Gora & Ors v Commissioners of Customs And Excise & Ors

These are appeals against decisions of the VAT and Duties Tribunal (“the Tribunal”), Mr Stephen Oliver QC (Chairman), released on 30 May 2002 following hearings in December 2001. Following certificates issued by the Tribunal on 30 July 2002, permission to appeal to this Court was given by Robert Walker LJ.

In each case, preliminary points were before the Tribunal for decision. The points as understood by the Chairman, and as agreed by the parties, are first: whether the appeals to the Tribunal involved the determination of a “criminal charge” within the meaning of that term in Article 6 of the European Convention on Human Rights; secondly, whether they involved determination of a criminal charge or only the determination of “civil rights and obligations”, within the meaning of Article 6, the jurisdiction of the Tribunal is sufficient to satisfy the requirements of Article 6. A related question arose as to the meaning of the word “seizure” in a context to be described and its consequences in Convention terms.

In so far as is material, Article 6(1) provides:

“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.”

Articles 6(2) and 6(3) confer specific rights on “everyone charged with a criminal offence”.

In the Gora group of cases, the appellants are traders in alcoholic drinks and are “revenue traders” as defined in section 1 of the Customs and Excise Management Act 1979 (“the 1979 Act”) in that they deal in goods liable to excise duty. In each case, they were in possession of excise goods, alcoholic liquor, on which the Commissioners of Customs and Excise (“the respondents”) were not satisfied duty had been paid correctly. It is not suggested that the traders were the producers or importers and they may have been several transactions away from the stage at which duty was payable..

Mrs Dannatt is the owner of a motor vehicle which, when being driven by her husband, was stopped by officers of the Commissioners at Eastern Dock Dover on 13 January 2000. Excise goods were found in the vehicle. There is an issue as to whether they should be restored to Mr Dannatt but Mrs Dannatt’s claim to the Tribunal arose because she was required to pay 25% of the duty alleged to be payable on the excise goods, a sum of £1,100, in order to have the vehicle restored to her. The officers decided that Mrs Dannatt had allowed her car to be used by her husband for an improper importation of the excise goods.

In each case, the respondents relied, before the Tribunal, on policies they followed in the discharge of their duties. These included a policy not to restore seized goods even when the failure to pay excise duty by the owner was innocent in that he had taken all reasonable steps to ensure that he was purchasing goods on which the duty had been paid. It also included a policy that the owner of a vehicle used by another for smuggling alcohol or tobacco, even if not party to the offence, will not have the vehicle restored without paying a sum equivalent to 25% (now 50%) of the revenue evaded.

For the appellants, Mr Cordara QC opened the appeal on the basis that the Court would consider the lawfulness of these policies in the context of the procedure by which they are enforced. Reliance was sought to be placed on the majority decision of this Court in International Transport Roth GmbH & Ors v Secretary of State of the Home Department [2002] 3 WLR 344 that a penalty scheme under section 32 of the Immigration and Asylum Act 1999, summarised later in this judgment (paragraph 25), was an unfair scheme in breach of Article 6. It also imposed such a burden on the carriers as to be disproportionate to the objective to be achieved and was a breach of Article 1 of the First Protocol to the Convention which deals with the peaceful enjoyment of possessions. This broader question was not considered by the Tribunal, nor was it required to be having regard to the preliminary questions, as understood by the Tribunal and the parties, posed.

This Court indicated that it was not prepared to go beyond the preliminary questions. The broader question should first be considered, if at all, by the Tribunal and upon facts as found and not upon statements of facts stated to be agreed solely for the purposes of the preliminary issues. Concessions, to which I shall refer, made by the respondents as to the jurisdiction of the Tribunal, support the view that it is not for this Court to embark upon the exercise at this stage.

The classification issue, that is whether the proceedings involve criminal charges or merely the determination of civil rights and obligations, does arise for determination. Additional rights are conferred by Article 6 upon those charged with a criminal offence and, in considering the substantive issues, the Tribunal will need to know into which category the proceedings fall. That issue was also considered in Roth. Two further points arise on which it is also appropriate to give a ruling. Provisions for the constitution and procedure of the Tribunal are provided in Schedule 12 to the Value Added Tax Act 1994. It is accepted that the Tribunal is “an independent and impartial Tribunal established by law” within the meaning of that expression in Article 6 of the Convention.

I will set out the statutory procedures together, though each of the points at issue requires consideration of only some of the provisions. We were referred to section 49 of the 1979 Act which provides that any imported goods, being goods chargeable on their importation with customs or excise duty, unshipped or unloaded without payment of that duty, shall be liable to forfeiture. Section 139 provides:

“(1)

Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty’s armed forces or coastguard.

(2)

Where any thing is seized or detained as liable to forfeiture under the customs and excise Acts by a person other than an officer, that person shall, subject to subsection (3) below either—

(a)

deliver that thing to the nearest convenient office of customs and excise; or

(b)

if such delivery is not practicable, give to the Commissioners at the nearest convenient office of customs and excise notice in writing of the seizure or detention with full particulars of the thing seized or detained.

(3)

Where the person seizing or detaining any thing as liable to forfeiture under the customs and excise Acts is a constable and that thing is or may be required for use in connection with any proceedings to be brought otherwise than under those Acts it may, subject to subsection (4) below, be retained in the custody of the police until either those proceedings are completed or it is decided that no such proceedings shall be brought.

