EXCISE DUTY  -  restoration of vehicle  -  forfeited Shogun vehicle owned by user’s wife  -  wife not implicated in smuggling activities  -  vehicle acquired by wife for her special medical needs to avoid being housebound  -  hardship suffered by non-restoration  -  user’s own Peugeot vehicle also forfeited  -  appeal allowed  -  Customs to conduct further review on footing that if Peugeot properly forfeited it would be disproportionate not to restore Shogun

MANCHESTER TRIBUNAL CENTRE

(1)	HAROLD JAMES CONNA
(2)	VERA CONNA

Appellants

-and-

THE COMMISSIONERS OF CUSTOMS AND EXCISE

									Respondents

Tribunal:	Mr M S Johnson (Chairman)
		Mr J E Davison

Sitting in public in Newcastle upon Tyne on the 27th August 2003

Mr M D Clarke, of Freeman Johnson, solicitors, for the Appellants

Mr C Rose, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	 In this appeal the appellants are requesting the tribunal to exercise its powers under section 16(4) of the Finance Act 1994 (“the Act”) in relation to the non-restoration by the Commissioners of Customs and Excise (“Customs”) of a Mitsubishi Shogun vehicle (“the Shogun”), Registration No R67 XFL, seized by Customs in Darlington on 2 October 2001.  The jurisdiction of the tribunal arises following a deemed upholding by Customs on review of a decision not to restore the Shogun.

2.	Mr Clarke, representing the appellants, called both appellants to give oral evidence to the tribunal, and they were cross-examined by Mr Rose, representing Customs.  Mr Rose placed in evidence unchallenged witness statements from Mr Christopher John McFadden, the reviewing officer of Customs, and from Mr Gerry Dolan of Customs, as to the policy of Customs.  Mr Rose called no oral evidence, but he helpfully provided the tribunal with a bundle of copies of documents relevant to the appeal, which included an unchallenged expert’s report from the appellant Mrs Conna’s GP, Dr R A G Harker, of Whinfield Surgery, Darlington.      

3.	We find that the facts of the matter are as follows.

4.	The Shogun was purchased by the appellant Mrs Conna for £15,000 in May 2001.  She suffers from chronic inflammatory demyelinating neuropathy which makes her mobility very poor, and from hypothyroidism.  She is prone to falls and is of weak physical condition.  The Shogun was acquired by her so that she should not be housebound.  It stands high off the ground and is thus easy of access; it also has automatic transmission, making it easier for her to drive than if it had manually operated gears.  The Shogun has only ever been used within the UK.

5.	At the time that the Shogun was seized by Customs, Mrs Conna was in London, enjoying a birthday treat with her family.  Mr Conna was driving the Shogun in Darlington.  He was stopped by the police and the contents of the vehicle were examined.  1,000 Regal King-size cigarettes were found in the boot and 200g of Samson in the front.

6.	For reasons which are unclear to the tribunal, Mr Conna’s home and lock-up garage were also searched.  Thereafter he was interviewed at the police station under caution.  Copies of the notes of his interview, signed by Mr Conna, are contained in the bundle before the tribunal.  Mr Conna’s home, 42 Wylam Avenue, Darlington, was found to contain 400 Regal King-size cigarettes and 400 Lambert and Butler cigarettes, in a cupboard under the stairs, and 250g of Virginia hand-rolling tobacco, in the kitchen.  His lock-up garage, in Springfield Road, Darlington, held approximately 15,000 cigarettes and 9 kg of hand-rolling tobacco.  

7.	It appears that Mr Conna was regarded as having been involved in smuggling activities and dealing in illegal goods.  All the cigarettes and tobacco mentioned were seized by Customs.  In evidence given to the tribunal, Mr Conna accepted that he had made frequent trips – once or twice a month – to the continent specifically to bring back cigarettes and tobacco, in addition to sourcing tobacco goods at reduced prices in the UK.  He may have used the Shogun for the latter purpose, although not for the former.  He maintained that he obtained cigarettes and tobacco for the various members of his own family to smoke.  He was not involved, so he said, in making a profit from dealing in cigarettes and tobacco.

8.	In our view Mr Conna did not adequately explain, either when interviewed or when giving evidence to the tribunal, the volume of cigarettes and tobacco which must have passed through his hands.  It appears that the police and Customs had good grounds for wanting to investigate Mr Conna in detail in this regard and to regard the goods as suspect.

