England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		6 November 2013

1. LORD JUSTICE RICHARDS: The issue in this appeal is whether the process of condemnation and forfeiture of goods pursuant to section 139 and Schedule 3 of the Customs and Excise Management Act 1979 is civil or criminal in nature for the purposes of Article 6 of the European Convention on Human Rights.
2. On 2 August 2009, Roger Amos and Gary Williams were stopped at Dover Eastern Docks by officers of the UK Border Agency. They had travelled with companions in a car to France and then Belgium, but on the ferry back they left their companions in the car and walked through the foot passenger part of terminal. Each of the two men was carrying a bag containing a total of 3 kilograms of hand-rolling tobacco. Mr Amos also had 200 cigars. They were first asked some general questions and then, following a formal decision to stop them, they were interviewed separately. The officers decided thereafter that the tobacco was liable for forfeiture on the ground that it was being imported for commercial purposes without payment of the duty chargeable on it; and the tobacco was then seized. The decision whether the tobacco was held for a commercial purpose rather than for personal use fell to be taken at that time by reference to factors set out in regulation 12 of The Tobacco Products Regulations 2001, which have subsequently been revoked but the detail of which is, in any event, not needed for the present appeal.
3. Provisions relating to the forfeiture of goods improperly imported are contained in section 49 of the 1979 Act. By section 139 anything liable to forfeiture may be seized; and provision is made by section 139(6) and Schedule 3 for proceedings to be brought for the condemnation of any thing as being forfeited. As the statute provides in paragraph 8 of Schedule 3, such proceedings are civil proceedings and may be brought in the Magistrates' Court. Condemnation proceedings are concerned only with liability to forfeiture. The 1979 Act makes entirely separate provision for criminal offences involving smuggling, offences which require proof of mens rea.
4. In this case, condemnation proceedings were instituted in the Dover Magistrates' Court which on 30 September 2010 made an order condemning the seized tobacco as forfeit. Mr Amos and Mr Williams appealed to the Crown Court. The appeal was heard on 16 September 2011 at the Crown Court at Maidstone by Mr Recorder S Taylor QC and a bench of magistrates. That court heard the matter de novo, receiving documentary and oral evidence for the purpose. In that connection it ruled that the witness statements of the relevant Customs officers were admissible, rejecting an argument that the proceedings were criminal and that there had been a failure to provide procedural protections applicable to criminal charges or proceedings. The conclusion the court reached was expressed in these terms: "Looking at all the evidence in the round, therefore, we are satisfied on the balance of probabilities that these two quantities of 3 kilograms each were imported for commercial purposes and not for personal use." The court therefore dismissed the appeal.
5. Mr Amos sought permission to apply for judicial review of that decision on a number of grounds, one of which was in broad terms that there had been a breach of the procedural protections conferred by Article 6 in relation to criminal proceedings. Permission to apply was refused in the Administrative Court by Beatson J on the papers and by HHJ Jarman QC, sitting as a Deputy High Court Judge, on an oral renewal.
6. An application for permission to appeal to this court was then considered on the papers by Lewison LJ, who granted permission to appeal on the Article 6 point alone and directed that the case should be retained by the Court of Appeal. What he intended was plainly the retention of the substantive judicial review, and I think it right to treat his order as a grant of permission to apply for judicial review with a direction under CPR 52.15(4) that the judicial review claim is to proceed in this court.
7. At the time of his application to the Administrative Court and his initial application to this court, Mr Amos was acting in person. He has been ably represented before us today by Mr Peter Caldwell acting pro bono. The defendant Crown Court has taken no part in the proceedings. Mr Andrew Bird, counsel for the Secretary of State for the Home Department as interested party, has filed a skeleton argument resisting Mr Caldwell's arguments on Article 6 and inviting us to dismiss the application for judicial review. Mr Williams, the man who accompanied Mr Amos at Dover, is also named as an interested party but has played no part in the proceedings.
8. The established case law of the European Court of Human Rights sets out three criteria to be considered in assessing whether proceedings are civil or criminal for the purposes of Article 6. They are sometimes referred to as the "Engel criteria" (see Engel v Netherlands [1979-1981] 1 EHRR 647). They have been affirmed repeatedly in cases running through to the latest cited to us, namely a decision of the Grand Chamber in Jussila v Finland [2007] 45 EHRR 39 and the decision of the Chamber of the Court in Ruotsalainen v Finland [2013] 56 EHRR 10.
9. The criteria and their effect were summarised in this way in paragraph 43 of the judgment in Ruotsalainen:

"The court's established case law sets out three criteria commonly known as the Engel criteria to be considered in determining whether or not there was a criminal charge. The first criterion is the legal classification of the offence under national law, the second is the very nature of the offence, and the third is the degree of severity of the penalty that the person concerned risks incurring. The second and third criteria are alternative and not necessarily cumulative. It is enough that the offence in question is by its nature to be regarded as criminal or that the offence renders the person liable to a penalty which by its nature and degree of severity belongs in the general criminal sphere. The relative lack of seriousness of the penalty cannot divest an offence of its inherently criminal character. This does not exclude a cumulative approach where separate analysis of each criterion does not make it possible to reach a clear conclusion as to the existence of a criminal charge."

