Brunel Motor Company Ltd v Revenue and Customs & Anor

Neutral Citation Number: [2008] EWHC 74 (Ch) IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION Case No: CH/2007/APP/0319 Royal Courts of Justice Strand, London, WC2A 2LL Date: 24/01/2008 Before : MR JUSTICE PETER SMITH - - - - - - - - - - - - - - - - - - - - - Between : Brunel Motor Company Limited Appellant - and - The Commissioners for HM Revenue and Customs - and – Ford Motor Company Limited - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - First Respondent Second Respondent Andrew Hitchmough and Jonathan Bremner (instructed by DLA Piper) for the Appellant Raza Mithani (instructed by HMRC Solicitors) for the First Respondent Jonathan Peacock QC (instructed by Ford Motor Company) for the Second Respondent Hearing dates: 16th January 2008 - - - - - - - - - - - - - - - - - - - - - Judgment Peter Smith J : INTRODUCTION 1. 2. This is an appeal by the Appellant (Brunel Motor Company Ltd in Administrative Receivership) against a decision of the VAT and Duties Tribunal (Michael Johnson (Chairman) and John Lapthorne) released on 3rd April 2007 to the effect that certain credit notes issued by the Second Respondent (“Ford”) to the Appellant were valid for VAT purposes thus obliging the Appellant to repay to the First Respondent (“HMRC”) VAT shown on those credit notes. The Appellant previously recovered that VAT as input tax. The credit notes were issued after the Appellant went into Administrative Receivership in respect of cars which had been supplied by Ford to it under a written Main Dealer Supply Agreement (“the Supply Agreement”) dated 1st February 2001 between Ford (1) FCE Bank Limited (2) and the Appellant’s holding company Quartic Motor Group Limited (3) (“Quartic”). 3. 4. The Appellant made two payments of £1,179,621 and £1,183,232 respectively (total £2,362,859). Under the terms of the Supply Agreement Ford was entitled to retain title until payment in full had been received. By clause 12(a)(ii) of Part C of the Supply Agreement, the Supply Agreement terminated automatically on the appointment of Administrative Receivers. TERMS OF SUPPLY AGREEMENT 5. 6. 7. 8. 9. Ford supplied motor vehicles to the Appellant under the terms of the Supply Agreement (Part B). Under clause 4 part B the dealer was deemed to have purchased any vehicle upon its adoption and was obliged to pay the full invoice price (which included VAT) but the property in the vehicle was retained until full payment had been received (ibid Part C clause 8) the vehicle in question could either be delivered to the dealer or held at a VHC (a vehicle holding centre). I should say that the delivery of the vehicles by Ford under the terms of the Supply Agreement was a sale upon which Ford was obliged to charge VAT under the terms of the Agreement and the Appellant was obliged to pay it. Ford would then account for that as output tax in due course and the Appellant in due course would have to claim it as input tax. Ford duly accounted for the output tax (although it was never paid). The Appellant did not actually claim the input tax (it has never paid it) although the Appeal is designed to reverse a payment made to HMRC in circumstances set out below so as in effect to claim the benefit of the input tax that it was due to pay but which it never paid. The obligation to pay after the invoices are delivered is upon the occurring of various events identified in part B of clause 4. Under the same part B clause 6 provided for transfer of vehicles held in stock between dealers. The purpose of this arrangement was so that a potential buyer could search for a particular type of vehicle which was held in stock for all Ford dealers that he might wish to buy. If a vehicle is found the dealer with whom he was negotiating could then claim that vehicle out of the stock pool and under that basis there is a transfer of the contract between the dealer on whose behalf the vehicle is being held to the new dealer to enable that latter dealer to sell the vehicle to the potential customer. This then makes the entirety of Ford vehicles held in these stocks available to any potential customer anywhere in the country. From such a transfer taking effect the first dealer contract is cancelled with immediate effect and Ford issues a credit note to that dealer (part C clause 6.1(c)). In VAT terms that would mean that the Appellant would no longer be able to claim input tax in respect of such vehicle and Ford would not have to account for output tax in respect of that sale but of course it would have to account for output tax in respect of the second sale to the substituted dealer. 