EXCISE – Restoration conditions – Freight vehicle – Haulier driving – 2159 kg tobacco hidden in trailer without haulier’s knowledge – Shrink wrapped onto pallets – Documentation inadequate – Load checked for weight distribution and security but contents of pallets not checked – Commissioners required payment of full value of tractor for restoration – No account taken in policy of gravity of infringement – Error in value placed on vehicle – Letter by Appellant not before Review officer – Need for proportionality – Appeal allowed – New Review directed

LONDON TRIBUNAL CENTRE

	SHELDON ROGER BRIGHT	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	THEODORE WALLACE   (Chairman)
						MRS SHAHWAR SADEQUE MPhil

Sitting in public in London on 4 and 10 November 2003

Mrs Jane George, of Rothera Dawson, solicitors, for the Appellant

Sarabjit Singh, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	This appeal concerns the conditions for restoration of the Appellant’s Volvo tractor unit which was seized on 26 May 2002 at Ramsgate after 2,159 kilogrammes of tobacco had been found concealed in the trailer with a consignment of laminates, motor spares and soap powder.

2.	The Commissioners took the view that the Appellant had failed to carry out basic reasonable checks, which would have identified the tobacco, and required payment of £5,025 for restoration of the tractor.  £5,025 was said to be the value of the vehicle.  The tractor has in fact been restored on payment of the above sum, so that the appeal is solely concerned with the sum required.

3.	Although the Appellant was the driver when the vehicle was seized it was not suggested that he knew of the presence of the tobacco or was in any way involved.

4.	There were two oral witnesses, the Appellant and the Review Officer who confirmed written statements and were cross-examined.  We found both to be honest witnesses and we accept their evidence of the facts of which they had knowledge.  There were agreed statements by a director of European Freight Logistics (“EFL”), for which company the Appellant was transporting the goods, and by the officers who interviewed the Appellant and seized the vehicle and who searched the vehicle.

5.	We find the following facts.

6.	The Appellant was the owner of the tractor unit, a 400 brake horsepower 3-axle Volvo F12 6x2 Globetrotter tractor unit first registered in January 1989.  The tractor had covered a very substantial mileage and has since been replaced.

7.	He operated a fleet of vehicles through a company which he controlled called 5J’s International Ltd.  He had been a heavy goods vehicle driver since 1980 working for others; in April 1999 he bought his own vehicle for the first time.  He now operates six vehicles, four on contract work in Wales and two on international journeys.

8.	The normal driver for the seized tractor was his brother-in-law who was on holiday for a week.  The Appellant was informed by EFL, a Belgian company, that a trailer needed to be brought over from Belgium on 26 May 2002, a Sunday.  He was told that the trailer was already loaded with the paperwork inside and was parked with the tractor at Jabbeke; EFL had booked the ferry. He was to deliver the laminates to Radlett from where another company would  deliver the rest to Lancashire.

9.	The trailer had three consignments on board. There was a consignment of laminate flooring lengths shrink wrapped onto pallets, part to go to Newcastle and part to Belfast. There were car parts packed in plain brown cardboard boxes sealed with self adhesive tape and shrink-wrapped onto pallets for delivery to Skelmersdale, Lancashire. Nearest to the rear door were five pallets with brown cardboard boxes labelled with soap powder; there were some individual cartons of powder on top of the boxes; the boxes and cartons were shrink-wrapped onto the pallets. There was CMR documentation for the motor parts and delivery notes for the laminate flooring but none for the soap powder; there was however a plain white sheet of paper with a delivery address in Liverpool in a red felt tip pen for the soap powder.  This document was not exhibited by the Commissioners and has presumably been lost by them.  It was the first delivery of soap powder to P&O at Liverpool.

10.	The Appellant had complained to EFL on a number of occasions about lax paperwork.

11.	The trailer had canvass sides.  The Appellant got onto the trailer to count the number of boxes against the number shown on the paperwork.  There were 124 boxes.  He counted the number of layers of boxes.  The flooring and parts were on boxes on standard white Euro pallets 800mm by 1200mm and were shrink-wrapped with clear plastic like cling film.  The boxes varied from 2 to 4 feet high.

