United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2007/E01069.html
Cite as: [2007] UKVAT(Excise) E1069, [2007] UKVAT(Excise) E01069

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Dariusz Skowera v Revenue & Customs [2007] UKVAT(Excise) E01069 (08 November 2007)

E01069

EXCISE – Restoration refusal – Review defective being based in part on matters for which no evidence – Whether Review decision "inevitably" the same see John Dee [1995] STC 941, 953 – No – Finding that Appellant who was not user unaware of smuggling – New Review directed on basis of facts found by Tribunal – FA 1994 s.16(4)(b)

LONDON TRIBUNAL CENTRE

DARIUSZ SKOWERA Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: THEODORE WALLACE (Chairman)

R S SURI JP

Sitting in public in London on 26 October 2007

The Appellant appeared in person with Mrs Iwona Ringland, interpreter

Sarabjit Singh, counsel, instructed by the Solicitor for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

1. This was an appeal against a review decision that the Appellant's Mercedes Sprinter seized at Dover on 16 September 2006 from Konrad Barankiewicz should not be restored.
2. The vehicle was a van which had been converted into a minibus with three rows of rear seats. Customs found 23,200 Benson and Hedges cigarettes concealed in a space under the back row of seats.
3. The Appellant's case was that the vehicle had been hired to Dziedzic Trans Passenger and Goods Transport, that he had no knowledge of any further adaptation to conceal the goods and no knowledge of any smuggling attempt.
4. It was a most unsatisfactory case because David Cawtraw, the Review Officer, relied in his decision on a series of matters which were not supported either by items contained in the Respondent's List of Documents or by material in the Bundle of Documents served in July but which were relied on in the Statement of Case dated 25 May 2007.
5. Rule 20(1A) provides in terms that the Respondents' List of Documents "shall contain a reference to the documents relied upon in reaching a decision on review."
6. On 1 October the Tribunal directed that by 12 October 2007 (a) the Respondents' List and bundle be amended to include all material which should be listed under Rule 20(1A), (b) that the Statement of Case be amended to delete all material for which no evidence was to be adduced and (c) that the Respondents serve statements by all further witnesses to be called. The bundle served in July included a statement by the Review Officer dated 12 April.
7. On 19 October Worthingtons, the solicitors for the Appellant, acknowledged receipt of the letter enclosing the direction and wrote that although they had advised the Appellant of the hearing they had received no instructions and were not in a position to represent him at the hearing.
8. At the hearing the Appellant attended in person with Mrs Ringland, a certified interpreter. Mr Singh attended without any representative of the Solicitor's Office and without the Review Officer who did not attend because of the letter from Worthingtons.
9. Mr Singh produced a Statement of Case amended in accordance with the Direction deleting a substantial part of the Respondents' contentions. He said that the Direction of 1 October had not been received by the Solicitor's Office until a copy had been provided. He said that he was instructed that the Review Officer had said that the other material should not be disclosed. He said that Customs wished to proceed on the basis of the documentary material alone and that the Review Officer had no first hand knowledge of the facts.
10. The Appellant said through his interpreter that, although he had only received the amended Statement of Case and skeleton argument at the hearing, he wished to proceed having come all the way from Poland
11. It is well established that on an appeal under section 16(4) of the Finance Act 1994 the jurisdiction of the Tribunal is to find the primary facts and to decide whether in the light of those findings the decision was reasonable, see Golobiewska v Customs and Excise Commissioners [2005] V&DR 267 at [17], a decision of the Court of Appeal. A decision is not reasonable if the decision maker fails to consider matters which he should consider or fails to include matters which are irrelevant, see per Lord Lane in Customs and Excise Commissioners v J H Corbitt (Numismatists Ltd) [1980] STC 231, HL applied in John Dee Ltd v Customs and Excise Commissioners [1995] STC 941, CA.
12. In the present case Mr Cawtraw's Review relied to a material extent on assumptions and allegations for which no evidence was produced. In our judgment facts for which there is no evidence are no different in principle from facts which are found to be contrary to the evidence or facts which are irrelevant. Quite apart from the Corbitt principle, the whole purpose of Rule 20(1A) would be defeated if Customs could chose to exclude from the appeal documents or material relied upon in reaching the decision under appeal.
13. It is a matter for considerable concern that the Review Officer cannot have understood that his decision must be founded on facts for which there is evidence in the event of an appeal and that the Solicitor's Office acquiesced in the withholding of material on which he had relied in spite of the specific requirements of Rule 20(1A).
14. In those circumstances the Review was unreasonable in law and could only stand if Customs could show that "the decision would inevitably have been the same" if Mr Cawtraw had only had regard to matters for which evidence was to be produced. The words quoted are from John Dee at page 953. Mr Singh did not contend otherwise.
15. We would add that there was no suggestion of a claim for Crown Privilege for the material withheld. In any event it seems to us that the statutory jurisdiction of the Tribunal to supervise Review Decision would be pro tanto negated if such material could be withheld on appeal.
16. In the above circumstances having endeavoured to explain to the Appellant that the Review Decision would only stand if the decision would inevitably have been the same on the facts established by evidence we proceeded to hear the evidence. In paragraph 10(f) of the Statement of Case it was pleaded that the Appellant was knowingly involved in smuggling the seized excise goods. If the Tribunal had concluded that the Appellant was so involved then the decision to refuse restoration would have been inevitable and the appeal would have been dismissed in spite of the defective Review.
17. The consideration of the evidence was made much more difficult by the fact that the Appellant had no understanding of English. Mrs Ringland told us that she was a certified interpreter. She said that she had made notes before the hearing of the explanations given by the Appellant to his solicitors and asked to read those to the Tribunal without the need for the Appellant to go through his evidence sentence by sentence. Mr Singh expressed reservations but agreed. The evidence recorded at paragraph 35 onwards is however the Appellant's oral evidence.

