FS v The Secretary of State for the Home Department

The appellant, a citizen of Turkey, appealed to the Tribunal against the decision of the Secretary of State on 21 August 2007 refusing to vary her leave in order to allow her to remain in the United Kingdom as a self-employed business person. The Immigration Judge dismissed the appeal. The appellant sought and obtained an order for reconsideration. Thus the matter comes before us.

The appellant’s claim is based on the terms of the EC-Turkey Association agreement of September 12 1963, usually known as the “Ankara Agreement”. The terms of the Agreement have been the subject of a number of recent decisions of the courts, including R (Tum and Dari) v SSHD, reference C-16/05 in the European Court of Justice and SS and others [2006] UKAIT 00074 in this Tribunal. For present purposes it is sufficient to say that the purpose of the Ankara Agreement was to promote a move towards the abolition of restrictions on freedom of establishment and freedom to provide services by those who wished to move between Turkey and the European community as it was at the date of the agreement. Article 41.1 of the Additional Protocol to the Agreement prohibits the introduction of new national restrictions less favourable than those in force at the relevant date. In the case of the United Kingdom, the relevant date is the date of the United Kingdom’s accession to the European community, that is to say 1 January 1973. Thus, in a case to which the Ankara Agreement applies, an applicant is entitled to have his claim assessed on the basis of rules which are no more restrictive than those in effect on that date. The Immigration Rules in effect on that date were HC 509 for control on entry and HC 510 for control after entry, both of 1972. Those rules permit “switching”, that is to say securing an extension of leave for a purpose different from that for which leave to enter the United Kingdom was obtained, in a wider range of cases than under the present Rules, HC 395. In this respect the present Rules are more restrictive than the Rules enforced on 1 January 1973, and it is common ground between the parties that the appellant is entitled to rely on the earlier Rules.

On 13 January 2007 the appellant was admitted to the United Kingdom with leave until 10 July 2007. The present application was made under cover of a letter dated 11 June 2007, that is to say within the currency of her leave. It was an application for an extension of leave as a self-employed person, under the provisions of para 21 of HC 510, of which we set out the relevant parts below. The application was accompanied by documentation relating to the appellant’s business as a cleaner. The application was refused because the Secretary of State was not satisfied that the appellant would really be self-employed, rather than working at the behest of others. The Secretary of State was also not satisfied that the appellant would genuinely be devoting assets of her own to the business and regarded other aspects of the application as lacking in credibility. Thus the application was refused.

Before the Immigration Judge the appellant attempted to prove that her business was one which entitled her to the benefits of para 21 of HC 510. We need to set out in some detail the evidence upon which she relied.

The most substantial document is a business plan prepared by accountants. It shows a cash flow forecast for the period of April 2007 to March 2008 and projected income of £10,671 for the same period. It is fair to say that it is calculated, no doubt with an eye to tax liability, after deduction of £100 per week for the “overhead expense” of the use of her home as an office. This is a projection, therefore, of a real income not far short of £300 per week. There are bills for advertising, dated April 2007, and a letter relating to the arrangements of a telephone line for the business, dated 12 February 2007. On 27 March 2007 HM Revenue and Customs wrote to the appellant indicating that from material available to them they believed that the appellant should be completing tax returns each year. There is a form submitted to HM Revenue and Customs indicating that the appellant started working for herself on 6 April 2007. On 17 April 2007 HM Revenue and Customs wrote to the appellant to thank her for telling them that she had begun self-employment. On 2 May 2007 the appellant took out business insurance under the name of her business. Advertising material issued in that name shows that there was a subscription to a number which perspective customers could call without charge. There was also a certain amount of financial information relating to the currency of the business, including a receipt for the purchase of cleaning materials on 20 April 2007, the total amount being £198.20. The appellant said in oral evidence that she had begun trading in June 2007 and indicated that her income was, by the date of the hearing, about £180 per week.

The Immigration Judge’s conclusion was that the appellant had dressed up what was really employment as a cleaner to make it look as though it were a cleaning business. In reaching that conclusion he took into account the minimal level of the appellant’s expenditure, and the fact that she had been somewhat disingenuous in claiming that her work came mostly from advertisements. He said:

“It is right to say that there is nothing in HC 510 which prevents a very small scale business from coming within the rule but applying the rule as best I can it seems to me that this kind of operation with its absence of assets and liabilities does not fall within the exemption granted for business people.”

