Knot Builders Limited, R (on the application of) v Construction Industry Training Board

A + B - C

For grant categories (b), (c) and (e):

The principles in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12 were well-established. The Defendant’s reliance upon the temporal restriction imposed by the second paragraph of the 2015/16 grant terms and conditions had constituted an unlawful fetter of its discretion, in the unusual circumstances of this case. In R (Behary and Ullah) v Secretary of State for the Home Department [2016] EWCA Civ 702, Burnett LJ had held that, even where a request to depart from a policy had not been made, there might be cases ‘where the facts are so striking that, it would be irrational in a public law sense not to consider the grant of leave outside the rules, or at least seek clarification from the applicant whether he was seeking such leave’. Here, the temporal restriction had been directed towards new entrants to the construction industry, and not to a situation in which the Defendant had registered and assessed a company many years after it had commenced business. On its face, the decision letter had indicated that the terms and conditions had simply been applied as a rule, without consideration of whether it had been fair or appropriate to depart from them, a matter accepted by the Defendant, in its amended detailed grounds of resistance. The Defendant had contended, first, that the Claimant had not requested a departure from the policy. That contention was wrong; the application for grant had made clear that a claim was being made for 2015/16, and had included a request for departures from the strict terms to the extent necessary. Inherent in such a claim had been the contention that the Claimant was eligible to make it. Secondly, the Defendant had recognised the unusual circumstances of the case, and had waived key provisions of the terms and conditions, in particular the so-called ‘gateway conditions’, whereby (a) the claim ought to have been made within a specified timeframe within which (b) a completed levy return had been submitted and (c) an assessed levy had been paid, or an appropriate direct debit arrangement agreed. The Defendant ought to have adopted a similar approach to the waiver of the temporal restriction, and, at least, rationally considered making such a departure. There were compelling reasons for departing from the terms and conditions. The Defendant had delayed registering the Claimant between September 2014 (when the Claimant had first raised the issue of its liability to a levy), and 1 April 2015 (the “cut off” date by which the Claimant had to be registered under the temporal condition for full eligibility in the 2015/16 grant year). The Defendant ought to have registered the Claimant in accordance with its statutory obligations and could not now rely upon its failure to do so in order to justify refusing the grant. That was because the Defendant had a statutory duty to assess the amount of levy from all in-scope entities, even in cases in which the levy was new. On the Defendant’s own case, the Claimant had been in scope from at least 2010 until 25 March 2018 and its business model had not changed. The Defendant had, therefore, been under a duty to assess (at nil) the quantum of levy owed in the years prior to the third levy period of the 2015 Levy Order and to have carried out the required internal administrative step (registration) in order to do so. A pre-action protocol letter, dated 23 March 2015 (predating the ‘cut off’ date by eight days), had prompted the Defendant to ‘consider… whether or not, the Claimant should be registered for levy’. Had the Defendant complied with its statutory duties, the Claimant would have been registered years before the ‘cut-off’ for the 2015/16 grant year and the temporal restriction would not have applied to prevent a grant in that year, a matter which appeared to have been conceded by the decision-maker, in his evidence in these proceedings. It was irrational for the Defendant to refuse to depart from the temporal condition, when its application had arisen through the Defendant’s own breach of statutory duty. Nor could the Defendant exculpate itself by seeking to rely upon the Claimant’s former position that it was not liable to levy. In breach of its statutory duty, it (the Defendant) had failed to reconsider its own position, despite a relevant decision of the Court of Appeal: CITB v Beacon Roofing Limited [2011] EWCA Civ 1203. Its reliance upon the Claimant’s prior submissions regarding liability to levy were equally misplaced; as the decision-maker accepted, it was for the Defendant, and not the Claimant, to decide whether an entity was liable to levy. Nor was the Defendant’s reliance in its pleaded case upon the policy rationale said to underpin the temporal restriction warranted, or its stated concern, regarding a ‘mismatch’ which ‘would risk undermining the viability of the grant scheme and levy’. The Defendant had since changed its policy to remove the waiting period from the date of registration, as evident from the 2019/20 and 2022/23 terms and conditions. The risk of any future mismatch was not, in practice, a concern. The financial viability of the Defendant would not be undermined. As evident from its annual report and accounts, it had very substantial cash reserves. Indeed, were levy to be payable without a grant, the Defendant would enjoy an unexpected windfall. In any event, there was no risk of a mismatch. The Defendant accepted that grant was offset against levy. Were the Claimant to succeed in its claim, its grant would be offset against its levy liability. The change in levy calculation meant that, for the first time, the full levy liability had been pushed down the chain of contractors onto the Claimant. That change alone sufficed to call for consideration of whether to depart from the terms and conditions. It had been unlawful for the Defendant not to have considered departing from the terms and conditions or, at least, to have sought clarification from the Claimant as to whether it was asking the Defendant to do so.

