ON APPEAL FROM THE UPPER TIER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
MR MICHAEL TILDESLEY OBE
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MOORE-BICK
LORD JUSTICE JACKSON
| THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS
|- and -
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The Respondents did not appear and were not represented
Hearing date: 27th January 2011
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Lord Justice Mummery :
(a) Original proceedings by HMRC, to whom notice of claim has been given by the owner of the goods. Those proceedings are brought in a magistrates' court or in the High Court for the condemnation and forfeiture of the goods.
(b) Appellate proceedings in the First–tier Tribunal (the FTT), formerly the VAT and Duties Tribunal, by the owner of the imported goods. An appeal to the FTT lies against a review decision of HMRC refusing the owner's application to restore the seized goods.
The issue on the appeal
Gora and Gascoyne
More background detail
"If you decide to withdraw from condemnation proceedings you must accept that the goods are legally seized, e.g in the case of intra EU excise goods that they were imported for a commercial use. This is a matter of law. You will no longer be able to contend otherwise."
"Having had an opportunity of challenging the seizure-which includes any claim that the goods were for 'own use' including gifts-in the Magistrates' court, one does not have a second chance of doing so in a statutory review (such as this letter) or at a VAT & Duties Tribunal. For further information about this see Appendix A attached "
The FTT appeal
The UTT appeal
"124. …The decision was one that a reasonable Tribunal, properly advised, could have made."
"120. …Mr and Mrs Jones' Appeal involved a deemed forfeiture, in which case the appropriate legal test is that the Tribunal can re-open issues relating to lawfulness of seizure provided it does not constitute an abuse of process. I am satisfied that on a proper analysis of its decision the Tribunal applied the correct legal test in Mr and Mrs Jones' Appeal. The Tribunal considered in depth whether it would be an abuse of process to admit evidence of own use from Mr and Mrs Jones…"
"56. 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 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.
57. 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 condemned as forfeited. The effect of the 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."
58. 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 the 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 reopened. 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."
" 62. 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."
"46. … I do not think that it can have been intended that the importer before the tribunal would have a second bite at the cherry of lawfulness, having failed in the condemnation proceedings, or let them go by default.
47. To the extent that it was argued that the literal provisions of section 152(b) are wide enough to allow such a second bite, I would agree that that is so, but the reason why the importer cannot have that liberty is not because of the terms of the statute, but because of the normal English law rules of res judicata or abuse of process.
48. As I have already said, that conclusion does not lead to the more severe conclusion tentatively drawn by Lord Phillips MR in para 10 of the original judgment in this case, in that it does not cause the tribunal to be effectively functus even on issues of discretion.
49. I turn to the Convention. The forfeiture process interferes with Mr Gascoyne's rights to his property that are potentially protected by Article 1 of the First Protocol to the Convention.
50. That is made clear in the judgment of this court in Lindsay v Customs and Excise Comrs  1 WLR 1766, 1784, para 52, to which I have already referred, in the leading judgment of Lord Phillips MR in that case. That being so, issues of proportionality, and indeed of due process in the arrangements made by this jurisdiction for dealing with issues of forfeiture, potentially arise.
51. As to those, in my view there is no Convention objection to holding that an actual finding in condemnation proceedings binds in a tribunal application, be it binding as to the decision as to lawfulness of seizure, or binding as to the underlying facts. In that respect, one can draw assistance, and the European Court of Human Rights has drawn assistance, from the parallel jurisprudence of Article 6. If the importer has actually been in court, first of all he has had his day in court in front of a judicial body, and, secondly, as is well known, Convention jurisprudence permits a proportionate restriction on access to a court, provided the essential rights that are in contest from a Convention point of view are not thereby rendered nugatory. That was decided in Lithgow v United Kingdom  8 EHRR 329, incidentally a First Protocol case, at pp 393-394, para 194.
52. Secondly, however, that jurisprudence itself creates a great deal more difficulty in relation to the deeming provisions under paragraph 5 of Schedule 3. One's instincts, if no more, suggest that the extent to which it was held in Gora's case that those provisions necessarily prevent any further consideration of the legality of the seizure was an excessive limitation.
53. Miss Simler drew our attention in that connection to what was said by Lord Phillips MR in Lindsay at p 1786, para 64 that the principle of proportionality requires that each case should be considered on its particular facts. Lord Phillips MR then went on to indicate the sort of facts that might be relevant.
54. As it seems to me, for an importer to be completely shut out in the only tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of Schedule 3 does not adequately enable him to assert his Convention rights.
55. In my view, therefore, in a case where the deeming provisions under paragraph 5 are applied, the tribunal can reopen those issues: though the tribunal will always have very well in mind considerations of, or similar to, abuse of process in considering whether such issues should in fact be ventilated before it.
56. The mere fact that the applicant has not applied to the commissioners, and therefore there have been no condemnation proceedings, would not, in my view, be enough. But, in my judgment, it goes too far to say that the deeming provisions have always, in every case, got to be paramount."
