England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand London WC2A 2LL
		11th July 2008

1. LORD JUSTICE MAURICE KAY: Under the Value Added Tax legislation an obligation is placed on registered businesses who have dealings in goods across European boundaries to make a monthly declaration. Failure to make such a declaration is an offence under regulation 6 of the Statistics of Trade Customs & Excise Regulations 1992.
2. The present case concerns proceedings in a Magistrates' Court whereby an information was laid by the Director of Revenue & Customs Prosecutions against NE Plastics Limited for failing to make such monthly declarations. In all, 16 offences were alleged, covering the months between March 2005 and June 2006.
3. When the matter came before the District Judge on 5th November 2007 NE Plastics took a point about time limits. In a nutshell, it was submitted on behalf of the company that the laying of the informations had taken place outside the period provided for in section 146A of the Customs & Excise Management Act 1979 (as amended). In the event the District Judge agreed with that submission and as a result the prosecution ground to a halt.
4. The case now comes into this court as an appeal by Case Stated, at the behest of the Director of Revenue & Customs Prosecutions. It is necessary to say a little about the procedural history although it will not be necessary to refer to the details of the alleged offences.
5. The agreed facts before the District Judge were as follows:

"(a) The offences are alleged to have been committed from March 2005 to June 2006 inclusive.

(b) On 29 March 2005 HM Customs and Excise(HMCE) wrote a warning letter to the respondents but relating to a period prior to the subject of any charge concerning late returns.

(c) On 9th February 2006 HM Revenue & Customs (HMRC) (as it had by then become) wrote to the respondents a 'final warning notice letter', regarding failure to furnish returns for the period March to December 2005 inclusive, advising that if the returns were not furnished within 21 days 'we will commence prosecution action without further notice'

(d) On 28th March 2006 HMRC wrote to the respondents a letter headed 'notice of intended prosecution'. The letter referred to the periods March 2005 to January 2006 and stated inter alia 'under the circumstances I have no alternative but to instigate criminal proceedings against you for alleged failure to furnish supplementary declarations in respect of arrivals for the March 2005 to December 2005/January 2006 reference periods'.

(e) On 8th August 2006 an officer of HMRC visited the respondents and spoke with a member of the company.

(f) Following that visit the Intrastat penalty unit of the statistics and analysis of trade unit of HMRC wrote to the respondents on 27th September 2006 a letter headed 'failure to submit Intrastat supplementary declarations.' The letter stated HMRC considered that the respondents rendered themselves liable to prosecution and, referring to the periods April, May and July 2006, stated that the matter could be resolved by way of an administrative fine should the returns for those periods be received. Failing this proceedings would be instigated by the Revenue & Customs Prosecution office (RCPO)

(g) On 22 May 2007 the information was laid by RCPO alleging the 16 offences."

6. At this point it is necessary to refer to the statutory provisions. The general provision providing the time limit for the prosecution of summary offences is to be found in section 127 of the Magistrates' Courts Act 1980. Section 127(1) provides:

"Except as otherwise expressly provided by any enactment and subject to subsection (2) below, a magistrates' court shall not try an information or hear a complaint unless the information was laid, or the complaint made, within 6 months from the time when the offence was committed, or the matter of complaint arose."

Notwithstanding that general provision, there has, for a considerable period of time, been a specific provision referable to Customs & Excise offences. It is to be found in its amended form in section 146A of the Customs & Excise Management Act 1979. Section 146A(3) provides:

"Proceedings for a summary offence shall not be commenced after the end of the period of 3 years beginning with that day but, subject to that, may be commenced at any time within 6 months from the date on which sufficient evidence to warrant the proceedings came to the knowledge of the prosecuting authority."

"That day" is a reference to the day on which the offence was committed. The prosecuting authority is now defined in section 146A(7) as meaning in England and Wales "the Director of Revenue & Customs Prosecutions".

