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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 >> Eastenders Cash and Carry Plc & Anor v Revenue and Customs [2010] EWHC 2797 (Admin) (04 November 2010) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2010/2797.html Cite as: [2011] STC 64, [2010] STI 2887, [2011] 1 WLR 488, [2010] EWHC 2797 (Admin), [2011] WLR 488

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		04/11/2010

Mr Justice Sales :

1. There are two applications for judicial review before the court in relation to alcoholic goods detained by the Defendants ("HMRC") on grounds of a suspicion that duty may not have been paid in respect of them.

Outline of the facts of the first claim

2. The relevant goods in the first application were detained when HMRC officers visited the warehouse of Eastenders (Coventry) Limited on 16 October 2009 and inspected a consignment consisting of 27 pallets of mixed beer, wine and whisky. Significant discrepancies were discovered in some of the paperwork relating to that consignment. At first the discrepancies appeared to relate only to the beer in the consignment, which led to the HMRC officers exercising their powers under section 139 of the Customs and Excise Management Act 1979 ("CEMA") to detain the beer in the consignment on 16 October 2009. Shortly afterwards, as a result of further checks on the paperwork for the consignment, additional discrepancies came to light which led to HMRC officers exercising their powers on 19 October 2009 to detain the wine and whisky in the consignment as well.
3. HMRC continued their enquiries in relation to the goods, tracing along the chain of supply to the Claimants, to determine whether duty had or had not been paid on those goods. By 23 November 2009, HMRC concluded that duty had not been paid on a portion of the goods and so decided to exercise their distinct power under section 139(1) of CEMA to seize that portion of the goods with a view to their forfeiture for non-payment of duty. Once those goods were seized the provisions in Schedule 3 to CEMA became applicable, according to which the Claimants became entitled to give notice to HMRC of their claim to the goods, obliging HMRC to take proceedings in the magistrates' court for an order to condemn the goods as forfeited. In those proceedings there will be scope for evidence to be called by the Claimants in seeking to establish that duty has in fact been paid on the goods: see generally the review of the relevant provisions in Schedule 3 set out in R (Checkprice (UK) Limited (in administration)) v Revenue and Customs Commissioners [2010] EWHC 682 (Admin); [2010] STC 1153 at paras. [12]-[15].
4. It is common ground that the Claimants have an effective remedy in the proceedings contemplated by Schedule 3 to CEMA in relation to the goods which have been seized, so that it is unnecessary for any judicial review claim to proceed in respect of those goods; and in fact no permission for judicial review was granted in respect of those goods.
5. The other goods in the consignment were not seized. After HMRC had taken their investigations into their provenance as far as they considered they reasonably could, they remained unsure whether duty had been paid on them but decided to release them to the Claimants. The goods were released to the Claimants on 17 December 2009. The goods so released comprised 80 cases of Tennent's Super beer, 80 cases of Special Brew beer and 897 cases of various "Alpa" wines (together, "the Coventry goods"). Permission was granted to the Claimants to claim judicial review of the detention of the Coventry goods, since where goods are detained but not seized the court procedure under Schedule 3 to CEMA is not available and judicial review is an appropriate means of challenging the lawfulness of the exercise of HMRC's power of detention.

Outline of the facts of the second claim

6. On 4 December 2009 HMRC officers visited the warehouse of Eastenders (Birmingham) Limited. They requested documentation relating to stocks of Polish beer held in the warehouse. Their enquiries broadened to include certain other alcoholic drinks at the warehouse. Discrepancies were found in the documentation available and a quantity of Lech beer was seized by the HMRC officers later that day. Other goods at the warehouse were detained by the officers and left at the warehouse, on the basis that that they should be treated as detained and should not be removed.
7. HMRC investigated the supply chains relating to the detained goods to try to determine whether or not duty had been paid on them. As a result of these enquiries some of the detained goods were then seized, on the grounds that HMRC believed that duty had not been paid on them. As regards those goods, the Claimants are able to pursue a remedy in proceedings under Schedule 3 to CEMA and so, as in relation to the consignment in issue in the first claim, no judicial review claim is pursued in respect of them.
8. Others of the detained goods were eventually released to the Claimants, as HMRC's investigations concerning them proved inconclusive and left HMRC in doubt whether the duty had been paid, and HMRC thought it more appropriate to return the goods rather than seize them or detain them any longer. The relevant goods which were released comprised 1,956 cases of bottles of Zywiec beer (released on 21 December 2009), 117 cases and 22 bottles of Smirnoff vodka (released on 19 January 2010), 772 cases of Foster's beer (released on 3 March 2010) and 89 cases and 22 cans of Tennent's Super beer (released on 3 March 2010) (together, "the Birmingham goods"). The second claim before the court relates to these goods.

