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	United Kingdom VAT & Duties Tribunals (Customs) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Customs) Decisions >> Addiction Ltd v Customs and Excise [2002] UKVAT(Customs) C00168 (29 October 2002) URL: http://www.bailii.org/uk/cases/UKVAT/Customs/2002/C00168.html Cite as: [2002] UKVAT(Customs) C00168, [2002] UKVAT(Customs) C168

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Addiction Ltd v Customs and Excise [2002] UKVAT(Customs) C00168 (29 October 2002)

CO00168

COSTS – Whether costs of purchasing a quota following Customs reclassification of goods are costs of or consequent upon an appeal – Refusal to suspend decision - Rule 29 of VAT Tribunals Rules 1986 and Regulation 2193/92 Article 244 considered – Article 1 of Protocol 1 of ECHR and Human Rights Act 1998 considered – Case of Nader followed

LONDON TRIBUNAL CENTRE

ADDICTION LTD Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: MISS J C GORT (Chairman)

Sitting in public in London on 18 September 2002

Mr J Walters QC, instructed by Roiter Zucker, for the Appellant

Miss P Whipple of counsel, instructed by the Solicitors for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2002

DECISION

1. This is an application for costs following the Appellant's successful appeal in the substantive matters in the case, it having been ordered by the Tribunal that the Appellant should be paid its costs "to be agreed between the parties", with liberty to apply in the event of disagreement.
2. On 28 March 2001 the Appellant had imported a consignment of garments which were entered to Community Code 6107 as men's pyjamas. On 18 May 2001 the Commissioners on review upheld a prior decision that the garments in question were properly classifiable as T-shirts and shorts, under heading 6109 and 6104 of the Combined Nomenclature. The appeal against that decision was heard over the course of two days in January 2002 and on 8 March 2002 the Tribunal's decision allowing the appeal was released.
3. The Appellant claimed both legal costs which were quantified in the date of the hearing in the sum of £43,806.24 plus VAT and the cost of purchasing a quota in the sum of £94,445.
4. Whilst the Respondents accept that they are liable to pay such reasonable costs as can properly be awarded under rule 29 of the VAT Tribunals Rules 1986, they dispute both the quantum of the Appellant's legal costs and the Appellant's claim in the sum of £94,445 for costs incurred in relation to the purchase of a quota for T-shirts and shorts, which was purchased to enable the Appellant to continue to import its products into the UK during the period 1 March 2001 to 12 April 2002.
5. On behalf of the Appellant it was submitted that the costs from 1 March 2001 to 12 April 2002 were "costs of and incidental to and consequent upon" the appeal.
6. The history of the matter is that on 4 April 2001 the Commissioners made their initial decision to classify the garments in question as T-shirts and shorts. On 5 April 2001 the Appellant requested a formal departmental review. The review decision was made on 18 May 2001 and the appeal was lodged on 15 June 2001. Prior to the lodging of the appeal there was a telephone conversation on 4 June 2001 between Miss Clare Tunstall of Roiter Zucker and Mrs Shelley Chamberlain of Customs and Excise. In the course of that conversation it was explained to Customs and Excise that the Appellant was suffering loss as a consequence of the classification decision and Customs and Excise were asked to agree to the Appellant continuing to use its preferred classification of the goods in question as pyjamas pending the final decision on appeal; the Appellant was willing to provide an undertaking to Customs and Excise to repay the difference in duty should that subsequently fall due. Mrs Tunstall was informed by Mrs Chamberlain that under Article 244 a decision of Customs and Excise could not be suspended during the appeal procedure. It was suggested to the Appellant that it could try and recover the costs of the quota as part of the "cost" of the Tribunal review. The possibility of taking judicial review on this matter was mentioned by Miss Tunstall.
7. By a letter dated 8 June 2001 Miss Tunstall asked Customs and Excise inter alia to confirm that there would be no objection to an application by the Appellant to the Tribunal for payment of their costs, including as an element thereof their expenses in connection with the purchase of a quota for T-shirts which was said to be consequential on the Commissioners' decision under appeal.
8. By a letter dated 14 June 2001 Mrs Chamberlain informed Miss Tunstall that no such assurance could be given. By a letter dated 17 December 2001 the Solicitors Office of Customs and Excise informed Roiter Zucker that it did not consider that the Tribunal had any jurisdiction to award costs occasioned by the wrongful classification meanwhile.

The law

9. The VAT Tribunals Rules 1986 provide as follows:

29-(1) A tribunal may direct that a party or applicant shall pay to the other party to the appeal or application –

(a) within such period as it may specify such sum as it may determine on account of the costs of such other party of and incidental to and consequent upon the appeal or application; or

(b) the costs of such other party of and incidental to and consequent upon the appeal or application to be taxed by a Taxing Master of the Supreme Court … on such basis as it shall specify.

(2) Where a tribunal gives a direction under paragraph 1(b) of this rule in proceedings in England and Wales the provisions of Order 62 of the rules of the Supreme Court 1965 shall apply, with the necessary modifications, to the taxation of costs as if the proceedings in the tribunal for a course or matter in the Supreme Court of Judicature in England.

10. The rules were made pursuant to the power vested in the Lord Chancellor by paragraph 9 of Schedule 12 of the Value Added Tax Act 1994. The rules were not made pursuant to section 51 of the Supreme Court Act 1981 (as amended) which provides the jurisdiction for the award of costs in the Civil Division of the Court of Appeal, the High Court and any County Court.
11. Regulation 2193/92 Article 244 is in the following terms:

"The lodging of an appeal shall not cause implementation of the disputed decision to be suspended.

The Customs authorities shall, however, suspend implementation of such decision in whole or in part where they have good reason to believe that the disputed decision is inconsistent with Customs legislation or that irreparable damage is to be feared for the person concerned.

Where the disputed decision has the effect of causing import duties or export duties to be charged, suspension of implementation of that decision shall be subject to the existence or lodging of a security. However, such security need not be required where such a requirement would be likely, owing to the debtors' circumstances, to cause serious economic or social difficulties."

12. Article 1 of the 1^st Protocol to the European Convention on Human Rights provides:

PROTECTION OF PROPERTY

"Every natural or legal person is entitled to the peaceful enjoyment of his possession. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

13. The Human Rights Act 1998 provides as follows:

Interpretation of legislation

3-(1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with Convention rights.

Acts of public authorities

6-(1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right.

(2) Subsection (1) does not apply to an Act if –

(a) as a result of one or more provisions of primary legislation, the authority could not have acted differently; or

(b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.

(3) In this section "public authority" includes –

(a) a court or tribunal, …

The Appellant's submission

14. Mr Walters referred the Tribunal to the case of Mahindra Dave (E00182) where the tribunal held that, following the making of the Civil Procedures Rules under the Civil Procedure Act 1997 the references in rule 29(1)(b) and (2) to taxation of costs must now be taken as references to costs under the Civil Procedure Rules Part 44.3, and logically the principles in Part 44 should be applied by the Tribunal when determining an amount under rule 29(1)(a). The Tribunal had relied on a passage from the judgment of Farquharson LJ in Nader v Customs and Excise Commissioners [1993] STC 806 and 810 where he said:

"… the relevant law governing the assessment of costs in this context is the same whether the costs are determined by the tribunal or by the Taxing Master."

In Dave it was pointed out that this jurisdiction was subject to "necessary modifications", in particular the jurisdiction of the tribunal was wider than that of the High Court in that the High Court power under section 51 of the Supreme Court Act 1981 was a power only to award "the costs of and incidental to all proceedings", whereas rule 29 also allowed the award of costs "consequent upon" an appeal.

15. The case of Dave had been heard in the High Court on 18 April 2002 (unreported), when the Commissioners' appeal had succeeded. Mr Walters sought to distinguish that decision on the basis that there had been no argument before the High Court on the Human Rights argument which was to be advanced by him in the present case.
16. It was submitted that there were two limbs to the Tribunal's power under rule 29(1)(a), the first being that the award must be a sum on account of "costs", and the second that those costs must be "of and incidental to and consequent upon the appeal", the two matters to be read disjunctively.
17. The definition of "costs" in the Civil Procedure Rules Part 43 applied : viz: "'costs' includes fees, charges, disbursements, expenses, remuneration, reimbursement allowed to a litigant in person under rule 48.6, any additional liability incurred under a funding arrangement and any fee or reward charged by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track."
18. The concept of "costs" was thus very wide and included all expenses actually incurred. The decision in Nader was distinguished because in that case the claimant was unsuccessfully claiming loss of profit, that is losses incurred by the closure of his business, which were not expenses or otherwise to be included in the definition of "costs".
19. The Appellant's claim is for "costs" because all the matters itemised were expenses which were actually incurred, whether on lawyer's services, the attendance of the expert or the purchase of the quota.
20. The Appellant had been obliged to instruct its Chinese manufacturer to get an export licence for the "tops" on the basis of their having been classified as T-shirts. This involved the manufacturer in purchasing a "T-shirt and shorts quota". This cost was a continuing cost. The Appellant had no realistic option but to continue the importations, but subject to the disputed classifications as T-shirts and shorts.
21. The Appellant relied on Article 244 of Regulation 2913/92 for showing that the Respondents had power to suspend implementation of the decision pending the appeal.
22. The Commissioners' decision not to suspend implementation of the decision pending the appeal was an exercise of a discretion which arose when the appeal was lodged. That decision was therefore consequent upon the appeal and the expense which the Appellant reasonably incurred (in order that the business should continue) was consequent upon the Commissioners' decision not to suspend implementation, and therefore, was likewise an expense "consequent upon the appeal".
23. The decision made by the Commissioners under Article 244 was itself consequential upon the appeal having been in contemplation, and there was therefore a necessary link with the appeal in the decision to refuse to suspend.
24. It was submitted on behalf of the Appellant that the words in rule 29 must be read and given effect in a way which was compatible with the rights guaranteed under the ECHR, in particular with the rights guaranteed by Article 1 of Protocol 1. The Tribunal was referred to the case of R v A (2) [2001] 2 WLR 1546 per Lord Slynn at paragraph 44. This obligation was reinforced by the prohibition in section 6 of the Human Rights Act, namely that it is unlawful for the tribunal, as a public authority, to act in a way which is incompatible with a Convention right.
25. It was incumbent on the Tribunal to take a broad approach,, the reality of the situation was that the costs were incurred consequent upon the appeal. They were incurred as a consequence of Customs and Excise refusing to exercise a discretion under Article 244, which was consequent upon the appeal. It was perfectly in order for the Tribunal to interpret its jurisdiction so as to cover those expenses. The Customs and Excise objection was a technical one.
26. The Appellant will have been unlawfully deprived of its possessions if it is unable to recover the quota purchase costs. The Commissioners' classification which occasioned the appeal was wrong, and its refusal to suspend implementation of the decision pending the appeal which caused the consequential quota purchase cost to be incurred had not been objectively justified. Both these events left the Appellant with no realistic option but to continue to import their products using the disputed tariff classification pending the appeal. In these circumstances the quota purchase costs have been effectively "thrown away" as a direct consequence of the Commissioners' acts.
27. Furthermore, no relevant public interest has been identified by the Commissioners as justifying the deprivation, nor was it subject to conditions provided for by law and by general principles of international law. No "fair procedure" governed the operation of the discretionary exercise of the power to suspend the implementation of the disputed decision. The Tribunal was referred to the case of R (on the application of Hoverspeed Ltd) v Commissioners of Customs and Excise [2002] EWHC 1630 at paras 155 onwards where the court referred to the case of Hentrich v France (1994) 18 EHRR 40.
28. Of the decision in Hentrich it was said that a significant part of the Strasbourg court's concerns related to the fact that the pre-emption procedure was not attended by the basic procedural safeguards, which did not, however, detract from the main thrust of the judgment at paragraph 42 which states:

"The Court considers it necessary to rule on the lawfulness of the interference. While the system of the right of pre-emption does not lend itself to criticism as an attribute of the State's sovereignty, the same is not true where the exercise of it is discretionary and at the same time the procedure is not fair.

In he instant case the pre-emption operated arbitrarily and selectively and was scarcely foreseeable, and it was not attended by the basic procedural safeguards. …"

29. In the Hoverspeed case the court also referred to the case of Air Canada. The Strasbourg court had held five to four in favour of the Commissioners' exercise of its wide powers of forfeiture, it had been held that the relevant law (though strikingly wide) was accessible, and the Commissioners' exercise of their powers following an express warning was predictable.
30. The Appellant's deprivation of £94,445 on quota purchase can be seen, following the Tribunal's decision, to have been unnecessary. No principal of law requiring the incurring of unnecessary quota import costs had been advanced by the Commissioners, and they had achieved no positive purpose for any party (other than the vendor of Chinese export quota for T-shirts).
31. The deprivation cannot be excepted from the general provisions of Article 1 of the 1^st Protocol on the basis that the deprivation is an incident of the right of the UK to enforce such laws as it deems necessary to control the use of property in accordance with the general interest, or to secure the payment of taxes or other contributions or penalties.
32. Whilst the suspension of the decision can be made if irreparable damage is feared, there is a very wide discretion which requires procedural safeguards. The Commissioners should have invited the Appellant to say why the discretion should be exercised in their favour. If there was to be a deprivation of property, this must be justified as being provided for by law, or in the public interest. In the present case it was neither. There is no principle which requires the Commissioners to be spared from the consequences of their having wrongly or unfairly failed to exercise a discretion, or from having exercised it unlawfully.
33. Even if the Appellant's deprivation of the costs of the quota purchase could be objectively justified, it could not be shown to be proportionate to any advantage pleaded by way of justification. The governing principle of Article 1 is that of "fair balance". A fair balance has to be struck between the protection of a person's fundamental rights and the demands of the general interest of the community. A person should not have to bear too heavy a burden in the pursuit of the public interest – see Holy Monasteries v Greece (1994) series A No.301-A, 20 EHRR 1, para 70. In addition the Tribunal was referred to paragraph 56-66 of that decision on the interpretation of Article 1.
34. It was submitted that Article 1 was engaged in the present case and there had been a breach of the Appellant's fundamental rights, it was therefore incumbent on the Tribunal (so far as it was possible to do so) to interpret rule 29 as conferring jurisdiction on the Tribunal to make a costs order including the expense of the quota purchase.
35. In the Greek Monasteries case the government was making a technical argument to say that there had been no technical deprivation, whereas the court said they could not rely on that. The court looked at the reality to see if in fact there had been deprivation, and the court did not accept that technical arguments which redeemed the position should deny the reality of the situation that there had been deprivation. In the present case the reality was that expenses were incurred because of the disputed decision and because of the decision not to suspend implementation.
36. The Respondents' argument that the quota costs were consequent on the decision, or upon the decision not to suspend under Article 244, and therefore were not consequent upon the appeal, was wrong in that the decision under Article 244 was itself consequent upon an appeal having been in contemplation, and therefore there was a necessary link with the appeal.
37. The availability of other avenues, such as seeking damages or judicial review proposed by the Respondents did not preclude this particular avenue being open to the Appellant.
38. Whilst it was open to the Appellant to cease importing the goods and thus to avoid incurring the expense, this again was an entirely technical point taken by the Respondents, and, as in the case of the Greek Monasteries, whilst it was true, it was irrelevant. In the present case the Appellant had no practical alternative but to incur the expenditure and there was therefore deprivation in a real sense caused by the Commissioners' decision. The ECHR leans against technical distinctions, as shown in the Greek Monasteries case.
39. The Commissioners had a wide margin of appreciation as to whether or not to suspend implementation of Article 244, the Appellant's case was not that they did not suspend implementation, but that the fact of their refusal to suspend implementation had consequences.
40. There must be a balance between the individual's right not to be deprived and the general interest. That balance requires that the exercise of any discretion must be according to procedures of access and foreseeability, neither of which were present in this case. The decision therefore was not taken according to the provisions of law. The Commissioners' duties as to the collection of tax and the application of the Customs Code required them to make decisions which may be overturned on appeal. The fulfilment of their duties required them to say whether they will or will not suspend implementation . It did not require them, given that there is a power to suspend, where a decision has been shown to be wrong, to be immune from an obligation to compensate. That was not necessary in order that their administrative duties should not be impaired.
41. With regard to proportionality, the Appellant's case was that there had been an infringement of Article 1, there had been a deprivation which was not subject to conditions provided by law, and that even if the deprivation was subject to conditions provided by law, it could not be sustained because the result was disproportionate. The advantage to the Commissioners was disproportionate to the Appellant's expenditure.

