Guildhall College, R (on the application of) v Secretary of State for Business Innovation and Skills

Guildhall College ("The College") is a private education college providing further and higher education to both domestic and foreign students. In this judicial review it challenges two decisions of the defendants, the Secretary of State for Business Invasion and Skills (the "Secretary of State" or "BIS") and The Student Loan Company Limited ("The Student Loan Company"). The first decision was dated 18 September 2012 and suspended all payments of student loans to students attending the College. The second decision was to withdraw the designation of two courses offered at the College: a two‑year full‑time HND in Business and a two‑year full‑time HND in Computing and Systems Development ("the designated courses"). That second decision was conveyed in a letter dated 23 October 2012. The result of those decisions was that students attending the College were no longer eligible for student loans.

Guildhall College was established in 2003 catering in the main for international students requiring a student visa. It is based in Whitechapel, London. Following the Government's decision to cut immigration there was a sharp decline in the number of foreign students attending the College. The College decided to diversify away from international students to focus on those coming from this country and elsewhere in the European Union. In September 2011 the College had two courses designated for the purposes of receiving Government subsidised student loan funding. The letter containing that decision emphasized that it was only those two courses which were designated and that the College should contact the Student Loan Company should there be a change in the structure of the course or a validating institution or any other organisational change. The letter also highlighted that designated courses were subject to periodic review and that it was imperative that the College respond to any request for information if they were to retain designated status for a course.

Apart from those two designated courses, the College had a variety of other courses, including HNDs in Health and Social Care, Travel and Tourism and Hospitality Management. Since those other courses were not designated, students undertaking them were not eligible for student loans. In April 2012 the College applied for designation of its HND in Health and Social Care, but no decision was ever made by BIS or the Student Loan Company as regards that application.

The student loan scheme has two components, the first being a sum payable in respect of tuition fees, and the second a sum in respect of maintenance. The tuition fee component is paid by the Student Loan Company directly to the course provider. Eligible students who undertake courses are able to receive loans to meet their student fees and the loans and grants to help their living costs only if they are studying a course which has been designated for students support. Eligible courses delivered through the publicly funded sector are automatically designated for this purpose. Private institutions, those not receiving public funding, must have courses designated individually by BIS.

Prior to receiving payment for fees under the system, Colleges are required to confirm that each student using the Student Loan Company's payment system is attending a course. This confirmation is provided by the College, not the student or third party. In the 2011 ‑ 2012 academic year, students must have been in attendance for 90 days after the start of the academic year in which their course began for the Student Loan Company to have made a tuition fee payment to a College following receipt of confirmation of attendance. In that academic year these days were: 1 September for courses which began in the autumn quarter; 1 April for courses which began in the winter quarter; 1 July for courses which began in the spring quarter; and 1 December for courses which began in the summer quarter.

In early August 2012, BIS received routine information from the Student Loan Company of the amount of student support paid to Colleges with courses specifically designated. The number of students accessing student support for courses at Guildhall College had increased from four in April 2012 to some 350 in June that year. Further analysis in mid‑August 2012 showed that 268 students at the College had begun to study an HND in Business course in April 2012.

In early September BIS received a complaint from a student who appeared in the records of the Student Loan Company as claiming student support for a designated course at the College but stated that he was in fact studying an undesignated course. As a result of this information, in a manner not evident from the evidence before the court, on 14 September 2012 Mr Islam, a director of the College, sent an e‑mail to the Student Loan Company. That e‑mail confirmed that although students had been recruited to begin courses in April 2012 some had not in fact begun their studies until July. The explanation offered was that the start dates for students had been staggered because of the anticipated disruption in East London as a result of the Olympic Games. I note in passing that, subsequently, other explanations featured for the staggered start dates for students that year, such as teething problems with the College having its courses designated.

That same day, 14 September, BIS and the Student Loan Company agreed that the latter should temporarily block further payments of student support for courses at the College while an investigation was undertaken. On 18 September the Student Loan Company Special Investigations Unit reported to BIS that students at Guildhall had contacted the Student Loan Company to raise concerns about the start dates for their courses. That same day, Mr Islam forwarded a spreadsheet to the Student Loan Company regarding student enrolments. At that point, £676,000 had been paid to the College in respect of fees for students undertaking courses there in the 2011 ‑ 2012 academic year, following the required confirmation of attendance from the College authorities.

