Sonmez v Secretary of State for the Home Department

For many years Turkey, although not a member of the European Union, has had a treaty with the EU (the Agreement) which since 1963 has aimed to extend to Turkish nationals the EU’s freedom of establishment. Since 1973 art.41(1) of the Additional Protocol, which is known as the standstill clause and has direct effect, has forbidden new restrictions on freedom of establishment for Turkish nationals.

The present issue arises out of applications by each of the four appellants for leave to remain under the Agreement in order to run businesses which they had set up while here on (in one case) a visitor’s visa or (in the other three cases) a student visa. All four applications were refused by the Home Office. The refusals were eventually upheld by the AIT on the ground that the appellants had only been able to get their businesses going by transgressing the restrictions to which their visas were subject.

The parties agree that the ground on which the AIT so decided, which was that no lawful claim could be based on an illegal act (ex turpi causanon oritur actio), was incorrect. The Home Secretary is therefore willing for Ms Sonmez’s case to be remitted to the AIT for redetermination on correct principles. She is not, however, willing for the other three cases to be remitted because she contends that, approached on correct principles, the appeals are bound to fail.

Filiz Sonmez, who is in her mid-thirties, came to the UK in January 2007 on a 6-month visitor’s visa. It was a condition of her visa, as it always is, that she was not to take paid work. A month before it expired she applied for leave to remain as a businessperson under the terms of the Agreement. Her business was a one-woman cleaning enterprise with about 6 regular clients. The Home Office refused on the ground that this was employment dressed up as self-employment, and on appeal IJ Blackford took a similar view. SIJ Jordan directed reconsideration because he was not satisfied that the Agreement prevented such an arrangement from being treated as a business.

It was on the reconsideration hearing that the AIT (Ockelton DP and SIJ Drabu) took the point which, by permission granted by Sullivan LJ, has brought the case and the three associated cases to this court: that by working in order to establish the business for which she now sought leave to remain, Ms Sonmez had had to break the law:

“To our great surprise,” the tribunal went on, “neither party appeared to have considered this aspect of the case before.” They proceeded to do so, and held that the principle ex turpi causa non oritur actio concluded the case against the appellant and was not mitigated by any acquiescence on the part of the Home Office, or by operation of EU law, or because it was irrelevant to the Immigration Rules. I will return to the legal reasoning which led the AIT to these conclusions.

Ercan Tozge, who is in his mid-twenties, entered the United Kingdom in September 2006 on a student visa which contained a condition that “Work (and any changes) must be authorised”. The visa was extended in due course to the end of January 2008. In November 2007 he applied for a variation to permit him to remain as a self-employed person. He had by then set up a trading business with a fellow Turkish student, but stopped his business activity when advised that he must first have permission to conduct it.

The Home Office refused his application on the grounds that he had established the business in breach of the conditions of his student visa and that this was “tantamount to fraudulent activity” and so fell outside the Agreement. On appeal, however, IJ Lingam distinguished the AIT’s decision in Ms Sonmez’s case, FS (Breach of conditions: Ankara Agreement) Turkey [2008] UKAIT 00066, on the ground that Mr Tozge had acted in good faith, had followed legal advice when he received it, and had completed his studies and not abandoned them for his business. The Home Office for its part had abandoned any suggestion of fraud and relied simply on the “no work” condition.

The immigration judge held that there was a critical difference between an appellant who, like Ms Sonmez, was relying on her illegal activity to found her application and one who, like Mr Tozge, had “found it attractive to build his business in the UK rather than to form the business as an excuse to remain in the UK”. Reconsideration was ordered not because the case was said to be indistinguishable from FS but because it was said to be in conflict with the decision of this court in LF(Turkey) v Home Secretary [2007] EWCA Civ 1441. SIJ Southern held that this was so. He also held the case to be indistinguishable in principle from FS. He therefore dismissed Mr Tozge’s appeal, concluding:

Halil Argun, who is 21 years old, entered the United Kingdom in August 2006 on a student visa. The visa was extended to the end of April 2008. In November 2007, with a Turkish asylum-seeker, he started a kebab takeaway business, incorporated as Charcoal Kebab Ltd, which in January 2008 took a three-year lease of retail premises. Taxes were duly paid and accounts prepared.

In February 2008 Mr Argun applied for leave to remain as a business person under the Agreement. Like Mr Tozge, he was refused on the ground that working in breach of his visa conditions was “tantamount to fraudulent activity” and so could not found an establishment application. On appeal IJ Finch held that, having been careful not to work for more than the permitted 20 hours a week, and having completed his course of study before setting up the business, Mr Argun came within the terms of the Agreement and the Rules. The appeal was allowed; but reconsideration was directed because there was an apparent conflict with FS. On reconsideration IJ Mather held that the case was indistinguishable in principle from FS, and substituted a decision dismissing the appeal.

Mehmet Demir came to the United Kingdom in October 2003, aged 21, with leave to remain as a student which was extended until the end of August 2007. He pursued his studies successfully, but at the same time, with capital sent by his brother from Turkey from their late father’s estate, set up two coffee shops employing regular staff. On this basis he applied in January 2008 for leave to remain as a business person but was refused on the same ground as the two previous appellants.

