England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MR JUSTICE CRANSTON
[2013] EWHC 3257 (Admin)

		Royal Courts of Justice Strand, London, WC2A 2LL
		17th July 2014

LORD JUSTICE CHRISTOPHER CLARKE :

1. Guildhall College ("the College") appeals from a decision of Cranston J declining to quash two decisions of the Secretary of State for Business Innovation and Skills (the "Secretary of State") and The Student Loan Company Ltd ("the SLC"). The first decision dated 18 September 2012 suspended all payment of student loans either to the College or to students attending it. The second decision was to withdraw the designation of two courses offered at the College. This decision was notified to the College by a letter dated 23 October 2012.
2. The College, which is based in Whitechapel, was established in 2003 as a private education college catering in the main for international students requiring a student visa. The Government's decision to cut immigration led to a sharp decline in the number of such students attending the College. The College decided to diversify from international students and focus on those coming from this country and from other countries in the European Union.
3. By a letter dated 19 September 2011 the Department for Business Innovation and Skills ("BIS") designated two 2 year full-time Higher National Diploma ("HND") courses in (a) Business and (b) Computing and Systems Development ("Computing") for the purposes of student loan funding for fees and maintenance. The letter informed the College that if the course details or structure of the course changed in any way the College must contact the SLC before implementing the changes because they might have an adverse effect on the designation of the courses. It also recorded that specifically designated courses were subject to periodic review by Student Finance England and that it was imperative that the College respond to these requests in order to retain designation status for the courses.
4. The College had a variety of other courses including HNDs in Health and Social Care ("HSC"), Travel and Tourism ("TTM") and Hospitality Management ("Hospitality"). These courses were not, however, designated so far as the College was concerned so that students undertaking them were not eligible for student loans.

The student loan scheme

5. Student loans fall into two parts: a sum that is payable to a higher education provider in respect of tuition fees (which in the 2011/12 academic year was set at a maximum of £ 3,375) and a sum in respect of maintenance. The tuition fee is paid by the SLC directly to the course provider and the maintenance loan is paid to the student. Students may also in some circumstances receive additional grants for living expenses which are not repayable.
6. The primary legislation governing the payment of student loans is contained in section 22 of the Teaching and Higher Education Act 1998. Regulations have been made under that Act. For present purposes the relevant regulations are the Education (Student Support) Regulations 2009 ("the 2009 Regulations").
7. The 2009 Regulations (now largely revoked) applied to funding for the 2011/12 academic year. Regulation 6 (1) defined a "designated course" as, broadly speaking, a full-time higher education course for at least one academic year wholly provided by a publicly funded educational institution. Students on such a course were, if eligible, automatically entitled to student support. Regulation 6 (9) gave the Secretary of State power to designate courses of higher education which were not designated under regulation 6 (1). Such designations are not transferable.
8. Regulation 110 of the 2009 Regulations provided:

"110.-(1) The Secretary of State must pay the fee loan or fee contribution loan for which an eligible student qualifies to an institution to which the student is liable to make payment.

…

(3) The Secretary of State must not pay the fee loan or fee contribution loan before-

(a) the Secretary of State has received a request for payment from the academic authority; and

(b) a period of three months beginning with the first day of the academic year has expired.

….

(5) No payment of fee loan or fee contribution loan can be made in respect of a designated course if-

(a) before the expiry of a period of three months beginning with the first day of the academic year the eligible student ceases to attend … ; and

(b) the academic authority has determined or agreed that the student will not begin attending or, as the case may be, undertaking in the United Kingdom the course again during the academic year in respect of which the fees are payable or at all."

9. Regulation 2 defines "academic authority" and " academic year" as follows:

""academic authority" means, in relation to an institution, the governing body or other body having the functions of a governing body and includes a person acting with the authority of that body;

"academic year" means the period of twelve months beginning on 1st January, 1st April, 1st July or 1st September of the calendar year in which the academic year of the course in question begins according to whether that academic year begins on or after 1st January and before 1st April, on or after 1st April and before 1st July, on or after 1st July and before 1st August or on or after 1st August and on or before 31st December, respectively;"

10. The effect of these provisions is that if an academic year begins on, say, 1 May, the Secretary of State is not to pay the fee loan to the College until after 30 June and is not to pay it at all if before then the eligible student ceases to attend and the academic authority makes the determination or agreement provided for in regulation 110 (5) (b). It would not however matter if he had only attended for a few days before 30 June.
11. The way in which it works in practice is that the student applies to the SLC electronically identifying the course which he wishes to take. The College will, if so minded, enrol him on the course; and will confirm his attendance on the course specified on the last day of the 90 day period. Only then will it receive the fee loan.
12. When the decision was made to designate courses at the College there was no detailed policy in place regarding how the discretion in regulation 6 (9) would be exercised. In June 2012 guidance was provided, in particular in relation to the withdrawal or suspension of course designations. It read as follows:

"The Secretary of State reserves the right to withdraw or suspend course designations, for example, if the provider failed to notify us of any change or if the department has serious concerns about the quality of provision or financial viability of the provider."

