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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Revenue and Customs v Jones & Anor [2011] EWCA Civ 824 (18 July 2011) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2011/824.html Cite as: [2011] STC 2206, [2012] Ch 414, [2012] 1 All ER 470, [2011] EWCA Civ 824, [2012] 2 WLR 544

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TIER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
MR MICHAEL TILDESLEY OBE
FTC/15/2009

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/07/2011

Lord Justice Mummery :

Introduction

1. When Her Majesty's Commissioners of Revenue and Customs (HMRC) seize goods on the ground that they have been illegally imported two procedures are available under the Customs and Excise Management Act 1979 (the 1979 Act) for resolving legal disputes about whether the owner can get his goods back:-

(a) Original proceedings by HMRC, to whom notice of claim has been given by the owner of the goods. Those proceedings are brought in a magistrates' court or in the High Court for the condemnation and forfeiture of the goods.

(b) Appellate proceedings in the First–tier Tribunal (the FTT), formerly the VAT and Duties Tribunal, by the owner of the imported goods. An appeal to the FTT lies against a review decision of HMRC refusing the owner's application to restore the seized goods.

2. In April 2008 HMRC seized substantial quantities of tobacco and liquor together with the car used by Mr & Mrs Jones, the respondents, for importing those goods. The respondents gave notice of claim to HMRC in respect of the goods. They were seeking to challenge the legality of the seizure on the ground that the goods were for their own use. The respondents' solicitors later withdrew that notice. No condemnation proceedings were brought. HMRC then made a review decision refusing the respondents' application for restoration of their car and the goods. The respondents appealed to the FTT against the refusal. They succeeded on the ground that the importation of the goods had not been illegal, the FTT finding as a fact that the respondents were importing the goods for their own use. HMRC appealed to the Upper Tier Tribunal (UTT) where they also failed.
3. HMRC now appeal to this court. Jacob LJ granted permission on 20 August 2010 for a second appeal. He was satisfied that the appeal (a) raises an important point of principle and practice and (b) had not become academic in consequence of HMRC's subsequent restoration of the car to the respondents and the destruction of the imported goods. The legal position is that HMRC remain subject to the order of the FTT, which was affirmed on appeal, requiring them to carry out a new review of their original decision not to restore the seized excise goods and to take into account the FTT's findings of fact, in particular the FTT's finding that, contrary to the contention of HMRC, the respondents were not importing the goods for commercial use.
4. On the wider front HMRC press this court with their concern that, if left unappealed, the decisions of the FTT and the UTT, which they say are wrong in law, may stand as flawed precedents in the tribunals for the principles of procedure and practice in this active vital area of HMRC's operations.

The issue on the appeal

5. The question for this court is: did the FTT err in law in allowing the respondents' appeal from the HMRC review decision on the basis of its finding that the respondents were importing the goods for their own use? At the first level of appeal the UTT found that there was no error of law in the FTT decision on that point or at all.
6. HMRC's case is that the FTT made a fundamental legal error on the limits of its appellate jurisdiction. They rely principally on deeming provisions in the 1979 Act (schedule 3 paragraph 5) as taking effect in the absence of a subsisting notice of claim by the respondents in respect of the goods. HMRC say that, on the proper interpretation of the statutory provisions and their application to the facts of this case, the goods and the vehicle in question were, following the respondents' withdrawal of their notice of claim, deemed by statute to have been duly condemned and forfeited as illegal imports for commercial use. In consequence the FTT had no power to treat them as legal imports on the basis of its factual finding of importation for own use. The FTT's finding flatly contradicted what the 1979 Act deemed to be illegal importation for commercial use following the withdrawal of the respondents' notice of claim.
7. The interrelationship of the condemnation procedure and the restoration procedure has been judicially considered and criticised in recent years. It was examined by this court in obiter observations in two cases: Gora v. CCE [2003] EWCA Civ 525; [2004] QB 93 (Gora) at paragraphs 54-58 per Pill LJ, and Gascoyne v CCE [2004] EWCA Civ 1162; [2005] Ch 215 (Gascoyne) at paragraphs 46-56 per Buxton LJ. Unsuccessful efforts were made by HMRC after the hearing to track down the transcript of an earlier judgment in the Gascoyne proceedings on 3 February 2004 when the appeal in that case was adjourned for further consideration of the correctness of the obiter dicta in Gora on the forfeiture of imported goods and for assistance from an advocate to the court.
8. Since Gascoyne the tribunals and the courts have followed an "abuse of process" approach indicated by Buxton LJ in connection with the exercise of the appellate jurisdiction of the tribunal. That approach takes account of Article 6 and Article 1 of the First Protocol of the European Convention on Human Rights (the Convention), which were not specifically addressed in the Gora obiter dicta . That approach also involves the potential application of the doctrine of abuse of process. The main debate on this appeal has been about the extent, if any, to which the observations in Gascoyne on the Convention and the abuse of process doctrine affected the FTT's jurisdiction in this case to find facts about the legality of the seizure, such as whether the respondents were importing the goods for commercial use or own use.