The Respondents' submissions

42. With regard to the Appellant's legal costs on which no argument had been advanced by Mr Walters to the Tribunal, the Commissioners had, in a letter dated 3 May 2002, made an offer of £28,000 net of VAT in full and final settlement of the Appellant's claim. The claim had been broken down as follows:

Roiter Zucker fees - £12,327.13 plus VAT

Counsel's fees - £28,000.00 plus VAT

John Mitchell's charges - £ 3,479.11 plus VAT

It was disputed by the Respondents that VAT was an item of costs which the Appellant was entitled to recover.

43. At the hearing it was stated that the Respondents had received no break down from Roiter Zucker of their costs claimed for the period January to March 2002, which were being claimed in the sum of £8,516.75. A maximum of £10,000 was therefore offered towards the firm's costs. An offer of £15,000 was made in respect of Counsel's fees, and an offer of £3,000 in respect of the experts' fees, which included a charge for visiting the Dutch Customs in Rotterdam on 13 February for which the Respondents were given no explanation.
44. It was submitted that the Commissioners' offer was reasonable in that costs must be proportional to the matters at stake, and it was not in keeping with the modern approach to litigation to expend as much as £43,000 which was almost half the Appellant's loss of £94,000, in costs in preparation for a two-day tribunal hearing.
45. The Commissioners were only required to meet the Appellant's reasonable costs. The Tribunal should assess how much the public purse should reasonably bear, and it was relevant that the payment would come from public funds.
46. With regard to the costs of the quota purchase, it was not a cost of or incidental to or consequent upon the appeal. It was a cost which was consequent upon the Commissioners' liability decision of 18 may 2001. The additional cost did not flow from the appeal and would have been incurred regardless of any appeal against the liability ruling. It was not within the plain words of regulation 29. The costs incurred were in consequence of the liability decision which was underlying the appeal. The link was between that decision and the purchase quota, it was not because of the appeal that the Appellant bought the quota.
47. It was clear from the statement of Mr Edward Woolf which was included in the original trial bundle that the decision on classification meant he could not get an import licence and he therefore purchased the additional quota which gave rise to the costs. This was also apparent from the letter of 8 June from the Appellant where it was said that the purchase of the quota was consequential upon the decision under appeal. It was not consequential upon the appeal itself.
48. The relevant question to ask was whether the costs would have been incurred if there had been no appeal, such as the situation with the legal expenses.
49. The case of Nader was relied on as showing that the additional costs were not "costs" within the meaning of Order 62 or CPR Part 43. In the case of Nader in the headnote the finding is summarised as follows:

(2) The losses sustained as a result of the closure of N's business were not recoverable under the rubric of "costs" in rule 29 of the 1986 rules. Moreover the words "consequent upon the appeal" connoted costs incurred following, or resulting from the appeal. Accordingly, even if the losses could be recovered as costs, they could not properly be described as costs "consequent upon" the appeal as the loss was sustained before the appeal was embarked on.