The decision to suspend payment was conveyed in a letter from the Student Loan Company to Mr Islam dated 21 September 2012. The letter pointed out that inconsistencies had been discovered in respect of the start dates and the attendances for courses at the College and that BIS had directed that Student Loan Company to undertake further enquiries prior to the release of any further payments. The letter explained that the Student Loan Company had also become aware that many of the applications for student support at the College appeared to have been made on behalf of students by a third party, which was not regular practice. Thus, the Student Loan Company needed to review the other applications to confirm that the necessary declarations had been appropriately signed by the student. That third party referred to was the Opportunity Network, of which more in a moment.

The letter continued that it was essential that the Student Loan Company know the correct start dates for the courses since this determined the date on which a College confirmed a student's attendance prior to the release of a payment. Tuition fee grant was only payable if the student was in attendance on the 90th day after the commencement of the academic year. The letter concluded with an appreciation of the potential impact which the suspension would have. The review would be concluded as quickly as possible and both BIS and the Student Loan Company would welcome an opportunity to discuss matters.

Unsurprisingly, a suspension decision provoked concern amongst students at the College in receipt of student loans and grants. A number of them telephoned the Student Loan Company. In a briefing to the Minister, the Right Honourable David Willets MP on 20 September 2012, his department officials explained that the telephone calls seemed to suggest that some students were unsure about the details of their course. Many confirmed that, despite having completed an application for student support through a third party organisation ‑ in fact, Opportunity Network ‑ for a course beginning in April, they were advised by the College not to attend until June or July. That was relevant, continued the briefing, since it brought forward the Government's liability to pay the College which could mean payment going to the College even if students dropped out in the first three months. The memorandum noted that the dropout rate at the College was high. The Ministerial briefing also noted that the role of Opportunity Network had come to light since the majority of business students at the College applied for student support online through a common IP address. The briefing concluded that the department's concern would be put to the College.

A meeting with the College was arranged for 2 October. The previous day there was a response to an e‑mail from the College regarding the duration of the proposed meeting and its agenda. A representative of the Student Loan Company e‑mailed that a meeting of some two hours was anticipated and that the discussion would revolve around the issues in the letter of 21 September.

The meeting at the College on 2 October was attended by representatives of BIS, the Student Loan Company and the College. The minutes from that meeting are before the court. These reveal that Paul Williams, a deputy director of student funding policy at BIS, confirmed that the purpose of the meeting was to discuss inconsistencies to course start dates and attendance and the apparent involvement of a third party in making plans to student finance on behalf of the College. Mr Williams added that he wanted to understand as well more about the spreadsheet provided by the College, which appeared to show that some students on the HND Business Course were undertaking courses in, for example, Health and Social Care.

As to the first issue, the inconsistencies in start dates and attendance, the minutes reveal that Mr Williams asked the College to explain the e‑mail of 14 September where Mr Islam had stated that the students registered with the College in April 2012 had a staggered start between April and July. The College responded that there had been a heavy demand from students who were keen to begin their courses before fees increased in September 2012. Not all students began attending their courses in April/May. Nevertheless, it was the College's intention to deliver the courses with the same projected end date. The College acknowledged that some students had been registered with it in April 2012 but had still not begun their courses in September, although they had begun their induction in July. The College undertook as an action point to provide a list of all students registered on its HND courses in Business and Computing, showing each student registered, and the date they began formally to attend their course.

The meeting then turned to third party involvement. The College representatives confirmed that they had entered into a contract with the private company, Opportunity Network, to recruit students. Opportunity Network interviewed the students and shortlisted potential entrants. The majority of students shortlisted were students eligible for student support. On enquiry by the department and Student Loan Company attendees, the College representatives confirmed that Opportunity Network advised students in making applications for student support and students were charged a fee of £35 for that service. On further questioning by BIS and Student Loan Company officials, the College representatives revealed that Opportunity Network were paid a commission of 15 per cent of the tuition fees paid to the College on behalf of any student it recruited. That only applied to students enrolled onto designated courses. Payment was triggered when the student Loan Company paid the tuition fee to the College.

As regard the third issue, the students registered on HND Business who were undertaking different courses, the College representatives confirmed that it had more than 600 students registered as attending HNDs in Business or Computing. The majority were registered on a business course. The College representatives also confirmed that about 300 of those students had opted to specialise in another subject such as Health and Social Care, Hospitality Management or Travel and Tourism. In the first year, students would complete four units of the Business course and another four units in, for example, Health and Social Care. If, say, the student then wanted to study a full HND in Health and Social Care in the second year, the student had two choices: either to pay their own fee and to support themselves financially; or to transfer to another College to complete the course.

When asked why students would choose to enroll in Guildhall, when the College could not offer a designated course in certain subjects, the College representatives said that the Business course offered a good grounding in year one when combined with other specialist modules and that they hoped that students would then choose to specialise in Business in year two. For those who did not wish to do so, the College representative said that they believed that the transfer arrangements to another College would work well, although they acknowledged that the College's website was not clear on the point, and that the manner in which Opportunity Network provided information on this arrangement probably amounted to "miscommunication" to potential students. The College explained that it had a letter of agreement with Nelson College to facilitate such transfers and that it was in discussion with two other Colleges, unnamed, with regard to a similar arrangement. The action point set out under this head of the minutes was that the College would supply a copy of its letter of agreement with Nelson College and also confirm the name of the course on which each student was enrolled.

The minutes clearly record that at the meeting Mr Williams expressed the view that it appeared that students were being misled about the courses they wished to study and there had been a systemic failure by the College to manage these matters appropriately. The Student Loan Company representative explained that many students had contacted it and, while it appeared that for funding purposes the students were taking the HND in Business, many were clearly under the impression that they were studying different courses. Mr Williams then explained that while there were doubts about start and dates for courses, and the discrepancy between what students had applied to study and what they were actually studying, it would not be possible to reinstate payments to students or the College. The College representatives then explained that the suspension of payments was causing hardship for their students and cashflow problems with the College. They were anxious to have the matter resolved quickly. Mr Williams stated that BIS needed to review what it had been told at the meeting and the information which the College had undertaken to provide.

In a further briefing to Mr Willets MP, dated 9 October 2012, his departmental officials proposed that designation for HND Business at the College should be withdrawn. In an unfortunate passage the briefing note stated that the College had confirmed that up to 300 of the students registered on the Business course intended to study Health and Social Care, Hospitality Management and Travel and Tourism. In fact, at the 2 October meeting, it will be recalled that the College had only confirmed that 300 student had opted to study these other courses. The briefing continued that the departmental officials considered the College's explanation that the students could have transferred to another College to complete their studies barely credible and tantamount to misrepresentation:

The briefing noted that the College had now advised BIS of the action it had taken subsequent to the 2 October meeting and the further actions that it proposed to take to facilitate transfer of students to other colleges. This was a reference to the College providing a letter from Nelson College which offered to take Guildhall students from January 2013 if they wished to continue their studies in courses other than those designated at Guildhall. On 11 October the College provided a database listing students studying the designated courses and their additional options subject, if any. The database also included the dates on which the students started their course.

The decision to withdraw designation of the two courses was conveyed in a letter to the College dated 23 October. The letter explained that the Secretary of State had decided that there was sufficient evidence to demonstrate to his satisfaction that the College had not complied with the terms of the designations for student support and with the provisions of the regulations relating to the attendance of students. Specifically, the Secretary of State was satisfied that the College had registered significant numbers of students on the HND Business course when those students in fact intended to study an undesignated course. The Student Loan Company would recover payments in respect of fees already paid by the College. The letter recognised that many students would be disadvantaged by the College's action and would be unable to begin their studies as intended, or might decide to leave the course shortly after it began. The Student Loan Company had sent them a letter to advise them of the decision to withdraw the designations.

By the date of the hearing, the Secretary of State sought to uphold the decision to withdraw designation on the sole ground that the College had registered significant numbers of students on the HND Business course when those students were wishing to study other courses.

Section 22 of the Teaching and Higher Education Act 1998 contains the statutory power for payment of Government subsidised student loans. Regulations under that Act, and relevant in these proceedings, are The Education (Student Support) Regulation 2009 SI No 1555. Regulation 6 of those Regulations sets out the criteria for determining whether a higher education course is eligible for student loan funding. Regulation 6(1) applies to higher education courses which meet a number of criteria, but in each case only when they are provided by publicly funded education institutions either alone or in conjunction with institutions abroad. In relation to private Colleges, Regulation 6(9) provides the power to designate a course, where Regulation 6(1) does not apply. This provided:

At the time of the decision to designate courses at the College there was not a detailed policy in place at the time regarding how the discertion under Regulation 6(9) would be essential. In June 2012 a guidance was provided, in particular in relation to the withdrawal or suspension of course designations. That guidance read as follows:

Regulation 110 of the 2009 Regulations provides for the payment of fee loans and fee contribution loans. It reads as follows:

The scope of the power to revoke designation is logically the first ground of challenge to be considered. In the course of his cogent submissions on the College's behalf, Mr Biggs submitted that the decision to revoke designation of the two courses in October 2012 was unlawful because it was outside the scope of the power conferred by the 2009 Regulations. In advancing this argument, he accepted that there was an implied power in the Regulations to withdraw the designation of courses eligible to receive student loans. However, he submitted that the drastic effect of a decision to revoke a designation and to suspend payments of Student Lone Company funding militated against the exercise of the power during the course of an academic year. Alternatively, he submitted, the power had to be tightly circumscribed and could only be exercisable on proof of abuse and not on the basis of mere suspicion.

In this case, he submitted that the sole surviving basis of the October decision, to withdraw designation, was that significant numbers of students were registered on the course in HND in Business when they intended to study another course, not designated for student support. That was not sufficient to exercise a power to revoke because it did not necessarily or even probably show an abuse of the system. In Mr Biggs's submission it was more than possible that Opportunity Network were solely or mainly responsible for the concerns of BIS and the Student Loan Company, given that this was the first year that the College had recruited students with Student Loan Company funding and that the College relied on Opportunity Network. At the date of the withdrawal of designation the Secretary of State, in Mr Biggs's submission, did not have a sufficient foundation of fact to take action against the College.

In my view, the withdrawal of designation of these two courses at the College was intra vires. The College accepts that the Secretary of State had the power to withdraw designation. That concession is properly made, given the fundamental rule of statutory interpretation that a power, not literally within the words of a statute, may be implied when it is incidental to, and may reasonably and be properly done, under the purpose of the statute (Attorney General v Great Eastern Railway Company [1880] 5 AC 473 at 478‑481. Here, the main statutory purpose was to provide student support but that was coupled with a purpose that public funds should only be channelled to particular outlets and not leach away for purposes which are not authorised.

In my view there was no basis for limiting the power to withdraw designation in the manner the College suggests. The power to withdraw cannot be limited either in terms of time (at the end of the academic year) or on the basis of proof of abuse. Student support is only available in accordance with the conditions set out in the statute and Regulations. If the Secretary of State suspects that public funds are leaching away from the statutory purpose then he must have the power to act immediately. Otherwise, the education provider could insist on its right to obtain funding, on one interpretation until the end of the academic year, or on the other interpretation until clear proof of abuse were available. That cannot be correct when limited public monies are available for this important public purpose. That does not mean that in removing the designation for courses the Secretary of State has an unfettered discretion to act. Under ordinary public law principles he cannot act for an improper purpose, taking into account irrelevant considerations, or ignore relevant considerings. Moreover, the exercise of the power cannot be arbitrary or Wednesbury unreasonable.

In this case, the Secretary of State had reasonable grounds to believe that public monies were going to non‑authorised purposes and he was entitled to withdraw designation of the courses. It was clear that a considerable number of students who had been awarded student support in order to study for the HND in Business at the College thought that they were studying other courses, Health and Social Care, Hospitality Management or Travel and Tourism. The College had claimed payment from the Student Loan Company of fees in respect of all those students. The College claimed that a significant number of students were studying Business with an option in another non‑designated subject and that those students who did not wish to continue with Business after the first year could either pay the fee to continue with their preferred course or transfer to another College.

In my view it was simply implausible that students would have enrolled at the College if this had been explained to them. The College has sought to blame Opportunity Network and it may be that students were not fully informed by that company of the contents of the application. However, it is not surprising that BIS and the Student Loan Company found implausible the College's suggestion that a student would choose to study a designated funded course for a year only to have to finance themselves for the following year or transfer to another College for that second year. Indeed, the suggestion of transfer to Nelson College was that this would take place in January 2013. That would have meant that some college students would not have even completed their first year of study at Guildhall before transferring.