Gora and Gascoyne

9. At this point an overview of Gora and Gascoyne will show the practical importance of this appeal to HMRC. Those cases and other authorities will receive more detailed treatment when HMRC's legal submissions are considered in more detail.
10. According to Gora legality of seizure issues fall exclusively within the jurisdiction of the ordinary courts in condemnation proceedings. On an appeal against HMRC's refusal to restore the goods to the owner, the FTT has no power to reopen either the factual basis on which the goods were condemned as forfeit in the ordinary courts or the legal consequences that are deemed by the 1979 Act to follow when the owner of the goods has not taken the opportunity to challenge the legality of seizure in the ordinary courts. Where the deeming provisions apply the goods are treated as forfeited. Following the failure of the owner to give the requisite notice of claim, or on the owner's withdrawal of a notice that has been given, the deeming provisions apply and the goods are treated as duly condemned as illegal imports. HMRC submit that the tribunal's inability to reopen that issue is not a breach of the Convention, as the owner of the goods had the option of recourse to the ordinary courts to challenge the legality of seizure in condemnation proceedings and chose not to make that challenge.
11. In Gascoyne Buxton LJ drew attention to the impact of the Convention on the tribunal's jurisdiction. In particular, he said that the potential impact of Article 1 of the First Protocol protecting rights of property is that the deeming provisions of the 1979 Act may not adequately enable the owner to assert his Convention rights. The deeming consequences may not therefore be paramount in every case. They may not necessarily prevent any further consideration by the FTT of the issues of fact relating to the purpose of the importation and the legality of the seizure. The FTT may allow those issues to be re-opened on hearing a restoration appeal, but must also bear in mind general considerations of, or similar to, abuse of process. That doctrine is generally applicable when one party seeks to re-open an issue that has been concluded between the parties in the same or other legal proceedings.
12. HMRC submit that this court should revisit the statutory provisions and the obiter observations in Gora and Gascoyne and that the FTT and the UTT misinterpreted and misapplied the relevant law. It was necessary to correct a wrong turn that has occurred in the handling of restoration appeals. As the discharge of their statutory functions in this area is affected, HMRC would welcome clarity from this court about the principles governing the allocation of issues to the two jurisdictions and procedures under the 1979 Act.

Legal representation

13. A possible logistical obstacle in the way of HMRC's ambitions for this appeal is that the respondents have decided not to take any part in it. They have not agreed to the appeal being allowed. That course would, in any case, be for the court to decide, not for an agreement between the parties.
14. In the initial stages of their dealings with HMRC the respondents successively instructed two firms of solicitors to correspond about the seizure of their goods and the car. In the tribunals below they appeared in person. In this court they have made no written or oral submissions. They have neither appeared nor have they been legally represented. Having won in the tribunals and recovered from HMRC the car that was seized, they seem to have no relish for further active involvement and they are unaffected by the outcome of this appeal.
15. It is for HMRC to satisfy the court that the FTT erred in law, otherwise the FTT's order stands, as affirmed by the UTT. It is unfortunate that in a case raising basic jurisdictional questions, on which the obiter views expressed in the two earlier cases are not in total agreement, neither the tribunals nor this court have received the benefit of professional legal argument against the HMRC case. We considered the possibility of requesting the appointment of an advocate to the court. As it was not thought to be vital, the court delayed a decision on the possible use of that procedure until after we had heard full submissions from leading counsel for HMRC.
16. We are more than usually grateful to counsel for the assistance we have received. The written and oral submissions of Mr Nicholas Paines QC and his responses to the court's specific inquiries identified possible arguments that the respondents could have advanced to the court through legal representatives. At the end of his very full presentation of HMRC's case we concluded that that this appeal ought to be decided on the basis of the materials received from HMRC before and during the hearing, as supplemented by further written submissions sent in, at the court's request, after the oral hearing was over.

More background detail

17. On 15 April 2008 customs officers stopped the respondents at Hull Ferry Port on their arrival from Zeebrugge. In their Ford Galaxy car they had 6 kilos of Golden Virginia hand rolling tobacco, 228 litres of wine and 187.5 litres of beer which, according to them, were for their personal use. The respondents were interviewed separately by a Customs Officer. They are in their 60s. They are retired people from Co Durham who say that they have worked hard all their lives and were never out of work. They have travelled frequently to Belgium, France and Holland over the last few years visiting lots of different places and occasionally buying some cheap wine, beer and tobacco to save themselves and their family money. They say that it is ludicrous to suggest that they bought the goods for commercial use. The goods were for personal use and family gifts. No one would be paying them for the goods.
18. The customs officers seized the goods and the vehicle, having satisfied themselves that the goods were being imported for a commercial purpose. The officers issued the respondents with a Customs Notice 12A informing them of their rights (a) to challenge the legality of the seizure in a magistrates' court by sending a notice of claim within 1 month of the seizure and (b) to request restoration of the goods and vehicle.
19. On 28 April 2008 HMRC received a notice of claim dated 22 April from the respondents' solicitors, Murray Humphrey Legal, stating that the respondents wished to appeal to the court against the legality of the seizure and requesting that HMRC notify them of the commencement of legal proceedings in respect of this seizure. On 28 April HMRC sent the solicitors a standard form letter stating that the respondents had chosen the options of "Appealing legality of seizure" and "Requesting restoration." As to the former it was explained that, except where an Independent Higher Officer upheld their appeal, the case would be prepared for condemnation proceedings in the Magistrates' Court within 6 months from the date the claim was received in the Customs office. It was also stated that

"If you decide to withdraw from condemnation proceedings you must accept that the goods are legally seized, e.g in the case of intra EU excise goods that they were imported for a commercial use. This is a matter of law. You will no longer be able to contend otherwise."

