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

This is the decision of Tribunal, to which both members have contributed.

The first application for Judicial Review is brought by JW & GW, who are mother and dependent child; both of whom are subject to an Anonymity Order. In this decision they are identified as A1 and A2. A2’s claim is entirely dependent on the outcome of the substantive challenge in A1’s claim and there is no distinct or substantive challenge to his refusal of leave to remain as a dependent of A1. The second application for Judicial Review is brought by Jiaqi Wu, referred to as Ms Wu in this decision. The two claims have been linked due to similarity of the facts and issues raised.

A1 challenges the Respondent’s decision of 20 December 2017 to refuse her application for further leave to remain as a Tier 1 (Investor) Migrant, upheld on Administrative Review on 6 February 2018; and A2 challenges the consequent decision of the Respondent to refuse his application for leave to remain as a dependent of A1. Ms Wu challenges the Respondent’s decision of 22 December 2017 to refuse her application for indefinite leave to remain as a Tier 1 (Investor) Migrant, upheld on Administrative Review on 6 February 2018. Both A1 and Ms Wu had previously been granted limited leave to remain as Tier 1 (Investor) Migrants, respectively seeking an extension of leave to remain and indefinite leave to remain in the same category.

A1 and Ms Wu were both sold a product, by Maxwell Holding Limited (“Maxwell Holding”), by which both the investment and immigration elements of the Tier 1 (Investor) Migrant route were to be satisfied. In both cases, the applicants obtained unsecured loans, in A1’s case of £1 million and in Ms Wu’s case of £5 million, from Maxwell Asset Management Ltd (“Maxwell”) which they both invested in Eclectic Capital Limited (“Eclectic”). These two applicants were amongst over 100 individuals who similarly obtained loans of £1 million or over from Maxwell, the funds from which were also invested in Eclectic.

To understand the nature of the applications for leave to remain, reasons for refusal and grounds of challenge in these applications for Judicial Review, it is necessary to set out in some detail information about the companies involved, as well as the structure and agreements between them and the applicants. Save for the existence of and detail of the original Services Agreements between each applicant and Maxwell Holding (which were only disclosed to the Respondent and the Upper Tribunal during the course of the oral hearing before us), all of the information which follows was before the Respondent at the time of the decisions under challenge, either from the applications made or from information in the public domain.

Maxwell Holding is a company registered and incorporated in Jersey, whose director is Mr Dmitry Petrovich Kirpichenko (“DPK”).

On 23 October 2013, A1 entered into what is described as a “Services Agreement” with Maxwell Holding (referred to in the agreement as the “Company”) in which the latter was to provide A1 with services pertaining to her intention to obtain a UK visa as a Tier 1 (Investor) for a service fee of £200,000. The specific nature of the services provided are set out in clause 2 of the Services Agreement (Footnote: ¹), which so far as relevant are as follows:

The ‘Manager’ is defined in section 1 of the agreement as meaning “Maxwell Asset Management Ltd., the company authorized by the Financial Conduct Authority UK, duly registered in the United Kingdom”.

Section 3 of the Services Agreement sets out a schedule of activity with obligations on both parties. So far as is relevant to the issues in the current proceedings, this included the following provisions and obligations on the part of the Client:

A materially identical Services Agreement was entered into by Ms Wu with Maxwell Holding on 27 January 2014, save the loan amount was £5 million.

The existence of the Services Agreement between A1 and Maxwell Holding, and between Ms Wu and Maxwell Holding was not expressly disclosed to the Respondent with either of their initial or subsequent applications for leave to remain in the United Kingdom as a Tier 1 (Investor). Its existence and a copy of the agreements were only disclosed during the course of the substantive oral hearing of these applications for Judicial Review further to specific questions being raised by the Tribunal.

There was however an undated letter to A1 from Maxwell Holding confirming receipt of payment of £200,000 on 19 November 2013 in accordance with the Services Agreement; an addendum to the Services Agreement between A1 and Maxwell Holding dated 20 June 2014 and a materially identical addendum to the Services Agreement between Ms Wu and Maxwell Holding also dated 20 June 2014. The addendum amended section 3.7.3 of the original agreement to include an agreement by the Company (Maxwell Holding) to pay interest on the Loan Agreement (that concluded between A1 and Maxwell dated 27 January 2014) on behalf of the Client (A1). It is unclear at what point or for what purpose these documents were provided to the Respondent, whether it was within the original application, provided with the application for Administrative Review or only as part of Judicial Review proceedings. We do not have a copy of any similar documents in relation to Ms Wu or her Services Agreement with Maxwell Holding.

Maxwell is a company which was incorporated on 21 May 2007, whose sole director since incorporation has been DPK. Between 17 July 2008 and 18 June 2013, Maxwell changed its name to Menostar Asset Management Limited, before reverting to being called Maxwell Asset Management Limited.

As at 21 May 2008, Maxwell was a wholly-owned subsidiary of Menostar Holdings Ltd (“Menostar”), a company incorporated in Cyprus whose sole director and owner is DPK. According to the annual return dated 23 April 2013, Maxwell’s shares were owned by Menostar (9,700), DPK (740,000) and Ms Nika Kirpinchenko (“NK”) (1,200,000). NK is the wife of DPK. Maxwell’s Annual Report and Financial Statement in 2017 records the company as being a wholly owned subsidiary of Menostar and the ultimate controlling party is its sole director, DPK.

In its Annual Report and Financial Statement in 2017, Maxwell states that:

With regards to the loans made by Maxwell, the Annual Report and Financial Statement for the year ended 30 September 2017 states:

A1 entered into a loan agreement with Maxwell on 23 October 2013. Under this agreement, Maxwell would lend £1 million to A1, the express purpose of which was to enable A1 to meet the requirements of the Immigration Rules as a Tier 1 (Investor). The loan amount was to be used for ‘AID’, defined in the agreement as “investments in share capital or loan capital in active and trading UK registered companies”. The loan term was for a period of five years, to be granted, in accordance with the requirements of A1’s Tier 1 Investor visa, no later than three months from the date of entry of A1 into the United Kingdom and the interest rate on the loan was 3% per annum.

Ms Wu entered into a loan agreement with Maxwell on 27 January 2014, which was materially identical to the one entered into by A1 with Maxwell, save that the loan amount was £5 million.

Eclectic is a company which was incorporated on 27 June 2013, from which point NK has been its sole director and NK has consistently held all 100 ordinary shares issued by the company.

On 12 June 2014, an amendment was made to the articles of association of Eclectic, which included the division of share capital of the company into ordinary shares and preference shares. Only holders of ordinary shares have the right to vote in general meetings of the company; holders of preference shares did not. Preference shareholders involvement in Eclectic was limited to a deferred entitlement of a dividend of 2% per annum on the nominal value of the shares, to be paid on the earlier of the redemption of the shares or on the sixth anniversary of the date on which the share was issued. Eclectic was entitled to redeem preference shares at any time in its discretion (for their nominal value or at a premium), but the holders of preference shares were entitled only to request redemption six years after the date of their issue and only at nominal value. Preference shares could not be sold, transferred, assigned, pledged, charged or otherwise disposed of without the consent of the owner of the majority of ordinary shares, namely NK.

As at 27 June 2014, as shown in the annual return for Eclectic, there were 23 preference shareholders, comprised of 22 holders each of 1 million preference shares at a value of £1 per share (which included A1) and one holder of 5 million preference shares at a value of £1 per share, which was Ms Wu.

On 19 May 2015, a further amendment was made to the articles of association of Eclectic, to divide the share capital into ordinary shares and two classes of preference shares, class A and class B, with the same terms for ordinary shares and class A preference shares (as the per the existing preference shares). The new class B preference shares were only entitled to a deferred dividend of 0.00001% per annum on the nominal value of shares, to be paid after six years if the same person had held the shares for a continuous six-year period. As with class A preference shares, Eclectic were entitled to redeem them at any time in their discretion, at the nominal value or at a premium; but the holders of class B preference shares were only entitled to request redemption after holding the shares for a continuous six-year period at nominal value.

As at 27 June 2015, the annual return of Eclectic shows that it had 104 preference shareholders, 103 of whom held 1 million preference shares for which they paid £1 per share and one shareholder with 5 million preference shares for which they paid £1 per share (Ms Wu).

On 22 February 2018, a further amendment was made to the articles of association of Eclectic to create a further class C of preference shares with equivalent limited rights to the class B preference shares. At each stage of amendment to the articles of association set out above, there were increases in the amount of share capital which could be issued.

Sarmand Global, the Chartered Accountants for Eclectic provided a detailed breakdown of the investments made by Eclectic as of 30 June 2016. These investments totalled £111,127,038 and save for one investment of £6,694,850 to a company in Jersey; all other investments were in companies in Russia. The letter went on to state that although at this date Eclectic’s principal business activity was security dealings, its focus had since moved to hospitality (wine bars) and media activity in the UK.

The accounts for Eclectic to 30 June 2017 stated that Eclectic has invested in subsidiary companies named Holborn Wine Bar Ltd, Eclectic Gallery Limited, Portobello Wine Ltd, AAT Lab Ltd and S.A.I.D (UK) Limited. The Respondent has provided documents filed at Companies House (which are publicly available and relate to the same or similar time period as the Eclectic accounts) in relation to each of these companies, showing that Holborn Wine Bar Ltd is a dormant company with only £100 of assets; Eclectic Gallery Limited has assets of £7934 and net liabilities of £2766; Portobello Wine Ltd is a dormant company with only £100 assets on its balance sheet; AAT Lab Ltd has net current assets of some £200,000 and net liabilities of some £233,000; and S.A.I.D (UK) Limited has net assets of some £59,500 and net liabilities of some £466,000. With the sole exception of Holborn Wine Bar, NK is the Director and/or a shareholder of all these companies.

A1 entered into a loan agreement with Eclectic on 20 January 2014, pursuant to which she would lend £1 million to Eclectic for a term of five years at an interest rate of 3.05% per annum. Ms Wu entered into a materially identical loan agreement with Eclectic on 19 February 2014, save that the amount to be lent in her case was £5 million. Those sums were, on the written instructions of A1 and Ms Wu, paid directly from Maxwell to Eclectic and were not paid out to the applicants to make the loan directly themselves.

On 20 June 2014, there was an additional agreement to the loan agreement between A1 and Eclectic and to the loan agreement between Ms Wu and Eclectic, pursuant to which Eclectic converted the loans given by each of them into 1 million and 5 million preference shares respectively, with a nominal value of £1 each. The additional agreement terminated the original loan agreement and specified that no interest at all had been accrued on the loan for the entire period from the date of the loan agreement until its termination on 20 June 2014.

Paragraph 245ED of the Immigration Rules sets out the requirements for leave to remain as a Tier 1 (Investor) Migrant, which so far as relevant to A1, provide as follows:

Paragraph 245EF of the Immigration Rules sets out the requirements for indefinite leave to remain as a Tier 1 (Investor) Migrant, which so far as relevant to Ms Wu, provide as follows:

Paragraphs 55 to 58 of Appendix A refer to the Tables contained in the Appendix setting out the points requirements for different categories of application according to whether the initial application for leave to remain as a Tier 1 (Investor) Migrant was made before or after 6 November 2014. So far as relevant to A1 and Ms Wu; who both had previous grants of leave to remain as a Tier 1 (Investor) Migrant prior to 6 November 2014, these paragraphs provide that the available points for further leave to remain for A1 are those in Table 8B and for indefinite leave to remain for Ms Wu are those in Table 9B. It should be noted that in Table 9B the size of the investment required decreases as the length of investment holding extends.

Table 8B, so far as relevant, provides as follows:

Table 9B, so far as relevant, provides as follows:

Paragraph 61 of Appendix A provides that: ““Money of his own”, “personal assets” and ‘his capital’ include money or assets belonging to the applicant’s spouse, civil partner or unmarried or same-sex partner, …” subject to further requirements in relation to the spouse or partner.

Paragraph 61A of Appendix A deals with the control of money, providing that:

Paragraph 61-SD sets out the specified documents required for the purposes of paragraph 61 of Appendix A.

Paragraph 65 of Appendix A provides notes for qualifying investments in Table 8A to Table 9B, which excludes investments by way of “(b) Open-ended investment companies, investment trust companies, investment syndicate companies or pooled investment vehicles”.

Paragraph 65A defines “Active and trading UK registered companies” as ones which (a) have a registered office or head office in the UK; (b) have a UK bank account showing current business transactions; and (c) are subject to UK taxation.

Paragraph 65-SD of Appendix A sets out the specified documents required as evidence of investment, including at (a) a series of investment portfolio reports, certified as correct by a UK regulated financial institution, which must, inter alia, (vii) “for investments made as loan funds to companies, be accompanied by audited accounts or unaudited accounts with an accounts compilation report for the investments made, giving the full details of the applicant’s investment. The accountant must have a valid licence to practise or practising certificate and must be a member of the Institute of Chartered Accountants in England and Wales …”.

A1’s application was for further leave to remain as a Tier 1 (Investor) under paragraph 245ED of the Immigration Rules was dated 20 February 2017 (under cover of a letter dated 23 February 2017), and which included an application for A2 as her dependent. The claimed attributes were that (a) she has money of her own under her control in the UK amounting to not less than £1 million, or, (b)(i) owns personal assets which, taking into account any liabilities to which they are subject, have a value of not less than £2 million and (ii) has money under her control and disposable in the UK amounting to not less than £1 million which has been loaned to her by a UK regulated financial institution.

Specifically, the Applicant stated that she made a loan of £1 million to a UK registered company (Eclectic) which was converted to preference shares in the nominal value of £1 million and such shareholding has since been maintained at that level, with the value of shares at 31 December 2016 being £1,003,270. Eclectic was said to have maintained active trading throughout the previous three years and an investment portfolio and unaudited accounts were provided. It was said therefore that the applicant earned 30 points by meeting this requirement.

A1 was interviewed in relation to her application on 7 August 2017 and further documents/representations were provided in support of it by her representatives on 18 and 25 August 2017. Extracts from the record of interview with A1 appear at Annex A.

The Respondent set out in three boxes the points claimed and points awarded under Appendix A: Attributes in respect of A1’s application. The first box deals with the requirement that the applicant has not less than £1 million in the UK, which has been loaned by a UK regulated financial institution, as required in paragraph b(ii) of Row 1 of Table 8B of Appendix A of the Immigration Rules. The evidence relied upon by A1 is set out followed by the conclusion that the funds loaned to A1 by Maxwell were not under her control in the UK. The reasons were set out as follows:

The Respondent then quoted parts of the interview with A1 on 7 August 2017 (extracts of which are at Annex A) and concluded that in light of all of the above, A1 did not satisfy the criteria at paragraph b(ii) of Row 1 of Table 8B for the award of points claimed.

The second box in the decision letter deals with the specific investment of £750,000 for the purposes of Row 2 of Table 8B of Appendix A of the Immigration Rules. The Respondent awarded no points for this part of the application on the basis that it was not accepted that the funds invested in Eclectic met the requirements of a qualifying investment set out in paragraph 65 of Appendix A of the Immigration Rules, specifically being excluded by paragraph 65(b) of the same. This is because the investment was made prior to 30 June 2016 when Eclectic’s principal business was to use funds to trade investments in companies, which is of a type that is excluded for the purposes of investment under Paragraph 65.

The third and final box deals with the criteria in Row 3 of Table 8B of Appendix A of the Immigration Rules, for which no points were awarded on the basis that the investment made, for the reasons already given, was not a qualifying investment.

A2’s application for leave to remain as a child dependent of a Tier 1 Migrant was also refused on 22 December 2017 under paragraph 319C of the Immigration Rules on the basis of the refusal of A1’s application.

A1 sought Administrative Review of the refusal of her application on the following grounds:

The Respondent accepted in the course of the Administrative Review that paragraph 245ED(g) of the Immigration Rules was not applicable to A1’s application as it related only to Table 7 and not Table 8B of Appendix A to the Immigration Rules. However, in any event A1 was still required under Table 8B to have money of her own under her own control and disposable in the UK. The Respondent decided that the balance of all the evidence available led to the conclusion that A1 was not in control of the funds, on the basis that A1 did not in fact have freedom to choose where to invest the loan funds, or to withdraw the investment once made. The Respondent maintained that relevant considerations in determining whether a person had control of the funds included the fact that money was transferred between two companies whose directors were married; the poor terms of the agreement and poor financial returns of the investment.

In relation to the refusal under paragraph 65(b) of Appendix A, the Respondent stated that Eclectic has attributes akin to investment vehicles expressly excluded by paragraph 65(b) and for the reasons already given in the refusal letter, it was not accepted that the investment met the requirements of the Immigration Rules.

Overall, the Respondent considered that the original caseworker had applied the Immigration Rules, policy and guidance correctly and reached a conclusion on the evidence that the funds loaned to A1 were not in her control in the UK; such that the decision to refuse the application with reference to paragraph 245ED(b) of the Immigration Rules was maintained. On this basis, the refusal of A2’s application was also refused as he was not at the time the child of a parent who has been granted leave to remain as a Points Based System Migrant.

Ms Wu applied for indefinite leave to remain as a Tier 1 (Investor) under the accelerated three year route under cover of a letter dated 10 January 2017, pursuant to paragraph 245EF of the Immigration Rules. The application was made on the basis that Ms Wu (i) owns personal assets which, taking into account any liabilities to which they are subject, have a value of not less than £10 million; and (ii) has money of her own under her control in the UK amounting to not less than £5 million which has been loaned to her by a UK regulated financial institution. Specifically, Ms Wu loaned Eclectic £5 million on 12 March 2014, which was converted to Preference Shares of the same nominal value on 20 June 2014 with the value maintained continuously to the date of application. The value of the shares as at 31 December 2016 was £5,016,350. Eclectic has maintained active trading over a three year period and their unaudited company accounts and investment portfolio report was submitted.

Ms Wu was interviewed in relation to her application on 16 August 2017 and further documents/representations were made in support of it by her representatives in essentially the same terms as were made for A1’s application. Extracts from the record of interview with Ms Wu appear at Annex B.

The Respondent set out Ms Wu’s immigration history and requirements for a grant of indefinite leave to remain as a Tier 1 (Investor) under paragraph 245EF of the Immigration Rules and by reference to Appendix A of the same, specifically paragraphs 54 to 65-SD and Table 9B of Appendix A.

In respect of paragraph b(ii) of Row 1 of Table 9B, the Respondent did not award Ms Wu any points as she was not satisfied that the funds loaned to her by Maxwell were under her control in the UK. The following reasons were given:

The Respondent then quoted parts of the interview with Ms Wu on 7 and 16 August 2017 and concluded that taking everything together, there were reasonable grounds to believe that the loan funds and investment in Eclectic were not under Ms Wu’s control.

In addition, the Respondent had not been provided with sufficient evidence from Ms Wu that she owned personal assets with a value of not less than £10 million. Her interview record stated that she had paid £3.5 million for her property and in addition that she had shown Maxwell Asset Management a bank statement showing a balance of £10 million, but the latter was not provided to the Respondent with the application. For this reason, the Respondent did not accept that the Appellant met the criteria in paragraph b(ii) of Row 1 of Table 9B.

In relation to Row 2, the Respondent did not award any points as she was not satisfied that the funds invested in Eclectic met the requirement of a qualifying investment in paragraph 65 of Appendix A of the Immigration Rules because the report and unaudited accounts for Eclectic dated 30 June 2016 and 30 June 2015 did not give full details of the applicant’s investment as required in paragraph 65-SD(vii) of Appendix A and further, that the investment was excluded from being a qualifying investment under paragraph 65(b) of the same.

In relation to Rows 3 and 4, the Respondent did not award points, essentially for the reasons already given above.

Ms Wu sought Administrative Review of the refusal of her application on the following grounds:

The Respondent maintained the original refusal of Ms Wu’s application in her administrative review decision dated 6 February 2018. Although it was accepted that the application fell under Table 9B of Appendix A to the Immigration Rules and not Table 7, the requirement is the same for an applicant to have money of their own under their own control and disposable in the UK, such that the Respondent must still be satisfied that this is the case and can refuse an application if there are reasonable grounds to consider that the requirement has not been met.

The Respondent did not accept that she was under any obligation to compound any decisions which may have been incorrect in the past by making further incorrect decisions on future applications, in particular in relation to the loan agreement submitted with the previous application for leave to remain which was successful. The Respondent considered that on the information now available, the initial application should not have been granted. A similar statement was made about any other applications which relied on investment into Eclectic.

The reasons originally given as to why Ms Wu was not considered to be in control of money were maintained and it was emphasised that she did not appear to have freedom to choose where to invest the money or to withdraw her investment once made. The published policy guidance relied upon by Ms Wu gave illustrative but not exhaustive examples.

In relation to the exclusions to qualifying investments in paragraph 65(b) of Appendix A to the Immigration Rules, the Respondent stated as follows:

The first four grounds of challenge are common to both A1 and Ms Wu’s applications for Judicial Review and are set out in materially identical terms. The fifth and sixth grounds of challenge are specific to Ms Wu’s application only.

The grounds of challenge are as follows:

The skeleton argument submitted on behalf of the applicants, supported by opening oral submissions from Ms Weston, went into some considerable detail about basic principles of interpretation of the Immigration Rules and the suggestion that the relevant Immigration Rules for Tier 1 (Investors) were inherently defective, lacking in clarity and contradictory both internally and with banking practice. However, it was expressly confirmed that there was no challenge to the legality of the Immigration Rules for this route and in applications such as these, it was solely a matter for the Upper Tribunal to properly interpret them. The global submission on behalf of the applicants that the rules and the Respondent’s practice in the assessment of such applications is inherently unclear is therefore only considered to the extent that the interpretation of specific parts of the relevant Immigration Rules have been expressly challenged within the pleaded grounds.

There is no real dispute as to the correct approach to the interpretation of the Immigration Rules, which has been clearly set out by the Supreme Court in Mahad v Entry Clearance Officer [2009] UKSC 16, with reference to Odelola v Secretary of State for the Home Department [2009] UKHL 25. Lord Brown stated:

In relation to interpretation of the Immigration Rules specific to the Points Based System, we also bear in mind the dicta of Holroyde LJ in R (on application of Sajjad) [2019] EWCA Civ 720.

Separately, on 28 May 2019, after the substantive oral hearing, an application was made on behalf of both applicants to make written post hearing submissions in respect of matters identified by the Tribunal during the course of the oral hearing, upon which Counsel for the applicants considered that she did not have an adequate opportunity to respond during the course of the hearing. The application was opposed by the Respondent.

We refuse the application to put in further written submissions on behalf of the applicants on the basis that there is no sufficient justification for further written submissions to be made and the content of those proposed take the applicants’ claims no further. Much of the text reiterates submissions already made during the course of the oral hearing by both parties and ultimately the majority of the submissions are not relevant to the issues raised in the grounds of challenge to be determined in these applications for Judicial Review. We have not therefore taken the post hearing submissions into account.

The applicants assert that the reference in the Respondent’s decision letters referring to the Secretary of State having “reasonable grounds to believe that the loan funds and the investment in Eclectic are not under your control” show that the decision was erroneously taken under paragraph 245ED(g) of the Immigration Rules which is expressly only relevant to cases where points are to be awarded under Table 7 of Appendix A, which is not the applicable provision for either A1 or Ms Wu.

Although it is accepted by the applicants that the Administrative Review decision in respect of each of them expressly states that paragraph 245ED(g) of the Immigration Rules was not applicable to either application, the Respondent said within those decisions that in any event the requirements in Table 8B and Table 9B of Appendix A mean that a person has to show money under their control and is therefore of the same effect. The applicants submit that this is erroneous and the only requirements to show that a person has money under their control are the evidential requirements set out in paragraphs 60, 61A and 61-SD of Appendix A; with no subjective judgement permitted.

However, the submission that the mere provision of documents in accordance with those specified in the relevant part of the Appendix is of itself sufficient, ignores the structure of the Immigration Rules governing applications under the Points Based System. The provision of specified documents is the required means by which an applicant can establish that the substantive requirements of the Immigration Rules are met for a grant of leave to remain, however the content of those documents must be examined to ensure the satisfaction of the relevant requirements of the rules.

In relation to A1, this included the requirement in paragraph 245ED(e) of the Immigration Rules that the “assets and investment he is claiming points for must be wholly under his control” and in Row 1 of Table 8B of Appendix A that the applicant “(a) has money of his own under his control …” or “(b)(ii) has money under his control …”. In relation to Ms Wu, this included the requirement in Row 1(b) of Table 9B to (i) have “money of his own under his control …” or “(ii)(2) has money under his control …”.

The specified documents in paragraphs 60 to 61-SD of Appendix A on their face only deal with two particular matters, namely the exclusion of money that a loan has been secured against, and, that money of his own includes that of a spouse or partner subject to specific evidential requirements. These are self-evidently distinct from the requirement for an applicant to be able to establish satisfaction of the underlying relevant Immigration Rules such as the award of points under the relevant Table as they only deal with evidential requirements for a specific element of control and could not of themselves establish it.

The burden is on an applicant to satisfy the Respondent that the money was under their control to meet the requirements of the rules and in the Administrative Review letter, it was stated that the decision that the funds were not under the applicants’ control was taken on the “balance of all of the evidence”, after considering “all factors and evidence” and “on consideration of this evidence as a whole … on a balance of probabilities”.

In these circumstances, we do not find that the Respondent erred in applying the wrong test or standard in refusing either application by the mere reference to “reasonable grounds to believe” in the original refusal letters. As expressly confirmed in the Administrative Review decisions, the standard which was applied was the balance of probabilities and this is borne out by the detailed assessment of the evidence before the Respondent at the date of decision and considered further below in relation to the second ground of challenge.

The first issue raised in the second ground of challenge turns on the interpretation of ‘control’ and the point in time at which a person has to have money under his control (either at the point when money is invested or afterwards, being control over the investment itself at the date of decision, or both). The second issue is then, as set out in the third ground of challenge, whether the Respondent properly concluded that neither A1 nor Ms Wu had the requisite control at the required time. We consider these grounds together.

Neither party suggested a specific definition of what ‘control’ means or how this is to be interpreted in the relevant parts of the Immigration Rules for Tier 1 (Investor) Migrants, the submissions instead focusing on elements of what it could include and what it could not include. In relation to when ‘control’ is required, submissions were made both ways by the parties but with an apparent common position that it is control at the point of investment, to be determined at the date of decision.

In relation to the meaning of control (the relevant requirements in relation to which being set out above in paragraph 72 for each of the applicants), the applicants’ case is that something less than complete and unfettered control is required. In any commercial situation, some degree of control has to be relinquished by an investor, even if simply a deposit in a savings account which can be subject to specific terms and conditions for withdrawal and that control cannot possibly rationally be interpreted as meaning entirely unrestricted access to and use of the money or investments in question. Numerous examples were given of the different meanings ascribed to the concept of control in commercial contexts and the different forms of control which exist, in contrast to the lack of definition or specific type of control being specified within the Immigration Rules.

Ms Weston submitted that one can look to paragraph 61A of Appendix A to give an indication of the ‘mischief’ behind the requirement to have control over the money invested, specifically that money which is used as security for a loan cannot be under a person’s control. It was submitted that this is an obvious instance of a situation where a person does not have control of the money or investment because it would have been ceded to a third party – a creditor of the investor – and therefore could not be used by the investor to invest in the United Kingdom and would be vulnerable to forfeiture in the event of default under a loan agreement. This, however, is contrasted with the usual commercial situations in which some degree of control has to be ceded to be able to benefit the destination of an investment.

It was submitted on behalf of the applicants that they plainly had effective and ultimate control over the Maxwell loans to them and had effective and ultimate control over the investments in Eclectic, in that (i) neither are (or were) subject to any security; (ii) the applicants had the legal right under their respective agreements to require Maxwell to pay the loans directly to an AID company of their choosing; and (iii) the applicants have a legal right to redeem their shares in Eclectic after six years.

The applicants’ case is that none of the reasons given by the Respondent for finding that investments were not under the applicants’ control, namely the links between the companies involved; the view that the applicants were required to invest in Eclectic; the poor commercial returns and lack of rights to dispose of shares or terminate agreements; were relevant or valid reasons, individually or cumulatively, for concluding that the applicants did not have control within the meaning of the Immigration Rules because (i) none involved ceding any control of the loans or investments to third parties, whether as security or otherwise; and (ii) each benefited (or would have benefited) Eclectic.

The above is premised on control being required after the investment, even though Ms Weston submitted that this of itself would be irrational under the rules. If in the alternative the money needed to be under an applicant’s control at the point of investment, the applicants state that on the facts they have demonstrated this. The applicants both rely on the terms of their respective loan agreements with Maxwell, which do not expressly define or require investment to be made in any particular company, only that it has to be made in an AID. The definition of AID in section 1.1(i) is “investments in share capital or loan capital in active trading UK registered companies” and section 1.1(j) of the loan agreement defines AID Company as “company for the purposes of AID”. The agreement does not refer to any specific company and within the agreement references to the singular include the plural and vice versa, such that it cannot be interpreted either as a single AID company. Further, the agreement does not mention Eclectic at all and it cannot be read into the agreement that the references to AID Company are to Eclectic and Eclectic alone.

The Respondent’s primary position is not that the applicants lost control of their investments once made, but that they had no control of the money before it was invested. In any event, it was submitted that the provisions of the Immigration Rules had to be interpreted in accordance with the normal rules set out in Mahad and not by reference to commercial or banking practice and there was no clear or express intention within the rules to restrict the meaning of control to a single criterion as is suggested by the reference to paragraph 61A of Appendix A.

Returning to the first issue raised, as to what is meant by ‘control’ in the relevant Immigration Rules, we do not consider it to be helpful nor required to set out, beyond what is already in the Immigration Rules, a definition of ‘control’. This word has to be interpreted, in the usual way, in accordance with its natural and ordinary meaning, namely that a person has the authority to manage and/or direct the use of the money, asset or investment (depending on the context). This is not just a question of legal or beneficial ownership of the same, but includes an element of choice and use. To determine whether a person has the requisite control, it is necessary to look at all of the facts and circumstances of the case and with reference to the overriding requirement in paragraph 245ED(e) of the Immigration Rules (at least for the purposes of an application for further leave to remain as a Tier 1 (Investor) Migrant) that the “assets and investment he is claiming points for must be wholly under his control”. The addition of the requirement of ‘wholly’ shows a higher level of control than one may normally expect in some commercial situations, but that is to be expected given that not every investment will satisfy the requirements for a grant of leave to remain under this route (for example, see the restrictions on qualifying investments in paragraph 65A of Appendix A).

