IAN FOX v HM CUSTOMS AND EXCISE [2002] EWHC 1244 (Admin)

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT
[2002] EWHC 1244 (Admin)Case No Case No: CO387/2002Venue Royal Courts of Justice, Strand,, London, WC2A 2LL
Between
IAN FOXAppellantHM CUSTOMS AND EXCISERespondent
Before
Mr Justice LightmanMr Ian Wise (instructed by Howells, 15/17 Bridge Street, Sheffield S3 8NL) for the AppellantMr Andrew Bird (instructed by Solicitor of HM Customs and Excise, New Kings Beam House, 22 Upper Ground, London SE1 9PJ) for the RespondentDate 3 July 2002
[1]Mr Justice Lightman: INTRODUCTION This is an appeal by way of Case Stated by the appellant Mr Ian Fox (“Mr Fox”) against a decision dated the 11th October 2001 (“the Decision”) of the Justices for the County of Kent acting in and for the Channel Petty Sessional Division (“the Justices”). The appeal involves questions of construction of the Customs and Excise Management Act 1979 (“the 1979 Act”) and relates to certain excise goods (“the Goods”) belonging in equal shares to Mr Fox and a Mr Everett and imported by them into the United Kingdom. All references in this judgment to sections and Schedules are to sections and Schedules to the 1979 Act. By the Decision the Justices held that the half share of the Goods belonging to Mr Fox (“Mr Fox’s Goods”) were liable to forfeiture because(a) they were part of a shared load comprising Mr Fox’s Goods and goods belonging to Mr Everett (“Mr Everett’s Goods”); and(b) Mr Everett’s Goods were condemned and forfeited under the deeming or default provisions contained in paragraph 5 (or possibly paragraph 10(3)) of Schedule 3. It is clear that, if the Justices had found as a fact on the evidence that Mr Everett’s Goods were part of such a shared load and that Mr Everett’s Goods were liable to forfeiture, under the provisions of section 141(1)(b) as a matter of law Mr Fox’s Goods would likewise be liable to forfeiture. The issue raised on this appeal is whether the legal position in respect of Mr Fox’s Goods is the same if, in place of a finding of fact on the evidence that Mr Everett’s Goods were liable to forfeiture, Mr Everett’s Goods have been condemned and forfeited under those deeming and default provisions. This is an important question for the CCE and importers of excise goods. FACTS[2]On the 23rd January 2001 Mr Fox was stopped by the Respondent, HM Commissioners for Customs and Excise (“the CCE”), at Dover Hoverport on his return to the United Kingdom from mainland Europe. He was travelling in his Motability Ford Focus car (“the Car”) with Mr Everett, his daughter’s then boyfriend. Mr Fox and Mr Everett informed the CCE that they had the Goods, namely 408 litres of beer, 2,900 cigarettes and 6 kilograms of handrolling tobacco all of which were for their personal (and not commercial) use. The CCE were not satisfied that the beer, cigarettes and tobacco were for personal use (and not for commercial use) and they seized the Goods and the Car as liable for forfeiture. On the 1st March 2001 the CCE restored the Car to its owners, Motability Finance Limited. By letter dated the 1st February 2001 Mr Fox gave notice of a claim on his own behalf that none of the Goods were liable to forfeiture. Mr Everett gave no such notice. On the 24th May 2000 the CCE instituted proceedings in the Channel Magistrates Court for condemnation of the Goods.[3]The proceedings came for hearing on the 11th October 2001. Mr Everett did not attend. Mr Fox did attend and gave evidence that he owned half of the Goods, namely Mr Fox’s Goods. The Justices held that, as Mr Everett had not contested that Mr Everett’s Goods were liable to forfeiture and as Mr Everett’s Goods should accordingly be condemned, as a matter of law under section 141(1)(b) Mr Fox’s Goods, since they were “mixed, packed or found with” Mr Everett’s Goods, were likewise liable to forfeiture and the Justices accordingly made an order for their condemnation. On the 18th October 2001 Mr Fox by way of appeal applied to the Justices to state a case for the opinion of the High Court, and this they did on the 14th January 2002. By the Case Stated, in terms which reflect some confusion as to the statutory scheme under the 1979 Act, the Justices sought to raise the issue set out in paragraph 1 of this judgment. STATUTORY PROVISIONS[4]Section 49 provides that goods chargeable on their importation with customs or excise duty which are imported without payment of duty are liable for forfeiture. Section 141 provides that:
“(1) Without prejudice to any other provision of the Customs and Excise Acts 1979, where any thing has become liable to forfeiture under the Customs and Excise Acts— ...(b) any other thing mixed, packed or found with the thing so liable shall also be liable to forfeiture.”
