England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		5 July 2012

Mr Justice Supperstone :

Introduction

1. The Claimant, CNM The College of Naturopathic Medicine Ltd, challenges the decision of the Defendant, the Secretary of State for the Home Department, dated 8 February 2012, to refuse the Claimant's application for highly trusted sponsor ("HTS") status under Tier 4 of the points-based system of the Immigration Rules ("the Decision"). On 4 April 2012 Nicola Davies J granted permission to apply for judicial review.

Legal and policy framework

2. The requirements for Tier 4 Sponsors and HTS status are set out in guidance, provided by the Defendant, which has changed from time to time. The material Guidance came into force on 5 September 2011 ("the Guidance"). It provided that all Tier 4 sponsors who had held licences for 12 months or more had to apply for HTS status by 9 October 2011.
3. Tier 4 of the points-based system of the Immigration Rules lays down criteria for the entry and stay of students in the UK. Since 22 February 2010, all potential international students have required a CAS (Confirmation of Acceptance for Studies) issued by a licensed sponsor in order to obtain leave to enter or remain under Tier 4. All education providers wishing to take students from outside the European Economic Area for over 26 weeks (or over 11 months in the case of English language providers by way of a temporary concession from the Rules announced by the Minister on 13 December 2010) must be licensed sponsors. Education providers have been able to apply to join the Register of Tier 4 Sponsors since 28 July 2008. From 31 March 2009, any education provider who wishes to recruit international students has been required to obtain a Tier 4 licence and to be registered as a sponsor with the Sponsor Licensing Unit of the UK Border Agency ("UKBA"). The UKBA issues guidance for Tier 4 Sponsor applications, which has been amended from time to time.
4. The Guidance set the following eligibility criteria for HTS status:

"Eligibility requirements for highly trusted sponsor (HTS) status

268. You must meet all of the requirements set out in this section. If you do not meet all of the requirements you will, in some circumstances, be allowed to apply again. In some circumstances your licence will be revoked.

How we consider an application for HTS

269. There are two stages in considering your application.

Stage One: mandatory requirements

270. At the first stage we assess you against the mandatory requirements in table (iv). We base our assessment only on students sponsored under Tier 4 and whose application to come to, or stay in the UK was supported by a CAS assigned by you.

Table (iv)

…

Your refusal rate must be less than 20%.

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%. 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 in applications we refused during this 12 month period.

…

271. If you do not meet one or more of these requirements, we will refuse your HTS application and your licence will be revoked. This is because you will have failed to meet the minimum standards for sponsors who have been licensed for 12 months or longer.

When we will refuse an application for highly trusted sponsor status

275. We will refuse your application for highly trusted sponsor status in any of the circumstances below.

You do not meet one or more of the mandatory requirements.

…

276. We will also refuse your HTS application for any of the reasons set out in the section called 'When we will refuse a sponsor licence application'."

5. The section called "When we will refuse a sponsor licence application" is at paragraph 94 of the Guidance. It provides:

"94. We will refuse your application in any of the circumstances below.

…

You do not meet the requirements of Tier 4 or the category you are applying for.

…

We find information that suggests you do not have the processes you need to comply with your sponsorship duties."

6. Paragraphs 452-479 of the Guidance outline the primary responsibilities of a sponsor. The material paragraphs provide:

"Reporting duties

461. Unless stated otherwise, you must report the following information to us within 10 working days using the sponsor management system. It tells us about students who do not attend, do not comply with our requirements, or disappear. We use the information to take enforcement action against them when necessary.

…

Students who do not enrol

463. You must tell us if a student you have assigned a CAS to does not enrol on their course within the enrolment period. You must report this no later than 10 working days [after] the enrolment period has ended. You must include any reason the student gives for not enrolling for example if they:

…

have had their application for permission to come to, or stay in the UK refused."

7. On 20 September 2011 the Defendant published a document entitled "Frequently asked questions on the new policy for highly trusted sponsorship (HTS) under Tier 4 of the points-based system". They include the following:

"How are refusal rates calculated and how does this impact on an HTS application?

