Golobiewska v Customs & Excise

In an appeal against refusal to restore forfeited property, the burden of proof normally lies on the person seeking restoration. The statutory exception placing the burden on the Commissioners applies only where liability to a civil penalty under section 8 of the Finance Act 1994 is directly in issue. The applicable standard is the balance of probabilities. A tribunal must give sufficient and specific reasons for rejecting central evidence on a serious factual allegation. Inconsistent, incomplete or fragmented reasoning may amount to an error of law. The appeal was allowed and remitted to a differently constituted Tribunal.

The appellant owned a Mercedes-Benz car which a friend borrowed and used to smuggle cigarettes into the United Kingdom. The car was seized and forfeited under section 139 of the Customs and Excise Management Act 1979. The Commissioners refused restoration under section 152(b), and the refusal was confirmed on review.

The VAT and Duties Tribunal directed a further review after finding, on the balance of probabilities, that the appellant knew the car would be used for smuggling. The High Court dismissed her appeal on a point of law. Permission to appeal to the Court of Appeal was limited to the burden and standard of proof and the adequacy of the Tribunal’s reasons for its finding of knowledge.

1. Disposition. The appeal was allowed unanimously and remitted to a differently constituted Tribunal. The appellant was awarded 50 per cent of her costs.
2. Under section 16(6) of the Finance Act 1994, the burden of proof lay on the appellant in an appeal concerning refusal to restore a forfeited vehicle under section 152(b) of the Customs and Excise Management Act 1979. Section 16(6)(a) applied only where the appeal was directly concerned with liability to a penalty under section 8. It did not apply merely because the facts might also amount to conduct within section 8(1).
3. The Tribunal had applied the civil standard. Since the appellant bore the burden, she had to establish the grounds of her appeal on the balance of probabilities. The Court distinguished the different statutory and procedural context in R (McCann) v Manchester Crown Court [2002] UKHL 39. It did not decide the wider observations in Gascoyne v Customs and Excise Commissioners [2003] EWHC 257 because they were irrelevant once the burden was held to lie on the appellant.
4. The duty to give reasons forms part of a fair hearing. Its extent depends on the subject matter. In a straightforward credibility dispute, stating which witness is preferred may sometimes suffice. Where central evidence is rejected on a serious allegation, the tribunal must identify and explain the matters critical to that conclusion so that the parties and an appellate court can understand the essential reasoning. The principles in English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605 and Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 applied.
5. The Tribunal relied on friendship, the earlier journey, and the unexplained loan of the vehicle, but did not explain their significance or reconcile its uncertainty about the reason for the loan with its conclusion that the appellant knowingly permitted smuggling. Its reasoning was inadequate and constituted an error of law.

• Court of Appeal (Civil Division): [2005] EWCA Civ 607 allowed the appeal for inadequate reasons and remitted the matter to a differently constituted Tribunal.
• High Court, Chancery Division: dismissed the appellant’s appeal under section 11 of the Tribunals and Inquiries Act 1992.
• VAT and Duties Tribunal: directed a further review after finding that the appellant knew the vehicle would be used for smuggling. The subsequent review confirmed the refusal to restore the vehicle.