Gransian Ltd & Anor, R (on the application of) v Secretary of State For the Home Department [2008] EWHC 3431 (Admin)

Case No CO/7751/2008[2008] EWHC 3431 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT
Venue Royal Courts of JusticeDate Tuesday, 16 December 2008
Strand
London WC2A 2LL
B e f o r e:
MR JUSTICE BLAKE
Between
THE QUEEN ON THE APPLICATION GRANSIAN LIMITEDClaimantXon Yong ZhouClaimantvTHE SECRETARY OF STATE for HOME DEPARTMENTDefendant
Computer-Aided Transcript of the Stenograph Notes ofWordWave International LimitedA Merrill Communications Company190 Fleet Street London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
Mr De Mello (Mr M Henley for judgment only)instructed by (Harvey Son and Filby Solicitors, London N3 1LQ) appeared on behalf of the ClaimantMr P Greatorex (instructed by the Treasury Solicitors) appeared for Defendant
J U D G M E N T
[1]MR JUSTICE BLAKE: This is a renewed application to bring judicial review proceedings against decisions made on behalf of the Secretary of State for the Home Department. This application is brought by two claimants. The first claimant is Gransian Limited and the second is Mr Xun Yong Zhou.[2]The decisions that are challenged are immigration decisions whereby the Secretary of State decided to remove Mr Zhou to Austria, pursuant to the arrangements made under the Dublin II Regulation in respect of those who claim asylum in the United Kingdom. Mr Zhou states that community law is engaged with respect to the activities of the first claimant company. The community law rights preclude the Secretary of State from making, or executing, the decision that he is otherwise minded to make.[3]With that very brief description of the nature of the challenge, I now turn first to the history of the matter. The helpful chronology prepared by the defendant in the summary grounds reveals the following: in December 2007 Mr Zhou was arrested in this country on suspicion of being an illegal entrant. He appeared to give a false name and it was subsequently recognised in January 2008 that he had made an asylum claim in Austria in March 2005. He denied subsequently in an asylum screening interview that he had ever previously made a claim for asylum, though the fact that he had made such a claim subsequently was never challenged. In due course in January 2008 the Austrian authorities indicated that they were considering, and subsequently accepted, responsibility for Mr Zhou under the Dublin Regulations. Therefore, on 15 February 2008 his asylum claim was refused, certified on safe third country grounds, and removal directions to Austria were set.[4]There was an initial challenge to those removal directions, which eventually did not proceed and need only be mentioned to explain the chronology. The permission to challenge the removal was refused on the papers in May 2008, and, although it was renewed and he was granted temporary admission on 2 June, in due course the renewed application was withdrawn and not proceeded with.[5]However, following the grant of temporary admission and pending the renewed application for that first judicial review claim that was not proceeded with, there was advice taken and as a result of which a company was incorporated in the Republic of Ireland. That is the first claimant company, Gransian Limited.[6]In the materials lodged with the court this morning in respect of this application, there is provided the Certificate of Incorporation of Gransian Limited and the minutes of the first directors' meeting held on 3 June, the day after Mr Zhou was granted temporary admission. That records that company formation agents that formed the company promptly then resigned in favour of Mr Zhou and his wife, who then became the shareholders in the company.[7]Pursuant to the incorporation of that Irish company an English subsidiary was also formed in July, and then in the same month the first judicial review application was withdrawn. The defendant then detained the second claimant pursuant to the original removal decision. That prompted representations by his solicitors that now there were rights under Articles 43 and 48 of the EC Treaty relating to freedom of establishment engaged. Those matters were considered, but on 13 August 2008 a decision letter was generated by, and on behalf of the Secretary of State, rejecting, in simple language, any claim for Mr Zhou to remain on the grounds of EC Treaty Law relating to the commercial rights of Gransian Limited.[8]Subsequently Mr Zhou was bailed again and then the present application for judicial review was lodged. It came before Pitchford J, who considered it on the papers on 21 October 2008. He refused permission, abridged time and indicated that any renewal would not operate on a bar for removal to Austria, but in respect of the EC Treaty argument said as follows:
"On the face of it the Art 43 argument is an empty device whose purpose is to frustrate the proper operation of immigration law. The claimant's solicitors are aware of pre-existing judicial opinion to the same effect."
It may be that at least one of the pre-existing expressions of opinion, to which Pitchford J made reference, was a decision on the papers given by Sullivan J in July 2007 in the case of Lin, where he said in respect of an apparently similar argument:
"The Article 43 claim is simply bogus, and as a matter of discretion I would refuse to grant any relief to a Claimant who made such a claim."
