Yaus Catering Services Ltd (Ireland) v Secretary of State for Home Department

MR JUSTICE OUSELEY: This case concerns 12 corporate and 27 related human claimants. At least 12 human claimants, one per corporate claimant, is a non EU/EEA national who they contend that the Secretary of State for the Home Department has unlawfully refused the applications by those human claimants for an EU residence card or some other form of leave to remain in the United Kingdom, which would enable them to be admitted to or remain here. Each contends that, although not an EU or EEA national, this refusal constitutes a restriction on the corporate claimant's rights of establishment under the European Community Treaty, Articles 43 and 48. The individual claimants say that it is a restriction on their derivative rights under that Treaty. The corporate claimants are incorporated either in the Republic of Ireland or in Cyprus. The position and those claimants whose residence rights are not at issue were not said to add to the legal means and any other claimant.

This is one of a number of cases involving similar arguments about EC Treaty rights which have either been rejected on paper as being without merit or at the oral permission stage as in R (On the application of) Gransian v Secretary of State for the Home Department[2008] EWHC 3431 (Admin), in respect of which Blake J approved the use of his judgment as it was a fully argued application, or at a full hearing, as in the case of R (On the application of) Lee Ling Low & Ors v Secretary of State for the Home Department [2009] EWHC 35 (Admin), a decision of His Honour Judge David Pearl sitting as a Deputy Judge of the High Court.

In this particular case Plender J granted permission on paper although he has, on some later occasions, refused permission in similar cases in terms equally robust as those used by other judges. The terms of the grant of permission in this case suggests that the issue which interested him was whether the actions of the claimants amounted to an abuse of community rights, an EC concept but one not unfamiliar in domestic law by different name.

The issue of abuse of rights was thought to arise because the individual claimants whose residence is at issue, were in the United Kingdom without any right to live, work or remain there, subject to one point which I shall come to, and had set up companies in the Republic of Ireland or Cyprus which they owned or controlled and had relied upon directions which they gave to those companies as a basis for asserting a derivative right to remain and work in the United Kingdom, pursuant to those companies asserted Article 43 rights or freedoms of establishment in the United Kingdom.

As it happens, Mr James Goudie QC, sitting as a Deputy High Court Judge, ordered that there be a split hearing of the two issues. First, whether the actions of the claimants engaged Article 43 or the decision of the Secretary of State infringed it, which are two sides of the same coin, and second, if so, whether the claimant's actions constituted an abuse of rights. The latter would entail greater consideration of the facts and is not at present before me. Mr Goudie concluded that he had no jurisdiction to accede to the Secretary of State's application that the grant of permission be set aside although the Secretary of State contended that Blake J's decision in Gransian was not referred to by Plender J and he appeared not to be aware of the fact that detailed consideration, it was said, had been given to the claim.

Each corporate claimant claims a right, under Article 43, to have the individual related claimant issued with an EU residence card, so that the individual can stay in the United Kingdom for the purposes of its business. Each individual claimant claims a right derived from his company's right to be issued with an EU residence card for that same purpose.

The factual basis for the claim is relevant. No individual claimant, whose residence is at issue, (and unless stated otherwise those 12 are the individuals whom I refer to as the hum or individual claimants) is a national of an EU or EEA State. They are mainly Malaysian or Republic of China nationals. None have any rights to enter or remain in the United Kingdom or to do so for the purposes of employment or self employment. Four of those 12 have had such rights in the past. Three as students (to the extent that students have such rights) and one as the spouse of a work permit holder. Those rights were extant when the four made their applications in 2007. The claimants contend and the Secretary of State disputes, that the effect of section 3C of the Immigration Act 1971 was to extend that leave on the same terms until the claimant's departure from the United Kingdom, which has not occurred, or decision by the Secretary of State on their case, by virtue of section 3C(2)(a). The decision was given on 24th June 2008, misdated 22nd January 2008.

However, none of the individual claimants had any rights to enter the Republic of Ireland or Cyprus. The company claimants were all purchased or set up in the Republic of Ireland or Cyprus with the related individual claimant as Director and owner, when the individual claimant was in the United Kingdom. No corporate claimant trades in the Republic of Ireland or Cyprus, as the case may be. None did so before the related individual claimant purchased it or set it up. Two of the 12 are now said to carry on some form of trade in the United Kingdom.