7. Prior to the establishment of the statutory position of the Director of Revenue & Customs Prosecutions by the Commissioners for Revenue & Customs Act 2005, the definition of "the prosecuting authority" referred to "the Commissioners and including in Scotland the procurator fiscal".
8. One of the main purposes of the 2005 Act was to put on a statutory footing a separation between the investigating branch and the prosecuting branch of Customs & Excise. Its other main purpose was to merge the investigating and prosecuting branches of the Inland Revenue and HM Customs & Excise.
9. The Case Stated refers to common ground between the parties that in respect of the 16 alleged offences, all of which are summary only offences, the information was not laid within 6 months of the relevant facts warranting the prosecution coming to the knowledge of officers of HM Revenue & Customs, but was laid within 6 months of the information coming to the attention of the office of the Director of Revenue & Customs Prosecutions.
10. The submission to the District Judge on behalf of NE Plastics was that the prosecuting authority was aware of sufficient evidence to warrant prosecution in relation to offences 1 to 10 by 28th March 2006 (the date of the notice of intended prosecution) and in respect of the remaining alleged offences by 27th September 2006 as evidenced by the letter of that date. It was therefore submitted that the very latest date when the prosecution were aware of sufficient facts to prosecute in respect of all charges was 27th September 2006 and consequently the latest date for laying the information was 26th April 2007.
11. Having considered the rival submissions the District Judge accepted those of NE Plastics and ruled that the information had been laid out of time. By the Case Stated he poses this question for the opinion of the High Court:

"Whether for the purposes of section 146A of the Customs & Excise Management Act 1979 matters within the knowledge of officers of Her Majesty's Revenue & Customs are to be imputed to the Director of Revenue & Customs Prosecutions?"

It follows from the decision of the District Judge that he considered such imputation to be appropriate. The subject matter of this appeal is therefore the correct construction of section 146A.

12. On behalf of NE Plastics Miss Agnew makes a candid concession that the "plain meaning" of section 146A is that subject to outer limit of 3 years, the relevant limitation period does not begin to run until sufficient evidence to warrant proceedings has come to the knowledge of the Director of RCPO or his officials. Nevertheless, she submits that such an interpretation produces a result that is contrary to the intention of Parliament. She seeks to identify that intention as being the promotion of the efficient and expeditious prosecution of summary offences as soon as is reasonably practicable after they have been committed. In her skeleton argument she refers to R v Scunthorpe Justices ex parte Mcfee & Gallagher 162 JPR page 635 which is authority for the proposition that the purpose of the 6-month time limit imposed by section 127 of the Magistrates' Court Act is to ensure that summary offences are charged and tried as soon as reasonably practicable.
13. Miss Agnew also makes the following submissions:

(i) that the "plain meaning" of construction has the effect of permitting a limitation period six times longer than that which applied before the 2005 Act amended the provisions of section 146 (as it then was) and which continues to apply to most summary offences by reason of the Magistrates' Court Act, section 127. This, she submits, cannot have been intended (ii) The RCPO is covered by the Code for Crown Prosecutors. Paragraph 5.10 of which states that prosecution is less likely to be appropriate if "there has been a long delay between the offence taking place and the date of trial." (iii) A situation could arise whereby an officer of HMRC informs a person that he is to be prosecuted for an offence that has just been committed but delays passing the file to RCPO for nearly 3 years, whereupon provided the information is laid within the 3 years of the commission of the offence, the prosecution would still be timely. This she protests cannot be right.

