Sabir & Ors, R (on the application of) & Anor v The Secretary of State for the Home Department

These are challenges brought by Mr Sabir and Mr Mehmood who are co-directors of a business called “Your Business Companion Limited”. They bring these claims to challenge decisions of the Secretary of State for the Home Department (the Defendant) to refuse them leave to remain as Tier 1 (Entrepreneur) Migrants under the Points-Based System in Part 6A of the Immigration Rules.

The background so far as is material can be shortly stated. The Claimants both had leave to remain in the United Kingdom as Tier 1 (Post-Study Work) migrants, which leave expired on 20^th September 2012. They both made applications on 21^st September 2012 for further leave to remain. Had they made those applications on or before 20^th September 2012, the applications would themselves have had the effect of extending their existing leave until the fresh applications had been determined. I am told that they had instructed immigration consultants to make these applications in early August 2012, but the immigration consultants negligently lodged the applications a day outside existing leave as opposed to within it. Technically, therefore, they became overstayers on 21^st September 2012, as opposed to having their leave automatically extended pending the determination of their applications for further leave to remain. However, this is not a point the Secretary of State appears to have taken against them and nothing turns on it for the purpose of these proceedings.

People are entitled to apply for leave to enter or remain as a Tier 1 (entrepreneur) Migrant if they meet the requirement to acquire a certain number of points, which criteria are set out in Appendix A to the Immigration Rules. Since the Claimants had previously been granted leave to remain in the UK as Tier 1 (Post-Study Work) migrants, they were able to apply for further leave to remain as Tier 1 (Entrepreneur) Migrants by demonstrating that they had access to a lower level of funding (£50,000) than would otherwise have been the case (£200,000). However, to acquire the requisite number of points, they also had to comply with evidential requirements to demonstrate that they were already engaged in genuine business activity in the United Kingdom, either as self-employed persons or as registered directors of a business. The evidence to be provided was set out in Appendix A (Attributes). This provided, so far as was material as follows.

Under Paragraph 41-SD (c)(iii), the Claimants were required to provide:

“one or more of the following specified documents:

(1)

Advertising or marketing material, including printouts of online advertising, that has been published locally or nationally, showing the applicants name (and the name of the business if applicable) together with the business activity;

(2)

Article(s) or online links to article(s) in a newspaper or other publication showing the applicant’s name (and the name of the business if applicable) together with the business activity;

(3)

Information from a trade fair(s) at which the applicant has had a stand or given a presentation to market his business, showing the applicant’s name (and the name of the business if applicable) together with the business activity, or

(4)

Personal registration with a trade body linked to the applicant’ occupation”.

These forms of proof were alternatives.

Under paragraph 41-SD(c)(iv), the Claimants were required to provide the following:

“one or more contracts showing trading. If a contract is not an original the applicant must sign each page of the contract. The contract must show:

(1)

the applicant’s name and the name of the business;

(2)

the service provided by the applicant’s business; and

(3)

the name of the other party or parties involved in the contract and their contact details, including their full address, postal code, landline phone number and any email address”.

The Secretary of State refused both Claimants leave to remain, by letters dated 7^th and 8^th May 2013 respectively. The basis for refusal in each case was identical, namely, that the Claimants failed to score the 25 points claimed under Appendix A (Attributes) to the Immigration Rules. They could not score the requisite number of points because they failed to meet the requirements of both paragraphs 41-SD(c)(iii) and (iv) of Appendix A.

In respect of the requirements of paragraph 41-SD(c)(iii) of Appendix A, points were not granted because, as I understood it at the hearing, the material which the Claimants had submitted with their application by way of advertising material in attempt to show that they were working did not include the nature of the business linked to the Claimant’s names. In fact, there was material in the bundle which, in combination, do link the Claimants’ names to the business and would – if they had been submitted – appear to have satisfied the requirements of paragraph 41-SD9(c)(iii)(1). Counsel for the Claimant did not appear to have full instructions on what had been submitted by the OISC representative at the relevant time, and in observations on the draft judgment (received the day before the judgment was due to be handed down, and too late for me to seek observations from counsel for the Respondent), has raised observations about what was or was not submitted. I am not in a position to decide what of the evidence in the bundle before me was submitted at the relevant time, but in any event, understood the claim to be based on a submission as to the legality of the rules. Counsel for the Claimant did not advance an argument that it had been Wednesbury unreasonable for the applications to be refused based on the Secretary of State’s own interpretation of the Immigration Rules.

In respect of the requirements of paragraph 41-SD(c)(iv), points were not granted because the document which the Claimants submitted to comply with this rule did not comply with the language of that provision. It was a contract between the company of which both Claimants were both directors, Your Business Companion Ltd, and a company called Hants Petroleum UK Limited. The contract gave Hants Petroleum’s name and physical postal address (which was mandatory), a mobile telephone number (which was not mentioned at all in the requirements of the rule) and an email address (which was mentioned in sub-paragraph 41-SD(c)(iv) but was only to be supplied in the contract if it existed – the language used was ‘email address (if any)’). However it did not also contain a landline number for Hants Petroleum (which was mandatory).

