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
		02/05/2014

Mr Justice Irwin :

Introduction

1. The Claimant's challenge relates to the decision of the Secretary of State for the Home Department ["SSHD"], dated 10 April 2012, to refuse the Claimant's application for Highly Trusted Sponsor ["HTS"] status under Tier 4 of the Points-Based System ["PBS"] for controlling immigration by students who want to study full time in the United Kingdom. Following the limited permission granted by Charles George QC, sitting as a Deputy High Court Judge on 18 December 2012, and following a subsequent abandonment of a specific ground, the Claimant offers two grounds of challenge to the decision. The first is that in concluding that the Claimant's refusal rate exceeded the mandatory 20 per cent threshold, the SSHD relied unlawfully on the refusal of applications to enter/remain in the United Kingdom by more than 60 students who had been accepted by the Claimant to study for the BSc in Applied Accounting. The second ground is, in essence, a criticism that the SSHD relied to an irrational extent on historic failures by the Claimant to report un-enrolled students who had been refused entry to the UK.
2. On examination, the case resolves itself into three questions relating to the first ground and one question arising in the second ground. In relation to the first ground, the questions are as follow:

"[1] What would be the understanding of the reasonable and literate individual as to the meaning of the relevant passages in the "Guide to Sponsoring Students under Tier 4 of the Points-Based System" of 5 September 2011, and in particular of the obligation described in paragraph 386 that the Sponsor "must assign a separate CAS for any stage of the course that leads to a recognised qualification in its own right?"

The second question is as follows:

"Was the application by the SSHD of the relevant guidance to the facts in this case Wednesbury unreasonable because it was based on an erroneous understanding of the meaning of the relevant guidelines?"

The third questions is:

"If, and to the extent that, the relevant guidance was ambiguous in its meaning, and the decision of the Secretary of State was based on a rational, but not the only rational, interpretation of her own guidance, is that application unlawful."

3. The question arising under the second ground is as follows:

"Was the decision of the Secretary of State to refuse HTS status to the Claimant irrational in that she paid undue regard to the Claimant's past record of failure to report students to whom they had assigned a CAS to enrol on their course within the enrolment period and as a consequence paid insufficient regard to the current capacity and performance of the Claimants in reporting such students?"

Background

4. On 31 March 2009 the Secretary of State implemented Tier 4 (General) of the Points-Based Immigration System. This system has now been the subject of a number of reported cases. The Defendant's principal witness in this case, Emma Fountain, in her witness statement of 11 April 2013, incorporates as an exhibit the witness statement of Mr George Shirley, dated 10 December 2012, made in different litigation. However, Mr Shirley's witness statement gives a comprehensive picture of the PBS.
5. In the course of that witness statement Mr Shirley makes several points which explain and underpin the operation of the system. Mr Shirley explains that from 2009 to 2011 educational institutions wishing to act as sponsors for students beyond the European Economic Area ["EEA"] were required to become licensed sponsors by applying to the UKBA to join the register of Tier 4 sponsors. Prior to September 2011 sponsor licenses were issued with a rating of A (trusted) or B (sponsor). A new category of Highly Trusted Sponsor ["HTS"] was introduced in April 2010 and review in the summer of 2011. The decision was then taken that, in due course, all sponsors who were licensed had to achieve HTS status. The introduction of the guidance in September 2011 was part of the mechanism of that change.
6. Students who wished to travel to the United Kingdom from beyond the EEA require a Confirmation of Acceptance for Studies ["CAS"] as a necessary basis for an application for entry clearance. A licensed sponsor has access to the Sponsor Management System ["SMS"] which Mr Shirley describes as "an electronic, internet-based tool" which licence holders can use –

"to assign CASs, update their own information, report on student activity, make payments and request an additional allocation of CAS if they are not subject to the interim limit." (See Shirley, paragraph 8)

Mr Shirley points out that –

"since the introduction of CAS every version of the guidance has set out that the sponsor should only assign a CAS to a student who, to the best of the sponsor's knowledge, will meet the requirements of the Tier 4 category under which the CAS is assigned and is likely to comply with the conditions of his or her leave." (See Shirley, paragraph 11)

7. Mr Shirley emphasises the high degree of trust placed in the sponsor and underpinning the shift to licensing HTS sponsors only. He states:

"the PBS system unequivocally transferred the task of assessing whether an applicant had the intention and ability to study the proposed course from the UKBA to the Tier 4 sponsoring institution." (See Shirley, paragraph 15)

He also emphasises –

"for the system to be effective, we must be confident that the sponsor will fulfil its duties scrupulously as otherwise there is a risk to immigration control." (See Shirley, paragraph 17)

8. Unsurprisingly, Mr Shirley emphasises that applications for HTS status have always been considered by reference to past performance (paragraph 44). He emphasises that before assigning a CAS to a migrant, it is for the education provider to be satisfied that the student is eligible and suitable to follow the course of study. Mr Shirley also describes how refusal rates, that is to say the proportion of students who are granted a CAS by a given sponsor but subsequently refused entry to the UK, are an important criterion when judging whether a sponsor should achieve or retain HTS status. In paragraph 50, Mr Shirley describes how, in the guidance published on 5 September 2011, the Defendant introduced a new "mandatory" 20 per cent refusal rate meaning that "of all the CASs that the sponsor assigned which students have used to support an application for entry clearance or leave to remain, the total number of applications we refused must be less than 20%". A high refusal rate has in the past been a clear indicator of threat to immigration control (paragraph 53) and is an indication of poor compliance and recruitment practices (paragraph 51). The basis on which the 20 per cent rate was calculated, allowing a deliberate margin for error above the average refusal rate of 15.3 per cent, is set out in paragraphs 56 and 57.

Background relating to the Claimant

9. The Claimant is a college specialising, inter alia, in qualifications in accountancy and business studies. The Claimant first applied for a Tier 4 licence in November 2008, was granted an "A" licence on 2 February 2009 and the "A" licence was renewed on 9 February 2010. On 10 October 2011, the SSHD received the Claimant's application for HTS status, accompanied by representations in favour of the grant. At the heart of these representations was a concern, raised by the Claimant, about more than 60 CAS applications relating to proposed study for a combined Association of Chartered Certified Accountants ["ACCA"] and BSc (Hons) in applied accounting awarded by Oxford Brookes University, which had been refused by entry clearance officers. The grounds of refusal were that the programme of study consisted of not one, but two, separate courses, and carried a requirement for two separate CAS letters. The representations went on as follows:

"We formally lodged our official complaint with your London office…. via emails … on 10 March 2011 and followed up with additional evidence on 15 March 2011. This complaint related to refusals between December 2010 and May 2011, to which a formal response was received from your Croydon office on 11 April 2011. …. We presented further compelling evidences in support of our complaint on 15 March 2011 but have had no substantive response … for several months now, even after several reminders. … The CAS letters issues … were identical in relation to the course title, awarding body and the duration, which was typically over three (3) years' duration. I am keen to ensure that you fully understand the nature of the above refusals which were, in our opinion, fundamentally flawed due to the fact that the course in question is, in fact, one (1) course which leads to one (1) qualification… I am equally keen to ensure that the refused applications, given their nature, are not taken into account in the UKBA quality audit, which is to take place from 9 October 2011, as they present a rather false and misleading image of our institution's refusal rate, which must not exceed 19.99 per cent according to the current HTS guidelines."

10. There is no evidence of any substantive response to those representations before the letter from the Defendant of 10 April 2012 refusing the application for HTS status. That letter added that the Defendant would shortly commence action to revoke the Claimant's sponsor licence. The reasons for refusal of the application are set out in full as follows:

"Our records indicate that your refusal rate is greater than 20 per cent. The total number of leave applications made was 643. Of these, 177 were refused giving a percentage of 27.53 per cent.

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 regard to reporting migrant activity.

We have identified 169 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 fail 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."

11. It follows that the Defendant, in refusing to grant HTS status, still made no substantive response to the question raised thirteen months before by the Claimants and repeated in the representations made in October.
12. Extensive correspondence by e-mail followed between the parties. Fortunately, it is not necessary for me to trace those exchanges. The dispute centred on whether applicants for the combined course required one or two CASs in the light of the Defendant's relevant guidance. There was also an extensive dispute as to the detailed numbers and the implications for the overall refusal rate. The latter dispute has been resolved by agreement. It is agreed that if the prospective students who were refused entry on the basis that one, instead of two, CASs had been provided are taken out of account, the Claimant's refusal rate falls just below the 20 per cent threshold.
13. The facts relating to the failure to report students who did not enrol are also agreed. The Claimant admits that until September 2011 they were in breach of these reporting obligations. More than 160 such students were not reported. The reason is acknowledged to be that the Claimant did not understand this obligation to exist. Once they did understand that obligation, the Claimant submits (and there is no contradictory evidence) that they have the capacity to make such reports effectively and have been doing so since September 2011. In their defence, the Claimants further submit that their processes and paperwork were inspected by the Defendant in 2009, 2010 and 2011 and this deficiency was not raised.