A high refusal rate is an indication of poor compliance and recruitment practices. However when a sponsor applies for HTS status, we are aware that on some occasions an error may occur.

When calculating refusal rates we will count all visa refusals for the previous 12 months. When calculating this figure, we will not include any refusal that has been overturned.

Equally, any refusal where a formal right of appeal is being exercised will not count towards the calculation of refusal rates.

Will an unsuccessful first visa application that is then followed by a second successful application still be counted? Or will it be excluded from the data on the basis that the second application was successful?

We will always look at an application in the round and consider the full details of any refusal and also look at any subsequent application for a visa or extension.

Yes, the first refusal will count but the issue of a second CAS which is then granted also counts. The percentages are such that a small number of errors by migrants will not affect the overall result of the application."

Factual background

8. The Claimant was founded in 1997. Ms Nicole Keppler, head of administration and accounts director of the Claimant, in her witness statement dated 5 March 2012 states that the Claimant "is one of the largest and most highly respected naturopathic training providers in the UK" (para 2). On 16 December 2008 the Claimant was granted an A-rated Tier 4 licence. On 4 October 2010 the Defendant granted the Claimant an A-rated Tier 2 (General) licence. This licence is in addition to, and separate from, the licence granted as a sponsor under Tier 4. On 30 September 2011 the Defendant received the Claimant's application for HTS status by application dated 19 September 2011. On 14 February 2012 the Defendant refused the Claimant's application by a letter dated 8 February 2012 for two reasons:

"Our records indicate that your refusal rate is greater than 20%.

The total number of leave applications made was 37. Of these, 11 were refused giving a percentage of 29.73%.

In addition to the above you have also failed to meet the requirements of paragraphs 276 and 94 of the Tier 4 Sponsor Guidance. In particular, we are not satisfied that you have the processes you need to comply with your sponsorship duties, as we have found evidence that you are not currently meeting your responsibilities as a licensed sponsor in regards to reporting migrant activity. We have identified 11 students who have had their applications for Entry Clearance/Leave to Remain refused and did not gain further leave for the same course start date, and thus failed to enrol within the enrolment period stated. No reporting has been received to inform UKBA of their failure to enrol. As such, we have identified that appropriate migrant activity reporting has not been made, in accordance with paragraph 463 of the Tier 4 Guidance."

The decision letter also stated that the Defendant "will shortly commence action to revoke your sponsor licence".

9. By e-mail dated 15 February 2012 the Defendant amended the reasons for refusal as follows:

"Having looked into your request, I can confirm that there were in fact 10 refusals rather than 11 that were stated in our e-mail, which gives a revised refusal rate of 27.03%."

10. On 25 April 2012 the Defendant filed and served detailed grounds of defence in which it was accepted, after checking with colleagues overseas, that the refusal of the application which used CAS No: E4GOIU7B01BOEX was wrong. Even so, the Claimant had 9 refusals out of a pool of 37, which is still more than the mandatory rate of 20%.
11. On 9 May 2012 pursuant to the case management direction of Nicola Davies J made on 4 April 2012 the Claimant filed a Reply to the Defendant's Detailed Grounds of Defence.
12. On 22 May 2012 the Defendant wrote to the Claimant's solicitors:

"We write further to our letters of 8 February 2012 and 13 March 2012 in relation to the decision to refuse your client's application Highly Trusted Sponsor (HTS) status under Tier 4 of the points-based system.

…

We have reconsidered your client's HTS application and we maintain the decision to refuse your client HTS status. We have discounted one refusal from our calculations (relating to CAS E4GO1U7BO1BOEX). However this means that 9 applications out of 36 have been refused, thus giving a refusal rate of 25%.