He therefore dismissed the appeal.

The grounds for reconsideration argue that para 21 of HC 510 does not impose any restriction on the size of the business. The Immigration Judge had made certain findings to the effect that the appellant was self-employed; he ought to have followed those through and concluded that she was entitled to the benefits of para 21. The order for reconsideration was on the basis that “there is an issue as to whether the Immigration Judge was permitted to define the type of business covered by the agreement in such [a way] as to exclude the appellant’s activities.”

Thus the matter stood when it came before us for reconsideration. At the beginning of the reconsideration hearing, having noted the history of the case and grounds for reconsideration, we pointed out to Mr. Morris that there was some doubt whether we ought to hear him. The reason for that question was that, as was evident, he proposed to demonstrate that, contrary to the Immigration Judge’s view, the appellant was the proprietor of a real business. In other words, he proposed to rely on her business activities to date, in combination with her proposal, to show the nature of the enterprise in which she was engaged. The appellant had, however, been admitted on a visitors visa. That was the visa for which she had apparently applied; she had apparently accepted it in her passport and had entered the United Kingdom on the strength of it. The visa is endorsed “NO WORK OR RECOURSE TO PUBLIC FUNDS”. The appellant’s case relies to a very great extent on a breach on that condition. On her own oral evidence she began work during the currency of her visitor’s leave; documentary evidence deriving from the appellant shows that for some purposes at least her case is that she began earlier than June 2007 indeed, she was in contact with the tax authorities in the United Kingdom relating to her self-employment within a few weeks after her arrival as a visitor. To work in breach of her leave was an offence, and it followed that in seeking to overturn the Immigration Judge’s decision Mr. Morris would be relying upon the appellant’s criminal acts; and would be doing essentially the same in asserting that she could derive substantive rights under para 21 of HC 510 by working in breach of the conditions of her leave to enter.

To our great surprise, neither party appeared to have considered this aspect of the case before. That may be understandable in view of the fact that the appellant’s application was, in terms, for the setting up a business in the future and the Secretary of State’s response to it also looked to the future. As we have noted, however, the evidence supporting the application and the appeal was not evidence devoted to the period after the expiry on the appellant’s leave as a visitor. Both parties accepted that the issue needed to be dealt with, and the reconsideration was adjourned to allow them time to do so.

The principal ex turpi causa non oritur actio is well known and was not the subject of any specific submission to us. A recent and helpful statement of it is to be found in the Polanski v Condé Nast Publications Ltd [2005] UKHL 10. The action was a defamation action, in which the claimant sought an order, which the court in its discretion could make, that he be allowed to give his evidence by video link from France. The intention behind that application was that by doing so he would avoid having to come to the United Kingdom, from where he would be extradited to the United States of America to be sentenced for unlawful sexual intercourse with a 13 year old girl in 1977. If he remained in France, he would not, as a French citizen, be subject to extradition. The trial judge made the order sought. The Court of Appeal allowed an appeal by the defendants. The House of Lords restored the judge’s order. Lord Nicholls, with whom Lord Hope and Baroness Hale agreed, noted there were issues of public policy as well as issues relating to justice between the parties. He said this at [16]-[19]:

“[16] …Public policy is based on wider considerations than the interests of the parties themselves. But this does not mean the consequences for the parties are irrelevant when considering wider questions of public policy. On the contrary they may be of relevance and importance…

[17] This approach accords with the contemporary trend in this area of the law. The trend on matters of this kind is to look broadly at the requirements of justice. Whether the use of the court's procedures in a particular way would bring the administration of justice into disrepute or, as it is sometimes put, would be an affront to the public conscience, calls for an overall balanced view. This does not mean the courts now apply lower standards in the administration of justice or that the public conscience is now less easily affronted. Rather, it means the courts increasingly recognise the need for proportionality. The sanction must be appropriate having regard to all the circumstances. Indeed, an over-rigid interpretation of the requirements of public policy in this field may be counter-productive. A legal principle based on public policy which ignores the consequences for the parties can itself bring the administration of the law into disrepute. It may also involve a breach of the parties' rights under article 6 of the European Convention on Human Rights.

[18] A similar approach is now adopted in cases where a party seeking to be heard by the court is in contempt of court. That fact is not of itself a bar to the contemnor being heard….