Secondly, the Claimant had a legitimate expectation of eligibility in the grant year 2015/16, founded upon the assurance given by counsel for the Defendant, at a permission hearing before Kenneth Parker J, on 8 October 2015, in the course of the Claimant’s challenge to the lawfulness of the 2015 Levy Order. The note of that assurance, taken by the Claimant’s then solicitors, had been accepted by the Defendant as being materially accurate:

The assurances noted were clear, unambiguous and devoid of relevant qualification, stating in no uncertain terms that the Claimant would be entitled to grant, and that there was nothing which prevented it from benefiting from grants, in relation to the 2015 grant terms and conditions which formed the basis of refusal in the relevant grant year. It would be unfair to allow the Defendant to depart from the legitimate expectation; indeed, the availability of the grant had been advanced by counsel for the Defendant as a reason why it was proper that the Claimant should now be subject to levy. The Claimant’s expectation, based upon the Defendant’s assurances, was that grant would be available in the event that it were obliged to pay levy. No doubt that was why the Defendant had waived the requirements for levy applications (the so-called ‘gateway’ conditions). Clearly, it had recognised that levy and grant needed to be considered together, and that it had assured the court that that would occur.

Contrary to the Defendant’s pleaded position, the representation had not been merely a promise that the Claimant would, in principle, be entitled to apply for grants, with no assurance that any such application would be determined on its merits and absent consideration of any applicable exclusions. The terms and conditions under consideration had been those which were now said to exclude entitlement, and yet the response had been that there was ‘nothing’ which would prevent the Claimant from receiving grants. Nevertheless, in a later e-mail, dated 31 May 2017, the Defendant had resiled from any legitimate expectation which it had created. That merely served to highlight the unfairness of permitting such an approach. The Claimant had been clear from, at the latest, 2015 that, if it were found to be within scope of the levy, it would apply for grant. It had been precisely for that reason that assurances had been given to the court. Sensibly, pending the outcome of the earlier litigation, no application for grant had been made, because the issue would not arise were there to be no levy liability. In these proceedings, the Defendant not only relied upon its failure to have carried out its statutory duties, but attempted to escape assurances given in open court as to the approach to be adopted. It could not fairly have it both ways. Counsel’s submission had been made on behalf, and on the instructions, of his client. In so far as the Defendant had sought to rely on immunity in judicial proceedings, the prohibition on collateral attacks, and/or exclusion of a duty of care in connection with the conduct of litigation, such reliance was misplaced. Immunity was not engaged; the question here was whether it was lawful for the Defendant to resile from its publicly stated position that a grant would be available if the Claimant were subject to levy. The purpose of the principle was to hold a public body to its position, consistent with the requirements of fairness. There had been no collateral attack on the judgment of the High Court, which had subsequently found the 2015 Levy Order to have been lawful. In these proceedings, the challenge was to the decision to refuse grant, and the assurances on which reliance was placed had been given in the course of argument in the earlier proceedings. The existence, or otherwise, of a duty of care was irrelevant as a matter of public law; the courts frequently found a legitimate expectation to have been generated in circumstances in which no duty of care could have arisen in tort.

