DfE and provider locked in legal battle over terminated contracts

It is believed to be the first time a training provider has taken the DfE all the way to court

It is believed to be the first time a training provider has taken the DfE all the way to court

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A training provider is suing the education secretary in the High Court after the firm’s FE loans and apprenticeship contracts were “unconscionably” terminated.

The Department for Education ended ABIS Resources Limited’s funding agreements in 2018 after discovering that an awarding body had imposed the most serious sanction possible and withdrawn its approval of the provider two years earlier.

Officials claimed that ABIS was in breach of its contracts because it failed to immediately and formally notify the DfE of the sanction when it was first enforced in June 2016. The alleged deceit also led to the provider being “mistakenly” accepted on to the government’s apprenticeship provider register.

But ABIS claims there was “no proper basis” for the termination because it had in fact notified the department of the awarding body “dispute” at the time.

High Court documents obtained by FE Week show the provider is now seeking damages worth £600,000.

The DfE, on behalf of the secretary of state – whom the contracts are technically entered with – is contesting the case and even counter-alleges the provider owes the government more than £100,000 in overclaimed loans funding.

This is believed to be the first time a training provider has taken the DfE all the way to court over terminated skills funding contracts.

A date for the case has yet to be decided, but a “costs and case management conference” is set to be heard by a judge on the next available date after October 30, 2021.

‘Serious misrepresentation’ leads to provider’s RoATP place

ABIS Resources, based in London, was set up in 2006 to offer a range of commercial and publicly funded courses. It is currently owned by Muhammad Shiraz Uddin.

The firm initially delivered Train to Gain courses until the controversial scheme was scrapped in 2010.

ABIS moved into the advanced learner loans market in 2015, holding direct contracts with the then Skills Funding Agency totalling almost £650,000 until 2018.

The provider was also a subcontractor to a firm called Hudson and Hughes Training Limited (HHTL) in 2016, delivering Access to HE qualifications from an awarding body called AIM Awards.

ABIS and HHTL had the same director, Balvinder Janjua, at the time.

AIM imposed a level 5 sanction – the most serious sanction an awarding body can place upon a provider – and withdrew its accreditation of ABIS in June 2016. This was due to “failure to comply with Access Validating Agency and Quality Assurance Agency for Higher Education regulations and failure to provide assurances in respect of robust quality assurance, including poor assessor/internal moderation assessment practice”, according to correspondence received by the funding agency at the time.

The court documents show that AIM did write to the Skills Funding Agency on May 5, 2016 to “advise” officials that it had permanently withdrawn ABIS’s approval, which the DfE admits to receiving and is pertinent to the decision to terminate the provider’s contracts two years later.

ABIS Resources particulars of claim against the DfE

ABIS claims that it also notified the DfE of the dispute “in writing” at the time, and despite alleged knowledge of the issue, the department entered a fresh advanced learner loans contract with the provider in May 2017.

The DfE also accepted ABIS’s application to the register of apprenticeship training providers (RoATP) in the same month.

However, the DfE contests that it received formal notification of the AIM sanction from ABIS, even though the provider was “contractually required to do so”.

The department said this failure “breached” ABIS’s funding agreement and was the reason for termination.

Additionally, RoATP applications asked providers whether “in the last three years have there been any issues preventing the award of a qualification, or apprenticeship, to your learners?”, to which ABIS responded “no”.

The DfE said this “serious misrepresentation” was the only reason the provider was accepted on to the register because the AIM sanction was hidden from the officials who processed the application.

In correspondence described in the court papers, ABIS claims there was a “misunderstanding of the question, but that has been completely unintentional and inadvertent”. The provider claimed it answered “no” because it believed the learners concerned in the AIM sanction were registered with HHTL, as the claimant was “only a subcontractor for delivery of that course” and the dispute “did not concern the award of qualifications”.

The DfE makes clear that ABIS was the relevant provider on whom the sanction was imposed and that it was entitled to remove RoATP applicants “in the event that it had included misleading information”.

A joint notice of termination for the advanced learner loans and apprenticeships contracts was served by the DfE to ABIS on October 31, 2017, citing breach of contract owing to the provider’s alleged failure to notify the department formally of the AIM sanction.

The DfE provides no explanation of why it took over a year to take action against ABIS, despite admitting to receiving information about the case from AIM on May 5, 2016.

But following threat of a judicial review from ABIS, the DfE backtracked on the provider’s exclusion from RoATP because it “should have been given the opportunity to make representations in relation to its removal”.

The DfE states that it “resisted” the judicial review and the proceedings were “dismissed at permission stage as having no real prospects of success”.

Subsequently, the department served a fresh notice of termination on April 3, 2018 in respect of both ABIS’s loans and apprenticeship agreements.

This notice “relied upon the general termination clauses which did not require the satisfaction of specific grounds,” according to the court documents.

‘It was unconscionable to terminate the relationship in all those circumstances’

ABIS’s key argument is that the ESFA “had been made aware of the issue concerning AIM from at least May 5, 2016” and “took no action against the claimant at that stage”.

Their lawyers add: “It was unconscionable to terminate the relationship in all those circumstances.”

ABIS alleges that it has suffered “loss and damage” as a result of the DfE’s “breach of contract”.

It is claiming for outstanding monies “due in respect of learners for whom courses were legitimately delivered” under the agreements of £354,508, and lost revenue totalling £247,678 from learners who had already applied to, and been registered with, ABIS for whom the provider “had a reasonable expectation that they would proceed with their courses”.

ABIS is also claiming for costs of staff “legitimately retained to ensure satisfactory delivery of courses under both agreements” of £60,000, as well as “interest from February 1, 2018 at a daily rate of £140.75.”

In the DfE’s counterclaim, the department denies that ABIS has “suffered any loss or damage” and demands the provider providers “strict proof” about the scale of its alleged loss.

The DfE goes on to claim that ABIS was in fact “improperly paid” £108,286 in loans funding and related bursary payments, and it is demanding repayment of these.

In addition, the department “seeks interest on those sums from the date on which they were wrongly paid until judgment”.

ABIS, the DfE and AIM said they could not comment as legal proceedings are ongoing.

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