12.	The soap powder was on larger pallets 4'6" to 5 feet high, the powder being in plain brown cardboard boxes sealed with self-adhesive tape.  The boxes with individual cartons on top were again shrink wrapped in clear plastic onto the pallets.

13.	The load was not damaged in any way and nothing aroused the Appellant’s suspicions.  He checked that the weight distribution of the load was safe and that the load was properly secured.

14.	EFL is a professional transport company in Belgium which had dealt with the Appellant for many years.  JP Transport had asked EFL by fax to arrange for delivery of five pallets of detergent to the warehouse of P&O Ferrymasters at Stockport.  The pallets were delivered to the warehouse of EFL and loaded onto the trailer.  They looked to EFL like a normal consignment.  The detergent had no documents.  The laminate flooring and car parts had been loaded by EFL’s customers before the detergents were added.

15.	The Appellant with his wife as a passenger collected the tractor and trailer on the Sunday from Jabbeke, Belgium, and crossed by ferry to Ramsgate.  

16.	The Appellant was directed to the freight shed at Ramsgate for examination at 1715 hours.  The reason is not apparent.  The officer, Gwilynn Williams, spoke to the Appellant and his wife.

17.	The Appellant said that he had car parts, laminate flooring and soap powder in the back, that he had not loaded the trailer himself and had picked it up at Jabbeke.  The officer’s note read,

“Q.	Have you looked in the back of the trailer?
 SRB.	No, I just opened the back door to pick up the paper work.”

The Appellant said that it was a normal load apart from the soap powder.  He agreed to open the back.  No questions were recorded as to the paperwork.  A detector dog was sent around the outside of the vehicle and trailer and then inside but gave no indication.

18.	Two officers then got into the trailer and began a rummage of the load which was entered on the manifest as non-hazardous groupage.  The Appellant stood at the back: he saw them cut the plastic and the tape.  At the back of the load nearest to the doors were five pallets manifested as washing powder.  On top of each pallet was a one box layer of “Tandil” washing powder.  Underneath each layer was found to be brown boxes which when opened contained Golden Virginia tobacco.  The officers notified Mr Williams and continued the search but found nothing more of interest.

19.	Mr Williams arrested Mr Bright and took him to the interview room at 1737 hours; he was interviewed under caution.

20.	The Appellant said that he had travelled out by car through Dover at 0615 hours and had gone to Ostend where he had a property; he runs haulage companies in Belgium and UK.  The trip was arranged in the last week because the regular driver was on holiday. The Appellant only knew on the Friday that he had this trailer and three drops.  That was the whole of the note of the interview under caution.

21.	The Appellant was released from arrest at 1905 hours and agreed to answer further questions.  He said that he contracted for EFL and supplied that company’s address at Jabbeke, Belgium.

22.	At some point after 1905 hours the Appellant signed the interview agreeing the contents.

23.	The Appellant spoke to someone at EFL who faxed to Customs a copy of the order from P&O Ferrymasters to EFL’s UK agent, JP Transport, to deliver 5 pallets of detergent from Belgium to an address on an industrial estate in Liverpool.

24.	The tractor and trailer were seized together with the tobacco.  On 28 May 2002 the Appellant applied for restoration of the tractor and trailer but later told Customs that the trailer was rented.  The mileage showed 47100 and the tachograph 079545.  The Appellant told us that the mileage had gone “round the clock” on a number of occasions.

25.	On 16 July Customs wrote to the Appellant inviting him to attend an interview at Dover.  The letter stated, “It is proper to inform you that the policy of HM Customs is that a seized vehicle will not be restored unless you can clearly demonstrate exceptional circumstances.”