The facts which I have outlined are the same for all material purposes as those which are described in Gransian (paragraphs 22 and 23), save for the application for a residence card by the four individual claimants who, at the time of that application had some form of extant leave to remain, involving permission to work in some way. Gransian concerned the position of employees. This case concerns the position of each individual claimant as Director of his own corporate claimant. Each contends that he has required his company to require him to establish a company or subsidiary in the United Kingdom and to carry on its business there.

The relevant provisions of the Treaty are as follows. Chapter 2, "RIGHT OF ESTABLISHMENT", Article 43:

The effect of this provision is to provide a limit on restrictive measures that infringe rights under Article 43. It restricts them to those that are made on the grounds set out in the last part of Article 46. It is not in dispute but that the grounds of public policy do not import wholesale domestic immigration law.

I refer, briefly, to Article 49 in Chapter 3 "SERVICES" because there are distinct similarities and some relevant case law. Article 49 provides:

The Secretary of State's position is not that any restriction upon which he relies is justified under Article 46, but that consideration of Article 46 never arises because none of the restrictions upon which he relies impact on any right of establishment under Article 43 or, putting it another way, Article 43 is not engaged by any act of the claimants.

The difference between the parties is stark. The claimants contend that the refusal of the Secretary of State to grant a residence card in accordance with domestic immigration law, or some other form of leave to remain is a restriction on the right or freedom of establishment enjoyed by the corporate claimants as companies incorporated in the European economic area and therefore is a restriction on the derivative right of the individual claimants. The corporate claimants are, for these purposes, nationals of an EU Member State within Article 43 by virtue of Article 48. It is a restriction because it prevents the corporate claimant establishing and operating a subsidiary business in the United Kingdom. As I have said, this restriction is not one which the Secretary of State seeks to justify under Article 46 and in any event the mere operation of immigration control is not sufficient to create a public policy justification for the restriction on Article 43 rights or freedoms.

The claimant does not contend that the restriction, which is the ordinary operation of domestic immigration law, is discriminatory as between other EU nationals and United Kingdom nationals or between other EU/EEA companies and United Kingdom companies. But Mr Cox, who appears on their behalf, contends that a restriction can be objectionable for the purposes of Article 43 even where it is not discriminatory. For these purposes he cites the decision in Reinhard Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di Milano [1995] ECR I-465, Case C-55/94. This case concerned restrictions on a German lawyer in Milan styling himself as an advocato. Paragraphs 35 to 37 of the European Court of Justice judgment hold that whilst there could be a requirement that someone taking up professional practice comply with provisions requiring particular qualifications:

Mr Cox emphasised that this meant that a national measure, hindering the right of establishment, could be objectionable, even if non discriminatory, and so the fact that immigration control was not objectionable in EU law on the grounds of discrimination, did not prevent him continuing to rely upon its effect as hindering the right to establishment.

This is not a satisfactory authority for his proposition because the European Court of Justice is merely setting out what has to be shown cumulatively for a national measure not to be a hindrance. But I accept that other authorities do show that measures can constitute a hindrance to the operation of Article 43, even when applied alike to nationals and non nationals: for example, where they may inhibit the establishment in another country instead of or in addition to establishment in the country where the business is already undertaken.

The Secretary of State's contention is that the right to establishment is simply not engaged by these applications. Mr Greatorex contends that the mere fact of making an application cannot of itself bring about the engagement of Article 43. Some right must exist before any application for an EU residence card can engage Article 43 or any refusal of that application can infringe it. I have no difficulty with that in principle. But, on the face of it, immigration control can operate as a restriction on that right and Mr Greatorex accepted that in some cases it would indeed have that effect. Mr Greatorex accepted that were the human claimant to be a third party national, lawfully resident and entitled to work in the Republic of Ireland or Cyprus, and were the company of which they were a director carrying on business in the Republic of Ireland or Cyprus, and were it to seek to set up a subsidiary or branch in the United Kingdom, a refusal of an EU residence card could engage Article 43, in the sense it being a prohibited restriction, at least to the extent that its refusal would require justification under Article 46.