[5]This liability to forfeiture is however at all times subject to a wide discretionary power to grant total or partial relief vested in the CCE by section 152.[6]Section 139(1) provides that the C&E may seize or detain anything liable to forfeiture under the Customs and Excise Acts. Section 139(6) provides that Schedule 3 shall have effect for the purpose of forfeitures and of proceedings for the condemnation of any thing as being forfeited under the Customs and Excise Acts. A seizure is only lawful under the section if the goods seized are in fact liable to forfeiture. It is not sufficient that the CCE believe them to be liable to forfeiture, though in this case the CCE will have a defence to any claim arising from an unlawful seizure if they had reasonable grounds for the seizure: see section 144.[7]Schedule 3, headed ‘Provisions Relating to Forfeiture’, contains the following material provisions: ‘Notice of Seizure 1.—(1) The Commissioners shall, except as provided in sub-paragraph (2) below, give notice of the seizure of any thing as liable to forfeiture and of the grounds therefor to any person who to their knowledge was at the time of the seizure the owner or one of the owners thereof. (2) Notice need not be given under this paragraph if the seizure was made in the presence of—(a) the person whose offence or suspected offence occasioned the seizure; or(b) the owner or any of the owners of the thing seized or any servant or agent of his; or(c) in the case of any thing seized in any ship or aircraft, the master or commander. ... Notice of claim 3. Any person claiming that any thing seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners any office of customs and excise. ... Condemnation 5. If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeited. 6. Where notice of claim in respect of any thing is duly given in accordance with paragraphs 3 and 4 above, the Commissioners shall take proceedings for the condemnation of that thing by the court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited. ... 8. Proceedings for condemnation shall be civil proceedings and may be instituted— (a) in England or Wales in the High Court or in a magistrates’ court; ... 10.—(1) In any proceedings for condemnation instituted in England, Wales or Northern Ireland, the claimant or his solicitor shall make oath that the thing seized was, or was to the best of his knowledge and belief, the property of the claimant at the time of the seizure. ... (3) If any requirement of this paragraph is not complied with, the court shall give judgment for the Commissioners.”[8]The Excise Duties (Personal Reliefs) Order 1992 lays down guidelines as to the quantities of excise goods indicative of importation for own use and for commercial use. The guidelines indicate that a commercial use may be inferred: a) where the number of cigarettes exceeds 800; (Mr Fox’s Goods, i.e. his half share of the Goods, included 1,400 cigarettes); b) where the litres of beer exceeds 110 litres. (Mr Fox’s Goods included 204 litres); and c) where the tobacco exceeds 1 kilogram. (Mr Fox’s Goods included 3 kilograms). STATUTORY SCHEME[9]Goods are only liable to forfeiture if the conditions laid down in statutory provisions are established. Examples of such provisions are section 49 of the 1979 Act or Article 5 of the Excise Goods (Personal Reliefs) Order 1992. In any case where the claim that they are liable to forfeiture is disputed in a manner provided by the 1979 Act, that issue of fact must be resolved in proceedings before the High Court or the Magistrates Court. Where the claim is not so disputed, the 1979 Act provides that the seized goods are to be condemned and forfeited without any need to investigate whether the conditions laid down in (for example) section 49 are in fact satisfied.[10]Proceedings for condemnation are proceedings “in rem” against the goods liable to forfeiture: see CCE v. Air Canada [1991] 1 All ER 570. For this reason paragraph 1(1) of Schedule 3 requires notification of the seizure to the owner or owners if he or they may be unaware of it and only the owner or owners of the goods are interested in the outcome of the proceedings and have any standing in the proceedings.[11]A claimant (who must for the reasons I have given be the owner of the seized goods) is required by paragraph 3 of Schedule 3, if he disputes that the goods seized are liable to forfeiture, within one month to give notice of his claim to this effect to the CCE and if he fails to do so under paragraph 5 the seized goods are deemed to have been duly condemned as forfeited. There is no need for any court proceedings: in default of protective action taken by the owner, the only person interested in the issue whether the seized goods are liable to forfeiture, by operation of the paragraph there is a valid and effective forfeiture.[12]Paragraph 6 however provides that, if a claimant within the one month period gives the notice of his claim disputing the liability to forfeiture, the CCE must issue proceedings for condemnation of the seized goods. Paragraph 10(1) provides that at those proceedings the claimant or his solicitor must state on oath that the goods seized were the property of the claimant at the time of the seizure, and if he or his solicitor does not do so, paragraph 10(3) provides that the court shall give judgment for the CCE. This is because the claimant will not have established his ownership of the seized goods and accordingly the necessary legal standing to challenge the claim that the seized goods are liable to forfeiture. Such a judgment neither requires nor involves any finding that the seized goods are in fact liable to forfeiture: it involves merely a finding of default of any adverse claim by the owner with the statutory consequences of such default being that, whether or not in fact the goods are liable to forfeiture, the Court is required to condemn them as forfeited.