England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MRS JUSTICE THIRLWALL
CO/8028/2011

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/03/2013

Lord Justice Jackson:

1. This judgment is in seven parts, namely:

Part 1. Introduction,

Part 2. The facts,

Part 3. The present proceedings,

Part 4. The appeal to the Court of Appeal,

Part 5. Did WGGS' failure to report the ninety two students who failed to enrol justify refusal of HTS status?

Part 6. Did the high refusal rate justify refusal of HTS status?

Part 7. Conclusion.

Part 1. Introduction

2. This is an appeal by a college against a decision of the Administrative Court upholding a decision by the UK Border Agency ("UKBA") to refuse the college's application for "highly trusted" status.
3. At the heart of this appeal is the question whether the college faithfully performed the tasks which are expected of an educational institution that seeks to obtain "highly trusted" status. The issues of law concern whether UKBA acted lawfully in the manner in which it assessed the college's performance.
4. The claimant in the Administrative Court and the appellant in this court is WGGS Ltd, which trades under the name "Western Governors Graduate School". I shall refer to the claimant as "WGGS". UKBA was defendant in the Administrative Court and is respondent in this court.
5. A Confirmation of Acceptance for Studies is an electronic document issued by certain colleges to overseas students whom they are willing to accept on their courses. I shall refer to this as a "CAS".
6. The Points Based System ("PBS") was progressively introduced during 2008 and 2009. This system enables people in certain categories (referred to as "tiers") to enter the UK for the purpose of work or study, provided that they secure the required number of points. The details of the PBS are set out in the Immigration Rules, appendices to the Immigration Rules and supplementary guidance. None of these documents are light reading. In some cases the issue has arisen as to whether matters contained in the supplementary guidance are ineffective on the basis that they ought to have been included in the Rules. Mr Ian Macdonald QC, who appeared on behalf of the appellant, takes no such point in this case. So for present purposes I can take the supplementary guidance at face value.
7. Under the PBS persons who come here to study fall into Tier 4. Rule 245 ZV of the Immigration Rules requires applicants in Tier 4 to score thirty points under paragraphs 113 to 120 of Appendix A to the Rules and ten points under paragraphs 10 to 13 of Appendix C to the Rules. In order to score thirty points under paragraphs 113 to 120 of Appendix A the applicant must obtain a CAS issued by an institution which has been licensed by UKBA for this purpose.
8. In order to score ten points under paragraphs 10 to 13 of Appendix C the applicant must have sufficient funds to pay the tuition fees and to meet his or her living expenses in the UK. The detailed financial requirements are set out in a table at the end of paragraph 11 of Appendix C.
9. Colleges which are licensed to issue CASs are expected to take rigorous steps to ensure that they only accept bona fide students. That means people who have both the intention and the ability to pursue a course of study in the UK. This entails that they speak English, have appropriate academic qualifications and possess sufficient funds to meet the cost of living and studying in this country for the duration of their intended courses.
10. UKBA therefore reposes considerable trust in those colleges which it licenses to issue CASs. Colleges may be awarded either an "A-rated" sponsor licence, or, where UKBA considers they merit an even higher degree of trust, a "highly trusted sponsor" licence. This is usually abbreviated to "HTS".
11. UKBA regularly publishes guidance for the assistance of colleges which have or seek HTS status. This guidance sets out what is expected of such colleges, how applications for HTS status may be made and related matters. Each edition of this guidance is referred to as "Version" followed by the relevant month number. Thus the guidance on HTS status published in July 2010 is referred to simply as "Version 07/10"; the general Tier 4 guidance published in October 2010 (which referred to the separate HTS Guidance then in force, which was the 07/10 Guidance) is referred to as "Version 10/10"; and so forth. I shall follow this convention.
12. The policy which underlies Tier 4 of the PBS is well known. Genuine foreign students are welcome in this country. They make a valuable contribution to the UK economy and, indirectly, to good international relations. After completing their studies here, they return to pursue careers in their own countries, hopefully having enjoyed and benefited from their time in the UK. On the other hand bogus applicants, who use the PBS to evade immigration control and to live in this country unlawfully, are not welcome. The purpose of the Tier 4 rules is to secure the admission of genuine students and to weed out bogus applicants.
13. After these introductory remarks, I must now turn to the facts.
Part 2. The facts