9.	However it is a feature of this case that Customs seized, at the same time as the goods and the Shogun, the appellants’ other vehicle, namely a Peugeot 306 Estate, Registration No T917 SEF (“the Estate”).  This, like the Shogun, was a capacious vehicle for carrying goods, but, unlike the Shogun, it had manual gears.  We find that this was never driven by the appellant Mrs Conna.  The Estate was a motability vehicle supplied and possessed for the use of Mr Conna.  His mobility is poor, following an industrial accident which, according to Mr Conna, affected discs in his neck and spine, and gave rise to the need for a knee operation to correct an injury which might take ten years to resolve.  A copy letter in the bundle of documents before the tribunal, dated 2 January 2001 and written to Mr Conna by Thompsons, solicitors of Newcastle upon Tyne, indicates that he was offered and accepted £65,000 in settlement of his personal injury claim, with a net sum of £50,366.21 receivable by Mr Conna after deduction of benefits paid.  We find that Mr Conna had been seriously injured, and that the supply of a motability vehicle to him appears to have been well justified.

10.	Mr Conna had enjoyed the use of the Estate for some months before it and the Shogun were seized.  Although Mr Conna did drive the Shogun, we find that, as between the two vehicles, the Estate was the vehicle that he normally drove, as well as being the vehicle that he would normally be expected to drive.  

11.	Having forfeited both vehicles, Customs restored the Estate to Motability Finance Ltd on or about 16 October 2001.

12.	On 19 October 2001, Freeman Johnson, the solicitors who represent the appellants, wrote to Customs applying for the return of the tobacco goods and vehicles.  Customs replied on 2 November 2001, stating that the Estate had just been restored, but declining to restore the Shogun, and indicating that Mr Conna had stated that the goods were correctly seized.

13.	Freeman Johnson then wrote to Customs on 21 November 2001, seeking a review of the decision not to restore the Shogun.  Mr McFadden conducted the review.  In his review letter, dated 1 February 2002, Mr McFadden recited the findings of Customs, and proceeded to uphold the earlier decision, without giving reasons.  We observe that the review had taken over two months, so that Customs were in breach of the obligation imposed upon them by section 15(2)(b) of the Act to give notice of determination of the review within 45 days of the review being sought.  The earlier decision was therefore deemed to have been upheld by the Act.

14.	Notice of appeal was served on 8 March 2002.  The stated grounds of appeal were that the Shogun had been improperly seized, as it had not been used for any illegal purpose.

15.	On 5 August 2002, Freeman Johnson wrote to Customs highlighting four matters considered to be particularly relevant to the decision not to restore and setting out additional information.  One of the highlighted areas was entitled, “Degree of Hardship to the Individual”.   In relation to that heading, they attached a copy of the medical report from Dr Harker referred to in paragraph 2 above.  They then stated:

“The report explains that [Mrs Conna] has a debilitating condition which makes her mobility very poor.  Without the use of a vehicle Mrs Conna is virtually housebound and the report makes it apparent that she is suffering extreme hardship as a result of the loss of her vehicle”.

Freeman Johnson accordingly gave notice requiring a second review pursuant to section 14(5) of the Act.  

16.	Mr McFadden carried out a second review as requested, notifying the result of this by letter dated 20 August 2002.  In respect of the heading, “Degree of Hardship to the Individual”, he wrote as follows:

“We hold evidence that not only this [i.e. the Shogun] but two previous vehicles registered in Mrs Conna’s name have been used to transport goods liable to seizure and it is my view that she been fully aware of her husband’s activities.  She must therefore bear some responsibility for the loss of her vehicle.  You state at paragraph 1 that Mrs Conna was in London for the weekend at the time her vehicle was seized.  I find this difficult to reconcile with her being virtually housebound”.

17.	Mr McFadden again upheld the original decision not to restore.

18.	On behalf of Customs, Mr Rose submitted firstly that the tribunal is not concerned with whether the Shogun was properly seized and forfeited, as the grounds specified in the notice of appeal might suggest.   As was held by the Court of Appeal in the cases of Gora, Dannatt and Ors v C & E Comrs  11 April 2003, Case Nos C3/02/1650-1, the tribunal’s jurisdiction is limited to considering restoration, on the basis that the forfeiture has not been challenged.  This appears from paragraphs 57-8 of the decision of the court, at the end of the judgment of Pill LJ.

19.	Secondly, Mr Rose referred us to the quantities of tobacco goods involved in this case.  They were greater than one might reasonably expect to have been obtained for one’s own use.  He invited us to reject the assertion that the goods were purely for consumption by the appellants’ family.

20.	Thirdly, Mr Rose referred us to the decision of the Court of Appeal in Lindsay v C & E Comrs [2002] STC 588, at 606 (paragraphs 63ff), submitting that it is not normally appropriate to consider the restoration of vehicles on grounds of disproportionality in cases of commercial smuggling.  He submitted that the Shogun was used for such purposes by Mr Conna.  He submitted that it was reasonable to have forfeited both vehicles, because they were both used for smuggling.

