Licence revocation did not breach substantive
legitimate expectation
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.
Key points

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.
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06 September 2012
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Background
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expressly stated that it would be valid for four years unless it was withdrawn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The licence was revoked in July 2011 on the basis that the business model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
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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:
i. the Secretary of State (through the UK Border Agency) had conferred a
legitimate expectation on Capital Care that the licence would enure for the fouryear term and that it had suffered loss as a result of it having been withdrawn
sooner; and
ii. 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.
Legitimate expectation
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.
Comment
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 [2012] EWCA Civ 1151; R v Department for
Education and Employment ex parte Begbie [2000] 1 WLR 1115
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