Documentary Evidence

18. It is convenient to start with the documentary material in the bundle produced by Customs.
19. The notebook of J Pope recorded that he stopped a white Mercedes Sprinter registration LKR 81 JL at 1015 hours. The driver was Konrad Barankiewicz who was accompanied by two passengers; all had Polish passports. The driver said that he spoke little English. He said that he was going to Wolverhampton; he would stay one day and then take people back to Poland. He handed the officer a registration document and green paper in the Appellant's name. Asked if they had any cigarettes, one passenger said he had one carton and the other two cartons. Mr Barankiewicz indicated that he and Robert Koslak were drivers and Daniel Zawada who was in the back was a passenger.
20. Mr Pope asked Mr Verrall and another officer to unload the baggage from the vehicle. This was at 1030 hours.
21. Mr Verrall's note recorded that the first two rows of seats were mounted on a raised floor approximately 2-3 inches from the original floor. He noted that in the fascia of this raised floor there were air vents and floor lights. On removing the light from the fascia which ran parallel to the seats, he was able to see into the void under a rear row of seats which were raised approximately 10 inches from the secondary floor level. In this void under the rear seats Mr Verrall noted that he could see packets of Benson and Hedges and informed Mr Pope. 23,200 cigarettes were found.
22. Mr Pope's note stated that Mr Verrall alerted him to the fact that he could see cigarettes visible through a vent in the floor. All the baggage had been removed from the back which revealed a carpeted board clearly cut at both ends. He noted that this was secured by two silver metal strips all having new screws. He noted that at 1038 hours he removed the screws and pulled back the carpet which revealed a row of brass hinges. Once both metal strips had been removed the hinged board lifted up. Behind the board numerous cartons of Benson and Hedges were visible. He noted "I removed cartons 23,200 total". He recorded that 25 cases of beer were removed.
23. Mr Pope started making his notes at 1056 hours, he issued seizure notices to Mr Barankiewicz at 1215 hours and completed his note at 1309 hours.
24. Mr Verrall's notebook was opened at 1116 hours.
25. When carrying out his review Mr Cawtraw had six photographs of the vehicle and the interior, which he listed as "Official Photographs of the vehicle and the concealment space." The second photograph shows that the rear row of three seats were secured to a floor which was the same height as the top of the wheel arches on either side around 10-12 inches from the floor of the luggage area. Looking from the rear of the vehicle there was a fascia with fabric similar to carpeting, with two air vents and a long central panel and two side panels. At the top and bottom there were white strips along the whole length. A further photograph showed the strips removed with screw holes visible. The fourth photograph showed the panel open with a hinge along the top and magnets at the bottom; in the space behind the panel there was a heater to which hoses are attached. The first photograph showed the vehicle number and appeared to have been taken on a parking bay.
26. We are satisfied that the photographs were of the vehicle in question and must have been taken by Customs following seizure because the Appellant would not have had access to the vehicle following seizure and because the Review Officer described the photographs as official and they were so described in the bundle.
27. A letter from Bienias Car Body Modernisation in Poland dated 10 January 2007 stated that the company had rebuilt the car at the Mr Skowera's commission. Four side windows had been installed and seats installed. In order to install the seats, a raised floor with seat anchor points was introduced. The seats were fitted in a 2-2-3 pattern. Under the rear row, a 3-passenger seat, there was a water heater depending on the engine running and designed for the car's heating. This row was covered entirely in order to hide the water heater and keep it safe from damage. The rear flap gave free and easy access to the water heater in case of repair or service. This type of construction was standard; a customer could not choose any other method of seat installation because the safety of passengers was the responsibility of Bienias.
28. Following the seizure, the Appellant wrote on 21 September that the vehicle had been hired to Dziedzic Transport under a contract, the hire period being from 1 June to 30 September 2006 and that he was not aware that it was going to be used for any purpose other than transporting passengers. The owner of Dziedzic Transport did not know about the incident as the smuggling attempt was by one of his drivers.
29. On 8 November Mr Thornton, of the Post Seizure Unit, wrote to the Appellant with a series of questions in Polish and asked for a copy of the hire agreement. The Appellant provided a copy of the agreement.
30. The agreement was dated 20 April 2006 between Mr Dziedzic as lessee and the Appellant and provided that the lessee would use the vehicle for carriage of people inside the country and abroad and expressly prohibited smuggling of cigarettes. Under clause 4 it provided for a daily fee of 125 Polish Zlotys (around £24) "according to the needs of the Lessee". Under clause 6 it was provided that during the term of the agreement "the overall maintenance costs of the vehicle, including ongoing repairs and overhauls, essential to business activity with the usage of the vehicle shall be charged by the Lessee" (the underlining is ours).
31. A letter from the Appellant faxed on 20 November in response to Mr Thornton's letter said that the Appellant owned a Mercedes Sprinter used only in urban transport and was co-owner of two Mercedes Sprinters which had never been to Britain. He had owned the seized vehicle since 31 October 2005, its date of manufacture being 2004. It was adapted to a minibus in November 2005 by Bienias. The English translation stated, "Mr Slawomir Dziedzic is an unfamiliar person to me, who also provides transport services. I have known Mr Slawomir Dziedzic since January 2006." He wrote that he did not take deposits and had not hired any other vehicles to Mr Dziedzic.
32. The initial decision refusing restoration dated 5 January 2007 by Mr Thornton stated that it had been confirmed by the company who converted the vehicle to a minibus that further modifications had since been carried out, not by themselves, to allow access to the raised floor area beneath the rear seats.
33. We observe that no evidence was produced to support this conclusion and that it conflicts with the letter from Bienias dated 10 January 2007 and with the photographs. It is clear from that letter that the original conversion did allow access to the area beneath the rear seats.
34. We now turn to the oral evidence of Mr Skowera interpreted by Mrs Ringland.