By contrast, submitted Mr Greatorex, where the individual director, in respect of whom the refusal of an EU residence card was said to hinder the Irish company's right of establishment in the United Kingdom, had no right to reside or work in the Republic of Ireland anyway, as is the case here, a refusal of an EU residence card in the UK, so that individual director could not work or reside in the United Kingdom, could not possibly be an act which hindered the establishment in the UK of a business by that Irish company. The hindrance, whatever it was, was just as great as that which applied in the Republic of Ireland any way. It was a sine qua non of the refusal of an individual residence card being a hindrance to the right of a company to establish itself in the United Kingdom that the absence of an EU residence card was not a hindrance to its operation in the Republic of Ireland.

To my mind those simple propositions are quite unanswerable. The operation of a national immigration law cannot be hindrance to the right of establishment because it prevents a company director staying in or entering the United Kingdom to work, if that company director has no right to enter or stay and work in the country where the business is said to be established. No obstacle or hindrance is created by that prohibition. No right or freedom is inhibited. The crucial question on this analysis is not so much whether he is prohibited from entering or staying in the United Kingdom to work, but is the prior question whether he has any entitlement to work or enter in the Republic of Ireland or Cyprus. It is not contended, indeed it is agreed, that none of these individual company directors have any such right at all. Of course, the mere establishment by the individual of a company in the Republic of Ireland or Cyprus with him as the director cannot create any rights for that individual to work and stay in the Republic of Ireland. No hindrance is created by the same state of affairs applying in the United Kingdom. Obviously, the mere fact of asserting a claim for a residence card in the United Kingdom cannot raise any Article 43 right when none exists independently of the claim. The mere making of an application to the Secretary of State cannot lead to the acquisition of a right to enter the United Kingdom. Bizarrely, if Mr Cox's submissions were right, the making of the application for a residence card in the United Kingdom, which would have to be accepted, would create a right to enter the country of establishment where no such right exists at all.

This is not, in my judgment, a question of a discriminatory measure or confining objectionable hindrances to those which are based on discrimination. It is simply that the decision of the Secretary of State does not involve the creation of a hindrance at all. A failure to remove an impediment which already exists in the country of establishment and the imposition of a like impediment does not make establishment in an additional or alternative country any more difficult than in the one in which it is said the corporate claimants are established.

No example of such a situation creating an objectionable hindrance has been shown by Mr Cox by reference to any of the decided domestic or European Court of Justice cases. This, as I have said, is not a situation where the restriction limits the operation of a business to one country. It simply maintains the same restriction which the establishment is under in the country of establishment.

Gebhard is certainly not an example of the situation which Mr Cox contends arises here. Paragraph 25, and I shall return to this, states:

The position of the Secretary of State and as contended for by Mr Greatorex can also be put in a different way to the same end. It is only where the individual Director (a national of a non EU/EEA State) is entitled to reside and work in an EU or EEA Member State, that his company can assert that the refusal of a residence card in another EU state by reference to its domestic immigration law infringes the right of establishment. Although it cannot be said that lawful residence is always a precondition for the exercise of every EU right, for example, in the case of third party nationals married to an EU national exercising Treaty rights, it would be astonishing if a third party national, with no right to enter or remain in any EU State could acquire such a right by the simple expedient of setting up a company in one EU State which he could not enter or work in and instructing this entity to instruct him to go to or remain in another EU State, which he equally had no other right to enter or work in. It would provide upon the simple wish of an immigrant a simple means for the avoidance of national immigration laws and would apply whether the third party national was actually present in the EU, or remained for these purposes in his home State, China for example.

I regard the observations of Blake J in Gransian (paragraphs 22-24) as equally applicable. The stark facts are essentially the same. Blake J said in paragraph 24:

Although I accept Mr Cox's submission that an obstruction can be prohibited under Article 43, even if it is not discriminatory, this does not reduce the force of Blake J's observations in the context of these cases.

Mr Cox submits that his point is not directly ruled upon in any European Court of Justice case. If he is right, that says more about the quality or lack of quality in the point than that it has not been raised despite its being arguably correct. Mr Cox urges caution against overstating the impact which it is said his argument would have on immigration law. He says that Article 46 would permit certain restrictions. This is of no real value to his argument. The starting point for Article 46 is there is a right and that it is engaged. The scope for the Article 46 restrictions to be justified is deliberately limited and limited in application. It is not intended, and certainly does not import the general domestic regime of immigration control. It remains the position that the establishment of the shell company by a third party national, with himself as a director, giving an instruction to the shell company to give an instruction to him to stay in the United Kingdom would avoid domestic immigration controls on non EU nationals, and an interpretation of EU legislation to the contrary effect by reference to Article 46 is not justified.