(4)

The following provisions apply in relation to things retained in the custody of the police by virtue of subsection (3) above, that is to say—

(a)

notice in writing of the seizure or detention and of the intention to retain the thing in question in the custody of the police, together with full particulars as to that thing, shall be given to the Commissioners at the nearest convenient office of customs and excise;

(b)

any officer shall be permitted to examine that thing and take account thereof at any time while it remains in the custody of the police;

(c)

nothing in the Police (Property) Act 1897 shall apply in relation to that thing.

(5)

Subject to subsections (3) and (4) above and to Schedule 3 to this Act, any thing seized or detained under the customs and excise Acts shall, pending the determination as to its forfeiture or disposal, be dealt with, and, if condemned or deemed to have been condemned or forfeited, shall be disposed of in such manner as the Commissioners may direct.

(6)

Schedule 3 to this Act shall have effect for the purpose of forfeitures, and of proceedings for the condemnation of any thing as being forfeited, under the customs and excise Acts.

(7)

If any person, not being an officer, by whom any thing is seized or detained or who has custody thereof after its seizure or detention, fails to comply with any requirement of this section or with any direction of the Commissioners given thereunder, he shall be liable on summary conviction to a penalty of [level 2 on the standard scale].

(8)

Subsections (2) to (7) above shall apply in relation to any dutiable goods seized or detained by any person other than an officer notwithstanding that they were not so seized as liable to forfeiture under the customs and excise Acts.”

An officer is a person commissioned by the Commissioners (Section 1).

Schedule 3, mentioned in section 139(6), sets out provisions relating to forfeiture.

“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 therefore 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 anything seized in any ship or aircraft, the master or commander.

2.

Notice under paragraph 1 above shall be given in writing and shall be deemed to have been duly served on the person concerned—

(a)

if delivered to him personally; or

(b)

if addressed to him and left or forwarded by post to him at his usual or last known place of abode or business or, in the case of a body corporate, at their registered or principal office; or

(c)

where he has no address within the United Kingdom [or the Isle of Man], or his address is unknown, by publication of notice of the seizure in the London, Edinburgh or Belfast Gazette.

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 at any office of customs and excise.

4.—(1) Any notice under paragraph 3 above shall specify the name and address of the claimant and, in the case of a claimant who is outside the United Kingdom [and the Isle of Man], shall specify the name and address of a solicitor in the United Kingdom who is authorised to accept service of process and to act on behalf of the claimant.

(2)

Service of process upon a solicitor so specified shall be deemed to be proper service upon the claimant.

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.

7.

Where any thing is in accordance with either of paragraphs 5 or 6 above condemned or deemed to have been condemned as forfeited, then, without prejudice to any delivery up or sale of the thing by the Commissioners under paragraph 16 below, the forfeiture shall have effect as from the date when the liability to forfeiture arose.”

Paragraph 8 provides that “proceedings for condemnation shall be civil proceedings” and may be initiated in England or Wales either in the High Court or in a magistrates court.

The power to seize or detain conferred by section 139 applies only to any “thing liable to forfeiture” under the Acts. However, section 144 confers a protection on officers purporting to exercise that power:

“(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 Acts 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, and judgment is given for the plaintiff or prosecutor, 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.

(4)

Any certificate under subsection (1) above may be proved by the production of either the original certificate or a certified copy thereof purporting to be signed by an officer of the court by which it was granted.”

Section 152 provides, amongst other things, that:

“The Commissioners may, as they see fit-

(a)

…

(b)

restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those [customs and excise] Acts; …

(c)

after judgment, mitigate or remit any pecuniary penalty imposed under those Acts.”

Sections 14 and 15 of the Finance Act 1994 (“the 1994 Act”) make provision for review of specified decisions of the Commissioners. By notice in writing to them, they may be required to review their decision. Section 16 provides for an appeal to the Tribunal with respect to decisions on a review. Schedule 5 identifies decisions “subject to review and appeal” and paragraph 2(1)(r) specifies “any decision under section 152(b) as to whether or not anything forfeited or seized under the customs and excise Acts is to be restored to any person or as to the condition subject to which any such thing is so restored”.

Section 16(4) of the 1994 Act defines the powers of an appeal tribunal:

“In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say—

(a)

to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;

(b)

to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and

(c)

in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.”

The issue as to classification is whether the refusal to restore in the Gora cases, and the refusal to restore without a substantial payment in Dannatt, involve the determination of a “criminal charge” for the purposes of Article 6.

The criteria for determining whether a scheme is criminal or civil were stated by Simon Brown LJ in Roth, at p 360E, following earlier authority:

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

The issue is to be determined in the context of circumstances in which the decision not to restore had no regard to the professed and possible innocence of the traders or the fact that they may have taken all reasonable steps to ensure they were purchasing goods on which duty had been paid. In a letter of 26 June 2000 to the appellants’ adviser in Gora, it was stated:

“Where the revenue and legitimate trade are threatened by failure to pay excise duty, it is the Commissioners’ policy to refuse restoration. The objectives of such a policy of non-restoration of seized goods are:

•

maximising the deterrent value of seizure

•

ensuring that excise goods not normally available in the UK from legitimate outlets are not made commercially available in the UK

•

demonstrate that even ‘innocent’ failures to pay excise duty cannot be condoned (because of the potential severe effect on legitimate trade) and that it is every citizen’s duty to comply with the law

•

demonstrate that smuggling is a very serious matter and must not be allowed to become socially acceptable

•

deterring the development of a ‘smuggling culture’

•

protection of both UK revenues and legitimate trade.”

