England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2A 2LL
		21st January 2009

1. MR JUSTICE STADLEN: This is an application for judicial review of a decision by Her Majesty's Revenue and Customs dated 25th April 2007 to disallow 101 claims made by the claimant, Huntingwood Trading Limited, in respect of excise duty drawback totalling £1,263,865. The two grounds on which the claimant sought judicial review were first that the commissioners had engendered in the claimant a legitimate expectation that a certain course of action would be followed in relation to the making and paying of drawback claims; and that it is unfair and an abuse of power for the Commissioners to frustrate that legitimate expectation by refusing to make the payments. In the alternative that the Commissioners' decision is unreasonable within the principles enunciated in Associated Provincial Picture Houses v The Wednesbury Corporation [1948] 1 KB 223 and 239.
2. On 30th January this year, Mr Justice Cranston gave permission for judicial review observing as follows:

"The legitimate expectation point is arguable, the irrationality claim is not but in as much as it is the legitimate expectation point dressed up as a failure to take into account relevant considerations permission for it can be given as well. The alternative remedies point seems to be a good one but possibly Sagemaster can be invoked to counter it."

3. I should add, by way of an introductory observation, that in the course of his submissions on behalf of the claimant Mr Milne QC, at an early stage in response to a question from me, indicated that the claimant was abandoning the Wednesbury argument and confining its application for judicial review to the legitimate expectation point.
4. The background to this application can be summarised as follows. The decision complained of in the application is the refusal by the Commissioners to pay claims for drawback of excise duty made by the claimant. Drawback of excise duty is a mechanism whereby duty can be drawn back, that is to say repaid, when it is proved to the satisfaction of the Commissioners that the goods in question are, "eligible goods"; that is to say goods on which duty has been paid and not already repaid and which will not be consumed in the United Kingdom, for example, when, as in this case, they have been placed in a warehouse for export.
5. The decision was contained in a letter dated 25th April 2007 in which the Commissioners refused to pay Huntingwood £1,263,965 in respect of 101 claims for drawback of excise duty made between 7th July 2006 and 5th September 2006, on the grounds that an invoice from Huntingwood's supplier which states that the goods are UK duty paid, "does not in itself provide proof that duty has in fact been paid" and that the presence of such an invoice,

"Does not obligate the commissioners to pay drawback if the statement cannot be supported by evidence of UK duty payment."

6. The facts relating to this application and relied on by the claimant are set out in a witness statement of Mr Stuart Roy Evans dated 23rd July 2007. Mr Evans is a director of Huntingwood along with his wife and he is the managing director and involved in all the day to day business and management activities of Huntingwood. Huntingwood's principal business activity is trading in beer and wine commodities. Initially, Huntingwood traded in goods using the duty drawback system which allows for the repayment of excise duty paid on goods that have not been and will not be consumed in the United Kingdom. As indicated, a claim for drawback may only be made in relation to eligible goods which are defined as goods where duty has been paid and not remitted, repaid and drawn back, and those goods have been exported warehoused for export or destroyed. The main purpose of the system is to avoid double taxation and Huntingwood was involved in the warehouse for export process.
7. There are commercial advantages available to traders for claiming drawback. Mr Evans indicates that he was attracted to the system because it avoids the artificial price increases levied by brand owners on the goods.

"Brand owners try to control the market [he says] and if you buy from them under bond you will pay a significantly higher price. It is cheaper and therefore makes your prices more competitive if you buy goods duty paid and subsequently claim drawback on export rather than obtaining the same goods under duty suspension arrangements. The drawback system allows legitimate traders to compete on an equal footing with the brand owners."

8. Before identifying the things said and done on behalf of the defendants, relied on by the claimant as giving rise to a legitimate expectation, so far as related by the claimant, it is convenient to set out the relevant legislative framework. The decision relates to excise duty on beer which is charged in accordance with section 36 (1) of the Alcoholic Liquor Duties Act 1979 as substituted by section 7 (1) of the Finance Act 1991.
9. Section 2 of the Finance (Number 2) Act 1992 gives the Commissioners power to make regulations:

"(1) (a) Conferring an entitlement to drawback in prescribed cases where the Commissioners are satisfied that goods chargeable with duty have not been, and will not be, consumed in the United Kingdom."

10. Section 2 (2) confers on them powers to provide for, or for the imposition of, conditions to which entitlement to drawback is to be subject.
11. Section 42 of the Alcoholic Liquor Duties Act provides so far as relevant:

"(1) This section applies to -

"(a) Beer which has been produced by a registered brewer.

"(2) Subject to the provisions of this section and to such conditions as the Commissioners see fit to imposed, drawback shall be allowable -

"...(b) On the exportation ... by any person of [any beer to which this section applies] ... and shall also be allowable, subject as aforesaid, in the case of any beer to which this section applies which it is shown to the satisfaction of the Commissioners is being [exported or shipped] as mentioned in paragraph (b) or (c) above as an ingredient of other goods.

"...(6) drawback under this section shall, where it is shown to the satisfaction of the Commissioners that duty has been paid, be allowed at the same rate as the rate at which the duty is charged."

12. Further detail relating to drawback is provided by the Excise Goods (Drawback) Regulations 1995. Regulation 5 spells out which goods are eligible for drawback providing, so far as relevant:

"(1) A claim for drawback may only be made in relation to eligible goods.

"(2) Subject to paragraphs (3) and (4) below, goods are eligible goods if duty has been paid and has not been remitted, repaid or drawn back and those goods have been -

"(a) exported.

"(b) warehoused for export, or

"(c) destroyed."

13. I interpose at this point that we are concerned with (a) that is to say goods that have been exported. I also interpose that the claimant does not suggest in support of this application that the goods which where the subject of the drawback claims were, in fact, eligible goods within the meaning of the regulations.
14. Regulation 6 defines eligible claimants. I do not go into that because it is not in dispute that the claimant is an eligible claimant for the purpose of the regulations. Regulation 7 sets out general conditions providing, so far as relevant:

"(1) Subject to paragraph (2) below and without prejudice to any condition imposed by or in accordance with section 133 of the Act, every eligible claimant shall -

"(a) save as the Commissioners may otherwise allow, comply with the conditions imposed by these regulations; and.

"(b) in addition to those conditions, comply with such other conditions as the Commissioners see fit to impose in a notice published by them and not withdrawn by a further notice."

15. Payment of the drawback claim is provided for in regulation 12 as follows:

"(1) No drawbacks shall be payable unless it is shown to the satisfaction of the commissioners that the claimant is an eligible claimant and that the goods are eligible goods..."[I emphasise the words to the satisfaction of the commissioners.]

16. The relevant notice published under regulation 7 (2) (b) is Notice 207 Excise Duty: Drawback November 2002, as amended in June 2006. Of relevance in the context of this application are the following parts of the notice. Paragraph 6.1:

"What are the main conditions for drawback?

"We will pay drawback of excise duty only [and I emphasise the word only] if we are satisfied that all of the following conditions have been met:

"2. The duty on the goods was paid not more than three years before the event giving rise to the claim of drawback...

"7.1. Claiming drawback.

"If you wish to claim drawback you must [and I emphasise the word must] do all the following:

"2. Ensure that duty was paid -- and not reclaimed -- on the goods no more than three years before the event giving rise to the claim...

"10.4. What do I do with a completed claim?

"Return the completed form to the DC along with evidence of the UK duty payments; and where appropriate, any other supporting documents. You will find more information about this in Sections 12 to 18.

"If you cannot provide the original evidence of UK duty payment, you must provide other evidence which demonstrates that the goods are UK duty paid...

"11.2. Do you ever reject or reduce claims?

"Yes. We may reject or reduce claims where goods... you have not complied with any of the conditions either set out in this notice or notified by us in writing.

"Additionally, if you do not follow the procedures set out in this notice then we will not accept your claim...

"11.4. Can you cancel or recover drawback?

"Yes. If irregularities come to our notice after drawback has been paid we can assess you for the duty...

"12.7. What documents must I submit with my claim?

"The completed claim (see section 10) must be accompanied by evidence of payment of UK excise duty and...

"13.10. What documentation must I submit with my claim?

"The completed claim (see section 10) must be accompanied by:

"(a) evidence of payment of UK excise duty..."

17. Section 5 (1) (b) of the Commissioners of Revenue and Customs Act 2005 provides that the Commissioners shall be responsible for:

"the collection and management of revenue for which the Commissioners of Customs and Excise were responsible before the commencement of this section."

18. Huntingwood commenced trading in duty paid lager using the warehouse for export process in July 2005. This allows drawback of duty to be claimed on goods which have been placed in an excise warehouse for export. Prior to doing so, Mr Evans had contact in a number of different ways with the Commissioners and he relies on those contacts and subsequent events as giving rise to the legitimate expectation upon which he relies.
19. Before going into the facts relied on, it is convenient to identify the relevant applicable legal principles governing the circumstances in which, in a case such as this, a legitimate expectation arises, or can arise, upon which a claimant is entitled to rely. Although the court was supplied with a large number of authorities by both parties, in the event, there was no material disagreement between the parts advanced to me as to the applicable principles, it being agreed that the question for decision in this application is a factual question as to whether, on the facts of this case, an expectation was or was not engendered by the defendants such as to give rise to an entitlement to the relief claimed by the claimant.
20. In his written closing submissions, Mr Coppel, who appeared on behalf of the defendants, submitted that a legitimate exception may arise where a decision maker represents that it will conduct itself in a particular way. Such representations may be express, in the form of an explicit promise or statement, or they may be implicit, in the form of a consistent past practice. It is now generally recognised that where a legitimate expectation arises, and apart from certain circumstances, the decision maker will be required to give effect to it unless circumstances entitle it to resile or depart from it. In order for a substantive legitimate expectation to arise, a public authority must have committed itself, by the practice or promise to adhere to a particular course of conduct. There must be a clear and unambiguous representation to the effect alleged, devoid of any relevant qualification.
21. Mr Milne QC drew my attention to two authorities which he submitted represent the relevant law on this topic. The first is R v Inland Revenue Commissioners ex parte MFK Underwriting Agencies Limited [1989] STC 873, a decision of the Divisional Court. The head note in that case reads as follows:

"Held - It was not inconsistent with the Revenue's statutory duty for the Revenue to advise a tax payer as to his rights and duties where an approach was made by the latter for such advice. However, if a public authority so conducted itself as to create a legitimate expectation that a certain course would be followed, it would be unfair if the authority were permitted to follow a different course to the detriment of the person who entertained the expectation, particularly if he acted on it. Accordingly, if the Revenue agreed to, or represented that it would forego tax which might arguably be payable on a proper construction of the relevant legislation, and the tax payer relied on such agreement or representation, the Revenue would be bound by that agreement or representation, and a decision to resile therefrom would be unfair and subject to judicial review on the ground of abuse of power. The Revenue would only be bound, though, in the case of an informal approach if the tax payer gave full details of the specific transaction on which he sought the Revenue's ruling, indicated the ruling sought and made it plain that a fully considered ruling was sought, and indicated the use he intended to make of any ruling given, and the ruling or statement was clear unambiguous and devoid of qualification."

22. Those last words that, "the ruling or statement must be clear unambiguous and devoid of qualification" are in my judgment central to the decision that I have to make. They are taken from the judgment of Lord Justice Bingham, as he then was. It had been argued in that case by counsel for the Commissioners that the Commissioners did not have a discretion to act contrary to statute. Lord Justice Bingham said this:

"I cannot for my part accept that the Revenue's discretion is as limited as counsel for the Crown submitted. In the Fleet Street Casuals case the Revenue agreed to cut past (irrecoverable) losses in order to facilitate collection of tax in future. In Preston the Revenue cut short an argument with the tax payer to obtain an immediate payment of tax. In both cases the Revenue acted within its managerial discretion. The present case is less obvious. But the Revenue's judgment on the best way of collecting tax should not lightly be cast aside. The Revenue might stick to the letter of its statutory duty, declining to answer any question when not statutorily obliged to do so (as it sometimes is: see, for example, section 464 and 488 (11) of the Income and Corporation Taxes Act 1970) and maintaining a strictly arm's length relationship with the tax payer. It is, however, understandable if the Revenue has not in practice found this to be the best way of facilitating collection of the public revenue but that this has been the Revenue's experience is, I think, made clear by Mr Beighton who, having described the machinery for assessment and appeal, continues:

"Notwithstanding this general approach in administering the tax system, the Board see it as a proper part of their function and contributing to the achievement of their primary role of assessing and collecting the proper amounts of tax and to detect and deter evasion, that they should when possible advise the public of their rights as well as their duties, and generally encourage co-operation between the Inland Revenue and the public."

"I do not think we, sitting in this court, have any reason to dissent from this judgment. It follows that I do not think the assurances the Revenue are here said to have given are in themselves inconsistent with the Revenue's statutory duty.

"I am, however, of the opinion that in assessing the meaning, weight and effect reasonably to be given to statements of the Revenue the factual context, including the position of the Revenue itself, is all important. Every ordinary sophisticated tax payer knows that the Revenue is a tax collecting agency, not a tax imposing authority. The tax payer's only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law (see R v A - G ex parte Imperial Chemical Industries plc (1986) 60 TC 1 at 64 per Lord Oliver). Such tax payers would appreciate, if they could not so pithily express, the truth of Walton J's aphorism, "one should be taxed by law, and not be untaxed by concession" (see Vestey [1997] STC 414 at 439, [1979] 1 Ch 177 at 197). No doubt a statement formally published by the Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the Revenue is of a less formal nature a more detailed inquiry is, in my view, necessary. If it is to be successfully said that as a result of such an approach the Revenue has agreed to forego, or has represented that it would forego, tax which might arguably be payable on a proper construction of the relevant legislation it would, in my judgment, be ordinarily necessary for the tax payer to show that certain conditions had been fulfilled. I say "ordinarily" to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the tax payer should have put all his cards face up on the table. This means that he must give full details of the specific transaction on which he seeks the Revenue's ruling, unless it is the same as an earlier transaction on which a ruling ing has already been given. It means that he must indicate to the Revenue the ruling sought. It is one thing to ask an official of the Revenue whether he shares the tax payer's view of the legislative provision, quite another to ask whether the Revenue will forego any claim to tax on any other basis. It means that the tax payer must make plain that a fully considered ruling is sought. It means, I think, that the tax payer should indicate the use he intends to make of any ruling given. This is not because the Revenue would wish to favour one class of tax payers at the expense of the another but because knowledge that a ruling is to be published in a large and important market could affect the person by whom and the level at which a problem is considered and, indeed, whether it is appropriate to give a ruling at all. Secondly, it is necessary that the ruling or statement relied on should be clear, unambiguous and devoid of relevant qualification.

"In so stating these requirements I do not, I hope, diminish or emasculate the valuable developing doctrine of legitimate expectation. If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. If in private law a body be in breach of contract in so acting or estopped from so acting a public authority should generally be in no better position. The doctrine of legitimate expectation is rooted in fairness. But fairness is not a one way street. It imports the notion of equitableness, of fair and open dealing, to which the authority is as much entitled as the citizen. The Revenue's discretion, while it exists, is limited. Fairness requires that its exercise should be on the basis of full disclosure. Counsel for the applicants accepted that it would not be reasonable for a representee to rely on an unclear or equivocal representation. Nor, I think, on facts such as the present, would it be fair to hold the Revenue bound by anything less than a clear, unambiguous and unqualified representations."

23. In relation to the question of whether this doctrine applies in a case where its application might be argued to involve the Revenue in doing something contrary to its statutory obligation to collect taxes, reliance was also placed by Mr Milne QC on the following passage in the judgment of Judge J, as he then was:

"If the argument for the Revenue were correct, any application for judicial review on the grounds of unfair abuse of power would be bound to fail if the Revenue were able to show that its actions were dictated by its statutory obligation to collect taxes. However it was clearly recognised in Preston that in an appropriate case the court could direct the Revenue:

"...to abstain from performing their statutory duties or from exercising their statutory powers if the Court is satisfied that "the unfairness" of which the tax payer complains renders the insistence by the Commissioners on performing their duties or exercising their powers an abuse of power...""

24. In this case, Mr Milne QC submitted that there is a sufficient discretion in the commissioners in relation to the relevant duty namely the collection of tax that is created by section 5 (1) (b) of the Commissioners for Revenue Customs Act 2005. Mr Coppel at one point in the course of argument submitted that in this case there is no applicable discretion in the sense that there is no discretion, on the part of the Commissioners, to depart from or waive compliance with the conditions set out in the regulations for the entitlement to claim drawback. He did, however, accept that in so far as those requirements include and involve the need for the Commissioners to be satisfied that duty has been paid, it is open to the Commissioners to indicate the kind of evidence with which they would or would not regard as being capable of as in fact satisfying themselves of that fact. However, he did accept that in principle in a case such as this, the commissioners are capable through words or conduct of giving to a person in the position of a claimant an indication such as to give rise to a legitimate expectation.
25. Mr Milne QC also relied on and drew my attention to a passage in the decision of Peter Gibson LJ in a case in the Court of Appeal, Rowland v Environment Agency [2003] EWCA Civ 1885. In paragraph 67, Gibson LJ set out a passage in which Lord Lester, appearing as counsel, had accepted, as accurate the first instance judge's summary of the general principle of English law on the circumstances giving rise to a legitimate expectation created by a public authority, the denial of which may amount to an abuse of power. This included reference to the proposition to be derived from MFK that, "the relevant representation must be unequivocal and lack any relevant qualification."
26. Lord Justice Peter Gibson said in paragraph 68:

"I add to that summary of the law in the following respects.