Ground Two

The Defendant had applied a ‘Tripartite Requirement’, whereby it was incumbent upon the Claimant to identify the need for training; organise it; and pay for it, for the 2015/16, and 2016/17 grant years, notwithstanding its acceptance that no such requirement was to be found in the terms and conditions applicable to those years. The Claimant was entitled to have its claim for grant decided by reference to the Defendant’s published policy, such that there had been no lawful basis upon which the Tripartite Requirement had been applied for the two years in question. The Defendant’s contention that that requirement was, and always had been, part of the policy and had been omitted due to an administrative oversight, did not assist it, in constituting an apparent acceptance that it had operated a secret, unpublished policy, the application of which, per Lumba, was unlawful. It was no answer to say that notice had been given in solicitors’ correspondence that the grant would be assessed by reference to the Tripartite Requirement; that letter had been sent after the end of the 2016/17 grant year and could not fairly be deployed to narrow the scheme after the event. It had constituted no more than advance warning of the Defendant’s intention unlawfully to apply a previously secret policy. In any event, the Defendant had retreated from its position by letter dated 5 March 2018. Nor was it an answer to assert that the Tripartite Requirement had in fact reflected the policy adopted throughout the relevant period. The Defendant’s pleaded case that its Training and Development Plan rules (‘the TDP Rules’) themselves contained the Tripartite Requirement could not assist it either; those rules had not been mentioned in the decision letter, other than in connection with the Defendant’s decision to the effect that the Claimant was, in principle, entitled to a grant for new starter inductions. Furthermore, the decision letter had indicated that those rules were only generally taken into account when determining grant claims. In any event, the TDP Rules did not themselves contain the Tripartite Requirement; they simply provided that the construction firm should have ‘paid the cost of the training’. In fact, the Claimant had paid that cost by paying the contractor for the period over which training had occurred. As the TDP Rules noted, the cost of ‘instructors and presenters’ and of ‘delivering the training’ could not be claimed. Secondly, the point could only apply to training within the scope of the TDP Rules, and thus, at most, could relate to category (b), but not to the other grant claims. Furthermore, it was apparent from the Defendant’s evidence that the change of policy was not an administrative oversight, a contention which was innately highly unlikely.

In any event, the Claimant had had a legitimate expectation, following the removal of the Tripartite Requirement from the policy rules, that it would not be imposed. If its imposition had been legitimate, it had been met by means of the Claimant’s ‘interlocking contracts’, with its clients and operatives. Under its standard form terms and conditions with its clients, the clients accepted all responsibilities under all applicable health and safety legislation in relation to the operatives’ engagement (which would include training). Under the standard form contract with its operatives, the latter were ‘to comply with the requirement stated in the client’s health and safety policy and those regulations enforced by the Health and Safety Executive.’ When attending required training, operatives were paid by the Claimant at the rate agreed with the relevant client. The issue was the proper construction of the policy, being a matter of law. The Defendant’s suggestion that the Tripartite Requirement was not satisfied because any training was carried out by its clients would lead to the perverse result that no-one would receive grants for the training provided to the Claimant’s operatives during the relevant grant years. That would be to undermine the purpose of promoting training in the construction industry and would lead to the Defendant enjoying a significant windfall, contrary to the purposes of the statutory regime.

Ground Three

Absent objective justification, it was irrational and unlawful for the Defendant to treat the Claimant differently from, and less favourably than, other firms in a materially similar position. It was clear from the Claimant’s evidence that other levy payers, which, like the Claimant, had made retrospective grant applications, had received ‘exceptional training grant’ (‘ETG’), equivalent to a supplementary payment, in as much as both were based upon timely payment of the levy and were, therefore, analogous and materially similar.

On the subject of relief, the Defendant’s position was that the possibility that it might have to pay a grant in relation to three grant years, whilst receiving levy in relation only to one, rendered it highly likely that a retrospective grant application would not be permitted, if remitted. Such an approach would be for the improper purpose of mitigating the Defendant’s own financial liability and put the Defendant’s case too high in relation to the second and third grant years. Whilst the Claimant did not submit that the absence of a levy for the later periods could not be taken into account, it did contend that there were arguments as to fairness and propriety to which the Defendant would need to have regard before taking its decision. In the alternative, there were ‘exceptional circumstances’ as there had yet to be any final determination of the quantum of any grant payable, such that the Defendant’s apprehension that it might pay out in grant more than it would receive in levy had yet to eventuate. It would be fair and appropriate to allow a quantum assessment to take place before any decision to refuse relief was taken.

‘The date from which we consider Hudson to be a ‘Levy payer’ is 17/02/16, however we have not received a 2016 Levy Return and the No Levy No Grant rule has been triggered. Hudson have therefore forfeit their right to claim Grants for the 2016/17 Grant Scheme year.’

Ms Beale explained that the Claimant would be eligible for Apprentice Grant from 1 August 2014, and for all other grants from 1 August 2016. She had been thanked by the Claimant for her clarification, by e-mail dated 1 June 2017.

‘Employers newly registered between 1 April 2015 and 31 March 2016 will be eligible to claim new entrant and apprenticeship grants from 1 August 2014 and all other grants from 1 August 2016. This is because their first year of liability will be based on their 2016 Levy Return and the levy liability will not be assessed until spring 2017.’

The criteria to be satisfied before a grant claim could be processed and paid had also been set out in the policy:

‘A Supplementary Payment of 10% is added to all Grants claimed by employers who are paying a Levy to CITB. To receive the Supplementary Payment, the following conditions must be met by 31 July 2015

a correctly completed 2014 Levy Return has been received that requires you to pay an assessment to CITB

this assessment has been paid in full or being paid by Direct Debit instalments

your correctly completed 2015 Levy Return has been received.’

‘It will not generally be appropriate for grant to be paid to an employer in respect of training that has been identified, organised and paid for by others (i.e. where the financial burden has been met by others), since this will not serve the purpose of encouraging training.’

It had also made reference to the need for compliance with the TDP Rules.

It was important to keep in mind the purpose of the legislative framework. It was accepted that the Defendant had a duty to assess those who had been identified as employers in the industry, but none of the Articles within the 2015 Levy Order addressed the prior question of how the Defendant was to determine whether an entity fell within that description. The register was simply its administrative list of those which it considered to do so. The legislation did not create any workable abstract test as to when proactive registration by the Defendant was required. Inherent in the Claimant’s case was a recognition of the absence of any legal duty beyond those required by ordinary public law principles, and the point in time at which the duty was said to have arisen had not been identified. In fact, the Defendant having previously accepted the Claimant’s position that it was not an employer in the industry, the critical change had come in 2015, with the Claimant’s apparent acceptance that it was, or might be, an employer in the industry, on which rational basis the Defendant had examined its earlier decision not to register the Claimant as such. In any event, the instant claim was concerned not with the breach of the ITA and/or the 2015 Levy Order per se, but with whether there had been a public law error in the Defendant’s decision. Recognising that registration conferred potential collateral benefits in connection with any application for grant, its purpose was to maximise levy return. There was no public law duty to pay grant to a particular entity and it could not be known at the time of registration whether a grant would in fact be payable.

The condition in the 2015/16 policy that an employer which was “newly registered” between 1 April 2015 and 31 March 2016 was not eligible to claim grants (other than new entrant and apprenticeship grants) until 1 August 2016 was unambiguous and applied to the Claimant, which had not been registered (and, then against its will) until 29 February 2016. The rationale for that condition appeared on the face of the policy: the first year of liability would be based on the 2016 levy return and the amount of levy liability would not be assessed until Spring 2017. That was a requirement of the policy because, as the policy explained, the grant scheme was conditional upon the levy received: when an employer paid levy for the first time, its payment did not align with the year and the levy income from which a grant would be paid, and so there would be a mismatch which would risk undermining the viability of the grant scheme and the levy. The Claimant’s challenge ran contrary to the principles in Suffolk Coastal District Council v Hopkins Homes [2017] UKSC 37 — the court should respect the Defendant’s expertise and refrain from undue interference. A clear distinction was to be drawn between ‘issues of interpretation of policy, appropriate for judicial analysis, and issues of judgement in the application of that policy’ [26]. A challenge to the Defendant’s judgment could only succeed, if it surmounted the irrationality threshold. The Defendant had not considered whether to depart from the policy, having not been asked to do so in the manner now submitted. The Claimant had not set out any fact or circumstance which was said to justify, even implicitly, such a departure. That was the more surprising given that the application had been made to Ms Beale who had made express reference to the relevant provision and its effect in her letter of 31 May 2017. The rule against the fettering of discretion did not oblige a public authority to consider departing from the terms of its policy in the absence of a request, indeed an express request, to do so. In R (AB) v Secretary of State for the Home Department [2018] EWCA Civ 383, Leggatt LJ had held [48] (with emphasis added) that:

In all the circumstances, the Defendant had not acted irrationally in applying the terms of the policy to the Claimant; indeed, in the context of the Claimant’s behaviour throughout it would have been irrational to have adopted an approach to the stewardship of public funds by acting otherwise.

The asserted legitimate expectation said to have been created by the oral submissions of the Defendant’s then counsel in the course of an oral permission hearing before Kenneth Parker J on 8 October 2015, was not sustainable in fact, law or principle. The note of counsel’s submissions fell a long way short of the requirement that a representation be clear, unambiguous and devoid of relevant qualification: Re Finucane [2019] UKSC 7. Counsel’s submissions had done no more than explain, before the Claimant had been registered and assessed, that the Claimant would be entitled, in principle, to apply for grants, as indeed was the case. Under the policy, the Claimant had been entitled to apply for new entrant and apprenticeship grants from 2014 (but had made no such application) and all other grants from 2016. By its decision, the Defendant had accepted that certain types of grant were, in principle, available to the Claimant, were the application to be appropriately evidenced. Counsel had not represented, clearly or otherwise, that the Claimant would be entitled to all grants for which it applied, or that the policy meant anything other than the Claimant now accepted it to mean. It was difficult to understand how the Claimant could sensibly maintain that it had had a legitimate expectation that the policy meant something other than its plain wording had stated. Nor had the position on grant been relevant to any issue which had been before the court: whether or not a person may recover grant is irrelevant to whether they are liable to levy: Gibbon Equipment Hire Ltd v Construction Industry Training Board [2001] EWHC Admin 954 at [14]-[15], per Keith J.