Appellant's evidence

35. He said that the contract with Mr Dziedzic was for the vehicle to be used when it was needed. He did not know why the reference to 1 June in his letter of 21 September came in. The contract did not provide for specific dates of use or a final date because both parties were not sure how the business would progress. There were no hirings other than to Mr Dziedzic; he was a regular user having hired the car some 15 times and paid at the end of each hiring. It was not normal to ask for a deposit of a big amount in Poland. He was absolutely unaware of the smuggling actions of the other parties.
36. Cross-examined, the Appellant said that the only strips of metal of which he was aware were the hinges. He never screwed or adapted the board from the original fitting. He denied putting screws in and said that he had no knowledge of metal strips. He said that when the car was handed over to Mr Dziedzic on the afternoon of 14 September there were no screws or metal strips and the connections to the heating system were as they should be. Mr Dziedzic came with Mr Barankiewicz who usually came with him, having been working for Mr Dziedzic for some time. The Appellant cleaned the car before handing it over.
37. He told Mr Singh that the English version of the letter of 20 November stating that Mr Dziedzic was "an unfamiliar person to me" meant that he was "a strange person to me"; by this he meant that he was unrelated and not part of his family but only a business acquaintance. A reference to providing "hiring services only occasionally" meant only for a few days at a time. He said that he and his brother had two other cars with which they ferried passengers between Krasnik and Old Krasnik which were 5 miles apart. He used the seized vehicle if one of those was not available or if he was ferrying passengers from Poland to Germany. He said that it was a replacement vehicle : when everything was going well it could be hired to Mr Dziedzic. In the event of a breakdown of one of the other two vehicles he could hire a replacement from another company.
38. Asked about clause 6 he said that it applied when Mr Dziedzic was in possession of the car. He denied a suggestion that it was inconsistent with occasional hirings. He told the Tribunal that the agreement was a ready made contract provided by his accountant's office.
39. The Appellant told Mr Singh that he had only known Mr Dziedzic for a few months, having been introduced by Arek Stola of Aria Transport Services. He denied a suggestion by Mr Singh that he had invented the hire agreement.