[13]This brings me to the critical provisions of Section 141(1)(b). This provides that, where any thing has become liable to forfeiture under the Customs and Excise Acts, any other thing mixed, packed or found with the thing so liable shall also be liable to forfeiture. The Justices held that for the purposes of this section Mr Everett’s Goods were “liable to forfeiture” because by reason of the failure of Mr Everett to serve a notice of claim under paragraph 3 of Schedule 3 Mr Everett’s Goods were to be deemed to have duly been condemned as forfeited under paragraph 5 of Schedule 3; and that therefore Mr Fox’s Goods, as goods “mixed, packed or found with them”, were also liable to forfeiture. DECISION[14]Mr Bird (Counsel for the CCE) has suggested that Mr Fox’s letter dated the 26th January 2001 challenging that any of the Goods was subject to forfeiture, since it related to all the Goods, should be treated as a notice of claim by both Mr Fox and Mr Everett, and that accordingly the default determination in respect of Mr Everett’s Goods was made under paragraph 10(3) by reason of the failure of Mr Everett to give evidence on oath at the hearing before the Justices as to his ownership of Mr Everett’s Goods. I do not think that the Letter can operate as a notice of claim by Mr Everett: the fact that Mr Fox’s claim extended to all the Goods cannot operate to convert a notice of claim specifically made on behalf of Mr Fox alone into a notice of claim by Mr Fox and Mr Everett. But whether or not Mr Bird’s contention in this regard is correct and whether the forfeiture of Mr Everett’s Goods took effect under paragraph 3 or paragraph 10(3) of Schedule 3, for the reasons which I will explain cannot in law be material.[15]The conclusion reached by adopting the approach adopted by the Justices, whether it is based on paragraph 3 or 10(3) of Schedule 3 is grossly unjust. For it involves holding that the failure on the part of Mr Everett for any reason to serve a notice of claim or to state on oath his ownership of Mr Everett’s Goods at the hearing of the proceedings commenced by the CCE operates to divest Mr Fox of his ownership of his goods, for it precludes him in those proceedings from challenging the contention that Mr Everett’s Goods were liable to forfeiture and accordingly the basis for the case made against him that his goods, because they were “mixed, packed or found” with Mr Everett’s Goods, were liable to forfeiture. Mr Wise (Counsel for Mr Fox) has submitted that such a conclusion is incompatible with Article 1 of the Protocol to the European Convention on Human Rights (“Article 1”) and that, unless some escape route is found enabling another conclusion to be reached there, should be a declaration of incompatibility.[16]Mr Wise has argued that an escape route lies in the construction of the term “liable to forfeiture” in Section 141. This term (he submits) is ambiguous and capable of meaning either “legally bound to be forfeited” or merely “exposed to the risk of forfeiture”, (connoting the existence of a discretion whether to forfeit) and the second of these constructions should be adopted to avoid the potential injustice to Mr Fox arising from default determinations against Mr Everett. He goes on to say that the discretion could and indeed should be exercised in favour of Mr Fox where it is unjust to treat Mr Fox’s Goods as liable to forfeiture by reason of contagion by Mr Everett’s Goods. I do not think that this ingenious escape route is available, for the statutory language is mandatory: where the goods are liable to forfeiture the Court is bound to condemn them. This is placed beyond question by the terms of paragraph 6 of Schedule 3 which expressly requires that the Court “shall” condemn as forfeited goods found liable to forfeiture at the date of seizure. In this regard it is informative (as submitted by Mr Bird for the CCE) to have regard to the construction adopted of its statutory predecessor, section 226 of the Customs Consolidation Act 1876, which provided that the Justices “on proof that goods are liable to forfeiture under the Customs Acts may condemn the same.” Notwithstanding the use of the word “may”, it was held that the justices had no discretion in the matter: if the goods were found to be liable to forfeiture, they were bound to condemn them: see De Keyser v. British Railway Traffic and Electric Co Ltd [1936] 1 KB 224 cited with approval in CCE v. Air Canada above. The legislature in enacting the 1979 Act made plain its intention that the court should have no discretion and that there should be no doubt in the future on this question by the deliberate substitution in paragraph 6 of Schedule 3 of the word “shall” for the word “may” in the earlier Act.