We note your submissions relating to the individual CAS references, however please be aware that the reason a high level benchmark of 20% has been set for the refusal rate criterion is to account for errors that may be outside a sponsor's control. The expectation is that a sponsor's recruitment practices include robust procedures for vetting their students, therefore reducing the quantity of refusals. … Please be aware that unless a decision to refuse leave has been overturned at appeal/administrative review, we will not discount the refusal decision from our calculations. Although an individual may have been approved leave on a later CAS, it does not automatically follow that the original refusal decision was incorrect.

…

Finally, as stated on the UKBA website within the section 'Frequently asked questions on the new policy for highly trusted sponsorship (HTS) under Tier 4 of the points-based system', we will consider whether a holistic approach should be applied for small sponsors. Please be aware that this is in relation to the number of CAS issued by a sponsor and, in view of the fact that your client's CAS usage for the previous 12 months was 36 we did not feel that there was any reason why a holistic approach would be appropriate and why the mandatory refusal rate should not be applied.

In conclusion, we consider that neither the size of the CAS usage, nor anything else about your client's application, requires an exception to be made to our normal policy to refuse any application where the refusal rate is above 20%.

In view of the above our decision to refuse your client HTS status is maintained."

Grounds of challenge

13. Ms Judith Farbey QC, for the Claimant, submits that the Decision is irrational on two grounds:

i) the Defendant has failed to demonstrate any or any material harm to effective immigration control caused by the Claimant. In the absence of demonstrating harm to immigration control, it is irrational to refuse HTS status (Ground 1);

ii) the obligation to report the non-enrolment of a student who has been refused entry clearance or leave to remain was in the circumstances of this case an irrational ground for refusing HTS status (Ground 2).

14. In response to the Grounds of Defence Ms Farbey submitted in the Claimant's Reply that certain parts of the Guidance should be quashed (Ground 3) and an Application Notice dated 9 May 2012 was lodged seeking an extension of time to challenge the policy. However Ms Farbey took the view in the light of the skeleton argument of Mr Rory Dunlop, for the Defendant, that it was not necessary for her to pursue that application and that ground of challenge.
15. During the course of his oral submissions Mr Dunlop indicated that if the only failure by the Claimant had been a failure to meet the reporting requirements of paragraph 276 and 94 of the Guidance (Ground 2), the Defendant would not necessarily have refused the Claimant HTS status. That being so, there is no need to consider Ground 2 further.

The parties' submissions

16. Ms Farbey submits that the Defendant ought rationally to have discounted three students from its assessment of the Claimant's refusal rate. If these students are discounted, the refusal rate is 16.2% and this part of the Defendant's decision falls away.
17. The facts relating to the three students are not in dispute and can be stated shortly:

i) CAS No: E4G3PS5AO3WOU9: JDF. JDF was refused leave to remain because she had £100 less in her bank account than required under the maintenance provisions of the Immigration Rules. She re-applied for leave to remain using CAS No: E4G1EN6AO4VOZ1 and, on 31 January 2011, she was granted leave to remain as a student until 1 March 2014.

ii) CAS No: E4G7117BO1FOJ8: RSP. RSP was refused entry clearance on 10 August 2011 because she relied on funds held by her father in bonds, not cash. She re-applied for entry clearance using CAS No: E4G2BB9BO5SOW7 and was successful.

iii) CAS No: E4G6MR4AO8WON8: ARB. ARB was refused entry clearance on the ground that he had not demonstrated sufficient funds in his bank account to satisfy the maintenance provisions of the Immigration Rules. He reapplied for entry clearance using CAS No: E4G1VN8BO2XON7 and was successful.

In all three cases Ms Farbey submits it is irrational for the Defendant to penalise the Claimant. There is no evidence that any of these students posed a threat to immigration control, or that the Claimant's actions in relation to them harmed immigration control.

