United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01086.html
Cite as: [2008] UKVAT(Excise) E1086, [2008] UKVAT(Excise) E01086

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Bass Ireland Ltd v Revenue & Customs [2008] UKVAT(Excise) E01086 (13 February 2008)

E01086

PROCEDURE – Direction – Unless order – Failure to comply with consent direction to disclose documents and provide particulars – Partial non-compliance by Customs – Whether Tribunal should allow appeal – Yes – VAT Tribunal Rules 1986 r.19(4) and (5)

NORTHERN IRELAND TRIBUNAL CENTRE

BASS IRELAND LIMITED Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: SIR STEPHEN OLIVER QC (Chairman)

Sitting in public in London on 15 and 16 January 2008

Sam Grodzinski, counsel, instructed by Lawrence Graham LLP, solicitors, for the Appellant

Rupert Baldry, counsel, instructed by the general counsel and solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION
1. Bass Ireland Ltd has made an application under rule 19(4) of the VAT Tribunal Rules 1986 ("the Rules") for the Tribunal to allow its appeal on the grounds of non-compliance on the part of HM Revenue and Customs ("the Customs"). Rule 19(4) reads:

"If any party to an appeal or application … fails to comply with a direction of a tribunal, a tribunal may allow or dismiss the appeal or application."

2. Bass Ireland has brought two substantive appeals against decisions confirming assessments to excise duty. The assessments were based on Bass Ireland being an authorised warehousekeeper of a warehouse in Belfast from which goods were despatched. The stated destinations were shown as warehouses in other EC Member States and the goods were stated to be under duty suspension arrangements.
3. The first assessment to which "the Italian appeal" (MAN/2007/8042) relates is dated 5 July 2004. It concerns 13 consignments of alcohol which were collected from Bass Ireland's warehouse between April and November 2001 for delivery to a warehouse in Italy. The sum assessed was £742,106.
4. The second assessment to which "the Greek appeal" (MAN/2007/8043) relates is dated 1 February 2005. It concerns 19 consignments of alcohol which were collected from the same warehouse between June and December 2002 for delivery to a warehouse in Greece. The sum assessed is £1,973,823.
5. In both cases the Customs have alleged that the goods in question did not reach their destination. Customs do not, however, rely on that as the legal basis for their assessment in relation to the Italian consignments. While it is not strictly relevant to this decision I should mention that the assessment to which the Italian appeal relates was made pursuant to section 94(3)(b) of Customs and Excise Management Act 1979 and was stated to be based on the fact that Box 10 of the Accompanying Administrative Documents (AADs) sent with the consignments of alcohol in question had been left blank by Bass Ireland's staff; a question of law will be whether non-completion of Box 10 of the AAD has entitled Customs to raise the assessment under section 94(3)(b).

The Tribunal's directions of 5 March 2007

6. Bass Ireland say that Customs have failed to comply with the terms of directions given by the tribunal on 5 March 2007. The date for compliance was extended by agreement, but the commitment assumed by the Customs remained the same as directed by the tribunal.
7. On 10 October 2007 Bass Ireland lodged the applications to which this declaration relates. The application, which relates to both appeals, reads as follows:

"That the appeal of the Appellant be allowed pursuant to rule 19(4) of the VAT Tribunal Rules 1986. The ground for the application is that the Respondents have failed to comply with the direction made by the Tribunal on 5 March 2007 requiring them to provide information and specific disclosure as identified in the Appellant's Notice of Application dated 7 February 2007. By a joint application (made by consent) dated 4 April 2007, the Respondents agreed that unless they complied with the aforesaid direction by 4.00pm on Friday 20 April 2007, the appeal would be allowed. The [Respondents have] failed to comply with the direction and the Appellant now seeks a direction allowing the appeal."

I refer to the direction of 5 March 2007 as "the March 5 Direction".

