RESTORATION – HGV – Refusal to restore – English driver employed by Danish haulier – Large quantity of tobacco found in trailer – whether Appellant had taken all reasonable steps to prevent smuggling – Failure to consider normal Danish practices – Whether restoration on payment of duty on tobacco "reasonable" – Appeal allowed
LONDON TRIBUNAL CENTRE
ARNE JENSEN VOGNMANDSFORRETNING A/S Appellant
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: ANGUS NICOL (Chairman)
RACHEL ADAMS FCA ATII
M M HOSSAIN FCA FCIB
Sitting in public in London on 16 January 2003
Mrs Birthe Boisen, of International Transport Danmark, for the Appellant
Christopher Mellor, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents
© CROWN COPYRIGHT 2003
DECISION
- This is an appeal against a decision on review to refuse restoration of a vehicle otherwise than on condition that the duty payable on excise goods imported in it was paid. It is a little unusual in that the driver of the vehicle on the occasion when it was stopped and excise goods seized from it, was a British citizen. The tractor was owned by the Appellant, a Danish company, and the trailer by DFDS, another Danish company. The vehicle was seized on 2 March 2002 at Felixstowe. It was loaded with hanging garments and groupage. It also contained 151 kg of tobacco, 1,600 cigarettes, 47.52 litres of beer, 40.5 litres of wine, and 11.25 litres of spirits. The Appellant was informed that the vehicle would be returned on payment of £17,596.94, that being the duty payable on the goods. The Appellant has paid that sum, and now appeals against the decision on the basis that it was unreasonable to require such a payment.
The facts
- The facts relating to the stoppage and seizure set out in the statement of case and in the review letter were not in dispute, and were as follows. The vehicle was being driven by Mr John Bedford, a driver then employed by the Appellant, and had come from Scheveningen. When first asked questions, Mr Bedford said that he had slept while the hanging garments were being loaded into the trailer, but had seen the groupage being loaded. He had some excise goods of his own in the trailer, an d some that belonged to a passenger travelling with him, one Paul Suffling, who had entered the United Kingdom at Harwich since he was unable to get onto the boat for Felixstowe. These excise goods were located near the back doors of the trailer. Mr Bedford produced receipts for various quantities of wine and spirits and cigarettes, which covered about three quarters of the goods that he said he had for himself. He said that he had 800 cigarettes, 0.5 kg of tobacco, six cases of beer, two of wine, and four bottles of spirits. Mr Suffling had the same amounts of tobacco and cigarettes, nine cases of wine, and three other bottles of alcoholic drink. All those goods, Mr Bedford told the officers, belonged to Mr Suffling and himself; they had purchased the goods on the way. The receipts shew that they were bought at Padburg, which, we were told, is about one kilometre inside Germany from Denmark, where cigarettes and tobacco are much less expensive than in Denmark. Mr Bedford said that both he and Mr Suffling worked for the Appellant, and that he was giving Mr Suffling a lift home so that he could save the air fare from Denmark. Mr Bedford said that he was aware of the guidelines as to importing excise goods, and had never had any such goods seized before, though he had had a telling off in Harwich in the previous year. He made the trip from Denmark about once a week.
- The goods said to belong to Mr Bedford and Mr Suffling were found near the back doors of the trailer. In the nose of the trailer the officers found a pallet containing 150 kg of hand rolling tobacco. After that, they interviewed Mr Bedford again, under caution. He said that he did not know that the pallet of tobacco was in the trailer, but he had an idea as to where it had been loaded, namely at SGS Denmark, which was part of Danzas who owned the garments. Mr Bedford said that he was the only driver who collected the Danzas load. He said that he normally slept while the vehicle was being loaded, because it took about four hours. Nor was he usually present when the hanging garments were unloaded, because he usually left the trailer at Danzas Tilbury on the Monday night and collected it on Tuesday morning. It was his decision to leave the trailer at Danzas Tilbury, he had not been asked to do so by Danzas. This was a regular weekly trip. He was asked whether he had bought the pallet of tobacco, and he said that he had not, nor did he think that Mr Suffling had. Asked if he thought the Appellant was involved in tobacco smuggling, he said "No, definitely not." The officer said that when the excise goods were found near the rear doors, Mr Bedford said that the Appellant would sack him. When the pallet of tobacco was found, Mr Bedford said that even if he could have talked the Appellant round, there would now be no chance and he would definitely be sacked.
- After the interviews, a search was made of the cab of the tractor. In it were found a number of pieces of paper which listed amounts of excise goods, some of which had sums of money noted against items of excise goods, and some had names of people written by the lists. There were also numbers which looked like telephone numbers.
- It was later discovered by Customs and Excise that Mr Suffling had not been a passenger in Mr Bedford's vehicle, but had entered the country at Dover on the same day driving another tractor and trailer also carrying hanging garments. It was also the case that Mr Suffling was known to Customs and Excise for previous imports of excise goods which had been seized.