[19] The same type of problem arises from time to time where a claimant, in order to pursue his claim, is forced to rely on his own illegal conduct. Then, on grounds of public policy, the court may refuse to aid him. This principle was affirmed, in a somewhat rigid form, in Tinsley v Milligan [1994] 1 AC 340. Whether this is the last word on this controversial subject remains to be seen.”

The reservation implied in the last two sentences of that passage may possibly derive from the fact that in Tinsley v Milligan itself Nicholls LJ (as he then was) had proposed a more flexible approach, based always on public conscience, which had not found favour in the House of Lords. That concerned a property claim in which the claimant sought relief in equity. Lord Browne-Wilkinson, giving the leading speech for the majority, said (at p 153):

“In my judgement the time has come to decide clearly that the rule is the same whether a plaintiff founds himself on a legal or equitable title: he is entitled to recover if he is not forced to plead or rely on the illegality: even if it emerges that the title on which he relied was acquired in the course of carrying through an illegal transaction” [emphasis added].

Lord Jauncey in the course of his speech agreeing with Lord Browne-Wilkinson, at p 143, said:

“It is well established that a party is not entitled to rely on his own fraud or illegality in order to assist a claim or rebut a presumption”.

Lord Goff, in his dissenting speech, with which Lord Keith of Kinkel agreed, took a stricter view: after a wide ranging review of the authorities he endorsed in essence the basic principal as stated by Lord Mansfield CJ in Holborn v Johnson (1775) 1 Cowp. 341, 343:

“The principle of public policy is this; ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If, from the plaintiff’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff.”

Thus, although in Tinsley v Milligan the claimant succeeded, because the majority of the House of Lords allowed her to base the claim she was making on matters other than the illegality, all members of the House endorsed the rule that a claimant cannot erect a claim (in law or in equity) on his own wrong.

Polanski v Condé Nast and Tinsley v Milligan are obviously binding upon us. We should, however, even if a more relaxed view were to be taken, have concluded that the rule ought to apply to a case such as the present. First, as between the parties, this is not (unlike the cases to which we have referred) a case in which the respondent receives a windfall if the claimant is not allowed to bring her case in a way she chooses. In the arena of public law, an application of the ex turpi causa principle to the claimant will typically secure merely enforcement of the legal rules that have been breached, with a corresponding intangible benefit to the public interest, but no perceptible financial or other benefit to the respondent himself. Secondly, as a matter of proportionality, we doubt whether it could be convincingly argued that it was disproportionate to refuse to allow a person to rely on immigration offences in order to establish an ordinary immigration benefit, whether the latter is presented under the auspices of EU law or otherwise. Illegality may have to be condoned where a claimant relies on human rights or on rights under the Refugee Convention; but the European Court of Justice has consistently ruled that rights under EU law cannot be based on illegal conduct, and there is nothing in EU law requiring any general inroads into the principles of English law that we have set out above. Further, in LF (Turkey) [2007] EWCA Civ 1441, the Court of Appeal refused to grant judicial review of a decision refusing leave to enter under the Ankara Agreement where the applicant, a failed asylum seeker, had worked in breach of the conditions of his temporary admission.

Mr. Morris sought to avoid the consequences of the ex turpi causa principle in three separate ways. First, he argued that the prohibition on the appellant’s working, contained in her visa, was itself unlawful and hence of no effect. That argument he derived from an examination of HC 509, the Immigration Rules relating to control on entry as they were in force on 1 January 1973 and hence as they apply to this appeal. We do not accept his argument. It is true that para 16 of HC 509 indicates that, in granting a visa for a visitor a condition prohibiting “employment” may be imposed, but that is given merely as an example, and we see no basis for saying that a condition prohibiting all forms of work was not permitted on 1 January 1973. In any event, the position was that the appellant accepted and used the visa, knowing it had a restriction on its face. There is no suggestion that she said to the immigration officer that she did not intend to comply with the condition because in her view it did not apply to her. Nor is there any suggestion that in making her application for a visa she sought to be considered under HC 509 rather than under the present Immigration Rules. She applied for and was granted entry clarance as a visitor under the rules applicable to visits. The appellant’s case is therefore substantially weaker than in LF, where the conditions imposed were not the result of an elective application.

Mr Morris’ second principal argument was that any breach of conditions by the appellant either had been condoned by the respondent or would routinely be condoned; or that the respondent was obliged to condone the breach in accordance with EU law, or that the breach was not relevant in the context of HC 510.