"32. The issue is whether the Tribunal misdirected itself in its consideration of the question of abuse of process. The decision as to whether there is or is not an abuse of process requires the Tribunal to consider and give appropriate weight, one way or the other, to all relevant factors and to disregard irrelevant factors. Its decision must be one capable of being reached by a reasonable tribunal having regard to the relevant factors. The decision is not in my view strictly an exercise of discretion. Either it is, or it is not, an abuse of process for the grounds for seizure to be investigated by the Tribunal, but that is a question of judgment to be made on a consideration of the relevant factors. The grounds on which the Tribunal's decision can be challenged on appeal are therefore effectively the same as for a challenge to an exercise of discretion. I accept the test put forward by Mr Puzey for HMRC in a subsequent written submission: has the Tribunal, having been properly advised as to the law, arrived at a reasonable decision which takes account of all relevant matters and leaves out of account all irrelevant matters?"
Submissions of HMRC in outline
(1) The respondents' goods seized by the customs officers could only be condemned as forfeit pursuant to an order of a court. The FTT and the UTT are statutory appellate bodies that have not been given any such original jurisdiction.
(2) The respondents had the right to invoke the notice of claim procedure to oppose condemnation by the court on the ground that they were importing the goods for their personal use, not for commercial use.
(3) The respondents in fact exercised that right by giving to HMRC a notice of claim to the goods, but, on legal advice, they later decided to withdraw the notice and not to contest condemnation in the court proceedings that would otherwise have been brought by HMRC.
(4) The stipulated statutory effect of the respondents' withdrawal of their notice of claim under paragraph 3 of Schedule 3 was that the goods were deemed by the express language of paragraph 5 to have been condemned and to have been "duly" condemned as forfeited as illegally imported goods. The tribunal must give effect to the clear deeming provisions in the 1979 Act: it is impossible to read them in any other way than as requiring the goods to be taken as "duly condemned" if the owner does not challenge the legality of the seizure in the allocated court by invoking and pursuing the appropriate procedure.
(5) The deeming process limited the scope of the issues that the respondents were entitled to ventilate in the FTT on their restoration appeal. The FTT had to take it that the goods had been "duly" condemned as illegal imports. It was not open to it to conclude that the goods were legal imports illegally seized by HMRC by finding as a fact that they were being imported for own use. The role of the tribunal, as defined in the 1979 Act, does not extend to deciding as a fact that the goods were, as the respondents argued in the tribunal, being imported legally for personal use. That issue could only be decided by the court. The FTT's jurisdiction is limited to hearing an appeal against a discretionary decision by HMRC not to restore the seized goods to the respondents. In brief, the deemed effect of the respondents' failure to contest condemnation of the goods by the court was that the goods were being illegally imported by the respondents for commercial use.
(6) The deeming provisions in paragraph 5 and the restoration procedure are compatible with Article 1 of the First Protocol to the Convention and with Article 6, because the respondents were entitled under the 1979 Act to challenge in court, in accordance with Convention compliant legal procedures, the legality of the seizure of their goods. The notice of claim procedure was initiated but not pursued by the respondents. That was the choice they had made. Their Convention rights were not infringed by the limited nature of the issues that they could raise on a subsequent appeal in the different jurisdiction of the tribunal against a refusal to restore the goods.
(7) I completely agree with the analysis of the domestic law jurisdiction position by Pill LJ in Gora and as approved by the Court of Appeal in Gascoyne. The key to the understanding of the scheme of deeming is that in the legal world created by legislation the deeming of a fact or of a state of affairs is not contrary to "reality"; it is a commonly used and legitimate legislative device for spelling out a legal state of affairs consequent on the occurrence of a specified act or omission. Deeming something to be the case carries with it any fact that forms part of the conclusion.
(8) The tentative obiter dicta of Buxton LJ in Gascoyne on the possible impact of the Convention on the interpretation and application of the 1979 Act procedures and the potential application of the abuse of process doctrine do not prevent this court from reaching the above conclusions. That case is not binding authority for the proposition that paragraph 5 of Schedule 3 is ineffective as infringing Article 1 of the First Protocol or Article 6 where it is not an abuse to reopen the condemnation issue; nor is it binding authority for the propositions that paragraph 5 should be construed other than according to its clear terms, or that it should be disapplied judicially, or that the respondents are entitled to argue in the tribunal that the goods ought not to be condemned as forfeited.
(9) It is fortunate that Buxton LJ flagged up potential Convention concerns on Article 1 of the First Protocol and Article 6, which the court in Gora did not expressly address, and also considered the doctrine of abuse of process. The Convention concerns expressed in Gascoyne are allayed once it has been appreciated, with the benefit of the full argument on the 1979 Act, that there is no question of an owner of goods being deprived of them without having the legal right to have the lawfulness of seizure judicially determined one way or other by an impartial and independent court or tribunal: either through the courts on the issue of the legality of the seizure and/or through the FTT on the application of the principles of judicial review, such as reasonableness and proportionality, to the review decision of HMRC not to restore the goods to the owner.
(10) As for the doctrine of abuse of process, it prevents the owner from litigating a particular issue about the goods otherwise than in the allocated court, but strictly speaking it is unnecessary to have recourse to that common law doctrine in this case, because, according to its own terms, the 1979 Act itself stipulates a deemed state of affairs which the FTT had no power to contradict and the respondents were not entitled to contest. The deeming does not offend against the Convention, because it will only arise if the owner has not taken the available option of challenging the legality of the seizure in the allocated forum.
Lord Justice Moore-Bick:
Lord Justice Jackson: