Darwins College Ltd v Secretary of State for the Home department

The Home Secretary appeals, with the permission of Sir Richard Buxton, against a costs order made in favour of the respondent, Darwins College, on the settlement of a claim by the college for judicial review. It is necessary to set out the facts in detail.

The college was formed in 2009 as a higher education college based in Manchester. Its principal and sole shareholder comes from a family of teachers in Pakistan. It offers courses in business management and business studies. Its students are all foreign students, mostly from Pakistan, and with a small number from India, Bangladesh, China and Nigeria.

In order to operate in the UK it required accreditation from the Accreditation Service for International Colleges ("ASIC"), which it duly obtained. It was granted full accreditation by ASIC in February 2011 with a recommendation for 426 students. Its students of course required visas. When the college began, the system applied by the United Kingdom Border Agency (“UKBA”) on behalf of the Home Office was that it maintained a register for bodies wishing to sponsor foreign students or foreign visitors for post study work. The register contained more than one tier. The relevant tier for foreign students was tier 4. Sponsors in tier 4 were sub divided into B-rated sponsors and A-rated sponsors. Within certain limits and on certain conditions tier 4 sponsors were authorised to issue confirmation of acceptance for studies or (“CAS’s”) to students.

In July 2010, following a visit by UKBA inspectors, the college was granted a tier 4 B-grade licence authorising it to issue 100 CAS’s in the first six months. In February 2011 the Home Secretary announced that she was proposing to make changes to the system in order to reduce migration into the UK and to regulate colleges more stringently. Some colleges had been found to be offering courses of dubious educational value, but I should make it plain that there is no such suggestion in relation to this college, which has conducted its business with unquestioned integrity.

On 11 April 2011 the college was informed that its rating was to continue to be a B rating. This decision was based on an inspector's visit over four months earlier on 2 December 2010. On the same day that the college was told that it was to remain a B-rated institution, UKBA also prepared an action plan for it. The action plan required it to put certain policies in place and listed the evidence required to satisfy UKBA that the evidence was in place, which would be involve inspection by visiting officers. The date for its next review was to be 11 August 2011. Just over a week later, on 19 April, the college received a further letter announcing the introduction of a temporary limit from 21 April on the number of CAS’s which tier 4 sponsors could issue. As a B-rated sponsor the college was not to be permitted to assign a CAS to any new student. If the college became A-rated, then it would be in a better position.

The double blow of the letter of 11 April notifying the college that it was not going to be upgraded from B grade and the 19 April letter telling it that B-rated institutions would no longer be permitted to issue a CAS had a severe effect on the college, about which it immediately complained to UKBA by a letter email dated 19 April. In the letter Mr Arif, the principal, said that after the visit by the inspecting officer on 2 December 2010 the college had taken steps to change its policies in accordance with the indications given to it by the inspectors and had emailed the inspector to notify him of the changes which they had made. The letter continued:

On 3 May solicitors for the college sent the first of several Pre-Action Protocol letters to UKBA threatening judicial review proceedings. On 6 May UKBA responded to the college's email of 19 April in which ASIC requested an urgent visit by inspectors with a view to the college's potential upgrading to A grade. The letter began by apologising for the delay in providing a response and pointing out that the introduction of the interim limit by the Home Secretary had produced a large volume of questions and inquiries. The letter went on to say:

On 11 May the college's solicitor sent several further Pre-Action Protocol letters. One was sent by recorded delivery to the Home Office Judicial Review Management Unit. In it the solicitors wrote :

In an email of the same date to UKBA's sponsor licensing unit the solicitors wrote :

In another email to the same body, in similar vein the solicitors wrote :

On 17 May UKBA replied to the Pre-Action Protocol letters saying that the interim CAS limit would not be raised. There was no reference in the letter to the repeated request for an urgent visit or to the possibility of a further visit or upgrade.

Meanwhile, in fact UKBA had been taking steps to arrange a further inspection and an unannounced inspection took place on 19 May. Why it was unannounced, in the light of the previous indication that the college would be told when it was to take place, is unclear but perhaps immaterial. The evidence does not show what was the outcome of the inspection at that time or whether any indications were given when a decision might be expected.