14. Notwithstanding the attractive way in which these submissions are advanced, I am unable to accept them. The structure created by the 2005 Act was a statutory novelty for the Revenue & Customs authorities although it had been preceded for a short time on a non statutory basis. The Director is appointed by and is answerable to the Attorney-General and he and his staff are designated "the Revenue & Customs Prosecution Office" by section 34 of the 2005 Act. The clear purpose was to separate the prosecutors from the investigators and to underwrite prosecutorial independence. That is the context in which section 146A, which amended the Customs & Excise Management Act 1979, refers to "the knowledge of the prosecuting authority" and defines "prosecuting authority" as the Director of the RCPO. In my judgment, this forecloses any argument that the knowledge of the prosecuting authority includes by imputation knowledge of HMRC staff.
15. In inviting us to that conclusion Mr Barnard, on behalf of the Director, has referred to Inco Europe Limited v First Choice Distribution [2000] 1 WLR 587 and the passage in the speech of Lord Nicholls at page 592C - H. We find that of some assistance. In my judgment, that approach requires, in this case, the construction contended for by Mr Barnard.
16. It would be inappropriate to depart from the plain meaning of the statute. The fact that the statutory time limit may now be substantially longer when RCPO does not acquire actual knowledge until considerably later than it would have been fixed with imputed knowledge before it achieved independence, is a consequence of the decision to prosecute being removed from HMRC and vested in the Director. The fact that it differs from the straight 6 months limit of section 127 of the Magistrates' Courts Act is nothing to the point. The Customs & Excise legislation always tolerated prosecution for a summary offence up to 3 years after its commission, with provision as to knowledge of material of a kind which has not existed in relation to the general provision in section 127 of the Magistrates' Court Act.
17. The point about the Code for Crown Prosecutors and the example of the hypothetical indolent investigator do not assist the construction of the statute. For my part, I accept that there may be cases in which, although the information is laid up to 3 years after the commission of the offence and the delay is attributable to culpable inactivity on the part of HMRC, an apparently in time prosecution may be an abuse of process. However, in such circumstances the remedy would be an application for a stay on that ground, not an unwarranted construction of the statutory time limit. Moreover it is in that context that the Code for the Crown Prosecutors might have some marginal relevance. I do not shrink from saying that, on the face of the undisputed facts, HMRC seems to have been inexcusably dilatory in this case. I see the force of much of Miss Agnew's criticisms. However, it would be inappropriate for this court to express any view as to whether an abuse application in the Magistrates' Court would be likely to succeed. Our concern is simply with the construction of the statute.
18. Returning to the question posed by the Case Stated, I would answer it in the negative and I would allow this appeal.
19. MR JUSTICE BLAKE: I agree for the reasons given by my Lord that this appeal should be allowed and the question both answered in the negative.
20. I have three brief observations of my own. First, it may be surprising and possibly even unintended consequence of the legislative changes made in the Commissioners for Revenue & Customs Act 2005, which came into force on 18th April 2005, that the time limit for prosecution of this offence may have changed and been put back by comparison with the position before that date. However, no circumstance arises from the construction of this legislation that would enable this court to give any other than effective plain meaning of the words of section and that section, in my judgment, has that consequence. Second, it might have been the case that even after the changes were made, the office of the prosecutor or the Director's office in charge of prosecutions relating to Customs & Revenue was intent for some delegated functions about the issue of notices of intended prosecution still to be issued by members of the Commission's staff. If that had been the case, there may well have been argument as to whether there would be found by the notices issued would be the knowledge or acquiescence even though no particular knowledge of the facts of particular case might have come to attention of any member of the Director's staff. Those, however, are not the facts found by the learned District Judge in this case and we have been informed they are not the facts of this case.
