England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Rolls Building, Fetter Lane, London, EC4A 1NL
		09/04/2014

Mr Justice Hamblen:

Introduction

1. The Claimant, Stanley College London (UK) Ltd, challenges the decision of the Defendant, the Secretary of State for the Home Department, dated 25 September 2012 ("the decision"), to refuse the Claimant's application for highly trusted sponsor status under Tier 4 of the points-based system of the Immigration Rules.

Policy framework

2. Tier 4 of the points-based immigration system sets out criteria for determining applications by non-European Economic Area nationals to enter or remain in the UK for the purposes of education. The application is required to be supported by an education provider who is authorised by the Defendant to sponsor the application. Since 22 February 2010, all potential international students have required a Confirmation of Acceptance for Studies ("CAS") issued by a licensed sponsor in order to obtain leave to enter or remain under Tier 4.
3. The introduction of the points based system initially provided for two levels of sponsor status 'A'; and 'B', the latter being a time limited transitory status requiring the educational institution to reach level A within the time limit (a maximum of one year). In 2011 a further level of sponsorship was introduced, that of 'Highly Trusted Sponsor' status ('HTS') as set out in the material Sponsor Guidance at paragraph 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').'

4. Tier 4 sponsors are required to apply for and obtain HTS status, failing which the sponsor licence is revoked. The requirements for Tier 4 sponsors are set out in "Policy Guidance", provided by the Defendant, which has changed from time to time. It was common ground that the generally relevant guidance was that which came into force on 5 September 2011 ("the Guidance").
5. So far as material to the present case, 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."

6. 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" (the "FAQ"). This included 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.

If an appeal has been heard and the original decision to refuse is upheld before we decide any HTS application it would at that point count towards the calculation of the refusal rate.

When the data is analysed as we consider an HTS application, we will look to see if there are any trends that might be useful to feed back to the sponsor and, if requested, this information may be made available to them.

…..

Will the holistic approach continue to be applied to Tier 4 sponsors with significantly low CAS usage?

We have always said we will use a holistic approach to those Tier 4 sponsors that demonstrate significantly low CAS usage and recognise that a small number of reports in these circumstances can have a disproportionate effect.

However, all factors are taken into account to ensure an appropriate balance between effective immigration control and the impact on genuine students.

What if the institution narrowly misses the required level for HTS?

We recognise that any refusal of HTS status will have a serious impact on institutions and their ability to remain on the sponsor register. We therefore give a second opportunity to those institutions which narrowly miss the required level for HTS. They can apply again no later than 6 months after the first refusal.

A near miss is when a sponsor scores between 50 and 70 points on its HTS application.

What sort of dialogue will take place before an HTS application is rated a near miss? Will there be any engagement with sponsors?

We recognise that any near miss of HTS status will impact on institutions and their ability to recruit international students. We will, where necessary have a dialogue with institutions and share data as requested so that we are able to assist in improving their performance against the HTS criteria.

….

Will everyone who applies after 5 September be required to meet the new criteria?

Yes. All applications made after 5 September will be decided against the new criteria. This will include all renewal applications submitted after 5 September 2011"

Factual background

7. On 9 March 2011, the Claimant was granted an A-rated Tier 4 licence.
8. On 21 March 2012, the Claimant submitted its HTS application.
9. On 25 September 2012, the UKBA refused the HTS application. Its decision letter stated:

"We have been unable to approve your application for the following reason(s):

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

The total number of leave applications made was 33. Of these, 8 were refused giving you a refusal rate of 24.24%.

Please note the 12 month period of used CAS we have assessed is from the 21/03/2011 to the 20/03/2012.

We take into account that some of the refusals may be out of your control and this is the reason the refusal benchmark is set at 20% to allow for this.

When assessing an application we look at all used CAS only within the 12 month period preceding your application being received, therefore the used CAS we have assessed is 33 not 49 as stated in your letter.

Your letter also states details of 8 Visa Refusals and the reasons for these. After considering this letter, it does not change the overall decision as stated above."

