1405952 (Migration)

1405952 (Migration) [2015] AATA 3476 (7 October 2015)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:  Mr Wenyu Li
Mrs Ying Ma
Ms Jingjing Li
CASE NUMBER:  1405952
DIBP REFERENCE(S):  CLF2013/150870 CLF2014/29812
MEMBER:Denise Connolly
DATE:7 October 2015
PLACE OF DECISION:  Sydney
DECISION:The Tribunal affirms the decisions not to grant the applicants Business Skills (Residence) (Class DF) visas.
Statement made on 07 October 2015 at 3:46pm

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Immigration on 26 March 2014 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) Subclass 890 visas under s.65 of the Migration Act 1958 (the Act).
The applicants applied for the visas on 3 July 2013 claiming the first named applicant (the applicant) has an ownership interest in one or more established businesses in Australia. At the time the visa application was lodged, Class DF contained 4 subclasses: 890 (Business Owner); 891 (Investor); 892 (State/Territory Sponsored Business Owner) and 893 (State/Territory Sponsored Investor). In this case, claims have only been made in respect of Subclass 890.
The delegate refused to grant the visas on the basis that the applicant did not satisfy cl.890.211 of Schedule 2 to the Migration Regulations 1994 (the Regulations). The delegate was not satisfied that the applicant had maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business. The applicant therefore did not satisfy the requirements of r.1.11(1)(b), and consequently did not satisfy cl.890.211.
Mr Wenyu Li appeared before the Tribunal on behalf of the applicants, on 11 August 2015, to give evidence and present arguments. The other applicants were present but did not give evidence. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.
The applicants were represented in relation to the review by their registered migration agent who also attended the hearing.
For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the applicant had an ownership interest in one or more actively operating main businesses in Australia for at least 2 years immediately before the application was made (cl.890.211) and continues to have an interest of that kind at the time of the Tribunal’s decision (cl.890.221). As the visa application was lodged on 3 July 2013, the relevant 2 year period immediately before the application is 2 July 2011 to 2 July 2013 (‘the 2 year period’).
Relevant law
Clause 890.211 provides:
890.211
(1) The applicant has had, and continues to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately before the application is made.
(2) For each business to which subclause (1) applies:
(a) an Australian Business Number has been obtained; and
(b) all Business Activity Statements required by the Australian Taxation Office (the ATO) for the period mentioned in subclause (1) have been submitted to the ATO and have been included in the application.
‘Ownership interest’ is defined regulation 1.03 and provides that ‘ownership interest’ has the meaning given to it in s.134(10) of the Act as follows:
"ownership interest"
in relation to a business, means an interest in the business as:
(a) a shareholder in a company that carries on the business; or
(b) a partner in a partnership that carries on the business; or
(c) the sole proprietor of the business;
including such an interest held indirectly through one or more interposed companies, partnerships or trusts;
The term ‘main business’ is defined in regulation 1.11:
Reg 1.11 Main business
1.11 (1) For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:
(a) the applicant has, or has had, an ownership interest in the business; and
(b) the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and
(c) the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s or de facto partner, in the business is or was:
(i) if the business is operated by a publicly listed company — at least 10% of the total value of the business; or
(ii) if:
(A) the business is not operated by a publicly listed company; and
(B) the annual turnover of the business is at least AUD 400000;
at least 30% of the total value of the business; or
(iii) if:
(A) the business is not operated by a publicly listed company; and
(B) the annual turnover of the business is less than AUD 400 000;
at least 51% of the total value of the business; and
(d) the business is a qualifying business.
(2) If an applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the applicant, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.
‘Qualifying business’ is defined in regulation 1.03 as follows:
qualifying business
means an enterprise that:
(a) is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and
(b) is not operated primarily or substantially for the purpose of speculative or passive investment.
Written evidence provided to the Department and the Tribunal
The visa application was lodged on 3 July 2013. The applicant has nominated Fortune Maker Pty Ltd (trading as Crazy Dollar) as his main business, situated at Fairfield Forum Shopping Centre, NSW. The business is described as a ‘grocery, daily commodity shop’. He claims that his involvement in the business commenced in January 2011 when he acquired a 35% shareholding in the company, and that in February 2012 he increased his shareholding to 60%. He describes himself as General Manager and Director. The remaining shares were held by Wei Jun Yang and Jian Hua Feng, from whom the applicant purchased his shares. He sets out his key responsibilities which include implementing regulations.
