6).[26]The appeal came on before His Honour Judge Yelton on 29 May 2014 in the Cambridge County Court. He gave an extempore judgment on the same date dismissing the appeal, although he reduced the penalty imposed from £7,200 to £6,000, on the grounds that the respondent had wrongly assumed that the appellant had been subject to the imposition of two previous penalties, when, in fact, that had not been the case.[27]The evidence and argument before the lower court was principally directed towards the issue of whether the appellant had made out its ground of appeal, namely whether it had an effective system which was being properly operated on 17 October 2013 and therefore whether it could avail itself of the defence under section 34.[28]In his judgment HHJ Yelton upheld the imposition of the penalty, but reduced it in amount. The key passage of his judgment, at paragraphs 22 - 25, in relation to the statutory defence afforded by section 34, was as follows: “"(b) an effective system for preventing the carriage of clandestine entrants was in operation in relation to the transporter ...".22. Various submissions have been made in relation to that. I agree with the submission that is made on behalf of the appellant that you do not rigidly have to keep to what is set out in the Code of Practice. It seems to me to say, as the respondent does, "well, it may be that they had a proper system" -- and they did have a proper system in terms of electronic tracking, if I can use that expression, in the way that I have set out earlier in my judgment -- "but they did not have a proper system for recording the checks that the driver made".23. What Ms Cohen says, and it is an unattractive argument, but I have to consider whether it is right, is that it does not matter that the lack in the system or the operation of the system did not cause the clandestine entrants to enter. That seems to me, as I say, not to be a very attractive argument. What I have to ask myself is this. On the basis which is common ground, as I have understood it, that the likelihood is that in this particular case the clandestine entrants got in at Frankfurt Airport,what system, if any, did the appellants have for preventing the carriage of clandestine entrants? The answer is absolutely none. They had no system at all for checking. They had no system for ensuring that a certificate was given, which I know is set out in the Code of Practice, and I heard what Mr. Duwel said about that.24. It does not seem to me that the CMR can be said to be a representation that there is nobody on there and, as Mr. Schellekens says, the trailer was left unattended, by that he means unattended by him, for a period of some considerable time. The difficulty with all of this is that these are in effect matters of strict liability with a defence open to the defendants if they prove it.25. I am satisfied that the system that the appellants had for monitoring the way in which the vehicle was after the driver got in it and started driving until he got to England, was perfectly sound. They did not have an effective system and there was no effective system, as I have said, for preventing the carriage of clandestine entrants because the driver did not and was not allowed to -- and it may not be his fault because it is not a matter of fault -- he did not and could not check who was on the lorry. In those circumstances it seems to me that the defence under section 34(3) is not made out, the burden of proof as I have said before being on the appellants. [My emphasis throughout this judgment].[29]The judge then went on to deal with the issue of penalty. It is important to note that, at the outset, he rejected the respondent’s argument that the appeal was “only against the imposition of the penalty at all on the basis of the [section 34(3) defence]”. He said, said at paragraph 26 and following: “26. The next issue is as to the penalty. Ms Cohen makes another able but unattractive point which is that the appeal is only against the imposition of the penalty at all on the basis of the defendants running section 34(3). Section 35A however, states: "(1) A person may appeal to the court against a penalty imposed on him under section 32 on the ground that —(a) he is not liable to the imposition of a penalty, or(b) the amount of the penalty is too high. (2) On an appeal under this section the court may — (a) allow the appeal and cancel the penalty, (b) allow the appeal and reduce the penalty, or(c) dismiss the appeal." 27. It seems to me that all of those courses are open to me on an appeal even if the appeal was brought solely on the basis that no penalty should have been imposed. ……” (a) he is not liable to the imposition of a penalty, or (b) the amount of the penalty is too high.[30]As to the amount of the penalty, he went on to say in paragraphs 27- 28:
“27. ……The difficulty here is this, one of the matters to be taken into account, both as set out in the Code of Practice and also one would have thought as a matter of common sense, are any previous penalties imposed on the company. 28. Mr. Hansell says that there were two previous penalties in his witness statement. That is, I think accepted now, not to be true. What had happened was that there were previous matters in relation to Visbeen but not in relation to Bolle and Mr. Bolle says in his witness statement, and I accept for the purposes of this hearing, that his company had never had any trouble at all. I am entitled on a re-hearing to deal with the matter as the department should have done. It seems to me that by imposing a penalty partly on the basis that there were two previous brushes with authority the government departments acted wrongly and I should revise the penalty, that I should not remove it for the reasons that I have set out earlier. It seems to me that the proper course would be to reduce the penalty by a proportion and I propose to reduce it to £1,000 a person rather than £1,200. I shall allow the appeal only to that limited extent.”
[31]Permission to appeal was granted on the papers by Lewison LJ on the basis that the appeal raised important questions of principle about the operation of the system of penalties imposed upon carriers under the 1999 Act.[32]The respondent filed a respondent’s notice seeking to uphold the judge's order for reasons different from or additional to those given by the judge.