A short summary of the circumstances behind the assessments

8. The information on which this decision is based is drawn from the bundle of documents produced to the Tribunal, from witness statements of a solicitor with Lawrence Graham LLP (acting for Bass Ireland) and from a lawyer with the Customs.
9. In January 2001 Bass Ireland were approached by J&J Hasletts Ltd ("Hasletts"), a firm in the Northern Ireland food and drink market with whom Bass Ireland had traded for many years. This led to an agreement whereby Hasletts would use one of Bass Ireland's warehouses, at its Ulster Brewery site, for the purposes of Hasletts' business exporting alcohol to other EC countries. It was agreed that goods would be stored at the warehouse, that Bass Ireland would prepare AADs and that the goods would be despatched on a duty suspended basis to other EC countries. These arrangements were cleared with Bass Ireland's Customs officer.
10. Bass Ireland took no part in the transportation of the goods. Hasletts nominated a haulier, Fitzpatrick Haulage, to collect the relevant consignments from the warehouse. In relation to the Italian consignments, Bass Ireland was informed that the goods would be taken to a warehouse in Italy which was authorised to receive duty suspended goods, called Michelotti Renato. Thirteen consignments of these spirits were collected by Fitzpatrick Haulage between April and November 2001 for transportation to Italy. It is not in dispute that Bass Ireland's understanding was that the goods had been properly delivered to the Italian warehouse under the duty suspended regime, and this duly signed and stamped copy 3 AADs were returned to Bass Ireland evidencing receipt by the Italian warehouse.
11. On 16 March 2004 a Customs officer visited Bass Ireland's premises to obtain details of the Italian consignments. During the course of the visit (so the Statement of Case states) Bass Ireland's warehousekeeper (a Mr O'Neill) produced a file marked "Holmes Portadown File (Knox)" containing AADs relating to other movements of duty suspended alcohol. Mr O'Neill stated that those goods had been purchased by Holmes Cash & Carry from P Russell Cash & Carry & Gilbeys and delivered to Bass Ireland. The goods had remained property of Holmes Cash & Carry. The warehousekeeper had sent an application form (pursuant to the Warehousekeepers and Owners Warehouse Goods Regulations 1999, "WOWGR") to a Mr McAteer at Holmes Cash & Carry and received back a WOWGR certificate for Central Cash & Carry. The warehousekeeper had not been aware whether Holmes Cash & Carry had been duly approved to store suspended goods.
12. Following an examination of the file Customs identified AADs relating to consignments of duty suspended spirits stored at Bass Ireland's premises between 26 June and 20 December 2002. All were completed by the individual warehousekeeper and all showed the consignee as Gerados Ioannis, Greece. All of the goods had been despatched from Bass Ireland's premises (according to Box 15 of the AAD) and the AADs had been signed and dated as being correct by Bass Ireland's warehousekeeper. Box 10 of the AAD, details of the guarantor for excise duty, gives Bass Ireland's reference 497 MP.
13. On further enquiry Customs established that the warehouse in Greece to which the goods had been consigned had been closed in October 2002.
14. In the course of the meetings of April 2004 the Customs officer expressed the view that none of the consignments of goods had left Ireland and indeed had travelled no further than a 20 mile distance from Belfast; no evidence has been produced as to the facts or evidence which had led Customs to this belief.

The Italian assessments

15. A departmental review of the Italian assessments took place in August 2004. The amount assessed was reduced by some £74,000 to £669,000 on the grounds that that part of the assessment had been made out of time by virtue of Finance Act 1994 section 12(4)(a). That provision imposes a time limit for the making of an assessment to the earlier of (a) the end of a period of three years beginning with a time when the liability to duty arose and (b) the end of the period of one year beginning with the date on which evidence of facts, sufficient in the opinion of the Customs to justify the making of the assessment, come to their knowledge. Customs had claimed 5 July 2001 (being what they regarded as the date on which the goods had been removed from the warehouse) as the duty point; on that basis the three year period ended on 4 July 2004.

The issue in the Italian appeal

16. A series of issues of law arise. Does Customs and Excise Management Act 1994 prescribe an excise duty point? If so were the deficiencies of the goods found before the lawful removal of the goods from the warehouse? Were the goods lawfully removed notwithstanding that Box 10 had been left blank? Were the goods even in excise duty suspension? These and other issues are not relevant to the present matter.
17. The issue of fact (and law) which gave rise to Bass Ireland's request for specific disclosure of documents and, in relation to Customs statement of case, further and better particulars, is when evidence sufficient to justify the assessment came to the knowledge of Customs. If that evidence came to their knowledge before 5 July 2003, Customs will (by virtue of Finance Act 1994 section 12(4)(b)) have been out of time to assess.