Further, by Ms Beale’s email of 31 May 2017, the Defendant had resiled from any legitimate expectation which had arisen from counsel’s submission. That e-mail had been sent in light of the way in which registration of the Claimant had come about and its timing; the nature of any proposed grant application; and the Claimant’s resolute refusal to contemplate the payment of levy. As Lord Kerr had held in Re Finucane [76], ‘provided a bona fide decision is taken on genuine policy grounds not to adhere to the original undertaking, it will be difficult for a person who holds a legitimate expectation to enforce compliance with it.’ There was no reason why it would be unfair to rely upon Ms Beale’s e-mail, which unlike the observations of counsel, had been sent in the context of a consideration of the Claimant’s wish to apply for grant, some three years prior to any application being made, and had not been disputed by the Claimant at the time. There had been no suggestion of reliance by the Claimant on the earlier purported expectation.

The Claimant had cited no authority for the proposition that a legitimate expectation could be generated by an oral submission of counsel in the course of a hearing in different proceedings. Such a claim was inconsistent with the broad scope of the absolute judicial proceedings immunity; the prohibition on collateral attacks on decided cases; the rule in Hollington v Hewthorn [1943] KB 587, that findings of fact in one case are not admissible to prove them in another; and the exclusion of a duty of care arising in relation to the conduct of litigation. None of those principles was directly applicable, but the policy of the law which underlay them was; that the courts generally restrict an ability to rely on previous proceedings and are reluctant to impose any civil liability arising from their conduct. Doubtless, that explained why the Claimant could cite no authority in which a legitimate expectation had been said, or even alleged, to have arisen from the submissions of counsel in the course of litigation.

Even if the Claimant were to succeed on ground one, it would need also to succeed on ground two for the claim in respect of the 2015/16 policy to have any material effect.

Ground Two

It was common ground that the Tripartite Requirement did apply in the 2017/18 policy. Dealing, first, with the Claimant’s assertion that it met that requirement, whilst the interpretation of the policy was a matter for the court, its application was a matter of judgement for the Defendant, with which the court should be slow to interfere. Thus, it was for the Claimant to show that the Defendant’s conclusion that the test had not been satisfied had been irrational. In neither of the standard form contracts on which the Claimant relied had there been any mention of training. Generic references to health and safety obligations and policies might encompass some concept of training, but neither the Claimant nor the Defendant had any idea whether that was so. The requirements of health and safety law were context-specific and were not within the Claimant’s knowledge or control. It had not suggested that it audited the limited contractual obligations which it had imposed. The Claimant had no knowledge of, or entitlement to know, the training which had been carried out, its content, or quality. The position was not akin to a construction entity which sub-contracted the delivery of its training to a specialist provider, not least because such an entity would have made a conscious choice as to the training which it wished to be provided and the identity of the provider. The Defendant would expect to pay grant in relation to the costs of such an arrangement. In previous proceedings, the Claimant had specifically disavowed any relationship with training, yet, in these proceedings, it had adopted a volte-face, without any explanation for the inconsistency. It had not organised or approved any training itself, nor turned its mind to whether or not training had been carried out. It received a flat rate of £15 per operative per week, whether or not that operative had undertaken any training during that week, or in any other. That ‘cost’ was unrelated to training. It had no record of training, had produced no adequate or complete training plan, and could not provide any relevant documentation. No evidence of a nature which the Defendant would ordinarily have expected to see had been provided. In that context, it could not be said that paying grant to the Claimant for any training, which might or might not have been arranged by its clients, or by its operatives on their own initiative, could serve or further the statutory purpose of encouraging adequate training of those employed in the construction industry. The evidence demonstrated that the Claimant had not identified the need for training in any material way, had not organised any training, and had not met the cost of training, the application of which test was a question of judgement for the Defendant, which expected some close degree of connection between the cost of training and it being met, at least in the first instance, by the employer claiming grant. The Defendant had been entitled – and, if necessary, right, as a matter of law — to conclude that the Claimant had not satisfied the Tripartite Requirement. The Claimant had objected that the result of that was that it would pay the levy, but that its clients (who were likely to meet the Tripartite Requirement, but who were not liable to levy for the Claimant’s operatives) could not claim the grant either, such that the Defendant would enjoy a windfall. In one sense, that was true (albeit limited to one year of levy liability and a sum of money which the Defendant had never received and which the Claimant had now acknowledged that it lacked the ability to pay), but the answer to that concern had always been in the gift of the Claimant, which had itself decided how to structure (and re-structure) its business; the terms of its standard contracts; and not to engage in the provision of training to those for whom it had adopted the employment and tax status risks. The Claimant could have involved itself in training so as to meet the Tripartite Requirement, and could do so in future. That it had chosen not to do so, and to focus on seeking to avoid levy liability, was a matter about which it could not now be heard to complain.