The arguments on the appeal

[33]The principal issues arising on this appeal are whether the judge was correct to hold that the appellant was liable to pay a penalty, or, even if it were liable, whether, as a matter of discretion in the particular circumstances of the case, any penalty should be imposed at all.[34]In his written and oral submissions, Mr Barraclough QC, for the appellant, attacked the judgment on a number of grounds, both legal and factual. His arguments may be summarised as follows: i) First, he argues that the judge wrongly approached the question of liability on the basis that the 1999 Act established a strict liability regime, and that, accordingly, in the absence of a carrier being able to establish a defence under section 34, the imposition of a penalty was inevitable. He submits that, even in circumstances where a carrier is unable to establish such a defence, nonetheless the court has a discretion as to whether to impose a penalty. In ruling that the issue was one of strict liability, the judge effectively prevented himself from exercising the discretion. ii) Second, he complains that that error meant that the judge failed to exercise afresh the discretion conferred on the Secretary of State, as the former was bound to do when determining an appeal by way of a re-hearing under section 35A. Mr Barraclough submits that, had the judge done so, he should, given the appellant’s inability to control the airside loading process, and to undertake the checks required in paragraph 1.1.2 of the Operating Code, necessarily have exercised his discretion to decide that no penalty should have been imposed. iii) Third, he submits that, insofar as the judge exercised his discretion at all, he did so wrongly, because it was unreasonable, given his factual findings, to impose any penalty at all on the appellant. He failed in reaching this conclusion to give any weight to the impossibility of the appellant complying with some aspects of the Code of Practice given the arrangements at Frankfurt Airport. iv) Fourth, he submits that, in the circumstances, this court can and should re-exercise the discretion on the evidence before the court. v) Fifth, he submits that the judge was in any event wrong, on his analysis of the evidence, to hold that the appellant’s defence under section 34 of the 1999 Act failed. Given that the judge had found that it was not possible for the driver to make the checks required in paragraph 1.1.2 of the Operating Code or to obtain the certificate there mentioned, the judge should have held that the defence was made out. vi) Sixth, in any event, he submits that the penalty was excessive because the judge failed to take into account several factors identified in the Level of Penalty Code.[35]In response, Mr Riley-Smith QC for the respondent submitted in summary as follows: i) The judge did not err in his approach. He did not disavow the exercise of a discretion. He understood the nature of the exercise which was required and that it involved a discretionary element. ii) The appeal below was brought on the sole ground that the appellant had a statutory defence to the imposition of a penalty under s 34(3) of the 1999 Act. Although the appellant’s original skeleton argument referred once to the fact that the power was discretionary, the substantive argument before the lower court was directed solely at issue of whether the appellant could establish that it had an effective system which was being properly operated and accordingly the appellant had a defence under section 34(3). The judge was not asked to address the question of discretion. In those circumstances he could not be criticised for not having done so. Following judgment, the appellant did not ask the judge to consider whether his judgment was defective for lack of reasons and/or to address the issue of discretion, as per the approach recommended in English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409, paragraph 25. iii) Whilst the judge did not expressly address issues of discretion, it was clear from his judgment that, having considered the evidence, he was of the clear view that the penalty was appropriate. iv) If this court were to hold that the judge had failed to exercise his discretion, the respondent would not oppose this court re-exercising the discretion on the basis of the evidence. v) In any event the judge was right to find both as a matter of fact and of law that the section 34 (3) defence had not been made out. On the evidence the judge was clearly entitled to conclude that the appellant did not have an effective system in place for preventing the entry of clandestine entrants during the loading process at Frankfurt airport. vi) The judge did not err in determining the appropriate level of penalty. The judge evidently had the level of Penalty Code of Practice well in mind and expressly referred to it in paragraph 27 of his judgment. If this court were to substitute its discretion it should uphold the judge’s penalty of £6,000 as appropriate. Discussion and determination Was the section 34(3) defence established?