On the following day, 20 May, the college issued its claim for judicial review. The decision challenged was :

Simultaneously with issuing the application for judicial review the college applied on paper for urgent interim relief. The application was served on the Home Secretary, as indeed the rules required, on the same day. The application was considered on paper on 24 May by HHJ Waksman QC sitting as a High Court judge in Manchester. He ordered that there should be an urgent half-day hearing to consider the application and directed that it should take place on 22 May. The judge was not informed that there had been an inspection on the day before the judicial review application was made and that the college was awaiting a decision from the UKBA in the light of that inspection. Although it was not a without notice application, the court ought to have been informed of that fact.

On the afternoon of 26 May, ie the day before interim application was due to be heard, T Sol sent a letter to the college's solicitors in the following terms:

The application for judicial review was indeed academic from that moment and was resolved by a consent order giving leave to the claimant to withdraw his application subject to determination of the respective parties’ liability for costs. As to that, directions were given for the filing of written submissions.

They were filed and, having considered the matter on paper, HHJ Pelling QC made the order against which the Home Secretary now appeals.

His decision was that the defendant should pay the claimant's costs of the proceedings to be assessed on the standard basis. His reasons were as follows :

Paragraph 34 of the submissions to which the judge referred had read as follows:

Bahta, to which the judge referred in his reasons, is the latest in a line of cases where the court has given guidance about the exercise of its discretion in the matter of costs where an application for judicial review has been settled without a contested hearing. In Boxall v LB Waltham Forest [2001] 4 CCL Rep 258 Scott Baker J summarised the principles to be deduced from the authorities as follows :

“(i)

the court has power to make a costs order when the substantive proceedings have been resolved without a trial but the parties have not agreed about costs.

(ii)

it will ordinarily be irrelevant that the Claimant is legally aided;

(iii)

the overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost;

(iv)

at each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.

(v)

in the absence of a good reason to make any other order the fall back is to make no order as to costs.

(vi)

the court should take care to ensure that it does not discourage parties from settling judicial review proceedings for example by a local authority making a concession at an early stage.”

That passage was cited with approval by this court in R(Scott) v LB Hackney [2009] EWCA Civ 217. Jackson LJ, in his report on costs, noted that a significant number of judicial review claims are settled in the claimant's favour but that the practical effect of Boxall was to make costs orders very rare in such cases. He suggested that, where a claimant has complied with the Pre-Action Protocol and the defendant concedes a material part of the claim only after the issue of proceedings, the claimant should normally recover his costs. In Bahta this court was invited to reconsider the Boxall guidelines in the light of the Jackson report. It declined to formulate an amendment to the Boxall guidelines for fear of such a formulation being applied mechanistically. However, Pill LJ said in the course of his judgment, with which the other members of the court agreed:

In giving permission to appeal Sir Richard Buxton said :

Those words have formed the kernel of the Home Secretary's appeal. Mr Hall, on behalf of the Home Secretary, submits that the judge did indeed misunderstand the reason why the case settled and misapplied the comments in Bahta on the facts. He submits that this is not a case where the settlement resulted from a concession made after proceedings had been instituted which could reasonably have been made after receipt of a Pre-Action Protocol letter and before the application for judicial review was issued. In this case the offer of settlement was the product of a process which was simultaneous with, but independent of, the legal challenge advanced in the judicial review application. Besides its challenge to the legality of the decision dated 19 April, the college had been requesting a re-inspection that took place before the judicial review application was issued, albeit only on the previous day. The visit was not devised for the ulterior purpose of enabling the Home Secretary to make a tactical retreat from the impugned decision. It was a genuinely new development in response to the college's request for a reinspection. The outcome was that the inspectors recommended the upgrading of the college's status and UKBA acted on the recommendation, but that involved no concession in the proper sense of the word. The judge therefore erred in his summary of the facts, and that vitiates the basis on which he exercised his discretion.