On appeal, IJ Jones noted that it was accepted that there had been a breach of the visa conditions but rejected the contention that this was tantamount to fraudulent activity and allowed the appeal. He concluded:

Reconsideration was ordered because of the apparent conflict with FS. On reconsideration SIJ Allen dismissed the appeal, holding that FS was rightly decided and that the ex turpi causa principle applied.

In the student cases it is common ground that, whether or not spelt out in the visa and whether or not expressly authorised, the Home Office does not object to overseas students taking paid employment for up to 20 hours a week. The dispensation does not extend, however, to self-employment. It follows that all four appellants had transgressed their conditions of entry and stay. But none was found or alleged to have gained entry in order to do this, or therefore to have entered the UK by deception.

The effect of the standstill clause is that each of these appellants is entitled to be dealt with under the Immigration Rules as they stood on the eve of 1 January 1973. Such freedom of establishment as the Rules at that time provided has been “frozen” by art. 41(1) of the Additional Protocol to the Association Agreement, which provides:

The rules operative at that date had been separately laid before Parliament as Rules for Control on Entry and Rules for Control after Entry. The material version of the Rules for Control after Entry is to be found in HC 510. It provides under the general head “Variation of leave to enter or remain”:

S.3 of the Immigration Act 1971 expressly permitted the imposition of conditions on the grant of leave to enter, including “a condition restricting [the entrant’s] employment or occupation in the United Kingdom”; and s.24 made it an offence to fail to observe such a condition.

The first question is therefore whether the ex turpi causa principle pre-empts or overrides the immigration rules contained in HC 510. It is common ground between the parties to these appeals that it does not apply in this field at all. But the question, being one of law, is for us to decide.

The AIT took the point of its own motion. It is not clear, and does not now matter, how wide the submissions on it went, though we are told that the tribunal were not shown the authorities which arguably limit the rule to contract and tort claims. The AIT for their part gave a scholarly account of the leading cases (Holborn v Johnson (1775) 1 Cowp. 341, Tinsley v Milligan[1994] 1 AC 340 and Polanski v Condé Nast Publications Ltd[2005] UKHL 10), deriving from them a principle of public policy restricted to cases where a party cannot succeed without direct reliance on his own unlawful act, but holding that the principle applied a fortiori in an immigration context where the rule conferred no uncovenanted benefit on the other party and where there was nothing disproportionate about applying it. I will come to the other issues which were canvassed; but the upshot was a conclusion that

Not cited to or by the AIT were authorities which at least suggest that the principle applies, if at all, only tenuously outside the classic areas of contract and tort. In Rampal v Rampal(No 2)[2002] 1 Fam 85, it was said by this court that Tinsley v Milligan was “completely authoritative only in the fields of contract and tort”. In Mark v Mark[2006] 1 AC 98, the House of Lords held that public policy did not prevent a divorce petitioner from including a period of unlawful residence in the computation of habitual residence and domicile. The ratio of the latter case, which carries a reasonably close analogy with the present one, was that the applicability of the principle depended on construction of the statutory provisions.

Here, correspondingly, it is common ground that such controls as public policy requires are contained in the Immigration Rules themselves. This seems to us to be a proper, indeed a compelling, approach to what is at root an issue of policy rather than of law. One looks first to see whether the applicable code anticipates claims based in any measure on illegal conduct. If it does, there is no need for a default rule which, among other things, constitutes an unsatisfactorily blunt instrument – for example in a case where an overseas student with a limitation of 20 hours’ work a week on his visa has averaged less than this but has worked sometimes a few hours more.

Here, as the Home Secretary and the appellants agree, rules 4 and 21 of HC 510 recognise that there will be differing degrees of merit among applicants. In particular, rule 4 spells out that, in deciding whether to grant a variation of leave, “account is to be taken of all the relevant facts”. This alone will bring into account any breach by the applicant of his or her visa conditions; but, every bit as importantly, it will do so in a fashion which is sensitive to degree and circumstance and does not equiparate the casual transgressor with the systematic cheat.

This being so, it is not necessary to go further and decide whether the AIT was wrong to hold that the ex turpi causa principle applies at all to claims made in public law. But it is appropriate to observe that public law claims are ordinarily made by way of judicial review, a system of discretionary remedies accessed by permission and thus protected at both stages against abuse. The same is true of equitable remedies, where the doctrine is that an applicant must come with clean hands. In both contexts there is no obvious reason why courts should have any need to use a default principle of public policy in preference to a calibrated exercise of judicial discretion, even where both would produce the same result.

In the immigration field such a point is axiomatically reached where fraud has been practised: see Tum and Dariv Home Secretary [2004] EWCA Civ 788, [2007] ECR I-07415. This is no doubt why the Home Office’s letters of refusal in the present cases explicitly relied on fraud. But in none of the four cases has fraud been made out, and the cases now hinge on a quite different issue.