The legislative framework

9. Section 49(1) of CEMA provides:

"49 Forfeiture of goods improperly imported

(1) Where –

(a) except as provided by or under the Customs and Excise Acts 1979, any imported goods, being goods chargeable on their importation with customs or excise duty, are, without payment of that duty -

(i) unshipped in any port,

(ii) unloaded from any aircraft in the United Kingdom,

(iii) unloaded from any vehicle in, or otherwise brought across the boundary into, Northern Ireland, or

(iv) removed from their place of importation or from any approved wharf, examination station or transit shed; or

(b) any goods are imported, landed or unloaded contrary to any prohibition or restriction for the time being in force with respect thereto under or by virtue of any enactment; or

(c) any goods, being goods chargeable with any duty or goods the importation of which is for the time being prohibited or restricted by or under any enactment, are found, whether before or after the unloading thereof, to have been concealed in any manner on board any ship or aircraft or, while in Northern Ireland, in any vehicle; or

(d) any goods are imported concealed in a container holding goods of a different description; or

(e) any imported goods are found, whether before or after delivery, not to correspond with the entry made thereof; or

(f) any imported goods are concealed or packed in any manner appearing to be intended to deceive an officer,

those goods shall, subject to subsection (2) below, be liable to forfeiture. …"

10. Section 139 of CEMA provides, so far as relevant, as follows:

"139 Provisions as to detention, seizure and condemnation of goods, etc

(1) Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard.

(2) Where any thing is seized or detained as liable to forfeiture under the customs and excise Acts by a person other than an officer, that person shall, subject to subsection (3) below, either –

(a) deliver that thing to the nearest convenient office of customs and excise; or

(b) if such delivery is not practicable, give to the Commissioners at the nearest convenient office of customs and excise notice in writing of the seizure or detention with full particulars of the thing seized or detained.

(3) Where the person seizing or detaining any thing as liable to forfeiture under the customs and excise Acts is a constable and that thing is or may be required for use in connection with any proceedings to be brought otherwise than under those Acts it may, subject to subsection (4) below, be retained in the custody of the police until either those proceedings are completed or it is decided that no such proceedings shall be brought. …

(5) Subject to subsections (3) and (4) above and to Schedule 3 to this Act, any thing seized or detained under the customs and excise Acts shall, pending the determination as to its forfeiture or disposal, be dealt with, and, if condemned or deemed to have been condemned or forfeited, shall be disposed of in such manner as the Commissioners may direct.

(6) Schedule 3 to this Act shall have effect for the purpose of forfeitures, and of proceedings for the condemnation of any thing as being forfeited, under the customs and excise Acts.

(7) If any person, not being an officer, by whom any thing is seized or detained or who has custody thereof after its seizure or detention, fails to comply with any requirement of this section or with any direction of the Commissioners given thereunder, he shall be liable on summary conviction to a penalty of level 2 on the standard scale.

(8) Subsections (2) to (7) above shall apply in relation to any dutiable goods seized or detained by any person other than an officer notwithstanding that they were not so seized as liable to forfeiture under the customs and excise Acts."

11. In the argument before me a contrast was drawn between section 139(1) of CEMA and section 138(1) of CEMA. Section 138(1) provides:

"138 Provisions as to detention of persons

(1) Any person who has committed, or whom there are reasonable grounds to suspect of having committed, any offence for which he is liable to be detained under the customs and excise Acts may be detained by any officer or any member of Her Majesty's armed forces or coastguard at any time within 20 years from the date of the commission of the offence."

12. Various sections in CEMA apart from section 49 also make provision for things to be "liable to forfeiture". For example, section 141(1) provides that ships, aircraft and so forth which are used for carriage or handling of a thing which is liable to forfeiture "shall also be liable to forfeiture".
13. Section 144 (1) and (2) of CEMA provide:

"144 Protection of officers, etc in relation to seizure and detention of goods, etc

(1) Where, in any proceedings for the condemnation of any thing seized as liable to forfeiture under the customs and excise Acts, judgment is given for the claimant, the court may, if it sees fit, certify that there were reasonable grounds for the seizure.

(2) Where any proceedings, whether civil or criminal, are brought against the Commissioners, a law officer of the Crown or any person authorised by or under the Customs and Excise Acts 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 either –

(a) a certificate relating to the seizure has been granted under subsection (1) above; or

(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 defendant shall not be liable to any punishment."

14. Section 152 of CEMA provides, so far as relevant:

"152 Power of Commissioners to mitigate penalties, etc

The Commissioners may, as they see fit - …

(b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those Acts; … "

15. Schedule 3 to CEMA governs the procedure applicable where goods are seized (as opposed to detained) under section 139(1). For present purposes it is unnecessary to examine the full terms of Schedule 3. It is relevant, however, to set out paragraphs 1-3 of Schedule 3 here:

"Notice of seizure

1. (1) The Commissioners shall, except as provided in subparagraph (2) below, give notice of the seizure of any thing as liable to forfeiture and of the grounds therefor to any person who to their knowledge was at the time of the seizure the owner or one of the owners thereof.