Mr Cox also says that the impact of his argument would be limited by the EU concept of abuse of rights. It may be that what has happened here would indeed be an abuse of rights if the claimants had any such rights. But I see no need to be, with respect, foolish and absurd about the existence of rights simply because a backstop concept may limit the damage which Mr Cox's argument would otherwise do to the proper operation of immigration control, paying full respect to the operation of EU rights. Indeed the authorities are all against his line of thinking and support the conclusion, which I have reached, as indeed did Blake J, that the entitlement to live and work in an EU State is a necessary prior condition for an Article 43 right to be infringed by the operation of domestic immigration law in another Member State.

Mr Cox referred to the decision in R (On the application of) Loutchansky v First Secretary of State [2005] EWHC 1779 (Admin) that he should be precluded from coming to the United Kingdom. Dr Loutchansky was a national of a third party State who was however lawfully resident and working in Austria and had, it was assumed for the purposes of this part of the decision of Moses J, a derivative right to enter the United Kingdom for the purposes of his business lawfully established in Austria, subject only to the consideration of public policy.

On the assumed facts, which included the lawfulness of said Dr Loutchansky's presence in Austria, and on the assumption that Nordex, Article 43 rights could not properly be exercised without Dr Loutchansky having a dependent derivative right derived from those rights of Nordex, the issue then arose only as to whether his entry was legitimately refused on Article 46 grounds.

On those assumptions the relationship to immigration control was considered. Moses J said in paragraph 46:

In my judgment, it is perfectly clear that what Moses J said was predicated upon Dr Loutchansky's right to live and work in Austria for the purposes of Nordex operation and hence a derivative right to enter the United Kingdom.

Although the precise arguments are different from those dealt with by Blake J in Gransian, the absence of the individual claimant's entitlement in that case to live and work in the Republic of Ireland was crucial to his thinking and to his analysis of domestic ECJ authorities.

The later decision of His Honour Judge David Pearl in Lee Ling Low (21st January 2009), though based upon Article 49 was concerned with essentially the same facts and the same corporate structure as a basis for a claim in relation to services. The same theme emerges in his consideration of Article 49 and the ECJ authorities. In paragraph 24 His Honour Judge Pearl said that although Vander Elst was concerned with third country nationals, it was clear that it was predicated on the assumption that the applicant third country national be both lawfully resident in the country of the service provider and be lawfully and habitually employed by that service provider. In paragraph 35, dealing with the Commission v Germany [2006] ECR 1885 2006 2 CLR 23, he said that the court did not suggest that it was unnecessary for the undertaking to make a prior declaration certifying that the workers' situation was lawful and the requirements of residence visas and social security were met. The court made it clear that such a prior declaration as to lawfulness was indeed necessary.

In considering the case of the Commission v Luxembourg [2004] ECR 1-10191, [2005] 1 CMLR 22, His Honour Judge Pearl said in paragraph 37 that the ratio of that case in no way supported the contention that a requirement for lawful residence was not lawful. In dealing with his overall view of the various cases which he referred to, it is plain that the conclusion in paragraph 42 involved reliance on lawful residence by third party nationals in the Member State of establishment. In paragraph 45 he took the same view as I have done of what the predicate for Moses J's decision in Loutchansky was, in relation to lawfulness of residence.

I should add that so far as those who made applications for residence cards while they had extant leave are concerned, their position is in substance no different because the Secretary of State put an end to that leave in June 2008, and the extension, if it existed, under section 3C neither continues to apply nor could it afford a basis for a distinction between those the others and those who had no right to remain once the decision has been made. His decision cannot be characterised as unlawful, in respect of them, without effectively the four claimants being able to pull themselves up by their own boot straps.

In my judgment as well the European Court of Justice authorities are equally clear. The Rush Portuguesadecision, to which I have already referred, was concerned with the position of Portuguese nationals before Portugal attained full EU membership. It is obvious that those Portuguese nationals were living and working lawfully in Portugal for a Portuguese company and they wished to enter France to work for that Portuguese company, which had obtained a construction contract in France. It was held that the French requirement for French work permit and local staff infringed the Portuguese company's Article 49 rights because it set up a discriminatory condition by comparison to local companies. But the starting point for its consideration was, of course, the fact that the Portuguese staff were lawfully working and residing in Portugal. That is obviously a necessary implicit assumption in the decision, so obvious that it did not need to be stated.