The Defendant's Guidance

14. The guidance sets out the Defendant's policy as to refusal of HTS status:

"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."

15. The "mandatory requirements" are set out in Table (iv) in paragraph 270. The relevant passages read as follows:

"Refusal Rate Your refusal rate must be less than 20 percent.

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

16. The policy continues:

"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 License Application"

When we will refuse a sponsor licence application

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

…

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

17. Therefore in summary, the Defendant's policy is that they "will refuse" an HTS application where the applicant does not meet one or more of the mandatory requirements or where they find "information that suggests [the applicant does not] have the processes [needed] to comply with [the] sponsorship duties".
18. There is separate guidance as to the duties under Tier 4 of the PBS for sponsoring students. The relevant passages read as follows:

"HOW TO SPONSOR MIGRANT STUDENTS

296. All students who wish to come to the UK under Tier 4 of the points-based system must obtain a visa before they travel. Students who are already in the UK under Tier 4 can apply for an extension of their permission to stay. We call this "further leave to remain".

297. They cannot apply for a visa or extension of stay without a confirmation of acceptance for studies (CAS). When you give a student an unconditional offer of a place on a course, you will issue the CAS using the sponsor management system. For details of the sponsor management system, see "becoming a sponsor".

298. The CAS will not guarantee that we will grant a student a visa or permission to stay longer in the UK. Before you assign a CAS, you should ensure that the student will meet the requirements for a visa or permission to extend their stay. You can find details of these on our website…

299. A student cannot apply to us under Tier 4 more than three months before their course starts.

…

Full time and leads to approved qualification

308. The course must be full-time, which we define as:

A full time course of study that leads to a UK-recognised qualification at Level 6 or above on the QCF or NQF or equivalent;

….

A course of study below UK degree level that involves a minimum of 15 hours a week of classroom-based day time study.

…

309. The Course must lead to an approved qualification. We define an approved qualification as one that is:

Validated by Royal Charter;

…

In England, Wales and Northern Ireland on the Register of Regulated Qualifications … at QCF or NQF level 3 or above.

What to consider before you assign a CAS

380. If you wrongly assign a CAS, we may take action against you.

…

383. You may only assign a CAS under Tier 4 if the course the student intends to follow leads to an approved qualification.

…

386. You must not assign one CAS to cover more than one course (unless the student is taking a pre-sessional course). You must assign a separate CAS for any stage of the course that leads to a recognised qualification in its own right. For example:

If a series of modules leads to a certificate or diploma, each of which is a recognised qualification in its own right; or

If a student will do a HND and then a Bachelor's degree.

387. You must assign a new CAS before each stage starts.

…

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.

462. You must report on students even if they are on a pre-sessional course at a partner institution named on their CAS or a work placement which forms part of their course.

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 the enrolment period has ended (sic). You must include any reason the student gives for not enrolling for example if they:

Missed their flight;

Have decided not to come to the UK;

Have decided to take up a course with a different sponsor; or

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

What would be the understanding of the reasonable and literate individual as to the meaning of the relevant passages in the "Guide to Sponsoring Students under Tier 4 of the Points-Based System" of 5 September 2011, and in particular of the obligation described in paragraph 386 that the Sponsor "must assign a separate CAS for any stage of the course that leads to a recognised qualification in its own right"?

19. It appears to be agreed between the parties that the correct test for the construction and meaning of a policy is that of the "reasonable and literate individual", a test recently reaffirmed in Nori v SSHD [2011] EWHC 1604 (Admin) and in the cases rehearsed in the course of that decision. The first question effectively turns on what the reasonable and literate individual would understand, in context, to be the meaning of the phrase "recognised qualification in its own right".
20. In my view the meaning of this phrase is perfectly plain. A "qualification" is defined in the Oxford English Dictionary as follows:

"A quality or accomplishment which qualifies or fits a person for a certain position or function; (now esp.) the completion of a course or training programme which confers the status of a recognised practitioner of a profession or activity."