10. Mr Caldwell's written submissions examine in much greater detail what has been said about the criteria but, subject to further consideration of the recent Strasbourg case law to which I will return, I think it unnecessary to go into any of that detail in this judgment.
11. The fact is that the application of the Engel criteria to proceedings of the very kind in issue in the present case has been the subject of specific consideration and decision by the domestic courts, first by the Divisional Court in Goldsmith v Customs and Excise Commissioners [2001] 1 WLR 1673, and then by the Court of Appeal in R (on the application of Mudie) v Dover Magistrates' Court [2003] QB 1238. In granting permission Lewison LJ referred to Goldsmith and said that the challenge was to the correctness of that decision in the light of later jurisprudence of the Strasbourg court. He had not been referred to Mudie, to which the attention of this court was first drawn by Mr Bird in his written submissions on behalf of the Secretary of State.
12. Goldsmith, like the present case, concerned forfeiture proceedings under section 139 and Schedule 3 of the 1979 Act in respect of a quantity of hand-rolling tobacco brought into the UK.
13. At that time, there was a presumption that any amount in excess of a quantity specified in the schedule to the Excise Duties (Personal Reliefs) Order 1992 was imported for a commercial purpose rather than for personal use. Although Mr Caldwell did not appreciate the point when he settled his written submissions, the 1992 Order was revoked with effect from 1 December 2002 by The Excise Duties (Personal Reliefs)(Revocation) Order 2002 and is of no relevance to the present case. But it was in play in Goldsmith and gave rise to an argument under the European Convention on Human Rights that the proceedings were criminal in nature and that the presumption in the order was contrary to Article 6(2).
14. In rejecting that argument, Lord Woolf said this at paragraph 22 of his judgment:

"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."