(2) Notice need not be given under this paragraph if the seizure was made in the presence of –

(a) the person whose offence or suspected offence occasioned the seizure; or

(b) the owner or any of the owners of the thing seized or any servant or agent of his; or

(c) in the case of anything seized in any ship or aircraft, the master or commander.

2. Notice under paragraph 1 above shall be given in writing and shall be deemed to have been duly served on the person concerned –

(a) if delivered to him personally; or

(b) if addressed to him and left or forwarded by post to him at his usual or last known place of abode or business or, in the case of a body corporate, at their registered or principal office; or

(c) where he has no address within the United Kingdom or the Isle of Man, or his address is unknown, by publication of notice of the seizure in the London, Edinburgh or Belfast Gazette.

Notice of claim

3. Any person claiming that any thing seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise. …"

16. It is also relevant to set out an extract from HMRC's internal guidance in relation to section 139 of CEMA, which was applicable at the time of the detention of the Coventry goods and the Birmingham goods, as follows:

"Reasons for detention

Things may be detained for a number of reasons. For passengers a duty-slip (countersigned by the owner) should be issued as receipt for the things and an explanation given to the person as to why the things are being detained.

If the things are being detained pending enquiries, state the reason for detention on the duty-slip ensuring that the things are described sufficiently for identification and assessment purposes. Examine the things for any damage and include any in the description of the article.

It is appropriate to detain things: …

(b). where there are reasonable grounds for suspicion about the status of the things but some form of investigative action by officers is necessary to establish whether the goods are liable to forfeiture (e.g. the detention of goods for verification of duty payment, or for advice on whether they are the subject of a prohibition (see c also), the latter might include film which needs to be developed or videos which need to be viewed; …

Time limits for the detention of things

…

In case (b) … things should not normally be detained for more than 10 working days before they are either released or the detention is converted to seizure. If it has not been possible to complete the necessary investigative action within that period, owing to the nature and/or complexity of the case, authority to allow continued detention of the things must be sought from the operational manager. Reasons for an extension might include:

insufficient evidence to decide whether to release or seize things

exceptional difficulty contacting the owner or importer of things

specialist input needed to correctly identify things

allowing the Intellectual Property (IP) rights holder to inspect suspected counterfeit things

court proceedings initiated by the 'rights holder' to confirm things infringe intellectual property rights

the 'rights holder' and declarant, holder or owner of things agreeing to abandon them for destruction by HMRC.

This list is not exhaustive and each case should be considered on its merits. You should also bear in mind whether or not the required information is likely to be available and/or can be obtained within a reasonable time period, or if our actions (proposed, or current) are proportionate and can be completed within a reasonable time period. …"