21.	For the appellants, Mr Clarke submitted that the Shogun had not been used for any illegal purpose.  It was the property of Mrs Conna, purchased for her own use, and not used for smuggling or transporting illegal goods.  She had suffered grave hardship by the non-availability of the Shogun, which been bought in order to give her mobility outside the home.

22.	Mr Clarke relied upon the Lindsay case in support of his submission that the Shogun should be restored.  He submitted that the decision not to do so was unreasonable.  He reminded the tribunal of the decision of the Court of Appeal in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.    

23.	We accept Mr Rose’s submission in relation to the case of Gora.  This tribunal is concerned with restoration, and restoration only.  But we do not regard the grounds of appeal as limiting the appellants in how they put their case with regard to restoration.

24.	We also accept Mr Rose’s submission in relation to the goods.  We think that it was reasonable of Customs to have regarded Mr Conna as engaging in smuggling-type activities in relation to cigarettes and tobacco.

25.	We do not however interpret the Lindsay case in quite the way urged by Mr Rose.  Paragraph 63 of the decision of the Court of Appeal in that case is dealing with the case of smugglers “ … who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture”.  That seems to us to be some way from the facts of the present case.     

26.	In our view, Mrs Conna is not implicated in the way described by Mr McFadden in the quotation from his second review letter set out in paragraph 16 above.  We are troubled by what he says in that quotation.  

27.	The “evidence” referred to in the first sentence of the quotation is not before this tribunal.  An assumption appears to have been made in relation to Mrs Conna’s awareness that is not borne out by anything that she has told this tribunal, either when giving her evidence-in-chief or under cross-examination.  Nor is it apparent to us that Customs hold any record of interview with Mrs Conna or any other information implicating her as described.   We are not satisfied that Customs had or have any evidence associating Mrs Conna with fraud of the kind referred to in paragraph 63 of the Lindsay case. 

28.	Furthermore we do not share Mr McFadden’s difficulty about Mrs Conna’s absence in London.  It seems to us that if, as we find to be the case, Mrs Conna could leave home for trips in the Shogun, she could readily leave home for a journey employing other suitable forms of transportation (e.g. taxi to the railway station and then the East Coast main line).

29.	We do not think that it is a reasonable conclusion that Mrs Conna bore responsibility for her husband’s actions.  Nothing that we have read or heard suggests that this should be the case.  We therefore accept Mr Clarke’s submissions in that regard. 

30.	Moreover, we are satisfied that Mrs Conna’s need for the Shogun was great and that hardship has been caused to her by its not having been restored.  Without the Shogun, she will have had to depend upon social services or other persons as the price of her mobility.  Alternatively she would have to take a taxi every time.  A car-less, able-bodied person can walk or take the bus, but those were not options open to her.

31.	So, although Mr Conna may well have had a profit in mind through dealing in illegal tobacco products, it does not seem to us that Customs could reasonably take the view that Mrs Conna was associated with that.  Although the discussion of proportionality in the Lindsay case is in connection with non-profit making importations, the non-association of Mrs Conna with the dealings of Mr Conna means, as we see it, that the principle of proportionality cannot be ignored.

32.	Customs seized both of the appellants’ vehicles and then restored the Estate but retained the Shogun.  Had the Estate not been a motability vehicle, we think that it would probably not have been restored.   In those circumstances, would it be reasonable for the Shogun to have been retained as well?   We think not.  It would be disproportionate to do so.  It would have been proportionate to have retained the vehicle having the closer connection with Mr Conna, namely the Estate, and to restore the vehicle having the more tenuous connection with him, namely the Shogun.

33.	For the above combination of reasons we have come to the conclusion that we should exercise our powers under section 16(4) of the Act in this case.  We therefore require Customs to conduct a further review of the decision not to restore the Shogun.  If, basing their review on the facts as we have found them to be, Customs come to the conclusion that the Estate would not have been restored but for the fact that it was a motability vehicle, they are to consider the retention of the Shogun not on the basis that the Estate has been restored but on the basis that it has not, and further on the basis that it would be disproportionate not to restore one of the vehicles.  That should, in our view, inevitably lead to the decision that the Shogun should be restored.     

34.	This appeal is accordingly allowed.  If either the appellants or Customs so wish, the appeal may be restored to the list for the limited purpose of argument as to costs.  We are not minded to express any provisional view as to what order as to costs might be appropriate in the circumstances of this case.

M S Johnson
Chairman
Release Date:

MAN/02/8051