14. Mr Mark Chhatlani is a director and the moving force of WGGS. Since June 2003 WGGS has operated a college in East London known as Western Governors Graduate School, to which I shall refer as "the college". The college provides training in business management and related subjects for foreign students. Most of those students come from India.
15. On 24^th February 2009 WGGS was licensed to issue CASs under the original version of the Tier 4 rules. Pursuant to that licence WGGS proceeded to issue CASs to students whom it saw fit to accept.
16. On 23^rd March 2011 WGGS applied to the UKBA for HTS status. By letter dated 23^rd May 2011 UKBA refused that application for two separate reasons. First, in the preceding twelve months ninety two prospective students, who held CASs issued by WGGS, were refused entry clearance or leave to remain. This represented a refusal rate of 21.5%. This indicated that WGGS's selection procedure was insufficiently rigorous. Secondly, WGGS had failed to comply with reporting requirements: WGGS had not reported to UKBA that those ninety two students had failed to enrol.
17. Over the next few weeks WGGS and its solicitors sent emails and letters to UKBA, setting out representations as to why HTS status should be granted. UKBA duly considered those representations. It was not, however, persuaded to reverse its original decision. By letter dated 22^nd July 2011 UKBA explained in greater detail to WGGS why UKBA was upholding its original decision on the grounds previously identified.
18. WGGS was aggrieved by UKBA's decision. Accordingly it commenced the present proceedings.
Part 3. The present proceedings

19. By a claim form issued in the Administrative Court on 22^nd August 2011 WGGS applied for an order that UKBA's decision be quashed and that UKBA be ordered to grant HTS status to WGGS.
20. The main grounds on which WGGS sought this relief were essentially twofold. First, WGGS argued that the refusal rate relied on by UKBA did not indicate any deficiency in the college's procedures. Nor was the refusal rate above that which UKBA's guidance envisaged. Secondly, WGGS denied that it was under any duty to report to UKBA the ninety two students who had failed to enrol.
21. WGGS also raised certain other grounds in its claim form. Those matters, however, were not pursued. So I shall pass over them.
22. In support of its claim WGGS lodged two witness statements of Mr Chhatlani. Mr Chhatlani provided much helpful information about the college and its recruitment practices.
23. In opposition to the claim UKBA lodged two witness statements of Mr Lee Bartlett. Mr Bartlett was at the material time employed by UKBA as deputy director of PBS Sponsorship. Mr Bartlett explained the PBS system. He also provided details in respect of each of the ninety two applicants who had been refused entry clearance or leave to remain. In summary, seven cases involved deception related to previous immigration applications. Forty four cases involved some other form of deception. Twenty five cases involved insufficient funds for maintenance. The other sixteen applications were refused for a variety of reasons, including little or no ability to speak English.
24. The action was tried before Mrs Justice Thirlwall in June 2012. The judge handed down her judgment on 15^th June 2012. She rejected both of WGGS's grounds of challenge and, accordingly, dismissed the claim.
25. WGGS was aggrieved by the dismissal of its claim. Accordingly it appealed to the Court of Appeal.
Part 4. The appeal to the Court of Appeal

26. By an appellant's notice dated 9^th August 2012 WGGS appealed to the Court of Appeal against Thirlwall J's decision. The two grounds of appeal are, essentially, the same as the two grounds of challenge which were pursued at trial.
27. WGGS contends that it was under no duty to report the ninety two students who failed to enrol because they were refused entry clearance or leave to remain. Alternatively, if WGGS was under such a duty, the failure to report was a minor matter which did not justify withdrawal of HTS status.
28. Secondly, WGGS contends that UKBA acted unlawfully in assessing the application by reference to a 20% refusal rate.
29. A further issue which was canvassed during the hearing is what the position will be if WGGS succeeds on one ground but fails on the other. In that event, does the UKBA decision still stand or should it be quashed? I will leave that interesting question on one side and only address it if it becomes relevant.
30. I must now turn to the first ground of appeal, which concerns WGGS's failure to report.
Part 5. Did WGGS' failure to report the ninety two students who failed to enrol justify refusal of HTS status?