10. On 1 October 2012, the Claimant's solicitors wrote asking for a review of the decision. It stated that the Claimant had now undertaken a careful analysis of the data, and agreed that the number of CASs was 33, of which 8 applicants were refused entry clearance/leave to remain. However, the Claimant stated that 4 of those 8 were due to reasons which could not be attributed to the Claimant in that the students had failed to demonstrate that they met the financial requirements, so that the refusal rate should be 12.12%. The letter asserted that the Claimant was not under a duty to assess the finances of a student, and cannot ensure that the applicants have the requisite funds for the 28 day period preceding the student's visa application (which will be after the period leading up to the CAS). The letter stated further that if only 2 students, refused solely on the basis of maintenance, were excluded, then the refusal rate falls to 18.18%, and "This is therefore a case where the UKBA's much advertised 'holistic approach' should be utilised".
11. By a letter dated 12 October 2012, Mr. Parvinder Singh, the director and shareholder of the Claimant, wrote to the UKBA. He reiterated that it considered four students, or 50% of the refusals, were out of the Claimant's control. This letter enclosed "the refusal letters and the detail arguments we are making", along with an Independent Schools Inspectorate report of 2012 and the FAQ.
12. On 15 October 2012, the UKBA replied to the letter of 1 October 2012. It stated that the Claimant's case had been reconsidered in detail and addressed the issues which had been raised. The argument that the four individuals were refused for reasons outside the Claimant's control was considered. It was stated that:

"Such refusals are accommodated within the 20% allowance that has been set and so will still count towards your refusal rate. The only time that these refusals would be discounted is if there was evidence that the original decision was flawed. On assessing each refusal we have found that none were overturned on appeal or administrative review. We also note that there were additional grounds for the refusals of Gagandeep Kaur Jassi and Mandeep Singh".

13. The letter concluded that: "we have not identified any reason to discount any of the refusals that were previously included in your client's refusal rate."
14. On 18 October 2012, the present judicial review proceedings were issued. The grounds were accompanied by a statement of Mr. Singh. In this, he stated that the reasons for each of the refusals was "not controlled by the Sponsor", and addressed each of the eight refusals referred to in the documents accompanying his letter of 12 October 2012.
15. On 25 October 2012, following consideration of the material which Mr. Singh had sent on 12 October 2012, the UKBA sent a further letter maintaining the decision.
16. On 4 January 2013, HHJ Vosper QC refused permission on the papers, noting that the 20% rate was not irrational or unlawful, that the rate takes account of the possibility that some refusals will be outside the control of the Claimant and that "the suggestion that an analysis of each refusal should be undertaken is contrary to the reasons for upholding a set refusal rate; it would be expensive, inconvenient and costly in time; it has been rejected by the courts".
17. At the oral permission hearing on 26 March 2013 permission was granted by Deputy Judge Lewis QC. Permission was limited to the amended grounds identified at paragraph 4 of the Claimant's skeleton argument.

The grounds of challenge

18. The grounds relied upon are that the Defendant ought to have exercised her discretion in relation to the fixed 20% threshold criterion and "looked into individual cases as the circumstances are exceptional" in that:

(1) Obvious errors were made by the Defendant when rejecting the CASs issued by the Claimant and these errors were brought to the attention of the Defendant by the Claimant; and

(2) The number of CASs issued by the Defendant were small, so that any refusals will have a disproportionate effect on the overall percentage refusal rate; and

(3) An independent report on the college (as required by the Guidance) suggests that the Claimant is committed as a sponsor; and

(4) As the number of CASs issued were small, re-examining the application as requested by the Claimant would not constitute a significant administrative burden and this ought to have taken place in view of the above.

19. In these circumstances it is contended that the Defendant's failure to look into the individual cases renders the decision "unfair and unreasonable where policy has fettered the exercise of discretion."

The relevant authorities

20. There have been a number of recent cases concerning the revocation or rejection of sponsor licences and the 20% threshold refusal rate. In this connection I was referred to the following decisions (listed chronologically): London College of Management [2012] EWHC 1029 (Admin); CNM [2012] EWHC 1851 (Admin); West London Vocational Training College [2013] EWHC 31 (Admin); WGGS Limited [2013] EWCA Civ 177; New London College Ltd [2013] UKSC 51; Warnborough College Ltd [2013] EWHC 3915 (Admin), and Global Vision College Ltd [2014] EWHC 205 (Admin).
21. These authorities show that:

(1) The use of a refusal rate as a mandatory requirement is lawful – see, in particular, West London Vocational Training College at [40]; WGGS Limited at [60].

(2) The use of a refusal rate of 20% is lawful - see, in particular, West London Vocational Training College at [41]; WGGS Limited at [62].

(3) The use of the mandatory refusal rate requirement does not unlawfully fetter the SSHD's discretion as it is recognised that there may be circumstances in which an application may be granted as a matter of discretion even though the mandatory requirement has not been met - see, in particular, West London Vocational Training College at [42].

22. In relation to (1), it is to be noted that one of the reasons for finding that the use of mandatory refusal rate was rational and lawful was that it would be impracticable for UKBA to examine the circumstances of each applicant who is refused entry clearance. As stated by Thirlwall J in the WGGS case at first instance [2012] EWHC 2076 (Admin) at [34] in a passage approved by the court in West London Vocational Training College at [40]:

"Mr MacDonald submitted in the skeleton and in oral

submissions that the use of a refusal rate is irrational. To my

mind, the opposite is the case. It is surely powerful evidence of

[lack of] robustness of recruitment procedures if a significant

number of those recruited do [not?] gain entry clearance. In the

absence of such an approach the Secretary of State would, as

Mr MacDonald submits she should, be bound to examine the

reasons for each refusal: a task which the partial delegation of

immigration powers to colleges was designed to avoid. The

claimant has undertaken the exercise at some length in these

proceedings, for reasons I understand, but the length and detail

of the exercise underlines why the use of a refusal rate cannot

be said to be irrational. There can be no in principle objection

to the use of a refusal rate as the basis upon which a decision

can be made that recruitment procedures are not sufficiently robust."

23. Statements to similar effect were made in London College of Management at [39] (HHJ Robinson): WGGS Limited at [60] (Jackson LJ) and Global Vision College Ltd at [30] (King J).
24. In relation to (2), the authorities recognise that part of the rationality of the rate of 20% is that it makes allowance to those who are refused without any fault on the part of the college. As stated by Jackson LJ in WGGS Limited at [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."

25. Observations to the same effect were made in West London Vocational Training College at [41] (Toulson LJ) and CNM at [32] (Supperstone J).
26. In relation to (3), it was noted in West London Vocational Training College at [42] that:

"…UKBA recognise that there may be instances when the circumstances of a case are so compelling that rigid application of a mandatory requirement may be disproportionate to the overall aim. In such cases UKBA would consider applying some form of discretion, but those instances would be limited to a small number of cases where the application of discretion can be clearly justified…"

27. There have been a number of unsuccessful challenges to the Defendant's failure to exercise her discretion to allow an application for HTS notwithstanding rejection on the grounds that the mandatory refusal rate of 20% was exceeded – see London College of Management, CNM, West London Vocational Training College, Warnborough College Ltd and Global Vision College Ltd.
28. The decision of HHJ Robinson in London College of Management involved express consideration of whether it was lawful for the Defendant to apply the refusal rate criterion without looking at the reasons for refusal in each case. She stated as follows:

"35 If the Secretary of State was entitled to adopt a mandatory criterion that refusals should not exceed 20 per cent, it is difficult to see why she should not apply the policy to this case but instead regard it as an exception such that the reason for each refusal should be looked at. The reasons for refusal identify precisely the sort of issues you would expect to arise in Tier 4 student cases: whether financial requirements are met, whether documentation is appropriate or genuine and the standard of the student's English. Of course refusal of the HTS application had serious consequences for the College's business as the Secretary of State's new policy is that to enrol non-EEA students the educational provider must have HTS status, but the same would be true of all existing Tier 4 sponsors so that is not a justification for making an exception in this particular case.

….

37…There are plainly administrative advantages to having a fixed threshold. These would be negated if individual cases had to be examined. As well as having regard to information in the hands of the UKBA, a judgment would have to be formed as to whether the refusal should be taken into account. This would involve considering whether the College should have anticipated the reason for refusal, which may in turn require information from the College. Decision making would take longer, be more complicated and costly.

….

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. In my judgment, there is no unfairness in this case such as to render the decision not to have regard to the individual reasons for each refusal unlawful"

29. Both parties relied on this decision. The Defendant relied upon it as showing that there is no general duty to examine the circumstances of individual cases. The Claimant relied upon it as recognising that there may be cases where an exception should be made. It submitted that this was such a case.

The Claimant's challenge

30. The Claimant relied on its four grounds of challenge as establishing that the circumstances in this case were exceptional. Each ground will be considered.

(1) Obvious errors were made by the Defendant when rejecting the CASs issued by the Claimant and these errors were brought to the attention of the Defendant by the Claimant.

31. The Claimant contends that five of the refusals were made in error. In summary:

(1) In relation to applications E4G4YT8B01W0Q5 and E4GIHR7B03D0F7 the Entry Clearance Officer misdirected himself in fact and law when failing to regard the bank statement bearing the official stamp of the bank in question as a qualifying document.

(2) In relation to application E4G4Y09B03J0W8 the Entry Clearance Officer wrongly concluded that the applicant did not have an established presence in the UK.

