The UK Border Agency (as it partially continues to call itself) is easily criticised for the way it performs its immigration functions. However, even in the revenue and customs spheres of its work the agency’s tactics in law enforcement have raised a few eyebrows. For example, in the instant case, Edwards-Stuart J held that the agency’s – more precisely the Border Force’s – tendency to give notice under Schedule paragraph 1 of the Customs and Excise Management Act 1979 to owners of seized goods while stating that its communication was not a “Notice of Seizure” was deplorable and had to stop immediately.
The court held that the practice was an attempt to defeat the statutory protection afforded to owners of seized goods by preventing time for making a claim from running from a date later than the date of seizure. In addition to the provisions of the 1979 Act, the court also considered the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 which transpose Council Directive 2008/118/EC – especially Article 21 which addresses the procedure to be followed on a movement of excise goods under suspension of excise duty – into domestic law.
This case was about 25,000 litres of mixed beers which were seized by the Border Force from Blackside (B). A company trading in Cyprus, B owned bonded goods which were stored in two bonded warehouses (under prescribed duty suspension arrangements goods on which duty has not been paid can be moved between bonded warehouses), one in France and the other in the UK. Aggrieved by the seizure of its goods while an independent contractor was transporting them by lorry between the two warehouses, B applied for judicial review of the seizure its consignment of beer. Although the driver of the lorry which was transporting the beers possessed documentation which was ex facie valid and matched the consignment carried, the Border Force took the view that the papers for an earlier delivery from a couple of days ago were being reused. A week later, B was informed that the administrative reference code (ARC) was being reused and a month afterwards it was contended – through a letter claiming “This is not a Notice of Seizure” – that the beers were lawfully detained as the paperwork was generated the day before the ARC number’s submission.
The question that arose was whether B had been sufficiently notified of (i) the seizure and (ii) the reasons behind such an action. B argued that under Customs and Excise Commissioners v Venn, Mather & Marquis Publications  EWHC Admin 1055, it was a condition precedent of a lawful seizure that reasons had to be given at the time. Moreover, B submitted that the authorities had been acting on a suspicion that the goods were liable to forfeiture, not on intelligence that the beers were, in fact, liable. In her servants’ defence the Secretary of State for the Home Department (SSHD) argued that owing to the fact that the lorry driver Mr Leon Ray was B’s agent, no service of a notice of seizure on B was required.
The Administrative Court
Early on in his judgment, Edwards-Stuart J observed that it is:
13. … [H]ard to imagine a more cynical letter. It told the Claimant on 19 October 2012, the very day on which the time for making a claim expired, that it had one month from 20 September 2012 in which to make such a claim.
However, refusing B’s application, the court held as follows.
Following the case of Revenue and Customs Commissioners v First Stop Wholesale Ltd  EWCA Civ 183, it is not a condition precedent of a lawful seizure that the reasons for it had to be given at the time. (The court  –  approved Pash v Director or Border Revenues  UKFTT 100 (TC) and did not apply the Venn case.)
Despite the above conclusion, however, the obligation under Schedule 3 (Provisions relation to forfeiture) paragraph 1 of the 1979 Act – to serve a notice on the owner where the owner was not present when the goods were seized – remained unaffected . Although there was no special form for such notice, the UKBA/Border Force was nevertheless content with operating a deplorable practice of giving the information required while simultaneously arguing that its communication was not a “Notice of Seizure”. Defeating the statutory protection afforded to the owner of the goods (under Schedule 3 paragraph 3 of the 1979 Act) by preventing time for making a claim from running from a date later than the date of seizure motivated such behaviour “and it was a practice that must cease forthwith.”
Edwards-Stuart J explained that although reasons might not have to be given at the time of seizure, government agencies’ operations needed to be subjected to some constraints . Arbitrary seizure of goods was unjustifiable as it violated Article 1 of the First Protocol (A1P1, right to peaceful enjoyment of property) of the European Convention on Human Rights.
Following Lord Nicholls’  and Baroness Hale’s  approach in Ghaidan v Godin-Mendoza  2 AC 557, the instant court opined that “[w]hen an organisation treats different cases in the same way, or similar cases in a different way, it can be said that its approach is arbitrary” .
Edwards-Stuart J  –  emphasised that:
- Any treatment that was not to be regarded as arbitrary was that it had to be done in good faith (“propriety of purpose”). If a seizing officer acted in bad faith, the seizure would be unlawful.
- A seizure had to meet the Wednesbury test.