The claims

17. In each claim the Claimants seek to establish that HMRC had no authority in law for the detention of their goods. If successful in that contention, the Claimants seek directions for a trial of their consequential damages claim against HMRC for wrongful interference with the Coventry goods and the Birmingham goods.
18. As set out at the hearing, the Claimants put forward two grounds of challenge to the actions of HMRC in each case. First, the Claimants submit that on proper construction of section 139(1) it is a necessary condition for the lawfulness of detention of an item that it should in fact be "liable to forfeiture" in the sense given that phrase by section 49 of CEMA (i.e. for the purposes of the present case, that no duty should in fact have been paid on the Coventry goods and the Birmingham goods), and that it is not sufficient that there are merely reasonable grounds for suspicion on the part of HMRC that duty might not have been paid on it, so that it might be an item which is liable to forfeiture in the sense given by section 49. If that is correct, Mr Jones QC for the Claimants says that they are entitled to judgment in their favour in relation to the Coventry goods and the Birmingham goods because after their detention those goods were restored to the Claimants, indicating that HMRC accept that they cannot establish that duty had not in fact been paid on them (otherwise HMRC would have seized the goods and the issue of payment of duty on them would have been tested in proceedings under Schedule 3 to CEMA).
19. In answer to this ground of claim, Mr Sheldon for HMRC submits that section 139(1) permits HMRC to detain goods in relation to which they have reasonable grounds for suspicion that duty may not have been paid, for a reasonable and proportionate period to allow them to carry out investigations into whether duty has been paid or not. These investigations may include tracing the supply chain to the current owner of the goods to determine whether duty had been paid on the goods by any person in that supply chain.
20. The second ground of claim advanced by Mr Jones, if he does not succeed on the first, is that even if HMRC are given a power of detention in section 139(1) which may be exercised in circumstances of suspicion, to allow for a period of investigation, the periods of detention of the Coventry goods and the Birmingham goods in these cases were considerably longer than the ten-day norm indicated in HMRC's internal guidance set out above; that that ten-day period should be taken to indicate the extent of the reasonable and proportionate period relevant in the circumstances of the present cases; and that that has the result that detention of the goods for any period significantly longer than that could not be regarded as lawful, even on HMRC's approach to the construction of section 139(1). For this ground Mr Jones placed particular emphasis on the judgment of Pill LJ in Gora v Customs and Excise Commissioners [2003] EWCA Civ 525; [2004] QB 93 at para. [51], where he emphasised that the power to detain goods under section 139(1) should be regarded as a short-term measure pending release or seizure and that enquiries to determine whether goods are liable to forfeiture should be "made expeditiously and a prompt decision taken as to whether to return the goods or to seize them". In that case, Pill LJ at [52] expressed concern about the length of the detention of alcoholic goods in Mr Gora's case from 30 December 1999 until 14 April 2000 when notice of seizure was given, since that period was completely out of scale with the few days of detention which the court was told was the normal practice (Pill LJ seems there to have had in mind HMRC's then applicable internal guidance, which was in terms similar to the internal guidance referred to above, but referred to a normal period of five rather than ten working days: see para. [42]).
21. Mr Sheldon's response was that periods of detention significantly longer than ten working days may be justified under section 139(1) in cases where the investigation which HMRC have to carry out is a complex one, as it was in these cases. He referred to authorities in which considerably longer periods of detention had been found to be lawful under section 139 in circumstances where a complex investigation had been required for HMRC to make a reasonable assessment whether duty had or had not been paid on alcoholic goods: R (Demand & Supply Cash & Carry Ltd) v Revenue and Customs Commissioners [2009] EWHC 3321 (Admin); [2010] STC 832 and Checkprice (UK) Ltd.
22. Mr Jones made it clear that he did not seek to maintain a distinct third argument, to the effect that, even if he was unsuccessful in his second submission, on detailed examination of the investigative steps taken by HMRC in these cases they could be shown to have taken an unreasonably long period of time for any of those steps, such that their detention of the goods became unlawful under section 139(1) on that basis. Accordingly, it was not necessary at the hearing to go into the detail of the steps taken by HMRC to investigate the provenance of the Coventry goods and the Birmingham goods in their attempts to determine whether duty had been paid on them (contrast the investigation of the detailed facts conducted by the court in Demand & Supply Cash & Carry Ltd and in Checkprice (UK) Ltd).

First ground of claim: the basis on which detention is authorised under section 139(1) of CEMA

23. Mr Jones correctly pointed out that there is no authority binding on me which determines the proper interpretation of section 139(1). The Court of Appeal in Gora authoritatively decided that HMRC have a power of detention under section 139(1) which is distinct from their power of seizure in that provision (see in particular paras. [40]-[49]), but did not have to decide what in law is the necessary foundation required by section 139(1) for the lawful exercise of the power of detention. Although Pill LJ (with whom Chadwick LJ agreed) was of the view that the power of detention given in section 139(1) was intended to allow for a reasonable investigation to be carried out where there is uncertainty whether duty has been paid or not (see paras. [50]-[52]), that was not part of the ratio decidendi and in the same case Longmore LJ sounded a note of caution about that at para. [68]. He said that:

"It must be, at least, arguable that detention of goods not in fact liable to forfeiture is an unlawful interference with goods…"

24. In Demand & Supply Cash & Carry Ltd and in Checkprice (UK) Ltd, no party argued that the power of detention in section 139(1) was limited in this way and the availability of such a power where there was only reason to suspect that goods might be liable to forfeiture by reason of non-payment of duty was simply assumed. Against those cases, Mr Jones pointed to observations of Mitting J in R (Millennium Cash and Carry Ltd) v Commissioners for Her Majesty's Revenue and Customs [2010] EWHC 1308 (Admin), a case concerning the grant of interim injunctive relief pending trial where, at paras. [8]-[11], he expressed reservations about the approach adopted in Demand & Supply Cash & Carry Ltd and about the extension of the statutory power to seize or detain goods beyond goods actually liable to forfeiture (as "an objective question of fact") to allow also for detention of goods for a reasonable period to determine whether or not the goods in question have had duty paid on them.
25. The main part of Mr Jones's submission has two limbs. First, he contends that there is a strong presumption that Parliament does not intend to authorise interference with private property and that accordingly clear language is required in a statute to authorise interference with property, including by a power of detention or seizure in the present context. Second, he says that on the ordinary words used in section 139(1) of CEMA (read together with section 49), detention or seizure of goods is only authorised where the goods are in fact "liable to forfeiture" in the sense that that phrase bears in section 49 (or, at any rate, the words used in section 139(1) do not clearly authorise detention or seizure of goods where there are only grounds for suspicion that duty might not have been paid on them). Therefore, section 139(1) does not confer power on HMRC to detain goods where there is merely a reasonable suspicion prior to detailed investigation that duty might not have been paid on them.
26. This interpretation of section 139(1) is reinforced, Mr Jones contends, by reference to section 138(1) of CEMA and to section 144(2) of CEMA. Section 138(1) authorises the arrest of a person "who has committed, or whom there are reasonable grounds to suspect of having committed" a relevant offence. That provision spells out an authority to act where there are reasonable grounds for suspicion, whereas section 139(1) by contrast does not. Section 144(2) confers protection for HMRC from damages, costs or punishment where goods are seized or detained where there were reasonable grounds for seizing or detaining them. Such protection, Mr Jones says, would be unnecessary if section 139(1) bore the interpretation that HMRC seek to place on it.
27. There is force in the Claimants' submission but, on analysis, I am not persuaded by it. While taking account of the presumption that Parliament does not authorise interference with private property without clear indication to that effect, the role for the court is to ascertain the intention of Parliament as expressed in the statute, reading section 139(1) in the context of the whole statute and in the light of the objective it was directed to achieving: compare Westminster Bank Ltd v Minister for Housing and Local Government [1971] AC 508, 529E-F per Lord Reid. In my judgment, there are clear indications from the scheme of CEMA and its context that Parliament intended that HMRC should have a power to detain goods where there is doubt whether duty has been paid on them, to allow for investigation of that question.
28. The starting point is that section 139(1) contains two distinct powers, a power to seize goods and a separate power to detain goods. Where HMRC believe that duty has not in fact been paid on goods, they will seize the goods (to simplify the analysis in this judgment, I focus on the case of alcoholic goods in respect of which duty has not been paid, but the same issue of principle will apply in relation to the other grounds set out in section 49 or other provisions, such as section 141 of CEMA, which allow for forfeiture of goods). The seizure will bring into operation the procedure in Schedule 3, which will afford the owner of the goods an opportunity to have the matter brought before a court for the question of payment or otherwise of duty on the goods to be tested on the evidence and made the subject of a court ruling (see, in particular, paragraph 6 of Schedule 3).
29. The exercise of the distinct power of detention in section 139(1) does not have the effect of bringing the procedure in Schedule 3 into operation (as noted in Gora at [50]). This immediately gives rise to the question, why did Parliament include such a power in section 139(1)? If it was a power the exercise of which was intended to be predicated on goods in fact being goods on which duty had not been paid (as the Claimants contend), one would have expected Parliament to have made similar provision as in Schedule 3 in the case of seizure of goods for a procedure for a court to examine that very question on the basis of evidence going to that issue. But there is no such procedure in relation to detention of goods. To my mind, that is a strong indicator that Parliament did not intend the availability of the power of detention to depend upon duty in fact not having been paid on the goods in question.
30. In my view, there is a clear reason why Parliament wished to create a distinct power of detention, namely to allow for the goods to be held where there is uncertainty whether duty has been paid on them or not, to allow for investigations to be carried out before HMRC decide whether to seize the goods or return them. That was the view of Pill LJ and Chadwick LJ in Gora (see paras. [50]-[52] and [59]) which, although not binding upon me, is strong persuasive authority. It does not require much imagination to see that there may be many cases in which there is uncertainty when HMRC officers inspect goods whether duty has been paid on them or not, and to see that in such cases the effective and fair implementation of the relevant tax and its associated enforcement regime will require that goods are held for a period while investigations are carried out in an effort to remove that uncertainty. In general (and without seeking to level criticism against the Claimants in the present cases), Parliament cannot have intended that an owner of goods should be able, just by obfuscating and creating uncertainty at the point of inspection in relation to his supply chain and whether duty has or has not been paid, to avoid the full rigour of the machinery for the enforcement of payment of taxes, including by forfeiture of goods on which duty has not been paid. Section 139(1) was intended to confer powers on HMRC to facilitate the effective and fair collection of tax, and to create effective sanctions where duty is not paid, and I consider that it is plain in that context that Parliament intended that there should be a distinct power of detention of goods to allow for a period of investigation where there is uncertainty whether duty has been paid on goods as it should have been.
31. That conclusion is strongly reinforced by the fact that it is difficult to identify any other sensible purpose to be served by the power of detention within the statutory scheme of CEMA. Mr Jones suggested two alternative possibilities, but neither of them is plausible.
32. First, Mr Jones submitted that a power of detention was required to allow for the withholding of goods by HMRC in a case where they decided to seize the goods in question but needed time to send the notice of seizure to the owner of the goods according to the procedure laid down in paragraphs 1 and 2 of Schedule 3 to CEMA, set out above. In my view, this argument proceeds upon a misreading of paragraph 1(1) of Schedule 3. That paragraph does not provide that the giving of notice of seizure is a precondition before exercise of the power of seizure can occur. On the contrary, I consider it is clear that paragraphs 1 to 3 of Schedule 3 proceed on the footing that HMRC first exercise their power of seizure and then are required, in certain circumstances, to give notice of having done so. The requirement to give notice is not to allow seizure to take place, but rather is designed to provide a proper opportunity for the owner of the goods to challenge the seizure and claim back his goods according to the procedure set out in Schedule 3 (see in particular paragraph 3, which sets out the time limits within which the owner of goods must give notice of his claim to the goods; where such notice is given, the onus is on HMRC to take proceedings in court for the condemnation of the goods as forfeit: see paragraph 6 of Schedule 3). The ability of HMRC to exercise their power of seizure in the absence of notice to the owner is illustrated by the situation which arises where the owner of goods is not present when the seizure occurs and his identity is unknown to HMRC. In such a case there is no requirement under paragraph 1 to give notice of the seizure, but paragraph 3 and the remainder of Schedule 3 contemplate that it takes effect as a valid seizure. It is difficult to see why a different principle should apply in relation to a seizure of goods when notice is required. Also, according to paragraph 1(1) of Schedule 3, in appropriate cases notice has to be given "of the seizure". In my view, the natural meaning of that phrase is that notice is given of something (the act of seizure) which has already occurred. Therefore, since on a proper reading of Schedule 3 no gap is contemplated before an exercise of the power of seizure takes effect (which occurs when the goods are first held by HMRC by way of an act of seizure), between the act of seizure and receipt by the owner of a notice of seizure, Schedule 3 affords no support for the Claimants' argument.
33. Secondly, Mr Jones suggested that Parliament conferred the power of detention (as opposed to seizure) in section 139(1) in order to allow HMRC some flexibility of response in exceptional cases where, although duty has not been paid (so that the goods are in fact liable to forfeiture), the owner makes prompt arrangements to effect payment, and forfeiture of the goods is regarded as an excessive sanction. Mr Jones suggested that Parliament conferred the power of detention to allow HMRC to detain the goods in such a situation pending payment of the outstanding duty. In my view, this also is not a plausible explanation why Parliament conferred the power of detention. In the statutory scheme, section 152(b) of CEMA gives HMRC full power to restore goods to their owner, without proceeding to forfeit them, where they consider it is appropriate to do so after the goods have been seized. The natural course for HMRC in the unusual circumstances posed by Mr Jones would be to exercise their power of seizure of the goods and then to consider releasing the goods under section 152(b) if the duty on the goods were promptly paid. It was not necessary for Parliament to create a distinct power of detention in section 139(1) to accommodate such cases.
34. There is also support for the view of the intended object of the power of detention set out in paragraph [27] above to be derived from the old law on the subject. The distinction between seizure and detention originally developed in the context of the old law of trespass in relation to goods. The leading case on the law of trespass in relation to the ability of the Commissioners of Customs and Excise to hold goods pending investigation into whether they could be seized and made forfeit was Jacobsohn v Blake and Compton (1844) 6 Man & G 919. In that case customs officers detained goods while investigations were conducted to determine whether the goods were in fact liable to forfeiture. The owner of the goods sued the officers for trespass to goods and the action in trespass was dismissed on the basis that the officers had not seized the goods, but had merely detained them for the purpose of examining whether they should be seized or not: see 925-926 per Tindal CJ, 926 per Coltman J, 927 per Erskine J, 927 per Cresswell J (the case is referred to by Pill LJ in Gora at paras. [43]-[48] as relevant to establishing the distinction between detention and seizure). It seems likely that it was this distinction between detention and seizure which Parliament intended to maintain by using the same terminology in what is now section 139(1) of CEMA, to reinforce and confirm the position that had been established in the old case law that customs officials should have a power to detain goods for a reasonable time to make inquiries to establish whether they were properly to be seized and forfeited, or not.