What is now argued by Robert Palmer for the Home Secretary is that the jurisprudence of the ECJ, followed by this court in LF (Turkey) [2007] EWCA Civ 1441, shuts out any reliance on the Agreement in the three student cases. As to Ms Sonmez’s case, he accepts that her appeal needs to be remitted to the AIT because their resort to the ex turpi causa principle has left the parties without a decision on the issue sent to them for reconsideration.

The ground on which Mr Palmer submits that the three remaining appeals must fail is that all are cases of abuse of Community law, and that all such abuse without more forecloses reliance on Community rights. For this contention he founds principally upon the decision of the ECJ in Kondova v United Kingdom [2001] ECR I - 6427and of this court in LF (Turkey). One of the cases before us, that of Ercan Tozge, was expressly decided by the AIT in reliance on LF (Turkey);but Mr Palmer submits that the decision governs all of them.

There, as here, the appellant had set up a business by working in breach of a visa condition and the Home Secretary had consequently refused to grant him leave to remain under the Agreement. The case was a judicial review of the refusal, not an immigration appeal. As a result the only question for the court was whether the Home Secretary had acted within the law. It was said that he had not because he had not followed his own internal guidance. Laws LJ, giving the leading judgment, explained that it was relevant under the Rules that an applicant had, albeit without fraud, been able only by reason of his own wrongdoing to meet the criteria for establishment.

The central passage for present purposes is this:

Simon Cox, who represents Ms Sonmez but whose submissions have been adopted by counsel for the other three appellants, contends that LF was decided per incuriam because two potentially influential decisions of the ECJ, the Halifax case[2006] ECR I-1609and the Centros case [1999] ECR I-1459, were not cited to the court. This point can be swiftly disposed of: Mr Palmer, who argued the case, has shown us his list of authorities, which includes these two cases. If they were not referred to by the court, it was not by accident or oversight but because they were not considered to add anything to the cases the court did cite.

As his fallback, Mr Cox takes what seems to us a better point. It is that LF does not enunciate a bright-line rule: it holds that the Home Secretary is entitled to refuse leave to remain because of abuse of the Agreement, but not that he or she is bound to do so. This seems to me to be right. It leaves open the question whether abuse renders such an application void or incompetent by operation of law. The proposition that it does, which is necessary if Mr Palmer is to succeed on this issue, finds support not directly in LF but in the decision of the ECJ in Kondova.

Before I turn to Kondova, it may be helpful to record the fundamental difference between the parties as to its effect. The Home Secretary contends that post-entry abuse such as has occurred here precludes any reliance on the Agreement just as abuse on entry does, and so denies the entrant the benefit of the pre-1973 rules. The appellants contend that the consequences of post-entry abuse are determined not by EU law, since entry has been lawfully made, but by domestic law. They accept therefore that if domestic law placed an absolute bar on establishment in the present circumstances, that would be an end of their cases; but since the pre-1973 rule requires all the circumstances of the breach to be taken into account, there is a manifest element of judgment which it is initially for the Home Secretary but thereafter for the AIT to exercise case by case.

The facts in Kondova were stark and, from the applicant’s point of view, highly problematical. She had signed an admission that her purpose in coming to the UK, albeit on a valid student or working holiday visa, had been to claim asylum, an endeavour in which she had failed. Her entry was therefore fraudulent and her entire presence in the UK unlawful. In that situation her only resort was to a submission that, even so, the Agreement with Bulgaria gave her an indefeasible right of establishment.

The key passage in the Court’s judgment is at §§77-80.

Although the Court indicates that it is adopting the reasoning of the Advocate General at §84 of his Opinion, the Advocate General’s reasoning is much narrower: it is limited to the effect of fraud to gain entry, such as was admitted by Ms Kondova:

The Court, by contrast, predicates its conclusion, which is the same as that of the Advocate General, on a much larger doctrine of abuse which appears to catch what has happened in all four of the cases before us: abuse not in order to gain entry but after having legitimately secured it. That this, and not the Advocate General’s approach, is the basis of their finding against Ms Kondova seems to follow from the word “Consequently” with which §80 begins.

But, as Mr Cox points out, other ECJ jurisprudence appears to adopt a less rigid and more fact-sensitive approach. In particular, in Dari and Tum v United Kingdom [2007] ECR I-07415, which is recounted more fully in the judgment of Dyson LJ, the Court at §64-67, basing itself on the Halifax and Centros cases, accepted that the applicants, whose position was very similar to that of the four appellants now before this court, were not burdened by fraud in seeking leave to remain under the Agreement but were entitled to have their claims processed under national law, taking account “of abuse or fraudulent conduct … in order, where appropriate, to deny them the benefit of the provisions of Community law”. While, as Dyson LJ holds, this enables abuse to block an application, it does not require it.