The applicant has provided a written statement to the Department in which he states the business was incorporated in April 2000. He was granted a Subclass 163 visa in August 2008 and soon after arriving in Australia looked for a business to invest in. He visited Australia again in September 2010 and inspected a number of businesses, introduced by business brokers. In December 2010 he came to Australia again having decided which business to invest in. He conducted research and collected statistics and chose a dollar shop business as he believed he had the capacity and connections to compete in this business. He looked at 2 stores; Crazy Dollar and Super Value, both in Fairfield and decided on Crazy Dollar as it had more potential to grow. On 1 January 2011 he secured 35% of the business’ shares with capital of $100,000. With his direct involvement in the business he identified 4 major problems with the business. He provided detailed reasons which in summary covered the following issues: the wholesalers used; quality of goods; limited products and sole dependence on retail rather that also trading in wholesale. He went about changing the business and because of his connections in China he was asked to take on more responsibilities. From March 2011 to June 2011 he visited 150 manufacturers in China and negotiated directly. He had to return to China a number of times. His business strategy really paid off and trading revenue increased. In February 2012 he acquired a further 25% of the business with $57,750 capital injection. In January 2013 he loaned the business $80,000. As at May 2013 his net assets in the business are $197,985. He also has a property interest in Australia. He has claimed a turnover is $845,769.
The applicant provided ASIC evidence of the transfer of shares, bank statements recording the monies transferred, evidence of his home loan, and evidence in relation to the other visa applicants. He also provided various financial documents relating to the visa applicants, the business and its employees. He provided photographs of himself at the shop, at a commodities event and in a factory.
The delegate wrote to the applicants inviting them to provide further evidence in relation to the business, its assets, the applicant’s management of the business and its employees. It also sought his comments on his movement records showing that, in the 2 years prior to making the visa application, he had spent 197 days outside Australia.
The applicant provided further evidence including documents relating to his purchase of the business shares, bank statements, financial documents, 45 suppliers, PAYG payment summaries, and insurance and superannuation records. The representative advised that the applicant had been overseas due to his mother’s serious medical condition.
The delegate’s decision record, provided to the Tribunal by the applicant, sets out his movements and records that he was outside Australia for 197 days during the 2 year period.The delegate formed the view that the stated key responsibilities of the applicant in the business’ management role required the applicant to be present. She was not satisfied he would have been able to perform those responsibilities during his numerous absences and 197 days offshore. She was not satisfied he maintained direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business during the 2 year period. She found that the applicant did not meet cl.890.211.
After making the application for review the applicant’s representative provided a written submission and further documentary evidence. Essentially, the representative submitted that the applicant’s previous migration agent had not provided correct advice regarding the qualifying business criterion and directing continuous involvement criterion. It is submitted that there are special circumstances which should be recognised. The representative submits that the applicant’s supplier liaison role demonstrates his significant involvement in the day-to-day management of the business. He typically work 40 hours a week at the premises unless he is on a business trip overseas. In 2012 for the Christmas season he was responsible for implementing the pricing strategy. He has successfully completed a workplace health and safety course. He has also been directly involved in the process of restocking. Supplier Mr Sun of B&S Homewares Pty Ltd, has provided a statement in support of this submission. The applicant has attended regular company meetings in relation to the operation of the business since acquiring his share. Important decision-making occurs at the meetings. For example, in July 2011 a resolution was passed for the applicant to decide quickly on a porcelain supplier. In October 2011 a resolution was passed to employ an extra staff member.
In relation to the delegate’s concern that the applicant has spent extended periods overseas, it is submitted that the applicant was in China seeking suitable suppliers for new and existing products and that the applicant expanded the wholesale part of the business by dealing directly with suppliers in China. To improve quality he met with the manufacturers in China. He frequently visited China and provided evidence of a recent visit to Yi Wu International Trade Park. The representative provided explanations for some of the applicant’s visits to China and copies of documents said to be from various suppliers, and email exchanges between the applicant and Jian Hua Feng in relation to products. He provided several names of local suppliers with whom the applicant has a business relationship. He asserted that when the applicant was offshore he maintained direct and continuous involvement in the day-to-day operational decision-making through mobile and email communication. He also delegated significant managerial responsibilities to his wife, the second named applicant, Ying Ma. He provided evidence of email exchanges between the applicant and Ying Ma. These are typically one or two lines of text.