"(1) The legitimate expectation may arise from, "the existence of a regular practice which the claimant can reasonably expect to continue" see Council for Civil Service Unions v Minister for the Civil Service [1985] AC 374 at 401 per Lord Fraser, quoted by me in Begbie [2000] 1 WLR 1118 at 1125. "(2) It is not always a condition for a legitimate expectation to arise that there should be a clear, unambiguous and unqualified representation by the public authority (R v IRC, ex parte Unilever [1996] STC 681 at 693 to 695, per Lord Justice Simon Brown): the test is whether the public authority has acted so unfairly that its conduct amounts to an abuse of power."

27. It is now convenient to summarise the contact between Mr Evans and representatives of the defendant upon which reliance is placed by the claimant as giving rise to the legitimate expectation alleged. Mr Evans, in his witness statement, says that he read Notice 207 to which I have referred. He says that there were two matters in relation to which he needed further clarification and guidance. Accordingly on 19th July he telephoned the defendant's National Advice Service and spoke to an adviser and his manager in Cardiff. On 20th July, Mr Evans wrote a letter to the defendant's enquiries website for written confirmation of the advice which he says he was given on the telephone on 19th July at the suggestion of the person to whom he spoke on the telephone. In that letter, he said that the claimant was seeking guidance on two matters relating to the application of duty drawback regulations.

"Please be aware that we have raised these questions with an adviser and his manager at the National Advice Service in Cardiff... the adviser suggested we write to this website for written confirmation of the verbal advice given.

"Question 1. In Notice 207 clause 7 and elsewhere, reference is made to a claimant's responsibility to ensure that duty has been paid on the purchased goods. If required, what evidence of duty payment would Huntingwood be expected to produce?

"Answer 1. It is sufficient that you obtain a properly drawn up invoice with supplier's name, address, VAT number et cetera as proof of purchase. Although this in no way "proves" the duty payment, it is acknowledged that no other documentation is likely to be available to you.

"Question 2. Huntingwood acquires duty paid goods in good faith from a UK supplier and makes a subsequent claim for duty drawback. At a later date it is discovered that the supplier or indeed any previous suppliers in the chain had not properly paid the duty. Could Huntingwood Trading be required to return its duty drawback receipt as a result of these previous omissions by others?

"Answer 2. No. Huntingwood would not be exposed provided that it had exercised reasonable care in the purchase transaction and was in no way involved or complicit in the previous failure to pay duty on the goods.

"We wish to operate our business in an open, professional manner and ensure there are satisfactory safeguards in place to comply with the duty regulations.

"We would therefore appreciate your written confirmation of the advice given."

28. I should add that the letter began:

"Huntingwood has recently started trading in the purchase and sale of beer/lager products. The company will typically purchase duty paid goods, which are stored in the UK bond under the provisions of "warehousing for export". The goods are subsequently dispatched to another member state in duty suspension, under the conditions set out in clause 15 of Notice 207.

"Internal controls and procedures have been installed to ensure that claims for excise duty drawback are properly documented and presented for payment."

29. In answer to that letter, Mr Evans received a letter dated 25th July 2005 from the National Advice Centre in the following terms:

"Based on the information you have provided in this letter and the discussion you had with the National Advice Service... I would like to bring the following to your attention which has been taken from Notice 207 Excise Duty: drawback."

30. There were then set out a number of the provisions of Notice 207 including the following:

"We will pay drawback of excise duty only if we are satisfied that all of the following conditions have been met:

"... 2. The duty on the goods was paid not more that three years before the event giving rise to the claim for drawback...

"If you wish to claim drawback you must do all of the following:

"1. Comply with the law and with the requirements of this notice.

"2. Ensure that duty was paid - and not reclaimed - on the goods no more than three years before the event giving rise to the claim.

"3. Ensure that your claims are accurate..."

31. The letter continued:

"With regard to the previous advice given which was correct, I would like to add the following:

"The supporting evidence should be original and not photocopied; and to make you are aware that if irregularities come to our notice after drawback has been paid, we can assess you for the duty.

"If you have any further queries regarding the contents of this particular letter then please contact the address shown above."

32. In addition on 19th July, Mr Evans telephoned his local officer of the defendants. In his witness statement, Mr Evans said that after his conversation with the NAS he had decided to telephone Mr Abdul Karim to double check the advice by the NAS. He says that he drafted a record note of the conversation, which was exhibited to his witness statement, and passed a copy of it at the start of a meeting on 26th July 2005, at which another of the defendant's officers, a Mr McWilliam, was also present. He told him, Mr Abdul Karim, that this was a record note of their conversation on 19th July and advised him that if he disagreed with its contents that he should let him know. He noticed Mr Abdul Karim reading it at the meeting and he did not advise Mr Evans of any areas that he disagreed with. Accordingly, he says he believed the record note was a true and accurate account of their telephone conversation and that the advice given was correct.
33. In argument it was accepted by Mr Coppel, on behalf of the defendant, that this note was read by Mr Abdul Karim and that I could proceed on the basis that the note is a fair representation of what was said in the conversation. The note reads:

"I contacted M.A.K by phone to clarify Huntingwood position in regard to two questions.

"Question 1. Huntingwood purchases duty paid beer/lager from a supplier. The supplier provides an invoice for the goods which contains all of the detail expected on a professionally prepared document. Could Huntingwood be required by Customs and Excise or Drawback Processing to provide additional evidence of duty payment, and if so what evidence will be required?

"Answer 1. Customs and Excise/Drawback Processing do not require any further evidence over and above a professionally prepared VAT invoice.

"However Huntingwood has a duty of care to make reasonable enquiries of the supplier prior to entering into a transaction. Huntingwood should also assess if the price being offered is reasonable for duty paid goods. By way of example, if the market rate at a given point for a case of lager was in a range of £10.50 to £12.00, but Huntingwood had been offered a case price of £7.00 - Customs and Excise would expect Huntingwood to either satisfy itself that the duty element had been paid or not enter into the transaction, as the price differential should give rise to suspicion of non payment of duty or the validity of the goods being offered.

"Question 2. Huntingwood purchases duty paid goods from a supplier in good faith, it receives a professionally prepaid invoice and submits a claim for duty drawback. At a later date Customs and Excise investigate the supplier of the goods and discover that despite charging a sum reasonably expected to include a duty payment, the duty had not been paid on the goods supplied. Who would become liable to pay the duty and could Huntingwood be required to repay the duty retrospectively?

"Answer 2. Customs and Excise would carry out a duty assessment on the supplier and then require them to pay the unpaid duty. Provided Huntingwood makes reasonable enquiries of the supplier and is in no way involved or complicit in the non payment of duty then Huntingwood acting in good faith, would have no obligation to repay the duty drawback.

"M.A.K was due to visit to Huntingwood with Mr McWilliams also from Customs and Excise on 26th July 2005, he agreed to bring to the meeting a list of vendor checks recommended to be carried out when assessing if a supplier would be suitable to provide goods in the future.

"Mr Abdul Karim also recommended that Huntingwood request future invoices from suppliers to state "Duty Paid" in respect of the goods purchased. Although this practice is not mandatory he suggested it would be a good working practice for Huntingwood to adopt for the future."

34. I shall return to the significance of those contacts when I have completed the relevant factual summary. On 1st September 2005, Mr Abdul Karim visited Huntingwood in connection with its application for approval to be an owner of duty suspended goods held in a excise warehouse, WOWGR. This is a different procedure which is not relevant to the current application. Mr Abdul Karim decided to grant that application.
35. Before I come to that I should refer to the meeting on 26th July between Mr Abdul Karim and Mr Evans. There is an internal note of the defendant's of that meeting which includes the following under paragraph 3 under the heading, "Action taken including education and advice issues addressed":

"Discussed the legal requirements with regard to time limits for the parts of the drawback procedure with regard to standing time prior to export and the potential liability that Huntingwood would incur if the supplier to Checkprice [which was one of two suppliers to Huntingwood] was found to be missing or if Huntingwood were buying from a business that was subsequently found to be missing. I advised that there would be no come back on Huntingwood if they bought the goods in good faith from Checkprice. If Huntingwood were to buy from someone who subsequently went missing then their liability would depend on the due diligence checks they had taken prior to dealing with the supplier."

36. On 1st September 2005, Mr Abdul Karim visited Huntingwood in connection with the application for approval to be an owner of duty suspended goods held in an excise warehouse, WOWGR; as indicated that is a different way of doing business which is not relevant for this application.
37. There was in paragraph 2 of the defendant's note of that a meeting under the rubric, "irregularities identified and reason for occurrence" the following:

"Some concerns highlighted within the supply chain. The sales made by BA Cash and Carry in Cardiff to Huntingwood appear to be sold for less than BA actually purchased them for. Further checks/visits are being carried out to BA Cash and Carry and others further down the supply chain. The implications of this would not make a difference to Huntingwood's application as they are able to produce a genuine purchase invoice from their supplier."

38. I would add in parenthesis here, that although there is in the rubric a reference to irregularities, and although it is said that the concerns highlighted within the supply chain would not make a difference to Huntingwood's application as they are able to produce a genuine purchase invoice from their supplier, in my judgment, that does not, of itself, advance the claimant's argument because it is dealing with the application for WOWGR status and is not in the context of the drawback claim and what were or were not indicated as being the requirements in relation there6to.
39. among the reasons for granting the WOWGR approval by Mr Abdul Karim as set out in his note were:

"Duty of care taken with their suppliers and customers, only dealing with recommended/better known wholesalers... the time spent/research done by the trader to ensure that all aspects of the business are fully understood. Minimising the risks whenever possible and the obtaining relevant notices/guidance and advice from the department. Any advice given is accurately documented by the trader. A clearly set out audit trail for each transaction undertaken by the business, with all of the documents immediately available on request."

40. Between July 2005 and July 2006, Huntingwood claimed drawback in relation to the purchases from its two suppliers, Checkprice Limited and Elbrook Cash and Carry Limited, for which the only evidence that duty had been paid for was an invoice issued by the supplier which stated that the goods were, "UK duty paid." All those claims were repaid by the Commissioners without difficulty or comment.
41. In his witness statement, Mr Evans says that on a number of occasions Mr Abdul Karim and Huntingwood's VAT control officer complimented Huntingwood on the high quality and comprehensiveness of its systems procedures and business records. He says that in every meeting with Mr Abdul Karim he would ask him if Huntingwood should change or amend anything to comply with the regulations and that on every occasion Mr Abdul Karim would confirm that Huntingwood's processes and procedures fully complied with the requirements and went further than those expected by the defendants. He says in his witness statement that he therefore continued to believe that he was doing everything required under the regulations. At no time did Mr Abdul Karim or the defendants indicate that the earlier advice, which he says he had been given, had changed or could no longer be relied upon.
42. In relation to the claims for drawback between July 2005 and July 2006, all of which were repaid without difficulty or comment by the defendants, the process and supporting documentation, says Mr Evans, was the same as the transactions which are the subject matter of this application in respect of which drawback has been denied.
43. On 10th March 2006, Mr Abdul Karim prepared a case summary of the drawback verification that he had conducted, in relation to the Huntingwood, and wrote:

"For each transaction Huntingwood are able to provide a wealth of information substantiating the drawback claims that they have submitted. Documents produced by Huntingwood for each claim include... a purchase invoice and a UK warehouse stock receipt...

"Purchases by Huntingwood have been referenced through the supply chain to ensure that the excise duty has been accounted for. Responses to these references show that the main suppliers to Huntingwood purchase their goods directly from the manufacturers who account for the duty themselves.

"We have also identified that in earlier transactions, one of the Huntingwood suppliers may in turn have been supplied by a missing trader, four suppliers back from the receipt of the goods. Consequently we have fully advised Huntingwood of their responsibilities in respect of due diligence and expect them to carry out reasonable checks on any suppliers or transactions that give cause for concern, such as unusually competitive prices et cetera.

"The trader discharges their "Duty of Care" in respect of the companies it deals with and avoids any money laundering implications by only accepting payment by bank transfers."

44. On 14th March 2006, as recorded in an internal note, it was recorded that due to the high level of drawback claims being submitted by Huntingwood, it had been selected by the defendant as one of the traders to be controlled under the national drawback project. Mr Abdul Karim recorded:

"As per previous requests the trader is able to provide a wealth of information to substantiate each individual drawback claim... Huntingwood have been able to produce, on request, any documents above what we could expect them to retain in their records. Copies of all document relating to drawback have been taken as an example of what you would expect to see for all of this trader's transactions and also a benchmark of what we would expect from other businesses using the drawback processes."

45. It continued:

"In addition to the above and as part of the Huntingwood's "Duty of Care" to ensure that the goods they purchase are duty paid, they have requested further evidence from their supplier in addition to a sales invoice. Checkprice state on their sales invoice under the description of the goods that they are "UK Duty Paid" and when asked by Huntingwood if they are able to provide further evidence of duty payment, Checkprice replied that they would not jeopardise their Excise Warehouse approval by falsely making this declaration."

46. I would comment that it would appear to be implicit in that it was apparent to Mr Abdul Karim that the claimant did not obtain any further information, or evidence, as to duty having been paid by a supplier higher up the chain to Checkprice. This was consistent with the evidence given by Mr Evans to the effect that it was unlikely that such information would be forthcoming from Checkprice because it would not be commercially in its interest to disclose such information for fear that Huntingwood would then go directly to such suppliers.
47. I now come to what is agreed by counsel and rightly, in my view, to be the most important factual part of this story. It consists of a meeting on 11th April 2006 between Mr Abdul Karim and Mr Evans and a letter dated 20th April 2006 following that meeting. Mr Abdul Karim's note of that meeting is as follows:

"Discussed recently submitted drawback claims with Mr Evans and mentioned to him that due to recent concerns with his supply chain as precautionary measures to protect the revenue from risk, the following steps have been taken. As from the 1st April 2006 any excise drawback claims submitted by Huntingwood will be the subject to pre-payment verification - the trader will be asked to provide evidence to substantiate each claim. Due to concerns with possible missing traders within the supply chain an invoice stating UK duty paid will not be sufficient evidence of excise duty payment on the goods to the department. Huntingwood should make enquiries with their suppliers and obtain further evidence of duty payment. Their suppliers may need to make enquiries through their supply chain. Acceptable forms of duty paid evidence include copies of W5D, REDS, Occasional importers, Invoice/Delivery note from UK manufacturers."

48. I was told by Mr Coppel that W5D is a warehouse keeper record of payment of revenue on release of goods from payment suspension and that REDS is receipted excise duty dealer and shipper.

"Mr Evans should expect the above condition confirmed in writing which he can appeal against should he choose to."

49. The note then refers to what he says are the relevant parts of the law that allows him to impose such conditions, which he says were mentioned to Mr Evans and CEMA 1979 Section 133 (5):

"The Commissioners may require any person who has been concerned at any stage with the good or article --

"(a) To furnish such information as may reasonably be necessary to enable the commissioners to determine whether duty has been duly paid and not drawn back and for enabling a calculation to be made to the amount of drawback payable; and

"(b) to produce any book of account or other document of whatever nature relating to the goods or article."

50. Then reference was made to the Excised Goods Regulations number 72.

"If the Commissions consider it necessary for protection of the Revenue they may by a notice in writing deliver to a revenue trader require him to comply with such additions that they see fit to impose."

51. The note continues:

"Mr Evans stated that he understood the new requirements but felt that it would be unfair if only his business had these conditions imposed on him. I confirmed that the conditions are already in the law for all drawback claimants to abide by and due to the level of drawback claims submitted by Huntingwood the action taken is purely to minimise the inherent risk. Again, once this has been confirmed in writing, Huntingwood would have the right to appeal against my decision."

52. Then on the next page under, "3. Action taken including education and vice issues addressed" the following is recorded.

"Guidance requested from our policy unit in Manchester, see e-mail correspondences included with this report. 20th April 2006 letter issued to Huntingwood withdrawing the above conditions imposed verbally on 11th April 2006. 21st April 2006, Huntingwood drawback claims reverted to post payment (see e-mail correspondences included with this report)."

53. I observe that the e-mail correspondence was not before the court and I infer that it was internal email correspondence within the Revenue and not as between the defendant and the claimant.
54. The letter of 20th April, which is there referred to, was in the following terms, from Mr Abdul Karim to Mr Evans:

"Further to our meeting on 11th April 2006 and our subsequent telephone conversations please accept this letter as clarification of the conditions imposed on Huntingwood Trading. These conditions related to the provision of evidence that UK Excise Duty had been accounted for on goods purchased by your company. We have received further guidance which suggests that we cannot impose on Huntingwood the condition to provide the original document evidencing UK Duty payment.

"Although the above condition will no longer be applied drawback claims may still be subject to further verification through your supply chain to ensure that the appropriate duty on the excise goods has been paid to HM Revenue and Customs. As such, our enquiries may have a bearing on the repayment of the drawback claim submitted by your company.

"You must still exercise the appropriate duty of care before entering into any transaction in order to satisfy HM Revenue and Customs that excise duty has been accounted for on goods purchased as UK duty paid. If you would like to discuss this matter further please do not hesitate to contact me on my direct telephone number."

55. In June 2006, the commissioners published a consultation document Reform of the Excise Duty Drawback System to which, among others, Huntingwood responded. The purpose of the consultation was described in paragraph 1.1 of the document:

"Over the past year there has been a marked increase in the warehousing of beer and spirits for export often for very short periods. HMRC is not aware of any clear commercial rationale for this and is concerned that given the relaxed evidence requirements that currently apply to drawback claims in respect of goods warehoused for export this could represent a fraud risk and threat to the livelihood of complaint traders.