31. UKBA clearly sets out in its published guidance that colleges must report students who fail to enrol. Paragraph 296 of Version 10/10 includes the following provision:

"All sponsors must report the following information or events to us, using the sponsorship management system within any time limit specified. This includes reporting events during any period that a student is on a pre-sessional course at a partner institution which was named on the student's confirmation of acceptance for studies. Information about students' non-attendance, non-compliance or disappearance will be used to take enforcement action against them:

*if a sponsored student does not enrol on his/her course within the enrolment period. The report must be provided within 10 working days and must include any reason given by the student for his/her non-enrolment (for example a missed flight)."

32. Paragraph 310 of Version 10/10 is to the same effect. It states:

"To clarify our reporting requirements on students who fail to attend, we expect sponsors to notify us of the details of any students who fail to enrol by no later than 10 working days after the end of their prescribed enrolment period."

33. Version 04/11 contains similar provisions. Paragraph 332 provides:

"You must report the following information or events to us, using the SMS within any time limit specified. This includes reporting events during any period that a student is on a pre-sessional course at a partner institution which was named on the student's CAS or, when a student is on a work placement which forms part of their course. This information about students' non-attendance, non-compliance or disappearance will be used to take enforcement action against them:

*if a sponsored student does not enrol on his/her course within the enrolment period. The report must be provided within 10 working days and must include any reason given by the student for his/her non-enrolment (for example a missed flight)."

34. Paragraph 348 of Version 04/11 is to the same effect. It provides:

"To clarify our reporting requirements on students who fail to attend, we expect you to notify us of the details of any students who fail to enrol by no later than 10 working days after the end of their prescribed enrolment period. This includes any student you have assigned a CAS to who fails to present themselves to you and enrol by no later than 10 days after this date."

35. Mr Ian Macdonald QC for WGGS submits that the duty to report students who fail to enrol does not extend to students who are refused entry clearance or leave to remain. He points out that UKBA must know anyway that these students cannot enrol for their proposed courses.
36. I do not accept this argument. Versions 10/10 and 4/11 of the UKBA guidance were current during the period leading up to the determination of WGGS's application. I have set out the relevant provisions above. They are all clear in their terms. Colleges are obliged to report every student who fails to enrol. There is no express or implied exception from this obligation.
37. As Mr Bartlett explains in his witness statements, there are a number of reasons why a college must report every student who fails to enrol. Also, in those cases where UKBA knows that a particular student cannot enrol, UKBA needs the reassurance of seeing that the relevant college is complying with its reporting obligations.
38. I note that in three previous cases it has been held that the UKBA guidance documents require colleges to report students who fail to enrol because they were refused entry clearance or leave to enter: see The Queen on the application of CNM (The College of Naturopathic Medicine) Limited v Secretary of State for the Home Department [2012] EWHC 1851 (Admin); The Queen on the application of London College Management Limited v Secretary of State for the Home Department [2012] EWHC 1029 (Admin); The Queen on the application of West End College, London v Secretary of State for the Home Department [20121] EWHC 2625 (Admin). I agree with that interpretation of the UKBA guidance documents. The provisions quoted above require colleges to report all students who fail to enrol. This includes students who fail to secure entry clearance or leave to remain.
39. There is an allegation that a UKBA representative told Mr Chhatlani that there was no need to report the non-enrolment of students who fail to secure entry clearance or leave to remain. The judge rejected this allegation on the evidence. If and in so far as WGGS challenges this finding of fact, I reject that challenge. The email produced by Mr Chhatlani does not support the assertion in his first witness statement.
40. It is common ground between the parties that WGGS did not, at the relevant time, report to UKBA the ninety two students who failed to enrol. Eighty eight of those students failed to secure entry clearance. The other four students were already in the UK, but were refused leave to remain.
41. Mr Macdonald submits that there were strong mitigating circumstances to excuse WGGS's failure to report. First, the provisions imposing the obligations to report were unclear. I reject that submission.
42. Secondly, Mr Macdonald submits that no harm was done by the failure to report, because UKBA already knew the facts. I reject this submission. UKBA is, amongst many other duties, seeking to regulate the admission of foreign students to some 2,100 different colleges. Each of those colleges is issuing CASs to students whom it deems worthy of receiving onto its courses. The UKBA needs to keep a clear record of what the position is in respect of each college. It is entirely reasonable for UKBA to require that each non-enrolment be reported. Also, even though UKBA can discern from its records which students have been refused entry clearance or leave to remain, UKBA still needs the comfort of seeing that colleges which seek HTS status are performing their obligations.
43. It should not be forgotten that under the PBS colleges are performing functions which used to be undertaken by entry clearance officers or other UKBA officials. There is a clear responsibility on those colleges to show that they deserve the trust which is being placed in them.
44. In so far as there are any mitigating circumstances, both WGGS and their solicitors drew these to the attention of UKBA in letters and emails following the original decision of 23^rd May 2011. UKBA duly considered those matters. Then by letter dated 22^nd July 2011 UKBA stated that it adhered to its original decision. In my view UKBA's approach was perfectly reasonable in this regard.
45. In the result, therefore, I agree with the decision of the judge on this issue. I reject WGGS's first ground of appeal. My answer to the question posed in Part 5 of this judgment is yes.
Part 6. Did the high refusal rate justify refusal of HTS status?