(3) In relation to application E4G1GU7BO4EOF7 and E4G9LZB08X0L5 the Entry Clearance Officer wrongly considered that details of the test results for the assessment of English ability were required to be stated in the CASs.

32. The argument based on alleged errors being made involves an element of circularity. As recognised by the authorities, an important reason for the adoption of the fixed threshold criterion is to avoid the need to examine individual cases and the consequent administrative burden. To require a substantive consideration of individual applications risks undermining that policy rationale. But such a substantive consideration is required in order to mount the Claimant's case of error.
33. No doubt in recognition of this difficulty, the Claimant sought to characterise the alleged errors made in this case as "obvious" errors. It said that this means that the error was "obvious" from the documentation provided. However, that still requires a substantive consideration of the application.
34. The Defendant acknowledged that there are circumstances in which a refusal will be discounted. Examples given in the FAQ are where a refusal has been overturned or is under appeal. This is a matter which can easily be checked. In Global Vision College Ltd the Defendant acknowledged it might also consider doing so where the evidence showed that a "factually incorrect" decision had been made. In the present case it was accepted that an example would be where the number of refusals has been miscalculated. In such a case the error will be patent and will be easily ascertainable. The Defendant stressed, however, that it was under no general duty to inquire into the reasons for refusal or to carry out a factual investigation into or a re-determination of the decision which the Entry Clearance Officer had reached.
35. The Defendant pointed out that requiring the HTS team to make a determination on the correctness of refusals, upon an application by a sponsor, is problematic, given that these decisions are undertaken by Entry Clearance Officers in respect of applications by individual applicants, who may seek to challenge the decision by way of administrative review, statutory appeal or judicial review. It was submitted that in the event that the refusal is not successfully challenged, it would be contrary to the principles of legal certainty and good administration for the Defendant to be required to re-determine, in a distinct context, such decisions. Further, it will often not be apparent to the HTS team what documents were before the Entry Clearance Officer at the time.
36. In my judgment the nature of the alleged errors in this case did not in themselves give rise to any duty to examine the circumstances of the individual cases. They did not fall within the type of cases referred to in the FAQ. They did not involve decisions which had been overturned, or decisions which were being appealed or reviewed. They did not, if relevant, involve patent factual error. They all required an inquiry into the detail of the individual case and a substantive consideration of the application made. If errors of the nature alleged are sufficient to give rise to a duty to examine the circumstances of the individual cases, then that will be so in virtually all, if not all, of the cases in which error is alleged. However, as the authorities, and in particular the London College of Management decision, make clear, that would undermine the purpose of the Defendant's lawful refusal rate policy.
37. Even if that be wrong, for reasons set out below, I am in any event not satisfied that the Claimant can show that any error, still less "obvious" error has been made.

(2) The number of CASs issued by the Defendant were small, so that any refusals will have a disproportionate effect on the overall percentage refusal rate;

38. The Claimant relied on the Defendant's stated "holistic" approach to cases where there is a "significantly low CAS usage" so that a small number of reports can have a disproportionate effect.
39. There were 33 CASs in this case. That is a significant number and required 7 refusals for the 20% limit to be breached. It was not a case where 1 or 2 refusals would be sufficient to do so. In my judgment the Defendant was entitled to consider that was not a case which required a holistic approach to be taken.
40. Further, in my judgment the number of CASs issued did not make this an unusual, still less an exceptional, case.

(3) An independent report on the college (as required by the Guidance) suggests that the Claimant is committed as a sponsor;

41. The Claimant relied on the report from an education oversight Inspection of the College which was conducted between the 29 November 2011 and the 1 December 2011 by the Independent Schools Inspectorate.
42. It reported in its executive summary that "the quality of the curriculum, teaching, and students' achievements all met expectations". "The college has robust arrangements to promote students' welfare and health and safety". "The College directors have a good understanding of education oversight and a strong commitment to delivering a good quality learning experience". It concluded at paragraph 2.4 (at 60CB) "at the time of the inspection, the college met all the key requirements of the standards for private further education colleges and quality is good."
43. The Claimant submitted that the report shows that the Claimant is committed to its sponsorship duties.
44. However, the Guidance requires more than commitment to sponsorship duties. It requires proof of compliance with those duties as reflected by the refusal rate criterion. The fact that the Independent Schools Inspectorate reported on the Claimant college in 2012, when it had 12 students, and considered that it met expectations in terms of educational standards, does not provide a basis for impugning the fairness or rationality of the decision to maintain a refusal arising out of a failure to satisfy one of the mandatory requirements for HTS status.
45. Further, in my judgment the fact that a required independent report was expressed in positive terms does not make this an unusual, still less an exceptional, case.

