The applicants attempted to merge the principle of estoppel with that of legitimate expectation though they accept that the principles are not the same. The word ‘estop’ is defined by Black’s Law Dictionary (supra) at p. 589 as “vb. To bar or prevent by estoppel”. It is clear that ‘estop’ is used when referring to estoppel. We think that attempt by the applicants to use the word ‘estop’ so as to merge the principle of estoppel with that of legitimate expectation is to attempt to effect a ‘marriage of convenience’ that is aimed at creating confusion in the application of the two different principles. The principle of legitimate expectation is wider than of estoppel. It is aimed at ensuring fairness in the administration of public affairs by public bodies, while estoppel is a rule of evidence that can be used in private affairs. While estoppel is a shield, the doctrine of legitimate expectation may be used as a sword.

Both parties do not dispute that the principle of legitimate expectation is part of the laws of Uganda. What is in dispute is whether the applicants can rely on it to avoid paying taxes. The principle of legitimate expectation is a common law principle. S. 14 (2) of the Judicature Act allows the High Court, in the exercise of its jurisdiction, to apply subject to written law, common law and doctrines of equity. The High Court is a court of record. The law that is applicable in High Court is also applicable in the Tax Appeals Tribunal.   According to J.L Caldwell: “Legitimate Expectation and the rules of natural justice”, the concept of legitimate expectation was first implanted in administrative law by Lord Denning in Shmidt v Secretary of State for the Home Department [1969] 2 Ch. 149, in a case where alien students of “Scientology” were refused extensions of their entry permits without being given a fair hearing.

In his judgement, Lord Denning proffered the view that the application of rules of natural justice depended on “…whether he has some right or interest or I would add, some legitimate expectation, of which it would not be fair to deprive him without hearing what he has to say.” J.L. Caldwell stated in this way, the “notion was introduced without any analysis or fanfare.” In a dissenting opinion, in Breen v Amalgamated Union of Engineering,[1971] 2 Q.B. 175 (CA) Lord Denning declared that: “if a person has some right or interest or some legitimate expectation of which it would not be fair to deprive him without a hearing or reasons given then these should be afforded him…” The doctrine of legitimate expectation was nurtured by Lord Denning.

It is apparent that the doctrine of legitimate expectation arose sometime around 1969. As to how a common law doctrine that arose in the late 1960s can be applicable to current Uganda (which got independence in 1962), none of the counsel addressed the Tribunal on that. However, since the Tribunal notes that both counsel are agreeable on its application in Uganda, it will not rock the boat any further. After all, it is a principle arising from natural justice whose principles cannot be exhaustively articulated.   The applicants argued that they are entitled to fair treatment by the respondent in respect of the promise to grant them an exemption. In IRC v National Federation of Self Employed and Small Business [1981] STC 260 at 279, Lord Scarman said: “the modern case law recognises a legal duty owed by the Revenue to the general body of taxpayers to treat taxpayers fairly, to use their discretionary powers, so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise, to ensure that there are no favourites and no sacrificial victims.

The duty has to be considered as one of several arising within the complex care and management of a tax, every part of which it is their duty, if they can to collect.” Mr. Richard Inch, in paragraph 10.5 of his witness statement alludes to a tax exemption granted to Bidco, another investor. The applicants feel that if exemptions are granted to other companies, why should they be denied one if it is in the EA2 PSA. Unfairness may arise from unjustified unequal treatment of taxpayers. However, the circumstances to which an exemption was made to Bidco, the criteria and the law under which it was granted, are not clear. This was not substantiated to the satisfaction of the Tribunal for it to find that there was unfairness in the failure to grant an exemption to the applicants when one was granted to Bidco.   The application of the principle of legitimate expectation is not absolute.

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