26.	The Appellant was interviewed at Dover on 19 August 2002 by Mrs Olver and another officer who took  notes.

27.	The Appellant said that he was the managing director responsible for everything.  He said that he provided the tractor and that EFL, a Belgian company, provided the trailers and the loads; this arrangement had been in place since February 2001.  EFL had box trailers for carpets and a few taut liners for groupage loads, mainly laminate flooring, car parts, coca cola and anything else they could get.

28.	EFL normally contacted him by mobile phone.  On this occasion they told him to collect the trailer which was loaded and parked in their yard in Jabbeke; the paperwork would be in the back and EFL would book the Ostend ferry.  This was the normal method of operating, but EFL would usually make the arrangement with the driver.  On this occasion the Appellant went to collect the lorry and trailer because the driver was on holiday.

29.	The Appellant told the officers that he checked inside the vehicle; he opened the doors to collect the paperwork and to check that the load was secure.  He noticed the pallet containing the soap which was on the back of the load. There was just an A4 piece of paper with a delivery address for the load.  He had had arguments with EFL about this before and had told them that he needed a CMR.  He had no reason to check inside the boxes of soap powder.  It was to be delivered to Liverpool; the address was on a piece of paper which he showed them.  The vehicle had not been sealed when he collected it, but if it had been sealed he would have broken it to check the load.  He said that he normally gets in the back and makes a physical check because of the risk of illegal immigrants.

30.	He had not checked the delivery address by telephone because it was a Sunday and no one would have been there. As a general rule his drivers were expected to check the amount against the paperwork but not the load. When EFL loaded the trailer the Appellant trusted them.  Neither he nor his drivers looked inside the packages to check that they were what they said.  He said that EFL had never had any trouble like this in the past but were carrying out more thorough checks now.

31.	On 20 August 2002 Mrs Olver offered restoration of the vehicle for £14,825.  The Appellant asked for a review on the basis that the amount was excessive.  He wrote that this was more than three times what it was worth.  Mrs Olver wrote on 9 September that there had been a mistake since the figure included the trailer : the figure for the tractor alone was £5,025.

32.	The Appellant wrote on 10 September to the Review Officer that the figure was still too high and he wanted a review.  On 16 September he wrote a lengthy letter of 56 lines in typescript to the Review Officer setting out matters which he asked to be considered.   This included the following, 

“I opened the back doors of the trailer got inside and checked the load.”

Later he wrote,  

“I have co-operated in every way possible, carried out all the checks that were unreasonable, without damaging the load.  Mrs Olver at the post seizure unit gives me the impression that she thinks the driver should open every carton on a load to check what is inside.  I am sure that you agree this is unreasonable, because both the time it would take and that customers do not like having their goods tampered with.  If I did suspect a consignment, then I would open it, regardless of the consequences.

To date I have been deprived of my truck for sixteen weeks.  To be asked to pay £5,025 for a truck that is worth £4,000, on top of that is an insult.”

33.	On 27 September 2002 an officer from the Review Team acknowledged the letter of 10 September which had been passed to the Review Team which would examine all papers and other available information.  It was stated that “the letter was received at this office on 27 September 2002 and the Department has a maximum of 45 days from that date” to conduct the review. We note that the letter of 10 September had in fact been addressed to that office. The legal duty on the Commissioners under section 15(2) was to conduct the review within 45 days “beginning with the day on which the review was required.”  The review was required on 10 September 2002 and not on 27 September 2002.

34.	Karen Philpott completed a review on 11 November 2002 which was therefore out of time.  The Review made no mention of the Appellant’s letter of 16 September which in spite of being addressed to the Review Officer was never placed before her.

35.	The Review contained the following passages,

“… you knew that the way in which the delivery of the soap powder had been arranged was unorthodox and that the documentation covering it was insufficient.  You nevertheless agreed to transport the soap powder without making any checks of the contents of the boxes; checks which would have revealed the illicit nature of the load.