Whatever the role of Opportunity Network in what has happened, in my view, the evidence of Paul Williams, that he did not believe that the College was not complicit, is entirely plausible. The Secretary of State was well within its power in deciding to withdraw designation.

The principles of procedural fairness admirably summarised in the well‑known passage in Lord Mustill's speech in R v Secretary of State for Home Department ex parte Doodey [1994] 1 AC 531 at 516, letters D and G:

There have been several recent decisions where the principles in Lord Mustill's speech regarding fairness have been invoked in the context of education provided or offered by private colleges. In R(on the application of San Michael College Limited) v Secretary of State for the Home Department [2011] EWCA CIV 1336 the Court of Appeal held that the procedure followed by the United Kingdom Border Agency, when suspending and then revoking the sponsor licence of San Michael College, had been so unfair and the decision making so obscure that the decisions to suspend and revoke had to be quashed. The sponsor licence in that case had enabled the College to issue a visa letter, or confirmation of acceptance for studies, to prospective overseas students. There was guidance regarding the duty to keep records and not to issue visa letters for confirmation of acceptance for study unless satisfied that the students intended to and were capable of following the course of study concerned.

The College's licence in that case had been suspended in February 2010 then reinstated in June of that year on the basis that the College would demonstrate that it had implemented effective processes. An action plan was agreed. But in September 2010 the UKBA suspended the licence again. This was with a failure to declare over 500 students who had been issued with a confirmation of acceptance and 51 per cent of the College's students were failing to attend for 80 per cent of the time. Revocation of the licence followed in October.

It is clear from the judgments of Pill LJ, with whom LJ Richards agreed, and of Davis LJ, that the unfairness identified by the Court of Appeal in that case was that the action plan was forward looking in its record keeping requirements. UKBA indicated that revocation would follow if the College failed to demonstrate that it had implemented the action plan. However, UKBA's decision to suspend and revoke had been based substantially on defaults which had occurred prior to the action plan was being agreed. The revocation letter had referred to a handful of events after the introduction of the action plan, but they were entirely different from the historic allegations. Moreover, the decisions had not taken into account progress which had been made pursuant to the action plan.

R(on the application of New London College Limited) v Secretary of State for the Home Department [2011] EWHC 856 (Admin) [2012] EWCA CIV 51 was another case involving a decision of UKBA to revoke a college's sponsor licence. The background was that the College had not gained accreditation for the premises which meant that it was in breach of a condition in the sponsorship licence. Moreover, it had issued more visa letters for prospective students than it had student places. In July 2010 the licence was revoked.

The College raised a number of arguments challenging the UKBA's decision. At first instance, Wyn Williams J held that the decision to suspend the licence without first giving the College an opportunity to deal with the circumstances was in breach of the principles of fairness as set out in Doodey. He continued that although the initial decision to suspend was unlawful, it did not follow that the decision to revoke the licence was also unlawful. When the matter went on appeal Wyn Williams J's approach to fairness was not challenged: (2012) EWCA Civ 51 [60]. Of the decision to suspend remained.

In this case the College submits that it was not given notice of the Secretary of State's decision to suspend in September and to suspend payments in September and to withdraw course designation in October. It should also have been given an opportunity to be heard before these decisions were taken. In Mr Biggs's submission, the College faced enormous commercial damage from those decisions. There was an obligation on the part of the Secretary of State and the Student Loan Company to act fairly. Yet the decision to suspend set out in the letter of 18 September was taken without any notice at all. That, in Mr Biggs's submission, was clearly unfair, an unfairness which vitiated the decision and the entire decision process. In his submission, the College should, at the very least, have been given seven days' notice with a requirement that it respond to the concerns which BIS and the Student Loan Company had. As to the decision to withdraw designation, set out in the letter of 23 October, that in Mr Biggs's submission was also procedurally unfair. The College was never have told that withdrawal was a possibility, let alone the likely result. Because of a lack of notice the College was not given an opportunity of making representations as to the imposition of a less severe measure than withdrawal of designation. An allegation of abuse was never put clearly to the College. Yet that was the basis on which the briefing to Mr Willets MP was made.

The meeting between the College and the representatives of the Secretary of State and the Student Loan Company on 2 October was not a meeting designed for the claimant to make representations in its defence. In Mr Biggs's submission, it was part of the investigatory process. Before that meeting, the College was never told about the concerns that BIS or the Student Loan Company had that students registered to undertake the Business HND course were studying other subjects.