The Claimants challenge proceeds on the basis that the evidential requirements of Appendix A to the Immigration Rules were unlawful because they were irrational.

Ground 1 of the challenge relates to the evidential requirements of paragraph 41-SD(c)(iv) (hereafter the ‘contract details requirement’). Ground 2 relates to the evidential requirements of paragraph 41-SD(c)(iii) (hereafter the ‘evidence of genuine business requirement’).

A final ground of challenge, Ground 3, is an alleged failure to consider exercising the discretion (or failure to exercise the discretion) contained in rule 245AA of the Immigration Rules, which permits the Secretary of State a discretion to apply an element of evidential flexibility in certain cases.

Although he did not formally abandon it, Mr Saini did not pursue the third ground at all in his oral submissions. I can dispose of this argument straight away.

Rule 245AA applies where an applicant has submitted specified documentation, but in the wrong format. In such circumstances, the Secretary of State has a discretion under rule 245AA(d) to contact the applicant to allow him to rectify errors in the material submitted.

However, I accept that this discretion did not arise in the circumstances of this case. The problem which the Secretary of State perceived with the Claimants’ documents was not with their format (such as, for example, whether they were properly authenticated, or on headed paper), but rather that they did not contain information which, on the face of the rules, they were obliged to contain. These were substantive not formal defects.

In Akhter & Another (para 245AA: wrong format) [2014] UKUT 297 (IAC) at [18], the Upper Tribunal held that the omission of specified details such as names, phone numbers etc. from documents were material defects which did not fall within the definition of ‘the wrong format’. That case too concerned failure to specify a postal address, landline telephone number or email address.

I agree with this reasoning, and this ground of challenge must therefore fail.

The legal basis for both these grounds is the same. The Secretary of State found that the advertising material provided to evidence a genuine business in which the Claimants were controlling minds did not satisfy the evidence of trading requirements of Appendix A to the Immigration Rules, because it did not contain evidence of their names or business activity. It is not in dispute that the sole contract provided did not satisfy the client contact details requirement, because the contract provided to evidence the trading relationship with Hants Petroleum UK Limited did not contain a landline telephone number.

Rather it is said that the precise requirements of the Immigration Rules that this information be provided, in this form, are irrational. It was said that these requirements imposed unreasonable limitations on the freedom to trade, and were not rationally linked to the purposes for which the requirements of Appendix A were prescribed. My attention was drawn to the case of Shebl (Entrepreneur: proof of contracts) [2014] UKUT 216 (IAC), a reported decision of the Upper Tribunal, in which it was held that the requirement to prove the existence of ‘contracts’ in paragraph 41-SD of Appendix A to the Immigration Rules could not be construed so as to require the contracts in question to be contained in a single document, though the contracts did need to be evidenced in documentary form.

In that case, the Defendant had refused to accept purchase orders as proof that Mr Shebl’s company had entered into contracts to provide services. However, the Upper Tribunal found that the combination of Mr Shebl’s evidence and documentation which had been submitted (which included such matters as advertising and marketing information, accounts, tax documentation etc) was sufficient to prove that he had done so. The Upper Tribunal also found that the combination of purchase orders and invoices formed contracts which – looked at compendiously – met the requirements of paragraphs 41-SD(c)(1)(iv). Thus, it was said, the reasons given for finding that Mr Shebl did not meet the requirements of paragraph 245DD of the Immigration Rules were inadequate.

The Upper Tribunal held that the Immigration Rules could not be construed as requiring a contract to be evidenced in a single document. It was held that:

“the intention behind the Rules is that the claimant be able to show that he is genuinely trading. It strikes us as inconceivable that the entrepreneur route was to be confined to the types of trading in which contracts are made by single documents. Paragraph 41-SD very properly specifies that there must be documentary evidence sufficient to show genuine contracts, and containing sufficient information to enable the Secretary of State to check the matter with the other parties for the contracts if she chooses to do so. But there is a world of difference between requiring contracts to be evidenced by a properly paper trail and requiring each contract to be contained in a single document. In our judgment, the Rules require the former, but not the latter”.

Mr Saini said that the logic of the Shebl decision required me to hold that the Hants Petroleum UK Ltd contract contained the evidence of the requirement that the Claimants were genuinely trading which the Defendant was properly entitled to require: a physical address, an email address and a mobile telephone number. But, he said, the Secretary of State could not require the contract itself to contain a landline telephone number in order for points to be awarded under the relevant sub-paragraph. Likewise, the Claimants could not be punished or deprived of points merely because all relevant information was not contained in their online advertising materials. This, he said, was to set the bar unreasonably high for novice entrepreneurs and would amount to an unlawful restraint on the freedom to contract.