Mr McKendrick, on behalf of the college, submitted that the judge cannot have failed to understand the facts. He had plainly taken on board the Home Secretary's submissions, because he referred specifically to paragraph 34 and to the argument that the application had been premature. It was wrong to read the judge's reasons as if he was understanding the Home Secretary to have conceded that her policy was unlawful. Of course she had made no such concession, but that was a rather over-narrow approach. The judge had to look at the facts more widely. Here there had been a failure properly to comply with the Pre-Action Protocol. The response of UKBA dated 17 May had not addressed the complaint of undue delay or the request that there should be an assurance of an immediate or urgent inspection and an assurance that this would be followed by an urgent decision. There had then been in substance a retreat by the Home Secretary, because in place of the decision that the college was prohibited from issuing any new CAS’s came now an approval of its upgrade to A status. The college had therefore achieved by that route its object of being able lawfully to continue to issue a CAS. It was in that sense that the judge must have been referring to a concession and in that sense the word was an apt description. It was true that there had been some movement on the part of the UKBA in that an inspection had taken place on 19 May, ie on the day before the issue of judicial review application, but that was not only very late in the day, at a time when the judicial review application was fully prepared, but also came without any assurance that there would be an urgent decision, against a background in which the UKBA had previously taken over four months to give a decision following an inspection. Without any assurance that a fresh decision would be taken speedily, it was reasonable for the college to press ahead with its judicial review application in the way that it did, and that must have been what the judge had in mind when he spoke of the college being faced with a stark position in which it had been driven to issue its application.

That is a nuanced analysis of the facts but I do not think that it is possible to spell it out of the judge's reasons. I have some sympathy with the judge. He was having to deal with the matter on paper without the benefit of oral advocacy, which is sensible in itself because the last thing the court wants is for there to be further time and expense on applications of this kind. Nevertheless it means that clarity in the presentation of submissions is extremely important. The story was quite a complex one, as the narration of the history shows. The Home Secretary's submissions on costs went at length into matters of doubtful relevance, in particular the argument as to the underlying merits of the judicial review claim, but they did not provide the judge with a clear analysis of the complex factual history that the college had set out in its chronology. Indeed the judge seems not have been shown the letter of the 30 May, although there was reference to it and he must have been able to glean what its contents were.

In short, the facts were more complex than a straightforward reading of the judge's reasons gives any ground to suppose that he apprehended. I consider that he was wrong to describe the conduct of UKBA as intransigent. His reasons took no account of the fact that there had been a reinspection before the issue of proceedings. If his reasoning had been that which Mr McKendrick seeks to attribute to him, it is really inconceivable that he would not have added if only a single sentence to his reasons to explain it. His reasoning is really altogether more straightforward, namely that this was a late concession of something which ought to have been conceded in response to the Pre-Action Protocol letter. If so, and that is how I think it has to be read, it was a flawed understanding of the facts. The UKBA had arranged a fresh inspection, which had taken place before the issue of proceedings and it was not in a position to make a decision on upgrading until it had received the result.

I conclude therefore that the ground on which Sir Richard Buxton gave permission to appeal is made out. I accept also that the basis of the exercise of the judge's discretion was therefore undermined and it is therefore for this court to decide what order should be made. I think that there is some criticism which can be properly be made of each side. Mr McKendrick has justification in saying that the letter of 17 May omitted altogether to deal with the complaint of delay or the request for urgent re-inspection. It was shutting the door in the face of the claimant by saying that there would be no increase in the college's CAS, but that was not the end of the story because a fresh inspection did take place before the application was issued. It would have been only sensible for the college in that situation to ask UKBA for a firm indication when they could expect a decision. After all, in one of the letters of 11 May, they had said that they would issue judicial review proceedings if there was no inspection within seven days to be followed by a decision within 14 days. They had now had an inspection within eight days and there was no necessity to issue proceedings without asking to know when they could expect a decision.

In all the circumstances I think that a fair disposal is that there should be no order as to the costs below. Costs of this appeal are another matter.

I agree. Although we are differing from the judge below, this is one of those very unusual cases in which we are probably better placed in this court than was the judge to reach a conclusion as to the appropriate order. That is because, as my Lord has already mentioned, we have had the benefit of oral argument, which was denied to the judge, and furthermore I am quite confident that the time allocated to the hearing of this matter in this court has been very considerably longer than is likely to have been allocated to the judge below for his consideration of the matter on the papers. I agree that the appeal should be allowed and an order substituted as my Lord as proposed.

I also agree with both judgments for the reasons given by my Lords.