[17]But as it seems to me there is a clear alternative escape route. Section 141(1)(b) upon its true construction only bites where the Court finds as a fact in the proceedings relating to the seized goods that other goods are liable to forfeiture and that the seized goods are mixed, packed or found with those other goods. As a matter of common sense and as a matter of common justice it must be open to the owner of the seized goods (in this case Mr Fox) to challenge the facts relied on to establish the liability to forfeiture of the other party’s (in this case Mr Everett’s) goods. It is nothing to the point that the other party (in this case Mr Everett) declines to make a claim or attend the hearing, and default decisions are accordingly mandated by the 1979 Act in respect of Mr Everett’s Goods. This construction accords with the language of Section 141. It is also the only construction which affords a respect for Mr Fox’s rights under Article 1, and accordingly, even if I thought such a construction somewhat strained (which I do not), nonetheless I would think that Section 3 of the Human Rights Act 1998 requires its adoption. CONCLUSION[18]The Justices raised two questions for the determination of the Court. They are both confusing and difficult, if not impossible, to answer in a manner which affords any clear guidance to the Justices. I accordingly reformulate these two questions as follows:
“(1) Whether the Justices were correct in holding that upon the true construction of section 141(1)(b) of the Customs and Excise Management Act 1979 the failure of Mr Everett to serve a notice of claim under paragraph 3 of Schedule 3 of the 1979 Act or to give evidence on oath at the hearing before the Justices in these proceedings required or entitled the Justices as a matter of law to hold that, if the goods owned by Mr Fox were mixed, packed or found with goods owned by Mr Everett, the goods owned by Mr Fox were for that reason alone liable to forfeiture. (2) Whether upon the true construction of section 141(1)(b) aforesaid in the circumstances set out above, in order to establish by operation of section 141(1)(b) that the goods owned by Mr Fox are liable to forfeiture, it is necessary to prove as a fact that the goods owned by Mr Everett are liable to forfeiture?”
And I answer the first question in the negative and the second in the affirmative.[19]I therefore hold that this matter should be remitted to the Justices to redetermine in the light of the guidance afforded by this judgment. POSTSCRIPT[20]I must add a short postcript to the judgment. After I had circulated a draft of the judgment to Counsel in the ordinary course for comments and corrections, Mr Wise made a further submission. He complained that, whilst the answers to the reformulated questions were of assistance in affording Mr Fox an opportunity to make representations and call evidence at the hearing to the effect that Mr Everett’s Goods were not liable to forfeiture, that was not sufficient to prevent the risk of injustice or an interference with his rights under Article 1. The risk arises because relations between Mr Fox and Mr Everett have long broken down and Mr Everett is clearly not going to seek to make a case that the Everett Goods are not liable to forfeiture. He accordingly asks me to give some ruling or give some guidance to the Justices in respect of this scenario.[21]There is no basis for Mr Fox’s complaint. There is no reason why Mr Fox should not have a fair trial before the Justices when they embark on the fact-finding exercise required for their determination whether Mr Everett’s Goods and Mr Fox’s Goods are liable to forfeiture. Mr Fox can compel the attendance of Mr Everett by summons under section 97 of the Magistrates Court Act 1980 and can himself give evidence as to the circumstances in which the shared load was acquired and any arrangement or agreement as to its proposed use. If Mr Fox is dissatisfied with the decision of, or the fairness of the procedure adopted by, the Justices he can appeal.[22]There is likewise no reason to anticipate any violation with Mr Fox’s rights under Article 1. Condemnation of Mr Fox’s Goods will only amount to a violation if it goes beyond what is proportionate in the circumstances of the particular case (including any findings of fact by the Justices): see Air Canada above. For this purpose regard must be made to the two successive courses of action open to Mr Fox. First Mr Fox can defend the claim before the Justices putting the full facts (as available to him) before the Court. Second (if he fails before the Justices) he can make (and indeed already has made) a claim for relief from forfeiture and restoration of Mr Fox’s Goods under the separate and distinct discretionary procedure which was successfully invoked in Lindsay v. CCE [2002] 3 All ER 118 . Until the full facts and the outcome of the two sets of proceedings are known, any such adverse prejudgment as Mr Fox seeks is at best precipitate and at worst groundless.[23]In summary I do not think that Mr Fox has raised any further question beyond those answered in the Stated Case requiring consideration. It is accordingly unnecessary to decide that exercising my appellate jurisdiction under section 28A(3) of the Supreme Court Act 1981 I have any jurisdiction to give any such ruling or guidance as he seeks. - - - - - - - - - - MR JUSTICE LIGHTMAN : I answer the question raised by the justices, as reformulated in my judgment, as set out in my judgment. I will make the order in the form which has been handed to the associate.

Cited in 7 later judgments