Balajigari v Secretary of State for the Home Department  EWCA Civ 673 (16 April 2019)
In a complex judgment, the Court of Appeal has held that the ongoing use of paragraph 322(5) of the Immigration Rules in the cases of highly skilled Tier 1 (General) migrants (T1GMs) is "legally flawed" because decision-makers are proceeding directly from finding that the earnings discrepancies in T1GM applications are the result of dishonesty, without giving applicants an opportunity to proffer an innocent explanation. Albert, Balajigari, Kawos and Majumder all appealed against the dismissal of the refusal of permission to apply for judicial review or of their substantive claim. The Court of Appeal noted that there are over 70 other appeals or applications for permission to appeal pending before the court and an unknown number of challenges pending in both tiers of the tribunal. Underhill, Hickinbottom and Singh LJJ held that where the decision-maker is minded to refuse indefinite leave to remain (ILR) under paragraph 322(5) on the basis of the applicant's dishonesty, or other reprehensible conduct, it is necessary as a matter of procedural fairness to indicate clearly to the applicant that the decision-maker has that suspicion, so as to give the applicant an opportunity to respond. The Home Office is required to take that response into account before concluding that there has been such conduct. The court said that refusal was "functionally equivalent" to a removal decision and that the lack of a "minded to refuse" letter rendered the refusal decisions procedurally unfair.
In the present "earnings discrepancy" cases T1GM applicants were refused ILR because of discrepancies between earnings figures declared in applications for leave to remain and the figures declared in their tax returns for equivalent periods or, in Majumder's case, a failure to file any return. Overall, the result of these proceedings was that each of these four appeals was allowed. Moreover, in all the appeals except in Majumder's matter, where the decision to refuse ILR was quashed, the case was remitted to the UT. As a preliminary point, Underhill, Hickinbottom and Singh LJJ expressed their displeasure with all the representatives involved, those of the appellants and the Home Office, for breaching the case management directions and the deadlines for filing skeleton arguments and violating the rules on their length. Their Lordships lamented "these failures made the court's task in pre-reading a good deal more difficult." However, in light of the complexity and general importance of these proceedings, such failures were only minor hiccups. In its heyday the highly skilled route attracted up to 10,000 migrants a year to the UK. But was it closed in order to bring migration down to the "tens of thousands".
Paragraph 322 (5) applies where it is "undesirable" to permit an applicant to remain in the UK "in the light of his conduct … character or associations or the fact that he represents a threat to national security". The rule is set out under part 9 (grounds for refusal) of the Immigration Rules. Under the (abolished) T1GM scheme, which used to be a part of the points-based system, applicants were awarded points for attributes in which earnings played a major part. Hence it was possible for people to claim beefed up sums in earnings to earn points in immigration applications. Whether the same figures were recorded with HMRC was another matter. The Home Office review of these cases showed that since 2015 a total of 1,697 ILR applications from T1GMs migrants had been refused using paragraph 322(5). This judgment will soothe their suffering.
Firstly, the appellants challenged the refusals on domestic public law grounds. Secondly, they contended that the refusals interfered with their rights under article 8 of the ECHR as incorporated by the Human Rights Act 1998. Thirdly, they also complained that judicial review is an unsuitable procedure through which to challenge refusals based on paragraph 322(5), the better route being a human rights appeal to the tribunal. The first ground fell to be examined by addressing (i) the correct interpretation of paragraph 322(5) and the approach which needs to be taken its application in an earnings discrepancy case, (ii) the requirements of procedural fairness, and (iii) whether the executive is subject to any Tameside duty.
The Court of Appeal
Underhill, Hickinbottom and Singh LJJ began their judgment by noting that the use of paragraph 322(5) has "attracted considerable controversy". The court noted that the Home Office refusal in each case rested on the basis that a proper decision had been reached that the discrepancies arose because of the appellants dishonestly mis-stating their earnings which is conduct captured by paragraph 322(5). The court also highlighted that all the appellants said that the discrepancies were caused by innocent errors and they claimed that the decisions to the contrary were unlawful.