35. There is force in the point made by Mr Jones on the language of section 139(1), when read with section 49(1). However, in my judgment, the point should not be pressed too far. Section 49(1) of CEMA is not a definition section. Like other provisions such as section 141, it lays down the circumstances in which it will be proper for goods to be forfeited at the end of the procedure which begins with seizure and is then governed by Schedule 3. Such provisions lay down the substantive rules to be applied in the course of that procedure (in particular, by the court acting pursuant to paragraph 6 of Schedule 3, in deciding whether seized goods should be condemned as forfeited). When one turns to section 139, on the other hand, one is dealing with a provision which applies in a different context, in the circumstances which exist before that whole procedure is brought into operation and has been worked through and where, in advance of determination by a court under Schedule 3, there may very well be uncertainty whether goods may ultimately be condemned as forfeit because duty has not been paid on them.
36. Section 139(5) emphasises this point, since it makes provision as to how any item seized or detained shall be dealt with "pending the determination as to its forfeiture or disposal". This sub-section contemplates that there may be a valid exercise of the power of detention and of the initial power of seizure in circumstances where there is uncertainty whether duty has been paid or not and where the determination of that issue remains to be determined.
37. In the particular context in which section 139(1) applies, I do not think that it is an abuse of language to describe goods detained where there are reasonable grounds for suspecting that duty might not have been paid on them as goods "liable to forfeiture", in the sense that they are liable to forfeiture if, at the end of the process of examination contemplated by the Act as set out in Schedule 3 (first by HMRC, then by a court), that suspicion proves to be correct. In that regard, it should also be noted that if the position were as Mr Jones contends, that would tend to undermine the statutory process set out in Schedule 3 in relation to seizure of goods, since it would seem that owners of goods could seek to take action by way of judicial review to challenge the initial act of seizure by reference to the underlying facts, without waiting for the structured and orderly procedure in Schedule 3 to be worked through. I thus consider that the other indicators of the true interpretation of section 139(1) reviewed above outweigh the support that Mr Jones seeks to derive from section 49 of CEMA.
38. Mr Jones's argument by reference to section 138(1) is again a textual one. In my judgment, section 138(1) does not provide a clear indication in favour of the construction of section 139(1) proposed by Mr Jones. The formulation of section 138(1) is of a kind generally familiar in the context of stipulation of arrest powers, and it is unsurprising that Parliament should have chosen to use such a formula when setting out the power of arrest contained in that provision. That provides the most obvious reason for the choice of text in section 138(1), rather than a decision by Parliament to set up a deliberate contrast with the phraseology in section 139(1) so as to create a wider power of arrest of a person than there would be a power of detention of goods under section 139(1). Indeed, it would be surprising if Parliament had intended there to be such a distinction, since ordinarily one would expect Parliament to be still more careful to protect the liberty of the person than to protect freedom of goods from detention for a limited time. Therefore, I do not consider that the presence of section 138(1) in CEMA could, either by itself or in conjunction with the other matters relied upon by Mr Jones, outweigh the indicators as to the proper construction of section 139(1) reviewed above.
39. Similar observations can be made in relation to section 144(2) of CEMA. In my view, there are two fundamental points with regard to that provision. First, it applies in relation to a wide range of acts and proceedings involving HMRC, and is not confined to actions taken under section 139(1). It also grants protection in relation to costs and punishment, as well as an award of damages. Therefore, adoption of the construction of section 139(1) contended for by HMRC would not render section 144(2) otiose in the scheme of the Act.
40. Secondly, section 144(2) recognises that HMRC and their officers will often have to act in circumstances where the facts are not immediately clear, and reflects a policy that when they have reasonable grounds for taking action by seizing or detaining goods in such circumstances they should be protected in certain ways from legal redress. This seems to me to be a recognition of reality on the ground and an indication of the appropriate policy Parliament intended should apply in light of that reality which tends to support the interpretation of section 139(1) for which HMRC contend. The provision appears to encourage HMRC to take action where there are reasonable grounds for seizing or detaining a thing. But if that is the policy indicated by this provision, it is best promoted (when one turns to the specific context of section 139(1)) by construing section 139(1) as allowing detention where there are reasonable grounds to suspect that duty may not have been paid on the goods in question. To construe section 139(1) more narrowly, in line with the Claimants' submission, would undermine that policy, since section 144(2) does not provide complete coverage dealing with all forms of remedies in law which might be available if action is taken by HMRC on grounds of reasonable suspicion. In particular, section 144(2) would not exclude injunctive relief being available to compel return of goods detained by HMRC, even while they were seeking to undertake reasonable inquiries. Again, therefore, assessing section 144(2) in the scheme of CEMA as a whole, I do not consider that it outweighs the indicators as to the proper construction of section 139(1) to which I have already referred.
41. For the reasons set out above, I conclude that the power of detention contained in section 139(1) is not limited to cases in which the goods in question are goods on which duty has in fact not been paid, but also covers cases in which there are reasonable grounds for suspecting that duty might not have been paid on the goods.