In relation to policy years 2015/16 (subject to ground one) and 2016/17, the Defendant had not applied a test of which the Claimant had been unaware, or which had been inconsistent with the published policies. In October 2017, the Defendant’s solicitors had made clear that any application for grant would be assessed by reference to the Tripartite Requirement, including for those years in which that requirement did not appear on the face of the policy, explaining that the omission had been one of oversight. The Claimant had been on notice of the test which the Defendant would apply and able to address the application of that test to its case. It had done so in its application. None of the legal principles relating to the application of secret policies applied in that context. It was no answer to assert that the relevant notification had been given after the end of the grant year where the application had been made retrospectively, years after the event, and there had been no suggestion that the Claimant had organised its conduct in any way in reliance upon the terms of the policies (a matter of no surprise, given that, primarily, it had structured itself so as to seek to avoid any levy). The application of the Tripartite Requirement had been consistent with the wider terms of the policies. Indeed, on the Claimant’s case, there would have been no applicable control test of any form. It was, in that context, relevant that the test remained embedded in the TDP Rules, as then applicable, and against which the application would have fallen to be assessed, had it progressed to that stage. Thus, even if the application had been accepted on the basis that the Tripartite Requirement did not apply generally to all types of grant claim, it would still have been applicable on the basis that most of the heads of grant claimed would have been subject to the TDP Rules. That reflected the consistency of the Defendant’s position as conveyed in October 2017 and would be relevant were the matter to be remitted for fresh consideration. It also reflected the approach in fact adopted by the Defendant throughout the relevant period. There had been no legitimate expectation created by the alteration of the 2015/16 and 2016/17 terms and conditions. The Defendant’s evidence was clear that the omission had been an administrative oversight and not the subject of instruction or approval by the Defendant. In the circumstances, and in any event, there had been no sufficiently clear and unambiguous representation made by the Defendant that the established test had not continued to apply, and, presumably, that no test would apply in its place. The claimed expectation could not be legitimate, and it had not been said that the Claimant had relied upon it, or conducted itself in any particular way as a result of its claimed understanding. The policies had to be read fairly, including against the background of the TDP Rules. In any event, any expectation created had been corrected and/or resiled from in the October 2017 correspondence which could have given rise to no unfairness in all the circumstances of the case. At the time at which the Claimant had made its application, it had known which test the Defendant would apply. Accordingly, the Defendant had been entitled to assess the entirety of the Claimant’s application by reference to the Tripartite Requirement, and entitled (indeed, obliged) to conclude, as a matter of fact and judgement, that the Claimant’s business model did not satisfy any of the elements of that test, still less all of them. That assessment had been for the Defendant, and was not for the court, to make.

Ground Three

In R (Gallaher Group) v Competition and Markets Authority [2019] AC 96, the Supreme Court had held that complaints of unfairness or inconsistency of treatment were not free-standing heads of judicial review and, if they were to be advanced, had to amount to irrationality. The Claimant could not meet that standard, and had not attempted to address any of the Defendant’s evidence, which was fatal to it. The Defendant had been entitled and right to conclude that the Claimant had not complied fully with the requirements regarding timely levy assessment and payment, and that to have awarded a supplementary payment would have been to undermine the purpose of the latter. The evidence of different cases in which the Defendant had, as part of a settlement of a levy dispute, permitted a levy payer retrospectively to recover a different ETG was not on point. The two forms of grant were not the same. An ETG had been used to distribute surplus levy funds, in two specific years (2012/13 and 2013/14) irrelevant to this claim. Supplementary payment was paid regardless of any surplus held by the Defendant and had been generally maintained under the policy. ETG did not afford a relevant analogy, nor one which could surmount an irrationality hurdle, and it was noteworthy that the Claimant’s evidence had made no candid reference to the fact that, in the case upon which it relied, in which ETG had been granted retrospectively, the Defendant had refused a request for retrospective supplementary payment. There had been no instance in which the latter had been granted retrospectively in circumstances remotely analogous to those of the Claimant. Furthermore, on its own terms, supplementary payment was calculated as a percentage of other grants paid, such that, in the Claimant’s case, there was nothing to which it could attach. There had been no irrational less favourable treatment of the Claimant.