Domestic public law grounds
It was the view of the court that dishonest submission of false earnings figures to HMRC or to the Home Office constitutes conduct which can, and generally will, justify refusal of leave to remain under paragraph 322(5).
Contrary to what is sometimes claimed, though not argued by the present appellants, paragraph 322(5) is not concerned only with cases where an applicant poses a threat to national security. Drawing on a wide spectrum of authoritative cases, the court addressed the challenges to the refusals on public law grounds as summarised below. The court did not itself make a finding about whether the appellants were dishonest but the judgment is equally clear that dishonesty cannot simply be assumed and must be established by the employment of a robust procedure.
(i) Correct interpretation and application
The interpretation and application of paragraph 322(5) are closely connected and were best addressed together. The court explained that first of all paragraph 322(5) involves deciding whether it is "undesirable" to grant leave. If yes, then the second stage is to decide as a matter of discretion whether to refuse leave. The court agreed with the idea that "undesirability" requires reliable evidence of sufficiently reprehensible conduct, and an assessment, taking proper account of all relevant circumstances, of whether the applicant's presence is undesirable.
The court approved of the treatment of dishonesty in Shahbaz Khan (Dishonesty, Tax return, Paragraph 322(5))  UKUT 384 (IAC), discussed here, and held that an earnings discrepancy only constitutes sufficiently reprehensible conduct if it is a result of the applicant's dishonesty. Therefore, carelessness or ignorance or poor advice are not conduct making it undesirable for the applicant to remain in the UK and, however regrettable, such errors are "genuine" or "innocent" in the sense that they are honest, and do not meet the necessary threshold. It was also the case that this approach converged with the treatment of dishonesty in Adedoyin  EWCA Civ 773, discussed here. As for dishonesty in the context of an earnings discrepancy case, the court said that Ivey v Genting Casino  UKSC 67 applied to the present context. However, it nevertheless opined that in practice a decision-maker or tribunal will not specifically need to refer to the principles articulated by Lord Hughes at paragraph 74.
As regards an assessment of whether the applicant's presence is undesirable in light of all relevant circumstances, the court accepted the submission based on the earlier case of Ngouh  EWHC 2218 (Admin) that a balancing exercise informed by weighing all relevant factors would be good practice for the Home Office to incorporate in its formal decision-making process and it disagreed with any contrary suggestions by Lord Tyre in Oji  CSOH 127 and Dadzie  CSOH 128, discussed here. But the court also stated that it would not always be an error of law for a decision-maker to fail to conduct the balancing exercise explicitly.
Moreover, Underhill, Hickinbottom and Singh LJJ judged that then at the second stage the decision-maker has to consider whether there are factors outweighing the presumption that leave should be refused owing to undesirability, such as the welfare of children who might be affected and any human rights issues which are in play.
(ii) Procedural fairness
The court made reference to its recent decision in Citizens UK  EWCA Civ 1812, discussed here, on procedural fairness where it examined authorities such as Osborn  UKSC 61 and Fayed  EWCA Civ 946. The latter authority concerned refused applications for naturalisation by two brothers settled in the UK on the basis of concerns about their good character which were not raised with them or indeed even disclosed at the time of the decisions. The decisions were quashed and in the present context the Court of Appeal considered Fayed to be instructive for several reasons and after examining it in detail the court applied the relevant principles to hold that:
55. … the conclusion that where the Secretary of State is minded to refuse ILR on the basis of paragraph 322 (5) on the basis of the applicant's dishonesty, or other reprehensible conduct, he is required as a matter of procedural fairness to indicate clearly to the applicant that he has that suspicion; to give the applicant an opportunity to respond, both as regards the conduct itself and as regards any other reasons relied on as regards "undesirability" and the exercise of the second-stage assessment; and then to take that response into account before drawing the conclusion that there has been such conduct.
56. We do not consider that an interview is necessary in all cases. The Secretary of State's own rules give a discretion to him to hold such an interview. However, the duty to act fairly does not, in our view, require that discretion to be exercised in all cases. A written procedure may well suffice in most cases.
Notably, paragraph AR2.4 of Appendix AR prevents the administrative reviewer from considering any evidence that was not before the original decision-maker except in certain specified cases for the correction of case-working errors. The result is that the applicant would normally only be able to assert that he or she had not been dishonest but would not be able to adduce evidence in support of that assertion. The Court of Appeal found that "the limited type of legal review is clearly inadequate here" and it reasoned that it is precisely because the applicant had no notice of the decision-maker's concerns that he or she had no opportunity to put evidence before the original decision-maker.
(iii) Tameside duty
The court held that the Home Office was not under a duty under Tameside  UKHL 6to make enquiries of HMRC regarding how it had dealt with the errors in applicants' tax returns, in order to determine under paragraph 322(5) whether they had been dishonest in filing the returns. The Home Secretary had power to make such enquiries but no duty existed for him to exercise that power. Overall, the court's conclusion was supported by the approach taken by Haddon-Cave J in Plantagenet Alliance Ltd  EWHC 1662applying which it was "impossible" to accept the appellants' arguments on the point. The court also noted that there may be many reasons why HMRC does or does not investigate a particular tax return. Indeed, it was always open for an applicant to draw the decision-maker's attention to HMRC having declined to impose a penalty (which would of course signify carelessness rather than dishonesty).
Engagement of article 8
Complex arguments arose in relation to article 8 and after considering several authorities in detail the Court of Appeal held that the refusal of ILR pursuant to paragraph 322(5) engaged the article 8 rights of the applicants who essentially submitted that a decision to refuse ILR to a T1GM on paragraph 322 (5) grounds engaged article 8. The was significant because it might also mean that it is open to affected T1GMs to bring a challenge by way of appeal rather than by judicial review. Equally, refusal also exposed the applicants to the full array of the nasty "hostile environment" provisions of the Immigration Act 2014 effectively barring them from driving, renting property, having a bank account, accessing healthcare and so forth. To simplify the issues, the court accepted that main submission on article 8 focusing on liability for removal from the UK. Overall, refusal was "functionally equivalent" to a removal decision because the applicant's existing leave would expire by the time of the refusal decision and they would be liable to removal at any time after refusal. The court held that:
92. The principal substantive consequence of our finding that the refusal of T1GM ILR on paragraph 322 grounds will (typically) engage article 8 is that in any legal challenge the tribunal will be obliged to reach its own conclusion on whether the interference is justified, rather than conducting a rationality review. In an earnings discrepancy case that means, principally, that it will have to decide for itself whether the discrepancy was the result of dishonest conduct by the applicant in the supplying of figures to either HMRC or the Home Office. If it was, in the generality of cases such a finding will be sufficient, for the purposes of the final Razgar question, to justify the applicant being refused leave to remain and in consequence, which is the relevant interference, becoming liable to removal.
The situation was analogous to the one witnessed in Ahsan  EWCA Civ 2009, where the claimants' article 8 rights were in practice dependent on whether they had cheated in their TOEIC tests and the Court of Appeal held that they were entitled to have that question determined by the tribunal as a matter of fact.
In light of the clear analogy with Ahsan, in principle the appropriate challenge to a refusal is an appeal to the FTT rather than a claim for judicial review in the UT. Notably, the refusal of ILR is not an appealable decision but a right of appeal is available under section 82(1)(b) of the Nationality, Immigration and Asylum Act 2002 if a human rights claim has been refused. The procedural requirements of making a human rights claim were reviewed in Shrestha  EWCA Civ 2810 and an applicant must use a form and pay a fee, failing which no human rights claim has been made and no right of appeal arises.
The court found that it would be uncommon for an applicant to include a human rights claim in their application. An applicant who had not done so would have to make a fresh application alleging that they had been rendered liable to removal, in breach of their article 8 rights on the basis of an unfair finding of dishonesty. On the other hand, an applicant had the option of securing an appeal by waiting until removal action was taken. These were unenviable choices and therefore the court held that:
102. Neither of those routes to an appeal is very satisfactory. The first requires the applicant to go through the formality of making, and paying for, a further application in order to decide substantially the same question, with no certainty as to how soon the decision will be made. The second requires him or her to wait for an indefinite and possibly lengthy period before being able to obtain an appealable decision.
Furthermore, upon an article 8 challenge through judicial review, the UT would decide for itself whether any dishonesty had been properly proved and removal was proportionate. No such case had been advanced by these appellants in the UT, which had accordingly been limited to deciding whether the decision-maker's finding that they had acted dishonestly was "rational". The court explained that it is unlikely that a tribunal will be prepared to accept a mere assertion from an applicant or their accountant that the tax discrepancy in question was simply "a mistake" without a full and particularised explanation of what the mistake was and how it arose.
Disposal of appeals and conclusions
Notably, after Fayed the Home Office introduced a "minded to refuse" procedure in naturalisation cases, by virtue of which applicants were given the opportunity to address any concerns that he might have before a decision was taken. Overall, in the cases of Balajigari, Kawos and Majumder the lack of a "minded to refuse" letter rendered the refusal decisions procedurally unfair. Moreover, in Albert's case, the Home Office had given reasons but the decision-maker had not made clear that dishonesty was being found. The court concluded that:
221. … the approach taken by the Secretary of State in deciding to refuse the applications for leave to remain in each of these cases on paragraph 322(5) grounds – which we take to have been his general approach in all earnings discrepancy cases – was legally flawed (except, for particular reasons, in Albert). This is principally because he proceeded directly from finding that the discrepancies occurred to a decision that they were the result of dishonesty, without giving applicants an opportunity to proffer an innocent explanation. But nor does he address the further questions of whether the dishonesty in question renders the presence of the applicant in the UK undesirable or whether there are other factors which outweigh the presumption in favour of removal, or give applicants the opportunity to raise any matters relevant to those questions: such cases will no doubt be exceptional, but the step cannot simply be ignored.
The court reiterated that the availability of administrative review is insufficient because the applicant is not permitted to rely on any further evidence that was not produced before the original decision. It also said that the Home Office can avoid future unlawfulness by adopting a "minded to" procedure informing applicants of the decision-maker's concerns and giving them the chance to show cause why ILR should not be refused by offering an innocent explanation of the discrepancies.
The outcome of these proceedings is a big win for highly skilled migrants in the UK who were desperately in need of relief. On the other hand, the result does not automatically annul every paragraph 322(5) refusal made by the Home Office and therefore the harsh predicament in which many highly skilled migrants find themselves is likely to continue until their appeals and judicial review challenges are finally settled. History demonstrates that such matters tend to linger on for years and no doubt history will repeat itself despite the fact that the T1GM route was made redundant in April 2015 and ILR applications were closed on 6 April 2018. The Court of Appeal's judgment states that there are an unknown number of appeals pending in both tiers of the tribunal and dozens of judicial reviews connected to the use of paragraph 322(5). An authoritative ruling on the subject was badly needed and so this was a timely judgment.
The court was careful to explain that the legal defects in Home Office decision-making identified in the judgment do not necessarily lead to a paragraph 322(5) refusal being quashed if the UT is satisfied that they are immaterial, i.e. that the result would have been the same even if the applicant had been given an opportunity to explain the discrepancies. Hence, remitting the cases of Balajigari, Kawos and Majumder would allow that question to be answered. The court also explained that there may be an issue, which remained unresolved in these proceedings, concerning the precise calibration of the test of immateriality but it added that the issue may be of limited importance in practice.
It is also worth noting that in Ahsan, with which the court found strong parallels, the Home Office ultimately decided to withdraw its appeal to the Supreme Court. So perhaps it is the end of the line for paragraph 322(5) as well but you never know what the future holds? As reported by Amelia Gentleman, it is a source of national shame for the UK that the Home Office is still forcibly removing unfortunate students caught up in the TOEIC scandal despite the fact that they did not cheat in their tests. With 34,000 visas having been cancelled or curtailed and a 1,000 students already removed, the numbers are quite staggering and Sajid Javid is being urged to act quickly to avert an immigration scandal which seems set to surpass even the deeply shameful Windrush episode.