46. It is helpful to begin by referring to the relevant guidance published by UKBA. Paragraph 23 of Version 07/10 is headed:

"What criteria must be met to qualify for a Tier 4 Highly Trusted sponsor licence?"

47. Paragraph 23 (4) provides:

"the sponsor must have in place practices to minimise the number of refusals of leave for migrants applying with a confirmation of acceptance for studies. We are not publishing a target percentage rate for refusals at this time and will instead look at how far refusal rates deviate from the 'norm' for that location and part of the sector. We expect to be able to publish a clearer statement of our expectations on refusals in due course."

48. Version 4/11 (the edition current when WGGS's application was being considered) contained an identical provision at the fourth bullet point in paragraph 108. A similar provision continued to appear in subsequent editions up to August 2011.
49. Version 09/11, which was published in September 2011, was substantially different. Paragraph 270 included the following provision:

"Refusal rate

Your refusal rate must be less than 20 per cent.

This means that of all the CAS you have assigned which students have used to support an application for a visa or permission to stay, the total number of applications we refused must be less than 20 per cent. We will assess this using CAS data from the SMS for the 12-month period immediately before you apply. We will take into account all CASs that students have used and applications we refused during this 12-month period."

50. The first complaint which Mr Macdonald makes on behalf of WGGS is that UKBA applied a yardstick of 20% in assessing WGGS's application. This was some four months before the 20% threshold was publicly announced.
51. It is clear from the documents that UKBA were indeed applying a yardstick of 20% in assessing WGGS's application. In its two decision letters UKBA said that a refusal rate of 21.5% was above the expected level and indicative of insufficiently robust recruitment procedures.
52. When WGGS made its application for HTS status, it knew that its refusal rate would be assessed by reference to the relevant "norm", although it did not know precisely what that norm would be. I do not think that this lack of information was in any way prejudicial to WGGS. I say this for three reasons:

i) The obligation of all HTS colleges is to operate robust recruitment procedures, so that they weed out as many bogus or unsuitable applicants as they properly can.

ii) The colleges neither before nor after September 2011 were trying to achieve a particular target rate for refusals. They were simply trying to minimise the number of refusals. It was, or should have been, the colleges' belief that each student to whom they issued a CAS was genuinely intending and able to pursue a course of studies in the UK.

iii) Whether or not the colleges knew what yardstick UKBA was applying should not have affected their approach. It would have been quite wrong for any college to lessen the rigour of its checks in the belief that a certain percentage of refusals would not matter.