If abuse, not in order to gain entry but following a lawful entry, were the automatic bar which Mr Palmer submits it is and the other members of the court hold it is, I find it difficult to see why the Home Secretary has accepted that the ex turpi causa principle has no application. In substance, shorn of the Latin, this is exactly what the Home Secretary’s case amounts to. In my respectful view neither that principle nor some analogous bar in EU law precludes these claims. They fall to be determined by domestic law. As to this, Mr Cox accepts that if the Immigration Rules as they stood at the end of 1972 placed a bar on any claims for establishment based on activity unlawfully undertaken while lawfully here, that would be an end of these applications. But the rules took (and for present purposes continue to take) a less decisive form, requiring a judgment on the merits. I am unable, with respect, to read either domestic authority or European jurisprudence as shutting out access to such a judgment on the basis of the very facts to which the judgment would be directed.

In my judgment, therefore, all four of these appeals ought to succeed. If the other members of the court did not take a different view, what would follow for each appellant?

First, and in any event, the ground on which the AIT has dismissed their appeals cannot stand. The fact that, in establishing a business, each has in some respect broken the conditions of his or her leave to enter or remain does not mean that their applications for leave to remain are so tainted by fraud that they cannot be entertained.

But secondly Mr Palmer submits that there is no available appeal in the three cases in which he does not concede remission. He bases this somewhat surprising submission (given that it is the first time the point has been taken) on the proposition that what the claimants are seeking is an exercise of discretion outside the Rules since the Act itself gives them no appeal

The relevant elements of s.84(1) of the Nationality, Asylum and Immigration Act 2002 are these

Decisions on the grant of leave outside the Rules, if adverse, are not in general susceptible of appeal. But if – what in my judgment is still to be decided – the facts of these cases do not attract an absolute bar in EU law, the challenge to the Home Secretary’s refusal of leave to remain is, as Mr Palmer accepts, within the 1972 Rules and susceptible of appeal by virtue of s.84(1)(a) and/or (f). Indeed, Mr Palmer was prepared to accept that even if he was right in his contention that abuse of any kind bars access through the Agreement to the 1972 Rules, paragraph (e) of the subsection still gives an appeal. He also accepts, in the light of the decision of Woolf J in Husbadak [1982] Imm AR 8, that on such an appeal the immigration judge must determine not only what has occurred but whether it amounts to abuse.

Thirdly, reliance is now placed on a fresh set of reasons submitted in the course of Mr Tozge’s appeal to the AIT by the Home Office and also, it seems, in Mr Argun’s. They read:

This is not, and does not purport to be, a fresh decision. It is an endeavour made in the course of an appeal to justify a defective Home Office decision on better grounds. As such, it stands or falls with these appeals.

Everything therefore turns on the question on which, I fear, I differ from the majority. If the answer is that abuse creates no automatic bar but one dependent on the application of the pre-1973 Rules, Mr Palmer fairmindedly accepts not only that Ms Sonmez’s appeal must be remitted for determination but that Mehmet Demir is entitled to have the appeal decision in his favour restored. The immigration judge’s decision in Ergan Tozge’s case was that it should go back to the Home Secretary for determination on its merits. This I would for my part endorse.

As to Halil Argun, his counsel seeks restoration of the immigration judge’s decision in his favour on the same footing as Mehmet Demir. This is opposed by Mr Palmer on the ground that the immigration judge’s determination fails properly to address the Rule 4 questions. His difficulty is that this was not a ground on which reconsideration was ordered by the AIT. The sole express ground was whether the immigration judge had erred in not following FS. But Mr Palmer is right to say that this further issue was also raised in the Home Secretary’s grounds, and that the order for reconsideration referred to the grounds as a whole. In my judgment it would not have been fair or satisfactory to let a potentially serious issue of this kind go by default, and I would for my part remit Mr Argun’s case for redetermination on its merits.

In the event, however, for the reasons given by Dyson and Maurice Kay LJJ, these appeals fail.

I agree with what Sedley LJ has said on the ex turpi causa issue and have nothing to add. But I have reached a different conclusion from his on the abuse issue.

As he has stated, in the appeals of Ercan Tozge, Halil Argun and Mehmet Demir, the Secretary of State accepts that the AIT erred in law is so far as it relied on the determination promulgated in the case of Filiz Sonmez. She submits, however, that the appeals should nevertheless be dismissed. That is because in these three cases, the Secretary of State rejected each of the appellants’ applications for leave to remain as a self-employed business person on the grounds that they had established a business in breach of the conditions of their previous leave and that this was “tantamount to fraudulent activity” with the consequence that they were excluded from taking the benefit of article 41(1) of the Additional Protocol of 1970 to the EEC--Turkey Association Agreement. Mr Palmer submits that the breach of such a condition amounted to an “abuse” or an “abuse of rights” as that concept is understood in EC law which justified the denial of the benefit of article 41(1). By reason of the abuse, the appellants were accordingly not entitled to have their cases considered under HC 510. It is for this reason that Mr Palmer submits that no purpose would be served in remitting these three appeals for reconsideration by the AIT, since they would be bound to fail.