The Vander Elst v Office des Migrations Internationales decision 1994 I-03803, concerned the position of third party nationals more directly. It dealt with a Belgian company's entitlement to employ third party nationals in another state, again France. But the Moroccan workers in Belgium, whom their Belgian company employer wished to employ in France, were already lawfully residing in and employed in Belgium. It is inconceivable that the Belgian company could have said that it could not lawfully bring them into Belgium from Morocco, but as it had won a contract in France, it could lawfully bring them into France from Morocco, pursuant to its Article 43 rights, even though it had no domestic French immigration law basis for doing so.

No more here can the corporate claimants here say that although it cannot lawfully bring the directors into the Republic of Ireland, it can lawfully bring them into the United Kingdom. It is irrelevant for these purposes that they are here already. What is relevant is that they have no leave to remain.

I have already referred to paragraph 25 of the European Court of Justice decision in Gebhard which, in my judgment, is to the like effect.

Mr Cox referred me to the decision of the European Court of Justice in The Commission v The Netherlands [2004] ECR I- 9761. Netherlands law required a company owning a Netherlands flagged ship to be majority owned and locally managed by EU nationals. This meant that an EU company national, under Article 48, which did not have such a corporate and employment structure, could not establish itself in the Netherlands as the operator of Netherlands flagged ships unless it changed its corporate structure and employees. The European Court of Justice rejected an argument that this was not a prohibited restriction within Article 43. The court continued in paragraph 20:

In my judgment, that does not help him at all. The presumption in that case was that there was no other obstacle than that national requirement to the establishment of the company in the Netherlands, that is to say, that the local engaged staff were entitled to live and be employed there, albeit that they were not EU nationals. It is not authority for some general proposition that entitlement to reside under domestic immigration law is irrelevant for non EU nationals once they are employed by an EU national company.

Granted that there is no harmonisation among EU States of domestic immigration law vis a vis non EU nationals, no more is required in relation to Article 43 and an obstacle potentially constituting an infringement, an obstacle created by immigration law, than that the individual have an entitlement to live and work in a EU/EEA State. The Secretary of State did not suggest that, if under the different domestic immigration regime of another EU country, Mr X established an entitlement to live and work in that other country, for example, in the Republic of Ireland, some different general United Kingdom immigration law could still lawfully preclude the exercise by Mr X of Article 43 derivative rights.

A further alternative way of putting the same point is that the content of the right to or freedom of establishment, which has to be infringed, is that the individual whose entry or stay for the purposes of the establishment of the company is at issue, has to have some right to enter or remain in an EU State other than that which the company wants to have him in. That company, just like any domestic company, has to abide by domestic immigration law as affected by EU Treaty rights; but EU Treaty rights do not establish that, just because an EU national wants to bring in a non EU national from outside the EU, with no other right to work or remain, his entry to another EU state has to be permitted.

As the corporate claimants only exist as shell companies in the Republic of Ireland or Cyprus without business there and without the directors in questions whose having derivative rights at issue having any right to work and live there, the content of their right to establishment cannot include an EU residence card for someone who has no residence right in the Republic of Ireland or Cyprus. The right is effectively not engaged or hindered.

I am satisfied the propositions underlying Mr Cox's arguments are wholly without foundation, notwithstanding the grant of permission, though I think it was granted with an eye to the abuse of rights argument which it is quite unnecessary to consider. I am also satisfied that although there are differences in the argument between these and other cases, the essential problem of a fundamental misconstruction of Article 43 which underlies this case is the same as that fundamental misconception which underlies the arguments rejected in the firm and clear decision of Blake J in Gransian and also reflects and underlies what was also rejected clearly in the Lee Ling Low case.

There may be other cases in a queue because the firm of solicitors here has run a number of such cases. The issues have now been considered in detail three times. All have been now rejected in clear terms. I venture to hope that no further permissions will be granted in relation to these arguments and any remaining cases will be brought on quickly for dismissal, if they rely essentially on these arguments and if they are not withdrawn. Whatever now may follow in costs terms, it is difficult, in my judgment, to avoid the conclusion that further cases involving shell companies, for those who have no leave to remain, would be an abuse of process and, as in the case of Gransian, would inevitably lead to consideration of a wasted costs order or orders under CPR 44.14. The Secretary of State should obtain a transcript of this judgment for such other cases. I also direct that a copy of this judgment, the judgment in Gransian and Lee Ling Low be sent to the Legal Services Commission and the Office of Supervision of Solicitors for their information.