At page 812 of that case Farquharson LJ stated as follows:

"I turn to the second category of costs, which is the subject of the cross-appeal by Dr Nader, namely the loss which he claimed he suffered as a result of having to close his business. He has already indicated that the loss he claims involved a very substantial sum. It needs, however, hardly to be stated that a loss of that kind is not recoverable under the rubric of costs. Indeed, they are not costs at all, as generally understood, but may be damages suffered as a result of the closure of the business. … Even assuming this loss is properly described as costs, which in my judgment it is not, they could not be categorised as consequent on the appeal. The loss was sustained before the appeal was embarked on, although no doubt it is continuing. "Consequent upon the appeal", in my judgment, connotes costs incurred following, or resulting from, the appeal, in contrast to the words "of" and "incidental"."

50. In the present case if the purchase of the quota is recoverable than it is so as damages. The Appellant makes a false distinction between loss of profit, as in the Nader case, and his loss in the present case. The Court of Appeal was not basing its decision on that, but was looking at the type of loss sustained. In the present case the Appellant has suffered damages as a consequence of the Commissioners' decision.
51. The Commissioners also relied on the case of Mahindra Dave in the High Court which overturned the decision of the tribunal in particular the dicta of Mr Justice Burton:

"It would have been very easy to find a different form of wording for the statute if it was intended that costs should be recoverable dating back to the commencement of the dispute. This is however, an appeal against the review, and it is only costs incidental to the appeal which are recoverable."

52. In the present case it was a matter of ordinary statutory construction, and there was no need to look at the matter in the light of the Human Rights Act. Regulation 29 is plain on its face. The High Court felt no need in the case of Dave to go beyond the conventional rules of statutory interpretation nor to refer to the ECHR.
53. The Appellant's argument under Article 1 of the ECHR could only conceivably apply in the context of the damages claim.
54. Insofar as the merits are concerned, the Commissioners' decision had not of itself deprived the Appellant of its possession. The Commissioners gave a liability ruling and that liability ruling did not affect the customs duty payable, and so had no direct or immediate financial consequences. The decision to purchase the additional quota was a commercial decision by the Appellant in response to liability ruling. The Greek Monastery case can be distinguished on that basis.
55. Furthermore there was a very wide margin of appreciation under Article 1, and any interference which may be established, will on the facts in this particular case fall within one of the following:

(1) the second sentence, as being subject to the conditions provided for by law – namely the Customs and Excise Management Act 1979, combined with the UK community obligations to enforce Community Customs Code; or

(2) the second paragraph, as being part of the measures undertaken by the UK to secure the payment of tax. The Commissioners must, in domestic and community law, administer customs duty; that involves giving rulings in relation to the application of the Community Customs Code in the individual's cases. It is relevant to this context that there was no bad faith or carelessness by the Commissioners in reaching the decision appealed against; a procedure exists for requesting binding tariff information in advance of importation, so as to avoid any uncertainty in the Customs duty liability or classification. The Appellant chose not to deploy that procedure in the present case.

56. If the Appellant is right and consequential losses amount to costs, this would give rise to an enormous potential liability to other public authorities. The Tribunal was referred to the case of X v Bedfordshire County Council heard in the House of Lords in October 1994 and June 1995 (unreported).
57. If the Tribunal were against the Commissioners on the matter of the costs of the quota purchase, the Tribunal was asked to allow further argument from the Commissioners as they had had no prior notice of the nature of the argument, only that Article 1 of protocol 1 would be raised. There would be very grave consequences to the Commissioners were the Appellant's arguments to be upheld.