- A senior officer of Customs and Excise, Mr Pells, wrote to the Appellant on 4 March 2002 with the information that the vehicle had been seized under section 141(1)(a) of the Customs and Excise Management Act 1979, as a result of the tobacco having been found concealed in the trailer. The letter then said,
"I am not satisfied that John Bedford is not involved in the smuggling of the goods. On this occasion the vehicle will be restored on payment of £17,596.94. This is without prejudice to any further action that the Commissioners of Customs and Excise may take against you in connection with this seizure.
You are advised that on any future occasion that this vehicle, or any other vehicle driven by John Bedford is detected carrying undeclared goods, HM Customs will not restore the vehicle.
The letter then said that the Appellant may ask for a review of the decision.
- In a letter dated 5 March 2002 (listed by the Commissioners as undated), signed by Kristian Jensen, a director of the Appellant, the payment of £17,569.94 was enclosed. The letter also said,
"In accordance with your notice our lorry with trailers, including goods, has been retained as security for the smuggling of a consignment of 150 kg of tobacco.
We reject any knowledge of such smuggling for which we disclaim any liability whatsoever."
The payment was expressed to be made notwithstanding the disclaimer of liability for the smuggling and subject to the Appellant's claim for repayment. The vehicle was restored to the Appellant on 6 March 2002, and was collected from Felixstowe by Mr Bedford, who was driven to the Customs House by Mr Suffling.
- Further correspondence ensued. In a letter dated 4 April 2002, Barker Gotelee, solicitors acting for the Appellant, confirmed that the Appellant wished the decision to be reviewed, and asked for copies of witness statements and interviews under caution to be sent. In a further letter, dated 17 April 2002, are set out the Appellant's case and the facts upon which the Appellant relies. We consider it proper to set this out in extenso.
"Mr Arne Jensen's haulage company was established in Denmark in 1928. Now his two sons operate a fleet of 30 vehicles engaged in both national and international work. The Company has never, in all its years of operation, had any problems with any of its drivers on the smuggling of goods or breach of Customs rules.
On employing drivers, and on various occasions throughout their employment, the Company emphasizes orally how important it is that the Customs and Excise regulations on the many borders which their international vehicles cross shall be strictly complied with. It has never had to do it so far, but it emphasizes how serious a transgression would be and that it would involve immediate dismissal. Just as in this country, an Operator's Licence holder in Denmark must have good repute and must report the convictions of any servants or agents to the equivalent of its Traffic Commissioner. The Company is very conscious of the need to protect its licence to operate vehicles.
In Denmark wages and working conditions for drivers are regulated by a collective agreement by SiD (the Drivers' Trade Union) and ATL (the Employers' Association for Transport and Logistics), and it is made quite clear by these parties that a serious breach of the law, such as smuggling, will result in an immediate dismissal. In 2001 six of the Company drivers were awarded the IRU (International Road Transport Union) Diploma of Honour. The Company takes pride in its professionalism and the training of its drivers.
Until now, the Company has had no formal written procedures but, with the help of International Transport Danmark which is the Danish equivalent to the Road Haulage Association, it has now instituted a formal written legal procedure incorporating suggestions such as those in the document 'Annex A' being the Customs Criteria against smuggling which the RHA in the UK suggests its members should follow. Unfortunately the Company was not aware of these suggestions until it took advice from us via the ITD following the unfortunate incident.
Since 1977 the Company regularly sends seven vehicles per week to the UK and it employs six English drivers some of whom have been with it for more than ten years. They are employed because they know the UK both geographically and its transport rules. The journeys are carried out for various regular Danish forwarding agencies, among them DFDS Transport Limited.
Mr Bedford has been employed in this work since the 20th July 1998. He was well thought of and regarded to be honest, straight forward, sound and reliable. His conduct has never aroused suspicion. He is 41 years of age and lives near London. Before the Company employed Mr Bedford it took up an oral reference. He came highly recommended. He previously worked for PJM Transport in the UK.
Mr Bedford has not been seen since the incident. He was asked for all the journey paperwork but nothing has been received. His tachograph charts were not handed in or seized so the Company cannot check his journey. Apparently Mr Bedford's passport was seized from him. Mr Bedford has not returned to Denmark nor claimed his wages or holiday pay. He was discharged, after union consultation, on the 12th March 2002.
The export of clothing from the Danish factory at Odense is a regular journey undertaken by Mr Bedford at weekly intervals.
On the 29th February 2002 Mr K Jensen spoke to Mr Bedford at Herning, driving the same vehicle and trailer that was eventually impounded. He had returned to Denmark by ferry from the UK and was unloading a part back load at Herning in Denmark. After unloading part of the load there were some garments remaining on the vehicle which were returned to Odense in Denmark that evening. Mr Bedford slept in the cab. There should have been nothing else in the trailer of the articulated vehicle except for a few garments for return to Odense. At the factory at Odense the remaining garments would have been unloaded and a fresh part load of garments for shipment to the UK was loaded.
On Friday the 1st March 2002 Mr Bedford began his journey to the UK after loading more goods at Ejby and Uldum in Denmark. He told the Company by telephone he checked the vehicle for stowaways at Padborg on the Dutch/German border when he padlocked the back doors of the trailer which was not sealed. At Scheveningen he boarded the ferry for the trip to Felixstowe. Mr Bedford's regular route to Denmark was through this port via Holland and Germany.