15. In paragraph 24, Lord Woolf referred to the case of R (McCann) v Crown Court at Manchester [2001] 1 WLR 1084, in which it was held that proceedings for an anti social behaviour order were not to be regarded as criminal for the purposes of Article 6(2). Lord Woolf said that approaching the issues in Goldsmith in very much the same way as had been done in McCann, he had come to the conclusion that condemnation or forfeiture proceedings were not ones to which Article 6(2) applied.
16. Goldsmith was then approved by the Court of Appeal in Mudie. Mudie again concerned forfeiture proceedings under the same provisions of the 1979 Act. The particular issue in the case was whether the justices in the Magistrates' Court had been correct to refuse a representation order on the ground that the proceedings were civil not criminal. In considering that issue, Laws LJ, giving the leading judgment with which the other members of the court, including Lord Phillips, took Engel as his starting point, considered McCann and then turned to Goldsmith and the contention that Goldsmith had been wrongly decided. He looked at a number of Strasbourg and domestic authorities, including the decisions of the Strasbourg Court in AGOSI v United Kingdom [1986] 9 EHRR 1 and Air Canada v United Kingdom [1995] 20 EHRR 150, in both of which it had been held that proceedings for the forfeiture of goods were civil in nature. He quoted, amongst other things, a passage from paragraph 52 of the Air Canada case in which emphasis was laid on the fact that the process there in question (under section 141 of the 1979 Act) was a process in rem against a vehicle used in smuggling. He referred in addition to factors such as the absence of a criminal charge or provision which was criminal in nature and the absence of threat of criminal proceedings in the event of non-compliance.
17. At paragraph 34 of his judgment, Laws LJ said that the owner's blameworthiness or otherwise is not of itself an element in what has to be proved or not proved in condemnation proceedings. Under the relevant provisions of Schedule 3, the court is concerned only with whether the goods were liable for seizure. Liability to seizure may arise in a whole series of circumstances, many of which would not involve blameworthy conduct at all.
18. He went on at paragraph 35 to re-state the point that the regime of Schedule 3 involves no necessary or defining element of blameworthiness; and, further, to state that no penalty is imposed in condemnation proceedings and that the court only declares what it finds to be the position. He also pointed to the existence of a power in the Commissioners to restore condemned goods. In the result, he could see no reason to suppose that the decision in Goldsmith was erroneous. He made further observations on the subject in paragraph 36, referring to the in rem nature of such proceedings and to Lord Woolf's judgment in Goldsmith in support of the conclusion that condemnation proceedings are not an instance of the use of State power to condemn or punish individuals for wrongdoing.
19. On the face of it, Mudie is plainly binding on us even if subsequent Strasbourg jurisprudence were to cast doubt on its correctness. That the ordinary rules of precedence apply save in very exceptional circumstances is vouchsafed by the speech of Lord Bingham in Kay & Anor v London Borough of Lambeth & Ors [2006] 2 AC 465 at paragraphs 40 to 45.
20. Mr Caldwell has nevertheless sought to persuade us that Mudie should not be followed. His first point was to suggest that the court in Mudie had been wrong to find an absolute distinction between civil and criminal proceedings for the purposes of the application of Article 6. He took us to passages in the majority judgments of the Court of Appeal in International Transport Roth GMbH & Ors v Secretary of State for the Home Department [2003] QB 728, suggesting a degree of flexibility in the application of article 6. Thus at paragraph 33, Simon Brown LJ said that the classification between civil and criminal is secondary to the more directly relevant question of just what protections are required for a fair trial; and at paragraph 148, Jonathan Parker LJ referred to "something in the nature of a sliding scale, at the bottom of which are civil wrongs of a relatively trivial nature, and at the top of which are serious crimes meriting substantial punishment".
21. In my judgment, however, none of that helps the appellant's case. Mr Caldwell accepts that the court has ultimately to decide in the present context whether proceedings are civil or criminal. A clear-cut decision on that was taken in Mudie and was indeed taken after consideration of the judgment in Roth, extensive passages from which, albeit not the passages now relied on by Mr Caldwell, were cited by Laws LJ in his judgment (Laws LJ having also been the dissentient member of the court in Roth).
22. A further submission by Mr Caldwell is that there has been a development since Mudie in the way in which the Strasbourg Court views the question of penalty as it affects the application of the Engel criteria. He took as his starting point for this some of the earlier case law on the relevance of whether penalties are simply compensatory or are essentially punitive and deterrent in nature, which is liable to give them a criminal character. He then cited the cases of Jussila and Ruotsalainen to which I have already referred.
23. Jussila concerned proceedings in which the applicant was found, following errors in his tax returns, liable to pay VAT and an additional 10 per cent surcharge. The assessment of tax and the imposition of surcharges has previously been held to fall outside the scope of Article 6 under its civil head. The court held, however, that the case fell within Article 6 under its criminal head. The main reasoning is at paragraph 37 to paragraph 39 of the court's judgment. As to the first Engel criterion, the court took into account that the surcharges were not classified as criminal but as part of the fiscal regime under domestic law; but that was said not to be decisive. The second criteria, the nature of the offence, was more important. The surcharges were not intended as pecuniary compensation for damage but as a punishment to deter re-offending. They were therefore imposed by a rule that was deterrent and punitive, which in the court's view established the criminal nature of the offence. The minor nature of the penalty was said not to remove the matter from the scope of Article 6.
24. Ruotsalainen concerned the imposition of what was described as a "fuel fee" for use of more leniently taxed fuel than diesel oil in the tank of the applicant's vehicle. The applicant had already received a financial penalty in summary criminal proceedings. The fuel fee was imposed in subsequent administrative proceedings. The main reasoning of the court is at paragraphs 45 to 47 of his judgment. As to the first Engel criterion, the court did not consider the administrative label to be decisive. Its view of the second criterion was more important. The fuel fee collected was a trebled sum, which in the court's view had to be seen as a punishment to deter re-offending, which was recognised as a characteristic feature of criminal penalties; so here too it was imposed by a rule whose purpose was not only compensatory but also deterrent and punitive.
25. For my part, I can see nothing in the reasoning in either of those cases to cast doubt on the correctness of the decision in Mudie or, more pertinently, on its status as an authority binding on us. Jussila and Ruotsalainen are applications of established principles rather than involving a material development of those principles. Mr Caldwell says that they give a focus to the element of deterrence but that, too, has long been part of the established approach taken into account in Mudie. He also says that they show that the penalty does not have to be very severe for the matter to be criminal but that was also taken into account in Mudie (where indeed, at paragraph 30, Laws LJ stated in terms that he accepted that even a minor financial penalty may be consistent with the scheme being treated as criminal if in truth its purpose is deterrent and punitive).
26. Mr Caldwell contends further that forfeiture of goods is by its very nature penal, an argument that might have some attraction to it if looked at de novo but one that was of course firmly rejected in Mudie itself.
27. He took us to Magill v Porter & Weeks [2002] 2 AC 357, at paragraphs 85 to 86, as an example of a case where measures were held to be compensatory and regulatory rather than penal in character, but I do not think that that case adds anything to the discussion.
28. In my view, it is unnecessary to refer to any of the further matters advanced by Mr Caldwell either in his oral submissions or in writing. He has struggled manfully in what everyone in court recognises to have been an uphill struggle in seeking to persuade us not to follow the decision in Mudie. But he has got nowhere near persuading me to take that course. I would follow Mudie and dismiss this appeal.
29. LORD JUSTICE ELIAS: I agree. Mr Caldwell has made attractive and forceful submissions but I fear they were directed to why the law should be other than it is. We are bound by Mudie, and the subsequent Strasbourg jurisprudence has not in my judgment altered any of the underlying principles applied in that case. It does not raise even the possibility that we might be entitled to depart from Mudie in order to maintain the appellant's Convention rights.
30. LORD JUSTICE RICHARDS: The appeal is dismissed.