Having referred to that and other documents emanating from the Commissioners, the Tribunal stated (paragraph 33):

“33.

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

Policy statements were also referred to in Dannatt, including a news release by the Commissioners stating:

“When a vehicle is seized and the owner is not present at the time of interception, Customs will interview the owners in order to establish whether they are culpable, negligent or innocent.

Where Customs believe that the owner is party to the offence, the vehicle will not be restored. Where owners are deemed as negligent they will get the vehicle back only after payment of a sum equivalent to 50% of the revenue evaded. The policy was originally to charge 25% of the revenue evaded on the first occasion.

If the vehicle belonging to a third party is used to smuggle and transport illicit alcohol and tobacco for the second and subsequent time it may not be restored.”

Mr Cordara relied upon the Tribunal’s acceptance in Gora (paragraph 43) that the Commissioners are “using the power contained in section 152(b) to stamp out crime. Its effect, even on the innocent owner who is refused restoration, will be penal”. He relied on the Tribunal’s acceptance in Dannatt that “the consequences of the decision to restore only on payment of £1,100 are penal and deterrent”. Mr Cordara submitted that it would be absurd to deprive those in the position of the appellants, who may have behaved innocently, from the protection available upon the determination of a criminal charge when the perpetrators of the alleged smuggling have the protection.

Mr Cordara accepted that two decisions of the ECHR in which situations similar to the present were considered upon a classification issue are against him. In AGOSI v United Kingdom (1987) 9 EHRR 1, coins were seized by the Commissioners and the claimant company were unsuccessful in obtaining their restoration under what is now section 152(b) of the 1979 Act. It was argued before the Court that the request for restoration of the coins amounted to a determination of a criminal charge. Having noted that criminal charges under domestic law had been brought against the smugglers but not against AGOSI, the Court concluded (paragraph 65):

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

In Air Canada v United Kingdom (1995) 20 EHRR 150 an aeroplane was seized as liable to forfeiture pursuant to section 141(1) of the 1979 Act. It was restored on payment of a penalty of £50,000. The company disputed that the aircraft was liable to forfeiture and proceedings were commenced under Schedule 3 of the Act but the aircraft was condemned as forfeit.

The company argued that it had been subjected to a criminal penalty. By a bare majority, the Court concluded that the matters complained of did not involve the determination of a criminal charge. Section 141 provided a process in rem against any vehicle used in smuggling. No criminal charges had been brought and the criminal courts had not been involved in the matter. There was no threat of criminal proceedings in the event of non-compliance. The fact that property rights had been adversely affected could not of itself lead to the conclusion that a criminal charge had been brought. In this case (unlike AGOSI), there had been no confiscation, though payment of a sum of money was required.

In a dissenting judgment, Judge Walsh attached importance to the fact that the aircraft was still in transit and loaded with passengers and the company had no alternative to paying the sum demanded. It was abundantly clear that it was the intention of the authorities to impose a penalty of £50,000 and they succeeded in that. That penalty was levied in personam.

Mr Cordara acknowledged the similarity of the circumstances in those cases to those in the present cases, Air Canada to Gora and AGOSI to Dannatt, save that the penalty imposed in Dannatt was on a different scale from that imposed in Air Canada, given the proportion of the value of the vehicle to be paid and Mrs Dannatt’s limited resources as a private individual. Mr Cordara submits, however, that there has been a change of climate on this issue as acknowledged in Roth, at p 361F, Simon Brown LJ stating that, since Air Canada the Strasbourg jurisprudence had “moved yet further towards the claimant’s position”. The scheme in Roth was for a fixed penalty on carriers of £2,000 for every clandestine entrant found concealed in a vehicle. It also provided for the issue of a penalty notice which permitted detention of the vehicle if a senior immigration officer considered that there was a serious risk that the penalty would not be paid and no satisfactory alternative security had been given. Simon Brown LJ stated (at paragraph 42): “Having … formed the view that liability under this scheme has indeed targeted those truly regarded as in some degree culpable, it follows that I incline to the judge’s view that for Article 6 purposes, the scheme is properly to be regarded as criminal”.

Simon Brown LJ referred to the decision of the ECHR in Lauko v Slovakia (2001) 33 EHRR 40. The applicant was fined under the domestic Minor Offences Act for accusing his neighbours, without justification, of causing a nuisance. The government relied on the modesty of the punishment capable of being imposed and the fact that the offence did not give rise to a criminal record as distinguishing it from offences within the criminal law. Not surprisingly, in my view, the Court held that:

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

Simon Brown LJ also referred to the decision of the ECHR in AP, MP and TP v Switzerland (1997) 26 EHRR 541, upon which Mr Cordara places great reliance. Fines were imposed on the applicants in respect of tax evasion by their late husband and father. The Court reaffirmed the three criteria to be taken into account for the purposes of classification and reiterated (paragraph 39) that the concept of “criminal charge” within the meaning of Article 6 is an autonomous one. Reference was made to the nature and severity of the penalty risked, and found that the fines were not inconsiderable. The Court stated:

“41.

As regards the nature of the offence, it is noted that tax legislation lays down certain requirements, to which it attached penalties in the event of non-compliance. The penalties, which in the present case take the form of fines, are not intended as pecuniary compensation for damages but are essentially punitive and deterrent in nature.