The history

13. The term beginning in April 2012 was the first term at the College when there were students receiving SLC funding. On 9 August 2012 BIS received routine management information from the SLC which gave details of the amount of student support paid to students who had had courses specifically designated. The number of students accessing student support in respect of courses at the College had increased from 4 students in April 2012 to about 350 students in June.
14. On 10 August BIS asked the SLC to provide information on (a) the number of students claiming tuition and maintenance support at the College; (b) the date that the designated courses started (the College had several intakes a year); and (c) details of how many students were claiming student support in each intake. This information was provided by SLC on 17 August 2012 and showed that 268 students started to study for an HND in Business in April. On 20 August BIS requested SLC's Special Investigations Unit to examine in detail the applications made by the 268 students. The initial investigation revealed that the majority of students had applied for a student loan online using a single Internet Protocol address. The address was linked to an organisation called Opportunity Network ("ON") which assists students to find college places.
15. On 4 September BIS received a complaint from a student who appeared on SLC's records as claiming student support for a designated course but who said that he was in fact studying Health and Social Care.
16. On 14 September Mr Amir Islam ("Mr Islam"), a Director of the College, emailed the SLC. His email indicated that the College had been advised to take precautionary measures on account of the Olympics to assure continuity of service to students during the Olympic Games. Accordingly, he said, the College had decided to allow a staggered start between April and July for academic purposes and had taken certain other steps including protracting the timetable, fitting in classes around available times, and guiding students through the studies which they were required to undertake over the period of the Games. He said that "understandably" there had been some confusion over start dates and whether students were April/May starts or July starts; but that for the purposes of their academic management and SLC funding all students were considered April/May starts. Thus, although the College had previously informed the SLC that some 300 students had started a Business course in April 2012 and a further 70 students had started a Computing course in the same month, some of them had apparently started their course in July.
17. If all the students were considered April/May starts regardless of whether they had started in July there was every likelihood that BIS had paid tuition fees which were not due.
18. The SLC forwarded Mr Islam's email to BIS on the same date. The covering email from the SLC included the following passage:

"… I am still concerned with the term start dates as I'm not sure how they can plan each course with such a flexible approach. Also, the students we have spoken to have confirmed that they started in July and not the April as mentioned in Mr Islam's email. Having an April start date may mean fees are being paid early for the student who may not ultimately start the course 3 months down the line.

…

We have blocked all payments this afternoon so we expect a large number of calls next week."

As is apparent BIS and the SLC had agreed that the latter should block further payments of student support whilst an investigation was undertaken.

19. On 18 September 2012 the Secretary of State directed the SLC to withhold funding from the College and its students pending further investigation. By now some
    £ 667,000 had already been paid to the College in respect of the 2011/12 academic year following the required confirmation of attendance by the College.
20. On the same day (a) the SLC Special Investigations Unit reported to BIS that students at the College had contacted the SLC to raise concerns about the start date for their course; and (b) the College supplied the SLC with a spreadsheet of students doing designated courses. The SLC forwarded it to the Secretary of State on 19 September 2012. The list provided the name of every student apparently studying Business or Computing. It contained 3 columns and some 657 names. The first column, headed "Course", specified either Business or Computing. The second, headed "Options/Choice" contained a number of different courses being either HSC, Computing, Business, TTM or Hospitality. The third column, headed "Intake" had, in each case, the same date – "April/May 2012". This appeared to indicate that a large number of students were following non designated courses as options or choices; and that all of them were treated as April/May 2012 starts.
21. On 20 September 2012 Mr Lilley at BIS prepared a written submission for the Minister, the Right Honourable David Willetts MP. It recommended that he should:

(i) note that the SLC had, with BIS' agreement, suspended maintenance and fee payments in respect of 585 students at the College and another college owing to concerns about the start date for the course and students' applications for support; and

(ii) agree that BIS should give the colleges concerned an opportunity to comment on BIS' concerns but not reinstate these payments until a satisfactory resolution of the concerns.

The submission recorded (as was the case) that a number of students at the College had contacted the SLC and that some seemed to be unsure about details of their courses and had confirmed that, despite completing an application for student support through a third party organisation – in fact ON - for a course that started in April, they were advised by the College not to attend until June/July, which would bring forward the liability date for payment of fees by three months. This could in turn mean that the College would receive student support payments in respect of students who had dropped out during the first three months of actual attendance. The submission recorded that a recent audit of the College on behalf of UKBA noted that its dropout rates were high. The Minister was told that the SLC was continuing to examine its data to determine the period that claims for student support started from and the timing of the attendance confirmations and that BIS would contact the College to put its concerns directly to them.

Notification of suspension

22. On 21 September 2012 the SLC wrote to Mr Islam at the College. The letter recorded that "due to some of the inconsistencies which have been discovered in terms of course start dates and attendance" the SLC had been directed by BIS to undertake further enquiries prior to the release of any further payment either to the students or the College. (Some students had called the SLC indicating that their courses started in July not April) The letter expressed concern that many of the applications for student support appeared to have been made on behalf of the students by a third party (i.e. ON), which was not normal practice; and that it would be necessary to review the relevant applications to confirm that the necessary declarations had been appropriately signed by the applicant. The letter said that it was essential that the SLC should be able to determine the correct course start date since that determined the date on which an institution may confirm a student's attendance to the SLC prior to the release of payment. Mr Islam was invited to make contact to arrange a discussion of these matters. The letter did not say anything about students being registered on a designated course but pursuing one that was not designated.
23. On 24 September 2012 SLC's analysis of the data provided by the College showed that it appeared to have 238 students studying Business and 72 students studying Computing; and that, in either case, their "option/choice" appeared to back this up. But many of the students listed as students of either Computing or Business appeared from their options/choice to be studying either HSC (190), Hospitality (64); Tourism (53) or had a blank entry (40) in the second column.

The meeting of 2 October 2012

24. On 2 October 2012 a meeting took place at the College attended by Mr Islam and other representatives of the College; two representatives from the SLC; and two representatives from BIS. Its purpose was to discuss the matters raised in SLC's letter of 21 September 2012 and the spreadsheet that had been provided by the College. Mr Paul Williams, a deputy director of student funding policy at BIS, confirmed that the purpose of the meeting was to discuss inconsistencies discovered in terms of course start dates, and the apparent involvement of a third party in making claims for student finance on behalf of students at the College. He also wanted to understand more about the spreadsheet provided by the College which appeared to show that some students on the College's HND in Business were undertaking different courses in e.g. HSC.
25. The note of the meeting records that there were to be three "Action Points". Action Point 1 was that Mr Islam was to provide either BIS or the SLC with details of any other college directorships held by him or by Mr Kabir, another director of the College.
26. In relation to the inconsistencies about course start dates and attendance the College explained that it had three intakes of students each year – in May for those who registered in April; in October for those who registered in September and at the end of January for those who registered at the beginning for January. Mr Williams asked the College to explain the email of 14 September in which Mr Islam had explained that students registered with the college in April 2012 had had a staggered start between April and July. The College explained that there had been heavy demand from students who were keen to start their courses before fees increased in September and that not all students had started to attend their courses in April/May; but that it was the College's intention to deliver the courses within the same projected end date. This was not the same explanation as was given in the email of 14 September: see [16] above.
27. The College explained that it operated a 3 stage process: (i) registration when the student attends an appointment to register with the College; (ii) induction when the student attends the College and is given certain material; and (iii) the date when the student starts to attend the College on a regular weekly basis. The College had staggered induction due to the number of students registering for the Business course. The College acknowledged that some students who had registered with the College in April 2012 had still not started their course in September 2012 although they had all had their induction in July. The College was asked to provide detailed information about all of its students.
28. As Action Point 2 the College was to provide a list of all the College's students registered on the College's HND courses in Business or Computing which would show clearly the date that each student registered and the date the student started formally to attend the course. It would also provide precise details of all students who had failed to attend.
29. As to third party involvement, the College confirmed that it had entered into a contract with ON to recruit UK/EU students including interviewing and short listing them. The majority of those short listed were eligible for student support. ON was paid a commission of 15% of tuition fees paid to the College on behalf of any student recruited who was on a designated course. ON also assisted and advised students charging £ 35 per student for the service. Both of these pieces of information emerged on inquiry by the BIS/SLC personnel.
30. The notes record the following:

"The college confirmed that it has more than 600 students registered as attending the HNDs in Business or Computing. The majority are registered on the Business course. The college confirmed that about 300 of the students that are registered on the Business course have opted to specialise in another subject (Health and Social Care, Hospitality Management or Travel and Tourism).

The college explained that, typically, in the first year of such study, students would complete 4 units of the business course and another 4 in, for example, Health and Social Care. If the student then wanted to study a full HND in Health and Social Care in the second year, the student had two choices - either to pay their own fee to the college (and to support themselves financially) since this is an undesignated course; or to transfer to another college^[1].

When asked why students would choose to enrol at Guildhall, when the College cannot offer a designated course in certain subjects, the College said that the Business course offered a good grounding in year one when combined with other specialist modules, and that they hoped that students would then choose to specialise in Business in year two. For those that did not wish to do so, they believed that the transfer arrangements to another College would work well, although they acknowledged that the College's website wasn't clear on the point, and also that the manner in which ON provides information on this arrangement probably amounted to 'miscommunication' to potential students.

……

The college explained that it had a 'letter of agreement' with Nelson College that facilitated such transfers (and enabled prior learning to be recognised). The college also explained that it was in discussion with two other colleges with regard to a similar arrangement but did not name them."