Second ground of claim: The reasonableness of the period of the detention

42. Since I have concluded that the power of detention in section 139(1) is not limited in the manner contended for by the Claimants on their primary submission, questions arise as to the precise threshold conditions which need to be satisfied before the power of detention may be exercised and the period for which it may be exercised. In addressing those questions, the provision has to be construed to ensure so far as it is possible to do so that it is compatible with the Convention rights of the owners of property (in particular, with the rights to protection of property contained in Article 1 of Protocol 1 to the European Convention on Human Rights): see section 3(1) of the Human Rights Act 1998. Accordingly, any interference with property rights which section 139(1) authorises has to be proportionate to some legitimate public policy objective: see Gora at [50]-[52] and Demand & Supply Cash & Carry Ltd at [14]. The same conclusion is given by reference to EU law, since detention of goods to enforce excise duty may also interfere with rights of free movement of goods: see Demand & Supply Cash & Carry Ltd at [14].
43. The effective and fair enforcement of taxes constitutes a legitimate public policy objective. In my view, to be proportionate to that objective, in cases where more than a routine spot check of goods to confirm that duty has been paid on them is in issue, section 139(1) should be construed as authorising detention of goods only where there are reasonable grounds for HMRC to believe that there is a real possibility that duty might not have been paid on the goods (see, to similar effect, Demand & Supply Cash & Carry Ltd at [24] per Kenneth Parker J). There is no serious dispute in this case that that threshold condition was satisfied in relation to the Coventry goods and the Birmingham goods, having regard to the discrepancies in the available documentation in relation to those goods.
44. The legitimate reason a power of detention is conferred on HMRC is to allow for reasonable investigations to be carried out in an effort to determine whether duty has been paid on the goods, so as to enable HMRC to take an informed decision whether to seize the goods or release them back to their owner. Since there is no reference to a court for detailed examination of the facts under the procedure set out in Schedule 3 to CEMA until goods have been seized, and the owner of the goods is deprived of their use while they are detained, the period during which detention of goods will be permissible should be as short as is reasonably possible in the circumstances of the case to allow for proper investigation whether duty has been paid on them to enable HMRC to take the relevant decision. In other words, as Pill LJ indicated in Gora, it is incumbent on HMRC to conduct their inquiries expeditiously and to take a prompt decision as to whether to return the goods or to seize them (para. [51]). The period during which it will be lawful for the power of detention to be exercised will vary depending on the particular facts of any case. It would unduly undermine fair and effective collection of duty and implementation of the enforcement regime to impose a rigid timetable upon HMRC within which such a decision should be taken. If the circumstances are unclear and the investigation required is complex, even an expeditious investigation may take a relatively extended amount of time. The proportionality of detention in such a situation is underlined by the fact that it is open to traders to seek to protect themselves against such detention by insisting upon the provision to them of proper documentation in good order when goods are supplied to them, to show when and by whom duty on those particular goods was paid, knowing that they are taking a risk that the goods may be subject to a period of detention by HMRC if they fail to do so.
45. This is not to say that detention of goods can be maintained indefinitely on the basis that HMRC have not yet got to the bottom of whether duty has been paid or not and can think of additional inquiries that might be made. The relative weight to be given to the owner's interest in having his goods freed from detention or else seized and made subject to the procedure in Schedule 3 will increase over time and eventually outweigh the interest in HMRC in detaining goods to enable further investigations to be conducted.
46. For the reasons given above, I do not accept the Claimants' submission that any period of detention significantly longer than the ten day norm indicated in HMRC's internal guidance should be regarded as disproportionately long and unlawful. The internal guidance itself states that longer periods of detention may be justified in complex cases, and in my view is correct to do so.
47. At the hearing, Mr Jones sought to bolster the Claimants' case that the detention of their goods had been for disproportionate periods of time by a further complaint that the power of detention had been exercised by means of a direction by HMRC under section 139(5) and (7) of CEMA requiring the Claimants to store the detained goods in their warehouses, so using up valuable warehouse space. There was no evidence adduced to substantiate this complaint, or to set out how (if at all) the Claimants suffered any loss as a result of this arrangement. In response, Mr Sheldon, on instructions, said that such an arrangement in relation to detention of goods was usually arrived at with the agreement of the owner of the goods, since retaining the goods in his warehouse would usually be more convenient for him. Certainly in some cases goods are detained in HMRC's own warehouses: this is what happened in Checkprice (UK) Ltd . Since there was no evidence on either side in relation to this issue, I found it impossible to form any concluded view on it one way or the other. Accordingly, I am not satisfied that this is a matter which affects the proper analysis in this case.

Conclusion

48. The present cases called for relatively complex investigations by HMRC. Mr Jones did not seek to suggest otherwise. No further argument was presented to suggest that the periods of detention of the Coventry goods and the Birmingham goods were unlawful by reason of the time taken to investigate the complex and uncertain circumstances surrounding the goods. Since the Claimants have failed in their two grounds of challenge, I dismiss their claims.