42.

As regards the classification of the proceedings under national law, the Court attaches weight to the findings of the highest court in the land, the Federal Court, in its judgment in the present case, that the fine in question was ‘penal’ in character and depended on the ‘guilt’ of the offending taxpayer.

43.

Having regard to the above features, the Court considers that Article 6 is applicable under its criminal head.”

Stress is placed by Mr Cordara on the reference to “nature and severity of the penalty” and to the “punitive and deterrent” nature of the penalties, considerations which he submitted exist in the present cases.

Neither AGOSI nor Air Canada were cited in the judgments in AP or Lauko. A feature of the facts in AP appears to be, as put to counsel by Chadwick LJ in the course of argument, that in Swiss law a remedy against the estate of the deceased is not possible. The taxation legislation provides that “irrespective of personal guilt, the heirs shall be jointly liable for the deceased person’s evaded taxes and the fine incurred by him up to an amount not exceeding their share in the estate”. Thus while the punitive, as distinct from compensatory, and deterrent features are common as between AP and the present cases, the proceedings in AP had a criminal context and involved the imposition of a criminal sanction not present in Gora or Dannatt. The Court went on to hold that “inheritance of the guilt of the dead is not compatible with the standards of criminal justice in a society governed by the rule of law”.

Other recent decisions do not support the change of climate advocated by Mr Cordara. In Butler v United Kingdom (application No 41661/98) a confiscation order was made in the sum of almost £240,000 seized from the applicant on the ground that customs officers believed the money was directly or indirectly the proceeds of drugs trafficking and/or was intended for use in drug trafficking (section 43(1) of the Drug Trafficking Act 1994).

The applicant contended that a court, when considering whether to make a forfeiture order in the circumstances at issue, “must effectively be asking itself whether the individual concerned was planning at some future stage to use the funds in question for drug-related activity”. The Court declared the application inadmissible stating:

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

The decisions in Air Canada and AGOSI were cited with approval. It is clear that the Court did not regard the “punitive and deterrent” nature of the measure, or its severity, as factors which required the measure to be classified as a criminal charge.

In Goldsmith v Customs and Excise Commissioners [2001] 1 WLR 1673 it was argued that forfeiture and condemnation proceedings under section 139 and Schedule 3 to the 1979 Act involved the determination of a criminal charge. Sitting in the Divisional Court, Lord Woolf CJ stated, at p 1679C:

“22.

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

Lord Woolf, with whom Poole J agreed, concluded that the condemnation and forfeiture proceedings were not criminal charges to which Article 6(2) applied.

In R (on the application of Mudie) v Kent Magistrates Court and HM Customs and Excise [2003] EWCA Civ 237, the status of condemnation proceedings pursuant to section 139 and Schedule 3 to the 1979 Act was considered, Laws LJ, with whom Lord Phillips MR and Brooke LJ agreed, giving the only reasoned judgment. Laws LJ concluded that the proceedings did not involve the determination of a criminal charge. Having accepted that the concept of criminal charge possesses an autonomous meaning in the Strasbourg jurisprudence and that the domestic classification of the proceedings is treated as no more than a starting point, Laws LJ stated (paragraph 36):

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

The sanctions imposed under the current scheme are indeed severe, loss of the goods in the Gora cases, even on a finding of innocent failure to pay excise duty. The sanction in the Dannatt type of case is also severe, though it makes some allowance for the owner’s conduct. The rationale of the severe sanction is in order to maximise the deterrent effect of seizure and forfeiture. These were factors taken into account by the ECHR in AP as pointing to the procedure having the character of the determination of a criminal charge. Moreover, in Roth, the fact that the remedy was against property, by way of not returning the vehicle, did not prevent the Court from holding the scheme as a whole was in the criminal category.

Those factors are not in my judgment crucial in circumstances such as the present. The present procedure does not involve the criminal courts and the absence of any criminal sanction, even of the modest kind present in Lauko, is a factor to be taken into consideration. There is, in most of the cases, an attempt to analyse the nature of the proceedings and whether they accord with what would conventionally be described as criminal or as Laws LJ put it in Mudie, condemning or punishing individuals for wrongdoing. In AP, a crime had been committed by the deceased and the proceedings against the claimants and the benefits they received were a direct result of that crime. The ECHR treated the circumstances as “inheritance of the guilt of the dead”. While the procedures under consideration in the present cases are consequential upon a crime having been committed by another, the nexus between that crime and the proceedings is less strong and of a different nature from that in the case against the beneficiaries in AP.

I do not consider that the procedure by way of an application to restore goods can be described as determination of a criminal charge. The authorities strongly support that conclusion. The facts in the Gora cases are not materially difference from those in Air Canada and those in Dannatt not materially different from AGOSI. The principles expressed in those cases are not diminished by AP, which was a very different case, and were recently applied in the ECHR in Butler. In Goldsmith, forfeiture proceedings were held not to be criminal and, in Mudie (binding on this Court), condemnation proceedings were held not to involve the determination of a criminal charge. I see no basis favourable to the appellants’ case on which the present proceedings can be distinguished from condemnation proceedings. It is not in my view possible to hold that subsequent proceedings by way of an application to restore the condemned goods amount to the determination of a criminal charge. However blameless the owners, and however severe the sanctions, the function of the Tribunal is not to determine criminal charges.