Mr Gullick for the Secretary of State sought to distinguish Shebl. That was a case, he said, about the proper interpretation of the evidence of ‘a contract’ in the rules, and not a case in which the court was invited to strike down or read down the content of the rules as being ultra vires. He pointed to the very wide discretion to make Immigration Rules under section 3 of the Immigration Act 1971, and said that the strictness or otherwise of evidential requirements was a matter for the Secretary of State.

The legal test to be applied was not really in dispute. Both parties accepted that an immigration rule can be condemned on common-law grounds for being unreasonable. That was described as a “well-established” rule by Simon Brown J as he then was as long ago as 1986 in R v Immigration Appeal Tribunal, ex parte Manshoora Begum [1986] Imm AR 385 at 393, relying on Kruse v Johnson [1898] 2 QB 91 at 99-100.

However, the Defendant argued that Simon Brown J had recognised that the judgment of the Lord Chief Justice in Kruse put the test for unreasonableness very high: rules in secondary legislation could only be treated as unreasonable if they were partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bath faith; if they involved such oppressive or gratuitous interference with the rights of the subject as could find no justification in the minds of reasonable men. A by-law (or, as in this case, an Immigration Rule) should not be treated as unreasonable merely because particular judges may think that it went further than prudent, necessary or convenient. That was a matter for government. He drew attention to the recent endorsement of Begum in AM (Ethiopia) v SSHD [2008] EWCA Civ 1082 at [65] and MM (Lebanon) v SSHD [2014] EWCA Civ 985 at [95]-[96] and the dicta of Beatson J as he then was in R (Chapti) v SSHD [2011] EWHC 3370, [2012] 2 All ER 653 at [146], which are reminders that the rationality threshold is a high one. He reminded me that the application of the Kruse v Johnson test to the immigration rules in MM is binding upon me.

Mr Saini did not dispute this, but says that the Wednesbury test takes colour from its context and the ambit and intention of the enabling power. He relied upon the decision of the House of Lords in Stewart v Perth & Kinross Council [2004] UKHL 16, [2004] 28 SSLP 32 In that case, a licensing committee’s decision to decline to renew a used-car dealer’s licence was said to be ultra vires the licence-making power. It unreasonably restricted the freedom to contract, and was not intended to regulate the terms of contracts made between others. Lord Hope at [26] relied on the speech of Lord Upjohn in Mixnam’s Properties Ltd v Chertsey Urban District Council [1965] AC 735 at 763 in which he said that freedom to contract is a fundamental right, and if Parliament intends to empower a third party to make conditions which regulate the terms of contracts to be made between others, then it must do so in clear terms.

Mr Gullick said that this is quite different because the statutory power in issue in the Stewart case was limited to attaching “such reasonable conditions” to licences as it saw fit. He also relied on the speech of Lord Hope in that case at [27] in which he said that legislation ought to be supported if possible, looking to the character of the body which is legislating the subject matter and the nature and extent of the authority which is given to the body to legislate in matters of this kind.

It is right to point out that Lord Hope also observed (at [28]) that the discretion which is vested in a particular body (in that case a licensing authority) is not unlimited. The scope of the phrase in issue in that case, ‘reasonable conditions’, ostensibly so wide as to include any conditions which could rationally be regarded as linked to licensing, must be ascertained from the context. The House of Lords concluded that, laudable though the aim of consumer protection was, it was intended to be approached at a national level. To impose local protection by use of licensing conditions was therefore to be treated as outside the ambit of section 2(5) of the Civic Government (Scotland) Act 1982.

The power to impose conditions governing immigration control in section 3 of the Immigration Act 1971 is a very wide one (as was recently observed in MM Lebanon). However, I do not accept that Kruse implies some notion of “extreme” irrationality: the test is the familiar Wednesbury test. The court will declare the rule itself bad for unreasonableness if, but only if, the conditions adopted in exercise of the power fall outside the rational ambit of the purpose of the power, or are partial in their operation or otherwise fall within the rubric of what Auld LJ in O’Connor v Chief Adjudication Officer [1999] 1 FLR 1200 called ‘good old Wednesbury irrationality [which] is about an extreme form for of irrationality as there is’.

In broad terms, the statutory discretion has been vested in the Defendant and it is for the Defendant to form a view on what constitutes adequate evidence of the genuineness and sufficiency of trading activity to justify the grant or denial of Tier 1 (Entrepreneur) Migrant status. It would not (for example) be for a court to castigate the requirement for a particular level of capital as irrational merely because it is higher than the individual judge might have imposed. Nor, for example, would it be for the court to interfere if it was decided that such a visa would not be granted to a person unless they could establish a particular level of trading activity. Where to draw those difficult lines is a matter for the Secretary of State.