The representative also made submissions in relation to the applicant’s ownership of the business, noting that the delegate found that between 11 January 2011 and 13 February 2012 the applicant had an ownership share of 35% in the nominated business. It is submitted that once he acquired this share he became directly involved in the management. The turnover of the business for the financial year ending 2012 was $869,790. His shareholding increased to 60% in February 2012.
The representative asserts that there are compelling and compassionate circumstances that warrant the Tribunal’s finding that the applicant has satisfied the direct and continuous involvement criterion. He asserts that the first and second named applicant’s parents have suffered serious long-term illnesses requiring visits by the applicants from time to time. The applicant returned to China to visit his sick parents and his in-laws. He provided evidence of their medical conditions. It is submitted the applicant maintained his involvement during these absences by having conversations with his wife and business partner, Jian Hua Feng, concerning the purchase of stock and the business turnover. During his absence, his wife and business partner went to wholesalers to buy stock and he trusted their ability to continue to run the business in his absence.
The representative provided various documents including:
·lists of suppliers, 45 in Australia and 40 in China
·statements from 4 suppliers who have dealt with the applicant
·company meeting minutes
·evidence of WHS training
·financial statement for financial year 2012 indicating trading income of $869,790
·wholesale transaction invoices
·Vodafone records
·Email exchanges
·Lease for premises recording that the lease expires on 31 August 2015
·ASIC extract
·Medical records for the applicant’s parents and in-laws.
The applicant provided a written submission in which he states that before making his investment in the business he conducted research into two stores, Crazy Dollar and Super Value. He provided data for each store about the number of customers per hour, and the average purchase per customer. He claims he talked to Crazy Dollar’s accountant about the business’ financial performance and ultimately decided to invest in Crazy Dollar.
Prior to the hearing the applicant’s representative provided further written submissions setting out the applicant’s involvement in the business. He provided the following description of the applicant’s duties as General Manager since joining the business:
·Formulate company business development strategy and supervise its implementation
·Reinforce business relationship with existing customers; create new sales opportunities
·Source and negotiate with suppliers of products to establish sound business relationships and ensure good quality products with competitive price from China
·Supervise staff and other shareholders' work performance; hold company meetings to discuss and solve the problems
·Review financial status and ensure the business operation is within budget; seek advice from accountant and tax agent; ensure tax and staff entitlements are paid on time
·Conduct surveys on customers' feedback and needs and adjust products accordingly
·Be responsible for recruiting and dismissing staff; arrange roster for all employees
·Monitor (or be reported by staff when away for business trips) the shop activities and make decisions on daily basis.
It is asserted that most of his travel to China was for business purposes. The applicant and his wife have purchased a café and another property, an off the plan city apartment. The third named applicant is in Year 11 at high school and is an excellent student. Various documents were provided including a business itinerary for the applicant’s trips to China in the 2 year period, letters from business associates and a statement regarding the roles and responsibilities of the Directors of Crazy Dollar. It states Jian Hua Feng Wei Jun Yang were the Directors until January 2015. There is documentation relating to the purchase of a café and the third named applicant’s schooling in Australia.
Evidence provided at the hearing
At the hearing the Tribunal discussed with the applicant the requirements of cl.890.211 and in particular the requirement that, in the 2 year period, the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business. The following is a summary of the evidence provided at the hearing.
The Tribunal asked the applicant about how he heard about the business, and about the business’ background. The applicant said that he was looking at a number of businesses. He walked into Crazy Dollar and had a talk to Jian Hua Feng who owned the business with his wife Wei Jun Yang. He said he picked this business because a relative said it was a pretty good business. He said he gave Mr Feng $100,000, 35% of the business’ value, on 5 January 2011. Its total value was $300,000.
The Tribunal asked the applicant why he chose to invest in Crazy Dollar. He said he had compared two shops and chose Crazy Dollar because of its location and its potential number of customers.
The Tribunal noted that the applicant had provided evidence and data regarding the performance of Crazy Dollar compared to Super Value. It asked where he got the data. The applicant said he sat outside the shop, in a nearby café, and counted the number of customers. He claims he did this for 10 days. He did the same at both shops. The Tribunal asked how he arrived at the amount of sales, as his data indicate customers spent $7-$8 on average. He said he was not always in the café. Sometimes he would go in the shop to see what customers were spending. The Tribunal indicated to the applicant that this approach seems somewhat doubtful. He asserted that this is how he undertook his research.