"HMRC's objective is to introduce changes to the excise duty drawback system."

56. The consultation was due to end on 14th September 2006. In paragraph 3.1 there was a further reference to the relaxed evidence requirements, it was on these terms under, "reasons for change":

"Often, the goods are only warehoused for very short periods. It seems, therefore, that traders using the WFE are not suffering a significantly greater cash flow disadvantage than those using the direct dispatch system. HMRC is not aware of any clear commercial rationale for using the WFE scheme in this way and is concerned that given the relaxed evidence requirement that currently apply to drawback claims in respect WFE goods, this could represent a fraud risk and a threat to the livelihood of compliant traders."

57. There were then identified options for change to the Duty Drawback Scheme including abolishing it and extending the period of notice within the arrangements.
58. The claimant relies, as part of the matters that he says gave rise to the legitimate expectation, on the reference in that document to the relaxed evidence requirements that currently apply to drawback claims in respect of the goods warehoused for export.
59. Finally on 4th August 2006, Mr Abdul Karim and another officer visited Huntingwood to verify its recently submitted drawback claims. In his internal report, Mr Abdul Karim referred to, "an impressive level of record keeping maintained by Huntingwood..." Later, set out in a question and answer, a question coming from Mr Evans and the answer by Mr Abdul Karim.

"Question. I pay my suppliers, the likes of Checkprice, slightly higher than average market prices to ensure the goods are granted UK duty paid. I would like to know truthfully if there has ever been a case of missing traders discovered in my supply chain?

"Answer. An honest answer is yes. Not always can we establish the duty payment/duty point due to missing traders in the supply chain. However, this is not to say any of your suppliers will know about this because they are also in a supply chain and again they may not be aware of suppliers actions/intentions further down the chain. Also from Huntingwood's point you have carried out your due diligence checks and provided what you are required to."

60. Under conclusions:

"Claims paid on the basis that Huntingwood have provided what is asked of them. All claims submitted are procedurally correct, however, very rarely can we evidence the duty point/duty payment on the goods currently due to delays in receiving references issued in the supply chain, and the presence of "missing traders" at the end of the chain."

61. I take that to be an internal note, not a note of something said to Mr Evans.
62. Between 7th July 2006 and 5th September 2006, Huntingwood made the 101 purchases of beer and lager from a bonded warehouse from Checkprice Limited, 101 of which are the subject of the decision which is sought judicially to be reviewed on this application. Huntingwood claimed drawback of excise duty in relation to those purchases.
63. On 15th August 2006, Huntingwood received the first of a series of similar letters from the defendants, informing it that the claims made in relation to the loads listed in that letter were being withheld until the defendants were satisfied that duty had been paid as provided for in regulations 12.
64. On 1st November 2006, the defendant advised Huntingwood that a significant proportion of the goods, more than 90 per cent, originated from missing traders. On 31st January 2007, the defendants made a decision to disallow Huntingwood's 101 claims for duty drawback totalling £1,263,665 on the basis that they were not satisfied that the goods were eligible goods within the meaning of paragraph 5.
65. The reasons stated were:

"This is because of the presence of missing or defaulting traders found in the supply chains relevant to the goods in question which prevents HMRC from tracing the supply paths of these traders and therefore establishing whether the goods originated from a duty paid source. Your client is also unable to provide sufficient evidence to satisfy HMRC that duty has been payed and not reclaimed on the goods in question."

66. On 8th March 2007, Huntingwood requested a form of departmental review of that decision. On 25th April 2007, the defendants upheld their decision of 31st January 2007 and it is that decision of 25th April 2007 which is the decision which the claimant seeks to challenge by judicial review.
67. I should interpose here that there were two procedural points taken by the defendant, neither of which, in my judgment, has any substance. The first is that there is an alternative remedy available to the claimant in the form of a statutory appeal; and that in those circumstances judicial review is not an appropriate remedy. In my judgment that is misconceived. It is right and I do not need to go into the relevant legislative details that there is provision for a review to be made by the Commissioners of a decision and an appeal from such a review to be made to the tribunal. However, it was accepted by Mr Coppel that in effect such an application for a review was confined to the question of whether duty was in fact payable, or whether a drawback claim was payable, and whether the appropriate conditions for it had been satisfied: thus in particular on this case whether duty had in fact been paid.
68. It was pointed out by Mr Milne QC, on behalf of the claimant, that it was not, of course, in a position to prove that, because it did not have the evidence going higher up the chain. Therefore, that statutory procedure was not one in which the claimant could obtain the relief sought on this application because it would not be open to the Commissioners under that statutory regime to give it. Therefore, it would not be open to the tribunal on appeal to make a finding that, even if the statutory requirements and the requirements of the regulations had not been complied with, and even if it had been shown that the duty had not been paid, nonetheless, and even if it had not been shown that the commissioners were satisfied that duty had been paid the claimant should be entitled to drawback because of the legitimate expectation point which is raised on this application. In those circumstances, and also because the powers of the Commissioners and the tribunal under the relevant legislative provisions do not extend and would not extend to an order requiring the drawback claim to be paid in my judgment, that is plainly not an appropriate or satisfactory alternative remedy such as to disentitle the claimant from making this application.
69. The allied point raised was that because of the point I have just made the relevant decision for which the claimant should be seeking judicial review is not that of 25th April 2007 because, for the reasons I have just given, the Commissioners and the Tribunal did not have the power under that statutory review appeal mechanism to grant the relief I have just indicated the claimant seeks. Therefore, the relevant decision is not that of 25th April but that of 31st January, and that being so, it is said that the claimant is out of time.
70. Mr Milne QC's answer to that was to rely on the letter of 8th March 2007 in which Huntingwood requested a formal departmental review of the 31st January decision in which, as well as dealing with the statutory point, a wider request was made in effect for the Commissioners to consider the legitimate expectation point. In my judgment, Mr Milne QC was right in saying that it was reasonable for the claimants to adopt that procedure, even though technically it was not open to the commissioners to entertain that application under the statutory regime. Nonetheless it was in effect the equivalent of a pre-action protocol letter, albeit such a letter formally was only sent on 3rd July 2007. In those circumstances, in my judgment, it would be quite wrong to say that the claimants are disentitled form pursuing this application on the basis that it was made too late.
71. I turn, therefore, to the point in issue which is whether or not the claimant has succeeded in satisfying the legal test in relation to the legitimate expectation for which it contends. The claimant, in its written submissions, submitted that the commissioners engendered a legitimate expectation that provided Huntingwood followed a particular course of conduct in its business dealings, it would satisfy the conditions in regulation 12 even if the goods subsequently turned out not to be eligible goods.
72. The course of conduct which it is submitted that the Commissioners advised Huntingwood to follow was:

(1) To produce a properly prepared professional VAT invoice from its supplier showing the goods were duty paid;

(2) To fulfil its obligation to exercise a duty of care to make reasonable inquires of its immediate supplier before entering into a transaction; and

(3) To assess if the price paid was a reasonable duty paid open market price which would also include VAT.

73. It is submitted that on the facts Huntingwood did all of those things, and I did not take it to be challenged by Mr Coppel, on behalf of the defendant, that in fact they had done those things.
74. The Commissioners, it was submitted, engendered the legitimate expectation in the following ways:

(1) By the specific advice given by the Commissioners' Advisory Service on 19th July 2005, as confirmed by the letter dated 25th July 2005.

(2) By the specific advice given by Mr Abdul Karim on 19th July 2005, as confirmed by his acceptance of the record note dated 20th July 2005.

(3) By the specific advice from the National Advice Service, in the letter dated 25th July 2005 in response to a specific question, that if it was discovered at a later date that its supplier (or any previous suppliers in the chain) had not properly paid the excise duty, Huntingwood would not be exposed provided it had acted in good faith, exercised reasonable care in the purchase transaction and was in no way involved or complicit in the previous failure to pay the duty on the goods.

(4) By giving Huntingwood during the period from the time Huntingwood started trading in July 2005 until August 2006 when its business was subject to close and regular scrutiny by the commissioners, repeated, clear and unambiguous assurances that its processes and procedures fully complied with the regulations and went further than those expected the commissioners.

(5) By withdrawing the specific ruling by Mr Abdul Karim on 11th April 2006 that future claims for drawback must contain evidence that excise duty had been paid on the goods Huntingwood had purchased.

(6) By giving no indication in the letter dated 20th April 2006 that they required any evidence from Huntingwood in addition to the supplier's professional invoice that the goods in respect of which drawback were being claimed were duty paid.

(7) By referring in the letter dated 20th April 2006 to the appropriate duty of care, which was a clear reference to the advice Mr Abdul Karim gave on 19th July 2005, that Huntingwood had a duty of care to make reasonable inquiries of the supplier and assess the price paid.

