Moon Fish Limited, R (on the application of) v The Secretary of State for the Home Department

In the sponsorship regime, the so-called mandatory grounds in Annex C1 do not remove the Secretary of State’s residual discretion to impose a lesser sanction. Lawful unpaid leave does not clearly become a change of salary under Annex C1(aa) merely because it was not reported; the reporting failure may fall under other, non-mandatory duties. Where the Secretary of State proceeds directly to revoke a sponsor licence, procedural fairness will normally require fair notice of the specific concern, a reasonable opportunity to respond, and an opportunity to address seriousness and mitigation. A general request for documents was insufficient. The decision was quashed for procedural unfairness and misdirection, and remitted. Relief could not be refused under section 31(2A) because a different outcome was realistically possible.

The claimant held a skilled-worker sponsor licence and employed three sponsored workers. After requesting payroll material, the SSHD identified a shortfall against one worker’s annual Certificate of Sponsorship salary and revoked the licence immediately under Annex C1(aa), without asking for an explanation. The shortfall resulted from authorised unpaid compassionate leave, which the SSHD did not dispute was permissible in itself. The claimant accepted that the absence should have been reported.

The judicial review challenged the decision for procedural unfairness, failure to enquire, misdirection in construing Annex C1(aa), and irrationality. The central issues were whether lawful unpaid leave and non-reporting made out a mandatory revocation ground, what fairness required before direct revocation, and whether relief was barred by section 31(2A) of the Senior Courts Act 1981.

1. Disposition. The claim succeeded. The revocation decision was quashed and remitted to the SSHD for reconsideration under section 31(5)(a) of the Senior Courts Act 1981.
2. Revocation framework. Although Annex C1 uses mandatory language, the SSHD retains a residual discretion not to revoke. She may suspend, downgrade or impose an action plan instead. The seriousness of the breach, the sponsor’s culpability and whether the breach indicates a systematic failing are relevant. The location of a ground in Annex C1 does not itself make every breach serious. The foreseeable consequences of revocation are matters the SSHD may consider, but need not specifically address.
3. Annex C1(aa). A lawful period of unpaid leave does not clearly amount to a change of salary or payment of less than the salary stated in the Certificate of Sponsorship. The failure to report such leave may breach the reporting duties in the guidance and fall within Annex C2(a), but it does not thereby become a mandatory Annex C1(aa) breach. The SSHD had misinterpreted the guidance by inferring the mandatory ground from the mathematical shortfall and the absence of a report.
4. Procedural fairness. The sponsorship scheme shapes the content of fairness but does not normally exclude it. Where the SSHD proceeds directly to revoke without a stipulated process, she must normally give the sponsor the gist of the specific concern and a reasonable opportunity to respond, including on seriousness, mitigation and the residual discretion. A general request for documents referring abstractly to salary compliance did not identify the concern about the particular worker’s unpaid leave. MFL therefore lacked a fair opportunity to explain the shortfall or address the proposed sanction.
5. Relief. The Tameside issue and wider rationality challenge did not require determination. Under section 31(2A), the question was whether it was highly likely that the outcome would not have been substantially different absent the errors, not what the SSHD would probably have decided on a hypothetical reconsideration. Given the legitimate leave, good-faith reporting error and absence of other compliance concerns, a different sanction was realistically possible. The statutory threshold, and the related arguments based on inevitability, immateriality, lack of prejudice and pointlessness, were not met.

First-instance judicial review. No appellate history is stated in the judgment.