The Tribunal asked about the circumstances in relation to his purchase of another 25% of the business. He said that in February 2012 he purchased another 25% for $57,750. The Tribunal noted that this appeared to be a different to his oral evidence about the share value to those shares purchased in 2011 and to that recorded in the documents provided. The applicant thought the value of the shares might have increased by 2012.
The Tribunal asked who was in charge of the business when he purchased the 35% share in January 2011. He indicated it was Jian Hua Feng. The Tribunal asked the applicant about who had the responsibility for the direction and day to day management of the business. He indicated it was Jian Hua Feng. It asked when he first took on those responsibilities and the management role. He said he was managing the business from January 2011. The Tribunal noted this appeared to be inconsistent with his evidence that it was Jian Hua Feng managing the business. He said there was an arrangement between himself and Jian Hua Feng. The Tribunal asked how he could have taken on the management responsibility from January 2011 if he was new to the business. He said that in the beginning he was learning information about the shop. He discussed with Jian Hua Feng how to improve the shop. They met every month. He spotted the problem that there was not enough variety.

The Tribunal noted that he held only 35% of the shares from January 2011 to February 2012. It asked how he and Jian Hua Feng shared the responsibility for the management of the business during that period. He indicated the daily tasks were all shared. He was in charge of strategy and going to China to purchase products. He thinks he first did this in March 2011. The Tribunal asked if the applicant and Jian Hua Feng still share the management and he confirmed that they do. However he said he has been responsible for the direction and day to day management since January 2011.
The Tribunal noted that the documents the applicant has provided indicate that the lease is due to expire on 31 August 2015. It asked the applicant about the landlord and what arrangements are being made for renewing the lease. The applicant said the premises are leased from Fairfield Shopping Centre. He appeared not to know that the lease was due to expire. He said that the rent increased by 4% per year. He said he had no direct contact with the landlord. When asked why, if it was the case that he had been responsible for the day to day management of the business, he said nothing special had happened. The Tribunal asked why he had not had contact with the landlord if the lease was about to expire. He said he had people in the business who talked to the landlord. The Tribunal asked who it was that managed the relationship with the landlord. He said it was Wendy Tu. When asked who she is, the applicant said that she is in charge of the daily stuff.
The applicant provided evidence in relationship to the business’ employee insurance. The Tribunal asked the applicant about the insurance. He indicated the business uses QBE and has insurance for 4 workers; Jian Hua Feng, Wei Jun Yang, Tu Min and Lui Ruohan. The Tribunal asked why Wendy Tu is not covered. He said she joined the business in July 2014 when she bought Jian Hua Feng’s shares. She is also a Director of the business.
The Tribunal asked the applicant about the problems he addressed when he first started managing the business. He said that there was a problem with variety and price. The location was good and the shop is really big. The Tribunal noted that his written submissions included a lot more detail than his oral evidence. It asked that the applicant expand on his oral evidence. The applicant repeated that the shop did not have great variety and quality was a problem. He said in China he has many friends doing this. He thought he could improve the types of products sold. For example he introduced China plates and dishes and increased the range of sizes. Also they were purchasing from wholesalers in Australia and he decided to deal directly with Chinese manufacturers. The Tribunal asked the applicant to identify the wholesalers the business had been using. He said they used All Seasons, Wendy’s Exports, B&S and W&S. He continues to use those wholesalers but purchases less from them.
The Tribunal asked the applicant to describe his introduction of a wholesale arm as described in his written submission to the Department. He said he started this after he joined the business in April 2011. He then indicated that he first started it in May 2012. He then indicated he could not remember. The Tribunal asked how much of the business’ turnover was generated from wholesale. He indicated it was $100,000 from March to May 2012. He indicated this had improved the business’ turnover. The Tribunal asked about the trading income for the 2014 year. The applicant indicated it was $780,000. The Tribunal noted this appeared to be a drop in turnover. It asked the applicant about the retail arm of the business. He indicated the revenue had increased because of more customers and more products. The Tribunal noted that if the trading income for the 2014 financial year was $780,000, this appeared to be down on the previous year. It asked the applicant why this had happened, given his assertions that his direction had resulted in increased products and customers. He said it was hard to say. He said he lost customers when he had to go to China because his parents were ill and sometimes business is not good. The Tribunal asked why his initiative to introduce the wholesale arm to the business had not overcome those losses. He said he had given up on wholesale.