“… it is not sufficient to blindly trust work colleagues and other companies …”

The Review stated this,

“Current policy states that on the first occasion when a vehicle is seized where the Commissioners consider that the driver or haulier [you are both in this case] has not carried out basic checks, which would have identified the illicit load the vehicle will be restored upon payment of a sum equivalent to 20% of the revenue which would have been chargeable or the value of the vehicle whichever is the lesser.  On this occasion the revenue chargeable amounted to £209,080.56 and 20% of that figure is £41,816.11.  The tractor unit has been valued at £5,025; therefore that lesser amount is the appropriate restoration fee.”

36.	Mrs Philpott told the Tribunal that the policy of the Commissioners in respect of the restoration of freight vehicles covered three possible situations.  Where an illicit load has been seized but the driver and haulier have taken all reasonable steps to prevent smuggling, the vehicle will be restored free of charge. Where Customs believe that the driver or haulier is knowingly involved, the vehicle will not be restored.  Where there is no knowing involvement but reasonable steps have not been taken to ensure there is no illicit load, then on the first occasion the vehicle will be restored on payment of 20 per cent of the duty involved or (if lower) the trade value of the vehicle.  In this case the final option applied.  The Appellant had not taken all reasonable steps to ensure the legitimacy of the load: he was transporting the soap powder to a new destination without accompanying documentation and did not check the consignment visually.

37.	She said that the figure of £5,025 had been provided by the Post-Seizure Unit and was based on the 2002 Glass’s Guide. She produced a photo-copy (which was not easy to read) in which the value of a 356 bhp Volvo tractor Unit introduced in April 1990 was shown as £5,025. A note stated “Globetrotter Cab worth considerably more”.  She told us that she knew little of values and relied on what was given to her.

38.	Mrs Philpott said that she had not seen the A4 piece of paper for the soap powder.

39.	She said that if Mr Bright had made representations as to hardship it would have been considered; proportionality would also be taken into account.  Every case had to be considered on its merits.  She said that as far as the vehicle value was concerned, it was the whole value or nothing; there was no scope for requiring a fee of less than the value.  She said that she imagined it would be open to her to reduce the value required in exceptional circumstances, however this had never happened in a freight case.

Submissions

40.	Mr Singh, for the Commissioners, said that the decision of the Review officer that the Appellant had failed to carry out basic reasonable checks which would have identified the illicit load was central; the Tribunal should decide whether this was unreasonable in the sense of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, CA.  He said that given the lack of documentation, that the Appellant had never delivered to the Liverpool address before and that no telephone call was possible being a Sunday, the Appellant should at the least have opened the shrink wrapping and examined one of the boxes.  He relied on the Tribunal decision in Buckley v Customs and Excise Commissioners (2003) E 479 where the haulier did not know the customer and prepared a CMR note without examining the load.  It was not reasonable here for Mr Bright to place blind trust in EFL, another transport company which was not the producer of the goods transported.

41.	Mr Singh submitted that although the Review Officer did not see the Appellant’s letter of 16 September 2002, her decision would inevitably have been the same, see John Dee Ltd v Customs and Excise Commissioners [1995] STC 941.  Her main grounds were that the Appellant had not checked the back of the trailer, there was insufficient documentation and the Appellant was wrong to trust EFL.  Nothing in the letter raised an issue affecting those grounds which the Review Officer did not know already.

42.	He said that the Convention on the Contract for the International Carriage of Goods by Road (“CMR”) is embodied into UK law by the Carriage of Goods by Road Act 1965. The Convention applies to every contract for carriage of goods for reward between different countries and Article 4 requires a consignment note to accompany the goods. The Appellant was in breach of this requirement and in any event the documentation was defective.

43.	Mr Singh said that the Tribunal had no power to decide that the restoration figure was too high, see Dannatt v Customs and Excise Commissioners (2002) E 243 at paragraph 16.  The figure was based on Glass’s Guide and in fact did not reflect the fact that Globetrotters were more valuable.

44.	He said that Colgan Transport Ltd v Customs and Excise Commissioners (2003) E397 had been wrongly decided and had been distinguished in Buckley.  He relied on Crilly v Customs and Excise Commissioners (2003) E 453.