Mr Cox submits that there is no scope for the application of the abuse principle on the facts of these cases. In short, he says that conduct amounts to an abuse only where it defeats the purpose or objective of the EC law rule in question; and there is no rule of EC law which permits a member state to deny a right conferred by EC law solely on the ground that, but for some historic unlawful conduct, the claimed right would not arise. The appellants were entitled to have their cases considered under HC 510. On the other hand, Mr Palmer submits that Mr Cox interprets the abuse principle too narrowly.

It will be seen, therefore, that the scope of the abuse principle lies at the heart of the appeals of Mr Tozge, Mr Argun and Mr Demir. In order to examine this issue, it is necessary to consider a number of ECJ decisions and then to consider the decision of this court in R (LF) v Secretary of State for the Home Department [2007]EWCA Civ 1441.

I start with R (Tum) v Secretary of State for the Home Department and R (Dari) v Same (Case C—16/05) [2007] ECR I- 07415. This was a case involving article 41(1) of the Additional Protocol. The applicants (both Turkish nationals) were granted temporary admission on their arrival in the United Kingdom subject to a restriction (in the case of Mr Tum) and prohibition (in the case of Mr Dari) on taking employment. Both claimed asylum and both claims for asylum were dismissed. After their applications for asylum had been dismissed, the Secretary of State refused applications by the applicants for leave to enter (in the case of Mr Dari) to continue a business that he had established during his stay in the UK, and (in the case of Mr Tum) to start a business here. They based their applications on article 41(1) and requested that their applications be considered by reference to the 1973 Immigration Rules (in that case, HC 509). The Secretary of State considered the applications under the current Immigration Rules rather than HC 509 and dismissed them.

The applicants challenged these refusals by judicial review proceedings. One of the arguments advanced by the Secretary of State was that article 41(1) could not apply to failed asylum seekers since, if it were interpreted as doing so, that would “involve the endorsement of fraud or abuse of rights”. It would enable a failed asylum seeker to benefit from Community law rights by reason of his unlawful entry into and presence in a member state: that would amount to an abuse.

It was in relation to this argument that the ECJ said this at [64]:

The court rejected the accusation of fraud at [65] and continued:

This is an important decision so far as the present appeals are concerned because it is one in which the abuse principle was considered and applied in an article 41(1) case. At [46], the court recorded (with apparent approval) that it was not disputed that article 41(1) has direct effect in the member states “so that the rights which it confers on the Turkish nationals to whom it applies may be relied on before the national courts to prevent the application of inconsistent rules of national law”. That is the case although the clause “does not operate in the same way as a substantive rule by rendering inapplicable the relevant substantive law it replaces, but as a quasi-procedural rule which stipulates ratione temporis, what are the provisions of a member state’s legislation that must be referred to for the purposes of assessing the position of a Turkish national who wishes to exercise freedom of establishment in a member state”: see [55].

It is clear from this decision, therefore, that applications under article 41(1) are capable of being defeated by reason of the abuse principle. If there was no scope for the application of the abuse principle in article 41(1) cases, that would have been a short and decisive answer to the Secretary of State’s argument.

At [37] above, Sedley LJ says that the court in Tum and Dari accepted that the applicants were entitled to have their claims processed under national law, taking account of abusive or fraudulent conduct in order, where appropriate, to deny them the benefit of the provisions of Community law. He adds that this enables abuse to block an application, but it does not require it. I respectfully disagree with this analysis of what the court said. At [64], the ECJ clearly stated that “Community law cannot be relied on for abusive or fraudulent ends”. That is an encapsulation of the abuse principle of EC law. It is clear and unequivocal. The court said that whether Community law is being relied on for abusive or fraudulent ends is a question of fact to be determined by the national court case by case on the basis of objective evidence (as opposed to evidence of subjective intention). The ECJ did not say that the applicants were entitled to have their claims processed under national law taking account of abuse or fraudulent conduct. At [64], where the abuse principle is discussed, the court said nothing about the applicants’ entitlement. The question whether, on the facts, the abuse principle did bar the applications was discussed at [65] to [67].

In Centros Ltd v Erhvervs—og Selskabsstyrelsen (Case C-212/97) [1999] ECR I- 1459, a member and sole director of Centros Ltd, which had been registered as a private limited company in England and Wales sought to register a branch of the company in Denmark. The Danish Board refused registration on the grounds that Centros was seeking to establish its principal establishment in Denmark by circumventing national rules concerning, inter alia, the paying-up of minimum capital fixed by Danish law in the sum of DKK 200,000.

The ECJ held that the refusal of registration constituted an obstacle to the freedoms guaranteed by article 52 and 58 of the Treaty. They then recorded the submission of the Danish authorities that the applicants could not rely on articles 52 and 58 since their sole purpose was to circumvent the application of the national law governing the formation of private limited companies and therefore constituted abuse of the freedom of establishment. As to this, the court said:

Halifax Plc v Customs and Excise Commissioners (Case C- 255/02) [2006] ECR I-1609 is a VAT case. It concerns transactions entered into for the purpose of gaining a tax advantage in relation to the right to deduct input VAT. One of the questions raised by the national court was whether the notion of “abuse of rights”, previously recognised in other areas of Community law, was also applicable in the field of VAT. As Advocate-General Maduro said in [60] of his Opinion, the doctrine of abuse of rights “would prevent taxable persons from obtaining a tax advantage resulting from transactions entered into and performed in pursuit of the sole purpose of securing that tax advantage”.