20. The HMRC letter of 28 April concluded by saying that the request for restoration would be considered and a decision sent in due course.
21. On 14 May 2008 a new firm of solicitors instructed by the respondents, Turner Morgan Jamieson, appeared on the scene. They sent a letter on behalf of the respondents replying to HMRC'S letter of 28 April and stating that the respondents did not "wish to proceed with the appeal against legality of seizure" and wanted that aspect of their application to be withdrawn. They said that they wished to proceed with their request for the restoration of the vehicle and that, given its value, the penalty imposed on them by being permanently deprived of it would be disproportionate in relation to the duty payable on the goods seized. The letter stated that on legal advice the respondents accepted that there was no legal merit in an application challenging the legality of the seizure, though they maintained that the goods which they attempted to import were not for commercial disposal.
22. On 22 May 2008 a Higher Officer of HMRC wrote refusing restoration of the car and the goods. HMRC had treated the application as covering restoration of the goods as well as the car. It was made clear that the decision was reached by looking at all the circumstances surrounding the seizure, but not considering the legality or the correctness of the seizure itself, as those matters were not relevant to restoration and could only be considered by a magistrates' court in cases where a valid appeal against seizure has been lodged.
23. On 2 June the respondents' solicitors wrote requesting a review of the decision. On 17 July 2008 the HMRC Review Officer replied to the respondents' solicitors stating in her decision letter that the goods had been held by the respondents for commercial use, not personal use as they claimed. They were informed that, as they had withdrawn their challenge to the legality of the seizure in the magistrates' court, the goods and the vehicle were deemed to have been legally seized and duly condemned as forfeited to the Crown. It was explained that that meant that the goods were deemed to have been for a commercial purpose and that they could not contend otherwise.

"Having had an opportunity of challenging the seizure-which includes any claim that the goods were for 'own use' including gifts-in the Magistrates' court, one does not have a second chance of doing so in a statutory review (such as this letter) or at a VAT & Duties Tribunal. For further information about this see Appendix A attached "

24. Appendix A explained the procedure following seizure of goods, the separate and different appeal options for challenges to the legality of the seizure and for restoration of the seized things and the law relating to appeals against seizure. The case of Gascoyne was mentioned in the Appendix.
25. On 12 August 2008 the respondents appealed to the FTT. They referred to the severity of the seizure and maintained in their detailed Statement of Case that the goods were for their personal use and as gifts for members of their family.

The FTT appeal

26. In their Statement of Case on the appeal against refusal of restoration HMRC contended that the appeal should be dismissed because the refusal decision was in line with publicly stated policy and was a reasonable exercise by HMRC of their discretion under s. 152(b) of the 1979 Act and that the respondents had failed to show any reason why HMRC should depart from their stated policy. The Statement of Case also asserted that, as the respondents had withdrawn their appeal challenging the legality of the seizure, "the goods and vehicle are deemed to be legally seized and are condemned as forfeit to the Crown" (paragraph 19).
27. On 18 June 2009 the FTT allowed the respondents' appeal against the HMRC review decision of 17 July 2008. In its decision [2009] UKFTT 133 (TC) it directed HMRC to conduct a new review of the initial decision not to restore the respondents' goods and vehicle taking into account the Tribunal's findings of fact. The findings included the fact that the goods were not for a commercial purpose and accordingly were not liable to seizure. HMRC were directed to consider whether, in those circumstances, it would be unreasonable for them to refuse to restore the goods.
28. The FTT held that the respondents' withdrawal of their challenge by notice of claim to the legality of the seizure did not, in the circumstances, preclude the tribunal from determining that the goods had been imported for personal use. The FTT decided that it was not an abuse of process for the respondents to proceed with the appeal based on their contentions on use.
29. The tribunal concluded that it could re-open the issue of the legality of the seizure and find the full facts. The FTT cited Gora and Gascoyne noting that in the latter case Buxton LJ did not specifically refer to the situation where the owner of the goods had given notice requiring HMRC to commence condemnation proceedings, but had then withdrawn that request before the condemnation proceedings were commenced. The FTT also noted that the current state of the law, with its division between the Courts and Tribunal, has been repeatedly criticised both in the tribunal and in the Higher Courts (see paragraph 15).
30. The tribunal heard the respondents' evidence about their own use of the goods and about their reasons for not carrying on with condemnation proceedings before the magistrates' court: incorrect legal advice and the anxious and depressive nervous disposition of Mrs Jones, which made her unwilling to appear before the magistrates. The tribunal held that the goods were not liable to seizure, as they were imported for the respondents' own use in the relevant sense: they were partly for their own consumption and partly as gifts to family without reimbursement. The tribunal regarded Mr Jones as a truthful witness. It was impressed by the effort made by Mrs Jones to attend the hearing as demonstrating her feeling that the injustice of the situation demanded her presence, even though she did not give evidence. The respondents felt that they had been treated like criminals since 15 April 2008 and that all along they had told the truth, though HMRC had tried to make it sound that they had not. The quantity of drinks purchased was explained by their plans for a surprise fortieth birthday party for Mrs Jones's daughter. The tribunal said that it was satisfied of the truth of what the respondents said about why they did not pursue the condemnation proceedings. There was no res judicata or abuse of process in relation to withdrawal, on legal advice, of the notice of claim prior to the commencement of condemnation proceedings by HMRC.
31. The FTT did not go on to consider the issue whether, assuming the goods were imported for a commercial purpose, the refusal to restore them was one at which HMRC could reasonably have arrived, taking account of other considerations, such as proportionality.

The UTT appeal

32. On 23 March 2010 the UTT (Mr Michael Tildesley OBE) dismissed HMRC's appeal on the ground that there was no error of law in the FTT decision when it decided that it could proceed with fact finding and that there was no abuse of process. It concluded that the FTT was justified in finding that it was not an abuse of process for the respondents to proceed with their appeal and with their evidence and that

"124. …The decision was one that a reasonable Tribunal, properly advised, could have made."