31. As Action Point 3 the College was to supply either BIS or the SLC with a copy of the letter of agreement with Nelson College and also to confirm the name of the course that every student was enrolled on.
32. The notes also record that Mr Williams expressed the view that it appeared that students were being misled about the course which they wished to study and that there had been a systematic failure by the College to manage matters appropriately. Mr Andrews of the SLC explained – as was the case – that many students had contacted the SLC and that, whilst it appeared that for SLC funding purposes the students were taking the HND in Business course, many were clearly under the impression that they were studying different courses. Mr Williams explained that while there remained doubt about the course start and end dates and the subjects that students had applied to study and what they were actually studying in practice it would not be possible to reinstate payments to either the student or the College. The College agreed to the Action Points in an effort to move things forward. The College explained that the suspension of payments was causing hardship for their students and cash flow problems for the College. They were anxious to have the matter resolved quickly. Mr Williams stated that BIS needed to review and consider what it had been told at the meeting and advised the College to submit the agreed information as quickly as possible.
33. On 5 October 2012 the College emailed BIS and the SLC to explain the severe effect that the blockage of payment was having on the College and its students. Its current action plan was to stop new student recruitment and transfer second term students to colleges with designated HSC courses. It had been in touch with 5 colleges with designated HSC courses; it had had director or senior management level meetings with four of them and verbally agreed arrangements for transfer of students, where appropriate, with two of them. It had sought legal advice. The College expressed itself committed (in order to deal with the current concerns of the BIS/SLC):

i) to keep only the Business and Computing HND students who were not taking any specialisation units in other fields such as HSC, which would reduce the effective number of students under SLC funding by about 40%;

ii) to stop new recruitment of students needing student loans pending a written and agreed set of directions for BIS/SLC; and

iii) to re-align payments to students based on the confirmed course start dates (not induction dates), which would be sent to BIS/SLC by the College.

9 October 2012

34. On 9 October 2012 the College replied to an email of the previous day which had reminded the College of what it was to provide under Action Points 1-3. The email confirmed that neither Mr Khan, Mr Kabir nor Mr Islam was a director or a senior management member of any other college. It said that the College was working on Action Point 2 and would provide details as soon as possible. Attached to the email was a copy of a letter from Nelson College to the College confirming the possibility of transfer of students to a designated course at the latter college from January 2013, as required by Action Point 3.
35. On the same day Mr Lilley updated his submission of 20 September. In it he proposed that BIS should withdraw the College's designation for an HND in Business. The submission informed the Minister of the College's confirmation that not all students had started to attend their courses in April/May – contrary to claims for student support made by students that indicated an April/May start date and contrary to the College's confirmation to the SLC that students had been in attendance for a period of 90 days as from April/May, which triggered a tuition fee payment of £ 600,000 to the College by the SLC. It also reported that some students did not in fact start their courses until September.
36. Paragraph 8 of the submission was in practically the same form as the first paragraph of the note of the meeting cited at [30] above. Its precise wording was as follows (differences underlined):

"The college confirmed that it has, since April 2012, recruited more than 600 students that it has registered as attending the HNDs in either Business or Computing. … However, the college has now confirmed that up to 300 of the students that are registered on the Business course are in fact intending to study Health and Social Care, Hospitality Management or Travel and Tourism)."

The principal difference between this paragraph and the notes of the meeting was the replacement of the words "have opted to specialise in another subject" with the words "are in fact intending to study".

37. Paragraph 9 began with exactly the same words as appear in the second paragraph of the note of the meeting cited at [30] above.
38. The briefing expressed the view that the College's proposals for the transfer of students to other colleges was a tacit admission by the College that a significant number of students (put by the College at 40% of its total recruitment) were in fact not intending to study an HND in Business Studies. It went on to say that the Department's officials considered the College's explanation that the students could have transferred to another College to complete their studies barely credible and tantamount to misrepresentation:

"We think that this irregularity, which has been further compounded by misrepresentation of start dates means that we can no longer have any confidence in Guildhall College's ability to meet the terms of its designation for student support in respect of its HND in Business and that this should be withdrawn with immediate effect."

39. The briefing noted that the College had now advised BIS of the action it had taken after the 2 October meeting and the further action that it proposed to take to facilitate transfer of students to other colleges. This was a reference to the College providing the letter from Nelson College – see [34] - which offered to take Guildhall students from January 2013 if they wished to continue their studies in Health and Social Care. This would involve some students remaining for less than 6 months at the College.
40. On 11 October 2012 the College provided a database listing students studying the designated courses and their additional option subject, if any. This included the dates on which the student started their course.
41. On 16 October 2012 the College's solicitors requested that the block on funding be lifted within 3 days failing which the College might opt for judicial review.
42. On 18 October 2012 Mr Lilley updated his submission of 9 October 2012 and recommended the withdrawal of the College's designation for HND Computer Studies. In paragraph 4 he said that his submission of 9 October had set out the evidence which substantiated BIS' belief that the College had been systematically recording incorrect start dates for many students on its two designated courses and had knowingly been registering students on this course, when students had been intending to study other, non designated courses. He expressed the view that the balance of evidence supported the argument that the College was no longer fit to receive public money and that the HND Computing course should also be de-designated.
43. By the time that the designations of the Business and Computing courses were withdrawn the SLC had received 137 telephone calls from students from the College. None of them had explained that they were studying Business with another optional subject with a view to financing their own studies in the following year or transferring to another college.