10. The termination provisions in part C are the most important provisions for the purpose of this Appeal in particular clause 12 which provides as follows:- “12. Termination This Agreement shall remain in force until (a) terminated:- (1) by Ford giving to the Dealer (and to FCE), provided that Ford is also terminating at the same time all other outstanding Main Dealer Vehicle Supply Agreements between it, FCE and Authorised Ford Dealers, at least 7 days prior written notice of termination; (2) by either Ford, FCE or the Dealer giving to the others at least 60 days prior written notice of termination; PROVIDED THAT this Agreement shall terminate automatically (without the need for notice) forthwith:- (i) on an administration order being made in relation to Ford, FCE or the Dealer or an effective resolution being passed or an order being made for the winding up of Ford, FCE or the Dealer; or (ii) on the appointment of a Receiver or Administrative Receiver to, or over any property of, Ford, FCE or the Dealer; or (iii) the directors of Ford, FCE or the Dealer making a proposal for a voluntary arrangement or obtaining a moratorium pursuant to Part 1 of the Insolvency Act 1986; or on equivalent steps or proceedings to those set out (iv) in sub-paragraphs (i) to (iii) above being taken in any jurisdiction in relation to Ford, FCE or the Dealer; or (v) shall terminate (howsoever occasioned). upon the date upon which the Dealer Agreement Ford and/or FCE may also by notice in writing to (b) the Dealer forthwith terminate this Agreement if the Dealer: (i) does not pay any amounts due under this Agreement; or (ii) is in breach of any of the other terms and conditions, express or implied, of this Agreement or of any of the terms and conditions of any other agreement between FCE and the Dealer; or (iii) any manner of execution or distress upon the Dealer's property is levied or threatened; or a mortgagee or chargee takes steps to enforce its security against the Dealer (or in Northern Ireland, an order for the seizure and sale of goods is made against the Dealer under the Judgment Enforcement (NI) Order 1981 or in Scotland a right of hypothec is exercised over the Dealer's property or assets or the Dealer's property or assets are poinded or assessments are issued against the Dealer), or a meeting of the Dealer's creditors is called; or (iv) does or causes to be done or permits or suffers any act or thing whereby Ford and/or FCE believe its right to the Vehicles are or may be put at risk; or (v) suffers an event falling within paragraph (v) (change in the ownership etc of the Dealer) of Attachment 4B to the Dealer Agreement. (c) Agreement: Immediately upon the termination of this (i) all Unpaid-for Vehicles (whether supplied under Part A or Part B (but (for the avoidance of doubt) in the case of Vehicles supplied under Part B only if and to the extent that they shall be Vehicles in relation to which the due date for the payment of the invoice in accordance with the provisions of clause 4 of Part B shall have occurred prior to the date of termination) in the case of a termination upon the happening, in the case of the Dealer, of any of the events specified in paragraphs (a) or (b) of this clause 12, or upon the termination of the Dealer Agreement as specified in paragraph (a)(v) of this clause 12; and all Unpaid-for Vehicles supplied under Part A, in (ii) the case of a termination upon the happening, in the case of Ford or FCE of any of the events specified in sub- paragraphs (i) to (iv) of paragraph (a) of this clause 12 (but subject to clause 7(c) of Part A); shall be returned to Ford, FCE or its agent (or as Ford, FCE or such agent may direct), but, in the case of Vehicles supplied under Part B, only if and to the extent that Ford and FCE shall so elect by notice to the Dealer, and the Dealer shall cease to be in possession of such Vehicles with the consent of Ford or FCE (as the case may be). Vehicles which fall to be returned under sub- paragraph (i) of this paragraph (c) or paragraph (d) of this clause 12 shall be returned at the expense of the Dealer. Vehicles returned pursuant to this paragraph (c) or the said paragraph (d) shall be in the same condition as when delivered to the Dealer, except and insofar as any modification, adaptation or addition shall have been carried out to them prior to termination (in which case the Dealer shall also become immediately liable to Ford or FCE (as the case may be) for the cost of reinstating the Vehicle to such condition. The termination of this Agreement (and the return of any Vehicle) shall be without prejudice to the respective rights, liabilities and obligations of Ford, FCE and the Dealer, with respect to Vehicles (including, without limitation, the Vehicle so returned) supplied to the Dealer under this Agreement prior to such termination (or return), and payments due or becoming due hereunder in respect of the same (including, without limitation, interest payable under clause 4(c) of Part A and clause 4(b) of Part B and any Violation Charge payable under clause 11 (b) of Part C)), and notwithstanding such termination the Dealer shall continue to be bound by clauses 5, 7, and 11 of this Part C. (d) If in the case of Vehicles supplied under Part B the Dealer shall upon or subsequent to the date of termination of this Agreement fail to pay an invoice in respect of a particular Vehicle supplied under Part B on the due date for the payment of such invoice in accordance with the provisions of clause 4 of Part B, the said Vehicle shall, if Ford or FCE shall so elect by notice to the Dealer, be returned to Ford, FCE or its agent (or as Ford, FCE or any such agent may direct) and paragraph (c) of this clause 12 shall apply to such Vehicle. (e) The return of a Vehicle to Ford or to FCE or its agent pursuant to this clause 12 shall be without prejudice to the other rights and remedies of Ford and/or FCE against the Dealer with respect to such Vehicle and its sale and purchase under this Agreement including without limitation the right to the extent applicable to damages for breach of contract and the recovery of the purchase price of the Vehicle if and to the extent that the same is due and payable but unpaid. (f) Paragraph (ix) of Attachment 4B to the Dealer Agreement shall be amended by the addition of the following at the end after the word "Agreement": "or the Vehicle Supply Agreement between Ford and the Dealer (as amended from time to time).” 11. 12. 13. 14. It will be seen that clause 6 part C (the sale to a new dealer) does not survive the termination (clause 12 (c)). The important provision is sub paragraph (e) which provides as set out above that the return of the vehicle “shall be without prejudice to the other rights and remedies of Ford…against the Dealer with respect to such vehicle and its sale and purchase under this Agreement including without limitation the right to the extent applicable to damages for breach of contract and the recovery of the purchase price of the vehicle if and to the extent the same is due and payable but unpaid.” The arguments before me have concentrated mostly on clause 12. Finally I should refer to Part C clause 21 of the Supply Agreement which provides:- “21 Entire Agreement This Agreement and the Dealer Agreement contains the entire agreement and the understanding of the parties hereto with the respect of the subject matter of this Agreement and can only be amended in writing by duly authorised officers of each of the parties.” 15. Whilst I accept that clause 21 as a matter of construction prevents the implication of an implied term of the type canvassed in argument before me I do not accept that it prevents the parties from agreeing a mutual rescission of the agreement in the circumstances set out in the decision of the Tribunal. THE EVENT 16. 17. 18. 19. 20. 21. Various vehicles were supplied to the Appellant under the terms of the Supply Agreement and remained unpaid for. On 2nd October 2002 three partners in Baker Tilly were appointed as joint Administrative Receivers. Under the terms of clause 12 as set out above the Supply Agreement terminated automatically. Ford then became entitled to the return of the vehicles subject to the provisions of clause 12. Those provisions preserve (at its option) all other remedies it has against the Appellant. Thus for example if a vehicle were to be repossessed and sold at a value less than the amount of the invoice (including for this purpose VAT) Ford would be able to claim that from the Appellant; it of course is in Administrative Receivership so that means in effect proving as an unsecured creditor with all the other creditors that exist. Ford also at the same time automatically issued a credit note in respect of the vehicles repossessed to the full value of the invoice which would formally have been presented. Subsequently Ford obtained from HMRC a repayment of the output tax it had previously paid in respect of the sale of the vehicles to the Appellant. It did not apply for Bad Debt relief. Had it done so it would have obtained a relief in respect of the output tax it had paid. When that occurred the Appellant became theoretically liable to repay the input tax which it would set off against its output tax liability. However by way of extra statutory concession HMRC in the case of an insolvent business does not require that input tax to be repaid thus reducing the size of the creditors proving in the insolvency of (in this case) the Appellant. In that eventuality as the Appellant would not have to repay the input tax it can off set that against the output tax that it is liable for. Thus HMRC suffers a loss if that procedure is operated. However that procedure was not operated and it is no longer possible for Ford to apply now for Bad Debt relief. Nor is it possible for HMRC to recover the output tax it has repaid to Ford which was claimed after the credit notes were automatically issued for the same reason. The consequence of the appeal if allowed therefore is that the Appellant will recover the sum of £2,362,859 plus statutory interest but HMRC will not be able to reverse the repayment of the output tax made to Ford and Ford will not be able to claim Bad Debt relief. ACTIONS UPON TERMINATION 22. The Tribunal heard the evidence of Bruce Alexander Mackay in a witness statement dated 27th October 2006. The evidence is summarised in the decision of the Tribunal and there is no challenge to those findings. As Mr Hitchmough who appeared (with 23. 