Director of Border Revenue v OM Cash and Carry Limited

A notice of seizure under Schedule 3 to the Customs and Excise Management Act 1979 is a procedural requirement. It enables the owner to challenge the seizure, but is not a condition of the lawful exercise of the seizure power or of condemnation proceedings.

Service on an owner’s authorised solicitors is effective. The statutory methods in paragraph 2 are deemed methods of service and do not exclude other effective methods. The notice need not be served at the time of seizure. Whether goods are liable to forfeiture is determined by the court with hindsight, using the evidence available at the hearing.

The Director of Border Revenue seized imported chewing tobacco on the ground that customs duty and VAT had been underpaid. A notice of seizure was sent to the respondent company’s solicitors after the seizure. The solicitors subsequently served a notice of claim, leading to condemnation proceedings.

Ipswich Magistrates’ Court concluded that the notice had not been properly served on the company, dismissed the condemnation complaint and awarded the company its costs. It nevertheless found that the initial seizure had been reasonable and issued a certificate under section 144 of the Customs and Excise Management Act 1979.

On an appeal by way of case stated, the Divisional Court considered whether service on the solicitors was valid, whether any failure of service invalidated the seizure or condemnation proceedings, and whether the costs order should stand.

1. The appeal was allowed. The answers to all four questions were No. The costs order was quashed, and the matter was remitted to a differently constituted Ipswich Magistrates’ Court to decide whether the goods were liable to forfeiture.
2. Service of the notice of seizure on the respondent’s solicitors was valid. The solicitors had been instructed in relation to the seizure, had communicated with the appellant, and had express authority to act as the respondent’s agents. Schedule 3 itself contemplated the involvement of an owner’s agent.
3. Paragraph 2 of Schedule 3 identifies circumstances in which service is deemed to have occurred. It does not provide an exhaustive code which invalidates every other effective form of service. The notice was seen, understood and acted upon, and generated the respondent’s notice of claim.
4. The notice was not required to be served at the time of seizure. The authorities establish that the notice is procedural. Its principal function is to start the period within which the owner may serve a notice of claim under paragraph 3.
5. Failure to serve a notice of seizure would not make the seizure unlawful. The validity of the seizure depends on whether the goods were liable to forfeiture, which is determined by the court with hindsight on the evidence available at the hearing. Neither section 139 nor Schedule 3 makes service of the notice a condition of seizure.
6. Once the respondent had served a notice of claim, condemnation proceedings were required under paragraph 6, irrespective of any dispute about the manner of service. The Magistrates’ Court therefore had to determine whether the goods were liable to forfeiture.

• Ipswich Magistrates’ Court: on 30 November 2022, dismissed the condemnation complaint, awarded costs to OM Cash and Carry Limited, and issued a certificate that the initial seizure was reasonable.
• High Court (Administrative Court): on appeal by way of case stated, answered all four questions in the negative, quashed the costs order and remitted the condemnation issue to a differently constituted Magistrates’ Court.