Padley Ltd and Agroeuropa Spa v Her Majesty's Revenue & Customs, C 00270

C00270

COSTS – Application for indemnity costs – Failure to disclose notes – Classification of uncooked seasoned meat – Samples sent for analysis – Reports produced without notes – Appellants told by Customs that no notes – Analyst produced notes during cross-examination – Finding that conduct of Customs unreasonable to a high degree – Direction for indemnity costs

PADLEY LTD (LON/04/7053) Appellant

• and –

AGROEUROPA SPA (LON/05/7046) Appellant

• and –

Tribunal: THEODORE WALLACE (Chairman)

MRS SHAHWAR SADEQUE, BSc, MPhil

Given in London on 23 February 2009 under Rule 29

© CROWN COPYRIGHT 2009

1. This decision concerns applications by the Appellants for indemnity costs following the decision on 27 March 2008 allowing their appeals against post-clearance demands for customs duty in respect of the importation of frozen uncooked peppered turkey from Brazil and Chile. The decision number in the appeal was C255.

2. At the request of the Appellants and also Customs we considered the application on the basis of written submissions although this proved much more difficult and time consuming than an oral hearing.

3. Customs do not oppose an order for costs on the standard basis but resist the application for indemnity costs.

4. The consignments giving rise to the demands were entered under Commodity Code 1602. Samples were taken by Customs and sent for analysis at the laboratory of CCFRA Technology Ltd (“CCFRA”), Chipping Campden, Gloucestershire. On the basis of analysis reports by CCFRA, Customs reclassified the consignments under 0207 involving increased duty and issued the demands

5. The appeals raised a series of issues in respect of the tests and analysis by CCFRA. We concluded that there were material irregularities in the examination of the samples, that but for the irregularities the outcome of the verifications might have been different and that there was therefore no valid verification within Article 71.2 of the Community Customs Code so that the declarations on entry stood.

6. The main ground on which both Appellants relied in applying for indemnity costs arose out of the production by Louise Gearey, the main witness for Customs, during cross-examination on the fourth day of the hearing of files which she had collected from her office overnight and which had not been listed by Customs. This was covered in paragraphs 13, 68 to 73 and 82 and 83 of Decision C 255.

7. The Tribunal had observed on the third morning of the hearing that CCFRA must have files relating to the tests. At the outset of her evidence that afternoon, Miss Gearey said that she did keep notes or files including the booking-in forms but did not have those with her. The reports had been prepared from the notes and her witness statements were prepared from the reports. It was in the middle of the following morning that she produced the files which up to that point had not been seen by counsel or solicitors on either side; those included the Analysis Request Forms (the booking-in forms) and Visual Assessment Sheets.

8. On 7 December 2007 the Tribunal directed,

“That by 20 December 2007 the Respondents produce to each appellant copies of the visual inspection records and any other material relating to the reports by CCFRA in respect of the consignments giving rise to the post-clearance assessments under appeal.”

These were duly produced on 20 December.

9. On 26 August 2005 Ince & Co, Padley’s solicitors, had served on Customs a request for further information and disclosure extending to 12 paragraphs on six pages. The request in paragraph 8 read as follows,

“8. Please provide copies of any notes taken either by CCFRA or HMCE, relevant to the issues raised in this appeal, from January 2002 to date, including but not limited to notes taken by the ‘classification team’ at Southend.”

The response by Michael Zeffman, senior lawyer, Customs and International Advisory Division dated 9 December 2005 was as follows,

“8. There are no notes taken by CCFRA or HMCE relevant to the issues raised in this appeal at the relevant time.”

10. Customs produced an e-mail from Mr Palmer to Miss Gearey on 7 November 2005 which included this,

“You will see from paragraph 8 of Ince’s fax that they are asking for copies of any notes taken by CCFRA or HMRC – can you also confirm whether or not you have any such notes as part of your statement – if the answer is yes then please add them to your list of exhibits.”

In an e-mail to Mr Zeffman on 18 November 2005, Mr Palmer said,

“I have requested a copy of any notes from Louise Gearey. There are no notes held by HMRC …

“You have the amended version of Louise’s statement – I am waiting to hear from her regarding whether there are any notes held by CCFRA.

Please let me know if you require any further clarification at this stage.”

11. On 24 April 2006 Ince & Co again wrote to Mr Zeffman referring to his letter of 9 December 2005 asking for any notes taken by CCFRA relevant to the issues pleaded. Mr Zeffman’s reply on 5 July 2006 said that he had asked all personnel involved in the appeal to check their records for further documents that should now be disclosed. This letter was copied by Mr Zeffman to Mr Palmer and Miss Gearey.

12. In a letter to Ince & Co on 28 December 2007 after the first hearings, Mr Zeffman wrote that he had sought instructions from the Review Officer, Mr Palmer, and that Mr Palmer had specifically asked Miss Gearey to check the files at CCFRA and “she informed him that no such notes were held at CCFRA.” In a further letter dated 7 January 2008 Mr Zeffman wrote,

“In fairness to Miss Gearey I should explain that Steve Palmer asked her to exhibit any such notes in her witness statement [later served and dated 30 November 2005]. Miss Gearey did not exhibit any such...