The Greek assessment

18. On 2 March 2004 the Customs officer visited Bass Ireland's warehouse and took away documents relating to goods despatched to Greece. On 14 April 2004 Customs informed Bass Ireland of their belief that the consignments (which included the Italian consignments) had not reached their destinations. The Customs officer advised Bass Ireland that they had instituted inquiries with the Greek authorities through the mutual verification system about the Greek warehouse and its status.
19. The assessment to excise duty in the sum of £1,973,823 was made under regulation 4 of the Excise Duty Points (Duty Suspended Movements etc) Regulation 2001. The basis for this was that "within four months of the date of removal the duty suspended movement is not discharged by the arrival of the excise goods at the destination"; consequently an excise duty point arose when the goods were removed from Bass Ireland's warehouse.
20. The factual basis of the assessment was said to be that the Greek authorities had confirmed to Customs certain matters. The first of these was that according to declarations by the Greek consignee, the stamp of his company and his signature on the relevant AADs were both counterfeit and that he had never received the relevant quantities or ran any kind of business with the consignor mentioned in the AADs. The second was that the signed declarations of the Customs officers who seemed to have signed the relevant AADs were counterfeit signatures. The third was that the warehouse licence of the Greek warehouse had been revoked on 14 October 2002. The fourth was that 14 of the Greek consignments departed for Greece after the date of revocation of the licence.

The issue in the Greek appeal

21. Legal issues arise. Was the wrong person assessed? Bass Ireland, it is said, is not a person who is chargeable with duty under Article 20 of Council Directive 92/12; the inclusion of a reference to Bass Ireland's movement guarantee was not, according to Bass Ireland, sufficient to make it a person who could be liable to duty. Were the goods no longer in suspension when they left Bass Ireland's warehouse?
22. The question of fact and law is whether as regards the assessment of 1 February 2005 Customs were out of time to assess in respect of any AADs in respect of which they had evidence of "irregularity" before 31 January 2004.
23. The factual issue arises from Bass Ireland's contention that Customs have produced no evidence that the Greek consignments failed to arrive at their intended destination. Customs have merely asserted, say Bass Ireland, that the Greek warehousekeeper's licence had been revoked, that the Greek consignment AADs were not submitted to the Greek authorities and were not recorded in the consignee's books, that that the company stamp and signature on the AADs had been false and that the consignee had denied conducting business with the consignor.
24. A number of requests were made on Bass Ireland's behalf to Customs to provide copies of such documentation as had been sent to them from the Greek authorities. These were not supplied. Nor had Customs supplied copies of such intelligence or information as had been available to them and which had led to the issue of Customs' request for information concerning the Greek consignments to the Greek authorities in the first place.
25. The relevance of the above matters is that if in fact the Greek consignments did arrive at the warehouse in Greece, or diversion in another Member State can be established, then the stated basis of Customs' assessment, under DSMEG Regulation 4 will (so Bass Ireland contend) be unsustainable and Bass Ireland will have a complete defence to the assessment. For that reason Bass Ireland have contended that it is entitled to see and test the evidence which Customs received from Greece and in particular what Bass Ireland see as the unsubstantiated testimony of the Greek warehousekeeper whose authorisation as a tax warehouse was allegedly withdrawn.

Events of 2004

26. Bass Ireland asked for a departmental review of the Italian assessment. The decision to assess was upheld subject to a downward adjustment to reflect the fact that the assessment was out of time as regards the earliest consignment. On 22 October Bass Ireland appealed on the grounds (among other things) that there had been insufficient evidence that the consignments to Italy had been diverted.

Events of 2005

27. In February 2005 the Greek assessment was issued. The review decision upholding the decision to assess was produced on 5 May. Correspondence then took place between Simmons & Simmons (solicitors acting for Bass Ireland at the time) and Customs during the course of 2005 relating to the factual background of the assessment. On 29 November Simmons & Simmons wrote to Customs requesting further information and documentation in relation to the time at which Customs had received information concerning the alleged diversions. No proper response to that letter appears ever to have been received.