53. Mr Macdonald's second complaint is that the yardstick selected by UKBA was unduly harsh. Most of WGGS's students came from India, where a number of scams were in operation. Applicants were often producing false documentation. Also many banks in India were providing false letters about student loans. In addition they were inflating the bank accounts of applicants for a couple of days, so that those individuals appeared to be much wealthier than they really were.
54. Mr Chhatlani argues in his witness statement that the colleges' recruitment procedures could not pick up scams of this nature. Mr Macdonald submitted that to allow for these factors colleges recruiting from India should be allowed a more generous margin than 20%. Alternatively, all refusals which could not sensibly be attributed to the college should be excluded from the assessment process. UKBA could then apply a much stricter and lower threshold than 20%.
55. Miss McGahey for the Secretary of State submits that the issue in these proceedings is not whether the method of assessment adopted by UKBA is capable of improvement. It is always possible to suggest improvements to procedures of this nature. The issue is whether the method of assessment adopted by UKBA is lawful.
56. Miss McGahey also points out there are some 2,100 institutions licensed by UKBA to sponsor students. UKBA must have a clear and workable system for assessing their performance. A minute analysis of the reasons for each refusal and whether the college can be blamed for that refusal is simply not practical. Overall approximately 15% of students with CASs are refused entry clearance or leave to enter. Therefore it is perfectly reasonable for UKBA to take a yardstick rate of 20% for determining which colleges no longer merit HTS status.
57. Miss McGahey also places reliance on R (on the application of West London Vocational Training College Limited) v Secretary of State for the Home Department [2013] EWHC 31 (Admin). In that case the Divisional Court approved UKBA's adoption of a 20% refusal rate as the yardstick: see the judgment of Toulson LJ at paragraph 20.
58. Miss McGahey also relies upon the decision of Her Honour Judge Alice Robinson sitting as a deputy High Court judge in The Queen on the application of London College of Management Limited v Secretary of State for the Home Department [2012] EWHC 1029 (Admin). In that case, however, the appellant conceded that the Secretary of State was entitled to adopt as a mandatory criterion that refusals must not exceed 20%. Mr Macdonald makes no similar concession in this case.
59. In my view many of Mr Macdonald's criticisms of UKBA's method of assessing colleges amount to little more than suggestions for possible improvements. I have little doubt that UKBA's system could be improved or refined. There is a report from the National Audit Office dated 27^th March 2012, which makes suggestions in this regard.
60. Although UKBA's method of assessing refusals may be capable of improvement, I do not accept that it is unlawful. It would be quite impracticable for UKBA to examine the circumstances of each applicant who is refused entry clearance or leave to remain and then to determine whether the college was at fault through failing to foresee the problems.
61. Take the example of a young Indian man who resolves to enter the UK by subterfuge and then to stay here in defiance of immigration controls. He obtains false documents from a dishonest bank official. He persuades that official to inflate his bank account artificially for a few days. He still needs to obtain a CAS from one of the sponsor colleges. So he applies to such a college. That college should interview the young man and carry out checks to see if he genuinely intends and genuinely is able to pursue a course of studies in the UK. If the college has suitably robust selection procedures, it will weed out many bogus applicants, simply because they are not suitable for admission as students. By definition the bogus applicants are not people who have the genuine intention and means to pursue a course of studies in the UK.
62. I readily accept that even if a college operates proper and rigorous selection procedures, from time to time bogus applicants or unsuitable candidates will slip through the net. I also accept that sometimes there will be an unforeseen change in the financial circumstances of a genuine candidate between the date when he or she secures a CAS and the date when he or she applies for entry clearance or leave to remain. All this is allowed for, however, by UKBA's present system. A refusal rate of 20% makes proper allowance for those applicants who are unsuitable to come here as students, but cannot reasonably be weeded out by the colleges' admissions staff.
63. The third complaint made by Mr Macdonald is that UKBA applied the 20% refusal rate inflexibly without giving any consideration to the particular circumstances of WGGS. I do not accept this criticism. It can be seen from the correspondence that after the initial decision letter of 23^rd May 2011 WGGS and their solicitors sent in written representations to UKBA. UKBA duly considered those matters before it finally decided on 22^nd July 2011 to uphold its original decision.
64. Let me now draw the threads together. For reasons broadly similar to those stated by the judge, I reject the contention that UKBA acted unlawfully in rejecting WGGS' application for HTS status on the grounds that its refusal rate was 21.5%. I should add that by my arithmetic the refusal rate was actually 22%, not 21.5%, but nothing turns on that small point. My answer to the question posed in Part 6 of this judgment is yes.
Part 7. Conclusion

65. For the reasons set out in Parts 5 and 6 above, in my view WGGS fails on both the grounds of appeal which have been argued.
66. There was originally a third ground of appeal based on the Supreme Court's decision in R (on the application of Alvi) v Secretary of State for the Home Department [2012] UKSC 33, [2012] 1 WLR 2208. WGGS does not, however, pursue that ground.
67. Accordingly, if My Lords agree, this appeal will be dismissed.

Lord Justice Treacy:

68. I agree.

Lord Justice Maurice-Kay:

69. I also agree.