Following that meeting, the College complied fully, in Mr Biggs's submission, with the requirements set out in the action points. There was no further opportunity to address the Secretary of State and the Student Loan Company as regards the decision to revoke. Moreover, Mr Willets MP was misinformed in the Ministerial briefing of what had been said at the October 2 meeting about the 300 students intending to study a course not designated for student support.

The factual and evidential basis of the decision to withdraw designation on the basis of abuse was never provided to the College. Given the seriousness of that allegation and the consequences for the College of the withdrawal of designation, the College was entitled to an indication of the key evidence against it. Without being able to consider that evidence, there was no significant prospect that it could fairly advance its case. It was perfectly acceptable that students undertaking business should study other options.

As Lord Mustill made clear in Doodey, the common law principle of procedural fairness is context driven. What fairness demands in any particular case depends on the circumstances. Urgency has always been an exception where the requirements of fairness may need to be relaxed:

The context in the New College case which led Wyn Williams J to decide that the suspension was procedurally unfair is explained by that quotation. In this case, at the time of the decision to suspend payment, the Secretary of State knew that the College had apparently recruited over 300 students to start the same course on the same day. Mr Islam's e‑mail of 14 September conceded that the students were considered as April/May starts even though that was not the case and some had been allowed a staggered start between April and July. There was information from students themselves who confirmed that they had only started in July. Yet the College received over £600,000 of public money and was claiming more. There was also information that applications for student support had been made by a third party using a single internet address linked to Opportunity Network. That gave rise to concern that in completing student applications the third party might have completed the declarations that students were required to make determining their eligibility for support.

In my view, all of that more than justified an immediate suspension of payments to the College and its students without notification to the College. The letter of 21 September explained these concerns and invited College representatives to meet BIS and the Student Loan Company to explore the situation.

Following the suspension both the Secretary of State and the Student Loan Company became aware of other troubling facts. For example, in the information the College had provided on 18 September, and significantly in the telephone calls which students made to the Student Loan Company once they knew of the decision to suspend payment. In particular, BIS and the Student Loan Company became aware that students had been recruited for one course while apparently thinking that they were studying another.

The minutes at the meeting on 2 October 2012 make clear that these concerns were squarely placed before the College representatives. In accordance with the requirements of fairness the College knew exactly what matters were of concern to the Secretary of State and the Student Loan Company. That the meeting was also designed to elicit further information in no way subtracts from the reality that the College was firmly put on notice about the concerns which BIS and the Student Loan Company had. In the course of that meeting further facts emerged, such as the payment of commission to Opportunity Network based on enrolment in designated courses. I note in passing that the College was invited to provide information about the problem of students telling the Student Loan Company that they were undertaking designated courses while the College had registered them as studying for the designated HND in Business. The College has still not explained that matter but has pushed responsibility onto Opportunity Network. The College's detailed grounds and skeleton indicated the College had initiated proceedings against Opportunity Network. I was told that the proceedings had not been initiated but a letter of claim had been drafted. The explanation given was that the College, deprived of its financial support, was concentrating its effort on the current proceedings.

In my view it is artificial for the College to characterise the meeting of 2 October as part of the investigation. What was involved, both before and after that meeting, was an iterative process where BIS and the Student Loan Company were attempting to elicit information but at the same time placing before the College their concerns. The College had the opportunity to put its case. At that meeting, the College was invited to provide information, and did so. But that simply confirmed the Secretary of State's concerns that students registered for one course were in fact studying another.

This was not the situation addressed in the San Michael College case, where the College had been given an action plan to implement. The College in this case was given action points but that in no way precluded it from providing additional explanations to address the concerns which had been canvassed by BIS and Student Loan Company representatives at the October 2 meeting. In particular, the College provided no information to support its contention that students applying to study a designated course, but intending to study a non‑designated course, would have undertaken that on the basis that they would continue to finance it themselves or would leave after a period of six months to study at another college. The College cannot characterise itself as the innocent victim of the activities of Opportunity Network when it must have known what courses it was teaching and that it was claiming public monies for teaching designated courses to students who thought they were studying non‑designated courses.