24. 25. 26. 27. Mr Bremner) for the Appellant acknowledged there is no general right of appeal against the finding of fact of the VAT Tribunal unless the factual findings were so extreme that the Tribunal could not reasonably have come to them. No such contention is made by the Appellant. As summarised in paragraphs 15-18 the then Administrative Receivers in October 2002 received large numbers of credit notes from Ford in respect of unpaid for vehicles to be returned to it. All the Administrative Receivers in question were skilled and experienced insolvency practitioners and they perceived correctly that their obligation had a commercial objective of eliminating the company’s “old debt” and putting the business in to such shape that following a clean break with the past trading could proceed with a reopened credit line with fresh supplies from Ford. On that basis the receivers achieved eventually a sale of the business (to Ford). The Administrative Receivers were therefore concerned to preserve the business with a view to selling it as a going concern. Obviously they could only do that if they could stock it with vehicles. The dilemma they faced was that Ford had an absolute right to return of the vehicles consequent upon the appointment of the Administrative Receivers. Therefore what happened was that the vehicles were returned to Ford and Ford issued the credit notes. Simultaneously Ford then sold the vehicles upon the same terms to the Administrative Receivers who were carrying on the new business at the Appellant’s premises. The sale was for the same price as the sale to the Appellant. The purpose of the exercise was therefore for the Administrative Receivers to run that new business and sell it ultimately for the benefit of the creditors of the Appellant (including of course the debenture holders who had appointed the Administrative Receivers). Without vehicles that would be impossible to achieve. The mechanism so adopted also involved Ford issuing the credit notes. In other words the Administrative Receivers and Ford acted very like the arrangement that would have taken place had there been a new dealer transaction in accordance with part B clause 6. As I have said above it could not operate as that because that clause did not survive the automatic termination in clause 12, part C upon appointment of the Administrative Receivers. The result of that exercise meant that the Administrative Receivers on behalf of the Appellant accepted the credit notes and the consequent reduction of input tax. That meant that the Appellant paid output tax to HMRC it was liable to pay without deducting the VAT cost of the acquisition of the vehicles as input tax. The acceptance of the credit notes by the Administrative Receivers therefore increased the Appellant’s liability to HMRC. The Administrative Receivers took advice from Berwin Leighton Paisner (“BLP”) their own internal departments and HMRC about the treatment of these transactions. BLP apparently advised that the title and retention clauses were valid and that the credit notes issued by Ford appeared also to be valid. In January 2003 HMRC visited the site and confirmed to the Administrative Receivers that they should for VAT purposes allocate the credit notes to the period in which the original VAT invoice had been issued, HMRC would approve the draft VAT returns to October 2002 and credit notes relating to VAT periods should be dealt with by way of voluntary disclosure. 28. In 2004 the Administrative Receivers took internal advice from Miss Caroline Van Hecke of Baker Tilley because National Westminster Bank one of the debenture holders disagreed with the treatment of the credit notes. She advised that the credit notes could not be treated differently for VAT purposes. 29. On 21st October 2005 two practitioners in Ernst & Young were appointed Administrative Receivers jointly with Mr Mackay. They reviewed the VAT position and sought to reclaim the above amounts of VAT by letter dated 31st October 2005 on the basis that the Appellant had been entitled to the input tax so the tax should never have been paid. It is significant that Mr Mackay in his statement (on behalf of Ford) does not say the processes which he participated in on behalf of the Appellant in 2002-2003 were made on any mistaken basis. His evidence was not challenged on this point. To the contrary he suggests that what he did was in accordance with advice he received from BLP, HMRC and advice within Baker Tilly. Also of course the Appellant did not actually pay the input tax and in effect an order for repayment will confer a windfall (primarily) in favour of the debenture holders at the expense of HMRC for the reason that I have set out above. Ford will not suffer a loss because of its inability to claim Bad Debt relief because it has obtained the VAT refund of the output tax as set out above. I accept that by virtue of the extra statutory concession referred to above had the procedure followed a claim for bad debt relief HMRC would have suffered a loss anyway. When the challenge was notified there was a short (a matter of a few months only) opportunity for HMRC and Ford to reverse the repayment of output tax and to claim Bad Debt relief. However neither step was taken and neither step is now possible the time limits having expired. DECISION OF THE TRIBUNAL 30. The Tribunal rejected the claim for repayment. 