The Claimant’s application for grant had related to the three years in which the Defendant had assessed it as liable to levy and issued levy assessment notices in significant sums. In accordance with the Defendant’s decision of 21 December 2020, the Claimant was not liable for levy for the second and third of those years and the two relevant levy assessment notices had been withdrawn. That had resulted from restructuring decisions of which the Claimant had first notified the Defendant on 10 November 2020 (the day after permission to appeal against its levy assessment had been refused by the Supreme Court). The Defendant’s assumption had been that the application for grant in connection with those two years, and its pursuit through this claim, would fall away. In fact, it had been maintained, with the Claimant seeking some £17 million in grant in respect of two years in which it was not liable to levy as a result of its own, deliberate steps, whilst simultaneously maintaining that the Defendant would obtain a windfall if the Claimant could not obtain grant.

There was no dispute that the Defendant had been unaware of the above change in position when taking its original decision, and when filing its Summary Grounds of Resistance. The Claimant had made no reference to its restructures and their effect on levy liability in its claim or accompanying evidence. They had not been addressed in the Claimant’s evidence in reply. There had been no explanation as to why the Claimant had first provided any detailed account of its restructures and their intended effect on levy liability only on 20 November 2020. In that, unusual, situation, the Court was entitled to consider, and the Defendant to provide, evidence as to how the application would have been approached had the true position been set out by the Claimant at the relevant time. Given that the Defendant had only considered the retrospective application as an exceptional exercise of its discretion, it was unsurprising that its unequivocal evidence was that it would not have exercised that discretion to consider the application for grant in respect of 2016/17 and 2017/18, where the Claimant was out of scope for levy entirely for the equivalent levy periods. The logic, rationality and lawfulness of the reasons given by the Defendant were unimpeachable. Any other approach would have operated to undermine the purpose of the policy.

Accordingly, even if grounds two or three were made out in any respect in connection with the application for 2016/17 and 2017/18, the court ought to refuse to grant any relief because it was (at least) highly likely that the outcome for the Claimant would not have been substantially different, if the conduct complained of had not occurred. The Claimant’s argument that it was registered as in-scope leviable was mere sophistry. It had, indeed, been registered to levy on the basis of the information then available to the Defendant. It had declined to engage with that registration process, maintaining that it was not liable to levy for reasons advanced in its then ongoing appeal. It had not brought to the Defendant’s attention the fact that, from 26 March 2018, it had no longer been liable to levy, on a different basis, having taken deliberate decisions to achieve that aim and, from then onwards, in its own words, had ‘simply existed to defend its position on grant and levy’. On any objective and purposive interpretation of the policies, the reference to being ‘registered as in-scope leviable’ must mean correctly registered as being in-scope leviable in law. Any other outcome would frustrate the purpose of the grant scheme: even the Claimant had not suggested that grant was available to a person who in fact was not in scope for levy. Yet, that was the outcome sought for the second and third years of its claim.

The claim ought to be dismissed and/or relief refused.

‘26. As regards the second proposition accepted by Mr Beloff, a decision-maker must follow his published policy (and not some different unpublished policy) unless there are good reasons for not doing so. The principle that policy must be consistently applied is not in doubt: see Wade and Forsyth Administrative Law, 10^th ed (2009) p 316. As it is put in De Smith's Judicial Review, 6^th ed (2007) at para 12-039:

As for the third proposition, the Court of Appeal dealt with the issue of whether there is a general rule of law that policies must be published at paras 70 to 79 of their judgment. Disagreeing with Davis J, they concluded that there is no such general rule and said that the fact that the appellants were detained pursuant to unpublished policies was not in itself a reason for holding that the decisions to detain them were unlawful. Mr Beloff did not feel able to support this conclusion. It is unfortunate that the Court of Appeal embarked on this topic at all, since it was not before them and was not, therefore, the subject of argument or citation of authority. As the point is of general importance, I need to say why in my view the judge was right and the Court of Appeal were wrong on this issue both as a matter of common law and ECHR law.