Submissions

40. Mr Singh submitted that the appeal turned on whether the Tribunal accepted that the Appellant was knowingly involved : if so the appeal should be dismissed.
41. He invited the Tribunal to find that there had been an adaptation fitting strips and screws and that it was unlikely that the Appellant did not know because Mr Dziedzic and Mr Barankiewicz had previously been to his yard. He submitted that the hiring was unlikely : there had been no mention by the Appellant of hiring 15 to 20 times in his reply to the letter of 8 November asking about previous hirings. The suggestion that the hirings were as and when needed was not consistent with the vehicle being indispensable to the Appellant's own business. He pointed to the inconsistency between the reference to 1 June in the letter of 21 September and the hiring agreement. He said that clause 6 was inconsistent with hiring the vehicle as and when it was needed. He submitted that there was enough material for the Tribunal to infer that the agreement was invented to avoid the consequences of smuggling.
42. The Appellant in reply said that he lost money if the car was left stationary in his yard. The contract was a typical off the shelf contract. Customs had not proved that he knew of the attempted smuggling.

Conclusions

43. At the end of the hearing we concluded that we were not satisfied that in spite of the defective review the result would inevitably have been the same and directed a new review in accordance with the directions to be specified in the full decision to be given in writing. On this aspect the burden of proof as to issues of fact was on the Respondents.
44. We now turn to consider what findings we should make on the evidence. Here the burden of proof was on the Appellant.
45. We reject the submission of Mr Singh that the hire agreement with Mr Dziedzic was invented. We accept the Appellant's assertion that it was a form provided by his accountant; we note that all the names including that of the Appellant were blank on the form, being filled in in manuscript. Like many agreements produced by accountants it was not an impressive legal document. It was a structure agreement providing for periodic hirings depending on the needs of the Lessee. Clause 6 provided for maintenance costs to be charged by the lessee: we read this as meaning that they would be paid by the Appellant. We find nothing surprising in this. The reference in the Appellant's letter of 21 September 2006 to the hiring period being from 1 June to 30 September 2006 was inconsistent with the agreement, however this was not pursued in cross-examination.
46. We are satisfied on the evidence that the creation of the area under the rear seats where the cigarettes were found was by Bienias Car Body Modernisation. That company installed the heater which clearly needed space for its operation. It is hardly a matter for surprise if the conversion of a van to a minibus for use in Poland which has a cold winter climate included the installation of heating in the rear of the vehicle. From the photograph it is clear that the heater itself although almost 10 inches high did not take up much space on the floor. We find that the strips and screws were a later modification albeit a very minor one. It is clear from Mr Pope's note that he only needed a few minutes to remove them.
47. We found the notes of Mr Pope difficult to reconcile with those of Mr Verrall and with the photographs. In particular we do not see how Mr Verrall could have seen the cigarettes through a vent in the floor.
48. Although the assessment of a witness is more difficult when his evidence is given through an interpreter and some of his evidence and the translations were over lengthy, we formed the view that he was telling the truth and that he was not involved. He was cross-examined by Mr Singh for a considerable time; although there were some inconsistencies, he gave answers which were basically consistent when account is taken of language difficulties.
49. We make the following findings. The seized minibus was converted when the Appellant bought it in 2005 so as to provide a space under the rear seats which were then installed, the space being for a water heater. This conversion was entirely legitimate. 23,200 cigarettes were concealed in that space. Access to that space was by a hinged board. The only alteration after purchase was screwing on two strips at the top and bottom which only took minutes to remove and would only have taken minutes to put on. This was done without the knowledge of the Appellant after Mr Dziedzic collected it on 14 September. The vehicle was hired to Mr Dziedzic to take passengers to Britain under the hire agreement. The hire agreement was provided by the Appellant's accountant and was in a standard form and not drafted for the particular hiring. The agreement prohibited smuggling. The Appellant had known Mr Dziedzic on a business basis for some months. There was no evidence that Mr Dziedzic was a party to the smuggling. The Appellant was unaware of the smuggling. We find the decision to refuse restoration to have been unreasonable and disproportionate on the facts.
50. We direct under section 16(4)(b) of the Finance Act 1994 that within 21 days the Commissioners conduct a further review of the original decision in accordance with the following directions. The review shall be conducted by an officer not previously involved in the matter and shall be provided in writing to the Tribunal and to the Appellant. The copy provided to the Appellant shall be in Polish. The Review shall be conducted on the basis of the findings of the Tribunal in this decision, in particular those in paragraph 49. If the Appellant is dissatisfied with the outcome of the Review he will be entitled to appeal against that Review to this Tribunal.
51. The Appellant is entitled to his costs of and incidental to the appeal including his legal costs, his travelling costs and the interpreter.

THEODORE WALLACE

CHAIRMAN

RELEASED: 8 November 2007

LON 2007/8032