31. Mr Hitchmough submitted before the Tribunal (and repeats the submissions before me) that Ford on termination had the rights set out in part C clause 12. It included the preservation of all rights it had against the dealer not withstanding the return of the vehicles. As I have said that is plainly intended to cover the shortfall (if any) between the sale price of the vehicle to the Appellant and the resale price obtainable by Ford. Thus Mr Hitchmough says that notwithstanding the return of the vehicle the Appellant remain liable to pay the price (in particular the VAT) under the terms of the Supply Agreement and that obligation was expressly preserved by clause 12. He submitted that the events that occurred amounted to a purported rescission of the Supply Agreement when clause 12 had no such power in it. On the contrary he submitted the Supply Agreement was determined for the future with a number of its clauses continuing to have effect. That meant that the obligation to make payment was accelerated thus the Appellant remained liable to pay the VAT as an input and was thus entitled to reclaim it or off set it against its output liability (whether it paid it or not). 32. He supported this submission by an example that he gave in his skeleton argument before me (paragraph 28). If Ford sells a vehicle to the Appellant for £100 plus VAT the total amount of the debt is £117.50. If Ford repossesses the vehicle and assuming there is no change the VAT debt of £17.50 remains. The return of the vehicle could not of itself extinguish the whole debt. With respect to Mr Hitchmough I think that he is confusing the operation of the treatment of the VAT in respect of the debt and the contractual liability. If Ford repossess the vehicle there will only be a shortfall (i.e. the outstanding £17.50) under clause 12 if Ford upon resale of the vehicle achieves a lesser price than £117.50 (including VAT). As a matter of contractual liability as between the Appellant and Ford I do not see how the VAT part of the debt is ignored for the purpose of the setting off the Appellant’s liability and the obligation on the part of Ford to give credit for the sale proceeds which it receives on the subsequent sale. Further clause 12 confers on Ford benefits but not obligations. It is not obliged to seek to recover any shortfall upon repossession. Further one has to be realistic when a dealer becomes insolvent and Ford repossesses its’ vehicles it is unlikely to be in a position to expect to be able to recover anything in real terms as opposed to proving in the insolvency (as an unsecured creditor) of the relevant dealer. It is likely to be at the end of a long queue. There is nothing in the case before me to suggest that Ford could ever have made any recovery of any surplus debt due to it from the Appellant consequent upon the realising of its assets and payment of its creditors. 33. For Ford Mr Peacock QC (who also appeared before me) submitted (see paragraph 28-29 of the Tribunal’s decision) that the parties had in effect adopted the clause 6.1 part B procedure. This enabled the debt to be extinguished (albeit at the reduction of the reclaimable input tax) and enabled the Administrative Receivers to salvage the business which they did. Therefore Ford properly issued a proper credit note because the Supply Agreement was terminated on the basis that the vehicles were returned and on the acceptance that there would be no further claim from Ford. 34. Mr Sadiq for HMRC submitted that the credit notes were issued in respect of goods that had been returned and the issue of the credit notes resulted from a state of affairs that was not unilaterally adopted by Ford but was a matter of agreement with Administrative Receivers. THE TRIBUNAL’S DECISION 35. The key part of the Tribunal’s decision in my view are the paragraphs 31-41 as follows:- “Decision of the tribunal with reasons 31 We have not found this to be a straightforward case. 32 We see the force of Mr Hitchmough's submission that the issue of a credit note is inappropriate if it serves only to remove a liability to tax in respect of which bad debt relief should have been claimed. The authorities cited by him show that it is not open to the parties retrospectively to pretend that a taxable supply never took place if in truth it did. But we agree with Mr Peacock that the circumstances in which a credit might properly be due are not circumscribed to the extent urged by Mr Hitchmough. 