Thanks for all the responses, the bottom line though is that there is a valid ticket, timed prior to the inspector issuing a pay later notice at£20 for the ticket
I accept the notice was ignored and that a penalty notice was issued subsequently with an admin fee on top ,total£55.
An appeal was launched but basically rejected as the original pay later notice was "ignored" .
The fact is, there is a valid ticket available timed prior to the pay later notice that was issued.
I don't want to add too much to a thread that hasn't perhaps brought either sympathy or the route to a refund that you were hoping for. It's frustrating for your grandson that he has paid the fare and then also ended up in a situation where a £55 bill has resulted and family have become involved. It will inevitably feel unfair.
The way you describe the interaction with the guard doesn't match with my experience of ticket inspections, even when I was at that age. Without accusing anyone of anything, I wonder if your grandson's frustration at the rapid inspection, and his failure to ensure his ticket was immediately available for such inspection, might have come across to the member of staff as rudeness or anger, even if it was not intended to. If it's a matter of waiting a minute or two, most staff performing ticket checks are able to handle this despite the inconvenience. Of course, the person in question might not have been so willing, but your grandson might like to consider why the guard chose not to in his particular case. He might be able to reduce the chance of a similar situation occurring in future.
Your grandson is an adult, both in terms of fares and in the eyes of the law. Ignoring the paperwork he was given until beyond the deadline is the true cause of the penalty, not the rights or wrongs of the original situation. Not recognising the situation and dealing with it properly is what has cost money. At £55 it's a relatively modest amount even in the context of railway fares disputes, even though it might be a lot of money to him. Hopefully he now recognises that it could easily have been meaningfully worse, just as it could easily have been less expensive had he engaged with the paperwork and responded in a timely fashion.
Almost any action you can take will not be worth your time, and may be actively harmful. Certainly don't try to get the penalty back through the bank, as this is unlikely to save money or pain in the longer run. It needs chalking up to experience - or perhaps in this case to inexperience.