While it was accepted on behalf of the appellants that the Tribunal was independent and impartial, it was submitted that its jurisdiction and powers are insufficient to satisfy the requirements of Article 6 of the Convention in the context of the right to peaceful enjoyment of possessions conferred by Article 1 of the First Protocol. Subject to an issue considered later in this judgment, recourse to the courts is provided only in condemnation proceedings and not in applications for restoration under section 152(b) of the 1979 Act. By reference to earlier decisions of the Tribunal, it was submitted that its powers are too restrictive to provide an effective remedy. The Commissioners might, in any event, ignore its findings.

In the course of argument, it emerged that the respondents took a broader view of the jurisdiction of the Tribunal than might have at first appeared. They were invited to set out in writing their views upon the jurisdiction of the Tribunal and Mr Parker provided the following written submission:

“1.

The Tribunal has found that:

‘the Commissioners have taken a policy decision not to restore properly seized goods. There are no exceptions to this. Even innocent failures to pay excise duty will not qualify as exceptions to the policy. The Commissioners regard themselves as exercising that power to deter illegal activities and to stamp our smuggling.’ (Gora, para 33)

2.

Whilst not material to the present case, there are in fact exceptions to this policy. The Tribunal has not yet decided on the lawfulness of this policy or its application to these cases.

3.

The Commissioners accept:

a.

It would be open to the Appellants to contend in the Tribunal that the decision on restoration was not reasonable (within the meaning of s 16(4) of the Finance Act 1994) on the grounds that it was based upon an unreasonable policy. (For the avoidance of doubt, it is denied that the policy is unreasonable or otherwise unlawful.)

b.

For the purpose of deciding whether the policy was unreasonable, it is submitted that the Tribunal should not substitute its view for that of the Commissioners as to the appropriate policy in this area of administration. It should ask itself, applying judicial review principles, whether the policy was one that could reasonably be adopted. In a context where Article 1 Protocol 1 of the ECHR was engaged, the principles of judicial review would include that of proportionality.

c.

The Appellants contend that the policy is ‘unreasonable’ in the above sense because it fails to take account of the alleged ‘blameworthiness’ of the Appellants. The Commissioners entirely accept that the Appellants are free to raise that contention in the Tribunal. If that contention were successful, the Tribunal would remit the matter to the Commissioners and impose such directions, requirements or declarations as it thought fit pursuant to s 16(4)(a)-(c) of the 1994 Act.

d.

The Commissioners would then retake the decision, in compliance with the Tribunal’s ruling. If in any subsequent appeal against a further decision, an issue arose as to whether the Appellants were ‘blameworthy’, subject to the proviso referred to below, the Tribunal’s role would be as the Tribunal held in Gora:

‘[The Tribunal] satisfies itself that the primary facts upon which the Commissioners have based their decision are correct. The rules of the tribunal and procedures are designed to enable it to make a comprehensive fact-finding exercise in all appeals.’

e.

Strictly speaking, it appears that under s 16(4) of the 1994 Act, the Tribunal would be limited to considering whether there was sufficient evidence to support the Commissioners’ finding of blameworthiness. However, in practice, given the power of the Tribunal to carry out a fact-finding exercise, the Tribunal could decide for itself this primary fact. The Tribunal should then go on to decide whether, in the light of its findings of fact, the decision on restoration was reasonable. The Commissioners would not challenge such an approach and would conduct a further review in accordance with the findings of the Tribunal.”

I would accept that view of the jurisdiction of the Tribunal subject to doubting whether, its fact-finding jurisdiction having been accepted, it should be limited even on the “strictly speaking” basis mentioned at the beginning of paragraph 3(e). That difference is not, however, of practical importance because of the concession and statement of practice made by the respondents later in the sub-paragraph. As a “tribunal” to which recourse is possible to challenge a refusal to restore goods under section 152(b) of the 1979 Act, the Tribunal in my judgment meets the requirements of the Convention.

A further point on which the Court was invited by the appellants to make a ruling, and which bears upon the jurisdiction of the Tribunal, is as to the meaning of the word “seized” in paragraph 2(1)(r) of Schedule 5 to the 1994 Act. It is submitted on behalf of Mr Gora that it includes what is described in section 139(1) of the 1979 Act as “detention”. The point arises because it was by way of exercise of a purported power of detention under section 139 that the respondents held Mr Gora’s excise goods from 30 December 1999 to 14 April 2000 when they purported to “seize” them. In addition to his subsequent appeal against the respondents’ refusal to restore the seized goods, Mr Gora had appealed against their refusal to restore the goods while detained and their refusal to review the decision to detain. The Tribunal held (paragraph 26) that it had “no right to entertain an appeal against the refusal by the Commissioners to restore his goods to him while they are detained by the Commissioners”.

It was submitted by Mr Cordara that no distinction can be drawn between “seizure” and “detention” for present purposes. They are both to be contrasted with “forfeiture”, which suggests a degree of permanence in relation to the deprivation. If the right of appeal against the respondents relates only to seizure, the respondents may nullify the right by choosing to call their possession “detention” rather than “seizure”, it was submitted.