As to the proposition that the College had no idea that the removal of designation was a possibility, that to my mind is implausible. In circumstances in which the Secretary of State reasonably believed that the College was claiming substantial sums of public monies to which it was not entitled, the College could have expected nothing less than that it would have its designation withdrawn and that a lesser penalty was simply not appropriate.

For the reasons I have already given, the suggestion that the Secretary of State acted in a Wednesbury unreasonable manner gets nowhere. Mr Biggs contended that the decision was Wednesbury unreasonable, partly because the ostensible reasons were not the true explanation for the decision which was stated (or mis‑stated) in the briefing to Mr Willets MP. Whatever the inferences the Secretary of State may have drawn about abuse, possibly even fraud, the decisions to suspend and withdraw were justified in the terms I have described. There was nothing Wednesbury unreasonable about those reasons.

The fourth ground of challenge advanced by Mr Biggs is that the designation of the courses for the purposes of Student Loan Company funding is a possession within the meaning of Article 1 Protocol 1 of the European Convention on Human Rights. At one point in his submissions Mr Biggs perhaps unwisely characterised designation as a blank cheque. In any event, his submission was that designation was a form of regulation which entitled a college to receive public monies directly from the state. That that directly contributed to the capitalised value of the claimant. There is a letter in evidence from the College's accountant to the effect that the designation contributed some £2 million to its capitalised value.

Article 1 of the first protocol of the Convention provides that a person is entitled to the peaceful enjoyment of his possessions and that no one should be deprived of those possessions, except in the public interest and subject to conditions provided for by law and by the general principles of national law. However, the protection offered does not impair the right of the state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or other penalties.

The concept of possession, for the purposes of Article 1 and Protocol 1, has an autonomous meaning and is not limited to the ownership of physical goods. Other rights and interests constituting assets could also be regarded as property rights and thus possessions for the purposes of the provision. A leading case in the Strasbourg jurisprudence is Tre Traktorer AB v Sweden [1989] 13 EHRR 309 where the court found that the withdrawal of a liquor licence had had an adverse effect on the goodwill and value of a restaurant. Those economic interests connected with the running of the restaurant were possessions within the meaning of the Article.

In the New College case, the Court of Appeal held that the College's student sponsorship licence was not a possession for the purposes of the Article. In the course of his judgment, with which the other members of the court agreed, Richard LJ canvassed the jurisprudence at length and held that a sponsor licence was not marketable or even transferable, nor was it obtained at a market price (paragraph 94).

In relation to the effect on goodwill, Richards LJ held that the suspension or withdrawal of a licence would not constitute an interference with the right to peaceful enjoyment of possessions within the meaning of the Article unless it had an adverse effect on that goodwill. There was no concrete evidence, he said, on which to found a conclusion that the goodwill of the business, in the sense identified in the authorities, had been or would be adversely affected by suspension or withdrawal of the licence. Nor could that effect have been inferred from the evidence before the court. The sponsor licence did not touch on the freedom of the College to provide courses of education to students. It was far from clear that the expected income stream from the College having that licence could be capitalised as part of the value of the business.

Mr Biggs sought to distinguish the New College case by suggesting that the possession interest in question in this case was a present interest, entitling the College to payment of the money. The Tier 4 sponsor licence in the New College case was not analogous and did not give rise directly to payment. In particular there was the letter from the accountant about the contribution to goodwill which the designation of these courses in this case had led. It was obvious in this case that designation had given rise to the payment of public monies to the College. Moreover, the interference by the Secretary of State and the Student Loan Company, through its decisions to suspend and to withdraw designation, was not proportionate. It was not in accordance with the law since there was no detail in either the regulations or the policy relevant to this case. The policy of June 2010 clearly did not cover this situation. Moreover, the interference was not proportionate given the absence of fairness in the decision making and given the fact that the Secretary of State and the Student Loan Company had failed to consider a less draconian response to their concerns.

In my view, the designation in this case is on all fours with the situation in the New London College case. Any rights to public money which designation gave in this case were derivative. The entitlement accrued to students who were eligible for student support. The designation gave the College an entitlement to payment but only if the students signed up for those courses. As in the New College case the designation was not such as to give rise to a contribution to the goodwill of the College. The letter from the accountants, as Mr Biggs conceded, did not constitute expert evidence. In my view, it was wholly inadequate to support the point about goodwill. In any event, were the designation to be regarded as a possession, for the reasons I have given both the decisions to suspend and withdraw designation were in accordance with law and were a proportionate response to the leaching away of public monies for unauthorised purposes.