33. In its decision [2010] UKUT 116 (TCC) the UTT said that the FTT had conducted a thorough analysis of the evidence relating to the respondents' reasons for not carrying on with the proceedings before the magistrates' court i.e the reasons of incorrect legal advice from their solicitor and Mrs Jones' nervous condition which made her unwilling to go to the magistrates' court in condemnation proceedings. The UTT rejected HMRC's contention that the FTT had not applied the correct legal test when it accepted jurisdiction on forfeiture. It said

"120. …Mr and Mrs Jones' Appeal involved a deemed forfeiture, in which case the appropriate legal test is that the Tribunal can re-open issues relating to lawfulness of seizure provided it does not constitute an abuse of process. I am satisfied that on a proper analysis of its decision the Tribunal applied the correct legal test in Mr and Mrs Jones' Appeal. The Tribunal considered in depth whether it would be an abuse of process to admit evidence of own use from Mr and Mrs Jones…"

34. In the light of the tribunal decisions I turn next to the statutory framework in which the tribunal decisions and the decisions of HMRC and the respondents were taken.

Statutory framework

35. Dutiable goods that are not declared on importation are liable to seizure and forfeiture. If any thing is seized as liable to forfeiture any vehicle used for its carriage is also liable to forfeiture. In relation to anything seized as liable to forfeiture s. 139(6) provides that Schedule 3 to the 1979 Act shall have effect.
36. Under paragraph 1 of Schedule 3 HMRC shall give notice of the seizure of anything as liable to forfeiture and of the grounds therefor to the owner.
37. Under paragraph 3 any person claiming that any thing seized as liable to forfeiture is not so liable has 1 month from the date of the notice of seizure in which to give notice of his claim in writing to HMRC.
38. Under paragraph 5, in the absence of a notice of claim under paragraph 3 complying with the requirements of paragraph 4, the seized goods "shall be deemed to have been duly condemned as forfeited." [my emphasis]
39. Where notice of claim is duly given in accordance with paragraphs 3 and 4 it is provided in paragraph 6 that HMRC "shall take proceedings for the condemnation of that thing by the court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited."
40. The proceedings for condemnation are civil proceedings and may be instituted either in the High Court or in a magistrates' court: paragraph 8. There are provisions as to proof in proceedings of the fact, form and manner of the seizure and of the condemnation of any thing as forfeited: paragraphs 13 and 14. For example, HMRC have to prove, on the balance of probability, that the goods were imported for commercial use. Condemnation of the goods vests the property in them in HMRC.
41. Under separate provisions in the 1979 Act HMRC have an administrative discretionary power to restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under the Acts: s.152 (b).
42. The Finance Act 1994 provides that there is an appeal procedure against a decision on restoration, which proceeds via a request for a review under s. 14 and the carrying out of a review under the procedure in s.15 to an appeal under s.16 against the review decision to the FTT.
43. The appeal tribunal on an appeal is confined to a power, where the tribunal are satisfied that the HMRC could not have reasonably arrived at the decision it did, to require HMRC to conduct a further review of the original decision: s.16(4).

The Authorities

44. None of the authorities cited are binding on the issue which this court has to decide on the interpretation and application of the provisions of Schedule 3 to the 1979 Act. Discussions and observations in the following cases are relevant.

Gora

45. In Gora HMRC seized imported dutiable goods on the ground that duty on them had not been paid. There were proceedings in the tribunal for restoration of the goods, which HMRC refused to restore. The question arose on an appeal under s.152(b) whether the tribunal had jurisdiction to determine whether duty had been paid and whether the goods were forfeit, even where they were deemed forfeit.
46. Leading counsel for HMRC accepted in a written submission to the court that the tribunal was empowered under its rules and procedures to carry out a "comprehensive fact finding exercise in all appeals" (see paragraph 38). I do not understand that to have been a concession by HMRC that the tribunal hearing a restoration appeal could consider arguments like the "own use" argument relied on by the respondents in this case. The whole thrust of HMRC's written submissions in that case was that the basis on which an appeal could be argued in the tribunal was that the HMRC decision refusing to restore the goods was not reasonable; for example, because it was based on an unreasonable policy, as judged by the application of judicial review principles, including proportionality. The submission accepted the fact-finding power of the tribunal to satisfy itself that the primary facts on which the HMRC based their decision not to restore the goods are correct, but it did not accept that the tribunal would be entitled to find facts contrary to the deeming process in paragraph 5 of Schedule 3.
47. Pill LJ commented that, in his judgment, the tribunal, to which recourse was possible to challenge a refusal to restore goods under s. 152(b), meets the requirements of the Convention: see paragraph 39. Pill LJ then discussed the jurisdiction relating to forfeiture. That point was argued in relation to a cross appeal arising from the finding of the tribunal that, in certain circumstances, it has a jurisdiction in relation to forfeiture. The observations of Pill LJ that followed were plainly obiter, as the cross appeal on the point was in relation to findings on preliminary points upon which the issue did not arise. He went on, however, to express a considered view on a fundamental point for the guidance of the tribunal:-

"56. The Tribunal accepted that where liability to forfeiture has been determined by a court in condemnation proceedings, "there is no further room for fact-finding by the tribunal" and it has no jurisdiction. However, the tribunal went on to hold that Mr Gora did not give notice under paragraph 3

"and as a result the law took its course and the goods were treated as property seized and so liable to forfeiture. No finding of fact resulted. A deemed fact is not a real fact. It cannot consequently rank as a consideration relevant to the subsequent decision on restoration until determined by the tribunal or conceded to exist."