For the respondents, Mr Parker QC submitted that the concept of detention, as identified in the statute, is separate from that of seizure. In practice, the power to detain goods liable to forfeiture is valuable to the respondents, and also to the owner, in that it gives officers the opportunity to take possession of suspect goods and to make enquiries before either restoring them or resorting to the formal measure of seizure with the consequences that follow from it. That opportunity to enquire may also be to the owner’s advantage. Guidance to officers provides that in a case where there is suspicion about their status, the goods, “should not normally be detained for more than five working days before either releasing them or converting the detention to seizure. If more time is required, authority to allow continued detention must be sought from the operational manager. Whenever such extensions are sought, the reasons must be fully documented”. Mr Parker submitted that the owner’s remedy against a prolonged detention is by way of judicial review.

The power to detain, as distinct from the power to seize, was recognised in Jacobsohn v Blake and Compton (1844) 6 Man. and G. 919. Custom-house officers took possession of goods landed by the plaintiff for the purpose of examination and detained them upon a misapprehension that they were prohibited and liable to forfeiture. In an action for trespass, the defence was that, there having been no seizure by the officers, the action of trespass could not be maintained. The jury were directed that the goods having been legally in the possession of the defendants, and there having been no seizure by them, the action of trespass could not be maintained. That direction was upheld in the Court of Common Pleas.

Tindal CJ stated, at p 925, that “in order to entitle the plaintiff to maintain such an action [of trespass] there must have been an actual seizure of the plaintiff’s goods”. Erskine J stated:

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

Cresswell J stated:

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

I refer to Jacobsohn to illustrate that the distinction between detention and seizure pre-dates, by a long way, the 1979 Act. I express no view as to whether the principle the case establishes now provides a defence to an action by the owner for the return of his goods, an issue which does not arise for decision. Limited protection against a claim for damages and costs, with respect to goods detained, is provided by section 144(2) of the Act.

In HM Commissioners for Customs and Excise v Venn, Masser and Marquis Publications [2001] EWHC Admin 1055, an issue upon a time limit depended on whether the taking of possession of goods by customs officers amounted to a seizure under section 139 of the 1979 Act. Harrison J considered the wording of that section before remitting the issue of fact to the magistrates. He stated:

“33.

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

Thus the distinction between detention and seizure is of long standing and has recently been affirmed in the High Court. The provisions of section 144 demonstrate that seizure has a formality which detention does not. While goods which are detained by officers are in something of a legal limbo, I am satisfied that the distinction between detention and seizure remains a feature of the law and that the word “seized” in paragraph (2)(1)(r) of Schedule 5 to the 1994 Act is not intended to mean and cannot be read as meaning “seized or detained”. The absence of the word “detention” in the paragraph reflects its absence in section 152(b) of the 1979 Act to which the paragraph refers. I cannot regard the absence of the word “detention” in section 152(b) as accidental or hold that the word “seized” in section 152(b) is to include “detained” when the distinction between the two concepts is maintained in sections 139 and 144.

The expression “seized or detained” (or a derivative) appears ten times in section 139 and four times in section 144. Where only seizure is in contemplation, as plainly it is in sections 144(1) and 144 (2)(a), the word appears on its own. While the word “seized” does appear without the word “detained” on one of two references in section 139(8), I cannot regard that apparent departure from the rest of the terminology as demonstrating a statutory intention other than that “detention” of a thing is something different from its “seizure”. During the time they were held before “seizure”, Mr Gora’s goods were “detained” rather than “seized” and the right to appeal to the Tribunal arises only upon seizure or forfeiture.

That finding leaves open the question whether in the absence, with respect to goods detained, of a right of recourse to the courts under Schedule 3 to the 1979 Act, or to the Tribunal, (and the presumed absence of an action for unlawful interference with goods) there is a breach of the Convention (Article 6 and Protocol 1, Article 1). The Tribunal held (paragraph 22):

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

Having considered the facts in Gora, the Tribunal concluded that the power had, in the circumstances, been exercised reasonably. That finding of fact is not open to challenge on the hearing of this appeal into findings on preliminary points.

I agree with the Tribunal’s view of the lawfulness of detention. There is a public interest in the availability of the procedure described by the Tribunal and some such procedure is reasonably required “to secure the payment of taxes”. The power to detain is both legitimate and proportionate as a short-term measure pending release or seizure. While the opportunity to hold the goods while enquiries are made may in some cases lead to seizure, in others it may lead to the release, without seizure, of goods found on enquiry not to be liable to forfeiture. The acceptability of the procedure does, however, depend on enquiries being made expeditiously and a prompt decision taken as to whether to return the goods or to seize them.

While it is not for the Court to make findings of fact in this case, I do express concern about the length of the detention in Mr Gora’s case from 30 December 1999 until 14 April 2000 when notice of seizure was given. That period of time is completely out of scale with the few days of detention which the Court was told was the normal practice. Two other features are unsatisfactory:

I would dismiss the appeal based on the Tribunal’s findings on the preliminary points

What is described as a cross-appeal arises by reason of a finding of the Tribunal in Gora (paragraph 57) that in certain circumstances the Tribunal has a jurisdiction in relation to forfeiture. These appeals are in relation to findings on preliminary points upon which this issue did not arise. That being so, the Court cannot pass judgment upon it but it is in my view appropriate that the Court should express a view on what is a fundamental point for the guidance of the Tribunal. For the appellants, Mr Cordara seeks to uphold the finding of the Tribunal on the basis that it must be able to find facts on the question whether duty on the goods has been paid.