This application is dismissed.

MR COX: My Lord, just some short factual judgments in your judgment, if I may?

MR JUSTICE OUSELEY: Yes.

MR COX: Your Lordship, I think at the outset mentioned there were 12 human claimants, there are in fact 27 human claimants because in some cases there is more than one director, one whom is a British citizen. The second point is that Plender J's grant of permission in this case in fact predated his refusals of permission.

MR JUSTICE OUSELEY: It predated.

MR COX: In this case on 13th March. The refusal of permission that the Secretary of State had put before the court was 1st May. My Lord, only one last point. I think your Lordship said of Rush Portuguesathat it was an Article 43 case.

MR JUSTICE OUSELEY: I did. I have got that wrong. Now 49, yes. Yes, I became aware of that and I could not remember what it was. Thank you very much.

MISS JACKSON: My Lord, I do have an application for costs in this case, not only against the claimant but also against the claimant's solicitors under 44.14.

MR JUSTICE OUSELEY: The problem -- and I anticipated that you would make that application -- with that is Plender J granted permission on this point. It seems to me very difficult, whatever might have been the merits otherwise, to say that the solicitor was not entitled to pursue a point which Plender J had said was or implied was arguable. So, I am against you on the wasted costs point, regardless of what otherwise might have been the position. What do you say about the order of costs in general?

MR COX: My Lord, I have no objection in principle to order of costs. The schedule of costs I have handed to my solicitors. Might I have a moment?

MR JUSTICE OUSELEY: Yes.

MISS JACKSON: While that happens, I did have points on wasted costs that were not just about the substance of the case but also about the conduct of the solicitors, in particular failing to confirm their position and failing to refer to correspondence.

MR JUSTICE OUSELEY: Very well, that is a different point from the more general proposition. I will deal with those separate points, yes.

MR COX: Sorry, my Lord, I did not catch that.

MR JUSTICE OUSELEY: Miss Jackson has a different basis for seeking a wasted costs order, relating to case specific conduct rather than merit of cases. I have indicated I am against her on a broader merit of case approach because of the grant of permission. So just dealing, first of all, with the question of the ordinary basis of costs, what is the amount you are seeking?

MISS JACKSON: Sorry, my Lord, I will hand up a draft schedule. It is £8,101.

MR JUSTICE OUSELEY: Is that in issue?

MR COX: My Lord, it is not. The amount has been modified to eliminate the costs of the unsuccessful application to set aside.

MR JUSTICE OUSELEY: There will be an order for costs in the Secretary of State's favour in the sum of £8,101. Is that an order that is to be made joint and several amongst all the claimants? It is probably easiest that it is. Jointly and severally against all the claimants. Any of them subject to Legal Services Commission funding?

MR COX: No my Lord.

MISS JACKSON: As to the conduct points, in terms of a joint order with wasted costs. There are three straightforward points. The Secretary of State first wrote to the claimants' solicitors following judgment in Gransian on 29th December 2008, as it did with all similar cases and requested confirmation that in light of that judgment the claim was being pursued. This was obviously before the permission was granted in this particular case. No substantive response was actually received to that correspondence despite chasers until 30th April 2009, which I appreciate was after the grant of permission but the Secretary of State were still waiting their response in relation to that case.

The second point is the defence--

MR JUSTICE OUSELEY: They reply and said: we are batting on.

MISS JACKSON: Yes. The second point is that in that correspondence although there were some comments in relation to Gransian, there was no actual substantive consideration of why that case would be different or why that case was wrong, particularly in light of the fact it was the same solicitors who dealt with that case and chose not to pursue an appeal against it until we received the claimant's skeleton argument last week.

The third point is following the application to set aside the order was for the claimant's skeleton and bundle for this hearing to be filed and served by 22nd June 2009. There was correspondence between the parties around that time for about three days to agree a short extension until the end of that week for the final serving of the same and then no response at all despite four letters from the Treasury Solicitors to the claimants' representatives asking for service or an update until the skeleton was received on 3rd August and the bundle received a couple of days later. As the defendant made clear, their own counsel was on leave last week and therefore was not enabled to respond to that until yesterday on his return from leave, which only gave one day's notice to deal with quite different arguments or at least a different emphasis that was made in the claimant's skeleton argument.