Discussion and determination

[36]It seems to me that logically the first issue for this court to determine is whether the judge was correct to hold that the appellant’s defence under section 34 of the 1999 Act failed. Although section 35A provides that an appeal to the judge is “a re-hearing of the Secretary of State's decision", thereby incorporating the full discretion enjoyed by the respondent under section 32(2), the fact is that, if a responsible person establishes its defence under section 34(3) or (3A) on the facts, then there can be no liability at all to the imposition of a penalty, and the respondent’s discretion as to whether to impose a penalty simply does not come into play. Likewise the court has no discretion as to whether the defence is satisfied; the defence is either established or it is not. The court at the first stage, therefore, simply has to determine on the evidence whether the responsible person has established all the relevant elements set out in section 34(3)(a) to (c) or section 34(3A)(a) to (d). If the responsible person fails to establish the defence, then the court has to move on to the second stage; it has to decide whether to impose a penalty, exercising the respondent’s discretion under section 32(2). It is clear that, even though the defence has not been established, nonetheless the court still has a discretion whether in all the circumstances to impose a penalty, and if so, in what amount.[37]In the present case the issue in relation to the defence was whether the respondent had satisfied the requirements to show that “an effective system for preventing the carriage of clandestine entrants was in operation in relation to the transporter”; and that "on the occasion in question the person or persons responsible for operating that system did so properly”.[38]Subject to one point, I do not see anything wrong in the judge’s approach, as reflected in paragraphs 7 and 23-25 of the judgment, in relation to the question as to whether the section 34 defence was satisfied. In that context if his comments are to be construed as suggesting that the effective system for preventing the carriage of clandestine entrants” which has to be in operation necessarily has to be that of the responsible person itself I would not agree. That the relevant system may be one operated by a third party seems to be envisaged by paragraph 1.1.2 of the Operating Code.[39]But I would not disturb the judge’s findings that the defence was not made out. It was a conclusion which he was clearly entitled to reach on the evidence before him. For example there was no evidence that DHL had any system for preventing the entry of clandestine entrants airside – something that it was incumbent on the appellant to prove, if it was going to rely on it. Indeed, as Mr Schellekens said, the trailer was left unattended during the period while he was waiting for it to be loaded. Nor was there any evidence that, even if DHL did have such a system, it was being correctly operated on the relevant occasion. Likewise there was no evidence whatsoever to suggest that the appellant had any system for checking that clandestine entrants had not entered during the loading process by DHL. The fact that the appellant’s driver had no involvement in the loading process and that it was apparently not possible for him to check the lorry when it was being loaded airside, does not seem to me to be an adequate answer. It would have been perfectly possible, as the Operating Code expressly envisages, for the appellant, or indeed Visbeen, as part of its contractual relations with DHL, to have insisted that, if the appellant’s driver was not permitted to be present at the time of final loading (which itself seems to me to be a questionable operational premise, since, if appropriately accompanied by a member of DHL’s staff, there would be no insuperable practical reason why the appellant’s driver should not have been present), DHL itself should warrant that it had carried out proper checks at such time of final loading. Likewise it would have been perfectly possible for the appellant/Visbeen to have obtained written confirmation not only that such checks had been properly conducted, but also that the trailer did not contain concealed persons at the time of final loading and securing. In that event there would have been a contractual chain which might entitle the appellant to an indemnity in respect of the penalties.[40]In this context Mr Barraclough sought to rely upon various passages in the expert evidence of Mr Duwel to support an argument that the appellant had done all that was possible and therefore had established the defence. This included the following (see pages 34-35 of the transcript):
“MR. CLARKE: What would happen if a driver asked for a certificate to the effect that there were no illegal entrants in the vehicle? A. They would rather (unclear). They haven't got such certificates and never use them. I have seen them because I saw a draft be signed in the Code of Conduct where they want the diver to sign and then somebody else will join the driver in the inspection to sign it as well. That would never work because you get answers like name and address, Mickey Mouse, Disney World. Q. Have you ever seen a certificate used? A. No. Q. Or issued? A. No. Q. If Bolle Transport said to DHL Frankfurt, "We are not taking any more of your loads unless you provide us with such a certificate" what response would they receive? A. They would more than likely lose the contract. Q. If the next company came along and said, "no certificate, no movement", what response? A. They would more than likely come into the same situation. The only way we could get those certificates in is if you stick it in the CMR Convention. Q. If the requirement was placed into the CMR Convention? A. Yes.”
Q. Have you ever seen a certificate used? Q. Or issued? Q. If the next company came along and said, "no certificate, no movement", what response?

