Terms of loan agreement must be clear to meet requirements of a Tier 1 (Entrepreneur) application

The Upper Tribunal has dismissed a judicial review challenging refusal of a Tier 1 (Entrepreneur) Migrant application because of a lack of clarity in the loan agreement. The case is R (Waljee) v Secretary of State for the Home Department (Tier 1, Directors Loan) [2024] UKUT 418 (IAC).

The headnote states:

The requirement in paragraph 45(d)(iii) of Appendix A to the immigration rules for specified evidence of investment in the form of a director’s loan, imposes a requirement that the loan agreement itself sets out the four factors identified in the rule, including the requirement that the loan is unsecured and subordinated to other creditors’ loans to the business.

The applicant had applied for leave to remain as a Tier 1 (Entrepreneur) Migrant which had a requirement that where the investment was a director’s loan, the applicant must provide a legal agreement showing that the loan is unsecured and subordinate to other creditors’ loans. The application was refused on the grounds that he had not provided evidence that the loan was unsecured and subordinate.

The applicant sought administrative review of the refusal, saying that as there was no term within the loan agreement to show that it was secured, this meant that it was unsecured. The applicant also said that certain clauses showed that the loan was also subordinate. These points were not accepted and the administrative review was dismissed.

The Upper Tribunal held that

it is clear that the word “showing” in paragraph 45(d)(iii) of Appendix A to the immigration rules, properly construed, imposes a requirement that the loan agreement sets out the four factors identified in the rule. That is; (i) the terms of the loan, (ii) any interest that is payable, (iii) the period of the loan, and (iv) that the loan is unsecured and subordinated to other creditors’ loans to the business. The fourth of those factors ensures that it is clear and there can be no doubt that secured and unsecured creditors will have priority over the debt payable to the director.  That construction of the requirement is in context, consistent with a purposive approach to construction of the relevant provision of the rules.

The tribunal held that the applicant’s loan agreement lacked sufficient clarity to establish the fourth point and the judicial review was dismissed.