Reasons for decision

58. Whilst the matter of the application of the Human Rights Act was not raised in the High Court in the case of Mahindra Dave, that decision was made on 18 April 2002 when the Human Rights Act was in force. The issues raised in that case were dealt with as matters of statutory interpretation, and the court did not itself see the need to raise any issue under the Human Rights Act. Whilst Mr Walters' arguments on the Human Rights Act might well be relevant when considering any action for Judicial Review or damages, which were both available to the Appellant as courses of action, I do not find that they are relevant in the present case.
59. I accept Miss Whipple's argument that the costs of the quota purchase were consequent upon the decision of the Commissioners to classify the goods to a different code from that which the Appellant had expected. The decision to purchase the quota was a commercial decision, it was not an inevitable consequence of the Commissioners' reclassification decision.
60. All the arguments so carefully raised by Mr Walters could be raised in proceedings for judicial review of the Commissioners' decision not to exercise their powers under article 244 in the Appellant's favour. Whilst I accept that the quota purchase costs were a consequence of that refusal, and that the discretion which was not exercised in the Appellant's favour only arises in circumstances where there is an appeal, the fact that the losses follow from there being a need to be an appeal does not mean that the losses are properly costs of the appeal itself.
61. I accept Mr Walters' submission that it is necessary for the Tribunal to interpret its powers in accordance with the Human Rights Act, and that there is an obligation to adopt a broad interpretation, nonetheless taking a broad interpretation is only necessary where there is ambiguity. There is no ambiguity in the wording of rule 29. On the plain meaning of the words the losses suffered by the Appellant are not 'costs of' and I do not find that they are 'consequent upon' the appeal. I adopt the reasoning of Farquharson LJ in the case of Nader at p.812 cited above, and do not accept that that case can properly be distinguished.
62. With regard to the legal and experts' costs, whilst I take note of Miss Whipple's information that her own brief fee for the two day hearing was only £1,000 whereas Mr Walters received a brief fee of £20,000, this discrepancy is more a matter of Customs and Excise not paying Miss Whipple adequately than of Mr Walters being paid excessively. I do not consider that either Counsel's fees or Roiter Zucker's fees are unreasonable. Mr Walters is a senior and experienced counsel and the matter was of very great importance to the Appellant. Miss Whipple made the point that there had to be some relationship between the costs expended for £43,806.24 and the loss to the Appellant of some £94,500. The £94,500 loss however was only that for one year. Had he lost the case, there would have been further greater losses to the Appellant's business.
63. I accept the argument that the costs of the experts' visit to Dutch Customs had not been justified and therefore the Customs offer of a payment of £3,000 towards his charges is a reasonable one.
64. At the hearing I asked Mr Walters whether any time had been expended by him in relation to advising on the issue of the quota cost, and he informed me that a small amount of time had been so spent and was represented in the sums claimed. In the circumstances therefore I direct that there be a reduction in both Counsel's fees and Roiter Zucker's fees in the order of five per cent.
65. In all the circumstances I reject the Appellant's claim for the costs of the quota purchase, but allow its claim for legal fees to the extent that Roiter Zucker's and Mr Walters' fees are only reduced by five per cent, and John Mitchell's charges are reduced to £3,000. No VAT shall be payable in respect of any of these amounts.
66. With regard to the costs of this hearing, a considerable proportion of time was taken up by the Appellant's argument on the Human Rights Act point on which it did not succeed, and its claim in respect of legal costs has been reduced in part, I therefore direct that the Appellant shall pay three quarters of the Respondent's costs.
67. Liberty to apply with regard to the costs of the hearing.

MISS J C GORT

CHAIRMAN

RELEASED: 29 October 2002

LON/01/7062-ADD.GORT