The ambit of the power is to be deduced from the purpose for which it was given and has been exercised. As the Upper Tribunal said in Shebl, the purpose of Appendix A is to enable the Secretary of State’s officials to satisfy themselves that an applicant for leave to remain as a Tier 1 (Entrepreneur) Migrant is genuinely trading. It is, of course, essential that the Secretary of State is able to establish that an applicant for such leave to remain is genuine, and it is in principle for her to decide what constitutes sufficient evidence to satisfy her of that, unless what she requires goes so obviously beyond what could reasonably be required for that purpose as to be beyond the grounds of rationality, or requires evidence which results in arbitrary and unfair distinctions between different businesses. The Secretary of State said that this was a wider statutory discretion than that in play in Stewart and it was not for the court to second-guess the Secretary of State’s judgment as to what constituted sufficient evidence of genuine trading.

I accept that argument in principle. The question is whether the rules in play in the present case go beyond what could rationally be regarded as necessary or appropriate for that statutory purpose.

The Secretary of State requires some form of material to show that a business is genuine and that the person conducting it and seeking entrepreneur status on the basis of doing so, is genuinely linked to that business. There is clearly a range of reasonable approaches to what the Secretary of State may require to satisfy herself of these matters.

In my judgment, the evidential requirements of paragraph 41-SD(c)(iii) cannot be said to go beyond that which the Secretary of State may legitimately require for this purpose. That paragraph provides a range of types of evidence which can be provided to demonstrate these matters. One satisfactory form of proof is marketing material containing sufficient evidence of the genuineness of the business and of the entrepreneur’s link to it. Marketing materials, which are within the applicant’s own control, can reasonably be expected to explain (as required) what the business is, the business name and to demonstrate the link between the applicant or applicants and the business. This does not require all the material to be on one website. (For example, a website which showed what the business did, with its name, and business cards which showed the Claimants held themselves out as directors of the business may, in combination, have been sufficient to satisfy this criterion). I do not see a basis for saying that the requirements of the rule were in any way irrational. Accordingly, the challenge to the rationality of the evidence of genuine business requirement, which forms Ground 2 of this application for judicial review must fail.

In the light of my decision on Ground 2, any observations on Ground 1 are strictly obiter. Since the Claimants needed the points attainable under both paragraphs 41-SD(c)(iii) and (iv), the failure of the challenge to the evidence of genuine business requirement means that the applications for Tier 1 (Entrepreneur) Migrant status would have failed in any event, and the application to quash the refusals must also fail.

That makes it unnecessary for me to reach a view on Ground 1 of the application for judicial review, namely, whether the requirement for a contract or contracts with details including a landline was ultra vires. I found this a difficult point to decide, and had it been necessary for me to do so, I would have been disposed to find on this issue for the Claimants.

I accept, on the basis of the observations of the Upper Tribunal in Shebl that the Secretary of State is entitled to require evidence of genuine trading, and must be entitled to require sufficient details of genuine contract or contracts to make enquiries if she wishes to do so. I accept that she has a wide discretion as to the means of doing this. I see the sense of requiring a physical address for such a client, to enable the genuineness of its existence to be checked easily if required. I see the sense of requiring some other form of ascertainable contact details.

However, I also accept the Claimants’ argument that by making an absolute requirement that the client business must have a landline telephone and must contain details of it in the contractual documentation in order for that documentation to ‘count’ as proof of genuine trading, the Secretary of State has created an evidential rule which is partial between those who contract with a business which happens to have a landline (but need not have any mobile telephone or email details) and those who contract with a business which happens to have only a mobile telephone, (though also email details) or where the landline details can be supplied but are not included in the contractual documentation itself. I see no rational justification for that distinction. To require one form of link (email address) only if it exists, but to reject a potentially very large contract as proof of genuine trading on the happenstance that the client business has chosen to operate using only mobile and not landline telephones would seem to me to go further than can be regarded as reasonable to secure the genuineness requirement, and to introduce a partiality between different applicants which is not explained or justified by the ostensible objective of the rule. No evidence has been put in to explain the rationale for an absolute requirement that for evidence of a contract with a client business to be accepted as proof of genuineness, the client business must both have a landline and include it in contractual documentation; whereas a contract with an otherwise identical client business would be regarded as proof of a genuine trading relationship provided it had a landline telephone number, even if it does not have a website or email address at all, and even if it does not have any mobile contact telephone numbers.

Had Ground 1 of the application been sufficient on its own to form a basis for quashing the Defendant’s decisions, I would have found for the Claimants on that basis and ordered accordingly. To have the decision quashed, however, these Claimants needed to succeed on both Grounds 1 and 2. Accordingly, this application for judicial review must be dismissed.

As indicated at the hearing, the form of order and consequential matters can be dealt with in writing.