United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2005] UKVAT(Excise) E879, [2005] UKVAT(Excise) E00879

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Firby Ltd & Anor v Customs and Excise [2005] UKVAT(Excise) E00879 (29 April 2005)

E00873

PRACTICE – Failure by Appellants to appear – Application by Customs under Rule 26(1) dismissed because Customs had appeared

EXCISE – Review – No request for Review by one Appellant – Appeal by that Appellant could not be entertained – FA 1994 s.16(2)

EXCISE – Restoration refusal – Haulier – hearing in absence – Dismissed on facts

LONDON TRIBUNAL CENTRE

FIRBY LTD First Appellant

JOHN CHALKLEY Second Appellant

and –

THE COMMISSIONERS OF HM REVENUE &CUSTOMS Respondents

Tribunal: THEODORE WALLACE (Chairman)

Sitting in public in London on 19 April 2005

Neither Appellant appeared or was represented

Eleni Mitrophanous, counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

This was an appeal lodged by solicitors on behalf of the two Appellants against a review decision dated 28 June 2002 refusing to restore a freight vehicle and trailer seized on 28 March 2002 at Dover.

At the outset of the hearing Miss Mitrophanous asked the Tribunal to strike out the appeal under Rule 26(1) because neither appellant had appeared.

That provision reads as follows:

"(1) If, when an appeal or application is called on for hearing no party thereto appears in person or by his representative, a tribunal may dismiss or strike out the appeal or application, but a tribunal may, on the application of any such party or of any person interested served at the appropriate tribunal centre within 14 days after the date when the decision or direction was released in accordance with Rule 30, reinstate such appeal or application on such terms as it may think just."

Miss Mitrophanous submitted that the words "no party thereto appears" applied notwithstanding the fact that the Respondents had appeared. She said that the words "party thereto" apply to the person or persons making the appeal or application and not to the respondents to it. She pointed out that the word "thereto" does not appear in Rule 26(2). She said that it appeared in Rule 26(1) so as to indicate that "party" in Rule 26(1) applied to the Appellant or Applicant alone. She said that the word "no" appears before "party thereto" to cover cases where there is more than one Appellant or Applicant.

She said that it would be sensible for Rule 26(1) to treat an appellant or applicant differently from the respondent to an appeal since the burden is on the person appealing or making the application. She said that it would be anomalous if the Respondents would have been better placed if they had not appeared but remained outside the room.

I have no hesitation in holding that the condition in Rule 26(1) is not satisfied if either party appears at the hearing. As a matter of syntax I do not see how the words of the Rule could be interpreted as she suggested. In effect her interpretation would substitute the words "the party making the appeal or application does not appear" were substituted for "no party appears thereto." Furthermore it conflicts with Rule 3(4) which provides expressly that subject to any direction under Rule 13 "the parties to an appeal shall be the appellant and the Commissioners."

The fact is that Rule 26(1) only empowers the Tribunal to dismiss the appeal or application is wholly out of keeping with the principle of equality of arms and it will only be in an exceptional case will it be appropriate for the Tribunal to exercise its discretion to dismiss an appeal under Rule 26(1). Such a case was Hazelacre Ltd v Commissioners of Customs and Excise [2000] V&DR 185. Rule 26(2) specifically empowers the Tribunal to consider an appeal in the absence of a party.

Miss Mitrophanous then applied for the appeal to be considered under Rule 26(2).

The solicitors who lodged the appeal informed the Tribunal in June 2003 that they no longer acted for Firby Ltd. Since that was in response to a hearing notice for a directions hearing for both, I can only assume that they are not acting for the Second Appellant either. The hearing notice was sent to two addresses provided by Customs. The hearing was therefore notified to the last known address. I agreed to consider the appeal under Rule 26(2).

The jurisdiction of the Tribunal under section 16(4) of the Finance Act 1994 is to direct a further review under section 16(4)(b) or to make directions under subsection (4)(a) or (c) "where the Tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it." That convoluted test has always been regarded as involving the consideration by the Tribunal of whether the decision was based on incorrect or irrelevant facts or whether the discretion was exercised on incorrect legal principles, in effect applying the test in Associated Provincial Picture House Ltd v Wednesbury Corporation Ltd [1948] 1 KB 223 at page 229.

The burden of proof as to the facts of course rests with an appellant. Frequently in cases such as this an appellant challenges the facts on which the decision was based and produces contrary evidence. In such circumstances the Tribunal has to consider whether those facts on which the decision was based were correct see Gora v Customs and Excise Commissioners [2003] WLR 160 at [38].

Here the Appellants have produced almost no factual material, although asserting through their solicitor that they were blameless and that the driver was in flagrant breach of his contract of employment.

The basic facts on which the decision was based were as follows.

Paul Filtness was stopped at Dover driving a vehicle registered in the name of the Second Appellant just before midnight on 27 March 2002. The trailer contained 1,110 kgs of hand-rolling tobacco on three pallets. The trailer also contained a cargo of machinery which had been loaded in Italy for delivery to Walton-on-Thames. The legitimate load left spare capacity.