So far actual condonation of the breach is concerned, Mr. Morris relied on the fact that no point was taken on it in the letter of refusal, that the application form for applicants under the Ankara Agreement appears to allow applicants to indicate that they have already been working, and that the IDIs appear to make no provision against those who have breached the terms of their leave. We examine each of these arguments in turn. So far as concerns the terms of the notice of refusal, as we have observed, it was addressed to an application looking to the future. It is true to say that some of the documentation then produced indicated that the appellant had already been working in breach of the terms of her leave, but the decision-maker thought that he had sufficient grounds for refusing the application in the terms in which it was made. He had no obligation to add other reasons, as the notice of the refusal is not equivalent to a pleading: see RM (Kwok On Tong: HC395 para 320) India [2006] UKAIT 00039 the parties have clearly had a full opportunity to deal with the issue now. In any event, in terms of what we make of the dynamics of litigation, this is not essentially an inter partes point: the question is whether we ought to hear an argument in the form proposed on the appellant’s behalf, rather than precisely whether it ought to succeed.

So far as concerns the application form, it is right to say that there are spaces available for indicating that the applicant’s present leave is as a visitor, and for present or past employment. But the application form covers a multitude of different possibilities and the fact that that combination of entries could be made cannot in our judgement be regarded indicating a condonation of work by those with leave preventing them from working.

The issue relating to the IDIs is a little more complex. In the relevant passage of a published policy “In Country Guidance for Persons Intending to Establish themselves in Business under Turkish – EC Association Agreement” (undated but after January 2005) there is a lengthy treatment of the “fraud exception” identified in Tum and Dari and applicable to those who are shown to have used fraud to obtain entry to the EU state in which they now propose to set up their business. We shall have a little more to say about this exception in due course: but in the present case it is not suggested that the appellant’s leave to enter was obtained by fraud. The distinction between those who did obtain entry by fraud and those who did not do so pervades the treatment of the issue in the IDIs. After dealing with cases subject to the fraud exception, there is a heading “non fraudulent in-country cases”, which indicates simply that those who have lawful residence in the United Kingdom (“for example as a visitor”) without the use of fraud, and who apply to remain, “are entitled to have their application considered in accordance with the standstill clause”. The IDIs continue as follows:

“Those who have overstayed their leave but who have not previously used fraud to obtain leave also benefit from consideration of their case under the standstill clause. All these cases should be considered on the basis of paragraphs 21 and 4 of the 1973 Rules HC510.

Those applicants who do not meet the requirements of paragraph 21 and 4 of HC 510 of the 1973 rules should be refused. The refusal notice should include the reasons why the applicant did not satisfy the decision maker that they have been able to establish themselves as a self employed business person.”

There is no overt reference to failure to comply with the conditions of leave. The treatment of overstayers is not such a reference, for the period for which leave is granted is not one of its conditions: see s 3(1)(c) of the Immigration Act 1971). As we shall see, however, para 4 of HC 510 does incorporate such reference, and if little else is clear from the IDIs, it would be difficult to assert that they suggest that decisions should be made without reference to para 4 of HC 510. Nothing in the IDIs as we read them indicates that a person who enters the United Kingdom without fraud, but who subsequently breaches to terms of her leave, is entitled to have the breach condoned in a consideration of an application under the Ankara Agreement.

Mr. Morris then referred us to the decision of the European Court of Justice in Case C-37/98 Savas [2000] ECR I-2927. He pointed out that in that case it does not appear to have been regarded as material that the claimant was an overstayer. With the greatest respect, we do not think it would be right to build very much on that. By overstaying, the appellant in Savas was not failing to comply with a condition of his leave. We do not know whether the point was raised at all, and if so in what context it may have been raised. Certainly there is no clear passage in the judgement in Savas requiring a Member State to condone immigration offences by a claimant to benefits under the Ankara Agreement.

Finally in this part of his submissions, Mr. Morris relied on the terms of HC 510 itself. He submitted that a person admitted to the United Kingdom as a visitor under the regime of HC 509 and HC 510 was entitled to switch to self-employment and that a refusal to allow the appellant to do so amounted to a restriction which post-dated 1 January 1973 and was thus unlawful.

We need to set out the relevant paragraphs of HC 510. They are as follows:

“Introductory

1.

