Lord Justice Rix :
- Kadir Ascioglu is a Turkish national who came to this country as a visitor with leave to enter or remain for six months from 22 March to 22 September 2007. On 20 September 2007 he applied, through Kuddus Solicitors, for leave to remain as a self-employed business person under the EC-Turkey Association Agreement (the "Ankara Agreement"). His case has been in the toils of the legal process commenced by his application ever since. Meanwhile, he has lawfully remained in this country under the provisions which extend his leave until the end of the appeal process.
The standstill clause and the relevant rules
- By article 41(1) of the Ankara Agreement, the so-called "standstill clause", the United Kingdom is prevented, as from its accession to the EC on 1 January 1973, from introducing more restrictive conditions on freedom of establishment for Turkish nationals. Thus Turkish nationals who seek leave to enter or remain as self-employed business persons have their applications determined under the then existent rules (made in 1972) rather than under more modern and restrictive rules. I shall call the then existent rules the "1972 rules", but sometimes they are referred to in relevant literature as the 1973 rules.
- Those rules are paragraphs 4 and 21 of HC 510. They provided as follows:
"4. The succeeding paragraphs set out the main categories of people who may be given limited leave to enter and who 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 which he wishes to stay, he might not be returnable to another country…
Businessmen and self-employed person
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 its 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 proportion 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 time of stay if the conditions set out above are still satisfied at the end of the period for which he was admitted initially."
The basic facts
- Mr Ascioglu was born on 1 January 1984. It is common ground that there is no need to anonymise his name, although that has occurred hitherto. His application was to remain as a self-employed barber. His application included a copy of his shorthold assured tenancy, his Turkish barber licence setting out his qualifications as a barber, banking documents from HSBC, his business plan and service agreements for renting a chair in a number of Glasgow barber shops. His application was made on a special Home Office Border & Immigration Agency form. In it he ticked the box headed "Switching" (ie "if you are a Turkish national and you entered the UK in a capacity other than as a self employed business person, and you wish to switch into this category"). One of the questions asked by the form was: "4.4 On what date did you start your self employment?" Mr Ascioglu wrote: "Will commence 1/10/07." This was admittedly an all-purpose form, which was also designed for those who were seeking to extend an initial twelve month grant of leave under the Ankara Agreement.
- In law Mr Ascioglu was not permitted to start his self employment until he received a favourable response to his application. In practice, however, at that time the Home Office was prepared to deal with such applications on a pragmatic basis which reflected a concern that delays in the processing of such applications were unacceptably long, so that applicants, who had to show that their business plan made economic sense and that they could support themselves without becoming a burden on the state, were finding that their store of capital, which they needed to start in business, became eaten up by the wait for approval of their application. The litigation in this case has occurred because Mr Ascioglu's application bridged a period when this pragmatic response changed into what essentially became a robust refusal to approve any application where the applicant had started working in breach of the condition of his leave. The history of that change is complex and convoluted and will need to be set out in further detail below, but that is the essence of the problem.
- On 28 January 2008, still reflecting the pragmatic approach just referred to, the Home Office wrote to Kuddus Solicitors concerning its need for "further documents/information requested below" so that it could consider the case. The listed documents included "Personal and business account statements (original) since the business commenced trading or for the past three months", "Evidence of work undertaken so far in the UK (contracts, invoices, letters from clients etc.) if they are currently on conditions which allow them to work", "Proof that he has advertised his services in the UK", and "Proof that he has notified the Inland Revenue that he is self-employed". The theme of the letter was to the effect that the applicant was asked to prove the genuineness of his business: but within the wording quoted an observant reader will have noted that there is a reference to "conditions which allow them to work". The requested details were provided by letter dated 14 February 2008. The letter enclosed –
"1. Evidence of work undertaken so far in the UK by our client includes service agreements, invoices, and the letters from clients.
2. Proof of advertising his business in the UK.
3. Proof of notification that Inland Revenue is aware of his self-employment as well as his business.
4. A written confirmation that he will not be seeking employment in the United Kingdom other than work for his business; and also on the same letter our client confirms that he will not claim public funds.
5. A letter from his landlord with a attached tenancy agreement.
6. Our client is not holding a bank account in the UK. However, he has a worldwide HSBC account and a bank card which he can use throughout the world. Also our client has 3250.00 GBP in his account."
- Mr Ascioglu was later to give unchallenged evidence to the Asylum and Immigration Tribunal (AIT, Immigration Judge Wood TD) that, having started work in October 2007 he had last worked on 29 February 2008. It appears that he did both, ie commenced work and ceased work, on the advice of his solicitors. IJ Wood stated that "I have no reason to doubt that the Appellant relied upon the legal advice that was made available to him" (at para 20). On that basis he expressed some sympathy for Mr Ascioglu "who has taken appropriate legal advice throughout the process" (at para 24). The significance of stopping work at the end of February 2008 was that it was from around that time (evidence in another case from the respondent secretary of state put it as "around March 2008") that refusal notices began to be issued refusing applicants solely on the ground of breach of conditions of leave.
The two Home Office refusals
- The Home Office refusal in Mr Ascioglu's case came on 31 July 2008. It stated:
"You established your business on 6 October 2007 in breach of the conditions of your previous leave to remain as a visitor which prohibited economic activity.
It is our position that establishing a business in breach of the conditions of your previous leave is tantamount to fraudulent activity and you are therefore excluded from taking the benefit of the standstill clause contained in the ECAA which gives effect to these Rules."
The letter went on to say that Mr Ascioglu failed to bring himself within the current rules. No consideration was given to the 1972 rules.
- In the light of Mr Ascioglu's application, which had been entirely open about his intentions and activities, the accusation that he had behaved in a way "tantamount to fraudulent activity" was entirely unjustified, and is no longer relied upon. Mr Ascioglu appealed.
- Mr Ascioglu's appeal succeeded before Immigration Judge Scobbie, whose determination was published on 8 January 2009. His reasons no longer matter save as part of the history of this litigation, but he held that the respondent Secretary of State had not acted in accordance with law because the refusal did not follow Home Office guidance in the form of Immigration Drectorates' Instructions (IDIs) and had not considered the merits of Mr Ascioglu's application under the 1972 rules. He referred the matter back to the respondent for a new decision on his application.
- The respondent's second decision was dated 7 April 2009. Mr Ascioglu's application was again refused, citing the fact that he had begun his business in breach of the conditions of his leave to enter. The refusal letter now stated:
"It is considered that establishing a business in breach of the conditions of your leave to remain amounts to an abuse of rights by you and is contrary to the long-established principle in law that a person should not benefit from their own wrong-doing (ex turpi causa non oritur actio). Recent case law in the UK courts supports this position…
It is our position that the breach of conditions by you is an abuse of rights that we consider to be sufficiently serious to place you outside of the standstill clause.
The current published Immigration Directorate Instructions (IDIs) at Chapter 6 Section 6 predates the case-law outlined above and it is acknowledged that the current IDIs state that cases, even if they are to be excluded from the benefit of the standstill clause, will nonetheless be assessed under the 1973 Rules.
Therefore we have considered the merits of your application against paragraphs 4 and 21 of HC510 [the 1972 Rules]…
It is clear that paragraph 4 permits the decision maker to take into account all of the relevant facts of the case, including whether or not a person has breached the conditions of their leave to remain. Your behaviour in establishing in self-employment when you did not have permission to do so clearly demonstrates that you have not obeyed the conditions of your visitor visa and therefore when assessed against paragraph 4 your application falls for refusal.
Furthermore, paragraph 21, makes it clear that applications should be from those who intend to establish themselves in business and that consent should be given by the Secretary of State prior to the commencement of the business.
It is not disputed that you have established a business which meets the requirements of paragraph 21 of HC510, however, in view of the fact that the business which has formed the basis for this application was established in breach of the conditions of your leave to remain in the UK and having taken into account all the relevant circumstances, the Secretary of State is not prepared to overlook the breach of conditions and grant you leave to remain in the UK as a self-employed business person."
- Mr Ascioglu appealed again.
The determination of IJ Wood
- Mr Ascioglu's second appeal came before IJ Wood, sitting in the AIT. The respondent was not represented. IJ Wood's determination was published on 16 June 2009. It resulted in the dismissal of the appeal. Although there was a subsequent reconsideration of this determination, nevertheless, for reasons which I will explain, this is the determination upon which it is common ground that Mr Ascioglu's appeal to this court depends.
- Although it was submitted on behalf of the respondent before this court that IJ Wood exercised his own discretion in determining the appeal before him (see below), it is clear from the terms of IJ Wood's determination that he considered that there was no basis on which he was entitled to interfere with the respondent's exercise of her discretion under the rules. Thus he reasoned as follows (I have emphasised those passages which in particular satisfy me that IJ Wood was regarding the matter as determined by the exercise of the respondent's own discretion):
"21. It seems to me that it does not matter whether or not the Appellant is entitled to rely on the standstill clause: the issue is whether or not he has set up his business in breach of entry clearance…
22. In terms of paragraph 4, however, the Respondent is entitled to take account of "all the relevant facts"…This puts the applicant on notice that the Respondent has a duty to take account of the whole circumstances of the application. The terms of the Rule then [go] on to provide examples of "relevant facts"…
23. No particular weight is allocated to any of those factors, all of which are given as examples only. The problem for the Applicant is that he has established a business before he obtained the consent of the Secretary of State. Although the Respondent has seemingly confused the issue by requesting information that could only be available once the business was established, there is no evidence that any decision was reached at that stage…
24. While I have some sympathy for an Appellant who has taken appropriate legal advice throughout the process, it appears to me that the Respondent is perfectly entitled to take the view that he has breached his conditions of entry clearance as a visitor by establishing a business without permission. Although Mr Aslam indicated to me that the Appellant's solicitors had acted for a number of Turkish visitors who had similarly set up businesses that had been sanctioned by the Respondent, the precise details of those businesses and cases were not available to me…
25. I find that I am not satisfied that the Appellant has relied on any guidance made available by the Respondent, because no such guidance for those in the Appellant's position has been made available to me. I find that the Respondent is entitled to refuse the Appellant's application on the basis of paragraph 4 of the 1973 Rules. For the avoidance of doubt, I am not satisfied that the Respondent is obliged to consider each and every of the "example" factors in reaching her decision. The Appellant has not satisfied the burden of proof upon him and accordingly, this appeal cannot succeed."
Subsequent proceedings
- Mr Ascioglu's appeal then obtained permission for reconsideration, and it came before SIJ King. In a determination promulgated on 14 October 2009, SIJ King considered that IJ Wood had erred in law and substituted his own decision, albeit dismissing the appeal on different grounds from those of IJ Wood. However, it is agreed between the parties that the determination of SIJ King is itself infected by error of law and cannot stand. It has therefore also been agreed between the parties that the way forward is for this court to consider the determination of IJ Wood and to decide if it contains a material error of law. Absent such, it is agreed that it stands as the final determination of Mr Ascioglu's appeal. It has therefore not been necessary for us to consider the details of SIJ King's determination.
- However, before that agreement was reached, Mr Ascioglu had obtained (limited) permission to appeal to this court from Sedley LJ on the basis of an arguable case that a policy change to be found in successive IDIs had operated unfairly in his case. Sedley LJ put the matter in this way in his order for permission, dated 19 January 2011:
"1…He has been dealt with under the 1973 rules. The notion that IDIs form a gloss on the Rules, at least on appeal, is incorrect. While the rules are policies which acquire the force of law, IDIs are in-house policies for consistency in administering the rules. They may well include things which are legally requisite, but that is a consequence of the general law, not of the IDI.
2. IDIs, like other policies, may generate legitimate expectations, but these cannot include an expectation that the policy will not change – only that any change will accommodate commitments made on the faith of the previous policy.
3. This, however, does not exhaust the question whether it was legally proper (the AIT was quite clear that it was not morally right) to rely on the newly toughened policy in redetermining an application which, had it been properly determined when it should have been, would almost certainly have succeeded. It seems to me arguable, whether or not it is put in terms of legitimate expectation, that the Home Office owed it to A to adopt the policy approach it should and would originally have adopted. This (like legitimate expectation) is a question of fairness, and fairness can be a question of law."
- It is because of the history of these proceedings that we have in the papers before us successive versions of relevant IDIs, and new evidence from the respondent, in the form of a witness statement from Ms Kirsten McFarlane dated 7 June 2011. Ms McFarlane was then in command of operational policy at the Home Office in connection with the Ankara Agreement. However, for reasons to which I will now come, the argument focussed on the IDIs has been superseded by amended grounds of appeal based on still further fresh evidence, this time from the side of Mr Ascioglu, as to the pragmatic way in which applications under the standstill clause of the Ankara Agreement were dealt with at the relevant time of Mr Ascioglu's application.
- On 27 June 2011 Sullivan LJ adjourned the hearing of this appeal until after the European Court of Justice (ECJ) had given judgment in a case concerning the standstill clause in the Ankara Agreement which had been referred by this court in Oguz v. Secretary of State for the Home Department [2010] EWCA Civ 311.
- The ECJ gave its judgment on 21 July 2011, Oguz v. Secretary of State for the Home Department (Centre for Advice on Individual Rights in Europe intervening) Case C-186/10 [2012] 1 WLR 709. In Oguz the ECJ held that the standstill clause was a procedural rule which designated the applicable provisions of national law. It was for national law to determine whether fraud, abuse of rights, or breach of conditions of leave led to the failure of an application. Nevertheless, the applicable national law remained that required by the standstill clause, which imposed "an absolute prohibition" on introducing more restrictive requirements (at para 27). Prior ECJ authority, which had been thought to suggest that such factors as at any rate fraud or abuse of rights took an applicant wholly outside the standstill clause (so that contemporary rather than standstill provisions applied) was distinguished or explained: see R (Kondova) v. Secretary of State for the Home Department (Case C-235/99) [2001] ECR I-6427 (a case on a different treaty) and R (Tum) v. Secretary of State for the Home Department (Case C-I6/05) [2008] 1 WLR 94 (Tum and Dari).
- In Oguz the applicant was granted leave to enter the UK as a student, and then later was granted leave to remain as a work permit holder on condition that he did not engage in any business or profession without consent. He later commenced self-employment before applying in 2008 for leave to remain as a self-employed business person under the standstill clause of the Ankara Agreement. He subsequently terminated his self-employment and later re-applied for leave, relying on the business he had already conducted. His application was refused on the ground that the breach of the condition of his leave took him wholly outside the standstill clause and was tantamount to fraudulent or abusive activity. Subsequently, on appeal to the AIT, however, the immigration judge had found that he had not acted fraudulently but that the breach of condition still took him outside the standstill clause.
- The ECJ appears to have dealt with the case on the basis, contended for by the Secretary of State, that there was not only a breach of condition but that that breach had been relied on by Oguz to establish the business on the basis of which he sought further leave to remain: for the ultimate ruling was expressed as follows:
"46. In the light of the foregoing, the answer to the question is that article 41(1) of the Additional Protocol must be interpreted as meaning that it may be relied on by a Turkish national who, having leave to remain in a member state on condition that he does not engage in any business or profession, nevertheless enters into self-employment in breach of that condition and later applies to the national authorities for further leave to remain on the basis of the business which he has meanwhile established."
See also at para 39.
- Nevertheless, even though it would seem that, in all cases, the merits of the application have to be dealt with under the provisions of the standstill clause, the ECJ observed that there are differences between various situations. Thus the Court distinguished the factual situation in Kondova from that in Oguz, pointing out that in Kondova the applicant had "knowingly misled the entrance clearing officer" in order to gain leave to enter, whereas in Oguz the applicant "was lawfully granted leave to enter and to remain in the United Kingdom and who was not in breach until he established a business, eight years after his entry into that member state" (at para 42).
- In Tum (or Tum and Dari) the applicants were Turkish nationals who had arrived as asylum claimants, but had lost their asylum claims and appeals. They had later sought leave to remain under the standstill clause. However, since under contemporary rules their status as failed refugees was that they were deemed not yet to have entered the UK, the secretary of state's position was that the standstill clause did not apply to such cases, but the ECJ held otherwise. In an additional obiter observation the Court had said:
"64. Last, as regards the alternative argument of the United Kingdom Government that failed asylum seekers such as the claimants in the main proceedings should not be allowed to rely on article 41(1) of the Additional Protocol, since any other interpretation would be tantamount to endorsing fraud or abuse, it must be borne in mind that, according to settled case law, Community law cannot be relied on for abusive or fraudulent ends (Halifax plc v Customs and Excise Comrs (Case C-255/02) [2006] Ch 387, para 68) and that national courts may, case by case, take account – on the basis of objective evidence – of abuse or fraudulent conduct on the part of the persons concerned in order, where appropriate, to deny them the benefit of Community law on which they seek to rely: see inter alia Centros Ltd v Erhvervs og Selskabsstyrelsen (Case C-212/97) [200] Ch 446, para 25."
- It was this passage which, prior to Oguz, had been interpreted by the Secretary of State to allow a national court, on the basis of fraud or abuse of rights, to deal with relevant applicants outside the standstill clause as a whole. However, the interpretation which Oguz emphasised was that in all cases it was for the national courts to apply the standstill clause, but that in doing so they might be entitled to rely on fraud or abuse of rights (or, as in Oguz itself, breach of condition) to deny applicants the leave to which they might otherwise have been able to demonstrate they were entitled under the national rules applicable pursuant to the standstill clause.
