R (Hoverspeed Ltd) v Customs and Excise Comrs

Customs must prove objectively reasonable grounds for a stop and search under sections 163 or 163A of the Customs and Excise Management Act 1979. A later discovery of goods exceeding Directive guide levels cannot itself establish the required prior suspicion. Rational profiles and trends may nevertheless supply reasonable grounds in an individual case; irrational stereotypes may not.

European law permits proportionate checks at or near an internal frontier, including random checks where domestic law permits them. It prohibits blanket, automatic or disproportionate interference with free movement. A seizure of goods liable to forfeiture is not automatically invalid because the preceding check was unlawful. Under the 1992 Directive, goods not acquired or held for an individual's own use are held for commercial purposes.

The Commissioners appealed limited parts of the Divisional Court's judgment, [2002] EWHC 1630 (Admin). Hoverspeed and three travellers challenged Customs checks at Dover after the travellers returned from France with tobacco and alcohol. Customs seized the goods and the car in which they travelled.

The Divisional Court had held aspects of the Excise Duty (Personal Reliefs) Order 1992 incompatible with Council Directive 92/12/EEC. That ruling was not appealed. It also quashed the checks and the ensuing seizures. The appeal concerned whether Customs had to justify the checks, whether profiles and trends could found reasonable suspicion, whether an unlawful check invalidated a seizure, and whether articles 8 and 9 of the Directive left a non-commercial intermediate category.

1. Appeal allowed in part. The court upheld the quashing of the checks, but set aside the orders quashing the seizures. The case was remitted for any fact-sensitive claims under European Community law or the Convention that remained open.

2. Customs bore the burden of showing reasonable grounds to suspect before exercising the stop-and-search powers in sections 163 and 163A of the Customs and Excise Management Act 1979. It could not satisfy that burden by inviting an inference from its decision to search and the later discovery of goods above the article 9 guide levels. Its failure to record or provide any positive reason left insufficient safeguards against unjustified interference. The Divisional Court was therefore right to quash the checks.

3. The Divisional Court was wrong to require suspicion based on facts unique to the individual and to exclude profiles or trends. European law permits proportionate checks under powers exercisable throughout the state at or near an internal frontier. It prohibits blanket, automatic, or disproportionate checks that impede free movement. It does not prohibit rational use of reliable profiles and trends to identify an individual or vehicle for which reasonable suspicion may arise.

4. Domestic law was more restrictive because sections 163 and 163A required reasonable grounds and did not authorise random spot checks. But those provisions did not restrict the information capable of forming such grounds. Profiles and trends founded on experience could therefore be used, provided Customs avoided unfounded and discriminatory stereotypes.

5. The statutory power to seize depended on whether the goods were liable to forfeiture, not on the legality of an earlier search. The seizure provisions in the Customs and Excise Management Act 1979 contained no express or implied condition linking the two. Any issue concerning statements obtained during an unlawful check was instead an issue of evidential fairness.

6. Articles 8 and 9 of Council Directive 92/12/EEC were antithetical. Goods acquired or subsequently held for a purpose other than the private individual's own use were held for commercial purposes. There was no intermediate category for goods supplied to others on a non-commercial reimbursement basis.

• Court of Appeal: Allowed the Commissioners' appeal only as to the quashing of the seizures, while upholding the quashing of the checks: [2002] EWCA Civ 1804.
• Divisional Court (Administrative Court): Held aspects of the Excise Duty (Personal Reliefs) Order 1992 incompatible with the 1992 Directive, quashed the checks and seizures, and made further findings concerning restoration of the car: [2002] EWHC 1630 (Admin).