It was held to be open to the tribunal to determine the question of fact whether the goods were seized.

57. I do not agree with that conclusion. Jurisdiction to decide whether any thing forfeited is to be restored under section 152(b) is with the tribunal. The jurisdiction in condemnation proceedings is, by virtue of Schedule 3, with the courts. If the deeming provision in paragraph 5 of the Schedule operates, the thing in question shall be deemed to have been condemned as forfeited. The effect of the deeming provision is to provide that the thing is to be treated as forfeited. The purpose of the provision is to treat the deemed fact as a fact and I cannot accept that it can be treated as "not a real fact."

58. While the division of jurisdiction between the courts and the tribunal may arguably be curious, and is probably retained because of the long standing jurisdiction of the courts in proceedings for condemnation, the division is clear and it is not intended that the tribunal should have jurisdiction to reconsider the condemnation of the goods as forfeited. Mr Cordara's submission that the tribunal should have jurisdiction to consider whether duty has been paid is no more than another way of claiming that the court's findings should be reopened. The tribunal's view would produce the surprising result that the person whose goods had been seized could make a choice of fact-finding tribunal. If he wanted the court to determine the issue he would serve a notice under paragraphs 3 and 4; if he wanted the tribunal he would do nothing. In my judgment, the statutory scheme does not produce that result. The application to the tribunal is for restoration under section 152. There is no breach of Article 6 because the owner has recourse to the courts in the condemnation proceedings."

48. Chadwick LJ agreed with Pill LJ, as did Longmore LJ, who said:

" 62. I agree with Pill LJ's conclusion that, once seizure has occurred, the issue whether duty has, in fact, been paid is not a matter which is within the jurisdiction of the tribunal. The provisions of Schedule 3 enact that if notice of claim, that goods seized are not liable to forfeiture, is not given to the commissioners, the thing in question "shall be deemed to have been duly condemned as forfeited". This provision cannot be sidestepped by saying (as the tribunal does) that a deemed fact is not a real fact. A deemed condemnation occurs because the forfeiture can no longer be challenged. If the forfeiture cannot be challenged, the goods-owner cannot claim in a tribunal that duty has, in fact, been paid because he is thereby challenging the forfeiture. That is what the deeming provision prevents him from doing."

Gascoyne

49. In Gascoyne a vehicle used to carry imported goods, on which duty was not paid, was forfeited. HMRC, who had not brought condemnation proceedings on the basis that the owner had served an application for return of the vehicle rather than a notice of claim, refused to restore the vehicle. On the appeal to the tribunal the owner took the point that the vehicle was not liable to forfeiture. The court held that, on its true construction, the owner's letter was an application for restoration: it was not, as the owner contended, a notice of claim asserting legal rights relating to seizure to be determined in condemnation proceedings.
50. The appeal in the Court of Appeal was limited to 2 grounds: whether on its true construction the letter was a notice of claim within paragraph 5 of Schedule 3 and, if it was, whether condemnation proceedings were available to HMRC in the High Court. Gora was cited on the division of jurisdiction between the courts and the tribunal. Buxton LJ said that Pill LJ was clearly correct so far as domestic law was concerned: see paragraph 46. There was, however, an issue relating to the Convention which cast doubt on the observations in Gora.
51. In his ex tempore judgment Buxton LJ explained the position on jurisdiction and the impact of the Convention:

"46. … I do not think that it can have been intended that the importer before the tribunal would have a second bite at the cherry of lawfulness, having failed in the condemnation proceedings, or let them go by default.

47. To the extent that it was argued that the literal provisions of section 152(b) are wide enough to allow such a second bite, I would agree that that is so, but the reason why the importer cannot have that liberty is not because of the terms of the statute, but because of the normal English law rules of res judicata or abuse of process.

48. As I have already said, that conclusion does not lead to the more severe conclusion tentatively drawn by Lord Phillips MR in para 10 of the original judgment in this case, in that it does not cause the tribunal to be effectively functus even on issues of discretion.

49. I turn to the Convention. The forfeiture process interferes with Mr Gascoyne's rights to his property that are potentially protected by Article 1 of the First Protocol to the Convention.

50. That is made clear in the judgment of this court in Lindsay v Customs and Excise Comrs [2002] 1 WLR 1766, 1784, para 52, to which I have already referred, in the leading judgment of Lord Phillips MR in that case. That being so, issues of proportionality, and indeed of due process in the arrangements made by this jurisdiction for dealing with issues of forfeiture, potentially arise.

51. As to those, in my view there is no Convention objection to holding that an actual finding in condemnation proceedings binds in a tribunal application, be it binding as to the decision as to lawfulness of seizure, or binding as to the underlying facts. In that respect, one can draw assistance, and the European Court of Human Rights has drawn assistance, from the parallel jurisprudence of Article 6. If the importer has actually been in court, first of all he has had his day in court in front of a judicial body, and, secondly, as is well known, Convention jurisprudence permits a proportionate restriction on access to a court, provided the essential rights that are in contest from a Convention point of view are not thereby rendered nugatory. That was decided in Lithgow v United Kingdom [1986] 8 EHRR 329, incidentally a First Protocol case, at pp 393-394, para 194.

