Checkprice (UK) Ltd (In Administration) v HM Revenue and Customs: Admn 31 Mar 2010

The claimant sought damages having been forced into liquidation after the defendant, it said, wrongfully seized its alcohol goods. Sales J had already held that the reasonable time had expired.
Held: Considering a claim for conversion of the goods in question, Sales J rejected the argument advanced by HMRC by way of analogy with the law on bailment. It had been submitted on behalf of HMRC that in a bailment context the bailee will not be liable for conversion for detaining goods if the reason upon which he relies is, on analysis, an unlawful one, provided he could lawfully have detained the goods for some other reason. Sales J said this: ‘I do not accept this argument. In the bailment example the bailee has an underlying right under the terms of the bailment to detain the goods, and it does not matter whether or not he correctly refers to that right at the time he detains the goods. On proper analysis, he detains the goods in question in circumstances where he has a right to detain them (cf. the right of an innocent party to a contract to rely on breaches of contract against the other party even though they were not invoked by him at the time he treated the contract as having been repudiated: Boston Deep Sea Fishing and Ice Co v Ansell (1888) LR 39 Ch D 339, CA). This analysis does not apply in the present case. HMRC had no right to withhold the goods in question save to the extent that they validly exercised a statutory power to do so. They had a statutory power under section 139(1) of CEMA to detain the goods for a reasonable period, which period expired in mid-August 2007. Thereafter, HMRC could only lawfully retain the goods if they properly exercised their distinct power of seizure contained in section 139(1). Exercise of that power of seizure brings into operation statutory provisions constituting a protective regime for the benefit of the property-owner. The notional availability of the power of seizure cannot be relied upon as a defence to a claim in conversion where it has not in fact been exercised and where, therefore, HMRC have not brought the statutory protective regime into operation. There is no underlying right of retention for HMRC as there is in the bailment situation. HMRC’s right of retention of the goods pursuant to the power of seizure is conditional upon their actual exercise of that power. Therefore, in my judgment, HMRC were liable for conversion in respect of the relevant goods in category C in mid-August 2007.’
As to the measure of damages, Sales J said: ‘section 144 of CEMA does not afford HMRC any defence . . since it is brought on account of the detention of the goods and at the point it arose HMRC’s reasonable grounds for detaining the goods had come to an end (see section 144(2)) . .’
Sales J
[2010] EWHC 682 (Admin), [2010] STC 1153, [2010] ACD 67
Bailii
Customs and Excise Management Act 1979 139 144
Citing:
CitedGora and others v Commissioners of Customs and Excise and others CA 11-Apr-2003
gora_custCA2003
The appellants challenged decisions of the VAT and Duties Tribunal after seizure of their goods, and in particular whether the cases had been criminal or civil cases and following Roth, whether the respondent’s policy had been lawful and . .

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Updated: 24 February 2021; Ref: scu.406630