Events of 2006

28. Lawrence Graham (Bass Ireland's new solicitors) wrote on 6 February to Customs asking when a reply might be received to the requirement for information of 29 November 2005. Lawrence Graham asked for further information on 3 March. No response was received from Customs; Lawrence Graham wrote, asking when the information would be received, on 16 March, 30 March and 4 May. Customs explained over the telephone that more time was needed and eventually the tribunal was asked for a standover until 19 July; on 17 July Customs asked for a further standover.
29. No information was made available by Customs in relation to either the Italian or the Greek appeals. On 12 October 2006 Lawrence Graham wrote letters relating to both assessments. Enclosed with those were requests for specific disclosure and for further and better particulars. These were substantially in the form of the schedules of documents and requirements for further and better particulars submitted to the tribunal on 28 February 2007 (to which reference will be made later) and with which this present application is concerned.
30. In a telephone conversation with Customs on 6 November 2006, Customs agreed that they would respond to the requests of 12 October by 11 December 2006 and would agree to a further standover of the appeal until 9 February 2007 to give Bass Ireland time to consider the documentation and the information provided. A draft joint notice of application reflecting this agreement was sent to Customs on 7 November 2006 but no response was received to that letter, nor were the documents information received by 11 December 2006.
31. On 12 December 2006 Lawrence Graham wrote to Customs requesting immediate clarification as to when the information would be provided and renewing their request. On 21 December they wrote to the tribunal confirming that they had heard nothing from Customs and informing the tribunal that they would be filing an application for specific disclosure and for further particulars at the beginning of January 2007.

The events of 2007

32. On 8 February 2007 Bass Ireland filed the applications which contained the following words:

"(a) That the Respondents do by 28 February 2007 carry out a reasonable search to locate all the documents or classes of documents listed in the schedule to this application ("the Schedule") and do make and serve on the Appellant a list stating whether any of the documents or classes of documents identified in the Schedule are in its possession, custody or power, and if not now in its possession, custody or power, what has happened to them. If the Respondents claim to have a right or duty to withhold inspection of the document, then full reasons should be given by the same date.

(b) That the Respondents do by 28 February 2007 provide further and better particulars requested by the Appellant in the request attached hereto ("the Request")."

33. The applications were accompanied by the Schedules asking for specific disclosures and for further and better particulars. The next move was a Notice of Application of Customs in the following terms:

"TAKE NOTICE that:

34. The Respondents CONSENT to the direction sought by the Appellant in the Notices dated 8 February 2007 …
35. The Respondents accept that there has been substantial delay on their part but HEREBY REQUEST that they have until 1600 hours on 28 March 2007 to deal with the requests for further discovery in the Notices of 8 February aforesaid."
36. On 5 March the tribunal made the direction –

"Application Granted UNLESS Appellant objects by 19 March 2007 (in which case matter to be listed for a hearing)."

On 13 March 2007 Bass Ireland confirmed that it did not object to Customs' request for the extra month.

37. In neither appeal did Customs comply with the extended deadline nor did it seek an extension of time. On 29 March 2007 Bass Ireland made applications that the appeals be allowed by reason of Customs' non-compliance. The following day Customs spoke to Lawrence Graham on the telephone and asked for more time to comply and suggested a further extended deadline of 16 April 2007. Lawrence Graham agreed to this further request, but only on the basis that Customs would consent to the 5 March direction becoming "peremptory" in its effect.
38. On 3 March 2007 Customs filed notice of objection to Bass Ireland's application, accepting that they were in breach of the tribunal's order, but applying for a further extension of time to 20 April 2007 on the basis that they had to carry out searches "within another business area of the Respondents". Following discussions, however, Customs then withdrew its application of 3 April and in its place Bass Ireland and Customs lodged a Notice of Application signed by both parties jointly applying for a direction that –

"… unless the Respondents comply with paragraph No.2 in the Tribunal's Direction made on … 5 March 2007 … by 4.00pm on Friday 20 April 2007 the appeals be allowed."

39. The joint application was not placed before a tribunal chairman, however on 19 and 20 April 2007 HMRC provided some responses to Bass Ireland's requests for disclosure and for further information in both appeals. The justifications claimed by HMRC for failing to answer many of the requests for particulars and to provide categories of documents are dealt with later in this decision.

The obligation to disclose documents etc.