33 What if the parties contractually anticipate the possibility of administrative receivership and in that case expressly provide a procedure for rescission in the agreement governing the supplies? That, in our view, must be relevant to determining the scope of the supplies. 34 In the commercial world, it is nowadays very common for a supplier of goods to seek to mitigate the financial downside of the insolvency of its debtor by agreeing for the retention of title in the goods supplied until they have been paid for. In such a case, the goods can be resold by the supplier if the debtor defaults. Logically, in an agreement containing detailed provisions as to interim possession of the goods pending payment, one would also expect detailed provisions governing the return of the goods to the supplier in order that they can be resold. 35 Accordingly, in this case, the Supply Agreement provides, in clause 12 of Part C, sub-clauses (c)(i) and (d), for the return to Ford, if it so chooses, of unpaid-for vehicles both where payment has become due prior to the onset of the Administrative Receivership and where payment becomes due following the termination of the Supply Agreement by reason of the administrative receivership. Even where the return of a vehicle takes place, sub-clauses (c)(i) and (e) provide that Ford's rights and remedies against the dealer will not thereby be affected, including the right to sue for damages and the right to sue to recover the purchase price of the vehicle, " … if and to the extent that the [purchase price] is due and payable but unpaid". 36 In accordance with ordinary principles of contract, the contracting parties would appreciate, on entering into the Supply Agreement, that where Ford suffered no loss on resale of the vehicles returned, it would not be in a position to sue in respect of the vehicles, save to recover nominal damages. Although not expressly stated in the Supply Agreement, it falls in our view to be implied that, in the circumstances just mentioned, the dealer would be unlikely to face a claim from Ford. 37 However, what if there were to be a loss on resale, or what if a particular vehicle, returned to Ford under the provisions, could not be resold? The Administrative Receivers would have to reckon with the possibility of claims by Ford against the group. An indication from Ford that it was content not to pursue the group would accordingly be most helpful. As we see it, it is this that lay behind the provision of the credit notes that we are considering. 38 We think that the parties to the Supply Agreement would all along appreciate that the dealer would probably not have to pay Ford anything in respect of vehicles returned under clause 12 of Part C. All that the credit notes achieved was to confirm that. The credit notes did not provide credit where it was not due; on the contrary, they served to confirm a cap upon the contractual liability of the group, a cap which, we think, must have been anticipated by the contracting parties as likely to result if the Supply Agreement were to be operated according to its terms. 39 By the same token, it would not have been open to Ford to have claimed bad debt relief, given that the effect of having operated the Supply Agreement according to its terms was that Ford had received consideration for the debt. The position immediately before the issue of the credit notes was that Ford was constrained to recognize that, having had returned to it the vehicles affected by clause 12 of Part C of the Supply Agreement, nothing further was due. 40 Thus it seems to us that the position was analogous to that in AEG (UK) Ltd v The Commissioners of Customs and Excise (VAT Decision No 11428), a tribunal decision of Mr Paul Heim, CMG. In that case he decided that preference shares received under a voluntary arrangement entered into by the debtor company amounted to consideration for the prior debt. The Chairman stated: "The issue of the shares under the voluntary agreement operated to replace the debt due to the Appellant Company by the shares, as it did those of other creditors so that there was not, upon receipt of the share certificate, any 'amount outstanding' which could be the subject of bad debt relief." 41 Clearly it would be wrong if Ford were enabled to make a claim for bad debt relief without giving full credit for having realized its security under clause 12. As well as providing Brunel with the evidence required for treating the group as discharged, the issue of the credit notes constituted an acceptance by Ford that it would not be correct to assert an entitlement to bad debt relief in this case”. 36. 37. 38. 39. 