21. In my view the reasonable literate individual would indeed understand the term "qualification" to mean the completion of a course or training programme which confers a relevant status. The reasonable literate individual would not understand a qualification to have been achieved where part of a course has been completed which, if completed, would confer the relevant status. Thus a student who passes two out of three examinations for an A Level would have no qualification; a student who has passed all three papers would have achieved the qualification. That understanding of the term would be correct even where the two papers in which the student has achieved a pass mark are essential ingredients of the qualification.
22. The next element in the definition is the adjective "recognised", a term which is given emphasis by the concluding phrase "in its own right". In my view, the meaning of this term, particularly given the final phrase in the sentence, is also clear. It carries the central idea of acceptance by relevant authorities, or public or professional bodies, of the qualification concerned as being meaningful and thus sufficient to "fit … a person for a certain position or function", by implication a position or function for which they would not be fitted absent the qualification.
23. Once again it is helpful to consider the student who passes two out of three exam papers for an A Level. The A Level is undoubtedly a "recognised" qualification. The exams he has passed are "recognised" in the sense of being accepted as part of the process towards a qualification. However the fact of their recognition does not give the student the qualification itself. Equally, the student who has completed a course and been sent a certificate has no recognised "qualification" unless the course and the certification have the necessary degree of public acceptance. The student may have achieved great proficiency in snake charming or paid for a degree certificate after attending three talks at a worthless and unrecognised "university". Neither the snake charmer nor the proud possessor of the "degree" certificate will be thought by the reasonable and literate individual to have achieved a "recognised" qualification.
24. In the course of correspondence between the parties and then argument in the case there were a good number of exchanges as to whether the terms "recognised qualification" and "approved qualification", which also appears in the Defendant's guidance, are synonymous. Indeed it was a developed argument advanced by the Claimant that that was the proper reading of the guidance. I reject that argument. In my judgment this issue too is susceptible of a ready answer. There may be many "recognised qualifications" which are or would not be "approved" by the Secretary of State for immigration purposes. A Grade VIII examination from one of the established bodies of musical education would almost certainly be considered a "recognised" qualification, but might very well not be approved by Government for immigration purposes. On the other hand, it is in the highest degree unlikely that a qualification which would be approved for the purpose of the regulation would not satisfy the definition of being a "recognised qualification".

Was the application by the SSHD of the relevant guidance to the facts in this case Wednesbury unreasonable because it was based on an erroneous understanding of the meaning of the relevant guidelines?

25. In considering the sequence of events, two or three matters of context are important. The first is that there was a relevant change in the academic route by which a student could achieve the BSc (Hons) in Applied Accounting from Oxford Brookes University ["the University"] in December 2011. Before December 2011, the ACCA qualification consisted of a Fundamental Level Certificate for papers F1-F9. The student required a pass in professional ethics before being allowed to proceed to complete the degree. According to the explanation given on 27 June 2012 in an email from ACCA:

"The Fundamental Level Certificate was not a qualification in its own right however formed the Fundamental Stage of the ACCA qualification, which has now been replaced with an Advanced Diploma in Accounting and Business."

26. If that picture is correct (and there is no evidence to contradict it) then the view of the relevant professional body was that until the change in December 2011, the preliminary stages leading up to and including the Fundamental Level Certificate did not represent a separate qualification, and therefore could not be taken to be a "recognised qualification" for present purposes. The view of ACCA would clearly mean that once they changed the system with effect from December 2011, the introduction of the Advanced Diploma as the replacement with some alteration of content for the fundamental level certificate, meant that there was indeed a separate qualification which would be achieved by the student in advance of the degree. The publicity material surrounding the Advanced Diploma generated by ACCA makes that picture clear: the intention was to give such students a useful recognised qualification even where they did not progress to a degree or other higher accounting qualification. Against that background, it is necessary to examine the sequence of events as affecting these Claimants.
27. It is clear that the Defendant was concerned as to the structure of the study offered by the Claimants leading to the Oxford Brookes degree. On 5 January 2011 the Entry Clearance Officer at the British High Commission at New Delhi emailed "Corporate Affairs Query" at the university in the following terms:

"Dear Sir/Madam,

We have received a student visa application by ….. to study BSc (Hons) in Management and Business Administration at Goldsmith International Business School. We found the mention of this course on college website…. The college states that they are accredited by Oxford Brookes University.