- Even pending the ECJ judgment in Oguz Mr Ascioglu had indicated that he sought to renew (to the extent that he had been given only limited permission to appeal) and/or amend his grounds of appeal: but Sullivan LJ had directed that this too should await the ECJ's decision.
- In the event, there was a hearing before Sullivan LJ on 4 November 2011 as a result of which an order was made permitting Mr Ascioglu to serve amended grounds of appeal in substitution to his original grounds and to have permission to appeal thereon; and also permitting the respondent to serve a respondent's notice dated 1 July 2011 out of time and to adduce the evidence of Ms McFarlane. Mr Ascioglu was also permitted to serve a new skeleton argument.
- In the run-up to the appeal hearing, Mr Ascioglu amended his substituted grounds of appeal still further. By an amendment dated 18 May 2012, Mr Ascioglu introduced what became his primary ground of appeal at the hearing, which was that IJ Wood erred in failing to consider for himself the discretion contained in paragraph 4 of the 1972 rules and approached the refusal of the secretary of state as if it were a decision subject only to judicial review rather than appeal. However, this new ground had already been anticipated in Mr John Walsh's skeleton argument dated 16 January 2012.
- Finally, but not until 23 May 2012, Mr Ascioglu applied for permission to adduce additional evidence and for permission to amend his grounds of appeal as indicated in the previous paragraph. The additional evidence comprised material relating to the practice or policy of the secretary of state at the time of Mr Ascioglu's application, including a witness statement of Mr Steve Lamb on behalf of the secretary of state made in the Oguz case itself on 6 March 2010, and, of particular importance, a consent order of this court dated 25 February 2010 and accompanying statement of reasons in the appeal of Karaaslan v. Secretary of State (C5/2009/0886). The latter documents demonstrated the secretary of state's consent to this court allowing Mr Karaaslan's appeal with the promise that he would be granted leave to remain in the UK as a self-employed business person pursuant to the standstill clause of the Ankara Agreement. All this material had also been anticipated in Mr Walsh's skeleton argument dated 16 January 2012.
- In the event, the secretary of state has consented to the admission of the new ground of appeal and this new evidence, and this appeal has been argued on the basis of them. We formally give permission. They have fundamentally transformed the dynamics of the appeal, which had previously concentrated on the IDIs as demonstrating the secretary of state's policy at the time of Mr Ascioglu's application. As will appear, the IDIs have now receded into the background.
Mr Ascioglu's new evidence
- The Karaaslan case arose out of almost identical facts to those pertaining to the present appeal. As already stated, Mr Karaaslan ultimately succeeded, in this court, by consent. Mr Karaaslan is a Turkish national who was granted leave to enter the UK as a student on 23 October 2000, subject to the condition that he should not undertake employment or engage in any business or profession without the secretary of state's consent. Successive extensions of his leave to remain as a student on the same conditions followed, expiring on 31 August 2007, save that in 2004 he was permitted to undertake part-time work, but remained unable to engage in any business or profession without consent. On 27 August 2007, shortly before his leave to remain was due to expire, Mr Karaaslan applied pursuant to the standstill clause of the Ankara Agreement to work as a business person. He registered a company for the purpose of his business on 7 August 2007, and began trading after 31 August. His application was refused on 18 June 2008, on the basis that his trading in breach of condition was "tantamount to fraudulent activity" and thus took him outside the standstill clause. His application was therefore refused under the current rules, but he was also assessed in the alternative under paragraphs 4 and 21 of the 1972 rules and failed under these as well.
- Mr Karaaslan appealed. His statutory appeal at first succeeded because the immigration judge considered that he had not been guilty of fraud. The secretary of state sought reconsideration on the ground that in any event he had been in breach of the condition of his leave. On reconsideration, the appeal was dismissed on the ground that breach of condition, although not fraudulent, was an abuse of rights, for the applicant had relied on his own breach of condition in making his application to remain. LF (Turkey) v. Secretary of State [2007] EWCA Civ 1441 was relied upon (a case in which the applicant lost his appeal on the ground that he had only met the requirements of the 1972 rules "by reason of his own wrongdoing in establishing a business in violation of the conditions of his temporary admission" (at para 11): this was considered an abuse of rights and no different from fraud (at para 17)). The statement of reasons (which accompanied and explained Mr Karaaslan's ultimate success by consent in this court) went on to refer to Sonmez v. Secretary of State [2009] EWCA Civ 582 (where LF (Turkey) was held to be binding on this court and was applied) in these terms:
"In Sonmez…the Court of Appeal considered the appeals of three Turkish nationals who had appealed against the refusal of their applications for leave to remain as a self-employed businessman under the standstill clause. Each had entered into business in breach of a condition of leave to remain, and had only afterwards applied for leave to remain under the standstill clause. The Court nonetheless held by a majority that the appellants in each of those cases were debarred from relying on the standstill clause on the grounds that he had improperly attempted to circumvent a national system of prior control, which conduct fell outside the scope of the standstill clause."
- I comment: the jurisprudence in LF (Turkey) and Sonmez (see further below) was premised on a view of the ECJ cases in Kondova and Tum and Dari as justifying stepping outside the standstill clause in a case of fraud or abuse of right. For these purposes this court considered that a case of abuse of right was the equivalent of fraud. All of that jurisprudence has now been superseded by the recent ECJ decision in Oguz. Indeed, we were told that the Karaaslan case was due at one time to be linked with the Oguz case in the court of appeal, but was withdrawn.
- The statement of reasons continued:
"11. The Secretary of State accepts that that principle [the abuse of right principle] does not apply where there is no evidence that a Turkish national has evaded a member state's "system of prior control".
The present case
12. The Secretary of State agrees that the appellant's case may be distinguished from those considered by the Court of Appeal in Sonmez. Unlike those cases, there is no evidence in the present case that the appellant sought improperly to circumvent the system of prior control by invoking the standstill clause, having regard to the following circumstances:
(1) The Secretary of State accepts on the facts of the present case that the appellant met the requirements of paragraph 21 of HC 510 as at the date of his application.
(2) At the point when he submitted his application for leave to remain, the appellant had been lawfully in the United Kingdom, had not entered into business, and had not overstayed his existing leave to remain.
13. The Secretary of State accordingly accepts that the present case falls to be considered under paragraphs 4 and 21 of HC 510 (being the applicable Immigration Rules in force on 1 January 1973). As set out above, he further accepts that the appellant meets the requirements of paragraph 21 of HC 510.
14. Paragraph 4 of HC 510 entitles the Secretary of State to have regard to the appellant's subsequent breach of condition in exercising his discretion as to whether to grant leave to remain. The Secretary of State does not consider in the circumstances of the present case (including all those set out in paragraph 12 above) that the appellant's subsequent breach of condition of the terms of his leave to remain was sufficiently serious to justify the refusal of his application for leave to remain under paragraph 4 of HC 510. He has accordingly decided to grant the appellant leave to remain" (emphasis added).
- The statement of reasons is a formal document, carefully drafted and agreed by both parties, and submitted to this court as the basis for inviting the court to agree to the dismissal of an appeal. It is referred to in the consent order signed on behalf of both parties.
- It will be observed that the essential facts in Karaaslan and in the present case are identical. In both cases the applicant had applied within time, and had only commenced self employment in breach of the condition of his leave after his application. On behalf of the respondent, however, Mr Robert Palmer has submitted that there is a critical difference in the agreed finding at para 12(1) of the statement of reasons that Mr Karaaslan had met the requirements of paragraph 21 of HC 510 "as at the date of his application". He submits that there is no similar finding in the present case. In truth there is no finding one way or the other. However, there is absolutely nothing about the facts of the present case to suggest that it was only subsequent conduct on the part of Mr Ascioglu which persuaded the secretary of state that he could meet the requirements of paragraph 21. It would indeed be very strange if the secretary of state would acknowledge that the requirements of paragraph 21 had been met, if they had only been met in circumstances of breach of condition. Indeed, the actual terms of paragraph 21 point to the future establishment of the applicant's business, as the respondent's second refusal letter itself remarked on (see at [11] above). (I observe, however, that the wording of the second refusal letter stated that "It is not disputed that you have established a business which meets the requirements of paragraph 21", but as to that see below at [69]). In Karaaslan, the refusal letter had simply accused Mr Karaaslan of a breach of condition "tantamount to fraudulent activity", and the findings of the AIT had twice concluded that his breach had amounted to an abuse of right. It would appear therefore that the para 12(1) statement was made not because of any positive finding, but because, as was twice stated in the statement of reasons, there was "no evidence" that Mr Karaaslan had sought to evade the system of prior control. Exactly the same is true in this case. Indeed, in the present case there is positive evidence in the contrary direction: first in the finding of IJ Wood that Mr Ascioglu had at all times acted on appropriate legal advice, and secondly in the fact that Mr Ascioglu had only referred to matters concerning his business during the brief period when he was operating it at the request of the secretary of state in a letter designed to suggest that what was requested would be of assistance to his application.
- In my judgment, therefore, the absence of a finding in the precise terms of paragraph 12(1) of the Karaaslan statement of reasons does not assist the respondent in this case. I am not in the circumstances satisfied that I should regard the present case as any different from that of Karaaslan. The only question which may arise, if this appeal is to be allowed, is whether the matter should be remitted to the tribunal to give the secretary of state a further opportunity to pursue factual findings adverse to Mr Ascioglu. I will deal with that question as may be necessary below.
- Although the Karaaslan case is the closest example of the secretary of state, at any rate on appeal to this court, accepting that a breach of condition subsequent to a valid application neither (a) fell within the pre Oguz view that fraud or its equivalent of abuse of right took an applicant outside the standstill clause, nor (b) should properly lead to an adverse decision on paragraphs 4 and 21 of the 1973 rules, the new evidence admitted for the purpose of this appeal also included a number of AIT determinations during the period of 27 September 2007 to 2 June 2008 (during which the secretary of state was considering Mr Ascioglu's application) to demonstrate that at that time the secretary of state was simply not relying on the commencement of business between application and its being dealt with as a ground for opposition.
- Thus in the case of Ertas (AIT appeal no IA/13619/2007, determination promulgated 27 September 2007) the application was refused simply on the basis that the secretary of state was not satisfied that the applicant could establish himself in business. He had applied on 18 May 2007, and had commenced trading since the beginning of July 2007. The appeal was allowed on the basis that he was genuinely self employed. No point was taken that trading had commenced in breach of condition.
- In the case of Coban (AIT appeal no IA/14793/2006, determination promulgated 15 October 2007), the application was refused on the same ground. The applicant applied on 16 February 2006, having incorporated his company in October 2005. He commenced trading in March 2007. The appeal was allowed on the basis that the immigration judge was satisfied that he met the requirements of paragraph 21. No point was taken that trading had commenced in breach of condition.
- In the case Beydogan (AIT appeal no IA/18980/2007, determination promulgated 20 December 2007) the application was made on 17 July 2007. The applicant started trading on 1 July 2007 (so, even before the application). The application was refused on the ground that the proposal amounted to disguised employment. The immigration judge was satisfied that the applicant's cleaning business met the requirements of paragraph 21 and allowed the appeal. No point was taken that trading had commenced in breach of condition, and had done so even before the application had been made.
- In the case of Ozalp (AIT appeal no IA/14894/2007, determination published 2 June 2008), the application was made on 19 May 2007 and refused on 28 August 2007 on the ground that the business proposal amounted to disguised employment. Trading appears to have commenced as early as March 2007. The immigration judge was satisfied that the business was not disguised employment and decided that the discretion under the rules should be exercised in the applicant's favour. He specifically referred to paragraph 4 of the rules and stated "there is no suggestion that discretion under paragraph 4 should not be exercised in his favour" (at para 18).
- This material, was attached to a witness statement of Mr Mohammed Abdulkuddus of Mr Ascioglu's former solicitors, Kuddus Solicitors, who states that he has had 9 years of experience of acting for clients making application under the standstill clause and that no such applications were refused on the ground of breach of condition, as distinct from failure to satisfy the secretary of state as to the merits of the business, until the middle of 2008. This material is further put in context by the witness statement of Mr Steve Lamb dated 6 March 2010, made on behalf of the secretary of state in the Oguz litigation. This witness statement was produced, as were the consent order and statement of reasons in the Karaaslan case, by Mr Adnan Mahmood, of Aman Solicitors, Mr Ascioglu's current solicitors. Mr Lamb was at the time of his witness statement in command of work at the Home Office associated with the Ankara Agreement. In other words, he was the predecessor of Ms McFarlane, who has made a somewhat similar statement in the present appeal. Mr Lamb's statement, however, unlike Ms McFarlane's, deals with certain correspondence between ILPA (the Immigration Law Practitioners' Association) and the Home Office in 2006.
Mr Lamb's witness statement
- Mr Lamb said that the purpose of his statement was to explain the evolution of the Home Office's policy and operational practice in considering applications by Turkish nationals under the standstill clause of the Ankara Agreement. He stated that in the light of Dari and Tum [2004] EWCA Civ 788 (the national decision of this court which had preceded the reference to the ECJ) a fraud exception had been developed whereby it was understood that those who had used fraud (for instance in entering into the UK) were dealt with outside the standstill clause. This was reflected in the IDI current in 2005. At that time, however, consideration had not yet been given to the different case of those who had breached the condition of their extant leave preventing them from trading in business or as self-employed at a time before they had been granted leave under the standstill clause.
- On 8 and 22 February 2006 officials from the Home Office met representatives of ILPA, at the latter's request, to discuss a backlog of dealing with Ankara Agreement (and similar Bulgarian and Romanian) applications. At that time the case working team had fallen some two years behind the lodging of applications. There were some 3000 outstanding applications in respect of the Ankara Agreement applications alone. A year later, in February 2007, a report recorded that the average waiting time over the whole of 2005 and 2006 was 425 days. Although the backlog had been considerably reduced by the end of 2006, it increased again in 2007 as the extra staff that had been recruited to deal with the backlog were redeployed in January 2007.
- At the meetings in February 2006, ILPA argued that the then current delays were operating unfairly in relation to the financial position of applicants, who were depleting the funds they had accumulated to make their applications while waiting for their applications to be dealt with. They could be forced meanwhile to take employment or to enter into business, in breach of the conditions of their leave and to the potential prejudice of their applications. The minutes of the meeting of 8 February 2006 (separately obtained and exhibited to the witness statement of Mr Abdulkuddus), recorded as follows:
"1. It was made clear by those from IND that the meeting would cover policy matters. Operational matters will be dealt with on 22 February 2006 by other operational colleagues from IND…
9. ILPA members expressed concern that the applicant who does not have work permission and does not work whilst awaiting the outcome of the application is prejudiced as he or she is likely to have to use savings to survive which were intended for investment in the business and as a result might be said to have insufficient investment funds by the time of decision. The applicant who works in breach of conditions appears therefore to fare better as his or her savings will not be diminished in this way. IND confirmed that at the present time working in breach will not form the sole basis of refusal. IND acknowledged that there would appear to be an unfairness and that the position on working without permission is unclear. IND undertook to revert in writing on this issue."
- Mr Lamb in his statement confirmed that to mitigate the adverse effects discussed, the Home Office agreed "at the present time" that although working in breach of conditions would be taken into account it would not form the sole basis of refusal. He referred in a footnote to the minutes just cited.
- Subsequently, by letter dated 9 June 2006 the Home Office wrote to ILPA and stated:
"Working prior to grant of leave under ECAA (Turkish)
We discussed this issue at our meeting some months ago. Caseworkers will be as pragmatic as possible when considering an individual application. Caseworkers will deal with the issue of working in breach depending on the specific circumstances of an individual's case – as such it is not possible, nor would it be appropriate, for IND to advise whether those applicants should work whilst their applications are considered."
Mr James referred to this letter in his statement and commented that the backlog situation was such as to necessitate –
"such a pragmatic approach be taken at that time, judging the circumstances of each business application on its merits. The result of the pragmatic approach outlined in IND's letter of June 2006 was that caseworkers concentrated primarily on whether the applicant's proposed business was viable, but also the timing of the application and the applicant's conduct and immigration history.
No point as to "fraud" or "abuse of right" was taken in the event of a breach of conditions at this time. However, it is right to say that at this time the Home Office had not considered whether the legal effect of such a breach of conditions might amount to an "abuse of rights" disentitling an applicant from reliance on the standstill clause."
- I comment: this appears to have been the situation current down to at least September 2007 when Mr Ascioglu made his application, and beyond into 2008. The "pragmatic approach" appears to have been reflected in the nature of the refusal letters used in the cases of Ertas, Coban, Beydogan, and Ozalp referred to above, as well as in the absence of any point taken on appeal in those cases as to working in breach of condition.
- Mr Lamb does not refer to anything as bringing this "pragmatic approach" to an end, other than an internal "standard note" of July 2008 referred to below. It will be recalled that the secretary of state's first refusal letter in Mr Ascioglu's case was dated 31 July 2008, but this did not employ the formula of the standard note, but reverted to the language of "tantamount to fraudulent activity" (also employed in the Oguz case).
- Mr Lamb continued his history by explaining that on 20 September 2007 the ECJ gave judgment in Tum and Dari and then on 18 October 2007 the court of appeal gave judgment in LF (Turkey). I have referred to LF (Turkey) above in the context of the statement of reasons for allowing Mr Karaaslan's appeal. In LF (Turkey) this court applied the so-called "fraud" or "abuse of rights" exception" to a case of breach of condition in a case where the breach of condition was said to have founded the viability of the application. Thus Laws LJ, having cited the obiter passage from Tum and Dari in the ECJ, immediately went on to decide the case before him as follows:
"17. This, if I may say so with great respect, is an application of the abuse of rights principle which is well established in the jurisprudence of the Court of Justice. There is a plain affinity with the common law rule (if I may express it very broadly) that a man may not profit from his own wrong and the linked principle expressed in the Latin phrase ex turpi causa non oritur actio. There is in the present context no reasonable distinction, I think, between abuse of rights and fraud. Such a distinction if it were asserted could not in my judgment survive the reasoning of the Court of Justice in Kondova and Dari [and] Tum. This conclusion is, I apprehend, in line with first instance decisions in the Administrative Court, notably Yilmaz and Temiz to which I have made reference. I will not, with respect, cite those judgments.
18. What then is the position here? I have concluded that the Secretary of State was entitled to deny the applicant the benefit of paragraphs 30 to 32 of HC 509 because his reliance on those provisions was in truth only viable by virtue of his own wrongdoing – the establishment of a business in 2004 in plain contravention of a then extant prohibition against his doing so…[emphasis added].
- We now know from Oguz that even in a true case of fraud or abuse of rights, the standstill clause still applies. We also know, as a matter of common sense, and also from Karaaslan, that a breach of condition in jumping the gun in the commencement of an applicant's proposed business need be neither fraudulent, nor an abuse of rights, nor tantamount to either. An abuse of rights only arises where, as Laws LJ put it, the right is claimed by virtue of its abuse. However, this is to speak perhaps with the benefit of hindsight. At the time, LF (Turkey), as a decision of this court, necessarily came to have a marked impact on the development of the law and Home Office practice.
- Thus, as Mr Lamb stated:
"29. From around March 2008, UKBA began to issue refusal notices refusing applicants solely on the ground that they had established in business in breach of conditions and were thus not entitled to the benefit of the standstill clause. This revised approach was in response to developments in domestic case law.
30. By July 2008 this more robust line was crystallised in a standard note that caseworkers attached to refusals where the basis for the decision was that the business had been set up in breach of conditions. The text of the note stated:
"This application for leave to remain under the terms of the ECAA has been refused on the grounds that the business was established and operated in breach of conditions of extant or previous leave.
A decision on these grounds represents a departure from the position in current published guidance but is considered to be consistent with the growing body of caselaw that has upheld this position. In particular, regard has been had to the following judgments…LF (Turkey)…e.g. paragraph 18…"
33. The note of July 2008 confirmed that "A decision on these grounds represents a departure from the position in current published guidance". The departure from policy which was being referred to was the policy, found in the May 2005 in country guidance [the IDI], that applications would be given dual consideration under both the current immigration Rules and the 1973 rules. The note was drafted to both inform the applicant of the reasons for the departure from the published guidance in force at the time and to enable UKBA caseworkers to apply this stricter approach underpinned by the new case law without any longer expending resources on considering the detail of the application under the 1973 Rules…
34…Even if it had been previously understood that those in breach of condition would have their applications assessed under the 1973 Rules, the Secretary of State considered in light of the courts' judgments that those who had established [in] breach of conditions were disentitled from reliance on the standstill clause, and so fell within the scope of the "fraud exception".
35. The law was further clarified and explained by the Court of Appeal in Sonmez [2009] EWCA Civ 582, which confirmed that the Secretary of State was correct to have denied the benefit of the standstill clause to applicants who had established their business in breach of a condition on their leave to enter/remain, on the grounds that such conduct placed the applicants outside the sphere of protection of the standstill clause."
- It is entirely understandable that the secretary of state should have been guided by then current case law, but, with respect it was wrong to regard breach of condition as the equivalent of fraud or abuse of rights. Moreover, we now know that this case law was legally wrong and has led to an operational muddle. It was wrong because nothing, not even fraud, takes a case outside the standstill clause (Oguz). Moreover, to use the fraud exception to cover the case of breach of condition as well as fraud and abuse of rights compounds that error in four respects. First, it widens the error exposed by the ECJ in Oguz. Secondly, it fails to observe that breaches of condition may come in all shapes and sizes. There is deliberate misleading of the authorities. There is an application which can only be made by means of breaching a condition (eg where an applicant could not accumulate the money he must demonstrate that he has to establish his business without first establishing it). This may be an abuse of rights. And there is the Karaaslan type of breach of condition, where no subterfuge is used, and where the applicant can demonstrate the viability of his proposed business without first establishing it (which cannot be a case of ex turpi causa). Thirdly, and consistently with the first two failures, it seeks to use a single blunt test to avoid having to consider each application on a case by case basis (whether the shibboleth is to say "tantamount to fraud" or "breach of condition"). As Mr James stated, it sought to use this blunt test, described as a "stricter approach", to save resources by making it unnecessary to consider applications in detail under the 1973 rules.
- Fourthly, in practice the use of breach of condition in the manner proposed by the July 2008 formula appears to have been operated in a condition of disarray. Thus, in the present case, the first refusal letter simply referred to breach of condition as tantamount to fraudulent activity. The first appeal determination was rightly concerned that no reasons had been given for that conclusion and remitted the matter back to the secretary of state. The second refusal letter included a recitation of the "standard note", but in addition (a) substituted "abuse of rights" as the ground which took Mr Ascioglu outside the standstill clause, and (b) also reverted to the practice discussed in the 2005 IDI of going on to assess by reference to the 1972 rules. The difficulty with that approach, however, is that the 1972 rules come to be addressed against the background that the breach of condition has already been stated to amount to an abuse of rights (citing LF (Turkey), a case which states that there is no reasonable distinction between abuse of rights and fraud. It is unsurprising therefore to find in the refusal letter an uncomfortable amalgam of language which at one and the same time purports to say that account has been taken of all relevant circumstances, but also clearly states that the refusal is because of the breach of condition: as in, "you have not obeyed the conditions of your visitor visa and therefore when assessed against paragraph 4 your application falls for refusal".
- Finally, Mr Lamb ends his statement (as does Ms McFarlane in similar terms) with an explanation of the "significance of working in breach of conditions". Two key reasons are put forward for the secretary of state's concern. The first is to ensure that labour migration complements, rather than substitutes for, the availability of skills and labour in the resident workforce. The second is to ensure that where migrants are admitted for the purpose of work, this will deliver a net economic benefit. These goals are wholly understandable, as is the added consideration that the condition against undertaking work without leave is necessary for the integrity of the system and also to public confidence in it.
Oguz and prior jurisprudence
- The references to prior jurisprudence above have made it unnecessary to do other than to summarise it.
- The cases referred to in the respondent's refusal letter are the same cases as were cited in the respondent's "standard note". They were also referred to by IJ Wood for the following proposition:
"As these cases make clear, in such circumstances there is no requirement for the Respondent to rely on any alleged fraud – or, for that matter, on any Latin maxim: if a business has been built up in breach of a condition of entry then that is an abuse of the immigration laws that should not benefit a particular applicant" (at para 19).
The difficulty with that proposition, however, is that the leading authority cited was LF (Turkey) which does not distinguish between fraud and abuse of rights; but neither does it say that every breach of condition is an "abuse". If all one means by "abuse" is that there is a breach, then that does not take the analysis very far. The doctrine of abuse of rights is a narrower doctrine than is justified by a mere finding of breach. Nor would it be fair to say that Mr Ascioglou had "built up" his business in breach of a condition of his leave, in circumstances where he had given up his business after a few months on the very basis that he had been advised to do so (presumably because of the new attention that was being given to working in advance of permission at the relevant time). Sonmez, was also cited, but, as discussed above, that follows LF (Turkey).
- Three first instance decisions were also mentioned (as having been also cited in the "standard note"). The first was Yilmaz [2005] EWHC 1068 (Admin). That concerned a Turkish national who came to the UK without entrance clearance and presented a fraudulent passport on entry. He had been running a café and had left and then returned to England with his fraudulent passport. He was required to report to the authorities, did not do so, and was treated as an absconder. It was only at that stage that he applied under the standstill clause, relying on the café business that he had been unlawfully running in the past. He was arrested, detained, and removal directions were given. He applied for judicial review (it was not an immigration appeal). The refusal of his application under the standstill clause was held by Beatson J to be lawful under the so-called "fraud exception", seeing that he had sought entry with fraudulent intent; alternatively he was an illegal entrant (at para 29). The decision is of no assistance in the present context.
- The second was Temiz [2006] EWHC 2450 (Admin). This applicant was a failed asylum seeker, who had dishonestly failed to mention that he had claimed asylum in Italy. He too had to be treated as an absconder. In the meantime he established a business. When he came to the attention of the authorities and was detained pending removal, he too applied under the standstill clause, but was refused. This was another claim in judicial review, not an immigration appeal. Collins J relied on Kondova, citing the applicant's illegal presence as a valid ground for rejection of his application. He also referred to the doctrine of abuse of rights. He said (at para 28): "while fraud will almost inevitably mean that an applicant must fail, illegal entry or overstaying even without fraud produces the same result". At para 40 he added: "He cannot obtain the benefit of the Association Agreement if he has created the ability to meet the requirements of the Rules by working or establishing a business in breach of conditions of his admission or while here unlawfully. It is not necessary to establish fraud, but if fraud is shown, there can be no doubt that refusal is proper". Mr Palmer has relied on the reference to breach of conditions in that quote: but it is quite plain that Collins J is there thinking of the case before him as a case of breach in abuse of rights (as well as fraud). The observation cannot simply be transposed to a situation like Karaaslan or the present case.
- Thirdly, reference was made to Aldogan [2007] EWHC 2586 (Admin), another case in judicial review, also concerning a failed asylum seeker, in which Collins J maintained what he had said in Temiz.
- However, these cases are all far from the facts of the present case, quite apart from any special considerations arising from the policy or practice which operated during the period from February 2006 to at least March or July 2008.
- The factual differences which may need to have account taken of them by the national court in applying the relevant rules are highlighted by observations of Advocate General Kokott in Oguz. She was discussing Tum and Dari and pointing out that the ECJ had held that the standstill clause applied even to illegal entrants and overstayers. She continued:
"52. The assessment should therefore be no different in a case like the main proceedings where, unlike the cases already decided, the person relying on the standstill clause even had leave to remain and had merely breached a condition of that leave. Lastly, the applicant in the main proceedings did not enter the United Kingdom unlawfully, but had entry clearance and even a work permit, albeit not for activity of a self-employed person. Only by taking up activity of a self-employed person, which he soon ceased again, did he breach a condition of his leave to remain."
Although Advocate General Kokott was speaking of the applicability of the standstill clause, not of the operation of the discretion exercised by the national authorities under the appropriate national rules, it is clear that the factual distinctions which she there adverts to, and which have a clear resonance for the present case, were considered by her to be relevant distinctions for the exercise of that discretion.
- Finally, I should also advert to paras 61/62 of Advocate General Kokott's opinion, where she discusses the possibility (without resolving it) that even the withdrawal of a more favourable post-standstill practice, amounting to a rule of law, might fall foul of the standstill clause. She was referring to the submissions by the applicant in that case "that there was published guidance of the Secretary of State to his caseworkers that the actual establishment of a business was acceptable in circumstances where a Turkish national had leave to remain on the basis of being in business. The Secretary of State therefore had a policy in place of ignoring a breach of obtaining consent before setting up a business." That is a submission made in the present appeal, without the added complexity of such a withdrawal being in conflict with the standstill clause. What is rather said, as Sedley LJ discussed in giving permission to appeal in this case, is that it may be unfair to previous applicants to change a policy or practice, without warning, in the course of its operation.
The IDIs
- That submission, referred to by Advocate General Kokott, had I think in Oguz and again in the present case previously been made by reference to the IDIs. The concentration of the present appeal is now rather on the special practice, the "pragmatic approach", which operated between February 2006 and March/July 2008.
- Nevertheless, it is appropriate briefly to refer to the IDIs, because they throw light on the factual distinctions which may have to be made between various scenarios.
- The IDI in operation from 2005 to 2009 was published in January 2005. It is headed "In country guidance on persons intending to establish themselves in business under Turkish-EC Association Agreement".
- The fraud exception was discussed in the following passages (it will be recalled that it was then the understanding that fraud constituted an exception which took a case outside the provisions of the standstill clause). Thus –
"Applications where fraud has been practised
The current Rules (HC 395 as amended) are still relevant to those applicants who have practised fraud in seeking to enter or remain in the UK. Applicants who have practised fraud waive their right to consideration under the 1973 rules. However, the 1973 Rules should still be applied in order to defend the Home Office position (see below)…
Illegal/fraudulent cases – the general position
The underlying Home Office position is that by virtue of their fraudulent behaviour, applicants in the following categories waive the right to have their case considered in accordance with the standstill clause and the 1973 Rules. Therefore, the current Immigration Rules (HC 395) will apply. However, an assessment should also be made on whether the application would meet the 1973 rules. This will ensure that, if an applicant subsequently challenges whether he falls within the scope of the fraud exception, then this challenge will only need to be resolved if the assessment is that he would have met the requirements of the 1973 rules…
Illegal entrants (meaning both clandestine entrants and those who made false representations on entry) would fall within the scope of the fraud exception but overstayers would not. This is because of an ECJ case called Savas in which the court held that an overstayer, was entitled to the benefit of the 1973 rules."
- The IDI then discussed various categories of fraudulent cases, viz "1) Illegal entry – fraudulent cases…2) Extension of stay – fraudulent cases…3) Switching – fraudulent cases". Below, however, the IDI came to a new heading, "Non-fraudulent in-country cases". Thus category "4) Extension of stay switching – non-fraudulent cases" stated as follows:
"Turkish nationals who have lawful residence in the UK in the business category or a non-business category (for example, as a visitor or as a student) without the use of fraud and apply to remain under the established provisions of the Turkish ECAA are entitled to have their application considered in accordance with the standstill clause. 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 HC 510 (Appendix A).
Those applicants who do not meet the requirements of paragraph 21 and 4 of HC510 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.
HC510 provides for leave to be granted to successful applicants for a period of 12 months. If the requirements of HC510 are met then a period of 1 year's leave to remain should be granted with a code 2 condition."
- The formula used in that penultimate paragraph just cited, "that they have been able to establish themselves as a self employed business person", probably explains the terms in which Mr Ascioglu's second refusal letter came to be written: that is to say, it speaks to what has or has not been established, not of proposals to establish. It would appear that at the time of drafting this 2005 IDI the Home Office had not yet turned their attention to the problem or possibility of an applicant who had started to establish themselves before receiving leave to do so.
- There is also a heading "Immigration History" later on, which reads:
"In accordance with Paragraph 4 of HC510 previous immigration history may be taken into account, and may point towards further investigation and exploration of particular aspects of the application. Evidence of fraudulent actions will determine which category the case falls into for consideration. However, a "negative" history, including unlawful presence in the UK, cannot, in itself, be conclusive in refusing an application."
- I observe: although, as Oguz was to demonstrate, an error was made, based however on English jurisprudence such as Dari and Tum [2004] EWCA Civ 788, to the effect that fraud took the applicant outside the standstill clause, in all other respects, however, this was to my mind careful and accurate guidance. In particular, it carefully separated out the fraudulent from the non-fraudulent applicant. Moreover, it qualified the Dari and Tum error by requesting the caseworker to perform a back-up assessment under the 1973 (ie 1972) rules even in the case of a fraudulent applicant. However, there was a lacuna with respect to non-fraudulent applicants who had breached a condition of their leave by commencing business before being granted leave to do so. Nevertheless, the IDI was correct, to my mind, in implicitly categorising any such applicants in the "non-fraudulent" category.
- There followed the period during which, because of pressure on caseworker resources and the build-up of the backlog in dealing with applications referred to above, the particular problem of the non-fraudulent breach of condition applicant was addressed but dealt with by the policy or practice of the Home Office's "pragmatic approach" which it agreed with ILPA and the consequences of which may be seen in the material and cases also referred to above. That period lasted from the February 2006 agreement until March/July 2008.
- We are told by the secretary of state's evidence (Mr James' witness statement) that in March 2008 refusal letters began to be written based on breach of condition. This was then formalised by the July 2008 "standard note" which referred to recent jurisprudence such as LF (Turkey) and the other cases which I have considered. It is not clear whether the standard note was published, other than as it began to emerge in refusal letters. It is now apparent, however, that this standard note was an error in that it suggested that all cases of breach of condition fell into the fraud exception (without saying so). Thus, the standard note did not bother to distinguish between fraudulent and non-fraudulent breach of condition cases. All breach of condition cases were in effect treated as being within the "fraud exception" on the basis that all breach of condition cases were examples of abuse of rights and that abuse of rights was indistinguishable from fraud (LF (Turkey). Moreover, whereas in the past under the 2005 IDI guidance, even fraudulent cases, although treated as lying outside the standstill clause, were also considered under the 1972 rules, breach of condition cases were now treated summarily as falling outside the standstill clause. Hence, the terms of Mr Ascioglu's first refusal letter.
- To bring the story almost up to date, a fresh IDI was issued on 1 June 2009. This was still of course prior to Oguz. The rewritten IDI now distinguished between three categories: (i) "fraudulent/abusive practice", (ii) "leave sought or obtained by deception" and (iii) "breach of the conditions of leave to enter or remain". The second category was stated to be an example of "abuse", ie of the first category. The first category was also said to include "applying to establish in business…whilst in breach of the conditions of leave to enter or remain (please refer to 2.1.2)", ie the third category. "Applying to establish…whilst in breach" would not, however, cover an applicant like Mr Ascioglu who had applied prior to being in breach. Cases in the first two categories are said to lie outside the standstill clause. As for the third category, the IDI stated:
"2.1.2 Breach of conditions of leave to enter or remain
Applicants already lawfully in the UK may be permitted to switch into the businessperson category and only if they meet the requirements of the 1973 business provisions. See section 3.1.
However, applicants should not normally be allowed to secure leave on the basis of a business established and operated in breach of conditions of extant or previous leave.
Applicants who breach the conditions of businessperson leave given under the ECAA should only be treated as abusive and denied the benefit of the standstill clause if it can be shown that their original application was abusive e.g. if they never had any intention to establish in business in accordance with the 1973 business provisions. Applicants who nonetheless can show that they have continued to run their business should not be denied the benefit of the standstill clause, although may be penalised in other ways e.g. for working illegally in addition to running their business.
Finally, there may be some circumstances in which the reasons for breaching conditions are not considered sufficiently serious to assert that the applicant is only able to make their business application by virtue of breaching their conditions and thus deny them the benefit of the standstill clause. In such circumstances the application should be considered under the 1973 business provisions, taking account of the breach of conditions as provided for in paragraph 4 of those rules. See section 4.3.1 for further guidance."
- This is reasonably nuanced guidance, seeking to draw a proper distinction between breaches of condition which may be considered abusive and other breaches which are not. The "not normally" guidance is new, but limited to abusive breaches, ie attempts "to secure leave on the basis of a business established and operated in breach of conditions".
- Section 4.3.1 (referred to at the end of the passage just cited about the third category) states as follows:
"4.3.1 Applicant's conduct
There are a number of circumstances in which adverse immigration status will prevent the applicant from taking the benefit of the standstill clause – see section 2.
However, there may be occasions when an applicant's conduct does not amount to fraud / abuse such that they should be excluded from the standstill clause but their conduct is nevertheless penalised under the terms of the 1973 business provisions, which state that it is relevant whether an applicant has "observed the time limit and conditions subject to which he was admitted". Only in exceptional circumstances will an applicant who has breached immigration law, but who is allowed to take the benefit of the standstill clause, be allowed to succeed under the 1973 business provisions.
Where it is decided to grant leave in such cases reasons for doing so despite the applicant breaching immigration law should be given in the grant letter."
- This is a new statement of policy. The "exceptional circumstances" indication is entirely new, and not obviously consistent with the 1973 rules' paragraph 4, which provides for an open discretion.
- Annex D to the June IDI gives "Example refusal wordings". Under the heading of "Breach of immigration law (paragraph 4 of HC510) the following is stated:
"You have applied for leave to remain in the United Kingdom in order to establish a business…However, further to paragraph 4 of HC510 your application is refused because you have breached immigration law in the following regard and it has been decided, taking all the circumstances of your case into account, that you should not be allowed to benefit from your breach of immigration law: [give details of breach]."
The premise therefore is that the breach of immigration law (which can of course come in many different forms) would, if the application is granted rather than refused, enable the applicant to "benefit from your breach". That, however, is falling back into the language and thinking of abuse of rights and is an unsatisfactory conclusion to the more nuanced approach found elsewhere in this guidance.
- All that Ms McFarlane has to say about the June 2009 guidance is that it "reflects the Secretary of State's conclusion that the abuse of rights/fraud exception applies to those circumstances where it is by virtue of a breach of conditions that the applicant is able to make his business application". That is a straightforward reprise of the LF (Turkey) approach which fails to recognise the more nuanced guidance published in the June 2009 IDI. Mr James also refers only briefly to the June 2009 IDI, but he puts the matter somewhat differently. He cites the passage in para 2.1.2 (see above in [74]) about occasions when the secretary of state is unable to assert that "they are only able to make their business application by virtue of their breach", and comments:
"The guidance stipulates that caseworkers need to assess whether an application under the ECAA standstill clause could only have been made because of an applicant's breach of conditions."
In doing so, he implicitly accepts the distinction between a fraudulent/abuse of rights application in breach of condition and a breach of condition which is not fraudulent or in abuse of rights. That is, with respect, a better point to make about the 2009 IDI than the point made by Ms McFarlane.
- On 7 September 2009 a revised version of the June 2009 IDI was published. Ms McFarlane refers to it but makes no comment about it. It does not appear to take matters any further.
- The new guidance reflects the difficulties of reflecting fairly the many different circumstances in which applications may be made. I sympathise with those difficulties. In my judgment, the new guidance goes a long way towards producing a rational system with a nuanced differentiation for differing situations. It is of course for the executive to formulate policy and practice within the confines of the rules, provided that is done fairly. There may be arguments, which, however, do not need to be addressed in this case, as to whether the situation which has been arrived at, at any rate when it is thoroughly understood, is compatible with the standstill clause's prohibition against the introduction of more restrictive requirements for the establishment of business or self-employment. I note in passing that in LE (Turkey) (AP) [2010] CSOH 153, in a case where an applicant was refused leave to establish his business under the standstill clause on the basis that he was an overstayer, Lord Emslie said that the new IDI with its presumptions about "normally" and the need for "exceptional circumstances" amounted to "a more restrictive approach" (at [18]).
Discussion
- Against the rich and changing background of the matters set out above, which I have set out in some detail because we are told that there are a number of pending cases which await the outcome of this appeal, I can proceed to the decision fairly briefly.
- The primary ground of appeal, as argued before us, is that IJ Wood erred in approaching his decision as though it were a matter of judicial review, where the decision is for the secretary of state unless there has been some unlawfulness about the exercise of the decision maker's discretion. It is submitted that under section 86(3) of the Nationality, Immigration and Asylum Act 2002, the decision on appeal is for the immigration judge. Section 82 provides for an appeal from an "immigration decision". Section 84(1) provides for grounds of appeal, among them –
"(e) that the decision is otherwise than in accordance with the law;
(f) that the person taking the decision should have exercised differently a discretion conferred by immigration rules…"
Section 86 is concerned with the determination of an appeal and provides:
"(1) This section applies on an appeal under section 82(1)…
(3) The Tribunal must allow the appeal in so far as it thinks that –
(a) a decision against which the appeal is brought or is treated as being brought was not in accordance with the law (including immigration rules), or
(b) a discretion exercised in making a decision against which the appeal is brought or is treated as being brought should have been exercised differently."
- It is submitted therefore that the discretion on appeal has to be exercised ultimately by the immigration judge, if he considers that it should have been exercised differently from the way in which the secretary of state exercised it. That submission appears to me to be correct, and, subject to a qualification as to how such a discretion on appeal ought to be exercised, Mr Palmer on behalf of the secretary of state agrees. Thus in R v. Peterkin (Adjudicator) ex parte Soni [1972] Imm AR 253 (in the divisional court) Lord Widgery LJ said of the identical provision then found in section 8(1) of the Immigration Appeals Act 1969 that –
"So that it was for the adjudicator to look at these facts afresh to consider, using his own discretion and judgment, whether the discretion should have been exercised in favour of the appellant, and if he thought that the discretion should be so exercised it was for him to allow the appeal and to order the entry certificate to be issued" (at 255).
And in Nadeem Tahir v. Immigration Appeal Tribunal [1989] Imm AR 98 (CA) Ralph Gibson LJ said (at 107):
"The appellate bodies are expressly given power to decide whether the discretion involved in the decision under appeal should have been exercised differently and it was in my judgment intended to be open to the Immigration Appeal Tribunal to decide that, notwithstanding their different view of what facts justified the decision, the discretion involved in the decision should not have been exercised differently."
- The qualification to this that Mr Palmer would introduce is that in exercising his or her own discretion the immigration judge can, and should, pay proper regard to the public policy considerations which bear on the decision, as the executive may understand such considerations to be. Thus Mr Palmer referred us to N (Kenya) v. Secretary of \State for the Home Department [2004] EWCA Civ 1094 where a decision as to deportation had to be taken under para 364 of HC 395. May LJ said this:
"In a deportation appeal under section 63(1) of the 1999 Act, the adjudicator has an original statutory discretion as provided in paragraph 21(1) of Schedule 4 of the 1999 Act. The discretion is to balance the public interest against the compassionate circumstances of the case taking account of all relevant factors including those specifically referred to in paragraph 364 of HC 395…Where a person who is not a British citizen commits a number of very serious crimes, the public interest side of the balance will include importantly, although not exclusively, the public policy need to deter and to express society's revulsion at the seriousness of the criminality. It is for the adjudicator in the exercise of his discretion to weigh all relevant factors, but an individual adjudicator is no better able to judge the critical public interest factor than is the court. In the first instance, that is a matter for the Secretary of State. The adjudicator should then take proper account of the Secretary of State's public interest view."
- Judge LJ spoke similarly at [83]:
"The Secretary of State has a primary responsibility for this system. His decisions have a public importance beyond the personal impact on the individual or individuals who would be directly affected by them. Provided that he is satisfied that he would exercise the discretion "differently" to the Secretary of State, he must say so. Nevertheless, in every case, he should at least address the Secretary of State's prime responsibility for the public interest and the public good, and the impact that these matters will properly have had on the exercise of his discretion. The adjudicator cannot decide that the discretion of the Secretary of State "should have been exercised differently" without understanding and giving weight to matters which the Secretary of State was entitled or required to take into account when considering the public good."
- Mr Palmer submitted that when IJ Wood said that the secretary of state was "perfectly entitled to take the view that he has breached his conditions of entry clearance as a visitor" and "is entitled to refuse the Appellant's application on the basis of paragraph 4", he was doing nothing more than what Judge LJ said that an immigration judge had to bear in mind the secretary of state was entitled to do, at the end of that last citation.
- I disagree. There is not the least sign that IJ Wood considered the facts or the exercise of discretion for himself, other than in his expression of "some sympathy for the Appellant who has taken appropriate legal advice throughout the process", a sympathy which he rejects out of deference to what the secretary of state was entitled to think and do (at paras 24-25 of the determination). In my judgment, therefore, the determination is flawed, and the immigration judge has erred in law in not considering for himself the "original statutory discretion" (per May LJ, above) which was his. If IJ Wood had allowed his sympathetic understanding of Mr Ascioglu's acting on appropriate legal advice to inform his own discretion, he might have determined otherwise than he did.
- There is a further error of law in IJ Wood's reasoning, as it seems to me, and that is in his acceptance of the cases relied on by the secretary of state in his second refusal letter (Yilmaz, Temiz. LF (Turkey), and Aldogan) as covering the different facts of the present case. He regarded those cases as dealing with "an abuse of the immigration laws" (at para 19). If by "abuse" he intended to refer to the doctrine of "abuse of rights", he was accurate about the cases but not about the facts of the present appeal, which he did not consider for himself, but which in my judgment do not fall within that doctrine, as the more nuanced approach of the June 2009 IDI now recognises. If, however, by "abuse" he merely intended to refer to the fact of breach of condition without more, then he did not, in my respectful opinion, properly understand those cases.
- I do not intend to be critical of IJ Wood. He was not assisted by any submissions on behalf of the secretary of state, who was not represented on that appeal: and it is easier now, some years later, with much more material before us, such as that to which I have referred above, to make the distinctions which in my judgment are necessary: and which the secretary of state has recognised for herself in the case of Karaaslan.
- The immigration judge's error of law on this first ground is sufficient to require this appeal to be allowed. In these circumstances, should this court decide the outcome of the application for itself, or remit the matter to the tribunal, as Mr Palmer submits we should in such an eventuality?
- I will revisit that question after dealing with Mr Walsh's second submission. That is, that in the light particularly of the Karaaslan case, but in general in the light of the material presented about the policy or practice of the "pragmatic approach" operated in the relevant period of Mr Ascioglu's application in September 2007, it would be unfair of the secretary of state to hold against him the mere fact that, in reliance on appropriate legal advice, he first commenced trading and then a short time later ceased trading. It is of the essence of fairness that like cases be treated alike. It is not a question of legitimate expectation: that is not relied on. However, it is a matter of common law fairness that Mr Ascioglu's case should be treated in the same manner as others of that period, pursuant to a policy or practice agreed with ILPA, however loosely that was expressed.
- In my judgment, Mr Ascioglu's case is on all fours with the Karaaslan case. It has not been shown that he took any advantage of commencing trading in order to leverage his position. The first refusal letter was quite wrong to state, after taking some ten months to respond to his application, that he had acted in a manner tantamount to fraud. The second refusal letter maintained that assertion, but on this occasion calling the breach of condition "an abuse of rights". The second refusal letter went on to say that Mr Ascioglu "should not benefit from his own wrong-doing" and that he fell outside the scope of the standstill clause, and then also purported to exercise a discretion under the 1972 rules "having taken into account all of the relevant circumstances" (but not it is patently obvious the agreement with ILPA in February 2006). In truth, however, the letter focussed entirely on the breach of condition that had already been identified as "an abuse of rights" and as "wrong-doing" from which Mr Ascioglu was seeking to benefit, saying that "therefore…your application falls for refusal". That second refusal letter was wholly inconsistent with the "pragmatic approach" agreed with ILPA whereby it was agreed that "at the present time working in breach will not form the sole basis of refusal". However, in April 2009, already nearly two years after Mr Ascioglu's application, the short period of working in breach was used as the sole basis of refusal. No other reason was given. The secretary of state was of course entitled to change her policy or practice, at any rate on due notice. But Mr Ascioglu's case should have been weighed in the context of the policy or practice contemporaneous to Mr Asioglu's application and breach. In my judgment, this process was conspicuously unfair to Mr Ascioglu. I would therefore hold that on this separate ground, which was of course not before IJ Wood but arises out of the new material which it has been agreed is admissible on this appeal, the second refusal decision was "not in accordance with the law".
- Finally, I revert to the question of whether there should be a remission to an immigration judge to exercise his discretion anew. In my judgment, that is unnecessary and would compound the unfairness. There is not the slightest evidence to support the secretary of state's view that this was a case of abuse of rights, as distinct from an incidental breach of condition, committed as a result of taking appropriate legal advice, and desisted from after a few months. While the breach cannot be gainsaid, it was not done with a view to improving his application. IJ Scobbie was right to be concerned that no reason had been given for the accusation of fraud, and IJ Wood was right to express sympathy for an applicant who had acted throughout on legal advice. Moreover, because IJ Wood did not know about the February 2006 agreement with ILPA about the secretary of state's "pragmatic approach", he was not to know that, whereas legal advice may often be wrong, on this occasion it would not have been possible to blame Mr Ascioglu's solicitors for misleading him. I bear in mind the important public interest in favour of maintaining the integrity of the system of conditions of leave to enter or remain; but I bear equally in mind that there is no public interest in a system which does not operate fairly or make rational distinctions. It seems to me that on the facts of this case, the exercise of the statutory discretion can operate only in Mr Ascioglu's favour.
- I would therefore allow this appeal and direct the secretary of state to grant leave to remain under the standstill clause for the standard initial period of 12 months.
Guidance
- Mr Palmer and Mr Walsh have asked the court to give such guidance as it feels it can as to the proper determination of such cases, seeing that a number of other appeals await the decision in this one.
- I would be cautious about doing so, save as has been necessary for the determination of this case. It goes without saying that each case must turn on its own facts and be determined in its own context. Nevertheless, I have indicated certain themes in the course of my judgment. I have set out the history of the standstill clause's operation. I have shown how between February 2006 and about March/July 2008 the secretary of state agreed a pragmatic approach whereby working in breach of condition would not form the sole basis of a refusal. In practice this meant that until March/July 2008 the secretary of state did not take a point about working in breach of condition. I have expressed the view that LF (Turkey) was premised on a factual situation which was viewed as an abuse of rights, equivalent to fraud, because the applicant there could only bring himself within the standstill clause by virtue of his breach. The other authorities relied on by the secretary of state take the matter no further. I have sought to demonstrate that the 2005 IDI did not deal with breach of condition outside what could properly be viewed as fraudulent activity or abuse of rights; and that the 2009 IDI has adopted a more nuanced attitude to breach of condition in a proper attempt to distinguish cases of fraud/abuse and other cases. Plainly, cases of fraud or abuse, or applications from persons who are not even lawfully in this country, are very different from the situation of incidental breach of condition. I have raised the question (but not answered it) as to whether, even so, the 2009 IDI, with its "normally" and need for "exceptional circumstances", raises a policy within the 1973 rules which is not consistent with the standstill clause. I have stressed that the test on an immigration decision appeal is not a judicial review test, but requires the exercise of an originating statutory discretion in the immigration judge. I have recognised the important public interest in the integrity of a system of conditions of leave.
- It seems to me that these considerations, and the decision in this case, may perhaps be of use in other cases. That however remains to be seen.
Lord Justice Tomlinson :
- I agree.
Lord Justice McFarlane :
- I also agree.