Under sections 3 and 4 of the Immigration Act 1971 an Immigration Officer, when admitting to the United Kingdom a person subject to control under that Act, may give leave to enter for a limited period and, if he does, may impose conditions restricting employment or occupation in the United Kingdom or requiring the person to register with the police. Under section 24 of the Act it is an offence to remain beyond the time limit or to fail to comply with such a condition.

General Considerations

4.

The succeeding paragraphs set out the main categories of people who may be given limited leave to enter and may seek variation of their leave, and the principles to be followed in dealing with their applications, or in initiating any variation of their leave. In deciding these matters account is to be taken of all the relevant facts; the fact that the applicant satisfies the formal requirements of these rules for stay, or further stay, in the proposed capacity is not conclusive in his favour. It will, for example, be relevant whether the person has observed the time limit and conditions subject to which he was admitted; whether in the light of his character, conduct or associations it is undesirable to permit him to remain; whether he represents a danger to national security; or whether, if allowed to remain for the period for wishes to stay he might not be returnable to another country.

Businessmen and self-employed persons

21.

People admitted as visitors may apply for the consent of the Secretary of State to their establishing themselves here for the purpose of setting up in business, whether on their own account or as partners in a new or existing business. Any such application is to be considered on merits. Permission will depend on a number of factors, including evidence that the applicant will be devoting assets of his own to the business, proportional to his interest in it, that he will be able to bear his share of any liabilities the business may incur, and that his share of its profits will be sufficient to support him and any dependants. The applicant's part in the business must not amount to disguised employment, and it must be clear that he will not have to supplement his business activities by employment for which a work permit is required. Where the applicant intends to join an existing business, audited accounts should be produced to establish its financial position, together with a written statement of the terms on which he is to enter into it; evidence should be sought that he will be actively concerned with its running and that there is a genuine need for his services and investment. Where the application is granted the applicant's stay may be extended for a period of up to 12 months, on a condition restricting his freedom to take employment. A person admitted as a businessman in the first instance may be granted an appropriate extension of stay if the conditions set out above are still satisfied at the end of the period for which he was admitted initially.”

Certain things are clear. Paragraph 21 gives no right to enter upon self-employment. It gives a right merely to make an application to the Secretary of State in advance of any such activity. A visitor coming to the United Kingdom under the regime of HC 509 and HC 510 needs the permission of the Secretary of State before setting up in business. Secondly, in deciding whether such permission is to be given, regard will be had to a number of factors, including compliance with the terms of existing leave. Thirdly, it is clear that the rules themselves are constructed with reference to the offences under s 24 of the 1971 Act (as it was on 1 January 1973). So far as the merits of this case are concerned, the position under HC 510 is that para 1 reminds her that working in breach of her conditions of leave is a criminal offence; para 4 points out that any breach of the conditions of her leave will be taken into account against her in deciding whether to grant any application for any further leave that she may make; and para 21 indicates that she needs permission before entering into business and that she has no right to that permission. So far as concerns the way in which the issue presents itself to us, however, the position simply is that nothing in HC 510 allows the appellant to rely on her setting up a business in breach of conditions for the purposes of establishing any right under HC 510 or the Ankara Agreement.

Mr. Morris’ third principal submission was that the issue we had raised was equivalent to the “fraud exception” which, as the decision of the European Court of Justice in Tum and Dari indicates, has a very limited scope. It was there held that the fact that the claimants had entered the United Kingdom without formality and that their subsequent asylum claims had been refused did not show that their presence in the United Kingdom was obtained by fraud. That may be so: but there is a world of difference between fraud on the one hand and simple disobedience to rules or breach of conditions on the other. Further, in Tum and Dari the appellants’ presence in the United Kingdom was the background to the claim they made, whereas in the present proceedings the appellant’s activities in breach of the terms of her leave are the centrepiece of the argument she seeks to put on reconsideration. We do not accept that the application of the principle ex turpis causa non oritur actio to the present appeal is affected by any analogy with the fraud exception in Tum and Dari.

It follows that we reject all Mr. Morris’ arguments on this issue. In attacking the Immigration Judge’s conclusion the appellant has to rely on facts which show her to have breached terms of her leave to remain, lawfully imposed upon her and accepted by her. She cannot succeed on such a basis. We are therefore not persuaded that the Immigration Judge materially erred in law. His determination dismissing her appeal must therefore stand.