We agree with the parties who appeared to be largely in agreement that for the purposes of Row 1 (b)(ii) of Table 8B and Row 1 (a)(ii)(2), (b)(ii)(2), and (c)(ii)(2) of Table 9B of the Immigration Rules, an applicant must establish control of the money at the point of investment, rather than after investment, to be satisfied at the date of decision.

In the circumstances of an application for extension of leave to remain or indefinite leave to remain as a Tier 1 (Investor) Migrant under either Table 8B or 9B, the money referred to in in Row 1 must have already been invested in the UK, as necessitated by the requirements which follow in Rows 2 and 3 that a person ‘has invested’ and done so within a specified timescale absent compelling reasons for delay. We find this supports the view that the date at which an applicant must show that they had money under their control (either their own money or money loaned to them) must refer to the time period before investment as it is that same money which is then used for investment to satisfy the other requirements. That view is supported by the construction of the Immigration Rules which refers to a sliding scale of investment according to the length of time an investor has spent in the UK identifying that a ‘specified continuous period must have been spent with leave as a Tier 1 (Investor) Migrant’

Ms Anderson submitted that in all of the circumstances, it was plainly rational for the Respondent to find, on the evidence as a whole, that neither applicant made a genuine investment of money under their control; taking into account in particular that they were required to invest the funds in Eclectic (for the reasons set out in the decision letter by reference to the terms of the Loan Agreements, the links between the companies and the terms of investment), the limitation on what they could do with their investments compared to the unilateral power of Eclectic to control the investments and the poor returns on them. These reasons were all expressly set out in the respective decision letters.

The applicants challenged the Respondent’s reference to the investments not being genuine, as not being founded in any of the requirements in the Immigration Rules for a grant of leave to remain as a Tier 1 (Investor) Migrant. The Rules do not require any assessment of the commercial value and rationale of an investment and it is not necessary for any investment to be a good one. The applicants’ case is that the only requirement under Table 8B or 9B is that the investment is in an active and trading UK registered company, as defined in paragraph 65A of the Immigration Rules.

We pause here to note that on the evidence before us, the applicants had not submitted documents to the Respondent to show that the requirement in paragraph 65A(b) of Appendix A had been met, that Eclectic was an active and trading UK registered company, there being no bank statements or similar document demonstrating a UK bank account showing current business transactions.

At the oral hearing, Ms Weston repeatedly submitted that it was a rational choice for both A1 and Ms Wu to deal with everything in one package as part of a scheme to meet the requirements of the Immigration Rules and the administrative convenience of doing so would be a legitimate benefit to both of them, who wished to relocate to the United Kingdom without the difficulty of withdrawing money from investments made in China. It was suggested that the primary motive for investment did not have to be good commercial returns (or in fact any commercial return), nor was that required by the Immigration Rules for a grant of leave to remain as a Tier 1 (Investor) Migrant.

The difficulty with this submission is that it was not founded in any evidence from the applicants themselves, nor was that their position when interviewed by the Respondent. For example, in her interview, A1 expressly stated that she invested in Eclectic, having become aware of them from a recommendation from Maxwell which she trusted (questions 29 and 31) and sought to invest in Eclectic because their projects were attractive and potentially lucrative on a long-term basis (question 30). When asked how the investment in Eclectic compared with other investments she considered, A1 answered that “this project is more retainable and can be lucrative on the long term” (question 38). A1 was asked why she chose to invest in this way in Eclectic, to which she stated, “Its just I have confidence in the business projects they are engaged in with a wine or media industry have great confidence in these projects. I am very experienced investor so I do evaluate and seek profit for myself” (question 53).

There is nothing within the interview with A1 or elsewhere in the documents submitted to the Respondent which makes any suggestion that her motive for taking out a loan from Maxwell to invest in Eclectic was anything other than commercial and profit driven, with specific reference being made to A1’s experience as an investor. There is no hint of any consideration of administrative or other convenience, nor of any recognition of the very poor commercial terms upon which she invested in Eclectic.

In her interview, Ms Wu did state that she made her investment using loan funds rather than her own money because it was a convenient way to invest without needing to transfer money from China and so that she could leave assets in China with high returns. In response to the investment in Eclectic, Ms Wu stated that this was one of the suggestions made by Maxwell and that she compared these investments and made her choice, with the Eclectic projects compared to all the options bringing her a more lucrative return with less risk, ensuring the investment retained its value (question 29 and 30) and that she thought “the investment projects will give better return than other products in other companies” (question 32).

As with A1, there is nothing in the interview with Ms Wu or elsewhere in the documents submitted to the Respondent which makes any suggestion that her motive for taking out a loan from Maxwell to invest in Eclectic was anything other than a commercial and profit driven and no suggestion that even part of the reason for this was administrative or other convenience. In answers given in interview, it was clear that Ms Wu was not aware of and did not understand the detail or nature of the agreements signed, nor did she recognise or address the poor commercial return on her investment in Eclectic.

In the circumstances and for the reasons set out by the Respondent in the decision letter, the nature of the investment made cannot possibly have been for good commercial reasons (there were none, the applicants having both made payments of interest upfront at the outset of the loan which were greater than the dividend payment to be made to them after six years of shareholding), as claimed by both applicants, which itself raises the question of whether it was a freely made investment of each applicant’s own choosing. We find that this, combined with the links between Maxwell and Eclectic and the terms of the loan agreements, entitled the Respondent to draw a rational and lawful conclusion that in all the circumstances of the investment, the applicants did not have a free choice to invest in Eclectic, but that they were required to do so. As such, the applicants were lawfully and rationally found not to have had money under their control for the purposes of the award of points under Row 1(b)(ii) of Table 8B for A1 or under Row 1(b)(ii)(2) of Table 9B for Ms Wu. Further, for the same reasons as identified by the Respondent, neither had sufficient control of their investments once made either.