At [62] to [71], he gave a valuable exposition of “the notion of abuse in the case-law of the [court]”. At [63], he identified the two main contexts in which the notion of abuse has been analysed by the court: “First, when the Community law provisions are abusively invoked in order to evade national law. Second, when Community law provisions are abusively relied upon in order to gain advantages in a manner which conflicts with the purposes and aims of those same provisions.”

At [65], he said:

He summarised the position at [68] in the following way:

Mr Cox relies on these authorities to support the submission that conduct amounts to an abuse only where it defeats the purpose of the EC law rule in question. He argues that there is no rule of EC law which permits a member state to deny a right conferred by EC law solely on the ground that, but for historic unlawful conduct, the claimed right would not arise. He further submits that the purpose and objective of article 41(1) is to oblige the United Kingdom to assess the position of a Turkish national who wishes to exercise the freedom of establishment by reference to the immigration regime in force in 1973; and it is not contrary to that purpose and objective to determine an application to remain under HC 510. Paragraph 4 of HC 510 allows the Secretary of State (and on appeal the AIT) to decide whether, on the facts of a particular case, the conduct of the Turkish national concerned merits refusal of leave to remain. The fact that such an assessment is to be conducted under that paragraph, as it was applied in 1973, is not contrary to the purpose of article 41(1).

It is clear from the authorities to which I have referred that a person may not rely on a Community law provision in order to gain an advantage which conflicts with the purpose and aims of the Community law provision on which it is sought to rely. Such a case would fall into the second of the two categories identified by Advocate General Maduro at [63] of his opinion in the Halifax case. But where the issue is whether a Community law provision is being abusively invoked in order to evade national law (Advocate General Maduro’s first category), I see no reason to hold that the question of abuse is determined solely by whether the provision is being invoked in order to secure an advantage contrary to the objective of the Community law provision in question. If that were the test in such a case, there would be no scope for Advocate General Maduro’s first category. There would be a single question: is the Community law provision being relied on in order to gain an advantage contrary to the purpose and aims of the provision? Moreover, there would be no scope for the application of the abuse principle at all in relation to article 41(1) cases. It could always be said that a claim by a Turkish national to the right to establishment was consistent with, and not contrary to, the purpose and aims of article 41(1). But the decision in Tum and Dari shows that the abuse principle does apply in article 41(1) cases.

It is difficult to see how the wrongful benefiting from advantages provided by article 41(1) can be judged otherwise than by reference to the question whether it is wrong to permit the applicant to rely on the national rules that were in force in 1973 than the less advantageous rules that were in force when the applications were made.

I acknowledge, however, that the application of the abuse principle in individual cases may be difficult. But whatever difficulties there may be in applying the abuse principle as explained in the ECJ decisions to which I have referred, Mr Palmer submits that the decision of the ECJ in Kondova shows clearly that the approach for which Mr Cox contends is too narrow and that it is impossible to challenge the decision of the Secretary of State that the abuse threshold was crossed in each of the three cases in which she refused leave on the grounds that establishing a business in breach of the conditions of the appellants’ previous leave was “tantamount to fraudulent activity”. It is to Kondova that I must now turn.

Article 45 of the Association Agreement between the European Communities and their Member States and the Republic of Bulgaria (“the Association Agreement”) provides that each member state shall grant for the establishment of Bulgarian nationals and for the operation of Bulgarian companies and nationals established in its territory “a treatment no less favourable than that accorded to its own companies and nationals, save for...” Article 59(1) provides that nothing in the Association Agreement “shall prevent the Parties from applying their own laws and regulations regarding entry and stay and...establishment of natural persons and supply of services, provided that, in so doing, they do not apply them in a manner as to nullify or impair the benefits accruing to any Party under the terms of a specific provision of the Agreement...”

The applicant, a Bulgarian national, gained entry into the United Kingdom by falsely representing that she wished to enter and reside here as an agricultural worker for 3 months, when in fact her intention was to seek asylum. The Secretary of State concluded that she had entered the United Kingdom illegally. She was granted temporary admission, pending her removal. She then started working as a self-employed cleaner. Several months later, she applied for leave to remain pursuant to the Association Agreement. The details of what happened thereafter need not be recited. It is sufficient to say that eventually the applicant issued judicial review proceedings in which she sought a declaration that she had at all material times been entitled to leave to remain in order to exercise her rights of establishment and residence pursuant to the Association Agreement.

The national court asked the ECJ for a preliminary ruling on five questions, three of which were distilled by the ECJ into the question whether, having regard to article 59(1), article 45 “is capable of conferring on a Bulgarian national a right of establishment and a concomitant right to reside in a Member State within the territory of (sic) which he has remained and carried on professional activities as a self-employed person in breach of national immigration legislation, where that breach took place before he claimed a right of establishment under article 45(1)”.