[9]Undeterred by the terms on which the permission on the papers had been refused, the claimant, through his solicitors, lodged extensive written grounds for renewing the application for permission to claim judicial review, in a document not signed by counsel, extending to some 22 pages, in which a great many EC authorities and legislative provisions are referred to. It seems, however, that that substantial document was not served upon the defendant because counsel, Mr Greatorex, who appears for the defendant today, had not had sight of it until he came to court, when the matter could not be listed until late on the morning.[10]In addition the claimants have served a further bundle of materials and further witness statements making the total volume of materials in this case something in excess of a thousand pages, although a great deal of that is a very large bundle of community law authorities.[11]The witness statement of the second claimant, however, deserves mention, because he accepts that he entered the United Kingdom around February 2007 clandestinely, and subsequently in June met his wife here. He had no basis of being here at all. She appeared to have a discretionary leave which was the subject of some further application. He says that he made an asylum claim in December 2007.[12]As far as the present application is concerned, the following paragraphs are material:
"7. As my wife and I both decided to enter into business, we approached our current representing solicitor Harvey Son & Filby (HSF) Solicitors for legal advice. I was also interested in learning if there were any other immigration routes open to me to regularise my stay in the UK. On 20 June 2008, I instructed HSF, to apply on my behalf, for written confirmation of whether I am entitled to any derivative rights of residence under EU law on the basis of my investment. 8.Through HSF, I instructed an Irish company formation agent, Company Setup, to assist me in setting up an Irish private company limited by shares. I bought a ready-made company, Gransian Limited, registration number 456159 that was incorporated on 03 June 2008. Its registered office is situated at Coliemore House, Coliemore Road, Dalkey,Co. Dublin. My wife and I are both the directors and shareholders of Gransian Limited. Each of us own 50% of the shares in Gransian Limited. My wife is also acting as the company secretary. I was advised that the purpose of setting up Gransian Limited was to enable me to establish myself in business in the UK lawfully pursuant to the provisions of Articles 43, 48 and 56 of the EC Treaty."
[13]With that chronology I come then to the arguments that have been developed this morning by Mr De Mello, counsel for the claimants. He disavowed any reliance upon most of the 22 pages of the grounds for renewing permission, focused simply upon Articles 43 and 48, and three cases relevant to the interpretation of that article, to which reference will be made shortly. He did also begin his submissions by inviting the court to adjourn this case until February 2009 because another constitution of this court was dealing with other cases, which, it is said, touched upon the present issues namely HHJ Pearl, sitting as a Deputy Judge at the High Court, had last week been seised of cases concerning companies in Ireland and Article 49, and indicated that he would not give judgment until February 2009.[14]That application to adjourn had been canvassed in the correspondence and did not find favour with the defendant. It was opposed in vigorous terms this morning and the court saw no reason whatsoever to adjourn this matter in the light of the extensive history of this case, and the need for clarity and certainty. As it happens, the court is confident that the principles on which Mr De Mello relies are familiar to the court. The opportunity has been taken to refresh the memory from the three cases, to which I shall refer in a moment, which are central to the submission. So this is not a case where the court feels that it is has been unable to penetrate the details of the argument. The facts are not in dispute. It is simply whether there is an EU argument worthy of further consideration by this court that should engage the grant of permission. I am also, of course, not concerned with deciding any other case which is not before the court.[15]I make it plain that although there have been difficulties in certain areas of marrying up domestic immigration control and certain classes of EU rights for those who are not EU citizens, this court is not concerned in any way with any case of what is known as a third country national who is married, or otherwise a family member of an EU citizen. Nothing that falls from this court's judgment about lawful presence, or any other matters relating to immigration, have any impact upon that line of cases where guidance has finally been given by the Court of Justice in the case of Mettock (?) in 2008.[16]Nor is it concerned with another area that has prompted debate and difficulty, namely the application of the Ankara Agreement (the Turkish association agreement) to UK immigration control where there have been a number of cases and references pending before the European Court of Justice.[17]The present case is concerned solely with company rights alleged to exist in the first claimant, which it is submitted gives a benefit to the second claimant, in so far as it prevents removal, unless a decision on proportionality and EU justification on public policy grounds is taken.[18]The principal case upon which Mr De Mello relied in his submissions in support of this renewed application was the case of Loutchansky, that is R (on the application of Loutchansky and Others) v the First Secretary of State [2005] EWHC 1779 Admin, also reported at [2005] 3 CMLR 15, a decision of Moses J, as he then was, at first instance given on 1 July 2005. Loutchansky concerned a Russian national who was resident in Austria and was the director of a substantial commercial enterprise registered and based in Austria, a company called Nordex Limited. As a director of that company Mr Loutchansky sought to receive and provide financial services in the City of London in the United Kingdom in connection with Nordex's business.[19]The sole question for Moses J, on a preliminary issue, was whether that statement of affairs gave rise to EU rights of movement across from Vienna to London, which therefore required EU principles of justification for any restriction or refusal of such right of movement. Having heard the argument on the preliminary issue, his Lordship concluded that there were EU rights engaged, primarily the rights of the company, Nordex, but which resulted in the particular case of the other claimant, Dr Loutchansky, having the ability to challenge an adverse immigration decision by reference to EU law principles. It is plain, however, that in reaching that conclusion, Moses J was applying community law as developed by the European Court of Justice in application of the articles of the Treaty, and was not seeking to extend it beyond the parameters that the Court of Justice had declared it to be. In particular, at paragraph 29 of the judgment in Loutchansky, Moses J makes reference to the decision of the Court of Justice in the case of Rush Portuguesa [1990] ECR 1 1417. To that case the court will shortly turn.[20]It is, however, relevant at this stage in the matter to set out the Treaty provisions upon which reliance is placed by the claimants, the Treaty now being the consolidated treaty on the European Union, as organised from December 2002. So Article 43 of the Treaty under the chapter headed "Right of establishment" says:
"Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 48, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the chapter relating to capital"
Article 48 provides:
"Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States."
It is relevant to have a look at Article 49 under the chapter "Services", although Mr De Mello did not base his submissions primarily on Article 49, but by analogy with the case law developing that article. Article 49 says:
"Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended."
I draw attention particularly to the words, "who are established in a State of the Community".[21]What Mr De Mello says is that once one has an Irish company, as one has here (the first claimant), that was established in Ireland pursuant to the law of Ireland relating to company formation, and wants to trade and conduct economic activity in the United Kingdom, then there shall be no restrictions with that company's ability to do so. That Irish company can employ who it wishes and it can employ, in particular, the second claimant: a Chinese national who has no leave to enter the United Kingdom and indeed has been required to leave the United Kingdom.[22]The remarkable fact of this challenge is that the second claimant and his wife have no connections with Ireland whatsoever. They are not Irish nationals. They are not family members of Irish nationals. They have never been to Ireland. They have no right to enter Ireland by reason of Irish immigration control, common travel area, or any EU right of entry to Ireland. They were appointed directors of an Irish company when they were resident in the United Kingdom. Mr De Mello confirmed, in answer to the questions of the court, that the Irish company has no existence other than the directors presently resident in the United Kingdom, and the mere fact of having a registered office in Dublin.[23]As the minutes of the incorporation of the company make plain, it had conducted no activity, economic or otherwise, before the transfer from the company formation agents to the second claimant and his wife. It has not been suggested that it has conducted any business in Ireland, or anywhere else, since that date. Clearly they would like to undertake commercial activity in the United Kingdom, but it is only in the United Kingdom that it wants to undertake commercial activity and the only employee is the second claimant, its shareholder, director and worker.[24]In my judgment those stark facts indicate that the case remains as empty today in terms of its factual foundation as it was before Pitchford J. I make it plain that in my judgment there is absolutely no substance in the basis of claim that has been developed in this application for judicial review, or in the oral submissions developed before me by Mr De Mello. However, to demonstrate that it is now necessary to turn to the two cases to which Moses J made reference in the Loutchansky case. Those are first the decision of the Court of Justice in the case of Rush Portuguesa Lda v Office nationale d'immigration [1990] EUECJ C-113/89, [1999] ECR (full citation will be completed in due course).[25]That was a case in which Portuguese nationals resident in Portugal, employed by a Portuguese company, wanted to enter France temporarily to fulfil a contract that the Portuguese company had won to provide services in France. The problem was that at that stage Portugal was not a full member of the European Economic Community, in particular, there had been a moratorium on its nationals entering other countries as workers. Any claim, therefore, that the Portuguese nationals had to enter France had to derive from the right of the company with respect to provision of services, under the articles of the EEC Treaty reflecting Articles 43 and 48, but with a different enumeration before the consolidated treaty was adopted.[26]The Court of

Justice in its ruling says at paragraph 12 as follows:

"Articles 59 [now 49] and 60 of the Treaty therefore preclude a Member State from prohibiting a person providing services established in another Member State from moving freely on its territory with all his staff and preclude that Member State from making the movement of staff in question subject to restrictions such as a condition as to engagement in situ or an obligation to obtain a work permit. To impose such conditions on the person providing services established in another Member State discriminates against that person in relation to his competitors established in the host country who are able to use their own staff without restrictions, and moreover affects his ability to provide the service."
That is the ratio of the case. That is the passage that was cited by Moses J in Loutchansky and the court, for good measure, contrasted that with the restrictions on freedom of movement, which then applied to Portuguese workers, and said at paragraph 15 of its judgment the following:
"15. The situation is different, however, in a case such as that in the main proceedings where there is a temporary movement of workers who are sent to another Member State to carry out construction work or public works as part of a provision of services by their employer. In fact, such workers return to their country of origin after the completion of their work without at any time gaining access to the labour market of the host Member State."
That is to say, these workers were not proposing to move permanently to France and work there at that stage.[27]The decision in Rush Portuguesa, therefore, at least founds the proposition that companies may be able to move from the place where they are established to another Member State, and to bring their staff with them applying the non-discrimination principles that underlie Article 43 and community law generally. The court next had to deal with the issue in case of Raymond Vander Elst v Office des Migrations Internationales (OMI), case number 43/93 [1994] ECR 1-3803. The Vander Elst case concerned Moroccan nationals who were resident in Belgium, and employed by a Belgium company that had won the contract to do building services in France.[28]They had obtained some immigration permission to bring their Moroccan workers with them from Belgium to France. However, a question arose in the context of penal proceedings against the company for employing foreign nationals, who were not community nationals, without a work permit, and whether they were entitled to bring those workers across under the provisions of community law. The answer that the court gave is that they were. At paragraph 11 of its judgment the Court of

Justice says:

"11. By those questions the national court seeks in substance to ascertain whether Articles 59 and 60 of the Treaty are to be interpreted as precluding a Member State from requiring undertakings which are established in another Member State and enter the first Member State in order to provide services, and which lawfully and habitually employ nationals of non-member countries, to obtain work permits for those workers from a national immigration authority and to pay the attendant costs, with the imposition of an administrative fine as the penalty for infringement."
Having posed the question at paragraph 11, the court gives its answer at paragraph 14:
"14 Article 59 of the Treaty therefore requires not only the elimination, against a person providing services who is established in another Member State, of all discrimination on the ground of his nationality but also the abolition of any restriction, even if it applies without distinction to national providers of services and to those of other Member States ..."
It gives numerous citations in respect of that principle. The court continued in the same paragraph:
"Furthermore, it is apparent from the judgment in Joined Cases 62/81 and 63/81 Seco and Desquenne & Giral v Etablissement d' Assurance contre la Vieillesse et l' Invalidité [1982] ECR 223 that legislation of a Member State which requires undertakings established in another Member State to pay fees in order to be able to employ in its own territory workers in respect of whom they are already liable for the same periods of employment to pay similar fees in the State in which they are established proves financially to be more onerous for those employers, who in fact have to bear a heavier burden than those established within the national territory."
[29]The quotations from those two core judgments are sufficient to indicate that what the court was concerned about was the principle of discrimination. Where a firm is lawfully established and operating in the sending state (in this case it would be Ireland), but wishes to undertake economic activities either for a short period, or for a more prolonged one in another Member State (in this case the United Kingdom), it does not, as it were, have to start again and recruit afresh staff from the domestic labour force of the United Kingdom. However, it can, subject to other principles of community law proportionality, seek to transfer, for the purpose of the duration of the contract or contracts, its own staff from the place of incorporation. It does not have to undergo the expenses of work permits, fees, other applications which might put it in an uncompetitive position with respect to another company already established here, who can undertake the work and provide the services and commercial activities without such expense.[30]Mr De Mello submits that it just happened to be the case in Vander Elst,Rush Portuguesa and Loutchansky that the third country nationals, the non-EU nationals, or in the Rush Portuguesa case the Portuguese nationals were workers who were lawfully resident in the first EU state, whereas the principle, he submits, is much broader than simply that. I do not agree. It is plain, in my judgment, that the principle itself is founded upon movement from people who are workers and established in an ongoing enterprise in EU country A, that seek to deliver economic services, or activities, in EU country B.[31]If there is no prior business established as a genuine and effective commercial undertaking in EU country A, there is nothing which is capable of engaging the non-discrimination principle. If an Irish company wants to establish itself for the first time in the United Kingdom it is, of course, entirely free to do so. It can do so by setting itself up either through a UK subsidiary, or simply conducting its activities pursuant to its definitive incorporation in Dublin. If it needs to recruit a labour force it can do so under the national rules relating to the recruitment of labour. It will be in precisely the same position as a UK company starting to set up for the first time, who wants to recruit labour. An Irish company, however, has no claim in such circumstances to recruit third country nationals from either outside the EU altogether, or from some other part of it, with whom it has no prior economic relationship and who have not been working for it in an economic capacity prior to the UK based activity.[32]Indeed the breadth of Mr De Mello's submissions would be truly astonishing. He submits that simply by establishing a shell company anywhere within the EU, and making a third country national a director, or at least a worker of such a shell company, then any EU country has to modify its immigration control to respect the rights of such nationals to come to this country to work. It is patently not the case. The Court of Justice in deliberating upon the true scope of Article 43, Article 48 and Article 49, as they now appear in the EC Treaty, have always made it plain that Member States are entitled to control immigration. In particular, they are entitled to control the immigration of third country nationals, but they must do so to respect the EU rights which may be afforded under particular provisions of the treaties. Outside the sphere of EU nationals themselves having free movement rights for the workers and those who set up companies outside the sphere of families, there will be a limited class of case where established countries have third country national employees and that is the limited class noted in the Rush Portuguesa and Vander Elst etc, cases, to which Moses J gave reference in the case of Loutchansky.[33]However, it is not a freestanding principle giving immigration rights to third country nationals simply by reason of a nexus to an EU company. The implications for not just the immigration law of the United Kingdom, but for every other country in the EU, would be enormous if there was any semblance of correctness in the submissions which have been advanced on the basis of these bare facts before the court today.[34]I therefore conclude that this application is wholly without merit. It raises no arguable case of EU law to which the first claimant or the second claimant could have any conceivable entitlement to pray in aid against the Secretary of State in the context of the immigration decisions taken in this case. Because no EU rights are engaged I have not considered it necessary to hear argument on, or reach a ruling upon, the EU concept of abuse of rights which could only arise if there was a right that could be capable of being abused.[35]I nevertheless note, in the absence of EU rights, the strong observations made by Sullivan J and Pitchford J in these cases, and I agree with them. Because there are no EU rights this is an empty vessel and it is attempting to create something which does not exist.[36]I have gone into some detail in this judgment with the facts, the principles and the submissions that have been advanced, because although this is a permission application, similar applications to the present ones have been brought before the court, not just in the decision of Sullivan J to which reference has been made, but on a number of other occasions before the courts where, to my knowledge, permission has hitherto been refused. It is important that the law is clarified upon this matter so all claimants know where they stand, as well as the defendant, the Secretary of State.[37]I have, therefore, given this judgment greater consideration than would normally be required in dealing with a permission application. It is intended to be a more detailed consideration of the case than would otherwise normally be the case, and, as I indicated to counsel before the short adjournment, I propose to give permission for this judgment to be quoted. For those reasons this application is dismissed.[38]MR GREATOREX: I am very grateful. The principal issue is obviously for costs. I think if there is any indication at all from the claimant that they intend to take this matter any further: the question of whether or not removal can take place reflecting the order of J Pitchford -- perhaps I will not say any more about that at this stage. My Lord, an informal schedule of costs has been drawn up, which I gave to my learned friend, Mr Henley, who is here on behalf of Mr De Mello this afternoon.

MR JUSTICE BLAKE: So far Pitchford J has awarded your client the costs of the AOS at £480?

[40]MR GREATOREX: Yes.

MR JUSTICE BLAKE: Were there representations on that?

[42]MR GREATOREX: I think the form of the order provided that --[43]MR JUSTICE BLAKE: You are saying this is a case where you should be given your costs of opposing the oral renewal, not as a normal course but as an exceptional departure?[44]MR GREATOREX: My Lord, yes. I ask for two things out of the ordinary. The first is an order for all of our costs against the claimant, and also an order in respect of those costs be made also against the claimant's solicitors on the basis of their unreasonable conduct. That is the application in a nutshell. My Lord, the total amount, including the £480 already ordered by Pitchford J, comes in at just under £2,000. It is £1,964.[45]MR JUSTICE BLAKE: Including the £480 and exclusive of VAT. Certainly the claimant would not be paying VAT.[46]MR GREATOREX: I suppose the first claimant is a limited company. I do not know. Certainly the fee that is included for that --[47]MR JUSTICE BLAKE: I do not think I have seen your costs. I am just trying to elaborate --[48]MR GREATOREX: Would you like to see the informal schedule?[49]MR JUSTICE BLAKE: I do not seem to have the White Book. In terms of your second application--[50]MR GREATOREX: Paragraph 44.14: the unreasonable conduct provisions. I do not understand this to come as any surprise at all to the claimant, or his solicitors.

MR JUSTICE BLAKE: Some fairly strong warnings have been given by my brethren beforehand.

[52]MR GREATOREX: That forms part of the application. If I can make the points very briefly. Quite apart from the complete lack of merit in this claim, there is the fact that the claimant's solicitors were on notice before even bringing this claim in the form of the order of Sullivan J in July 2007. The point about that, I am sure your Lordship noticed, is it is not that that was attached to our summary grounds of defence, it is that they were the solicitors in that case in July 2007. It is not as though it only came to them at that stage. That is obviously the main reason for it. These costs have to be paid. We do ask for an order against the claimants as well as against the solicitors. As I said, it does appear that this is the sort of case where the solicitors have really taken matters into their own hands and, in the face of warnings from the court which they should have heeded, pursued this matter all the way.[53]There are some other less important, but still significant, matters that I would rely upon. The first is just in general terms of the history of this case where we have had, every time removal directions have been set, attempts to frustrate it, first of all, challenging the third country removal and then that being withdrawn. Second of all, we were not sent the grounds of renewal in this case. We wrote a letter in November asking for them, which did not produce them.

MR JUSTICE BLAKE: I do not think I have at all mastered the correspondence.

[55]MR GREATOREX: I do not think it is in the bundle. I have a copy here if your Lordship would like to see it? It was a letter in November asking for it.

MR JUSTICE BLAKE: Is it Mr Henley?

[57]MR HENLEY: Yes.[58]MR JUSTICE BLAKE: Welcome, Mr Henley, to court. You have heard what has been said.[59]MR GREATOREX: If there is any issue about that I can show my learned friend a copy in a moment. Then, of course, this morning we received a bundle with that in for the first time and all the other documents.[60]MR JUSTICE BLAKE: Thank you. Mr De Mello probably gave you some indication.[61]MR HENLEY: A very brief indication. It was literally a five or ten minute conversation outside court 71. I obviously understand what the case is about from your judgment, but clearly I have not had a look at any correspondence. It is very difficult for me to make any sort of detailed reply on the question of costs.[62]MR JUSTICE BLAKE: I did rather say to Mr De Mello, who asked not to be present this afternoon, that if he was not going to be present he would need to have someone who was able to say something. I am not going to go behind what discussions you and he may not have had. I am afraid you are in the hot seat for the time being.[63]MR HENLEY: I realise that is the burden for counsel from time to time. I accept that burden. First of all, I would like to point, my Lord, to the summing-up of your judgment that you gave at the end, and the reasons why you gave such a full judgment. It seems to me that you were saying that there are a great many cases where these issues have arisen, similar issues as appear in this case, and that it was also alluded to by my learned friend that it was necessary to settle these issues, because they keep cropping up. It seems to me on first blush--[64]MR JUSTICE BLAKE: I should warn you that you are on slightly dodgy ground. I know over the last three months I have seen at least two of these such claims. I refused them on the paper with perhaps a similar tick box of manifestly unfounded-- nevertheless they probably came from the same firm of solicitors, though I cannot positively assert that -- I see there are nods.[65]MR HENLEY: I am not in a position to gainsay that.[66]MR JUSTICE BLAKE: There was obviously persistence and courage shown by those instructing you in bringing these matters, therefore that is what I had in mind in giving the judgment.[67]MR HENLEY: The point I was about to make, which is slightly different from perhaps the point you had in mind, is that clearly the Secretary of State has had in mind that they wanted a definitive judgment on this, because of the number of applications that involved these sorts of principles, and therefore that is why they appear today. I think, as you pointed out, it is not usual for the defendant to make an appearance at an oral permission hearing.[68]MR JUSTICE BLAKE: That is quite usual. It is not usual that they get their costs of so doing, because the Mount Cook principles are that since these days any defendant has to incur the costs of an AOS before they get to the oral stage, they should not be out of pocket for so doing. Equally the principles of costs, at this stage, enable the court to make an order, first of all, against the claimants because of the activity in renewing when the court was clearly expressing its views in favour, and then secondly against your solicitors. There we are.[69]MR HENLEY: Nevertheless, I do make the point that, of course, the claimants would be liable for the AOS payment of £480, but we say that in the normal practice we should not be made to pay.

MR JUSTICE BLAKE: You say the normal rule should apply.

[71]MR HENLEY: We should not be liable for additional costs. If that is the normal practice then that is what should apply, in my submission. I think that there are greater issues with regards to the wasted costs issue. Whether somebody proceeds on a particular course, or a set of solicitors proceeds on a particular course, it very much depends on their instructions.[72]Of course, I am not in a position to quote the case law, but my recollection of the case law on wasted costs is that the professional duty of the professional advisers is to act on their client's instructions. Sometimes these instructions are to pursue hopeless cases. Certainly the Bar is duty bound to act on their instructions. They may advise, of course, and they may advise in publicly funded cases. They may advise that there is not sufficient merit to warrant the use of public funds.[73]However, to pursue a case may well be a matter of the instruction of the client, and of course the court is not, in my submission, allowed to make an inquiry as to whether they were so instructed, because to do that would go to the heart of legal professional privilege.

MR JUSTICE BLAKE: Yes, thank you.

[75]MR HENLEY: For that reason it is very harsh to stick, as it were, (if I may use the colloquialism) the solicitors with a costs order for which they may have only been doing their professional duty to their client. It is, in my submission, always the difficulty with these sorts of cases, and in my understanding of the case law what you look at is things like gross incompetence of professional advisers--[76]MR JUSTICE BLAKE: I am pretty sure, although I do not have all the CPR 44.14 in front of me, what is being relied upon here is unreasonable conduct in the incurring of the costs. The court has said, "We are not quite into the gross incompetence limb of punitive costs sanctions".[77]MR HENLEY: In terms of unreasonable conduct it is things like not doing the things one ought to have done, like taking witness statements when one ought to, or complying with the directions of the court.[78]MR JUSTICE BLAKE: For good measure I do not think they did any of that either. There was no service of the renewed grounds upon the defendant, no lodging of the bundle and there was a witness statement that was relied upon just this morning.[79]MR HENLEY: Clearly I am not sufficiently au fait to make that argument. I still think that the issue about whether the court is right to try and look behind what the instructions are to the instructing solicitors is not, in my submission, the correct approach. Therefore, the normal costs order should be made, rather than a wasted costs order.

MR JUSTICE BLAKE: Thank you very much.

Ruling on Judgment

[81]MR JUSTICE BLAKE: Pursuant to the judgment refusing permission which the court has just handed down, there are applications made by the defendant in respect of costs. On the paper decision Pitchford J awarded costs of the acknowledgment of service in the sum of £480, but since then there have been the costs of attending today to oppose this application and to respond to the supplementary grounds in support of it, that have been lodged by the claimant.[82]I indicate at once that in my judgment this is a case in which the circumstances can exist in terms of conduct, and absence of underlying merits, to go beyond the normal course of restricting adverse costs orders to those incurred necessarily by defendants in the filing acknowledgment of services, and making an award of costs for the defendant's costs of attending today. I do so largely by reference to the history of the matter set out in this judgment, and the absence of any assemblance of merit in the underlying legal claim.[83]I therefore order that the first and second claimants, jointly and severally, be liable for the sum of £1,964, which includes the £480 already ordered by way of the acknowledgment of service, and that is the total sum. I understand the net of VAT is probably not charged, or certainly not in that sum today.[84]There is then a further application made by the defendant. Since it is quite possible that the first costs order will not be effective in the light of the anticipated imminent removal of the second, who is the sole persona behind the first claimant company along with his wife, there is an application for costs against the claimant's solicitors, pursuant to CPR 44.14, which empowers the court to make orders against legal representatives where there has been unreasonable conduct on their behalf.[85]Mr Henley, who has appeared this afternoon at short notice, and whom the court is grateful to for the assistance that he has given in a difficult case, makes the point that the court should be circumspect about making any such order where it may well be that the solicitor was doing no more than obeying his or her instructions in renewing the matter, however lacking in merit they personally concluded the claim may be.[86]I am grateful for the reminder of caution that needs to be exercised in this jurisdiction. Equally I observe that the court is not exercising punitive wasted costs jurisdiction based upon flagrant incompetence, but it is concerned with the reasonableness of the conduct of the claimant's solicitors in this particular case. In my judgment there is sufficient reason to make that order in this case for the following reasons:(1) As the witness statements reveal they seem to have been the source of the advice behind the setting up of the Irish company and the basis of the claim that was being made. It is unlikely that the second claimant himself had any knowledge, or understanding, of those matters in the absence of that advice.(2) It is apparent that they have been the solicitors acting in a number of other similar cases, notably in the case in which Sullivan J made his trenchant remarks in 2007 quoted in his judgment, and I understand, in a number of other cases that have come before the Administrative Court on the papers in recent months. They therefore have a fuller understanding of the point. They appear to have promoted the point by their advice and to their clients, and they are more than usually exposed to an adverse costs consequence when the court concludes that the underlying argument is wholly without merit.[87]Thirdly, even in terms of the way this present case came before the court with an unfortunate history of judicial review applications made, I think, by the same firm of solicitors, which were then drawn, that enabled the Irish company to be set up, it does have a strong look of devices being created to delay removal that was otherwise perfectly appropriate and inevitable. Moreover, the way in which the case has been renewed to this court is bad practice: a very over-inflated bundle of over 1,000 pages, including supplementary material, which was not lodged with the court for a hearing, or with the defendant. This extended to some 350 pages, or so, some of it including authorities, but others being of relevant factual concerns, including the witness statements that have been quoted in this judgment.[88]For those reasons the court is satisfied that there has been conduct by the claimant's solicitors, as a firm, which can be castigated as unreasonable in the way that this application was pursued, and indeed in the pursuit of it, in the light of the previous strong comments from this court, and the absence of underlying merit and the immigration history of the individual client. Therefore, I do also make a costs order against that firm. Of course there is only going to be one recovery of those costs, not a triple recovery. That deals with costs. I hope.

MR JUSTICE BLAKE: Are there any other matters?

[90]MR HENLEY: I may be treading on delicate grounds here. I think there was one other thing that Mr De Mello asked me to mention to the court. He accepts Loutchansky and did quote from it. What I understand from Mr De Mello is that he did not make submissions to you on the other two cases that you quoted, or make detailed submissions. That is what I was asked to say by Mr De Mello. I am not sure whether it is a well-made point, or not.[91]MR JUSTICE BLAKE: He made his submissions by reference to Loutchansky. You only need to go to Loutchansky to see that Loutchansky itself is only an application in a UK court to an immigration context of the principles in the other cases. You cannot read Loutchansky without looking at Rush Portuguesa and Vander Elst.[92]MR HENLEY: I think he makes the point that he perhaps did not address you as fully as he might have done on those two cases.

Cited in 2 later judgments