When interviewed Mr Filtness said that he had been approached by a man in a Mercedes in Calais who had offered him £2,000 to take three pallets of tobacco to Stroud. He had collected the tobacco from Belgium and was to have followed the man in the Mercedes to Stroud.

He had said that he was a self-employed lorry driver and this was the fourth job for Firby Ltd over 3-4 weeks, but the first job abroad; he was paid in cash. He had driven from England leaving on Sunday night, he had collected the machinery in Italy on the Tuesday and had driven back to Calais where he had been approached at the Pidou Warehouse. He had then gone to Belgium where the tobacco was loaded. He said that the tachograph would confirm the timings. He said that he had not yet been paid for the tobacco; £2,470 in the cab was running money, £100-150 wages from Firby Ltd and savings to buy a horse for his wife. He said that his employer was not involved.

Mr Filtness pleaded guilty to smuggling tobacco with a revenue value of £107,459.

On 11 April 2002 the solicitors wrote to Customs on behalf of Firby Ltd asking for the return of the vehicle and trailer. The letter said that the contraband was not the responsibility of their client in any way and that their client was being penalised as a result of the action of a third party in flagrant breach of his contract of employment.

On 8 May Customs replied to the company refusing restoration and on 13 May the solicitors asked for a review stating that their client was blameless and had no knowledge of any smuggling. Up to this point the solicitors had stated that they were acting for Firby Ltd and had made no mention of Mr Chalkley.

In response to a letter from Customs which was not in the bundle, on 22 May the Solicitor sent a copy of the log book showing that the owner was Mr Chalkley with a copy of the purchase invoice to him. They wrote,

"Obviously, Mr Chalkley has no contractual relationship with Mr Filtness. He has not been negligent in any way and we trust that the Review Officer will take this into account and will not uphold the decision not to restore."

The Review Officer, Mr Carl Penfold, replied in a letter headed "Firby Ltd" asking them to obtain a copy of the employment contract from their client and to forward it. No contract was sent.

The Review recorded that Mr Chalkley had been a director at the time of seizure but had since resigned. The Review stated at page 6,

"I am not satisfied that Firby Ltd was not without blame in this matter. [The "not" was clearly an error.] At the very least, there was negligence on the part of Firby Ltd, and at worst, there is a possibility that Firby Ltd or someone in the employ of Firby Ltd was in collusion with Mr Filtness. I see no good reason to restore the seized vehicle."

Although there were a number of references to Mr Chalkley the review was headed "Firby Ltd" and was in response to the review requested on 13 May "on behalf of your client Firby Ltd."

Section 16(2) of the Finance Act 1994 provides that an appeal shall not be entertained unless the appellant is the person who required the review.

Unless the letter of 22 May can be construed as a request for a Review on behalf of Mr Chalkley an appeal by him cannot be entertained. If it was a request by him the review failed to address his position directly and is defective.

It is clear from the wording of the Review that Mr Penfold considered that the appeal was on behalf of the Company. Given that the request was by a firm of solicitors, I consider that he was entitled to do so.

It follows that the appeal of Mr Chalkley cannot be entertained by reason of section 16(2). This is on the assumption that he authorised an appeal in his name.

There was no suggestion that Firby Ltd could not appeal. Presumably it was a bailee of the vehicle and trailer.

Apart from the letters by the Solicitor who ceased to act in 2003 no material has been provided by Firby Ltd whatsoever. No List of Documents was provided and the contract was not provided.

The smuggling by Mr Filtness involved a diversion to Belgium of some 50 miles each way and it appears that he was going to drive to Stroud before delivering the machinery to Walton-on-Thames. Given the time and cost involved it is difficult to see how the company would not have become aware of the diversion of their vehicle. If the driver assumed that no one would ask, this indicates substantial laxity by the company. The additional journey would as Mr Penfold pointed out in his review be apparent from the tachograph. In evidence he also pointed out that additional fuel would be used.

In my judgment Mr Penfold's conclusion that Firby Ltd was at the least negligent and at the worst in collusion was one which he was entitled to reach.

As already pointed out no evidence was produced to show that his conclusion was incorrect.

In the light of that conclusion I am not satisfied that the decision to refuse restoration was unreasonable and the appeal fails.

Costs

Miss Mitrophanous asked for costs if Customs succeeded because the Appellants had not attended. She asked for £600 plus VAT, being counsel's fee, and £40.50 travelling costs for Mr Penfold. She said that she was only instructed to ask for the costs of the hearing. She said that the application under rule 26(1) had been taken on instructions and was a reasonable application to make.

Without wishing to be discourteous to the ingenious argument of Miss Mitrophanous, I consider that the application under Rule 26(1) was hopeless. It would have involved disregarding the clear words of the words "no party thereto appeals."

The application occupied a third of the hearing time and I am only prepared to allow two-thirds of the legal fees for the hearing.

The Appellants were not partners and are not jointly liable. I direct that within 28 days each Appellant pays to the Respondents one-half of the costs allowed, which including £70 VAT on £400 comes to £255.25 each.

THEODORE WALLACE

CHAIRMAN

RELEASED: 29 April 2005

LON/02/8210