(8) By accepting and paying Huntingwood's earlier claims for drawback, made from June 2005 to June 2006, when the only evidence that the goods in respect of which drawback had been claimed were duty paid was a VAT invoice marked, "duty paid".

(9) By publishing a consultation document, "Reform of the excise duty drawback system" in June 2006 which referred twice to "the relaxed evidence requirement that currently apply to drawback claims" in relation to goods warehoused for export.

(10) By telling Huntingwood during the visit on 4th August 2006 that, "you have carried out your due diligence checks and provided what you are required to do" thus reinforcing the earlier advice given.

75. It is contended that by their conduct the Commissioners engendered in Huntingwood a legitimate expectation that it would be able to satisfy Regulation 12 of the Regulations and that the Commissioners would allow its claims in the same way as they had allowed Huntingwood's earlier claims. It was as a result of that expectation, which was engendered by the Commissioners that Huntingwood continued to make claims for drawback in the expectation that they would be paid.
76. If it had appreciated that, notwithstanding its compliance with the guidance given by the Commissioners, there was still a risk that they would disallow its drawback claims and there was nothing it could do to avoid potential exposure in the event of irregularities outside its control, not least because it could not be aware of whether the duty had been paid before the goods had been purchased by Checkprice and had no means of finding out, it would not have entertained into or continued this business. It is therefore unfair and an abuse of power for the Commissioners to frustrate that legitimate expression.
77. In my judgment, the answer to the claimant's contention is to be found in the letter of 2006.
78. In the course of argument, Mr Milne QC, on behalf of the claimant, accepted that if the defendant had refused a drawback claim on 21st April 2006, following receipt of that letter, the claimant would have had no ground of complaint. He thus, as it seems to me, accepted, indeed he explicitly accepted, that that letter was not itself a clear and unambiguous indication of what the defendant would require thereafter. He accepted that it was in itself at least ambiguous.
79. He had the following arguments in respect of the letter. First, he said, it did not unambiguously remove the previous indication which had been given before the 11th April 2006 meeting which, he submitted, was accordingly reinstated and which previous indication, he submitted, was one which was unambiguous, clear and unequivocal.
80. Second, he submitted that although taken in isolation and on its own, the letter of 20th April 2006 did not constitute a clear, unambiguous and devoid of qualification indication, the continued payment of drawback after the letter, with no further evidence being supplied by the claimant than before, that is to say nothing beyond an invoice from Checkprice saying that duty had been paid was a representation that the letter would not be relied on and that the status quo prior to the 11th April 2006 conversation and the letter of 20th April 2006 would continue.
81. Third, he submitted that in the sentence, "as such our enquiries may have a bearing on the repayment of the drawback claim submitted by your company", the reference to, "a bearing on the repayment of the drawback claim", on its proper construction, was only referring to the timing of the repayment of the drawback claim and not to whether the repayment would in fact be made. Alternatively, he submitted, and this was in response it has to be said to a point that I raised in argument about what the word repayment meant, that actually repayment might be referring not to the making of a drawback claim by the defendant to the claimant, but rather a demand for a refund of such a repayment by the defendant from the claimant at a later stage.
82. Fourth, he suggested that the reference to the sentence, "as such our inquiries may have a bearing on the repayment of the drawback claim submitted by your company" should not be read in isolation but should be read together with the sentence in the next paragraph.

"You must still exercise the appropriate duty of care before entering into any transaction in order to satisfy HM Revenue and Customs that excise duty has been accounted for on goods purchased as UK duty paid."

83. Read together and in context, submitted Mr Milne QC, all that was being said was that because the defendants might still seek verification through the claimant's supply chain to ensure that appropriate duty had been paid, the bearing that was being referred to was no more than effectively saying, if as a result of such enquiries we find that you did not duty exercise a duty of care then we reserve the right not to pay a drawback claim. In other words, this is really no more than going back to what had previously been said that it was a requirement of being entitled to the drawback claim, that even if no more evidence was supplied than a VAT invoice, that the claimant should exercise proper due care.
84. I deal with those arguments in turn. In relation to the first submission, in my judgment, Mr Milne QC's argument adopts the wrong approach. The position is that certain things had been said and written in July 2005 and thereafter there was then an indication that the defendants were going to impose a new condition and a whole new approach in the 11th April 2006 conversation. The letter of 25th April 2006, in my judgment, did a great deal more, or at any rate can reasonably be read as possibly doing a great deal more, than merely indicating that the proposed conditions were not going to be imposed, so that the position was exactly as it had been before the 11th April 2006. In my judgment, it is impossible for a claimant, who is seeking to rely on the doctrine requiring a clear unambiguous indication without qualification, to read that much into this letter. The proposition that, even if the claimant is right that there had previously been an indication that was clear, unambiguous and without qualification, that could not of itself be changed other than by something that was itself clear, unambiguous and without qualification, in my judgment goes too far. In my judgment, one has to read the document as a whole and form a judgment as to what it is doing or what it might reasonably be thought of as doing. In my judgment, the letter created a new situation, and if and to the extent that it was not unequivocally and necessarily consistent only with any prior indication that had been given, as Mr Milne QC by implication accepted that it was not, then it was not reasonable, and would not be reasonable, of the claimant to regard any earlier indication which might be inconsistent as continuing.
85. In my judgment Mr Milne QC's concession is right and it is fatal to this application. In my judgment, if it is right, as he accepted that it is, that a complaint made by the claimant on 21st April had a claim for drawback been refused that day, would not have been a legitimate complaint in reliance on that letter, it must follow that any such indication, as had existed prior to the letter, and or prior to the 11th April 2006, on which it might have been up to that point reasonable for the claimant to rely on, no longer was one which could reasonably be relied on.
86. As to Mr Milne QC's second argument, it seems to me to be based on a logical fallacy. The fact that the Commissioners continued after the letter of 20th April 2006 to meet the claimant's drawback claims with no further evidence being supplied than before the letter is in my view not an unqualified clear and unambiguous indication that the letter would not be relied on by the Commissioners or could safely be ignored by the claimant and that the status quo prior to the letter (if, contrary to my finding below, that status quo involved an existing representation on which the claimant had hitherto been entitled to rely on) would continue. The silence of the Commissioners coupled with their continued payment of drawback was in my view neutral and not such as to convert what Mr Milne QC accepted, rightly in my view, was an ambiguity later into an unambiguous representation. The continued payment of drawback on receipt of no more than an invoice marked "duty paid", while not inconsistent with the claimant's understanding of the position, was also not inconsistent with the Commissioners remaining free to insist in the future upon requiring to be satisfied that duty had been paid by better evidence than that furnished by the claimant between April 2006 and August 2006.
87. As to Mr Milne QC's third submission, in relation to the word, "bearing", in my judgment, it is not reasonable to read the relevant sentence as meaning no more than that any verification inquiries made through the supply chain made by the defendants might have a bearing on the timing of any repayment of the drawback claim submitted by the claimant. It does not specifically refer to timing and if that had been the way in which it was read, and there is no suggestion in Mr Evans' witness statement that it was read that way, the ambiguity surrounding it is such that if he had wished to rely on it, in my judgment, he should have sought further clarification.
88. As to Mr Milne QC's fourth argument, I can see that it is a possible construction of the letter. I can see that a possible reading of the letter is that having said that the new conditions canvassed on 11th April 2006 would not be imposed, the letter was doing no more than indicating that, as had always been the case, drawback claims might be subject to verification by the defendant up the supply chain and that because, as had always been indicated in the past, it was a requirement for any claim to be paid, that the claimant should exercise what was described as an appropriate duty of care, all the letter was doing was warning the claimant that if such inquiries as might be made thereafter revealed that duty had not been paid, the defendant would then investigate whether the claimant had or had not discharged its so called duty of care. If it turned out that it had not done so, it would be in breach of the previous requirement that had been indicated, namely that of complying with the duty of care. I can thus see that a possible interpretation of the letter is that it is doing no more than saying, "we remind you that you have still got an exposure to not being entitled to a drawback claim in the event that you do not discharge your duty of care." However, that does not seem to me the only reasonable interpretation of the letter. It seem to me that another reasonable interpretation of the letter is that the statement:

"Drawback claims may still be subject to further verification through the supply chain to ensure that the duty has been paid and as such our inquiries may have a bearing on the repayment of the drawback submitted by your company."

Might be read as indicating that it was possible that the result of such inquiries might be, if it turned out that duty had not been paid, that a drawback claim would not be paid. In other words, the words as such, "our inquiries may have a bearing on the repayment of the drawback claim submitted by your company," were intended to be as general in their form as they are and not limited in the way suggested by Mr Milne QC. On that reading, the last paragraph would be an independent reminder to the claimant that, quite apart from anything else, it must continue to exercise its duty of care, because it might be that the defendant would continue to pay drawback claims provided the duty of care had been satisfied, albeit it was not undertaking that that would necessarily be so if the commissioners were not satisfied that that duty had in fact been paid.