Removal of designations

44. On 23 October 2012 BIS notified the College that the Secretary of State was satisfied that the College had registered significant numbers of students on the HND course in Business when those students in fact intended to study a course that was not designated for student support; and had submitted inaccurate data on course start dates for a significant number of students with the effect that payments for maintenance and tuition fees had been made in advance of entitlement in respect of those students. Accordingly the Secretary of State withdrew the designations of the HND courses in Business and in Computing with immediate effect.
45. As the judge recorded, by the date of the hearing the Secretary of State sought to uphold the decision to withdraw designation solely on the ground that the College had registered significant numbers of student on the HND Business course when those students were wishing to study other courses.

The issues

46. The arguments in this case have been presented attractively and with admirable conciseness by Mr Michael Biggs on behalf of the College and Miss Cathryn McGahey on behalf of the Secretary of State. There are four issues:

a) whether or not the Secretary of State had power to revoke the designation;

b) whether he had acted unfairly;

c) whether his decision was Wednesbury unreasonable; and

d) whether the designation of courses for the purpose of SLC funding was a possession within the meaning of Article 1 Protocol 1 of the European Convention on Human Rights of which the College had been illegally deprived.

Ultra vires

47. Mr Biggs submits that the decision to revoke designation of the two courses was beyond the powers conferred by the 2009 Regulations on the Secretary of State. He accepted that there was an implied power in the Regulations to withdraw the designation of courses eligible to receive student loans. But so drastic was the effect of such a revocation and suspension of payments of student loans that the circumstances in which it arose were limited. Before the judge it was said, firstly, that there was no implied power to do so during the academic year – a contention which is no longer pursued. Secondly it was, and is, submitted that the power could only be exercised on proof of abuse and not mere suspicion. Abuse was not proved simply because significant numbers of students were registered on the Business course when they intended to study another non designated course. It may well be, Mr Biggs said, that ON were the party solely or mainly responsible for the matters that concerned BIS and SLC since this was the first year in which the College had recruited students with SLC funding, doing so through the agency of ON.
48. The judge rejected this submission for the following reasons. A power which is not contained in the express words of the statute may be implied when it is incidental to, and may reasonably and properly be done, under the purpose of the statute: AG v Great Eastern Railway Company [1880] 5 AC 473,478-481. Under the Act and the Regulations the main statutory purpose was to provide student support coupled with a purpose that public finds should only be channelled to particular outlets and not leach away for unauthorised purposes. There was no basis for limiting the power to withdraw designation to withdrawal at the end of an academic year or only if there was proof of abuse. If the Secretary of State suspects that public funds are leaching away he must have the power to act immediately. Such a power is subject to the usual public law restrictions. Thus the Secretary of State cannot use it for an improper purpose; ignore relevant or take into account irrelevant considerations; or act wholly unreasonably or in an arbitrary manner. In the present case the Secretary of State had reasonable grounds to believe that public monies were being used for non-authorised purposes and was entitled to withdraw designation.
49. Mr Biggs submitted that the judge was in error. Any incidental power under section 22 of the 1988 Act, and by extension regulation 6 (9) of the 2009 Regulations must be narrowly confined. Its existence and extent must be determined by a construction of the relevant legislation: Hazell v Hammermsith LBC [1992] 2 AC. In the present case the need to invoke any power of de-designation arises by virtue of the need to avoid abuse of public funding and such abuse needs to be established.
50. I agree with the judge's analysis. As he observed, the purpose of the legislation is twofold: to provide for the payment of fee loans in respect of designated courses and to ensure that they were not paid in respect of non-designated ones. The fee loans become payable three months after the commencement of each academic year (as defined). They constitute significant amounts of public money, which is in short supply and which it is the duty of the Secretary of State to protect from use for unjustified purposes. The Secretary of State must be taken to have power to withdraw the designation (and thus prevent the potential loss of public monies) if he has reasonable grounds to believe that the system is being abused. That there must be some power of withdrawal is not in dispute. The two limitations suggested - no withdrawal before the end of the academic year or until proof of abuse - would be unacceptably restrictive. In the case of the former it would prolong the time when the Secretary of State could do anything for a considerable period during which time there would be fresh intakes of students; in the case of the latter it would impose a requirement, not prescribed in any statute or other provision, which is unduly restrictive, in circumstances where the Secretary of State's powers are in any event circumscribed by classic public law principles. It would, also, potentially give rise to considerable debate as to what amounted to "proof" and how it was to be established.
51. The Secretary of State had, as the judge found, reasonable grounds to believe (on the basis of what had either been put to or had come from the College) that public monies were going to the College in respect of non-designated courses. The material before him indicated that students who had been awarded support in order to study for Business or Computing, and in respect of whom the College was claiming payment of fees, thought that they were studying other courses. The College claimed that a significant number of students were studying Business or Computing with an option in another (non-designated) subject and that, for the second year of the course, if they did not wish to continue with Business they could either pay the fee for their preferred course themselves or continue with it at another college. This was, as the judge held, an implausible scenario. Students would be unlikely to choose to embark on a 2 year course on the basis that it would be funded for a year and then, if they were to pursue their "option/choice", they would have to be either entirely unfunded or go to a different college.