Unfortunately, the Company has no means of checking or knowing where Mr Bedford may have acquired and loaded the pallet of tobacco and alcohol with his intention to smuggle it back into the UK. It is understood that Customs officials in Denmark may have made inquiries at Herning and Odense where employees in the warehouse confirmed that there were some hanging garments and the pallet was in the trailer. If the Company had been told this it would have been able to do something about it.
Also it is understood from enquiries from Customs officers in Denmark and the UK that warehouse employees at the factory at Odense had seen a pallet at the front of the trailer of Mr Bedford's vehicle on previous occasions when he had called at the factory to load or unload. Both these places are regular customers well known to the Company and it is very upset that it was not told of anything of which people at these places were suspicious. If they had known Messrs Jensen would have taken immediate very serious action.
The vehicle and trailer did not call at the Company's yard with the return load on the 29th February 2002 or with the full load of garments after these had been loaded at Odense, Ejby and Uldum for the next export journey to the UK on the 1st March 2002.
It is accepted that the comments which we are able to make having taken the Company's instructions via the ITD are not as precise as we would like because we have asked Customs and Excise for copy statements of all those involved in the investigation and seizure, but these have not been provided. We must therefore reserve the right to make further comments when this information has been made available. We must, however, lodge this letter of appeal within the time limit.
The Company and Messrs Jensen deeply regret the behaviour of this driver. Over many years they have taken very successful precautions to ensure that they have never been placed in this position before by an employee. They have a very small turnover of drivers most of whom are loyal and long serving. They feel most strongly that they have become involved despite their own innocence and lack of blame. They ask therefore that this appeal shall be granted and that the £17,569.94p which was paid for the release of the vehicle, which was vital for continued business, shall be repaid.
Messrs Jensen are not sure if this is so, but if Customs in either the UK or Denmark had a suspicion that Company employees might be smuggling, they would have been very keen to co-operate in any way they could to ensure that such a person would be caught. As an international haulier of long standing and good repute, without any criticism of its operation having been made in the past, the Company and Messrs Jensen are the first to accept that international regulations on the movement of goods across borders must be honoured and obeyed."
- The review letter, dated 20 May 2002, set out the facts referred to above and the relevant legislation. The letter refers to a revised seizure and restoration policy in respect of HGVs which took effect from 16 July 2001. The review officer declared herself satisfied that the seizure of both tractor and trailer had been carried out correctly. The letter stated that no criminal charges had been brought against Mr Bedford since the Commissioners did not feel that they could prove that he was knowingly concerned in the fraudulent evasion of duty on the 150 kg of tobacco, and a higher burden of proof was required than in the case of seizure. The review officer said that she had seen the letters of 5 March, 4 April, and 17 April 2002 referred to above, and had obtained all the case papers, and had consulted the officers in the case, the Customs policy, and the solicitor's office. Referring to the Customs policy on restoration, the letter said,
"The recent HGV policy introduced as from 16 July 2001 makes provision for seizure and restoration upon payment of a sum of money where the drivers and hauliers cannot satisfy us that they are not actively involved in the smuggling operation."
However, the review officer also said in the reasons for her decision,
"With effect from 15 March 2002 a supplement to the policy on HGVs was introduced. Although this came into effect after the interception of Mr Bedford I have taken the contents into consideration when carrying out my review."
- The reasons given for the decision were as follows. There was no record of the checks, if any, made by Mr Bedford under the CMR convention in relation to the health care products carried in the vehicle. Mr Bedford said that he always slept when hanging garments were being loaded, and he was not present when they were unloaded. (The last part of that sentence does not, of course, apply to the journey under discussion, since the garments were never unloaded before seizure.) There was no confirmation that any checks under the code of practice under the Immigration and Asylum Act 1999 were carried out by Mr Bedford. (It was also not alleged that there were any stowaways in the vehicle.) But the review officer said that she failed to see how Mr Bedford could have been sure that there were no stowaways on board once the vehicle was fully laden.
- Because Mr Bedford had been "economical with the truth" and because of the lists of excise goods in the cab, and the fact that Mr Suffling had not travelled as his passenger, the review officer did not believe the version of events given by Mr Bedford. She said,
"The explanation given that he always sleeps when the hanging garments are loaded does not ring true and that he is not present when they are unloaded, is again too convenient.
In your letter dated 17 April your own enquiries have subsequently shown that the factory in Odense has seen a pallet at the front of Mr Bedford's trailer. This to me is a further indication of Mr Bedford's involvement in this matter."
- The reasons continued:
"You say that the company emphasises orally how important it is that Customs and Excise regulations are adhered to. You say that they also emphasize how serious any transgression would be and that it would involve instant dismissal. To ensure that they are adequately covered I would have thought it would have been prudent to introduce written procedures and signed acknowledgments of the facts to ensure that any drivers employed are in no doubt as to where they stand if they are found to have breached regulations.