- A seizure had to be a proportionate step in the circumstances.
- Even where the above three requirements were satisfied, a rationality test would still apply.
Rejecting the submission (as “misconceived” ) that the SSHD needed to be sure in advance that liability for seizure arose, Edwards-Stuart J held that often officers could not know, at the time of seizure, what finding would ultimately be made about liability to forfeiture, and a suspicion was all that they could act on. Nonetheless, officers’ state of mind was relevant because the decision to seize needed to justifiable on public law grounds. Although no evidence existed in relation to reasonable grounds for suspecting that the goods were liable to forfeiture because of designs to evade duty, the officers in the present case had acted in good faith (i.e. “honestly”). The officers’ suspicions were rational, and the seizure decision had not been perverse or disproportionate .
On the agency point (the legal principle of agency rather than the outgoing Border Agency), the court opined that the SSHD had not discharged the onus of showing that the lorry driver Mr Ray was B’s agent because the French warehouse transferred the beers and the means of transport were left for the warehouse controllers to determine. The controllers opted to engage an independent transport carrier and no evidence of an agreement between B and the carrier was available. Moreover, ambiguity existed in respect of whether the lorry driver Mr Ray was an independent contractor himself or an employee of the carrier. Ultimately, the court was not in a position to infer an agency relationship simply because Mr Ray informed B of the seizure.
Eastenders in Supreme Court
In First Stop, where the Court of Appeal (Jackson, Lewison and Beatson LJJ) considered three linked judgments of Singh J, the first two appeals related to the lawfulness of the detention of goods and not their seizure. Beatson LJ  found himself to be bound by the Court of Appeal’s earlier decision in R (Eastenders Cash and Carry plc) v Revenue and Customs Commissioners  EWCA Civ 15 under which the 1979 Act (within the meaning of section 139) empowers detention only if the goods were in fact liable to forfeiture on account inter alia of unpaid duty. Beatson LJ (with whom Jackson and Lewison LJJ concurred) held that the conditions precedent to lawful exercise of the power of seizure were the same as those of the power of detention. In light of Eastenders, reasonable grounds for detention or seizure were not a sufficient condition of lawfulness. So, “albeit not without hesitation” , because of the treatment of the issue in First Stop, for the time being Edwards-Stuart J found the Court of Appeal’s decision in Eastenders to represent the law and accordingly he was bound by it.
Eastenders – where the appellants complained that their liquor was wrongly detained by Her Majesty’s Revenue and Customs (HMRC) – is an intriguing case and the Court of Appeal (Mummery [dissenting], Elias and Davis LJJ) ruled against HMRC.
In Eastenders, the claimants argued that upon a true and proper construction section 139(1) of the 1979 Act only allowed the lawful seizure and detention of goods if they are actually “liable to forfeiture”. Moreover, the claimants also maintained that Sales J 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.
And, persuaded by such rationale, Elias LJ said this:
76. In my judgment, the judge’s [Sales J’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.
For Elias LJ  the inevitable inference from the way the section was drafted was that the conditions precedent to the lawful exercise of the power of detention should be precisely the same as those which would justify the lawful exercise of the power of seizure. However, on the other hand, that did not lead to the consequence that the concepts of detention and seizure were identical. Properly analysed, reasonable grounds for detention or seizure were not a sufficient condition of lawfulness.
The Supreme Court (Lord Neuberger PSC and Lords Mance, Sumption, Reed and Carnwath JJSC) will hear the appeal in the Eastenders case on 27/28 November 2013. Prior to Eastenders there was no binding authority on the construction of section 139(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” – of the 1979 Act.
In First Stop, Beatson LJ told us this about the impending appeal in the UK’s court of last resort:
21. The Supreme Court will decide whether it is a condition precedent to the power in section 139 of the 1979 Act to detain goods that they are in fact liable to forfeiture, or whether, as Mummery LJ considered, the legality of the exercise of the power in section 139 does not depend on proving this. HMRC will contend that Mummery LJ was correct and that the legality of the use of the power under section 139 is a matter subject to review by reference to ordinary public law principles, including the requirements of the Human Rights Act 1998.
Needless to say, it will be extremely interesting to see how the Supreme Court deals with HMRC’s appeal in Eastenders. It is also worth noting that, on 25 July 2013, the Supreme Court (Lord Neuberber PSC and Lords Reed and Carnwath JJSC) granted permission to appeal in R (First Stop Wholesale Ltd) (Appellant) v The Commissioners of HMRC (Respondent) UKSC 2013/0094.