Unfairness

52. The judge cited the well-known summary of the principles of procedural unfairness in the speech of Lord Mustill in R v Secretary of State for the Home Department ex parte Doodey [1994] 1 AC 531, 516 D-G:

"What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often-cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive that (1) where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer."

The Secretary of State relies particularly on points (2) – (4).

The College's submissions

53. Mr Biggs' contentions before the judge and before us were that the Secretary of State had acted unfairly in the following respects. The decision to suspend on 18 September was taken without any notice at all, a circumstance which vitiated both that decision and the entire process. The College should, at the lowest, have been given a week's notice of the BIS/SLC's concerns with a requirement to respond. The decision to withdraw designation made on 23 October was one made when the College was never told that withdrawal of designation was even a possibility. As a result the College was given no opportunity to make representations that some measure less than withdrawal was appropriate. The allegation of knowing abuse was never clearly put. Yet that was the basis on which Mr Lilley briefed the Secretary of State. The meeting of 2 October was not a meeting whose purpose was to enable the College to make representations in its own defence. It was part of the investigatory process. Before then the College had not been told about BIS/SLC's concerns that students registered for the Business HND course were studying other subjects. After the meeting the College complied with the requirements set out in the Action Points. It was given no further opportunity to address the concerns and Mr Willetts was misinformed of what had been said at the 2 October meeting. If the allegation of knowing abuse had been clearly put there was much to say including that the students may have been misled by ON. The factual and evidential basis of the decision to withdraw designation on the basis of abuse was never provided to the College and the College had no opportunity fairly to advance its case. More was needed than an ad hoc meeting at which serious allegations were made en passant.

The judge's findings - Suspension of payments

54. The judge observed that urgency was something that had always been regarded as an exceptional circumstance where the requirements of fairness might need to be relaxed. In the instant case the Secretary of State was faced with a situation where, when payment was suspended, the College had apparently recruited over 300 students to start the same course on the same day. Mr Islam's 14 September email conceded that these students were considered April/May starts even though that was not so in every case and some had been allowed a staggered start between May and July. Information from some students themselves confirmed that they had only started in July. Yet the College had received in excess of £ 650,000 of public money and was claiming more. There was information that ON was completing student applications and might therefore have completed the declarations that students were required to make which determined their eligibility for support. Those circumstances, in his view, "more than justified" an immediate suspension of payments to the College and its students without notification to the College. The letter of 21 September explained the concerns and invited the College to meet BIS and SLC to explore the situation.
55. The judge was not, in my view, in error in reaching this conclusion. The 14 September email amounted to an admission that the College had already claimed and received payments to which it was not entitled; and some students themselves had confirmed that they had only started in July. The involvement of a third party in making applications for student support raised concerns that students were not fully aware of what was being submitted (either in relation to commencement date or nature of course) on their behalf and as to its accuracy. In those circumstances the Secretary of State was not acting unfairly in taking the swift action – suspension coupled with an invitation to immediate discussions – that he did.

The decision to withdraw

56. As to the decision to withdraw the judge pointed out that, following the suspension, information came in – from the College on 18 September and in telephone calls which students made to the SLC – to the effect that students recruited for one course apparently thought that they were studying for another. The concerns which SLC/BIS had were, he held, squarely put before the College so that it knew exactly what they were. It was artificial to characterise the 2 October meeting as simply part of the investigation. It was part of a process which began before and continued after the meeting in which BIS/SLC were both attempting to elicit information and placing their concerns before the College which had the opportunity to put its side of the case. What was said served to confirm the Secretary of State's concerns that students registered for one course were in fact studying another.
57. In the course of the meeting further facts were revealed such as the payment of commission to ON based on enrolment in designated courses. The College was invited to explain why students were telling the SLC that they were undertaking undesignated courses while the College had them registered as studying for an HND in Business. The judge noted that the College had still not explained how that came to be so other than to say that proceedings against ON were contemplated. The College was given action points but that did not preclude it from providing further explanations to address the concerns that had been raised. As it was it provided no information to support its implausible claim that students applying to study a 2 year designated course, but intending or wishing to pursue a non designated course, enrolled with the College on the basis that they would finance themselves in the second year or would leave, after a period as low as 6 months (or even less in the case of students who did not start until September) as the putative transfer to Nelson College in January 2013 suggested, to study at another college. Nor could the College have had no idea that the removal of designation was a possibility. If the Secretary of State reasonably believed that the College was claiming substantial sums of public money in respect of a designated course to which it was not entitled the College could have expected nothing less than that it would have its designation removed and that a lesser penalty would not be appropriate.
58. Again I do not regard the judge as being in error in deciding that the Secretary of State had not acted unfairly. In essence, in the light of the matters the judge identified, the Secretary of State had good reason to believe that the designated courses were being used to attract students (and state finance) for courses that were not in fact designated and were not, therefore, entitled to such support. The College can have been in no doubt that these were BIS/SLC's concerns (they were told in terms by Mr Williams that some Business course students appeared to be undertaking different non designated courses and that in his view students were being misled) and that the fault was being laid at its door since it was the College which (a) was claiming money for the courses and (b) must have known what courses the students in respect of whom the monies were sought were actually taking or intending to take and on what basis.
59. The College had the opportunity, of which it availed itself on 5 October, to respond to what had been raised at the meeting. It did not then complain that it had not had sufficient opportunity to meet the points raised; and, significantly, it proposed a 40% reduction in the number of students with SLC funding by keeping on only those who were not taking any specialisation units in other non designated subjects. Noticeably the College did not:

(a) produce either to BIS/SLC or the judge any evidence from any students that they regarded themselves as registered as taking a two year HND course in Business and had simply opted for modules on other undesignated courses, realising that finance for those courses full time (or at least as the primary course) was not available to them if they stayed at the College so that, in the absence of private funding, they would have to leave in a year or even six months; or

(b) explain how up to 300 students could possibly without its knowledge have obtained student support for one course whilst intending or in fact studying for another; or

(c) at that stage put the blame on ON. It later did so in Mr Islam's third witness statement of 10 July 2013.

It must or should have been apparent to the College that the designation of these courses was in jeopardy. Whatever may be the position in another case, fairness in this case did not dictate that there should be a discrete investigative stage, followed by the communication of a proposed decision with the grounds, and an opportunity to respond.

60. Reliance was placed by the College on the case of R (San Michael College) v Secretary of State for the Home Department [2011] EWCA Civ 1336 in which this court held it to be unfair for the Secretary of State for the Home Department to approve an action plan to enable the college to show that it had improved its procedures and then seek to revoke the college's licence on account of failure that had occurred before the action plan was put in place. That is not this case. There was no suggestion to the College that compliance with the Action Points would mean that the College would keep its designation.

Wednesbury unreasonableness

61. The judge summarily rejected this claim. He was right so to do. It cannot be said that no reasonable Minster could have reached the decisions impugned, having regard, inter alia, to the sums involved and the absence of satisfactory explanation of what was going on. Reliance was placed in this respect on the difference between the paragraph in the notes of the meeting of 2 October 2012 set out at [30] above and the similar, but not identical paragraph in the submission of 9 October 2012: see [36] above. Cranston J described the use of language in the latter paragraph as "unfortunate" but held [51] that whatever inferences the Secretary of State drew about fraud the decisions to suspend and withdraw were justifiable for the reasons described. I agree.
62. The College submits that the difference in wording transmutes what was being said from a statement that the students were on the Business course, with an option to take other modules in addition, to a statement that the students were not on the Business course at all; and that it thereby records an admission that was never made with the result that the true reasons for the decision were never communicated to the College.
63. There is not, in my view, a world of difference between the two notes, neither of which was verbatim. Both reflected what BIS/SLC understood to be the position from what they were told namely that these 300 students wanted to study courses other than the Business or Computing course for which they were registered and would be doing so ("have opted to specialise in"/"are in fact intending to study"). If the latter phrase goes any further than the former it was an inference that it was well open to the officials to draw in the light of (a) reports to BIS/SLC from students that, although registered for Business they understood that they were studying something else; (b) the description of the arrangements as being a Business or Computing course with a different "option/choice" of a non-designated course, suggesting that it was the latter course that was the student's true choice; and (c) the implausible suggestion that students had knowingly embarked on a course when to pursue their "option/choice" would involve either no public funding for the second year or transferring to another college. In addition, the hope expressed by the College at the 2 October meeting, as recorded in the notes, that those who had opted to specialise in a course other than Business or Computing would choose to specialise in Business in year two, was an indication that what they had chosen to do was not Business.