I note in your letter of 17 April that you say that the Company has not seen Mr Bedford since the incident. This is at odds with the version of events given by the Officer in this case, Mrs Horsborough.... She recalls that once payment was confirmed that Mr Bedford arrived to pick up the tractor unit and trailer on the 6 March and was driven by Mr Paul Suffling.
. . .
I note that the Company has employed Mr Bedford since 1998. He is said to have come highly recommended. You say that an oral reference was given. In my experience it is usual when employing people, for whatever role, to take up references in writing which would involve more than one reference.
In summary you say that over the years the Company has taken very successful precautions to ensure that an employee has never placed them in this position. I have seen nothing tangible to back up this assertion."
The reasons concluded with the belief that Mr Bedford was involved in the smuggling attempt of all of the excise goods found within the load, and continued,
"I further conclude that the Company, Arne Jensen, in my opinion did not take all reasonable steps to prevent one of their drivers smuggling."
The decision was, therefore, upheld.
- The review officer, Mrs Caroline Gowing, also made a witness statement and gave oral evidence. She said that the background information in the review letter came from the case papers and from speaking to the officers, Mr Pells and Mrs Horsborough. She referred to the Supplementary Policy document, and said that she had taken advice. She said that there were no exceptional circumstances warranting not applying the department's policy on restoration. When she was asked by Mrs Boisen, on behalf of the Appellant, what would be an exceptional circumstance, she said that she could not say, as she had never come across any such. Mrs Gowing said that there was no evidence that the required checks had been carried out during loading in respect of the goods on the CMR note. She conceded that there was no positive information as to any previous involvement of Mr Bedford in smuggling activities. The written instructions now in use were in line with the Supplementary Policy document. Mrs Gowing asserted that anyone who applied for a job in the United Kingdom had to have written references. She was unable to answer when asked how the "reasonable steps" set out in the Supplementary Policy" could have been taken if they came into force only after the date of this incident. There had been no requirement for written instructions until 15 March 2002. Mrs Gowing said that she had not taken into account the fact that Mr Bedford's employer was resident in a foreign country. She agreed that Mr Jensen had not misled Customs in saying that Mr Bedford had not been seen again: that was a misunderstanding of his letter. But Mrs Gowing surprisingly said that she did not feel able to say that Mr Bedford had smuggled the 150 kg of tobacco: she would have to go through all the interviews to give a view on that. She also conceded that she had made an incorrect inference that the "pallet" referred to as having been seen in front of the trailer was a pallet of tobacco. Finally, she said that Mr Bedford had not been prosecuted, or penalised in any way, because Customs had decided that there was not enough evidence.
- We were referred to the Customs policy in respect of HGV seizure and restoration, and the Supplementary Policy. The former was dated 21 June 2001, and contained the following relevant passages:
"Following on from the vehicle seizure policy which we have implemented for PLGs we are now toughening up our seizure policy in relation to HGVs This is outlined in more detail at Annex A, and presented in flow-chart form at Annex B, but in essence it is:
- drivers and hauliers who cannot satisfy us that they are not actively involved in the smuggling operation
* on first detection - vehicle seized and not restored
- drivers and hauliers who have not carried out basic reasonable checks which would have identified the illicit load
* on first detection - vehicle seized and restored for 20% of the revenue evaded or the trade value of the vehicle (whichever is lesser); and
* on the second detection - vehicle seized and not restored.
- Drivers and hauliers who have taken all reasonable steps to check the legitimacy of the load
* vehicle seized and restored free of charge.
. . .
The policy is aimed not only at those who are clearly involved in the smuggling operation but most importantly at those who blatantly turn a blind eye despite the fact that the circumstances warrant care. It is not aimed at those hauliers who have taken all reasonable steps to ensure that their load is not being used to carry illicit goods.
. . .
... However, there will clearly be exceptional circumstances where it is proper to depart from the general policy. It is not possible to explore every scenario that might arise, but officers must consider whether on the facts of a particular case it is reasonable and proportionate to reuse restoration or require the usual sum."
Annex A goes into a little more specific detail, and includes the following:
"1. Customs not satisfied that the driver of haulier are not involved
. . .
- below £50,000, where the driver or haulier is clearly involved with smuggling -
- first detection: seizure of vehicle and restoration for 100% of the revenue value or the value of the vehicle, whichever is lower and issued of warning letter (...)
- second detection (within six months): seizure of vehicle and not restored."
- Annex C lists indicators of involvement. The list contains a note that no list of indicators can be exhaustive, and that this list contains some of the common indicators that the haulier/driver are involved in the smuggling attempt. There are eight indicators listed, none of which has any application in the present case. The nearest indicator is: "none of the above factors apply but the degree of carelessness is high and the haulier/driver has a previous criminal record for excise fraud or other smuggling." Whether there is any carelessness in this case, on the part of the haulier, is very much in dispute, and in any event neither the driver nor the Appellant has any previous record for smuggling or excise fraud.
- Annex D is a list of "Reasonable checks to be undertaken by hauliers/drivers". Of these, two are relevant to this appeal. The first is: "basic checks would have revealed the presence of the illicit goods (...)." The other is almost a repetition of that one: "simple examination of the load would have revealed the illicit goods but the driver admits that these were not carried out...." We will return to consideration of these later.
- Annex E sets out the haulier's obligations under the Immigration and asylum Act 1999, for the prevention of the carriage into the United Kingdom of clandestine entrants. This includes the obligation to make a check inside the vehicle, and, "Where it is not possible to secure a vehicle by means of a lock, seal, or other security device a thorough manual check of the load and load space must be conducted." Annex E also includes the haulier's obligations under the CMR Convention, which, it states, is applied in the United Kingdom under English law by the provisions of the Carriage of Goods by Road Act 1965. Most countries in Europe are parties to this convention, which applies automatically to an international road haulage journey. The carrier is obliged to check the accuracy of the details shewn on the consignment note. The annex states, "The prime intention of the CMR Convention is to give a legal base for the contract to carry the goods should a dispute subsequently arise."
- The Supplementary Policy is dated 15 March 2002, and modifies, with immediate effect, the policy relating to HGV seizure and restoration. Part 3 of the policy document sets out details of the modified policy, and includes the following:
"3.1 Driver: First detection
- If the haulier can demonstrate that all reasonable steps have been taken to prevent one of his drivers smuggling (see Annex A) - seizure of tractor unit and restoration free of charge. A warning letter should be issued (see Annex B) outlining the consequences of future detections.
- If the haulier has not taken all reasonable steps - seizure of tractor unit and restoration for 100% of the revenue value or the value of the tractor unit, whichever is the lower. A warning letter should be issued...."
- Annex A to this policy is headed "Suggested indicators that may give grounds to suggest that a haulier has taken all reasonable steps to prevent one of his drivers smuggling". Again, this is stated not to be an exhaustive list, and that each case will have to be considered on its merits. The introduction continues,
"In most cases, it is likely that some sort of documentary evidence may be necessary but there may be circumstances where a statement by the haulier is sufficient or the production of some paperwork coupled with a statement is sufficient."
Of the six suggested indicators, two relate to the use of agency drivers, and are therefore of no application here. Of the remaining four, the first is, that a copy of the driver's contract, or a letter from the haulier to the driver (signed by the driver), is made available stating that smuggling will be treated as a serious offence leading to automatic dismissal or other strong sanctions. The second is, that the haulier has obtained a copy of employment references from the driver's previous employers. Thirdly, the haulier has made inquiries of the driver's previous employers to establish that he had no previous dealings with Customs. Lastly, that the haulier can produce a record of an interview with the driver in which it is confirmed that he has had no previous offence dealings with Customs.
- Mr Kristian Jensen, a director of the Appellant, gave evidence. He had made a statement, which he confirmed was true. In his statement he said that the rules issued by the English Customs and Excise had never come to the Appellant's notice, and had never been given to the Appellant as a member of ITD or as an employer in another Member State. The Appellant did its utmost to ensure that it employed drivers on whom it could rely. He had difficulty in seeing what the Appellant could have done, other than what it did, to prevent smuggling by a driver. Drivers caught smuggling would be dismissed immediately, but it had never happened before. All the English drivers were aware how dangerous it was; although the Appellant did not give written instructions it had been discussed with them and they knew that automatic dismissal would be the result. It would be too costly not to warn them against smuggling. As a result of this matter, written instructions were now given. The English drivers all knew what they were allowed to take into the United Kingdom for their own use. It seemed strange to him, Mr Jensen said, that the Appellant, as the haulier, should be responsible for actions by a driver of which the Appellant knew nothing, and that no action should be taken against the driver. There was no pressure on the driver, in those circumstances, to prevent him smuggling. Mr Jensen adopted the facts and matters set out in the letter from Barker Gotelee of 17 April 2002, set out in paragraph 8 above.
- In cross-examination, Mr Jensen said that Mr Bedford had been dismissed immediately. The only communication that the Appellant had had with him since his being stopped was by telephone. He had collected the vehicle from Customs, but another driver had driven it back to Denmark. Since this incident, Customs had told the Appellant of two other drivers who had been caught smuggling; they were also dismissed. Mr Bedford had known what the consequences would be. No written instructions had ever been given to drivers as to smuggling or the checks to be carried out on loading their vehicles. They were told what to do, and also learnt from the other drivers. Mr Bedford had been driving for a company called PTM, and came with a recommendation from another driver, one Peter Davies (who was one of the two now also dismissed for smuggling). But before this incident, the Appellant, or any employer in Denmark, would never check up on a driver, because that would poison the relationship between employer and employee, although information about the drivers was needed before entrusting them with a lorry worth £100,000 and a load possibly worth more.
- There was also a statement of Birthe Boisen, who also represented the Appellant and gave evidence. She is a legal adviser with ITD, and is also a member of the Danish National Customs Committee, and had considerable knowledge of the employment system as it is affected by Customs rules in Denmark. In answer to the points set out in the statement of case in paragraph 14(f)(1) to (10), Miss Boisen said, first, that Mr Bedford knew the Appellant's attitude to infringements of the smuggling laws, and nevertheless went ahead and did it; a written instruction would have made no difference. He had not been prepared to say that he had carried out the required checks on picking up his load, and had taken the responsibility for the smuggling.
- In answer to paragraph (3), Miss Boisen said that all carriers know that the consequence of a delay is the payment of compensation, and especially those transporting goods for DFDS, which was the owner of the trailer being driven by Mr Bedford. The slightest deviation from the contract, she said, results in a claim for compensation, and no haulier in Denmark transporting for DFDS did so without being aware of this, and therefore gave exact instructions to the drivers regarding illegal immigrants and illegal goods.
- Relating to employment rules, in answer to paragraph (4), Miss Boisen said, "It is to be emphasized that rules for the employment of persons in Denmark and England are strikingly different. In Denmark an employment is generally exclusively done on the background of qualifications (examination papers). Only during recent years employers have started to request that a job applicant has to inform about persons who can give them personal references and this only in connection with employment of salaried employees in top positions. Generally this does not cause problems, as it is comparatively easy in Denmark to discharge employees who are not wanted because they disobey rules. In many cases, drivers can be dismissed with a day's notice.
- Point (6) of paragraph 14(f) stated that the Appellant's own inquiries should have established that a factory in Odense had seen a pallet outside the trailer. Miss Boisen said that ITD had tried to investigate that matter by means of information from the company at Odense and through the Customs Centre in Denmark. "However, they cannot confirm that there should have been any suspect about Arne Jensen's drivers. English Customs have never warned Arne Jensen of any suspicions."
- Point (7) was that there were no written instructions that ensured that the Appellant's drivers adhered to Customs and Excise regulations. Miss Boisen said, "There are no written instructions concerning the consequences of smuggling. Arne Jensen was not aware about these requirements, when John Bedford was employed in 1998. ITD had not received any instructions from the Central Customs and Tax Administration or from the International Road Transport Union (IRU) that road hauliers should instruct their employed drivers in writing about the consequences of infringing the English legislation. Therefore Arne Jensen had not received such instructions. The IRU memo of 25/7/2002 and the UK policy document (of which copies are attached) has never been made known to ITD or Arne Jensen. As soon as Arne Jensen was made familiar with this demand, the company introduced the written instructions to all its drivers (...). It should be pointed out that in Denmark the main rule according to the contract law is, that a verbal agreement/instruction is just as binding as a written one. Furthermore, all employees are aware of the fact that an infringement of the smuggling legislation, when being in an employment, causes the consequence to be dismissed without any notice. Any employee is also aware of the fact that no employee's union will defend an employee in such a situation. Therefore, the employment contracts in Denmark do not include information on the consequences of illegal actions, as these are not ruled by the contract but by the underlying practice between employee and employer, and is thus not questioned by the employees' representatives who will not support illegal acts." And Miss Boisen observed that the drivers' union, SiD, known to be a very strict union, approved the dismissal of Mr Bedford without notice.
- When the Appellant asked Mr Bedford to drive the lorry back to Denmark, it was not known that he had been involved in smuggling; the Appellant thought that the pallet of tobacco had been put in the trailer by some other person. That Mr Bedford was involved in the smuggling was discovered only later. It was unfair that the Appellant should be penalised for acts of the driver which were not foreseeable by the Appellant and were outside the driver's employment: this would not be lawful in Denmark. If a driver ran someone over, for example, then his employer would be liable, but smuggling is so far outside the driver's duty that the employer would not be liable. The revised rules should have been circulated to other Member States before being implemented with such far-reaching consequences.
- The Appellant also produced a number of statements, from SiD, the National Police Commissioner, the Ministry of Taxation, all of which state that the Appellant is in good standing and has not been guilty of any breaches of law or regulations so far as each of those departments is concerned.
The Commissioners' contentions
- Mr Mellor, who appeared for the Commissioners, also provided the Tribunal with a skeleton argument. He pointed out that seizure had not been challenged. The Commissioners had not fettered their own discretion by refusing to listen to a submission that the policy should not be applied in this case. The policy referred to was that of 16 July 2001, and it was part of that policy that the document itself stated that there could be exceptional circumstances. Mr Mellor also reminded the Tribunal of its jurisdiction under section 16(4) of the Finance Act 1994, and stressed that the Tribunal's consideration was restricted to the facts known to the Commissioners at the time of the review decision, and did not include any new factual matter that had become known only during the hearing. He submitted that the Commissioners had applied the policy after consideration of all the facts and matters surrounding the seizure, and of all the representations made by the Appellant.
- Mr Mellor contended that the Commissioners had reasonably concluded that Mr Bedford was involved in the smuggling of the tobacco, and that the Appellant had not taken all reasonable steps to prevent their employee smuggling. The factual matters upon which the Commissioners relied, so far as they relate to the Appellant rather than Mr Bedford, were:
1. that the Appellant's inquiries had shewn that employees at a factory in Odense had seen a pallet in the trailer (the evidence was that a pallet had been seen "at the front of the trailer" and did not mention whether inside or outside);
2. that there was no evidence that the Appellant had required Mr Bedford to carry out any checks of his load;
3. that there was no evidence of any written procedures produced by the Appellant ensuring that the Appellant's drivers adhered to Customs and Excise regulations;
4. that there was no evidence that the Appellant made any sufficient checks of its drivers before employing them;
5. that the Appellant had misled the Commissioners when stating that Mr Bedford had not been seen since the incident, when he had arrived, with Mr Suffling, to collect the vehicle.
Mr Mellor also relied upon the decision in Houlton Meats Ltd v Customs and Excise Commissioners (2002) (Decision No E000), in which the appellant had allowed a person who was not an employee to make use of a company vehicle for his own purposes, and the vehicle was used for importing excise goods considerably in excess of the then current indicative levels.
The Appellant's contentions
- Mrs Boisen had had no opportunity of considering Houlton Meats before the hearing, and was pressed for time on the day of the hearing as she had to catch a flight back to Denmark in the afternoon. We therefore permitted her to send further submissions in writing on the decision in Houlton Meats, which in due course she did.
- Mrs Boisen contended that Mr Bedford had acted completely outside his employment. In Denmark it was simply not the normal practice to have written references, nor written contracts of employment at that level. Nor was it the practice to check up on people. Only in the last year or two had written references begun to be used, and that was two to three years after Mr Bedford had been taken on. Under Danish law, the Appellant had done all that it was obliged to do. The Appellant had no means of knowing what the rules or policy in England were, or whether they may have changed.
- Dealing with Houlton Meats, Mrs Boisen said that the facts in that case were very different from those in the present appeal. She contended that in that case the appellant had had a choice; it was not for a business purpose that the driver had had access to the appellant's car, and by allowing this the appellant had accepted an unnecessary risk. In the present appeal, the Appellant had no choice: the vehicle is used legally for a commercial purpose for transporting customers' goods to England. The use by an employed driver was, therefore, not voluntary but was necessary for the carrying on of the Appellant's business. Mrs Boisen stressed that before the smuggling ever took place the Appellant had instructed its employees about the amounts that could be brought into the United Kingdom, and the employees knew what the consequences would be, as to their employment, if they were involved in smuggling. English drivers were employed in the belief that they would have a better knowledge of England and of English standards and law than Danish drivers.
- Mrs Boisen contended that the review should not have been conducted on the basis of the policy document which took effect on 15 March 2002, as Mrs Gowing said in evidence, since the smuggling had taken place on 2 March. The review letter also insisted on written instructions to drivers, but at the time, Mrs Boisen said again, the Appellant had taken all the measures that were considered necessary and satisfactory in Denmark; the same also in respect of references for employees. There was no doubt that Mr Bedford was aware of the rule as to checks of loads under the CMR Convention. He had been so instructed by the Appellant, and there had been no problems with his loads during the four years before this incident.
- It was contended that when a decision depends upon a discretion, that discretion should make allowance for the actual circumstances. In this case, those circumstances were that the Appellant was a Danish company, with no branch or subsidiary in England, and depended upon information on the legislation either from the Danish authorities or from ITD, the transport association of which the Appellant is a member. No such information had been received, other than a letter from IRU of 25 July 2001, which gives a summary of the Customs policy then in force, the stated object of which was to "target 'cowboy' operators who disregard their legal obligations and take no steps to ensure that their vehicles are not being used to carry illicit goods". It should also be taken into consideration that the Appellant was a company with a good reputation that had done all in its power to instruct the driver and to keep informed by being a member of an association which should inform its members.
- The review, and the statement of case, also insisted that the Appellant had lied to the Commissioners by maintaining that Mr Bedford had not been seen by the Appellant since 2 March 2002. That was one of the reasons for the decision, and Mrs Gowing had accepted that it was wrong in her evidence. She also conceded that the pallet mentioned as having been seen at the front of the trailer had never been described as a pallet containing tobacco. That was an assumption by the Commissioners, not a fact.
- Finally, Mrs Boisen said that it was difficult, from a Danish point of view, to understand why in England there was a system under which a Danish haulier who behaved conscientiously had to pay a large penalty corresponding to a year's wage, when the driver, who was involved in the smuggling, received no penalty: it was a system that seemed to make smuggling attractive.
Conclusions
- The jurisdiction of this Tribunal is set out in section 16(4) of the Finance Act 1994, which provides, so far as is relevant,
"(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say-
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision;
(c) . . ."
In this context, "reasonable" is used in the sense in which it was construed in Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223, followed in J H Corbitt (Numismatists) Ltd v Customs and Excise Commissioners [1980] STC 231, in which Lord Lane said, at page 239, that the Tribunal can only properly review the Commissioners' decision
"...if it were shown that the Commissioners had acted in a way in which no reasonable panel of Commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight."
This does not allow the Tribunal to look at the decision and simply disagree with it and substitute its own decision.
- We therefore turn to the review decision and to what the review officer, Mrs Gowing, said about it in evidence. The principal matters upon which that review decision was based are partly summarised and partly set out in paragraphs 10 to 12 above. Stress is laid upon the fact that there were no written references and no written instructions to drivers. Whilst it can readily be seen that such written documents would be of great assistance, especially in a case such as the present, it did not appear to us that they were essential if there were evidence that references were taken and instructions given. The written documents are, after all, only a more concrete kind of evidence. Evidence is still evidence if given orally by a reliable witness. We find as fact that an oral, favourable, reference was taken in respect of Mr Bedford in 1998 when he was first employed. We also find that oral instructions were given to Mr Bedford in respect of his duties as a driver and as to the consequences to him of smuggling. The first confirmation that there was such evidence, which leaps to the mind, is that of the Commissioners themselves. Their evidence, from the interviews of Mr Bedford, was that Mr Bedford was well aware that he was faced with and expected instant dismissal as a result of the finding of the 1 kg of tobacco and the wines and spirits, and inescapably so after the finding of the 150 kg of tobacco. There could hardly be clearer evidence that that had been made plain to him by the Appellant. Again, there was confirmation that the measures which the Appellant did take, in taking references and giving instructions to their drivers, were at least adequate in the fact that in 74 years there appears to have been no incident of any like nature to that in the present appeal. More to the point, until this incident, Mr Bedford had been a well-recommended driver who had not put a foot wrong. If he had done so, within the four years of his employment, it would have been surprising if the Commissioners had not known of it. It is also the case that instructions may be given in writing, but they have no greater effect than instructions given orally, if the employee decides to ignore them. It was clear from the way that the oral instructions were referred to in the review letter that, because they were not in writing they were ignored by Mrs Gowing. We should add, that in reaching that conclusion we are not taking into account any evidence as to business practice given by Mr Jensen or Mrs Boisen during the hearing which was not before the Commissioners at the time of the review decision. It appeared to us that Mrs Gowing did not consider the possibility that all necessary instructions had been given to the Appellant's drivers, even though orally.
- There was one thing that Mrs Gowing admitted having left out of consideration, and three specific things that she admitted to having assumed or simply got wrong. The first was that the Appellant is a Danish company; there may well have been matters of common practice in any country outside the United Kingdom which are not the same as normal practice in the United Kingdom, as was mentioned in Barker and Gotelee's letter of 17 April 2002. The second was the matter of the pallet which was said to have been seen at the front of the trailer. As to that, no further inquiry was made. There was no evidence before Mrs Gowing (or at any stage) as to when that pallet was seen, whether it had been inside or outside the trailer, whether it had in fact any connexion with Mr Bedford or the trailer, or whether it was laden with tobacco or any other particular thing, or unladen. Thirdly, Mrs Gowing assumed that the Appellant was deliberately trying to mislead the Commissioners in saying that Mr Bedford had not been seen since 2 March 2002. She admitted in evidence that that was not correct. Lastly, she apparently decided the matter on the basis of the revised policy document of 15 March 2002.
- As to the revised policy document, consideration of the appeal was carried out using criteria which were different from those actually obtaining at the time, and of which the Appellant could not possibly have been aware. The grounds for non-restoration, or conditional restoration, were different, and the revised conditions for restoration, which appear to have been applied in this case, were more severe. The other three things were of central importance to the decision, and, in our judgement, Mrs Gowing erred in considering them in the way that she did. For those reasons, we find that the review decision was not one at which a reasonable body of Commissioners could have arrived within the Wednesbury criteria.
- The appeal is, therefore, allowed. We have no power to direct that the sum paid of £17,569.94 be repaid, as section 16(4) of the Finance Act 1994 makes clear. All that we can do in the circumstances is to direct a further review, in accordance with the terms of the Direction below.
- No application was made at the hearing for costs. We take the view that if the Appellant were to make such an application, costs should follow the event in the normal way. We therefore give liberty to each party to apply to the Tribunal on the matter of costs, in case there should be any dispute about costs in principle or as to quantum. Any such application should be made not more than 42 days after the date of release of this decision and direction.
AND THIS TRIBUNAL DIRECTS
- that the Commissioners shall carry out a further review of the decision to restore the vehicle only on payment of the sum of £17,569.94, representing the revenue value of the goods
- that the further review shall be carried out by an officer who has had no previous connexion with this matter
- that in carrying out the further review the Commissioners shall have regard to the matters set out in paragraphs 39 to 41 above and to the matters relating to business practice in Denmark mentioned in the statements of Mrs Birthe Boisen and of Mr Kristian Jensen and given by them in evidence at the hearing, in addition to all other facts and matters that were in the possession of the Commissioners when the first review decision was taken
- that in the event of the further review being adverse to the Appellant, that will be a decision from which a further appeal to the Tribunal will lie
- that each party shall be at liberty to apply to the Tribunal on the matter of costs, in the event of any disagreement as to costs or the amount of costs; any such application should be made not later than 42 days after the date of release of this decision and direction
ANGUS NICOL
CHAIRMAN
RELEASED:
LON/2002/8161