45.	Mr Singh submitted that the issue whether the Appellant should have opened and inspected the boxes is a value judgment for the Commissioners and not a question of fact for the Tribunal.

46.	Mrs George, for the Appellant, said that when originally stopped the Appellant’s answer had been misinterpreted.  He had meant that he had not looked into the boxes; it was clear that he had looked into the back.  The note was made some time later.

47.	She said that the Appellant had known EFL for six years and had personal knowledge of the directors.  There had been no previous incidents with EFL loads.  In the circumstances he was entitled to trust EFL.  In the real world CMR notes are not always produced when transport is booked by telephone. It was unreasonable for Customs to say that he should either have opened the load or refused to take it.  EFL was a long standing and reputable customer, see Buckley at paragraph 21.

48.	Mrs George said that the Tribunal could not properly find that the Review Officer’s decision would inevitably have been the same even if she had known of the letter of 16 September.

49.	She said that the Review Officer had relied on the value of a model which was introduced 15 months later.  She had merely considered what had been supplied by the post-seizure unit.

50.	She relied on the observations of the Tribunal in Colgan Transport at paragraphs 46 to 51.  In a case such as this the restoration fee produced by the formula was disproportionate, being economically the same as confiscation. Once Customs concluded that reasonable care had not been shown, the fee was the same regardless of the degree of negligence or culpability.  The value of the illicit cargo was not within the Appellant’s knowledge.  Here at worst the Appellant had failed to make reasonable checks; it was not a case of gross carelessness as in Buckley or cavalier behaviour as in Crilly.  The policy inevitably fettered the Review Officer’s discretion since it simply set out three alternatives.  There was no distinction between the level of culpability, between new and old vehicles and between large and small operations.

Conclusions

51.	This was a most unsatisfactory case.  The Appellant’s lengthy letter of 16 September 2002 although addressed to the Review Officer was not put before the Review Officer. No explanation for the figure of £5,025 was produced until the hearing, when a Glass’s Guide value for a later model was produced.  The only documentary evidence for the soap powder was lost by the Commissioners following seizure. Over two weeks before the hearing, the Appellant’s solicitor submitted a substantial skeleton argument which was never provided by the Solicitor’s office to Mr Singh. This last omission made it impossible to complete the case in one day, although it would never have been easy.

52.	Having heard the Appellant’s evidence we were both satisfied that in spite of the note recorded at paragraph 17 above the Appellant did go into the back of the vehicle before starting. We are satisfied that he checked the security and distribution of the load. Furthermore it is quite clear that he did know how the load was distributed.  The note only recorded six relatively short questions and answers in a period of eight minutes and was clearly not complete and was written up nearly two hours later.

53.	The Appellant was in a difficult situation.  The paperwork was incomplete particularly for the soap powder.  It was a Sunday so he could not telephone P&O and there was no one at the yard at Jabbeke.  If he cut open the wrapping he would have had to make it secure again. Although EFL did not always provide proper paperwork, he knew them well and there had been no previous incident.

54.	The fact is however that the Appellant did fail to check the soap powder and in the circumstances we accept that it was not unreasonable for the Commissioners to require some fee for restoration of the tractor.  However we regard the reference to blindly trusting other companies (paragraph 35) as excessive. The Appellant was the victim of a scam and his lack of care was at the low end of carelessness.

55.	We endorse the observations of the Tribunal in Colgan Transport (chairman, John Walters QC) as follows:

“47.	But the aspect of the policy relating to the restoration fee … which the Tribunal considers is most vulnerable to attack for lack of relevant proportionality is the fact that, in cases where the revenue evaded is very substantial, the formula results in a restoration fee equal to the trade value of the vehicle.  In economic terms, this is equivalent to confiscation of the vehicle (i.e. non-restoration).
48.	…
49.	In the Tribunal’s judgment, the policy is not ‘fine tuned’ to give a proportionate penalty in cases (such as this Appellant’s) where the driver or haulier is to be taken as guilty of nothing worse than naivety or carelessness, but nevertheless – unbeknown to him – the revenue sought to be evaded is substantially greater than the value of the vehicle.”