(4) As the number of CASs issued were small, re-examining the application as requested by the Claimant would not constitute a significant administrative burden and this ought to have taken place in view of the above.

46. As the Defendant pointed out, there cannot be one approach for small colleges, and another for larger colleges.
47. Further, as is acknowledged, the point made depends on establishing that the Defendant should have been re-examining the applications for the other reasons given ("in view of the above"). This has not been made out. As a free-standing point it is difficult to see that there is a principled basis for requiring the Defendant to depart from her lawful policy of applying the refusal rate threshold without examining the particulars of individual cases according to the happenstance of the number of CASs involved.
48. Again, there is nothing unusual, still less exceptional, about the fact that the number of CASs issued may have been relatively small.
49. In oral argument the Claimant also relied upon the fact that in a number of the cases the applicant had no right, or only a limited right, of appeal. However, in every case there would have been a right to seek review and, in any event, restricted rights of appeal are neither unusual nor exceptional.
50. In summary, whether considered individually or collectively, I am not satisfied that the Claimant has made out its case that the grounds relied upon show that the circumstances of this case are exceptional or are sufficiently compelling to require an exception to be made and the circumstances of the individual cases examined, notwithstanding the failure to meet the stated mandatory requirements.

The alleged errors

51. In so far as it is material to consider the substance of the alleged errors, my findings are as follows.

(1) Applications E4G4YT8B01W0Q5 and E4GIHR7B03D0F7

The relevant Guidance required any electronic bank statement relied upon to show the bank's logo, not merely a stamp. The bank statements relied upon (if they were statements from an online account, as required) did not do so, as the rejection letters pointed out. On any view that was an approach which the Entry Clearance Officer was reasonably entitled to take. No error, still less "obvious" error has been established.

(2) Applications E4G1GU7BO4EOF7 and E4G9LZB08X0L5

These refusals were not challenged in the Claimant's solicitor's letter of 1 October 2012 nor were they referred to in the Claimant's letter of 12 October 2012 (although documents relating to them were included with the documents provided with that letter). The Guidance applicable at the time of the CASs provided that where an approved English language test has been used to check competence "you must state on the CAS their test result for each component". Neither CAS did so, as the rejection letters pointed out. On any view that was an approach which the Entry Clearance Officer was reasonably entitled to take. No error, still less "obvious" error has been established. Further, there was a further independent and unchallenged ground for refusal in respect of Application E4G9LZB08X0L5.

(3) Application E4G4Y09B03J0W8

A variation of leave to remain was said to be refused on the basis that the applicant did not complete this course as he failed to sit year 3 and it was concluded that the applicant did not have an established presence in the UK. The Claimant contended that the college at which the applicant attended previously closed down; that in these circumstances, a student has 60 days to change a sponsor and as long as the student has studied for 6 months and is taken to have an established presence in the UK, so that UKBA erred in not granting leave to remain. The Defendant was not able positively to challenge the facts alleged, but noted that it was unclear what evidence had been before the Entry Clearance Officer and that there appeared to be no evidence as to compliance with the 60 day requirement. It also pointed out that the practice relied upon was not communicated until after the date of the CAS. In all the circumstances I am not satisfied that an error, alternatively an "obvious" error, has been established.

52. It follows that no errors, or "obvious" errors, have been established on the evidence. Further, two erroneous refusals would need to be established for the 20% threshold to be met. If, contrary to my primary finding, the Defendant was required to examine the circumstances of the individual cases, I find that it would not have made any difference to the outcome and that this is not therefore an appropriate case for any judicial review remedy.

Conclusion

53. The decision was made in accordance with the Defendant's lawful policy of applying a 20% refusal rate.
54. After representations had been made, the Defendant reconsidered the decision. She considered whether to discount any of the refusals which had been included but found that there was no reason to do so. It was noted that there was no evidence that the any of the original decisions were flawed, such as if it had been overturned at appeal or on administrative review. The Defendant did reconsider the decision in the light of the matters raised by the Claimant but concluded that there was no reason to change it.
55. The evidence does not establish that the Defendant should have examined the circumstances of the individual cases or that it would have made any difference had she done so. Nor does the evidence establish that she should have exercised her discretion in the Claimant's favour notwithstanding its failure to meet the mandatory requirement of having a refusal level below the 20% threshold.
56. The impugned decisions have not been shown to be irrational or otherwise unlawful. The Defendant was entitled to refuse the Claimant's HTS application and the application for judicial review must be dismissed.