Q. If the requirement was placed into the CMR Convention?

[41]Apart from the fact that Mr Duwel’s speculative view - to the effect that DHL would not have contracted with any carrier on the basis that DHL warranted that proper checks had been carried out at the time of loading - were well outside his relevant expertise, they were in any event wholly unsupported by any objective empirical evidence and the judge was clearly entitled to reject them. The Operating Code clearly envisaged the possibility of such confirmation being given to the carrier, where the driver is not present at the time of final loading, and there was nothing in the evidence to suggest from a commercial or common-sense viewpoint that a reputable company such as DHL could not, or would not, carry out the relevant checks at the time of loading, or would not have been prepared to give such an assurance in the circumstances prevailing at Frankfurt airport. Nor was there any objective evidence that such confirmation was impossible to obtain. In particular, there was no evidence from Mr Bolle, or from the transportation industry generally, that requiring a consignor to give the required assurance would in practice be impossible or otherwise would adversely or disproportionately impact on the carriage of goods by road. There was, for example, no evidence of steps taken by the appellant to negotiate with DHL or Visbeen to ensure that adequate checks were taken at the loading stage or for the relevant confirmations to be given.[42]If carriers, who are involved in the transportation of trailers to the United Kingdom, choose for their own commercial reasons not to insist on obtaining due confirmation from consignors that proper checks have been carried out at the time of loading by reputable persons to ensure that there has been no unauthorised entry, then it seems to me entirely appropriate that carriers should bear the risk of incurring the relevant penalty and factor in the cost of doing so into their rates. It is not for this judgment to speculate as to what would constitute circumstances where the obtaining of such confirmation could justifiably be regarded as impossible. It is enough to say that there was no evidence to support such a conclusion in the present case.[43]Finally, there is nothing in the judge’s use of the phrase “strict liability” in the context of his consideration of the section 34 defence that in any way undermines his decision on this issue.

Did the judge fail to exercise his discretion?