In the light of the order that this should have been served almost six weeks prior, it is unreasonable conduct in this particular case. It also with reference to the fact that both parties had agreed that this case should be dealt with on an expedited basis.

MR JUSTICE OUSELEY: Did it cause any extra costs?

MISS JACKSON: Not necessarily in terms of costs although it did cause difficulty yesterday preparing for this hearing. It has inconvenienced the court as well with late service of our skeleton.

MR JUSTICE OUSELEY: Yes thank you.

MR HAYNES: Costs were occurred with various correspondence with chasing in small amounts.

MR JUSTICE OUSELEY: I am not going to make a wasted costs order in this case.

In most litigation most parties can find something to complain about in the other's tardiness. I am sure that the Secretary of State has also been responsible for this sort of thing sometimes.

The late reply to the Gransian letter may be regrettable but the permission was granted on 13th March 2009. It was not legitimate for the solicitors to wait and see what the outcome of their permission application was and having received it to decide, in the light of perhaps unexpected but nonetheless real success, that they were going to bat on.

The second point either goes to the generality of a wasted costs order, which I have refused in the light of Plender J's grant of permission, or it goes to the third point, which is the failure to comply with the directions of the court.

Certainly this has not been a case where there has simply been a repeat of Mr De Mello's arguments, saying that Blake J was wrong to reject Mr De Mello's arguments. The arguments may have met with no greater favour and they may have suffered from kindred flaws. But it was not quite so simple as mere repetition of the Gransian arguments. I do not think ground 2 is a basis for making a wasted costs order under 44.14 order.

It is right that the claimants were in breach of the requirements of the order of Mr Goudie. Of course there are many circumstances in which a court would visit such a breach of an order or failing with wasted costs, particularly where it has caused costs to be thrown away. Although, of course, it has created inconvenience, it has not added at all, so far as I am aware, to the costs which are claimed. It has not led to any adjournment and the process of apportioning responsibility or analysing whether on full argument there should be a wasted costs order would create unnecessary satellite litigation. So I decline to make the order.

MR COX: My Lord, I do have an application for permission to appeal. As your Lordship may have seen from the papers Laws LJ has granted permission to appeal to the claimants in Lee Ling Low. I am afraid I do not have a copy of the order. I recollect that it was an order that indicated that the permission was being granted and the Court of Appeal should decide it, not on the basis that it had any great prospects of success. I would not want to mislead your Lordship on that.

In my submission, your Lordship's judgment, while I entirely accept reaching the same conclusion as that of Blake J and for the same policy reasons does rest itself on a very important proposition which is of much wider application than the facts of these cases. That is that a measure to which a company is subject in the state of incorporation is not a measure which is capable of being a restriction or at least is not a non discriminatory measure capable of being a restriction on that company's freedom of establishment if applied in another Member State. That is a proposition which has emerged from the fruits of the discussion yesterday, but it is not one for which any community law authority has been cited and it has a much wider effect than pure immigration cases. It would, for example, mean that if the Commission had not brought an action against the Netherlands and the German State had adopted the same rule as Dutch had as ship ownership, that a German company could not have complained about the Dutch rule, albeit a Belgian company could. I do not say that your Lordship is necessarily wrong about that. What I do say is that is really is a very important issue and it is one which your Lordship ought to grant permission.

The second point is that, in my submission, the question of whether or not a person's lawful presence in a Member State or right to reside in a Member State is one of much greater application than simply persons who are overstaying or will be overstaying in this country. It also applies to the examples that I gave to your Lordship in argument yesterday. Those of entirely law-abiding foreign nationals with Directorships of community companies and who may have no right to enter a community country in order to work as a director there. Not necessarily working in any more than in a meeting. In my submission those are very important issues. I see your Lordship's logic and I see that, in my submission, your Lordship's logic does rest on those issues and those are the important ones.

MR JUSTICE OUSELEY: I understand what you say. I regard, notwithstanding what you told me about Laws LJ granting leave in Lee Ling Low, I meant I am not entirely sure of the basis for it, but accepting he thought there was a point they wanted to resolve, I nonetheless do not think this is a case where I am going to grant leave. If you can persuade the Court of Appeal, so be it. I regard the answer, I am afraid, as a glimpse of the obvious and if the Court of Appeal does not think so, no doubt they will grant you leave.

MR COX: My Lord.