40. Customs consented to and the tribunal's 5 March direction approved the terms of paragraphs (a) of Bass Ireland's applications of 8 February. (See paragraph above). These required Customs, by the stated date (which following agreed extensions became 20 April 2007):

(i) to carry out a reasonable search to locate all the documents or classes of documents listed in the Schedules and

(ii) to list the documents in Customs' possession and power and

(iii) where such documents were not in Customs' possession or power to state what had happened to them.

The concluding words of paragraph (a) cover the situation where Customs choose to claim "to have a right or duty to withhold inspection of a document"; in those cases Customs are to give "full reasons" by the stated date (i.e. by 20 April 2007).

41. Before I examine the actual disclosures effected by Customs in relation to both the Italian and the Greek appeals, there are some introductory observations.
42. First, a "reasonable search" for all the listed documents etc. is in any event required of Customs. Customs, who have consented to the applications, cannot absolve themselves by asserting that the classes of documents are irrelevant or not required for the fair disposal of the appeal. Nor can Customs absolve themselves from searching for and listing the documents by claiming that an order of the Tribunal is needed before such documents can be disclosed; listing is an obligation.
43. Second, in determining whether the requirement to search goes beyond the bounds of reasonableness and proportionality, Customs must take steps to ascertain the scope of the required search before asserting that it is too onerous or oppressive.
44. Third, the obligation to which HMRC have consented is to search for documents and classes of documents explicit details of which had been requested in Bass Ireland's communications of 12 October 2006. Customs had had at least four months to prepare themselves. If Customs saw good reasons to decline to make disclosure they had had plenty of time to consider their position. And yet, by signed consent of 5 March 2007, Customs specifically consented to the obligations to search for and list the Schedule documents by the due date. They are bound by their consent. They cannot thereafter assert that the documents etc. in the listed classes are not relevant.
45. Fourth, this is a situation in which a liability to excise duty arises irrespective of care or carelessness on Bass Ireland's part. In essence a strict liability is imposed on Bass Ireland who may not have known of (and in fact claim to be ignorant of) the diversions of the goods when they left their Belfast warehouse. The cards are all in Customs' hands. The relevant information obtained in the course of their investigations has formed the basis of the assessments. Considerations of reasonableness and the interests of justice require that Bass Ireland (and others in their position) be given the opportunity to displace the assumptions and the underlying premise on which the excise duty assessments have been raised. These considerations may demand that the documents etc in the hands of other law enforcement bodies be searched for and listed. Of course Customs can plead privilege or some recognised immunity; that is enshrined in the concluding words of paragraphs (a) of both of the applications. Customs are not however absolved from the obligation to search for and list documents in those classes.
46. The above observations are reinforced by the decision of the Court of Appeal of England and Wales in Fearis v Davis [1989] 1 FSR 555. This establishes that where parties have consented to an unless order, it is not open to one of them to rescind its position and seek to avoid doing what it has already consented to do. Markan Shipping v Kefalas (another England and Wales Court of Appeal decision) [2007] 3 All ER 365 was concerned with non-compliance with unless orders and with the consequences. The Court of Appeal confirmed that the unless order means what it says and that the consequences of non-compliance take effect in accordance with the terms of the order. The Court of Appeal went on to say that there was ample power to do justice on the application of the party in default; and that is an aspect of this appeal to which I will return later.