The Tribunal asked the applicant about how he determines pricing of store items. He said that he calculates based on the prices in nearby stores. When the Tribunal queried whether this was in fact the case, he said he adds the cost of rent and employees. He then said he charges 2.5 times the wholesale price, or 3 times if the product is unique. He said if he has a lot of stock he has a sale.
The Tribunal referred to the written evidence regarding the applicant’s dealings with numerous suppliers and asked about those negotiations. He said that before the visa application there were not many negotiations with wholesalers in Australia. The Tribunal noted this was somewhat different to the written submissions which referred to about 45 suppliers. He said before the visa application he negotiated with David Lu at W&S and Lanshing. When asked about other suppliers he said he could not remember. He then said he negotiated with Smart Link Homewares but could not remember any specific person. When asked what he purchased from that supplier he indicated he could not remember, it was all sorts of things. He then said it was plastic items.
The Tribunal asked the applicant who was responsible for the financial documentation for the business from July 2011. He said the financial matters were left to the accountant, Vivien Chen. When asked who dealt with her, he said that he did. When asked about the change in the business’ trading income for the 2014 and 2015 financial years, he said it has changed a lot because there are more customers. He thought it would be even better this year. The Tribunal asked why that was the case. He said he had paid more attention to costs. The Tribunal noted this evidence about the business’ takings was somewhat different to his earlier evidence and asked why it appeared to be inconsistent. He indicated there had been some confusion. He referred to the BAS for 2014/15 which indicated trading income of $800,000 to $850,000.
The Tribunal asked the applicant about his involvement in recruitment. He indicated there had not been any recruitment since 2011. He then indicated there was one new employee, he thought it was Wendy, who started on 1 July 2014, and she purchased an interest in the business on 30 January 2015. She manages the day to day stuff for the business. The Tribunal noted this was somewhat inconsistent with his evidence that he is responsible for the day to day management of the business. It asked what she does. He indicated she accepts and arranges products for the business. She also arranges the cleaning. The Tribunal asked how she was recruited in July 2014. He said it was arranged by Tu Min, her sister. The Tribunal asked if he has ever been involved in any recruitment for the business, as indicated in the written material provided to the Tribunal before the hearing. He indicated he has put ads in newspapers and he has interviewed prospective employees. The Tribunal asked who he interviewed. He said he employed Ruohan Lui at the beginning of 2012 and she works 30 hours a week. The Tribunal asked about the other employees of the business. He said Min Tu works 18 hours a week and Wei Jun Fang works 40 hours a week. He indicated Jian Hua Feng left the business at the end of 2014 when he bought another shop in Fairfield. The Tribunal asked if there was anyone else working in the business as the written material indicates he has been responsible for recruiting and training. He said Kim Angel works 15 hours a week, having started in February 2014.
The Tribunal asked about the business’ expenditure on wages. He indicated every year was different. He thought in the 2012 financial year it was about $170,000 and in the 2014 financial year it was about $150,000. The Tribunal asked why the wages expenditure dropped if his employee numbers were steady or had increased. He said it was because sales were not good. He indicated Ruohan Lui had stopped working. He then said the other staff were casuals, Kim Angel and ‘Heng’ (or Cheng). The Tribunal noted he had not previously mentioned the last named employee.
The Tribunal asked the applicant to describe his involvement in influencing the business’ overall direction and performance since July 2011. He indicated he increased the types of products and improved quality. Regarding the management of the business he supervised staff and sought to increase customer satisfaction. He indicated the drop in trading income in 2014 was mainly from a retail point of view and because there was no wholesale trade. Also they did not pay attention to savings.
The Tribunal noted the applicant has provided a detailed written description of his duties as the manager. It asked the applicant to describe in detail his duties. He said he supervises people and serves customers. He cleans and arranges products. He is in charge of getting stock from China. He attends a meeting every week and a shareholders’ meeting every month. He is responsible for recruitment and training. He pays attention to safety. He is in charge of product supply. He deals with safety and attendance. When asked he did not know what regulations he implements. The Tribunal asked how he attends to these duties when he is offshore. He said that there are two other shareholders in his shop and while he is away they help. When asked about supervision during his absence, he said everyone in the shop supervises each other and he phones to check.
The Tribunal asked about the shareholders’ meetings. He said they occur in the shop once a month but sometimes they are too busy so they are not held but the shareholders are together every day.
The Tribunal asked the applicant if he had anything further to add. He apologised for not having a good memory and not being accurate about some things. The Tribunal agreed to wait until 14 August 2015 for the applicant to provide further financial documentation.