89. In my judgment that is the more likely reading on an objective basis of that letter, but it is not necessary, in my judgment, for this application to fail, for me to find that that is the more likely reading of the letter than that contended for by Mr Milne QC. Whichever is more likely than the other, in my judgment, the most important point about this letter is that it is, on any view, as accepted by Mr Milne QC, ambiguous. Given the ambiguity, and given the requirement for any indication relied on as giving rise to a legitimate expectation to be, "clear, unambiguous and without qualification"; and given in addition the requirement for a claimant, as indicated by Lord Justice Bingham, to make very clear that what is sought is a formal ruling upon which reliance will be made, in my judgment, if the letter had been sought to be relied on it should have been followed up by Mr Evans with a further letter seeking clarification indicating what was his understanding of the prior indication and asking for confirmation that this letter did not remove that understanding.
90. The statement that, "As such our enquiries may have a bearing on the repayment of the Drawback claim submitted by your company" is in my judgment capable reasonably of being read as indicating that if the enquiries revealed irregularities and/or evidence that the appropriate duty had not been paid the claimant's claim for drawback might not be met. I accept that it could be read, in conjunction with the sentence in the next paragraph, as indicating no more than that the claimant would in that event be at risk if it had not exercised due care, but that is not in my judgment the only or even the most likely meaning which the claimant ought reasonably to have placed on it. Given the importance of the matter and the explicit invitation to discuss it further, in my judgment this ambiguity is fatally inconsistent with the requirement of a clear unambiguous and unqualified representation. Not only is it in itself incapable of constituting such a representation, in my judgment it at the least introduced into the dealings between the parties a sufficient ambiguity as to whether any prior clear unambiguous and unqualified representation as may have been made was intended by the defendant to be of continuing effect as to deprive such a representation of any ability safely to be relied on by the claimant in the future without seeking clarification from the defendant.
91. Finally, I turn to the thrid alternative submission of Mr Milne QC, that it is possible that the reference to the repayment was in fact not a reference to payment of the claim by the defendant to the claimant but rather a claim for refund by the defendant from the claimant in the event that it subsequently was found that duty had not been paid. I do not consider that that is the right reading of the word repayment. I think repayment simply means payment by the defendant to the claimant. If I am wrong on that, and in any event as Mr Milne QC accepted in argument, it would be a Pyrrhic victory even if he were right. That is because even if he were right, for the reasons that I have already given, if there was no legitimate expectation, that in circumstances where there was not actual satisfaction by the commissioners that duty had been paid, and all duty had not in fact been paid, the defendant would not be entitled to demand a refund in such circumstances, then even if the defendant was otherwise obliged as a result of a prior indication before 11th April 2006 to pay the claim in the first place, this would be a Pyrrhic victory as the claimant would ultimately be obliged to refund the money to the Commissioer and end up out of pocket. It would thus not be appropriate for judicial relief to be granted as a discretionary remedy.
92. I should add that I am conscious of the reliance by Mr Milne QC on the dictum by Lord Justice Peter Gibson in the Rolland case that it is not always a necessary condition for a legitimate expectation to arise, that there should be a clear, unambiguous and unqualified representation by the public authority. The test is whether the public authority has acted so unfairly that its conduct amounts to an abuse of power.
93. In my judgment, if and in so far, as there is a material difference between those two tests, it is not one that is engaged by the facts of this application, having regard to the factual background which I have outlined and given the finding which I have made such as to lead to a different result.
94. In those circumstances, it is perhaps not necessary for me to make findings as to whether there was any, and if so what, legitimate expectation prior to 20th April 2006. Whatever legitimate expectation may have given rise to by any prior indications did not continue in the light of and after that letter.
95. However, in case I am wrong on the letter on 20th April 2006, I shall express my view briefly. In short, although I am sympathetic to Mr Evans and can understand his sense of frustration, in my judgment there are aspects of the material in July 2005 which fall short of a clear, unambiguous and unequivocal indication on the part of the defendant that strict compliance with regulation 12 and the need to satisfy the commissioners that duty has been paid was being waived in the way suggested.
96. I refer first to the letter of 25th July 2005 from the contact centre of the National Advice Service, in answer to Mr Evans' request for confirmation that the two answers he had been given over the telephone by the National Advisory Service were correct. In my judgment, the letter did not constitute a clear unambiguous and unqualified confirmation. It is true that the letter referred to the previous advice given as being correct. However, the letter did two other things. First of all, it drew to Mr Evans' attention, and through him to the attention of the claimant, the provisions in Notice 207 that the defendant would only pay drawback if satisfied that the duty had actually been paid and that if a claimant wished to make a claim for drawback it must ensure that duty was paid. On its face, of course, those references to the regulations go much further than what had been said over the telephone as to a VAT invoice from the supplier being sufficient, subject also to reasonable inquiries being made. There was, at the very least, in my judgment, a tension between the explicit reference to those parts of Note 207 and indeed the highlighting of the word, "you must do all of the following including ensuring that duty was paid", on the one hand and the reference to the previous advice given as having been correct on the other.
97. Second, the letter added that the advice centre wished to make the claimant aware that if irregularities came to the defendant's notice after drawback had been paid, the defendants could assess the claimant for duty. Mr Milne QC submitted that taken in context, the word irregularities should be read as referring, not to irregularities higher up the chain, but only to irregularities within Huntingwood. He says that is because the answer to the second question in the letter of 20th July, which was under reply, in circumstances where Huntingwood had acquired duty paid goods in good faith and made a claim for duty drawback and at a later date it was discovered that the supplier or indeed any previous supplier in the chain had not properly paid the duty was that Huntingwood would not be exposed provided it had exercised reasonable care in the purchase transaction and was in no way involved or complicit in the previous failure to pay duty on the goods. Mr Milne QC submitted with some force that there would be an inconsistency between that answer and reading the word irregularities in the second bullet point on the second page of the letter of 25th July as referring to the irregularities higher up the chain. What the second answer was doing, so he submitted, was saying in effect that if there were irregularities higher up the chain, Huntingwood would not be exposed provided it had exercised reasonable care.
98. However, in my judgment, although there is some force in that submission, the fact remains that there was an inconsistency, on its face, between the general statement that if irregularities come to the defendant's notice after drawback has been paid they could assess the claimant for the duty and the proposition to be found in answer number 2. The word irregularities was not expressly confined to irregularities within Huntingwood. In those circumstances, in my judgment, this is the kind of ambiguity which falls outside the requirement for an indication to be clear, unambiguous and without qualification; particularly when taken together with the emphatic drawing of the claimant's attention to the explicit black letter requirements of regulation 12, as referred to in Note 207 that a claimant must ensure that duty was actually paid and that the defendants would only pay duty if satisfied that all the conditions had been met including duty having been paid. I note also in this context that the letter ended by saying, "if you have any further queries regarding the contents of this letter please contact the address shown above."
99. In my judgment, it was sufficiently ambiguous that if the claimant wished to rely on its understanding of the letter it should have said sought explicit confirmation that its understanding was correct. In paragraph 46 of his witness statement Mr Evans says:

"On the basis of my conversations with Mr Abdul Karim and the NAS, my understanding of HMRC's statement that, "if irregularities come to our notice after drawback is paid, we can assess for the duty" was that HMRC would only assess Huntingwood for the duty, if irregularities in the way Huntingwood conducted itself came to their attention by not following their advice. Any reasonable interpretation would confirm this view."