Customs' responses to the Italian assessment disclosure request

47. Bass Ireland made fifty requests. Customs declined to answer some eleven of those. The reasons given by Customs fell under four heads. First they said that the requests were disproportionate and not required for the fair disposal of the case. Second they have declined without order of the Tribunal to disclose certain particulars and documents associated with criminal investigations undertaking by Customs in relation to the alleged diversion of the goods. Third, the requested material was said not to be relevant to the fair disposal of the appeal. Fourth it is said that to require searches for specific documentation is disproportionate and not required for the fair disposal of the appeal.
48. Request 14 referred to copies of assessments to excise duty and/or VAT issued in respect of and arising out of or in connection with the alleged diversion of duty suspended goods destined for the Italian warehouse. Although it is not strictly relevant to the present issue, I am satisfied that this request, which was evidently aimed at the question of whether the assessments were out of time, is relevant. The Italian warehouse has featured in English High Court proceedings which were determined in November 2002 (Anglo German Breweries) in connection with an alleged diversion of duty suspended alcohol consignments between September and November 2001. Moreover a witness statement of a Customs officer in the present case confirms that Customs had inspected the business records of the Italian warehouse in May 2007. Request 15 related to documents about challenges to assessments identified by Customs pursuant to request 14. The aim behind this request was evidently to understand when Customs had first seen Bass Ireland's AADs. Customs' response to this request, as to request 14, was that it was disproportionate and not required for the fair disposal of the case.
49. Requests 18 and 19 asked for copies of documentation relating to the investigation that had taken place into the alleged diversion of consignments destined for the Michelotti Renato warehouse and any subsequent prosecutions arising out of those. The evident purpose of these requests, once again, was to ascertain what information had been available to Customs and when with a view to determining whether or not the assessments have been made in time. Customs declined to give any information about these without the order of the tribunal and they reserved the right to resist any application for disclosure.
50. Customs declined to produce an AAD relating to another transaction and the Notice of Application (and the Notice of Appeal of that other trader (and witness statements produced in relation to that appeal)). Customs and Excise denied the relevance of the documents sought.
51. Another request asked for copies of correspondence and documents relating to enquiries into some nine other individuals and business entities. All those individuals and entities were known to and had had some association with Bass Ireland and its business. The enquiries were primarily concerned with establishing whether the Italian assessment was out of time. Customs declined to list those on grounds that the material was not relevant.
52. Bass Ireland's request for documentation relating to criminal and civil investigations into the same nine named individuals and entities conducted by the law enforcement authorities was met with a statement that Customs declined to produce the information without order of the Tribunal and that they reserved the right to resist any application for the disclosure. Finally, in relation to a request for copies of all WOWGR certificates issued by Customs from 1999 until 2003 to six entities listed in the request, Customs' response was that this was a disproportionate request which was not required for the fair disposal of the trial.
53. (I infer from the last response that Customs had not made a "reasonable search" to locate the documents and that if they had Customs had unilaterally decided that the information should not be listed. In both respects it appears that Customs had failed to do what they had agreed to do. Customs' right to claim to withhold inspection does not absolve them from searching for and listing the documents. In regard to the other requests, had Customs wished to challenge the relevance of the documents, they should not, in my view, have consented to the terms of the 5 March direction.)

Customs' responses to the Greek assessment disclosure request

54. The reasons for declining eleven requests were of a substantially similar nature to those advanced in relation to the Italian assessment disclosure request. Bass Ireland had, for example, sought disclosure of documentation arising out of or in connection to Customs' assessments or investigations of other individuals and entities in circumstances where their knowledge of the closure of the Greek warehouse and/or alleged diversion of duty suspended goods destined for that warehouse, arose in connection with such assessments or investigations. Customs had replied that none of that material was relevant or indeed required for the fair disposal of the appeal and that, moreover, it would have been oppressive and disproportionate to have required the searches requested.
55. As with the Italian assessment disclosures, my conclusion is that Customs, who had known the details of the request for nearly five months before consenting to the 5 March direction, are bound by the terms of the consent. They cannot subsequently decline to comply (save in the terms of the proviso to paragraphs (a) of the Applications of 8 February 2007).

Bass Ireland's requests for further and better particulars, both appeals

56. Customs' consent to the 5 March direction required them (in the terms of paragraphs (b) of the 8 February 2007 Application) to "provide further and better particulars as requested by the Appellant in the request attached". With both appeals the relevance of the requests for further and better particulars was similar to those relating to the requests for disclosure. Customs had, as with the other requests, been provided with them on 12 October.
57. In the Italian assessment request, Customs declined to provide information in relation to ten of the forty requests. The declined requests was said to have been too widely drawn, to involve disproportionate effort and not to be relevant to the fair disposal of the appeal. Customs declined, without the order of the tribunal, to disclose any particulars associated with criminal investigations and intelligence.
58. In the Greek assessment request Customs and Excise declined to provide information in relation to seven out of the forty-one requests. The reasons for declining were that they requests in question were said to have been too wide or disproportionate (or both) and were not required for the fair disposal of the appeal. Regarding other requests relating to criminal investigations, Customs had declined without order of the tribunal to make disclosure.