40. I should note two concessions made by the parties. First (echoing paragraph 33 of the decision of the Tribunal) Mr Hitchmough acknowledged that if the Supply Agreement had expressly provided for a procedure on termination or rescission of the Agreement, return of the vehicles and the issue of a credit note his appeal would fail. The operation of that procedure if in the Supply Agreement would mean that the credit note was validly issued because the consequent rescission of the Supply Agreement meant that there was no taxable supply. Conversely both Mr Peacock QC and Mr Mithani who appear for HMRC have conceded that if the actions of Ford and the Receivers were done solely under the express wording of clause 12 there was no basis for the issue of a credit note. The key parts of the decision are paragraph 36 where the Tribunal said that in the light of the commercial world the contracting parties would appreciate on entering into a Supply Agreement where Ford suffered no loss on the resale of the vehicles returned it would not be in a position to sue in respect of the vehicles save to recover nominal damages. That in my view is factually correct. I reject Mr Hitchmough’s extra £17.50 VAT argument. In that context the Tribunal then said “although not expressly stated in the Supply Agreement it falls in our view to be implied that in the circumstances mentioned the Dealer would be unlikely to face a claim from Ford”. During the course of the appeal there was much debate as to what that sentence meant. One possibility was that the Tribunal were referring to an implied term. Faced with that possible argument I reminded Mr Hitchmough of clause 21. In that context he contended that if they decided it was an implied term no such term could be implied because of the entire agreement clause. I should say this is not a point taken before the Tribunal nor in the skeleton arguments before me as it was a point which I raised. 41. It seems to me that at first sight (and absent any other challenge and there is none) clause 21 does prevent the implication of a term outwith the written terms of the Supply Agreement. 42. 43. On further consideration however and in the light of the submissions of Mr Peacock as supported by Mr Mithani I do not see the Tribunal decision as proceeding on an implied term. The word “implied” is what is to be implied in “the circumstances just mentioned”; in my view that means looking at the position that Ford would recover and not suffer a loss and in the light of the commercial world as identified in paragraph 34. It also reflects the position of the Administrative Receivers as set out in the decision of the Tribunal and their desire to continue trading. Thus in my view what the Tribunal have decided is set out in paragraph 39. I do not accept the second sentence of paragraph 39 as referring to clause 12 alone. If one looks at paragraphs 37 and 38 the Tribunal are plainly making a decision based on what the parties did upon the appointment of the Administrative Receivers. They plainly did not operate clause 12 but the parties did operate a procedure whereby the following occurred:- (1) The vehicles were returned (2) Ford issued the credit notes (3) The Appellant acting by the Administrative Receivers no longer claimed the VAT on the invoices as input tax (4) The Administrative Receivers paid the VAT to HMRC in full without any such deduction (5) Ford sold the vehicles to the Administrative Receivers at the same price (including VAT) (6) That enabled the Administrative Receivers to trade the company out for the benefit of the old creditors of the Appellant. (7) Both the Appellant and Ford acted as if the Supply Agreement had been rescinded and there were no further obligations arising under it. 44. Mr Hitchmough objects that there is no evidence of an agreement expressly agreed between the Administrative Receivers and Ford so that the relationship falls to be covered entirely by the express terms of clause 12. 45. I accept that the Tribunal did not in so many words say that there was a particular agreement struck on a particular day but all of the above that I have referred to was done by all the parties. I do not see that that can be anything other than the parties, (which they have the ability to do), simply operating outwith the Supply Agreement a different regime for their own particular purposes. Ford wanted its vehicles back but wished to sell them. The Administrative Receivers wished to continue the business. It needed stock. All of this in my view is a genuine transaction (not an artificial one for the purpose of extinguishing a VAT liability). Furthermore of course as I have set out above it was done with the approval of HMRC. The parties have in effect agreed that the Supply Agreement should come to an end on the basis that it was rescinded, no vehicles were ever supplied and no VAT was therefore payable and the credit notes were properly issued. 46. That in my view is what the Tribunal found. It is a finding of fact based on the evidence. I therefore do not see any basis for suggesting that they acted upon the express wording of clause 12 alone. 47. It follows therefore in my view that the Tribunal decision which is based on their fact finding cannot be challenged by the appeal. Further in my view had the matter come to me afresh I would have come to the precisely the same conclusion. 48. Accordingly I dismiss the appeal.