Section 139(6) of the 1979 Act 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 Acts. Paragraph 3 of the Schedule provides that any person claiming that any thing seized or liable to forfeiture is not so liable may give notice, within the period specified in the paragraph, of his claim in writing to the respondents. Paragraph 6 provides that, where such notice of claim is duly given, 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 the seizure liable to forfeiture the court shall condemn it as forfeit. Paragraph 5 provides that, in the absence of a notice under paragraphs 3 and 4, “the thing in question shall be deemed to have been duly condemned as forfeited”. The proceedings for condemnation may be instituted in the High Court or in a magistrates court.

The Tribunal accepted that where liability to forfeiture has been determined by a court in condemnation proceedings, “there is no further room for fact finding by the Tribunal” and it has no jurisdiction. However, the Tribunal went on to hold that Mr Gora did not give a notice under paragraph 3 “and as a result the law took its course and the goods were treated as property seized and so liable to forfeiture. No finding of fact resulted. A deemed fact is not a real fact. It cannot consequently rank as a consideration relevant to the subsequent decision on restoration until determined by the Tribunal or conceded to exist”. It was held to be open to the Tribunal to determine the question of fact whether the goods were seized.

I do not agree with that conclusion. Jurisdiction to decide whether any thing forfeited is to be restored under section 152(b) is with the Tribunal. The jurisdiction in condemnation proceedings is, by virtue of Schedule 3, with the courts. If the deeming provision in paragraph 5 of the Schedule operates, the thing in question shall be deemed to have been duly condemned as forfeited. The effect of this deeming provision is to provide that the thing is to be treated as forfeited. The purpose of the provision is to treat the deemed fact as a fact and I cannot accept that it can be treated as “not a real fact”.

While the division of jurisdiction between the courts and the Tribunal may arguably be curious, and is probably retained because of the long standing jurisdiction of the courts in proceedings for condemnation, the division is clear and it is not intended that the Tribunal should have jurisdiction to reconsider the condemnation of goods as forfeited. Mr Cordara’s submission that the Tribunal should have jurisdiction to consider whether duty has been paid is no more than another way of claiming that the court’s findings should be re-opened. The Tribunal’s view would produce the surprising result that the person whose goods had been seized could make a choice of fact-finding tribunal. If he wanted the court to determine the issue he would serve a notice under paragraphs 3 and 4; if he wanted the Tribunal he would do nothing. In my judgment, the statutory scheme does not produce that result. The application to the Tribunal is for restoration under section 152. There is no breach of Article 6 because the owner has recourse to the courts in the condemnation proceedings.

I agree.

I agree with Pill LJ that the proceedings before the Tribunal in relation to the Customs’ refusal to restore Mr Gora’s goods or Mrs Dannatt’s car did not involve the determination of a criminal charge. The short reason for this conclusion is that this court decided in R (Mudie) v Kent Magistrates Court [2003] EWCA Civ. 237, The Times 7th February 2003, that even condemnation proceedings pursuant to section 139 and Schedule 3 of the 1979 Act were not criminal charges. This decision was reached after full consideration of the decisions of the European Court of Human Rights on which Mr Cordara relied. If anything, proceedings relating to a refusal to restore goods are even less penal in nature then condemnation proceedings because they can, as they did in Mrs Dannatt’s case, lead to restoration of the goods seized if part of the duty alleged to be payable is, in fact, paid. It would, on any view, be inconsistent for this court to hold that proceedings in relation to a refusal to restore are to be differently classified from condemnation proceedings. We are, therefore, bound by authority to uphold the Tribunal’s decision on this point.

I agree with Pill LJ that in the light of the Commissioners’ acceptance of the content of Mr Parker’s written submissions as set out in paragraph 38 of my Lord’s judgment, the jurisdiction of the Tribunal complies with the European Convention on Human Rights.

I agree with Pill LJ’s conclusion that, once seizure has occurred, the issue whether duty has, in fact, been paid is not a matter which is within the jurisdiction of the Tribunal. The provisions of Schedule 3 enact that if notice of claim, that goods seized are not liable to forfeiture, is not given to the Commissioners, the thing in question

“shall be deemed to have been duly condemned as forfeited”.

This provision cannot be sidestepped by saying (as the Tribunal does) that a deemed fact is not a real fact. A deemed condemnation occurs because the forfeiture can no longer be challenged. If the forfeiture cannot be challenged, the goods owner cannot claim in a Tribunal that duty has, in fact, been paid because he is thereby challenging the forfeiture. That is what the deeming provision prevents him from doing.

Like my Lords I have been concerned by this aspect of Mr Gora’s case. I respectfully doubt whether many people, outside the Customs, are aware of the distinction drawn by the Customs between detention (for the purpose of conducting inquiries as to the proper payment of duty) and formal seizure of the goods. Nevertheless it may often be in the interest of the goods-owner that the time which runs from formal seizure for the purpose of condemnation proceedings should not be the same time as the time when the goods are first taken into custody by Customs. It is, however, troubling that, while when goods are seized, the goods owner is given documentary information as to his rights, no such documentation is given to the goods owner if his goods are merely detained. That may be because even the Customs have doubts as to what those rights are. Mr Parker suggested that the only right a goods-owner has is to complain about the length of detention in judicial review proceedings.