In any event, once the further documents disclosed to the Respondent and the Tribunal during the course of the hearing, namely the Services Agreements concluded between each applicant and Maxwell Holdings, are taken into account, there can be no doubt at all that neither applicant had control over the funds loaned to them or the destination of their investment. That control was expressly ceded under the Services Agreement to Maxwell, as set out in section 3.7.4 where the choice of investment in specific instruments is at the discretion of Maxwell. In addition, the Services Agreement required the applicants to grant Maxwell Holdings a Power of Attorney or other document to allow Maxwell Holdings to act on the applicant’s behalf or to represent its interests on issues related to the provision of services (section 3.4); for the Manager to manage the investment account in a UK bank (section 3.3.3); ensured that the Manager invested the Client’s borrowed funds in an authorised instrument (section 3.7.2); all of which show that control was ceded to a third party.

We were not at all persuaded by Ms Weston’s submissions in relation to section 3.7.4 of the Services Agreement that ‘choice of specific instruments’ was unhappily drafted but meant only a function of monitoring the nature of the vehicle invested in to ensure the maintenance of the value of investment so as not to put an applicant at risk of an investment falling below the required level for the purposes of the Immigration Rules. The submission was contrary to the plain wording of the section, where in the Manager’s choice of specific instruments for investment was the means by which the requirements of the rules and monitoring of satisfaction of those requirements was achieved.

Further, Ms Weston submitted that section 3.7.4 did not specify where the money was to be invested, provided it was within an authorised investment. This takes the applicants’ case no further given the express wording within the Services Agreement that the choice of destination of investments was at the discretion of Maxwell. It was the fact that Maxwell chose where to invest, managed the bank account and actually invested the funds that is relevant for the purposes of the applicants’ lack of control rather than any specification of which company Maxwell chose for the investment to be made into.

In any event, it was submitted that the existence of the terms of the Services Agreement was not fatal to either of the applicant’s applications and that these documents would simply be part of the evidence to be addressed in any further reconsideration decision (on the assumption that the applicants were successful on the grounds and evidence as it was before the Respondent). However, as we have already concluded, it is beyond doubt that the overarching Services Agreement entered into between each applicant and Maxwell Holdings ceded control of the loans and investments from the applicants to Maxwell Holdings and/or Maxwell and as such the applicants could not establish that they had the requisite control of funds loaned to them to satisfy the requirements of Table 8B or 9B of Appendix A. Section 31 (2A) of the Senior Courts Act 1981 dictates that permission should be refused in claims where it is highly likely that the outcome for the applicant would not be significantly different if the conduct complained of had not taken place. This is such a case where the applications were bound to fail on the basis of the documents belatedly disclosed to the Respondent and the Upper Tribunal.

The application for Judicial Review must therefore be dismissed on grounds two and three. Where there is an independent substantive reason for refusal of both applicants’ applications for leave to remain as a Tier 1 (Investor) Migrant which has been upheld in these proceedings, the applications as a whole must fail as the relief sought to quash the decisions under challenge cannot be granted. It is clear that the applications would have failed and the Administrative Review decision correctly upheld the initial refusal is in both cases. In these circumstances we deal with the remaining grounds of challenge relatively briefly.

The Respondent refused both applications on the basis that the funds invested in Eclectic were not a qualifying investment under paragraph 65(b) of the Immigration Rules, primarily because the investment was made prior to 30 June 2016 when Eclectic’s principal business was to use funds to trade investments in other companies, which is said to be of a type which falls within the exclusion. This part of the decision was reiterated and confirmed within both of the Administrative Review decisions, with the additional explanation that Eclectic has attributes akin to investment vehicles expressly excluded by paragraph 65(b) of Appendix A.

The applicants’ case is that paragraph 65(b) of Appendix A to the Immigration Rules provides an exhaustive list of investments which are excluded, some of which are defined in other legislation, the definitions for which are not satisfied in the case of Eclectic and it is not sufficient for the Respondent to merely say that Eclectic has attributes akin to these types of investment vehicle.

Specifically, an ‘open-ended investment company’ is defined in section 236 of the Financial Services and Markets Act 2000 and by Regulation 2 of The Open-Ended Investment Companies Regulations 2001, which, inter alia, means a body incorporated by virtue of regulation 3(1) of the latter, authorised as such by the Financial Conduct Authority. Eclectic has not been authorised under this provision.

A pooled investment vehicle, otherwise known as a collective investment scheme is defined in section 235 of the Financial Services and Markets Act 2000 and said not to apply to Eclectic because the original investment was made by way of a simple loan which was subsequently converted into shares.

An investment trust company is defined in section 1558 of the Corporation Tax Act 2010, which includes the requirement that shares are publicly traded on a regulated market.

The applicants have not identified any statutory definition of an investment syndicate company but referred to explanations of this from other sources. It is said that Eclectic is not an investment trust company because it is not publicly traded on the stock market and that it is not an investment syndicate company because resources are not pooled for the purpose of investing in a specific business venture.

The Respondent points to the rationale for the Tier 1 (Investor) route to obtain leave to remain in the United Kingdom, which is to encourage capital investment in UK companies as well as generate tax revenue from the same. For these reasons, certain investments are excluded, including those in investment vehicles which essentially reinvest the money elsewhere but with no guarantee that the ultimate destination of the further investment is in a UK trading company. This is the policy objective behind paragraph 65(b) of Appendix A consistent with the guidance given for such applications as a Tier 1 (Investor) Migrant.

Ms Anderson submitted that the list in paragraph 65(b) of Appendix A was not exhaustive and that the Respondent could not be expected to list each and every possible thing or scheme which would not meet the policy objective of ensuring a controlled investment, the ultimate destination of which is within the United Kingdom. It was submitted that there is no limitation intended by specific or implicit incorporation of a technical meaning of the phrases listed in paragraph 65(b) of Appendix A from any other definition used for non-immigration purposes. Given the purpose of the Immigration Rules and their self-contained nature aimed at a ‘standalone’ status enabling applicants to know the position by reading the Rules, they would have contained any specific definitions to those terms if applicable. In the absence of any prescribed definitions in the Immigration Rules, it was submitted that in line with the guidance in Mahad, the normal presumption must be that these expressions are intended to have their plain English meanings.

The Respondent highlights general meanings attributed to each of the expressions outside of the legislation referred to and relied upon by the applicants. On the basis that all of the types of investments are grouped together within one paragraph, the Respondent says that on the ordinary principles of statutory interpretation, it is not necessary to determine which of the four types or similar type of vehicle covers Eclectic. It is sufficient that all of these types of investments have in common the feature that they involve funds from many different investors being aggregated into a single fund which is then invested in diverse investments, for which there is no guarantee of the ultimate destination being within the UK.