For these reasons, I dismiss the claim.

MS MCGAHEY: My Lord, in the circumstances the Secretary of State would ask for his costs.

MR JUSTICE CRANSTON: Yes.

MS MCGAHEY: Clearly there is no application for summary assessment. However, my Lord, the Secretary of State has put together an estimate of his costs which my learned friend has not seen. They are in excess of £35,000. We are very concerned about the financial position of this College. Mr Islam has been frank from the outset in saying that the loss of designation would essentially ruin the business. Your Lordship will have seen that from Mr Islam's witness statement. In these circumstances we do ask the court to order the College to pay within 14 days half of the sum which we have estimated. That would come to £17,551.80. Of course, if the sum of costs finally agreed or assessed turns out to be less than that we would undertake this opportunity to return funds.

MR JUSTICE CRANSTON: Why haven't you got an assessment?

MS MCGAHEY: Because this was listed for two days so it would not trigger a request for summary assessment. Your Lordship has dealt with it rather more briefly than I would have anticipated.

MR JUSTICE CRANSTON: I don't know whether I should take that as flattery or not.

MR BIGGS: I don't resist costs in principle as you would expect. I have concerns that I have not seen the summary assessment of costs that the defendant says has been done. That puts me in difficulties. What I can say is that the figure for costs does seem rather high in the circumstances given that there wasn't a huge amount of work done by the defendants that was apparent to us, at least. There wasn't for example detailed grounds of defence put in. The evidence that was submitted was submitted very late and it wasn't exhaustive but it certainly wasn't particularly extensive. In those circumstances, I have concerns as to the approach that has been suggested with respect to costs and I would be reluctant to endorse my learned friend's suggestion.

That said, I can't resist the matter of costs in principle. I should also say that it has always been the claimant's position that this is a one‑day case or less. My learned friend, after permission was granted, was eager to maintain a two‑day hearing. I never fully understood why that was, with great respect to my learned friend. This has always been a one‑day case so perhaps in those circumstances it was always appropriate to seek summary assessment. My client is concerned that there would be further time inevitably needed in a detailed assessment now because of the approach taken by the defendants.

MS MCGAHEY: The reason for a two‑day estimate was that I had envisaged, as it turns out wrongly, that my learned friend might wish to cross‑examine Mr Williams and in that there would be costs (Inaudible) to Mr Islam, because they did appear at the outset to be a real dispute as to what happened at the meeting on 2 October, so it was for that reason that we sought a two‑day hearing.

MR JUSTICE CRANSTON: When did that disagreement evaporate?

MS MCGAHEY: I have to say because of the service of witness statements was so late on both sides there wasn't any time for anyone to give notice in advance. Mr Williams is here on the off‑chance that my learned friend, we say perfectly reasonably, we do not mind saying that we would like to cross‑examine him. But our very real concern is that this College will end up paying nothing. It will go out of business. We recognise £35,000 is an estimate. We have asked for 50 per cent at £17,000. If your Lordship were minded to order payment of £10,000 ‑ £15,000 within 14 days we would be extremely grateful to ensure the Secretary of State recovers something of his costs.

MR JUSTICE CRANSTON: What about an interim payment of £10,000 or £15,000? Do you want longer than 14 days?

MR BIGGS: I think I am going to have to turn my back in a second. All I do want to say at this stage is that I never once sought to cross‑examine the defendant's witness. My understanding was my learned friend did want to cross‑examine the claimant's witnesses. If I could turn my back. (Pause)

My Lord, my instructions are to accede to the suggestion that a third of the suggested costs be paid on account so long as my clients can have 28 days to make payment. A third of the total estimated costs by way of payment on account of detailed assessment is the usual practice; certainly 50 per cent is a little high. In the circumstances, given the concerns that I have raised, and given that financial situation of the College, in my submission that's a proportionate way to move forward.

MS MCGAHEY: I'm grateful, my Lord. In that case I would ask for an order that the College pays £11,500 within 28 days.

MR JUSTICE CRANSTON: Thank you. Anything more?

MR BIGGS: My Lord, no.

MR JUSTICE CRANSTON: Thank you very much.