18. Further Ms Farbey contends that the Defendant has treated her policy guidance as binding, and has therefore fettered her discretion. A policy "is precisely not a rule: it is required by law to be applied without rigidity, and to be used and adapted in the interests of fairness and good sense" (Pankina v Secretary of State for the Home Department [2011] QB 376 at para 28, per Sedley LJ).
19. Effective immigration control concerns the control of the entry and stay of individuals in the UK. For this reason, Ms Farbey submits, the grant of immigration status to these three students was a relevant consideration and ought to have been considered by the Defendant.
20. Further Ms Farbey submits that the Defendant's policy of only discounting refusals that are overturned is irrational. Unless entry clearance cases engage either discrimination or human rights grounds, an appeal is not possible. In the absence of a general right of appeal, a student who disagrees with an entry clearance decision may seek judicial review or may re-apply for entry clearance. The decision about which course of action to adopt lies with the student, not the sponsor. In any event issuing a new CAS and the student making a new application may be simpler and less expensive than challenging the original decision whatever the merits of that decision.
21. Finally, Ms Farbey submits, in so far as the Defendant did exercise some discretion, she erred in treating as irrelevant or failing to give proper weight to a number of factors which include the following: that the UK will, as a result of the Defendant's decision, no longer offer a degree level course in naturopathy to international students; that the Claimant is widely and internationally recognised as being a leading provider in the field; that the loss of a licence "would have the most serious professional and financial consequence for the college and its proprietors" (R (London Reading College Ltd) v SSHD [2010] EWHC 2561 (QB) Admin); and that the three CASs under consideration all related to applicants who were subsequently granted immigration status.
22. Mr Dunlop submits that the purpose of the criteria for HTS status in the Guidance is not just to exclude those who have in fact harmed immigration control, but also those whose past behaviour indicates that they have the capacity to harm immigration control, in other words, those who cannot be "highly trusted". (R (London Reading College Ltd) v Secretary of State for the Home Department [2010] EWHC 2561 (Admin) at para 60).
23. Mr Dunlop further submits that the Defendant did not fetter her discretion, but rather considered whether to depart from the Guidance and grant the Claimant HTS status and decided not to do so. It is clear, he submits, from the letter of 22 May 2012 that the Defendant took into consideration the Claimant's submissions in relation to JDF, RSB and ARB. The Defendant concluded that there was not sufficient reason to depart from the Guidance.
24. Mr Dunlop submits that there are plainly administrative advantages to having a mandatory criterion, which he describes as a "bright line" policy. As HH Judge Robinson observed in R (London College of Management Ltd) v Secretary of State for the Home Department [2012] EWHC 1029 (Admin) at para 39:

"In my judgment, it would entirely defeat the purpose of adopting a criterion with a fixed threshold if individual cases routinely had to be examined as well. That is not to say there will not be occasions when an exception should be considered and made. Those should be decided on a case by case basis."

25. Finally, Mr Dunlop submits that it is reasonable for the Defendant, in applying the Guidance, to draw a distinction between the refusal of a CAS which is later demonstrated to have been wrong on appeal or by administrative review, and the refusal of a CAS, where the student relying on that CAS is successful in a later application with a different CAS. Refusals which fall into the former category cannot reasonably be used as an indicator of insufficiently robust vetting practices on the part of the educational provider assigning the CAS, whereas refusals which fall into the latter category can properly be so used.

Discussion

26. In support of her principal submission that in the absence of harm to immigration control it was irrational to refuse the Claimant HTS status, Ms Farbey refers to paragraph 19 of the Guidance which states:

"Sponsorship is based on two basic principles. They are that:

those who benefit most directly from migration (employers, education providers or other bodies that bring in migrants) help to prevent the system being abused; and

those applying to come to the UK to work or study are eligible to do so and a reputable employer or education provider genuinely wishes to take them on."

