Sajjad, R (On the Application Of) v Secretary of State for the Home Department

Under the Points Based System, an investment by a company director which creates a debt repayable by the company is a director’s loan for the purposes of the Immigration Rules. An applicant claiming points for that investment must provide the specified legal agreement, including the terms, interest, period, and unsecured and subordinated status of the loan. Evidential flexibility does not require the Secretary of State to invite an applicant to supply a specified document which was never submitted. The scheme’s emphasis on certainty and administrative efficiency may produce harsh results, but it does not make a clear requirement optional.

A Pakistani national holding leave as a Tier 1 (Entrepreneur) Migrant applied for further leave to remain after investing substantial sums in a company of which he was sole director. He supplied accounts and accountants’ letters, but no legal agreement recording a director’s loan.

The Secretary of State refused the application, and administrative review upheld that decision. Upper Tribunal Judge Smith refused permission for judicial review on the papers; Elisabeth Laing J, sitting in the Upper Tribunal, refused permission after an oral hearing. The appeal concerned whether the investment was a director’s loan under paragraph 46-SD(a)(iii) of Appendix A to the Immigration Rules and, alternatively, whether ambiguity or fairness required an opportunity to provide the missing agreement.

1. Appeal dismissed. The Upper Tribunal judges were correct to refuse permission to apply for judicial review. The Secretary of State had not acted unlawfully in rejecting the application for failure to provide the specified documentation.
2. The phrase director’s loan in paragraph 46-SD(a)(iii) of Appendix A bears its simple meaning: a loan made by a director to the company of which the director is a director. It does not require a specialist analysis of finer points of contract or company law. The appellant’s payments to or for the benefit of his company, recorded in the director’s current account and described by the accountants as a loan, fell within that meaning.
3. Paragraph 46-SD(a)(iii) required a legal agreement showing the terms of the loan, interest payable, period of the loan, and that it was unsecured and subordinated in favour of third-party creditors. The requirement was substantive as well as formal. Subordination protects other unsecured creditors and places a director making a loan in a position comparable, on insolvency, to an investor taking equity.
4. The Points Based System is designed to apply clear and objective criteria predictably and efficiently. Paragraph 245AA supplies only limited evidential flexibility. It may address omissions or defects in documents submitted, but it does not require a request for a specified document which was not submitted. The court left open whether other forms of investment, including a gift, could qualify for points.
5. The appellant’s residual-discretion and fairness arguments failed. The phrase was not unclear, and an applicant who denied making a director’s loan could not realistically rely on a discretion to invite evidence of one. There were no arguable grounds for judicial review.

• Upper Tribunal (Immigration and Asylum Chamber): Upper Tribunal Judge Smith refused permission to apply for judicial review on the papers. Elisabeth Laing J, sitting as a judge of the Upper Tribunal, refused permission after an oral hearing.
• Court of Appeal (Civil Division): The appeal against that refusal was dismissed. Holroyde LJ gave the principal judgment; Males LJ agreed and added comments on the substantive importance of the documentary requirements; the Senior President of Tribunals agreed with both judgments.