We would be grateful if you could please advise us of the following:

This looks like a joint ACCA/Uni qualification and the website suggests that F1-F9 need to be successfully completed before moving on to the desertion (sic) part of the programme and the part assessed by the university. Please confirm if this is correct.

Is it a pathway programme.

We would be grateful for a reply by Tuesday 12 January 2011…."

28. The university replied by email on 7 January 2011 in the following terms:

"Thank you for your interest in Oxford Brookes University.

We currently run the BSc (Hons) in Applied Accounting degree in partnership with ACCA which is available to ACCA students who have completed papers F1-F9 and the ACCA professional ethics module. After this time a student becomes eligible to submit a Research and Analysis Project to the university as the final component of the degree programme.

For more information on this programme please visit [the ACCA student website]. I can further confirm that this is a full undergraduate degree. It is of the same standard as any campus-based BSc degree offered by the university.

If you have any further queries relating to this please do not hesitate to contact me again."

29. In her principal witness statement of April 2013, Ms Fountain does not suggest that there was any further enquiry on behalf of the Defendants of the university, or indeed of the Claimant. In paragraph 10 of her witness statement Ms Fountain goes on to say that the Entry Clearance Manager "also confirmed that the consistent policy of he and his regional colleagues had been to refuse entry clearance on the ground that two CASs were required for the BSc in Applied Accounting". The material disclosed by Ms Fountain in that witness statement consists largely of the material from ACCA relevant to the period after December 2011 when the Advanced Diploma had been created. In paragraph 21 of her witness statement Ms Fountain makes clear that by the time she signed this witness statement she had seen the letter from ACCA dated 27 June 2012 which I have quoted earlier in this judgment. It is not clear if that letter, summarising the view of ACCA, was ever given further thought by the Defendant. There is no evidence that they sought any clarification beyond the brief exchange of emails in January 2011. There is no indication that the Defendant made any enquiry of ACCA as to whether or not the Fundamental Level Certificate should be regarded as a recognised qualification.
30. Ms Fountain has disclosed an exchange of emails between a case worker in the UK Border Agency and the Entry Clearance Manager in New Delhi at the beginning of May 2012. The caseworker, Ms Milner, explains to New Delhi that she and her colleagues are "currently reconsidering a HTS refusal". The request to New Delhi is to re-examine one of the refusals and "advise whether the decision was correct".
31. The reply from Daniel Sinclair-Jones, the Entry Clearance Manager, is instructive. He replied as follows:

"I do remember this concern. It was our assertion that the "combined" course was in fact two courses, requiring two CASs and could not be combined in this manner. This appears to be confirmed by the correspondence received by Oxford Brookes University."

The Entry Clearance Manager then quotes the email I have set out above of January 2011. Mr Sinclair-Jones goes on:

"So the reasoning behind the refusals is that whilst it may be possible to gain the BSc (Hons) once the student has completed the relevant ACCA modules by submitting additional work, they would only be eligible for this option once they have completed papers F1-F9. So the sponsor cannot offer this as a combined course, because whether a student can proceed on to the BSc aspect of the course is conditional on them completing ACCA modules F1-F9.

The information I have …. refers to Jan-March 2011 and confirms that our position at that time was that we were not accepting the course be valid. Mumbai were also of the same opinion.

I do not have anything after this date, either from regional colleagues, policy colleagues or Goldsmith to confirm that this course was acceptable."

32. As a matter of history, therefore, it seems clear that the Defendant made no further enquiry of Oxford Brookes University, made no enquiry of ACCA at the time and decided the matter for the reasons given by Mr Sinclair-Jones. His email of May 2012 notes that Goldsmith submitted no further applications to Delhi for this course after March 2011. In that context he goes on to remark:

"Does this not imply a tacit acceptance that the course is not valid for Tier 4 purposes? Additionally, if the sponsor thought that the refusals were incorrect, why did the applicant not resubmit a request for an Administrative Review at the time?"

