The Court of Appeal, in a judgment delivered by Laws LJ, has confirmed that the Secretary of State for the Home Department was entitled to revoke a sponsorship licence granted to Capital Care Services (UK) Limited (Capital Care) in circumstances where it was mistakenly granted in the first place and was subject to withdrawal at any time. In the circumstances, Capital Care did not have a legitimate expectation that the licence would enure for the full four-year term.
- The courts will generally be slow to fix a public authority with the consequences of having erroneously given rise to a legitimate expectation.
- A claim of breach of legitimate expectation must be supported by sufficient evidence of any alleged detrimental reliance.
- The rights conferred under the private law doctrines of estoppel by representation and estoppel by convention are no greater than those enjoyed under the public law concept of legitimate expectation.
Capital Care, the appellant, sought on appeal permission to challenge by judicial review the decision made by the respondent Secretary of State to revoke its licence to operate as a sponsor of migrant workers under the United Kingdom Border Agency Tier 2 points-based system.
Under the Tier 2 points-based system, a prospective sponsor could apply for a licence to employ migrant workers who fell within the Tier 2 category and wished to remain in the United Kingdom to work. Guidance on the Tier 2 points-based system (the "Guidance"), which was issued by the respondent from time to time, consistently noted that the policy was subject to change. Capital Care applied for a Tier 2 sponsorship licence in November 2008 and was granted a licence by the United Kingdom Border Agency in January 2009. The letter granting the licence expressly stated that it would be valid for four years unless it was withdrawn before then. Sponsors were obliged to ensure that they fulfilled the duties set out in the Guidance.
The licence was revoked in July 2011 on the basis that the business model operated by Capital Care was contrary to the requirements of the sponsorship licence scheme as set out in the Guidance. This was because under the contractual arrangements between Capital Care and the NHS, which it supplied with workers, Capital Care was acting as an employment agency and did not retain full responsibility for the workers' duties and functions.
The essence of the challenge before the Court of Appeal was that the Secretary of State had, in revoking the licence, acted in breach of Capital Care's legitimate expectation that it would hold the licence for the full 4 years of the term for which it was granted. Capital Care claimed that:
- the Secretary of State (through the UK Border Agency) had conferred a legitimate expectation on Capital Care that the licence would enure for the four-year term and that it had suffered loss as a result of it having been withdrawn sooner; and
- under the doctrines of estoppel by representation and estoppel by convention, the revocation of the licence was so unfair as to amount to an abuse of power.
In considering whether Capital Care could rely on a substantive legitimate expectation, the Court of Appeal noted that it was acknowledged that the licence had been granted in error. Capital Care's claim was therefore based on the withdrawal of a benefit which it had obtained as the result of a mistake.
The Court of Appeal followed the case of R v Secretary of State for Education and Employment ex parte Begbie ("Begbie"). In Begbie, it was held that where the court was satisfied that a mistake had been made by a public authority, the court should be slow to fix the public authority permanently with the consequences of that mistake. The absence of reliance and detriment in Begbie was also taken into account in the court's finding that there was no abuse of power in that case.
While Capital Care in the present case had clearly relied on the licence and claimed that it had suffered loss as a result of its revocation, the Court of Appeal held that its case was weakened by the express stipulation that the licence could be withdrawn at any time and that the Guidance could be changed. The Court of Appeal further noted that the appellant was not without responsibility in ensuring that it complied with the Guidance – in other words, it should have been aware that its business model did not comply with the Guidance.
It was also held that Capital Care had failed to provide sufficient evidence of the detriment that it claimed to have suffered and that one invoice and generalised assertions of the loss suffered could not be considered sufficient.
Doctrines of estoppel
The Court of Appeal did not consider it necessary to deal with the appellant's claim that revocation of the licence was so unfair as to amount to an abuse of power by reference to the doctrines of estoppel by representation and estoppel by convention. It was held that the application of the doctrines of estoppel to the exercise of public functions by public authorities did not confer any greater rights on Capital Care than the operation of the public law concept of legitimate expectation.
This decision confirms the reluctance of the court to enforce a mistake made by a public authority on the basis of a legitimate expectation. It is also notable for the court's finding that the application of the doctrines of estoppel does not provide greater rights than those protected by the doctrine of legitimate expectation. Finally, the decision highlights that sufficient evidence is required to show detrimental loss.
R (on the application of Capital Care Services (UK) Limited) v Secretary of State for the Home Department  EWCA Civ 1151; R v Department for Education and Employment ex parte Begbie  1 WLR 1115