56.	The leading case on proportionality in relation to restoration appeals is Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766.  At paragraph 52 Lord Phillips MR said that in order to be justified the deprivation of people’s possessions must strike a fair balance between the rights of the individual and the public interest.  He accepted the submission by counsel that it is necessary to consider the individual case to ensure that the penalty is fair.  At paragraph 54 Lord Phillips cited a passage from the Court of Justice in Louloudakis v Greece (Case C-262/99) [2001] ECR I-5547,

“a penalty must not be so disproportionate to the gravity of the infringement that it becomes an obstacle to the freedoms enshrined in the Treaty …”

57.	The impact of the policy in the present case was that, once the Commissioners concluded that the Appellant had not exercised reasonable care the restoration fee took no further account of the gravity of the infringement.  The Review Officer was unable to give any example of substance to her assertion that every case was considered on its merits.  In particular she said that there was no scope for fixing a fee lower than the value.

58.	In Lindsay Lord Phillips stated at paragraph 64,

“There is open to the Commissioners a wide range of lesser sanctions that will enable them to impose a sanction that is proportionate where forfeiture of he vehicle is not justified.”

By forfeiture, Lord Phillips clearly meant non-restoration.  The “wide range of lesser sanctions” must refer to payment of a fee for restoration.  The Tribunal is unaware of any case in which any sanction other than payment of a fee has been imposed, indeed it is unclear what other lesser sanction is available.  We do not see how the reference to a “wide range” can be satisfied by a policy which requires payment of the full value of the vehicle unless 20 per cent of the revenue involved is less with no scope for variation depending on the gravity of the infringement.

59.	Indeed the economic effect of the policy on the haulier is the same whether he is compliant in unlawful smuggling or has been a victim albeit one who has not shown sufficient care.

60.	Although the Review Officer relied on the lack of documentation for the soap powder, no question were recorded as to this and the piece of A4 paper produced by the Appellant was lost by the Commissioners in spite of its importance as an exhibit.

61.	We do not accept Mr Singh’s submission that the result would inevitably have been the same if Mrs Philpott had considered the letter of 16 September 2002.  His submission was not based on any assertion by her.  We observe that it would have been her duty to approach the letter with an open mind.

62.	A further problem in this case was the origin of the figure of £5,025 demanded for restoration.  Mrs Philpott had no personal expertise in values and relied on an extract from Glass’s Guide supplied to her.  The extract was not listed nor was it exhibited to her statement, notwithstanding a direction to exhibit all material considered. When produced the value was that shown for a model introduced 15 months later with different brake horsepower. No value at all was shown for any earlier models, presumably because of their obsolescence. Although there was an annotation “Globetrotter Cab worth considerably more” there was also a note “Adjust for condition and mileage.”  It is clear that the vehicle had a high mileage.  Having heard the evidence we accept the Appellant’s submission that the figure of £5,025 significantly exceeded the trade value of the vehicle although we cannot judge by how much.

63.	In the result we conclude that the Review was defective in law.  The Commissioners through their Review Officer took into account wrong facts, in that they used an incorrect value for the vehicle and wrongly concluded that Mr Bright did not get into the back of the trailer.  They failed to have regard to the Appellant’s letter of 16 September 2002.  Finally, they applied a policy which drew no distinction of substance between the circumstances of a case such as this where the Appellant was not involved in the illicit smuggling but had not exercised all possible care from cases where a trader is involved in smuggling or is grossly negligent.

64.	We direct that the Commissioners carry out a further review by a different review officer applying the findings and conclusions in this decision and taking account of any further representations or material provided by the Appellant within 14 days of the release of this decision to The Review Team, Clarkson House, Rhodaus Town, Canterbury CT1 2RR.  We direct that the further Review be served within 15 working days thereafter both on the Appellant and on the Tribunal.

THEODORE WALLACE
CHAIRMAN

RELEASED:

LON/02/8340