[44]In my judgment Mr Barraclough is, however, correct in his submission that, having rejected the appellant’s section 34 defence, the judge failed specifically to address the question as to whether, nevertheless, in the fresh exercise of his discretion in determining an appeal by way of a re-hearing under section 35A, he should, given the facts he had found, allow the appeal and cancel the penalty. Whilst the judge was well aware of the courses open to him under section 35 A (see paragraphs 26 and 27 of the judgment), and the issue of discretion was (contrary to the respondent’s argument in this court) ventilated in the appellant’s submissions at trial, he did not, in my judgment, address the separate question as to whether, even though the section 34 defence was not available, he should consider in the exercise of his discretion whether, under section 35A(2)(a), the appeal should nonetheless be allowed and the penalty cancelled. He appears to have gone straight on to consider the question as to whether the penalty should be reduced and, if so, by how much. That being so, I consider that this court should, as it is entitled to do, re-exercise the discretion. It is in as just a good position as the judge to do so on the evidentiary materials before it, as both parties came to accept at the hearing of the appeal.

How should the discretion be exercised?

[45]Whilst I accept that the question as to how the discretion should be exercised is an entirely separate one from the issue as to whether the section 34 defence has been established, I do not accept Mr Barraclough’s submission that : i) given the judge’s factual findings that “ According to what Mr. Duwel and, indeed, the drivers say, they did not see that [the loading process]. They were not allowed near, to use the vernacular, until the seal was applied to the trailer. … They did not have an effective system and there was no effective system, as I have said, for preventing the carriage of clandestine entrants because the driver did not and was not allowed to -- and it may not be his fault because it is not a matter of fault -- he did not and could not check who was on the lorry.”; and ii) the other evidence given by Mr Duwel in relation to security at Frankfurt airport and the appellant’s inability to control the airside loading process, and to undertake the checks required in paragraph 1.1.2 of the Operating Code, the court’s discretion should necessarily be exercised in such a way as to allow the appeal and cancel the penalty.[46]On the evidence before the court in this case, I do not accept that, as a matter of discretion, a carrier should be excused from liability simply because in its own perceived commercial interest, it does not seek the appropriate assurance, confirmation and/or indemnity from the consignor, whatever the superior bargaining position of the latter. My reasons for this view reflect those set out in paragraph 42 above. As Mr Riley-Smith submitted, that approach is consistent with the policy of the scheme under the 1999 Act. The scheme was introduced to meet the increasing scale of illegal entry into the United Kingdom, which was described by the Court of Appeal in International Transport Roth GmbH and another v Secretary of State for the Home Department [2003] QB 728 as a “grave social evil”: see per Simon Brown LJ at paragraph 1. As Sales J said in Bogdanic v SSHD [2014] EWHC 2872 (QB) the scheme of the 1999 Act is to place the burden of combating clandestine entrants on the haulage industry and to “encourage carriers, such as lorry drivers, not to transport clandestine entrants into the United Kingdom and to exercise care to ensure that there are no clandestine entrant stowaways hidden in their vehicles when they come to the United Kingdom from abroad.”[47]Accordingly, in the exercise of the court’s discretion, I would not cancel, or reduce, the penalty on the grounds put forward by the appellant.

Should the penalty be reduced?

[48]Finally, I reject Mr Barraclough’s submission that the penalty was excessive because the judge failed to take into account various factors identified in the Level of Penalty Code. He clearly had the Code well in mind and it would not have made any difference if he had expressly referred to any of the factors at this latter stage of the judgment. It is clear from his judgment that he was well aware of the electronic tracking system and the back door sealing system which the appellant did properly operate (see e.g. paragraph s 11 and 12 of the judgment), but the fact that he did not expressly refer to these as positives, or to the asserted difficulties which the appellant had at Frankfurt airport in checking the sealed vehicle, does not provide any basis for challenging the judge’s discretionary determination that the relevant penalty should be reduced to £1,000 per clandestine entrant, i.e. a total of £6,000. I regard that as an entirely appropriate penalty in all the circumstances.

Disposition

[49]It follows that I would dismiss this appeal.[50]I agree.[51]I also agree.

Cited in 1 later judgment