52. Secondly, however, that jurisprudence itself creates a great deal more difficulty in relation to the deeming provisions under paragraph 5 of Schedule 3. One's instincts, if no more, suggest that the extent to which it was held in Gora's case that those provisions necessarily prevent any further consideration of the legality of the seizure was an excessive limitation.

53. Miss Simler drew our attention in that connection to what was said by Lord Phillips MR in Lindsay at p 1786, para 64 that the principle of proportionality requires that each case should be considered on its particular facts. Lord Phillips MR then went on to indicate the sort of facts that might be relevant.

54. As it seems to me, for an importer to be completely shut out in the only tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of Schedule 3 does not adequately enable him to assert his Convention rights.

55. In my view, therefore, in a case where the deeming provisions under paragraph 5 are applied, the tribunal can reopen those issues: though the tribunal will always have very well in mind considerations of, or similar to, abuse of process in considering whether such issues should in fact be ventilated before it.

56. The mere fact that the applicant has not applied to the commissioners, and therefore there have been no condemnation proceedings, would not, in my view, be enough. But, in my judgment, it goes too far to say that the deeming provisions have always, in every case, got to be paramount."

52. Buxton LJ said that the Convention issue was never brought to the attention of the court in Gora's case; if it had been, he doubted whether the court would have expressed itself in quite the unqualified terms that it adopted.
53. In my judgment, the passage cited from the judgment of Buxton LJ is also plainly obiter and is not binding on this court. Buxton LJ said in paragraph 22 that, on the view he took of the appeal, the correctness of Gora's case did not arise on the issues before the court, although it did affect a collateral question of jurisdiction. He said that, as the matter had been debated at length, it would not be right to say nothing about it. The Court of Appeal had, at an earlier stage in the same proceedings expressed concerns about the correctness of the dicta in Gora, and had decided to adjourn it for further argument and the assistance of an advocate to the court.
54. It is important to be clear on what was the precise issue before the court on the appeal in Gascoyne. It was whether a letter sent by Mr Gascoyne to HMRC was, as he asserted, a notice of claim for the purposes of the condemnation proceedings, or was, as HMRC treated it, an application for the restoration of the goods. The dispute turned entirely on the construction of the document. It was held by the judge below (Neuberger J), who heard the appeal from the VAT and Duties Tribunal and whose decision was affirmed on appeal by the Court of Appeal, that the letter was properly treated and acted on by HMRC as an application for restoration, not as a notice of claim. That meant that there was a "failure to give a paragraph 3 notice" and that, in most cases, precluded subsequent challenge to the lawfulness of the seizure (paragraph 76).
55. The Gascoyne appeal was thus simply a decision on the construction of a document. It was not necessary, for the purpose of deciding the appeal, to enter into questions about the deeming effect of paragraph 5 and the extent to which the tribunals could find facts on issue relating to the legality of the seizure of the goods.
56. Carnwath LJ obviously appreciated that point when he said that it would be inappropriate for the court to go behind the observations in Gora which was "a recent considered judgment given for guidance" (paragraph 89). He added that only the legislature could correct the underlying problem of the very unsatisfactory mismatch of the two statutory procedures derived from different historical sources. Brooke LJ expressly agreed with those comments.
57. According to the Law Report summaries of the counsels' arguments there was no submission from Mr Gascoyne's counsel that the legality of seizure could be reopened in the appeal to the tribunal. In fact Mr Gascoyne took the opposite position about the tribunal's jurisdiction to that taken by the respondents before the FTT in this case. Counsel for Mr Gascoyne concentrated on the construction of the letter, contending that condemnation proceedings were the only route by which he could be deprived of his property and that the tribunal had no jurisdiction to determine whether the goods seized and liable to forfeiture should be condemned.
58. HMRC also made it clear in their submissions in Gascoyne that the issue arising on the appeal was whether the letter was a notice of claim and, if so, whether HMRC were out of time for commencing condemnation proceedings. As for the Gora dicta relating to the inability of the tribunal to re-open a deemed finding of fact by the court, it was submitted that they were in principle correct (p 218 f-h) It was argued that the legislature did not intend that the tribunal should adjudicate on matters affecting the legality of forfeiture, or that travellers should have a choice of jurisdiction, which would emasculate the intended role of the courts and cause significant practical difficulties. On the Convention point HMRC contended that there was no conflict between the Gora dicta and the requirements of the Convention, provided that it was made sufficiently clear to travellers that, if they wish to argue that goods were being transported for private use and not for commercial purposes, they must serve a notice of claim within 1 month. That would be made abundantly clear by a revised public notice of procedures. HMRC would not object to the tribunal hearing all the facts of the case and indicating its views on the question of personal use in respect of cases currently before the tribunal where there are or have been no condemnation proceedings, or where a party has expressly accepted that the goods were liable to forfeiture.
59. The advocate to the court in Gascoyne (Ms Ingrid Simler) submitted that the owner of the goods duly condemned and forfeited was not prevented in restoration proceedings from advancing a case that the penalty is disproportionately harsh and whether the refusal to restore was lawful and proportionate.
60. Bearing in mind the limited nature of the issue before the court in Gascoyne, the legal submissions made on that appeal and the obiter character of Buxton LJ's observations I turn to the line of cases in which judges have sought to apply the abuse of process approach indicated in those dicta.

Post-Gascoyne decisions

61. In HMRC v Smith [2005] EWHC 3455 (Ch) Lewison J cited Gascoyne saying that it was clear that "in the run-of-the-mill case where there has been a failure to give a paragraph 3 notice invoking the condemnation proceedings, the deeming provision will indeed operate against the applicant in any subsequent appeal to a tribunal." He likened the tribunal's function to that of a sentencing court once a defendant has been convicted and cannot question the correctness of his conviction.
62. As for considerations of abuse of process mentioned by Buxton LJ in Gascoyne, Lewison J said that the tribunal must ask the question whether the appellant could have raised the question of the lawfulness of the forfeiture in other proceedings and, if so, why did he not do so. In the light of the reasons for not raising the matter in condemnation proceedings the tribunal can then answer the question "Should he have done so?" and, if the answer is "Yes", in most cases it will be an abuse of process for him to raise the question before the tribunal (paragraph 23).
63. HMRC v Weller [2006] EWHC 237 (Ch) (Evans Lombe J) cited Gora observing that it was common ground that the passage on forfeiture in the judgment of Pill LJ was not necessary for the decision of the court. He cited Gascoyne observing that it was common ground that, as was plain from paragraph 40, the judgment of Buxton LJ on the point was obiter. He also cited Smith saying that he agreed with Lewison J's approach to abuse of process in this case. He added that a statutory rationalisation of the procedure governing the forfeiture of goods by HMRC was urgently required as the present system is so confusing to the public and pregnant with the possibility of substantial injustice.
64. In HMRC v Dawkin [2008] EWHC (Ch) 1972 David Richards J reviewed the authorities and stated the test which has been applied in the tribunals and courts since Gascoyne as follows:-

"32. The issue is whether the Tribunal misdirected itself in its consideration of the question of abuse of process. The decision as to whether there is or is not an abuse of process requires the Tribunal to consider and give appropriate weight, one way or the other, to all relevant factors and to disregard irrelevant factors. Its decision must be one capable of being reached by a reasonable tribunal having regard to the relevant factors. The decision is not in my view strictly an exercise of discretion. Either it is, or it is not, an abuse of process for the grounds for seizure to be investigated by the Tribunal, but that is a question of judgment to be made on a consideration of the relevant factors. The grounds on which the Tribunal's decision can be challenged on appeal are therefore effectively the same as for a challenge to an exercise of discretion. I accept the test put forward by Mr Puzey for HMRC in a subsequent written submission: has the Tribunal, having been properly advised as to the law, arrived at a reasonable decision which takes account of all relevant matters and leaves out of account all irrelevant matters?"

Submissions of HMRC in outline

65. HMRC made five main points in their overall submission that the dicta in Gora are correct, that FTT erred in law and that the UTT was wrong to uphold its decision and to dismiss their appeal against it.
66. First, the basic error of the FTT was in making a finding of fact that the respondents were not importing the goods illegally as they were for their own use. That issue on legality going to legality of seizure was for decision by the courts in the condemnation proceedings. If the respondents had wanted to take that point, they should not have withdrawn their notice of claim to HMRC. Having done so, a statutory deeming process was triggered; the Tribunal was precluded by the deeming from arriving at a contrary conclusion; and it was an abuse of process for the respondents, having withdrawn the notice on legal advice, then to challenge in the tribunal the deemed due condemnation of the goods as forfeited.
67. Secondly, on a practical, but no less important, point, HMRC say that in practice the tribunals have increasingly adopted the approach of allowing issues of lawfulness of importation to be re-opened in appeals against a refusal to restore the goods. That put HMRC in an impossible position: they cannot know in advance of the tribunal hearing whether they will need to lead evidence from the seizing officer's order to support the legality of the seizure or whether the evidence required will be limited to the reasonableness or proportionality of the decision of the reviewing officer refusing to restore the goods or the vehicle.
68. Thirdly, in the scheme of the legislation governing the procedures relating to imported goods seized by HMRC, Parliament has provided for different avenues for challenging condemnation and forfeiture via the courts on the one hand and the restoration procedure, via an appeal to the FTT against the refusal of HMRC to restore goods, on the other hand. It is a fundamental feature of the legislative scheme that there is condemnation of the goods as forfeit and the vesting of the power of disposal of the goods on HMRC.
69. Fourthly, the nature and scope of the right of appeal to the FTT is significant. The appeal is against the discretionary review decision on the issue of restoration of the goods. The legislation does not provide for a right of appeal to the FTT against forfeiture and condemnation. The FTT has no express jurisdiction to determine that issue on appeal. It is not just a question whether there is abuse of process by re-litigation: a more fundamental question is whether the FTT had any jurisdiction to determine such an issue on a restoration appeal at all. It does not.
70. Fifthly, on the question of Convention compliance, there is no problem with either the condemnation procedure and the restoration procedure. Both procedures are available to the owner of the goods when they are seized. Both are clear in their terms. If the owner wishes to challenge the condemnation of the goods as forfeit, the notice of claim court hearing procedure is available: if he simply wishes to challenge the refusal to restore the goods, the appeal tribunal hearing procedure is available. There is simply no question of an owner being deprived of his property without an opportunity to challenge in a court the legality of the decision to seize the goods and to challenge in a judicial tribunal the legality of the decision refusing to restore them.

Conclusions

71. I am in broad agreement with the main submissions of HMRC. For the future guidance of tribunals and their users I will summarise the conclusions that I have reached in this case in the light of the provisions of the 1979 Act, the relevant authorities, the articles of the Convention and the detailed points made by HMRC.

(1) The respondents' goods seized by the customs officers could only be condemned as forfeit pursuant to an order of a court. The FTT and the UTT are statutory appellate bodies that have not been given any such original jurisdiction.

(2) The respondents had the right to invoke the notice of claim procedure to oppose condemnation by the court on the ground that they were importing the goods for their personal use, not for commercial use.

(3) The respondents in fact exercised that right by giving to HMRC a notice of claim to the goods, but, on legal advice, they later decided to withdraw the notice and not to contest condemnation in the court proceedings that would otherwise have been brought by HMRC.

(4) The stipulated statutory effect of the respondents' withdrawal of their notice of claim under paragraph 3 of Schedule 3 was that the goods were deemed by the express language of paragraph 5 to have been condemned and to have been "duly" condemned as forfeited as illegally imported goods. The tribunal must give effect to the clear deeming provisions in the 1979 Act: it is impossible to read them in any other way than as requiring the goods to be taken as "duly condemned" if the owner does not challenge the legality of the seizure in the allocated court by invoking and pursuing the appropriate procedure.

(5) The deeming process limited the scope of the issues that the respondents were entitled to ventilate in the FTT on their restoration appeal. The FTT had to take it that the goods had been "duly" condemned as illegal imports. It was not open to it to conclude that the goods were legal imports illegally seized by HMRC by finding as a fact that they were being imported for own use. The role of the tribunal, as defined in the 1979 Act, does not extend to deciding as a fact that the goods were, as the respondents argued in the tribunal, being imported legally for personal use. That issue could only be decided by the court. The FTT's jurisdiction is limited to hearing an appeal against a discretionary decision by HMRC not to restore the seized goods to the respondents. In brief, the deemed effect of the respondents' failure to contest condemnation of the goods by the court was that the goods were being illegally imported by the respondents for commercial use.

(6) The deeming provisions in paragraph 5 and the restoration procedure are compatible with Article 1 of the First Protocol to the Convention and with Article 6, because the respondents were entitled under the 1979 Act to challenge in court, in accordance with Convention compliant legal procedures, the legality of the seizure of their goods. The notice of claim procedure was initiated but not pursued by the respondents. That was the choice they had made. Their Convention rights were not infringed by the limited nature of the issues that they could raise on a subsequent appeal in the different jurisdiction of the tribunal against a refusal to restore the goods.

(7) I completely agree with the analysis of the domestic law jurisdiction position by Pill LJ in Gora and as approved by the Court of Appeal in Gascoyne. The key to the understanding of the scheme of deeming is that in the legal world created by legislation the deeming of a fact or of a state of affairs is not contrary to "reality"; it is a commonly used and legitimate legislative device for spelling out a legal state of affairs consequent on the occurrence of a specified act or omission. Deeming something to be the case carries with it any fact that forms part of the conclusion.

(8) The tentative obiter dicta of Buxton LJ in Gascoyne on the possible impact of the Convention on the interpretation and application of the 1979 Act procedures and the potential application of the abuse of process doctrine do not prevent this court from reaching the above conclusions. That case is not binding authority for the proposition that paragraph 5 of Schedule 3 is ineffective as infringing Article 1 of the First Protocol or Article 6 where it is not an abuse to reopen the condemnation issue; nor is it binding authority for the propositions that paragraph 5 should be construed other than according to its clear terms, or that it should be disapplied judicially, or that the respondents are entitled to argue in the tribunal that the goods ought not to be condemned as forfeited.

(9) It is fortunate that Buxton LJ flagged up potential Convention concerns on Article 1 of the First Protocol and Article 6, which the court in Gora did not expressly address, and also considered the doctrine of abuse of process. The Convention concerns expressed in Gascoyne are allayed once it has been appreciated, with the benefit of the full argument on the 1979 Act, that there is no question of an owner of goods being deprived of them without having the legal right to have the lawfulness of seizure judicially determined one way or other by an impartial and independent court or tribunal: either through the courts on the issue of the legality of the seizure and/or through the FTT on the application of the principles of judicial review, such as reasonableness and proportionality, to the review decision of HMRC not to restore the goods to the owner.

(10) As for the doctrine of abuse of process, it prevents the owner from litigating a particular issue about the goods otherwise than in the allocated court, but strictly speaking it is unnecessary to have recourse to that common law doctrine in this case, because, according to its own terms, the 1979 Act itself stipulates a deemed state of affairs which the FTT had no power to contradict and the respondents were not entitled to contest. The deeming does not offend against the Convention, because it will only arise if the owner has not taken the available option of challenging the legality of the seizure in the allocated forum.

Result

72. I would allow the appeal.
73. To sum up: the FTT erred in law; the UTT should have allowed the HMRC's appeal on the ground that the FTT had no power to re-open and re-determine the question whether or not the seized goods had been legally imported for the respondents' personal use; that question was already the subject of a valid and binding deemed determination under the 1979 Act; the deeming was the consequence of the respondents' own decision to withdraw their notice of claim contesting the condemnation and forfeiture of the goods and the car in the courts; the FTT only had jurisdiction to hear an appeal against a review decision made by HMRC on the deemed basis of the unchallenged process of forfeiture and condemnation; and the appellate jurisdiction of the FTT was confined to the correctness or otherwise of the discretionary review decision not to restore the seized goods and car. No Convention issue arises on that outcome, as the process was compliant with Article 6 and Article 1 of the First Protocol: there is no judge-made exception to the application of paragraph 5 according to its terms; the respondents had the option of contesting in the courts forfeiture on the basis of importation for personal use; they had decided on legal advice to withdraw from their initial step to engage in it; and that withdrawal of notice gave rise to the statutory deeming process which was conclusive on the issue of the illegal purpose of the importation.

Lord Justice Moore-Bick:

74. I agree.

Lord Justice Jackson:

75. I also agree.