The court first rejected the argument that the application of national rules requiring Bulgarian nationals to obtain leave to enter was in itself liable to render ineffective the rights granted by article 45(1): see [56]. The court then considered whether the restrictions imposed on the right of establishment conferred by article 45(1) were compatible with article 59(1). The court approached this question on the basis that the reason for the Secretary of State’s refusal was that the applicant was an illegal entrant because she had obtained entry by false representations: see [68].

In order to see what the court then decided, it is necessary to set out the whole of the passage [71] to [80]

In my judgment, the whole of this passage should be understood as dealing with the question whether, as a matter of interpretation, article 45(1) of the Association Agreement, when read in conjunction with article 59(1), permits the authorities of a member state to refuse leave to remain to a Bulgarian national on the grounds that her presence within the territory of the member state is illegal. The competent authorities of the host member state may refuse leave where the requirements of a system of prior control have not been met: see [75]. Although the court stated that the state may “in principle” refuse leave, it seems to me that the court reached this conclusion as a matter of interpretation of articles 45(1) and 59(1). At [77] and [78], the court found support for this interpretation in the policy considerations there mentioned. At [79], the court said that an “interpretation” which allowed a Bulgarian national to succeed in an application for establishment in reliance on previous unlawful activities “would risk depriving article 59(1)...of its effectiveness and opening the way to abuse through the endorsement of infringements of national legislation on admission....”. It seems to me that this made it clear that the whole of the passage that had gone before was concerned with a question of interpretation. It was not an application of the principle of abuse to the facts of the case, although an interpretation contrary to that adopted by the court would “[open] the way to abuse”.

Mr Palmer places particular reliance on [80]. But in my view, the introductory word “consequently” shows that the court is not making a new point or putting forward an alternative basis for its conclusion. It is summarising the effect of what it has said in the preceding paragraphs which, as I have stated, are deciding the issue as a matter of interpretation. Nevertheless, the words in parenthesis at the end of [80] are important. It is clear from these words that the court sees an analogy between its conclusion on the interpretation of articles 45(1) and 59(1) and the principle of abuse in relation to the circumvention of national law by the improper invocation of Community law (the first of the two categories identified by Advocate General Madrigo at [63] of his opinion in Halifax).

Thus, Mr Cox is right to submit that, as a matter of form, Kondova is not a decision on the application of the abuse principle. But in substance it is the abuse principle which informed the court’s interpretation of article 45(1) when read with article 59(1). As it said at [79], if article 45(1) is read so as to prevent the authorities of the host state from enforcing its system of prior control, that would open the way to “abuse through endorsement of infringements of national legislation on admission and residence of foreigners”. The court recognised that there is an analogy between (i) an interpretation of a Community immigration provision which denies to a person the right to invoke the provision abusively for the purpose of evading a member state’s system of prior control and (ii) an application of the abuse principle so as to deny to such a person the right to invoke the provision for that purpose. In Kondova, the court decided the issue as a matter of interpretation. But in the light of its reasoning and in particular what it said at [80], it would surely have reached the same conclusion if it had applied the abuse principle explicitly.

In my judgment, therefore, Kondova is consistent with the ECJ authorities on the meaning and scope of the abuse principle. I respectfully disagree with the submission that other ECJ jurisprudence appears to adopt a less rigid and more fact-sensitive approach than was adopted in Kondova: see [37] above. I do not consider that there is a conflict in the ECJ jurisprudence as to the nature of the principle to be applied. The statementof principle at [64] in Tum and Dari relied on and adopted the statement of principle in the Centros case; and the analogy made at [80] in Kondova also relied on the statement of principle in the Centros case. It is clear from [80] in Kondova that the ECJ considered that its approach in that case was consistent with the jurisprudence on the abuse principle. I would add that the application of the principle to the facts in an individual case may give rise to difficulty. I would not accept the argument (if it were advanced) that there was no proper basis on the facts for treating the applicants in Tum and Dari more generously than the applicant in Kondova. But even if that argument were correct, I do not see how it would assist the appellants in these cases.

For these reasons, I consider that Kondova is fatal to the cases of the three appellants in whose cases the Secretary of State, in effect, invoked the abuse principle. There is this further point. Adopting the approach taken by the ECJ in Kondova, I can see no reason why the court should not hold, as a matter of interpretation of article 41(1), that a person cannot invoke that provision so as improperly to circumvent a national system of prior control. It is true that the circumvention of prior control in Kondova was illegal entry, but the principle which led the court to its conclusion as to the true interpretation of articles 45(1) and 59(1) was the broader one that a person may not take advantage of a Community provision in order to circumvent a national system of prior control. That principle applies no less to a person who obtains leave to enter lawfully but remains in the member state in breach of a condition that he must not work or set up a business. In my judgment, such a person places himself “outside the sphere of protection afforded to him” under article 41(1) of the Additional Protocol just as much as Ms Kondova placed herself outside the sphere of protection afforded to her by article 45(1) when read with article 59(1) of the Association Agreement.