100. In my judgment, whatever Mr Evans may or may not have thought, the indication given in that letter, taken together in the round, and taken together with the other parts of the letter to which I have referred, was not such as to give rise to a reasonable legitimate expectation of the kind contended for by the claimant.
101. In my judgment the ambiguity in the letter dated 25 July was such as also to remove any entitlement that the claimant might otherwise have had to rely on any earlier representation which it thought it had received on the telephone without going back to the defendant and seeking clarification.
102. As to the fourth particular of conduct relied on by the claimant in my judgment Mr Coppel was right to characterise it as no more than a summary of, and thus adding nothing to, the particular statements relied on elsewhere in the claimant's argument.
103. As to the fifth particular, the withdrawal of the oral 11th April 2006 ruling by Mr Karim, again in my view this in itself takes the matter no further forward for the claimant. It leaves the claimant still needing to succeed on the 20 April 2006 letter and the July 2005 material, on both of which, for the reasons already given in my judgment it fails.
104. As to the eighth particular of conduct alleged by the claimant to have constituted a representation, namely the payment of drawback claims between June 205 and June 2006 upon receipt of no more evidence than a VAT invoice marked "duty paid" that, in my view, suffers from the same fallacy as does Mr Milne QC's second argument in respect of the 20 April 2006 letter. It seeks to elevate what is in reality at its highest an ambiguous silence coupled with a current payment of drawback on receipt of limited evidence into a clear, unambiguous and unqualified representation that the Commissioners were committing themselves irrevocably to never in the future requiring more stringent additional proof so as t be satisfied that duty had been paid. In truth this argument can only succeed in my view if the other arguments, which I have rejected, are accepted as to the July 2005 and April 2006 conversations and letters having themselves constituted such representations. Once those arguments are rejected, the continued payment of drawback lacks any element of a representation as to the Commissioners' intentions in the future. This is well illustrated by the fact that the conduct is said to have commenced in June 2005 even before the July 2005 conversations and letter. I do not see how it can be said that payment of drawback before the first alleged express representation by the defendant constituted an unambiguous representation as to the Commissioner's irrevocable intentions in the future.
105. So far as the reference to "relaxed requirements" in the consultation document are concerned, in my judgment taken on its own, and even taken together with the 20th April 2006 letter, that is not such as to give rise to a clear, unambiguous and unqualified indication of the kind that would be required. I note in this context that that consultation letter was one that was addressed generally to interested parties. It was not, and could not, have been reasonably understood by the claimant as referring to, or summarising the particular indications that had been given to it earlier to which I have referred in this judgment.
106. As to the tenth particular of conduct relied on by the claimant, namely the statement on 4 August 2006, this in my view, taken on its own (as, in the light of my earlier findings that there had before then been no clear and unambiguous representation it has to be) falls short of the clear, unambiguous and unqualified representation which the claimant needs to prove. I add for the sake of completeness that even if I am wrong about that, it came too late to avail the claimant in respect of all transactions entered into before 4 August 2006.
107. In all those circumstances, in my judgment, this application fails.
108. MISS HANIF: My Lord, I am grateful for that. My Lord, there is one matter of the defendant's cost in this matter. My Lord, I do believe a schedule was submitted to the court, there is a very modest amendment which I wish to make from it.
109. MR JUSTICE STADLEN: I think I have one from the claimant but not from the defendant.
110. MISS HANIF: Perhaps I can hand one up. I am going to (inaudible) my Lord, simply because one or two of the items that were recorded, perhaps for the claimant's benefit, I can simply run through those very briefly. In the respect of the subheading, "work done on documents" you will see that there is recording of 13.3 hours. My Lord, that in fact should --
111. MR JUSTICE STADLEN: Sorry, where is this?
112. MISS HANIF: It is on the first page, my Lord, and there is a subheading that says, "work done documents" against (b). I would simply cross that out and put 16 hours in red pen, my Lord, it is an oversight, it was under recorded.
113. "Attendance at hearing", my Lord, apparently that should be eight hours, an estimate was put in as six for the hearing yesterday. My Lord, overleaf I have made a similar amendment to counsel's fees for the hearing £600 is six hours and I have amended that to £800; which my Lord brings that to a total of £32,062.50.
114. MR JUSTICE STADLEN: What do you say?
115. MR YATES: My Lord, can I just take some instructions.
116. MR JUSTICE STADLEN: Yes.
117. MR YATES: My Lord, I do not have any specific comments in relation to the schedule other than just to raise the matter that it would be customary in a summary assessing the matter just to allow some deduction as is usually the case, but other than that I have no specific comments.
118. MR JUSTICE STADLEN: But you say some deductions.
119. MR YATES: Just a deduction on the basis that this assessment will be on the standard basis rather than the indemnity one.
120. MR JUSTICE STADLEN: These figures are not figures actually incurred, are they?
121. MISS HANIF: Yes, in fact, my Lord, this is actually less than what has actually been incurred. My instructing solicitor has prepared this with what I would say is a very generous eye, so in effect, it is an under recording as opposed to what, in my opinion, has actually been spent; so it is, in fact, less than the amount of time that has actually been spent on this case.
122. MR JUSTICE STADLEN: But all these hours that you have just been changing, I take those to be actual hours.
123. MISS HANIF: Yes, indeed my Lord, yes.
124. MR JUSTICE STADLEN: Well, if they are actual hours then why are they under estimated? If you want to take instructions by all means.
125. MISS HANIF: My Lord, simply due to pressures of work, my instructing solicitor has been slightly behind on the recording. So, in a sense, my Lord, the figures that have been amended relate to the hearing yesterday, an estimate was put in for six hours but it was, in fact, eight hours. In respect of the additional work done on documents, my Lord, 30 minutes of that goes to preparing the schedule costs and the remainder is simply the additional preparation for the actual hearing itself. So in a sense, my Lord, the amendments I have made do reflect an accurate -- but in a sense this is not everything that has been done on this case, it is simply, as my instructing solicitor says, there is in fact more time that has been spent but it is not reflected in this schedule.
126. MR JUSTICE STADLEN: Well, I do not expect that your solicitor is saying that she has put in a claim for less costs than were actually incurred on the basis -- she is saying that.
127. MISS HANIF: Yes, my Lord, yes.
128. THE DEFENDANT'S INSTRUCTING SOLICITOR: I am purely behind. I just wanted to make it clear. Otherwise if they went for assessed costs, it could rise and I just want to make it clear, that is all.
129. MR JUSTICE STADLEN: My question really was, that I understand they may not be up to date to take account of today's hearing or judgment, but I assume and take it that they have not been prepared on the basis that, as it were, the defendant has itself put in costs anticipating that it is only entitled to the standard rather than indemnity basis and therefore has not put in the full amount of its costs. In other words, I should take it that these are the actual costs.
130. MISS HANIF: These are real costs incurred, yes, and they may not represent the whole costs but they are real.
131. MR JUSTICE STADLEN: I think what is being said is that the ordinary basis upon which costs are awarded where the standard of cases is applied is not one hundred per cent indemnity, but something more in the order of two thirds or there abouts.
132. MISS HANIF: My Lord, I take that point being made and in a sense I can take this point no further, other than to say that --
133. MR JUSTICE STADLEN: If I were to make an order that summary assessment in the amount of £20,000 would you be seeking very hard to dissuade me from that course?
134. MISS HANIF: Well, my Lord, yes, I would, for two very simply reasons. First of all, as I said, at the risk of labouring the point, this is in effect less than the costs that have actually been incurred by my instructing solicitors and in a sense it would be a double penalty.
135. MR JUSTICE STADLEN: But you are not telling me how much, so can you give me an indication?
136. MISS HANIF: I am told that a very rough working sum, my Lord, is that there is work that has been done since the 12th December that has not been recorded on this time sheet and that would come within the region of the sum of thousands.
137. MR JUSTICE STADLEN: This is the work on?
138. MISS HANIF: This is the work that has been done since 12th December which unfortunately is not reflected in the schedule.
139. MR JUSTICE STADLEN: I see.
140. MISS HANIF: Apparently that would come to somewhere in the region of thousands.
141. MR JUSTICE STADLEN: Can you give me a better indication than thousands?
142. MISS HANIF: I am told, my Lord, it would be between £5,000 and £10,000.
143. MR JUSTICE STADLEN: What do you say?
144. MR YATES: Well, my Lord, this statement of costs was served on 19th January so if there were costs since the 12th December, there was ample time to record that and put it on the schedule. I would submit, my Lord, that --
145. MR JUSTICE STADLEN: It is obvious that costs have been incurred since the 12th December, is it not, because of all the work in the run up to the hearing, skeleton argument and the preparation of the hearing?
146. MR YATES: Quite so, but there does not seem to be any adequate explanation as to why that is not included on the schedule.
147. MR JUSTICE STADLEN: Pressure of work is, I think, what is being suggested.
148. MISS HANIF: Yes, my Lord.
149. MR JUSTICE STADLEN: So you are suggesting that I should assume that the actual figure is more than like £38,000.
150. MISS HANIF: Indeed yes, my Lord.
151. MR JUSTICE STADLEN: Well, in my judgment the right figure to award on summary assessment is £24,000.
152. MR YATES: My Lord, I am instructed to ask for permission to appeal both in relation to your finding and in relation to the letter of 20th April which was not ambiguous and in relation to your finding, as well, that the situation prior to that letter, the circumstances were not the case that there was a legitimate expectation. I do not raise any new argument, I would simply repeat those which were submitted to you by Mr Milne.
153. MISS HANIF: My Lord, very simply this: you very helpfully identified at the outset of your judgment, and as indeed accepted by counsel yesterday, that a legitimate exception argument is highly factor specific. In respect of the letter itself, my Lord, that is clearly a judgment which is based heavily on the document itself and the facts put before this court. Therefore, in my submission, my Lord, the threshold is not met for permission to appeal to be given and an appeal would not have a realistic prospect of success; nor has it been suggested that there is any other compelling reason why permission should be given. For those reasons, I say it should be refused.
154. MR JUSTICE STADLEN: With some misgivings in the light of Mr Milne QC's acceptance that the letter of the 20th April was ambiguous, in my judgment, I cannot say that there is no realistic prospect of an appeal succeeding and I grant leave for permission to appeal.
155. Anything else?
156. MR YATES: No, my Lord.