The Court of Appeal referred to a statement of Sedley LJ in R v Secretary of State for Education and Employment Ex P Begbie [2000] 1 WLR 1115, 1132C that there were "cogent objections to the operation of undisclosed policies affecting individuals' entitlements or expectations" and said at para 72 that they had no difficulty in accepting this as (no more than) a statement "of good administrative practice". They also said that the judge was wrong to rely on Sunday Times v United Kingdom (1979) 2 EHRR 245 and criticised the reasoning in Nadarajah at paras 64-67 which relied on the Sunday Times case in support of the proposition that a relevant policy is part of the law that must be accessible, so as to enable those affected by it reasonably to foresee the consequences of their actions. At para 73, they said that the relevant passage in the judgment of the ECtHR at para 49 of the judgment in the Sunday Times case is "not, as we read it, about policy as such, but is rather directed to the need for accessibility and precision, as requirements of law in the strict sense". … In short, policy is not the same as law (para 57).

…

The rule of law calls for a transparent statement by the executive of the circumstances in which the broad statutory criteria will be exercised. Just as arrest and surveillance powers need to be transparently identified through codes of practice and immigration powers need to be transparently identified through the immigration rules, so too the immigration detention powers need to be transparently identified through formulated policy statements.

The individual has a basic public law right to have his or her case considered under whatever policy the executive sees fit to adopt provided that the adopted policy is a lawful exercise of the discretion conferred by the statute: see In re Findlay [1985] AC 318, 338E. There is a correlative right to know what that currently existing policy is, so that the individual can make relevant representations in relation to it. In R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604, para 26 Lord Steyn said:

Precisely the same is true of a detention policy. Notice is required so that the individual knows the criteria that are being applied and is able to challenge an adverse decision. I would endorse the statement made by Stanley Burnton J in R (Salih) v Secretary of State for the Home Department [2003] EWHC 2273 (Admin) at para 52 that "it is in general inconsistent with the constitutional imperative that statute law be made known for the government to withhold information about its policy relating to the exercise of a power conferred by statute." At para 72 of the judgment of the Court of Appeal in the present case, this statement was distinguished on the basis that it was made "in the quite different context of the Secretary of State's decision to withhold from the individuals concerned an internal policy relating to a statutory scheme designed for their benefit". This is not a satisfactory ground of distinction. The terms of a scheme which imposes penalties or other detriments are at least as important as one which confers benefits. As Mr Fordham puts it: why should it be impermissible to keep secret a policy of compensating those who have been unlawfully detained, but permissible to keep secret a policy which prescribes the criteria for their detention in the first place?

…

The precise extent of how much detail of a policy is required to be disclosed was the subject of some debate before us. It is not practicable to attempt an exhaustive definition. It is common ground that there is no obligation to publish drafts when a policy is evolving and that there might be compelling reasons not to publish some policies, for example, where national security issues are in play. Nor is it necessary to publish details which are irrelevant to the substance of decisions made pursuant to the policy. What must, however, be published is that which a person who is affected by the operation of the policy needs to know in order to make informed and meaningful representations to the decision-maker before a decision is made.’

‘Hudson does not find labour, negotiate the financial terms on which they are engaged move labour from client to client, involve itself in the day-to- day activities of the operatives, or provide training. In practice, what we do is contract with the self-employed operatives, verify them with HMRC, make payments to them, and account for their tax deductions under the CIS. A copy of a sample contract with an operative is at page [] of the bundle. We have no control over any sites, or parts of sites, or even operatives on sites, nor do we operate any sites. Our role is simply to provide a compliance risk service to clients.’

In oral submissions, Mr Jaffey expanded his argument to contend that the cost of training was borne by the Claimant in as much as the Claimant was obliged to pay levy, at 1.25% of the hourly rate payable to the operative, for time spent in training. That, too, is misconceived; the levy is payable by virtue of the Claimant’s status as an employer in the construction industry, funding the work of the Defendant and for the benefit of the industry as a whole. It is calculated according to a formula set out in legislation. It is not itself ‘the cost of training’ and, in any event, no such contention was made to the Defendant in the Claimant’s grant application, such that it cannot be criticised for any failure to have considered it. Contrary to the Claimant’s position, the construction of the third element of the Tripartite Requirement which I find to be correct does not lead to the conclusion that no profitable firm could ever be eligible for a grant. The question is not whether the grant applicant makes a profit but whether it bears the financial burden of the training in question. The same analysis applies to the requirement in the TDP Rules that the grant applicant is obliged to have paid the costs of training.

must refuse to grant relief on an application for judicial review, and

may not make an award under subsection (4) on such an application,

if it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred.