R (on the application of JW and Others) v Secretary of State for the Home Department (Tier 1 Investor; Control; Investments)

These two applications were linked due to the similarity of the facts and issues raised. JW, and her dependent child GW, challenged the decision of the Secretary of State for the Home Department to refuse her application for further leave to remain as a Tier 1 (Investor) Migrant. Ms Wu challenged the Secretary of State's decision to refuse her application for indefinite leave to remain as a Tier 1 (Investor) Migrant. Both decisions were upheld on Administrative review in February 2018.

JW and Ms Wu were both sold a product, by Maxwell Holding Limited (“Maxwell Holding”), by which both the investment and immigration elements of the Tier 1 (Investor) Migrant route were to be satisfied. In both cases, the Applicants obtained unsecured loans, in JW's case of £1 million and in Ms Wu's case of £5 million, from Maxwell Asset Management Ltd (“Maxwell”) which they both invested in Eclectic Capital Limited (“Eclectic”). Mr DPK was the director of Maxwell Holding and the sole director of Maxwell. The sole director of Eclectic was Ms NK, who was the wife of Mr DPK.

Regarding JW, although the Secretary of State accepted on Administrative Review that paragraph 245ED(g) of the Immigration Rules HC 395 (as amended) was not applicable to JW's application as it related only to Table 7 and not Table 8B of Appendix A to the Rules, the Secretary of State stated that JW was still required under Table 8B to have money of her own under her own control and disposable in the United Kingdom. The Secretary of State concluded that JW was not in control of the funds, on the basis that she did not in fact have freedom to choose where to invest the loan funds, or to withdraw the investment once made. The Secretary of State maintained that relevant considerations in determining whether a person had control of the funds included the fact that money was transferred between two companies whose directors were married, the poor terms of the agreement and poor financial returns of the investment. The Secretary of State also concluded that Eclectic had attributes akin to investment vehicles expressly excluded by paragraph 65(b) of Appendix A and therefore the investment did not meet the requirements of the Immigration Rules.

Regarding Ms Wu, the Secretary of State also concluded that she did not have the funds under her own control as required by Table 9B of Appendix A as she did not appear to have the freedom to choose where to invest the money or to withdraw her investment once made. The Secretary of State also concluded that, on the balance of probabilities, the investment in Eclectic was excluded by paragraph 65(b) as it had attributes similar to companies which could be used as a vehicle to channel funds into other investments and which might not be active and trading United Kingdom companies.

Before the Upper Tribunal, JW and Ms Wu raised four common grounds of challenge: first, the Secretary of State had applied the wrong test under paragraph 245ED(g) of the Immigration Rules; secondly, the Secretary of State had misinterpreted the requirement for an applicant to have money under his or her control; thirdly, the Secretary of State' decision was irrational and had taken into account irrelevant factors; and fourthly, the Secretary of State had erred in relation to her interpretation and application of paragraph 65(b) of Appendix A. Ms Wu raised two further grounds of challenge. Fifthly, the Secretary of State had erred in failing to accept the evidence provided by Ms Wu of her personal assets, or in the alternative, further documents should have been requested pursuant to paragraph 245AA of the Immigration Rules or a limited period of leave granted rather than indefinite leave to remain. Sixthly, the Secretary of State had erred in failing to take into account evidence relating to paragraph 65-SD(a)(vii) of Appendix A, and/or erred in finding that that paragraph applied at all.

Held, refusing the applications:

(1) The Secretary of State did not err in applying the wrong test or standard in refusing either application by the mere reference to “reasonable grounds to believe” in the original refusal letters. As expressly confirmed in the Administrative Review decisions, the standard which was applied was the balance of probabilities and that was borne out by the detailed assessment of the evidence before the Secretary of State at the date of decision. Moreover, the submission that the mere provision of documents in accordance with those specified in the relevant part of the Appendix was of itself sufficient ignored the structure of the Immigration Rules governing applications under the Points Based System. The provision of specified documents was the required means by which an applicant could establish that the substantive requirements of the Immigration Rules were met for a grant of leave to remain. The content of those documents must, however, be examined to ensure the satisfaction of the relevant requirements of the rules (paras 72 – 78).

(2) The meaning of ‘control’ in paragraph 245ED(e) and in Appendix A, specifically in Tables 8B and 9B, of the Immigration Rules was to be interpreted in accordance with its natural and ordinary meaning, namely that a person had the authority to manage and/or direct the use of the money, asset or investment, depending on the context. It included not just a question of legal or beneficial ownership but also an element of choice of use. The money must be under a person's control at the point of investment. To determine whether a person had the requisite control, it was necessary to look at all the facts and circumstances of the case and with reference to the overriding requirement in paragraph 245ED(e) of the Immigration Rules (at least for the purposes of an application for further leave to remain as a Tier 1 (Investor) Migrant) that the “assets and investment he is claiming points for must be wholly under his control”. The addition of the requirement of ‘wholly’ showed a higher level of control than one might normally expect in some commercial situations, but that was to be expected given that not every investment would satisfy the requirements for a grant of leave to remain under that route (paras 87 – 89).

(3) The Secretary of State properly concluded that the Applicants did not have control of the money at the requisite time. The nature of the investment made could not possibly have been for good commercial reasons as claimed by both Applicants, which itself raised the question of whether it was a freely made investment of each Applicant's own choosing. For that reason, combined with the links between Maxwell and Eclectic and the terms of the loan agreements, the Secretary of State was entitled to draw a rational and lawful conclusion that, in all the circumstances of the investment, the Applicants did not have a free choice to invest in Eclectic, but that they were required to do so. As such, the Applicants were lawfully and rationally found not to have had money under their control for the purposes of the award of points under Row 1(b)(ii) of Table 8B for JW or under Row 1(b)(ii)(2) of Table 9B for Ms Wu. Further, neither had sufficient control of their investments once made either. In any event, in the light of the Services Agreements concluded between each Applicant and Maxwell Holding, which were disclosed during the Tribunal hearing, there could be no doubt that neither Applicant had control over the funds loaned to them or the destination of their investment. Accordingly, the application for judicial review must be refused on grounds two and three (paras 90 – 103).

(4) The terms listed in paragraph 65(b) of Appendix A to the Immigration Rules were not to be interpreted by reference to statutory definitions outside the Immigration Rules but in accordance with the ordinary rules of interpretation applicable to the Immigration Rules, the terms bearing their ordinary and natural meaning. The rationale for the Tier 1 (Investor) route to obtain leave to remain in the United Kingdom was to encourage capital investment in United Kingdom companies as well as generate tax revenue from the same. For those reasons, certain investments were excluded, including those in investment vehicles which essentially reinvested the money elsewhere but with no guarantee that the ultimate...