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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> First Stop Wholesale Ltd, R (On the Application Of) v Revenue & Customs  EWHC 2191 (Admin) (16 July 2012)
Cite as:  EWHC 2191 (Admin)
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QUEEN'S BENCH DIVISION
B e f o r e :
| The Queen on the application of FIRST STOP WHOLESALE LIMITED
|- v -
|COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS
Wordwave International Ltd (a Merrill Communications Company)
190 Fleet Street, London EC4
Telephone No: 020 7421 4040
(Official Shorthand Writers to the Court)
(instructed by Rainer Hughes) appeared on behalf of the Claimant
Mr James Puzey (instructed by Her Majesty's Revenue & Customs,
Manchester) appeared on behalf of the Defendant
Crown Copyright ©
Monday 16 July 2012
MR JUSTICE SINGH:
"Where any proceedings, whether civil or criminal, are brought against the Commissioners, a law officer of the Crown or a person authorised by or under the Customs and Excise 1979 to seize or detain any thing liable to forfeiture under the Customs and Excise Acts on account of the seizure or detention of any thing, and judgment is given for the plaintiff or prosecutor, then if ....
(b) the court is satisfied that there were reasonable grounds for seizing or detaining that thing under the Customs and Excise Acts,
the plaintiff or prosecutor shall not be entitled to recover any damages or costs and the defendants shall not be liable to any punishment."
"I can see no basis in section 144(2) for the distinction on which claimants rely in their additional submission. The only condition stipulated by section 144(2) is the objective one that there were reasonable grounds for detaining the goods. That stipulation assumes that the detention was unlawful, as, if the detention was lawful, there would be no occasion for HMRC to invoke section 144(2). Nothing is said in the section about whether the reason relied on at the time of detention is a potentially lawful reason or a reason which is unlawful per se. In any event, it is difficult to see what difference in substance there is between the existence or non-existence of reasonable grounds for detention of the goods and the different kinds of reason for the detention of the goods. The reasonable grounds in this case were the reason for detention."
"43. I do not accept this argument. In the bailment example the bailee has an underlying right under the terms of the bailment to detain the goods, and it does not matter whether or not he correctly refers to that right at the time he detains the goods. On proper analysis, he detains the goods in question in circumstances where he has a right to detain them (cf. the right of an innocent party to a contract to rely on breaches of contract against the other party even though they were not invoked by him at the time he treated the contract as having been repudiated: Boston Deep Sea Fishing & Ice Co v Ansell (1888) LR 39 Ch D 339, CA). This analysis does not apply in the present case. HMRC had no right to withhold the goods in question save to the extent that they validly exercised a statutory power to do so. They had a statutory power under section 139(1) of CEMA to detain the goods for a reasonable period, which period expired in mid-August 2007. Thereafter, HMRC could only lawfully retain the goods if they properly exercised their distinct power of seizure contained in section 139(1). Exercise of that power of seizure brings into operation statutory provisions constituting a protective regime for the benefit of the property-owner. The notional availability of the power of seizure cannot be relied upon as a defence to a claim in conversion where it has not in fact been exercised and where, therefore, HMRC have not brought the statutory protective regime into operation. There is no underlying right of retention for HMRC as there is in the bailment situation. HMRC's right of retention of the goods pursuant to the power of seizure is conditional upon their actual exercise of that power. Therefore, in my judgment, HMRC were liable for conversion in respect of the relevant goods in category C in mid-August 2007."
When turning to the question of the measure of damages, Sales J said:
"52. .... section 144 of CEMA does not afford HMRC any defence ...., since it is brought on account of the detention of the goods and at the point it arose HMRC's reasonable grounds for detaining the goods had come to an end (see section 144(2)) ...."
As is plain from that passage, Sales J had well in mind the very provision with which I am concerned in the present case.
(The court adjourned for a short time)
"In general an interim order for payment of costs prior to assessment should be made, but the court has to take into account all the circumstances in the particular case including the unsuccessful party's wish to appeal; the relative financial position of each party; the court's overriding objective to deal with cases justly."