Article 1, Protocol 1 ECHR

64. Article 1 of the First Protocol of the European Human Rights Convention (A1FP) provides:

"1) Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

(2) The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

65. Mr Biggs contends that the designation of a course is a "possession" for the purposes of A1FP. It is something which entitles the College to the benefit of state funding for the payment of tutorial fees. Accordingly, the College was entitled not to be deprived of it except in the public interest and subject to conditions provided for by law.
66. "Possessions" within the meaning of A1FP are to be given an autonomous meaning. They are not confined to physical things or land or choses in action. Thus in Tre Traktorer Aktiebolag v Sweden (1991) 13 EHRR 309 the ECHR regarded a non-transferable liquor licence for a restaurant as a possession on the ground that the economic interests concerned with the running of the restaurant were possessions and that the withdrawal of the licence had adverse effects on the goodwill and value of the restaurant.
67. However in Denimark Limited v United Kingdom (2000) 30 EHRR CD 144 the ECHR recalled its case law that goodwill may be an element in the valuation of a professional practice but that future income was only a "possession" once it had been earned or an enforceable claim to it existed. It concluded that the element of the complaint based upon diminution in the value of the business assessed by reference to future income fell outside the scope of Article 1.
68. In R (Nicholds) v Security Industry Authority [2007] 1 WLR 2067 Mr Kenneth Parker QC (as he then was), sitting as a deputy High Court judge, held that a permission to act as a nightclub supervisor was not a possession because it was clear from the Strasbourg jurisprudence that A1FP only protected goodwill as a form of asset with monetary value and not an expected stream of future income "which, for mainly organisational reasons, cannot be or is not capitalised. In other words, the Convention …protects assets which have a monetary value, not economic interest as such". Licences that were neither marketable nor obtained at a market price representing the value of the discounted future cash flows that the licence might generate were not assets having a monetary value for the purposes of A1FP and were not possessions.
69. In R (Malik) v Waltham Forest NHS Primary Care Trust (2007) 1 WLR 2092 Auld LJ observed that when considering a person's claimed future monetary entitlement derived from an interest such as licence or permit " a court should focus first on whether the entitlement had a present economic value to him in the sense of being marketable by him"; a licence was not by itself a possession and whether the economic interests that flowed from it were a possession depended on the facts "one of which may be the marketable goodwill that can flow from the exercise of a licensed trade".
70. In R (New London College) v Secretary of State for the Home Department [2012] EWCA Civ 51 this Court held that the College's sponsorship licence was not a possession for the purposes of the Article. Richards LJ held that the suspension or withdrawal of it would not constitute an interference with the right to peaceful enjoyment of possessions within the meaning of A1FP unless it had an adverse effect on the goodwill of the business in the sense identified by the authorities (as opposed to a loss of future income), of which there was no concrete evidence. The sponsor licence did not touch on the freedom of the College to provide courses for students and it was far from clear that the expected income stream from the College having the licence could be capitalised as part of the value of the business.
71. Mr Biggs submits that, unlike the Tier 4 sponsor licence in the New College case, the designation of the two courses was an interest entitling the College to payment of fee loans in respect of students. There was produced to Cranston J a letter from the College's accountant to the effect that the designation contributed some £ 2 million to its capitalised value.
72. Like the judge, I do not regard the designation of the two courses as any form of possession within A1FP. Any right that the College may have to receive the payment of fee loans derives from the fact that students have enrolled on and begun a designated course. The entitlement to a loan is an entitlement of the student derived from his falling within the scheme of student support and signing up for a designated course. The designation itself gives no right to funds; nor does its absence preclude the College from providing educational services. It is something without which the College cannot expect to attract students who are not privately funded and with which it could expect to do so - as was the case with the Tier 4 licence which would enable or assist overseas students to acquire a visa.
73. The case is to be distinguished from R (Infinis Plc) v Gas and Electricity Markets Authority [2013] EWCA Civ 70 where the accreditation under the Renewables Obligation Order 2009 that was refused would give the electricity provider who possessed it an absolute right not to pay a charge. In the present case the designation cannot be purchased; nor can it be sold. If the business was sold the designation would have to be renewed. The judge regarded the letter from the College's accountants (which was not claimed to constitute expert evidence), stating that in their view course designation added a value of over £ 2 million to the goodwill of the company, as wholly inadequate to support the point about goodwill, i.e. the suggestion that the designation was itself a marketable asset with a monetary value. So do I. It seems to me wholly implausible that the designation alone could properly be regarded as valued at £ 2 million. I note that no accounts were produced that showed that to have been so.
74. If, contrary to his view, the designation was to be regarded as a possession, the judge held that both decisions were in accordance with law and were a proportionate response to the leaching away of public monies for unauthorised purposes.
75. Mr Biggs contends that the decisions could not be regarded as proportionate and that, in any event, the College had been deprived of its possession in circumstances where the conditions for such deprivation had not been provided for by law, it being unclear in what circumstances such suspension or withdrawal would or might take place. The judge disagreed on both counts and so do I.
76. As to the former, the Secretary of State's powers were circumscribed by the conditions laid down by public law for all such decisions. That provides the necessary legal framework of sufficient certainty. I am not persuaded that the decision of the House of Lords in R (Purdy) v DPP [2010] 1 AC that the details of the DPP's then policy in relation to giving his consent for prosecutions for assisting suicide did not satisfy the Article 8 (2) requirements of accessibility and foreseeability, means that general public law duties are insufficient legal provision for present purposes.
77. As to the latter, since the Secretary of State's decision was neither unfairly reached nor unreasonable in the circumstances it was a proportionate pursuit of the legitimate aim of precluding the College from receiving further public funds to which it was not entitled.
78. If I had taken a different view it would have been necessary to consider what remedy to grant. Before the judge the Secretary of State adduced witness statements from three students, signed on 1, 7 and 12 July 2013 to the effect that they were, to the knowledge of those running the College, enrolled on non designated courses and received tuition only in respect of those courses. However the College had claimed payment of tuition fees in respect of them. The Secretary of State submits that, in the light of that evidence, it would be inappropriate to grant any relief. The College expressed a wish to cross examine the individuals concerned, whose evidence came in late. If I had otherwise been in favour of the College I would have been minded to remit the question of remedy to the High Court in order for it to decide whether or not to order cross examination of these witnesses – something that I would not think appropriate to order before the College had set out with precision what its case was in respect of each of them. As it is the question does not arise.
79. I would dismiss the appeal.

Lord Justice Fulford

80. I agree.

Lord Justice Jackson

81. I also agree.

Note 1   The fact that a student studies certain modules in respect of a designated course does not mean that the student is eligible for student support. The critical question is what is the final qualification for which they are studying.     [Back]