The Respondent submits that the accounts for Eclectic show some 98% of its value consisted of investments (104 different people having each loaned at least £1 million to Eclectic who then subsequently converted the loans into share capital) and that such investments were not in Eclectic itself as a company, but were in practice used to make further investment in separate companies, some of which were subsidiaries of Eclectic with common ownership by NK, including dormant companies. However, as at June 2016, all except one of the investments were in Russian companies, the remaining one being in a company incorporated in Jersey. There is a lack of evidence of any substantial investment by Eclectic in active trading UK companies.

Of the four vehicles expressly listed in paragraph 65(b) of Appendix A, not all have statutory definitions, with one described in various ways by different financial dictionaries and publications. We cannot at least for this one identify a consistent or agreed definition.

In the context of the Immigration Rules, there are numerous examples of specific terms being identified by reference to statutory definitions or provisions, either in the common interpretation section or generally throughout the rules. The terms listed in paragraph 65(b) of the Immigration Rules are not so defined, either within that section or elsewhere within the Immigration Rules and there is no provision of interpretation applicable generally across the rules that the meanings given to terms in other legislation outside of the immigration context are to be applied within the Immigration Rules. In these circumstances, the ordinary rules of interpretation of the Immigration Rules apply, that is that the terms bear their ordinary and natural meaning.

We do not find it necessary to set out a specific interpretation of each of the four terms listed because, having considered the various descriptions and definitions put forward by both parties, we accept that there is a common theme to all four that funds are invested by a number of different people and used not for the benefit directly of the company invested in, but are at least to some extent pooled and used as capital for further investments in other companies, the final destination of which is not necessarily easily identifiable or determined and there is no guarantee that such investment is made in other active trading companies within the UK. Such investments defeat the purpose and clarity of the Tier 1 (Investor) scheme and we find the Respondent was therefore rationally entitled to conclude that the investment in Eclectic by both applicants was excluded from being a qualifying investment because it shared the common features of the vehicles listed in paragraph 65(b) of Appendix A.

This ground of challenge was not pursued orally at the substantive hearing, with reliance placed by Ms Weston only on the initial written grounds of challenge.

Ms Wu asserts that in relation to evidence of personal assets with a value of no less than £10 million as required in Row 1(b)(ii)(1) of Table 9B in Appendix A, all of the specified evidence required by the rules had been met. This included a letter from Maxwell dated 7 February 2014 confirming Ms Wu’s net worth and the same being confirmed within the application form. There was no further specified evidence required within the Immigration Rules over and above the initial confirmation provided by an FCA regulated body in her first application for leave to remain as a Tier 1 (Investor).

For similar reasons to those set out in relation to ground one above, the burden is on an applicant to show that he or she meets the requirements of the Immigration Rules. In the Points Based System, these are substantive requirements set out in the main body of the rules, with additional specific requirements for the award of points set out, in this case in Appendix A, specifically Table 9B and finally the specification of the relevant evidential requirements.

It is not the case that because there is not a listed specified document for each and every requirement, that it is not necessary for an applicant to provide any evidence at all to show satisfaction of a particular requirement. Ms Wu’s suggestion in this ground that the fact that a third party had, in early 2014 as part of her initial application for leave to remain as a Tier 1 (Investor) Migrant confirmed her net worth, was sufficient to show that as at the date of application for indefinite leave to remain as a Tier 1 (Investor) or the date of decision thereon, that she had assets of not less than £10 million is wholly unsustainable. On any rational view, an outdated third-party assertion of assets is woefully insufficient to meet the express requirements for the award points set out in Row 1 of Table 9B in Appendix A.

In the alternative, Ms Wu claims that the Respondent ought to have used the discretion available in paragraph 245AA of the Immigration Rules to request further evidence of her assets. However, no such discretion is available to the Respondent in the circumstances of this application in accordance with the provisions in paragraph 245AA, which expressly only deal with required specified documents where specified evidence is missing from the documents; the document is in the wrong format; or document does not contain all of the specified information. That is not the situation here. First, because the missing evidence to establish satisfaction of part of Table 9B was not specified evidence; and secondly, what was missing could not on any view fall within the categories outlined in paragraph 245AA(b)(i), (ii) or (iv) of the Immigration Rules. In any event, in accordance with paragraph 245AA(c), no request for documents would be made when an application is to be refused for other reasons, as it was in this case under other parts of the relevant Immigration Rules. In any event, as accepted by Ms Weston in submissions, this point falls away if Ms Wu has not succeeded on her earlier grounds of challenge, which she has not.

Also in the alternative, Ms Wu claims that if the Respondent was not satisfied of the full value of her assets for a grant of indefinite leave to remain as a Tier 1 (Investor), she should have considered the application as one for further leave to remain under Paragraph 245ED and Table 8B of Appendix A to the Immigration Rules. For the reasons given above in relation to the other grounds of challenge, it is clear that in any event Ms Wu could not satisfy these requirements either, such that any alternative consideration by the Respondent of the application for leave to remain was bound to fail.

Ms Wu’s final ground of challenge is that the Respondent was wrong to say that the report and unaudited accounts of Eclectic did not give full details of her investments sufficient to satisfy paragraph 65-SD(a)(vii) of Appendix A to the Immigration Rules in circumstances where there was a compilation report from Sarmand Accountants dated 22 December 2016 which gave full details of such investment.

In any event, Ms Wu claims that paragraph 65-SD(a)(vii) of Appendix A does not apply to her at all because as at her date of application and the date of decision, all loaned funds to Eclectic had been converted to preference shares and this provision only applies to loan funds’ investments.

This ground of challenge was not developed orally at the substantive hearing. The Respondent does not accept this interpretation of the Immigration Rules, but in any event submitted even if this provision did not apply, this part of the decision could not materially affect the outcome of Ms Wu’s application which was bound to fail for other substantive reasons.

For the reasons already set out above, this final ground of challenge is wholly immaterial to the outcome of these applications for Judicial Review and we therefore make no detailed findings on the application of paragraph 65-SD(a)(vii) of Appendix A of the Immigration Rules and whether or not it applies only to investments which were made and continue as loans to companies, or whether the requirement is restricted only to existing loan funds.

Signed:

Dated: 11^th October 2019