R (On the application of Eastenders Cash and Carry plc and others v The Commissioners for Her Majesty's Revenue and Customs

A statutory power to seize or detain goods which are “liable to forfeiture” applies only where the goods are objectively liable to forfeiture. Reasonable suspicion alone does not satisfy that condition.

However, a statutory power to inspect or examine goods carries an ancillary power to detain them where officers have reasonable grounds to suspect that duty has not been paid. Detention may continue for the reasonable time needed to complete enquiries forming part of the examination. Its lawfulness depends on the existence and proper exercise of that power, not on an officer’s accurate identification of its statutory source.

These conjoined appeals concerned alcoholic goods detained by customs officers while enquiries were made into whether excise duty had been paid. Some goods were later seized, but others were returned when the enquiries proved inconclusive.

In Eastenders, Sales J dismissed the claim for judicial review: [2010] EWHC 2797 (Admin). The Court of Appeal held by a majority that section 139(1) of the Customs and Excise Management Act 1979 applied only to goods actually liable to forfeiture and declared the returned goods unlawfully detained: [2012] EWCA Civ 15. A later costs decision applied section 144(2): [2012] EWCA Civ 689.

In First Stop, Singh J initially held the detention unlawful and section 144(2) inapplicable. The Court of Appeal reversed those decisions: [2013] EWCA Civ 183. The central questions were whether section 139(1) authorised detention on suspicion, whether an examination power impliedly authorised temporary detention for enquiries, and what consequences followed for costs.

1. The Commissioners’ Eastenders appeal was allowed; First Stop’s substantive appeal was dismissed; and the costs appeal was allowed. Lord Sumption and Lord Reed delivered the judgment, with which Lord Neuberger, Lord Mance and Lord Carnwath agreed.

2. Section 139(1) of the Customs and Excise Management Act 1979 permits seizure or detention only of goods objectively liable to forfeiture. The condition depends on the facts, not an officer’s reasonable belief or suspicion. Elsewhere Parliament expressly authorised powers based on reasonable suspicion. Moreover, “liable to forfeiture” governed seizure and detention alike, and seizure necessarily concerned goods actually liable to forfeiture. Section 144(2) also assumed that an officer might incur liability after mistakenly detaining goods which were not liable to forfeiture, while receiving protection from damages and costs if reasonable grounds existed (paras 22–23).

3. Section 139(1) was not the only source of detention authority. Following Jacobsohn v Blake and Compton, a statutory power to inspect or examine goods carries, by necessary implication, power to detain them temporarily while reasonably necessary enquiries are completed. That ancillary power is available where officers have reasonable grounds to suspect that the goods may be liable to forfeiture. It is distinct from section 139(1), both temporally and by purpose: examination precedes the determination of forfeiture, whereas section 139(1) operates after objective liability exists (paras 35–45).

4. In Eastenders, section 118 C(2) authorised inspection and consequently authorised detention for the reasonable period required to investigate the goods’ duty status. In First Stop, the corresponding examination powers under sections 112 and 112 A carried the same ancillary authority. The unchallenged findings established reasonable suspicion and a reasonable detention period in each case (paras 47–51).

5. First Stop’s detention was not unlawful merely because the notices cited section 139 rather than the correct examination power. Lawfulness depended on whether the Commissioners possessed and properly exercised a detention power. The explanation that the goods were being held pending duty-status enquiries sufficiently enabled First Stop to exercise its rights (para 52).

6. Since both detentions were lawful, judgment should not have been entered for the claimants and section 144(2) did not apply. The courts retained their ordinary costs discretion. The earlier costs decisions were set aside, with submissions invited on costs in the Supreme Court and below (paras 53–56).

• United Kingdom Supreme Court: The Commissioners’ Eastenders appeal was allowed, First Stop’s substantive appeal was dismissed, and the costs appeal was allowed: [2014] UKSC 34.
• Court of Appeal—First Stop: The Commissioners’ appeals against the rulings on detention and section 144(2) were allowed. The ruling on the seizure notices was upheld: [2013] EWCA Civ 183.
• High Court—First Stop: Singh J held successively that the detention was unlawful, that section 144(2) did not prevent an award of costs, and that the seizure notices adequately stated the grounds: [2012] EWHC 1106 (Admin); [2012] EWHC 2191 (Admin); [2012] EWHC 2975 (Admin).
• Court of Appeal—Eastenders: A majority reversed Sales J and declared goods not liable to forfeiture unlawfully detained: [2012] EWCA Civ 15. The court later held that section 144(2) prevented an award of costs: [2012] EWCA Civ 689.
• High Court—Eastenders: Sales J held the detention lawful and dismissed the judicial review claim: [2010] EWHC 2797 (Admin).