We do not, on these appeals, have to decide if that is right but I would not, for my part, wish to preclude any future argument that a goods-owner would, in an appropriate case, be entitled to launch proceedings for the return of his goods. There would, of course, be argument about what he would have to prove on any such application. Mr Parker relied on Jacobsohn v Blake and Compton (1844) 6 M&G 919 for the proposition that a customs officer commits no trespass to goods (and thus does not commit the modern tort of interference with goods) while he merely detains the goods preparatory to deciding whether to seize them. The statutory background seems to have been as follows.

Section 18 of Chapter 52 of 3 & 4 William IV entitled “An Act for the general Regulation of the Customs” provides that any importer should deliver to the collector or controller of the port a bill of entry of the goods he wished to import and should pay the duty on the goods mentioned in such bill of entry; once the bill had been signed by the collector or controller it constituted the warrant to the importer for the landing and delivering of the goods to him. Section 20 provided for any goods not duly entered to be forfeited; section 21 enacted that if goods were dutiable according to number, measure or weight or according to their value, the numbers, measure, weight or value must be stated in the bill of entry.

Chapter 53 of 3 & 4 William IV was entitled “An Act for the Prevention of Smuggling”. Section 38 provided:-

“. . . . it shall and may be lawful for any Officer or Officers of Customs, or Persons acting under the Direction of the Commissioners of His Majesty’s Customs, having a Writ of Assistance under the Seal of His Majesty’s Court of Exchequer, to take a Constable, Headborough, or other public Officer inhabiting near the Place, and in the Daytime to enter into and search any House, Shop, Cellar, Warehouse, Room, or other Place, and in case of Resistance to break open Doors, Chests, Trunks, and other Packages, there to seize and from thence to bring any uncustomed or prohibited Goods, and to put and secure the same in the Custom House Warehouse in the Port next to the Place from whence such Goods shall be so taken as aforesaid.”

Section 43 contained a proviso comparable to section 133 of chapter 52 in relation to seizures of vessels and goods. The part of the Act concerning jurisdiction began with section 75 providing for Penalties and Forfeiture to be sued for and recovered in any of His Majesty’s Courts at Westminster, Dublin or Edinburgh or by information before any two or more of His Majesty’s Justices of the Peace. Section 102 provided that if an information or Suit was brought on appeal on account of any goods seized or forfeited under any Customs Act, and it appeared to the Judge that there was probable cause for such seizure, the Plaintiff was not to be entitled to more than Two-pence by way of damages nor to any costs. It is, perhaps, noteworthy that this section makes no reference to detention. For good measure section 103 then provided that no process was to be sued out against any customs officer for anything done in the execution of his office until one month after formal notice containing the intended cause of action and the name and address of the person intending to bring such action. Section 105 further provided that it was lawful for any person to whom such notice was given to tender amends and, if such tender was not accepted, to plead such tender in bar to any action brought against him. It was, apparently, this section on which the customs officer first relied in Jacobsohn by their plea of not guilty by statute in answer to the declaration alleging trespass to goods, see page 921.

The goods in Jacobsohn were knives and scissors some of which were mounted on cards which had words on them printed in English language; other knives and scissors had impressed on them the names of English manufacturers. These were prohibited goods and under the relevant Victorian statutes liable to seizure for that reason. At the trial the Customs denied any trespass to the goods on the ground that no duty had been paid and no bill of entry had been delivered which when signed by the collector or controller, would constitute the warrant for delivery to the importer. The result of that was the plaintiff had no right to possession. This defence was rejected by Tindal CJ because the goods were not detained on the ground of non-payment of duty but were detained as absolutely forfeited. (This ruling appears more clearly from the Law Journal report at 13 LJCP 89 than from Manning and Granger’s report.) It was then said that, in any event, trespass would not lie because the goods were lawfully in the possession of the customs at the port and there had been no trespassory taking. Tindal CJ agreed with this submission but granted the plaintiff leave to move to enter a verdict if the full court thought that trespass would lie. The argument was that the customs’ assertion that the goods were forfeited was an interference with the plaintiff’s right of possession but the Full Court agreed with the Chief Justice. Tindal CJ said:-

“In order to entitle the plaintiff to maintain such an action there must have been an actual seizure of the plaintiff’s goods. But the evidence here was all the other way and went to show that the defendants merely took possession of the goods, in the execution of their duty as custom-house officers, for the purpose of examination.”

This is thus a decision on the statutory provisions then in force that mere detention for the purpose of deciding whether goods were prohibited goods and, by implication from the earlier ruling, mere detention for the purpose of deciding whether appropriate duty had been paid or tendered by the importer did not constitute trespass.

The current statutory provisions are in somewhat different terms; section 139 gives express authority to seize and to detain goods liable to forfeiture. It must be, at least, arguable that detention of goods not in fact liable to forfeiture is an unlawful interference with goods and that old authorities as to what constitutes a trespass to an importer’s goods are irrelevant to that argument.

The only question before us, however, is whether, when paragraph 2(1)(r) of Schedule 5 confers a right of appeal with respect to any decision under section 152(b) of the 1979 Act in relation to any decision to restore anything “forfeited or seized” that can be construed to mean anything “forfeited or seized or detained”. I do not think it can and would uphold the Tribunal’s decision that they had no jurisdiction in relation to any decision of the Commissioners not to restore any goods that had been detained.

Furthermore, I agree with Pill LJ that the absence of such right of appeal does not mean that there is a non-compliance with Article 6, since any unnecessarily lengthy detention can be controlled by judicial review.