27. However the purpose of the criteria for HTS status is not in my view, as Mr Dunlop correctly submits, just to exclude educational providers who have in fact harmed immigration control, but also to exclude those providers whose past behaviour indicates they may cause damage to immigration control in the future. Paragraph 94 of the Guidance states that a sponsor licence application will be refused when information suggests that the applicant does not have "the processes you need to comply with your sponsorship duties" (see para 5 above). Further paragraphs 31-32 and 34 of the Guidance are of particular relevance in this regard:

"Highly Trusted Sponsor status

31. Highly trusted sponsor status (which we call HTS) is designed to ensure that all education providers are taking their obligations on immigration compliance seriously. It recognises sponsors who show a good history of compliance with their sponsor duties and whose students meet the standards of compliance with the terms of their visa or permission to stay in the UK (known as 'leave to remain').

32. When you have had a sponsor licence for 12 months, you must be able to successfully apply for highly trusted sponsor status. If you do not meet the HTS requirements we will revoke your licence. See 'Eligibility requirements for highly trusted sponsor (HTS) status' for full details of the HTS criteria.

…

Sponsoring students – the confirmation of acceptance for studies

34. A confirmation of acceptance for studies (CAS) is your way of confirming, as a licensed sponsor, that:

you wish to bring an overseas student to the UK to study; and

to the best of your knowledge, that student meets the requirements of the rules for a valid CAS and will be able to make a successful application for leave to come to or stay in the UK."

28. In R (Westech College) v Secretary of State for the Home Department [2011] EWHC 1484 (Admin) Silber J observed at paragraph 14:

"In essence, the Secretary of State and UKBA entrust to sponsors such as the claimant the vital function of monitoring compliance of its students with immigration law."

29. The policy applies equally to prospective students who are refused entry to the UK and to those who have already entered the country. In the case of the former there will be no actual harm to immigration control. However their cases may suggest that the sponsoring education providers do not have the processes they need to comply with their sponsorship duties. The Defendant is not required to ignore such evidence when considering an application for HTS status.
30. There is no justification in my view for requiring, as Ms Farbey suggests, the Defendant to demonstrate that the Claimant has caused actual harm to immigration control in order lawfully to refuse the Claimant's application for HTS status.
31. It is clear from the Defendant's letter of 22 May 2012 that the Defendant did not fetter her discretion.
32. In my view the Defendant had regard to all relevant considerations when deciding whether an exception should be made to the policy to refuse any application where the refusal rate is above 20%. First, the letter of 22 May 2012 noted that one refusal (relating to CAS E4GO1U7BO1BOEX) had been discounted from the Defendant's calculations. Second, the letter stated that the Claimant's submissions relating to the three cases in issue had been noted and responses to those submissions were given: (i) the reason a high level benchmark of 20% has been set for the refusal rate criterion is to account for errors that may be outside a sponsor's control. The expectation is that a sponsor's recruitment practices include robust procedures for vetting their students, therefore reducing the quantity of refusals; (ii) unless a decision to refuse leave has been overturned at appeal/administrative review, the refusal decision will not be discounted from the Defendant's calculations. Although an individual may have been approved leave on a later CAS, it does not automatically follow that the original refusal decision was incorrect; (iii) consideration is given as to whether a holistic approach should be applied to small sponsors. However having regard to the Claimant's CAS usage for the previous 12 months the Defendant did not feel there was any reason why an holistic approach would be appropriate and why the mandatory refusal rate should not be applied; (iv) in conclusion, the Defendant did not consider that either the size of the CAS usage, "nor anything else about [the Claimant's] application", required an exception to be made to the policy in this case.
33. In my view the Defendant's policy of counting refused CASs where a subsequent application was successful is not irrational for the reasons put forward by Mr Dunlop (see para 25 above). It is not inappropriate to hold the refusal of a CAS, where the student relying on that CAS is successful in a later application with a different CAS, against the educational provider because it is an indicator of insufficiently robust vetting practices on the part of the educational provider assigning the CAS. There was one refusal which was wrongly made (CAS No: E4GO1U7BO1BOEX) and, when this was pointed out, the Defendant exercised her discretion to discount it, even though it had not been the subject of a successful legal challenge.

Conclusion

34. In my judgment, for the reasons I have given, this claim fails.