The case for Customs

59. A witness statement provided for Customs stated that, as regards both the requests for disclosure of documents and for further and better particulars, the stance of Customs was justified and respectable. The argument for Customs was that overall Customs had not failed to comply. The responses had been sufficiently comprehensive to amount to due compliance. And even if there had been a limited degree of non-compliance, the Tribunal is not required to allow the appeal. Another decision of the Court of Appeal of England and Wales, QPS Consultants Ltd v Kruger Tissue (Manufacturing) Ltd [1999] BLR 366 establishes that if an unless order is breached, the court nonetheless has a wide discretion to do whatever was required in the interests of justice. Here the least just outcome would be for the tribunal to allow the appeals. Rule 19(4) enables the Tribunal to "allow or dismiss the appeal" in circumstances of non-compliance; rule 19(5) enables the Tribunal to waive a breach. The right course for the Tribunal would be to set up a new timetable and allow the appeal to progress.

Conclusion

60. Customs have failed to comply properly with the 5 March Direction. The non-compliance has, as my review of the facts has shown, been substantial. Customs should have listed the documents etc. sought in the Schedules. If the documents were not available to them, they should have said so. If Customs were to claim privilege or an immunity, they should nonetheless have listed the documents and applied to the Tribunal with reasons for withholding them from inspection. It was not open to them to refuse documents or information on the grounds that they were irrelevant or that the documents and the information were not required for the fair disposal of the appeal or that the requirement was disproportionate. The joint Notice of Application signed by both parties on 4 and 5 April 2007 is in the form of an "unless order" to which both parties have consented. In the application the parties have agreed that the appeals will be allowed unless compliance is made by 20 April. That is the position unless Customs' breaches can be waived.
61. Is it in the interest of justice that Customs' breaches should be waived and a new timetable be directed? That course would not in my view be just. The delays on the part of Customs have been too long and too recurrent and the extent of the non-compliance has been too great. Customs had plenty of time in which to consider their position and react to Bass Ireland's earlier requirements for the documents and for the information (i.e. the requirements of November 2005 and the four set of requirements of 12 October 2006). Customs' failure to comply by the agreed date (20 April 2007) has, in my view seriously prejudiced Bass Ireland's case and may well have damaged their chances of success in both appeals. In both cases Bass Ireland's liability to excise duty has arisen as the result of diversions carried out many years ago (allegedly in 2001 and 2002) by others and in circumstances over which Bass Ireland apparently had no control or even knowledge. Customs had the information necessary to justify their decisions to assess. That information, and any other information perceived by Bass Ireland to be relevant to the appeals, should have been disclosed. Bass Ireland's enquiries were, as I indicated, directed at determining the circumstances of the diversions of goods destined for Greece and at the question of whether Customs had sufficient knowledge of the facts to enable them to raise the assessments in both cases.
62. Those enquiries are now much harder to pursue. For example potential witnesses (identified by the disclosure/information sought) might no longer be contactable and documentary evidence may have been disposed of. (Indeed Customs have admitted that one set of files taken from Bass Ireland is no longer available.) Similarly, witnesses from whom Bass Ireland might wish to obtain statements, when the nature of the case it has to meet has been properly particularised, may have left their relevant employments and therefore no longer be compellable. Further, the memories of those witnesses who are able to give evidence (including those of Customs' officers, who Bass Ireland will wish to cross-examine) will inevitably have faded.
63. Bass Ireland's chances of getting hold of reliable information have, I think, been seriously compromised. The damage has been done and cannot now be put right. No proper explanation for the delays has been given by Customs. For all those reasons I am against waiving Customs' failures to comply with the relevant directions.
64. I therefore allow Bass Ireland's appeal.

Costs

65. Bass Ireland have applied for their costs. I direct that Customs pay to Bass Ireland their costs of an amount to be agreed. If the amount cannot be agreed, the matter should be referred back to me for further directions.

The preliminary issue in the Italian appeal

66. Bass Ireland have challenged the assessment in the Italian appeal on the grounds that it was wrong in law (as distinct from out of time). A separate decision will deal with that issue.
SIR STEPHEN OLIVER QC CHAIRMAN RELEASED: 13 February 2008

MAN 2007/8042

MAN 2007/8043