21. Third, I would myself endorse what my Lord has said about the remedy for any unfairness in this case being by way of an application to stay proceedings on the ground of abuse of process on the grounds that it would not now be fair to try the defendant in the light of the particular circumstances of this case. That application, of course, is not to be determined by this court today but there would appear to be material on which an argument of some cogency could be put that the defendant would be misled by the receipt of the letter simply believing the time had passed without any actions being taken. But for the reasons previously given that is for another day and it does not affect the way in which this appeal should be determined beyond the answer to the certified question.
22. MR BARNARD: My Lord, I would ask your Lordship to remit the case to the District Judge to proceed in accordance with the appeal in the court.
23. LORD JUSTICE MAURICE KAY: Yes.
24. MR BARNARD: So far as costs of this appeal are concerned, I bear in mind the observations that both your Lordships have made and it may be that the matter proceeds, if it does proceed to the District Judge, there will be a different form of application, but so far as this appeal is concerned on the question of the statute which was of importance, in my submission, I ask for the costs.
25. LORD JUSTICE MAURICE KAY: Costs? Of this appeal.
26. MR BARNARD: Paid by HM Revenue & Customs, yes.
27. MISS AGNEW: My Lord, I would resist that application. The decision reached by the learned District Judge was, of course, a decision urged upon him by counsel representing NE Plastics. As you say that was myself.
28. LORD JUSTICE MAURICE KAY: It was yourself.
29. MISS AGNEW: Yes. He reached that decision and Revenue & Customs took the decision to appeal that decision reached by the learned judge. It is, of course, a matter of importance to Revenue & Customs but it was very much their decision to appeal that decision by way of Case Stated. They could of course have sought to distinguish this case on the basis of the correspondence sent by the officer in the case to NE Plastics. They chose not to do that. Instead they chose to come to this court and seek a point of principle, as it were. In my respectful submission, given how we come to be here today, importantly, how NE Plastics come to be here together. I should say they are represented today by the two owners of the company, that it would be unfair in all the circumstances to ask them to pay the costs of today's hearing.
30. LORD JUSTICE MAURICE KAY: I think it can never be said to be unfair if somebody takes the point and succeeds in one court and there is an appeal against that which succeeds in another court that the party that has set that in motion and ultimately failed should have to pay the costs. That is not of course to say it is always appropriate they should do so. What is unfair about it?
31. MISS AGNEW: Well, perhaps my Lord the better argument is, and I am grateful to my learned friend, it is simply not appropriate to ask them to do so. Given how they have found themselves effectively my Lord.
32. LORD JUSTICE MAURICE KAY: Given that?
33. MISS AGNEW: Given how they find themselves in this court. A point was taken upon legal advice in the lower court. They succeeded in that point in front of the learned District Judge and Revenue & Customs Prosecution Office decided that it was such a matter of public importance that they should appeal but, as I have said, a decision could have been taken to distinguish this case on its particular facts, given the correspondence entered into by the officer in the case to Ne Plastics. That decision was not taken.
34. MR JUSTICE BLAKE: You rely in that submission on the last sentence of Mr Barnard's skeleton about the general points.
35. MISS AGNEW: Absolutely my Lord.
36. LORD JUSTICE MAURICE KAY: Paragraph 2.
37. MISS AGNEW: Absolutely.
38. MR JUSTICE BLAKE: To that case in respect of the decision below given.
39. MISS AGNEW: Absolutely.
40. LORD JUSTICE MAURICE KAY: I am just trying to find the statutory provision on costs in Case Stated appeals. I think it has created difficulties in one or two cases in the past. (Pause) See section 17 of the Prosecution of Offences Act, the court may in any proceedings before a Divisional Court, in respect of a summary offence order the payment out of Central Funds of such amount as the court considers reasonably sufficient to compensate the prosecutor for any expenses properly incurred by him in the proceedings.
41. MR JUSTICE BLAKE: That (inaudible).
42. MR BARNARD: My Lord, I certainly would not be asking for costs out of Central Funds because that would be a totally pointless exercise as far as the Commissioners are concerned, it would be one government department paying the other.
43. LORD JUSTICE MAURICE KAY: Yes, but that must always be the case.
44. MR BARNARD: Yes indeed. My submission whether it was right or wrong would be against the respondent.
45. LORD JUSTICE MAURICE KAY: You are not making a Central Funds application.
46. MR BARNARD: No I am not.
(The Bench Conferred)
47. LORD JUSTICE MAURICE KAY: We have one or two short cases, would you like to go and have a look through the Practice Direction and the statutory provisions because this is a difficulty that this court has got into once or twice before.
48. MR BARNARD: May we mention it at the end of your list, or at some convenient point.
49. LORD JUSTICE MAURICE KAY: We have two other cases.