33. On the basis of that material it seems clear to me that the answer to the second question arising in this case is "yes". The reasoning behind the "refusals" recited by Mr Sinclair-Jones was based on an erroneous understanding of the meaning of the relevant guidelines. The heart of his reasoning is that it was necessary for the student to complete papers F1-F9 before proceeding to the BSc course and the BSc course was "conditional on them completing ACCA modules F1-F9". This was to ask the wrong question. The correct question was whether the completion of papers F1-F9 constituted a "recognised qualification". There is no evidence that that was the approach taken in January – March 2011 and the retrospective account of events by Mr Sinclair-Jones in his explanation of 2 May 2012 is strong evidence that the correct question was not posed.
34. It is also worthy of comment that the overall approach by Ms Fountain in defence of the position is to treat the post-December 2011 diploma as to all intents and purposes the exact equivalent of the pre-December 2011 requirements for eligibility for the degree programme. This ignores the fact that there was some change of content from the one to the other, and that ACCA, the relevant professional body, explicitly introduced the diploma as a recognised qualification at that point. It seems to me therefore that had the necessary minimum enquiries been made of ACCA in the early part of 2011, then the Defendant's representative should, and would, have reached the view that this was not a "recognised qualification".

If, and to the extent that, the relevant guidance was ambiguous in its meaning, and the decision of the Secretary of State was based on a rational, but not the only rational, interpretation of her own guidance, is that application unlawful.

35. In strict sense this question no longer arises. The decision of the Secretary of State was not based on a rational application of her own guidance. However the question stimulates one further relevant observation.
36. It is established law (and for very sensible reasons) that where a "criterion with a fixed threshold" is adopted in regulations or guidance, there is no obligation on the Secretary of State routinely to re-examine individual cases: in this instance routinely to re-examine individual cases of refusal: see R(London College of Management) v SSHD [2012] EWHC 1029, at paragraph 39. That must particularly be so where there is a built-in margin for error, as in this instance between the average refusal rate of around 15 per cent and the 20 per cent threshold set by the guidance: see R(CNM) v SSHD [2012] EWHC 1851 (Admin) at paragraphs 25 and 33. In oral submissions, Mr Kellar for the Secretary of State emphasised that the refusal rate was a strict criterion, intended to allow for a significant proportion of errors not the fault of the Sponsor. If there was a genuine misunderstanding by the Claimants then that was sufficiently accommodated by that margin. He laid emphasis on the remarks of the Divisional Court in R(West London Vocational Training College) v SSHD [2013] EWHC 31 (Admin) at paragraphs 29 to 31, as to the construction of the guidance as a fixed criterion.
37. However, it cannot be right in my view that the application of a fixed criterion in guidance across a range of cases determined by a mistaken view of the guidance itself or indeed a particular view as to the meaning of ambiguous guidance can be exempt from re-examination. Where guidance is ambiguous and the Secretary of State takes one view out of a number of rational views, those affected by the guidance and relying upon it, may have taken a different but rational view. The application of a fixed criterion to the detriment of an attentive party who has read ambiguous guidance and acted on a rational interpretation of that guidance, may well be unlawful. I stress that is not the basis on which I have reached my conclusion in this case in relation to the first ground. The Defendant's decision on refusal was unlawful because the Defendant failed properly to apply her own clear and unambiguous guidance. Despite the submissions of Mr Lemer for the Claimant, this is not a matter of a failure to consider the exercise of discretion. It is unlikely his client could have succeeded on such a basis.

Was the decision of the Secretary of State to refuse HTS status to the Claimant irrational in that she paid undue regard to the Claimant's past record of failure to report students to whom they had assigned a CAS to enrol on their course within the enrolment period and as a consequence paid insufficient regard to the current capacity and performance of the Claimants in reporting such students?

38. There can be no doubt as to the historical failure in relation to reporting as I have set out above: the matter is conceded. The obligation to report has been the subject of litigation and the matter has been decided: see R(Western Governor's Graduate School) v SSHD [2013] EWCA Civ 177, in which the Court of Appeal concluded that the policy guidance clearly required the reporting of non-enrolled students who were not in the United Kingdom (paragraph 36), and that it was reasonable for the UKBA to require such reporting (paragraph 42). The question here is whether the Claimant's historic failure in reporting was sufficient to justify the refusal of HTS status, where there was other evidence to demonstrate the Claimant's capacity to fulfil its reporting obligations.
39. The Defendant argues that it is legitimate to have regard to the Claimant's historic failure, and the Claimant concedes that is a relevant matter. However, the Claimant contends that the Defendant's approach was flawed because the Defendant was not considering the correct test. The correct test was not "have you failed to comply with your sponsorship duties?" The correct test was did the Secretary of State "find information that suggests you do not have the processes you need to comply with your sponsorship duties".
40. It is obvious common sense that past performance is relevant and important evidence properly to be taken into account when judging future compliance. In addition to common sense it is the law: see CNM Ltd v SSHD [2012] EWHC 1851 (Admin) and R(London Reading College Ltd) v SSHD [2010] EWHC 2561 (Admin). Moreover, there is here a particular context for the application of guidance in the grant of HTS status. The point was well set out by Jackson LJ in WGGS v SSHD [2013] EWHC Civ 177 at paragraph 43 when he said:

"It should not be forgotten that under the PBS, colleges are performing functions which used to be undertaken by Entry Clearance Officers or other UKBA officials. There is a clear responsibility to show that they deserve the trust which is being placed in them."

41. Mr Kellar, for the Defendant, emphasises the importance of trust in this context, and rightly so. He argues that where the past conduct of the college has demonstrated that it cannot be trusted to fulfil its duties, evidence of current compliance may not be sufficient to reassure the SSHD that an institution is deserving of HTS status.
42. Mr Kellar goes on to point out that nothing in the guidance or policy requires the Defendant to disregard the past conduct of an institution when considering whether to grant HTS status, and indeed the relevance of past conduct to the question of whether an institution can be Highly Trusted is clear from paragraph 31 of the guidance:

"Highly Trusted Sponsor Status… 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."

43. Mr Lemer, for the Claimant, emphasises that the test in its very language is focussed on the capacity of the candidate for HTS status:

"… information that suggests you do not have the processes you need (emphasis added) to comply with your sponsorship duties."

44. It is acknowledged that from 5 September 2011 the Claimant was compliant with its reporting duties. The application for HTS status was accepted as valid on 10 October 2011. As Mr Kellar says, the Secretary of State was therefore entitled to look back at the twelve months through to 9 October 2011. But as Mr Lemer emphasises the object was to see whether the processes were in place, not whether they always have been. In any event, the Claimant's argument is that the processes and capacity were always there: what was lacking was the understanding of the obligation to report. In support of this, Mr Lemer relies on the fact that the Claimant otherwise had a history of good compliance and of achieving satisfaction in the Defendant's compliance checks through the relevant period.
45. I find the answer to the fourth issue finely balanced. It is clear from all of the documentation that it was the perceived high refusal rate which was the first and more important consideration in the Defendant's decision to refuse the application for the grant of HTS. This is tolerably clear from the witness statement of Ms Fountain of April 2013 at paragraph 3 which reads:

"The application was initially refused on 10 April 2012 due to the sponsor not being able to meet the mandatory criteria for HTS (emphasis added). One of the reasons for this was that more than 20 per cent of the students to whom the Claimant had assigned a CAS had applications for a visa or permission to remain in the UK refused."

It should be remembered that the reporting criteria was not strictly one of the "mandatory criteria" for HTS.

46. The body of the witness statement is focussed on the refusal issue. The issue of failure to report students who did not enrol is given less emphasis in the witness statement and indeed in the correspondence. There is little or nothing in the evidence to which my attention was drawn, or which I have seen in my reading, to demonstrate that the decision to refuse the application rested on this aspect of the case anything like as much as it did in the other. Nor have I been taken to material which demonstrates that the Secretary of State focussed on the systems or capacity for reporting, as opposed to the historic failure. Nor is there evidence that before September 2011 it was clear that the Claimant lacked the capacity or necessary processes to fulfil the reporting obligations: rather it is perfectly clear that the failure arose from ignorance of the obligation and that such ignorance not been detected during the compliance checks mounted.
47. For those reasons my conclusions on this issue are as follows. I am unable to conclude that the Secretary of State paid "undue regard to the Claimant's past record of failure to report students": it rather appears that this question was a makeweight in the decision-making process which was dominated by the concern about the refusal rate. However, on balance I am able to conclude that in the course of the decision-making in this case, the Secretary of State did pay "insufficient regard to the current capacity and performance of the Claimant in reporting such students".

Conclusions

48. For those reasons, the decision of the Secretary of State to refuse the application for Highly Trusted Status is quashed. I will listen to applications for any further order.