I should now refer to LF, the one domestic court decision which was cited in oral argument to us. The applicant, a Turkish national, sought judicial review of a decision by the Secretary of State to refuse his application for leave to enter the United Kingdom as a self-employed businessman. He relied on article 41(1) of the Additional Protocol. He had established a business in breach of the conditions of his temporary admission. The Secretary of State refused the application on the grounds that the applicant was not entitled to the benefit of article 41(1) since he only met the 1973 Immigration Rules by reason of his own wrongdoing in establishing a business in violation of the conditions of his temporary admission.

It will be seen that in broad terms the facts of that case are not distinguishable from those of the present appeals. At [13] Laws LJ (with whom Gage and Rimer LJJ agreed) identified the first relevant question as being: “was the Secretary of State entitled to disregard the facts (as it were, the qualifying facts) of the applicant’s establishment of his business on the grounds that those facts were the fruits of the applicant’s breach of his conditions of temporary admission?”

In answering that question, Laws LJ took as his starting point the decision in Kondova. Having referred to what was said by this court in Tum and Dari, he referred to [64] of the judgment of the ECJ in that case to which we have referred at [55] above. He then said:

Mr Cox concedes (rightly) that what Laws LJ said in these paragraphs is the ratio of his judgment and, therefore, the ratio of the court’s decision. He submits, however, that we are not bound by the decision. First, he criticises the statement by Laws LJ that there is a plain affinity between the abuse of rights principle and the ex turpi principle. As to this, I would observe that, whether it is right to say that there is such an affinity may be open to debate, but that statement did not form part of the reasoning of Laws LJ. Secondly, Mr Cox submits that the decision in LF was per incuriam. For the reasons given by Sedley LJ at [30], I cannot accept this submission.

Finally, Mr Cox submits that LF did not decide that the Secretary of State was bound to refuse leave to remain; merely that she was entitled so to decide on an application of the abuse principle. In my judgment, this is not a correct basis for distinguishing LF. It is clear that Laws LJ held that the abuse principle applied to the facts of that case which, as I have said, are not materially different from those of the present appeals. In the context of such a case, there was no reasonable distinction between abuse of rights and fraud: if such a distinction was asserted, it could not survive the reasoning of Tum and Dari and Kondova. In other words, there was no relevant distinction between the reasoning in those two cases. In my judgment, the outcome in LF depended on an application of the abuse principle.

There is no significance in the fact that Laws LJ said that the Secretary of State was entitled, rather than that he was bound, to deny the applicant the benefit. The use of the word “entitled” does not suggest, let alone indicate, that Laws LJ was not applying the abuse principle. Whether the conduct of a person amounts to abuse within the meaning of the abuse principle is a question of judgment to be determined on the facts of the individual case. In some cases, it will be obvious that the abuse threshold has been crossed. In others, it will be obvious that it has not been crossed. In yet others it may be difficult to decide. At [18] of his judgment (in the context of judicial review proceedings), Laws LJ was saying no more than that the Secretary of State was entitled to conclude that the abuse threshold had been crossed on the facts of that case.

In my judgment, therefore, the decision in LF is binding on this court. In any event, however, for the reasons that I have given, I am of the opinion that LF was correctly decided.

It follows that the abuse principle is at least capable of applying in the three cases in which the Secretary of State refused the applications on the grounds that the appellants’ conduct was “tantamount to fraudulent activity”. I would accede to the submission of Mr Palmer that no purpose is served by remitting any of these cases.

I would, therefore, allow the appeal of Filiz Sonmez but dismiss the appeals of the other three appellants.

After some initial hesitation, I find myself in substantial agreement with the judgment of Dyson LJ. I have reached this conclusion for two reasons. First, I consider that the three controversial appeals are indistinguishable from LF, by which we are bound. For the reasons given by Sedley LJ, by no stretch of the imagination can LF be said to have been decided per incuriam. Nor do I consider that it can be circumvented by latching on to Laws LJ’s use of the word “entitled”. Such usage is the common currency of judges steeped in judicial review. I agree with Dyson LJ that LF was based on an application of the abuse principle.

Secondly, I too consider that LF was rightly decided and was a correct application of the principles established in the most relevant ECJ authorities, in particular Tumand Dari and Kondova. Mr Cox’s submissions are founded on an attempt to universalise a requirement in abuse cases of – in the language of Advocate-General Madero in Halifax – conflict “with the purposes and aims of” the relevant Community law provisions. However, like Dyson LJ, I consider that the Advocate-General was expounding two distinct criteria, the first of which – “when Community law provisions are abusively invoked in order to evade national law” – is not limited by further reference to the purposes and aims of the relevant Community law. Of course, if the national law in question is inherently incompatible with Community law, the Advocate-General’s first criterion would not be applicable. However, that is not the position here, as Kondova and LF demonstrate. In my judgment, LF is an application of the Advocate-General’s first criterion or proposition which is equally applicable to the question of abuse in the present case. My conclusions about the disposal of the present appeals are the same as those of Dyson LJ.