On 13 August 2015 the applicant provided company tax returns recording income from sales of goods and salary and wage expenses as follows:
a.2012 – income $869,790, salary and wage expenses $158,652
b.2013 – income $805,621, salary and wage expenses $171,600
c.2014 – income $708,917, salary and wage expenses $123,962.
Assessment of the evidence
Clause 890.211 requires the applicant to have had, and to continue to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately prior to making the visa application.
The Tribunal accepts that the applicant nominated Fortune Maker Pty Ltd, trading as Crazy Dollar, as the main business in this application. In considering whether the applicant meets the requirements of cl.890.211 in respect of the nominated main business, the Tribunal finds that the relevant 2 year period immediately before making the application is 2 July 2011 to 2 July 2013 (‘the 2 year period’).
The ownership interest in the business: r.1.11(1)(a)
Regulation 1.03 of the Regulations provides that ‘ownership interest’ has the meaning given in s.134(10) and includes a shareholder in a company that carries on the business.
The Tribunal has seen evidence from ASIC provided by the applicant that as at 11 January 2011 the business had a total of 231,000 shares and the applicant purchased 80,900 shares, and therefore held a 35% share in the business. The records show the applicant paid $1.00 per share, a total therefore of $80,900. The ASIC records indicate that he was first appointed as an officeholder of the business on 1 January 2011 around the time that he acquired 35% of the business. The ASIC records show that he subsequently purchased another 57,750 shares for $1.00 per share on about 1 February 2012 and he held 138,600 of the total 231,000 shares, or 60% of the business. The other shareholders were Jian Hua Feng and Wei Jun Yang who held 20% each. The Tribunal finds that at the time of application, the applicant had an ownership interest of 60% in the main business and therefore he has an “ownership interest” in the main business, as defined in s.134(10)(a) of the Act.
Maintaining direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business: r.1.11(1)(b)
To meet the definition of “main business” in r.1.11(1)(b), the applicant must maintain, or have maintained, direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business. The Tribunal is of the view that this criterion contains two requirements. First the applicant maintained direct and continuous involvement in the management of the business from day to day. Secondly the applicant maintained direct and continuous involvement in making decisions that affected the overall direction and performance of the business.
In assessing whether the applicant satisfies the requirements of r.1.11(1)(b), the Tribunal has taken into account the judgement Lobo v MIMA (FCAFC [2003] 168 which discusses an equivalent provision in relation to the former Subclass 845 visa. The Court specified that there are a variety of ways in which a person might maintain direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance. A person involved in the ‘management of the business’ does not necessarily have to manage the whole of the business. The Tribunal must have regard to all the circumstances and requirements of the individual business.
The Tribunal has considered the nature and size of the business. Crazy Dollar is a retail store selling homewares and other items to the public. The applicant has claimed that it also had a wholesale arm although his evidence is not clear as to when it commenced and ceased wholesaling. The applicant has provided some information regarding its employees. The written evidence indicates it employed 4 people during the 2 year period, the shareholders Jian Hua Feng and Wei Jun Yang, Min Tu and Ruohan Lui. The applicant has indicated that other employees were subsequently employed although his evidence about these recruitments was vague.
The Tribunal accepts that the applicant was one of 3 directors during the relevant period and that he has invested money in the business. It accepts he has had some involvement in the business. He has provided evidence that he was present during shareholder meetings. Considering the evidence from a few suppliers in Australia and letters from business associates it accepts he has had some dealings with those suppliers and there is other evidence indicating he visited manufacturers while he was in China. However, taking into account all of the evidence, for the reasons set out below, the Tribunal does not accept that the applicant has maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business in the 2 year period.
The applicant’s oral evidence in relation to the purchase of his interest in the business is not consistent with the actual amounts exchanged according to the ASIC records. The Tribunal is of the view that this in itself is not particularly adverse however it does raise some concern that the applicant thought the shares in the business were valued at $300,000 when in fact they were valued at $231,000.
The Tribunal also considers the applicant’s evidence about the research he conducted before investing to be unpersuasive and inconsistent. In his written submissions he indicated he was introduced to businesses by brokers and that he collected data for Super Value and Crazy Dollar on customers per hours, and average purchase price, and spoke to Crazy Dollar’s accountant before deciding to invest in that business. In his written material he provided data regarding those factors, and the hourly and annual turnover. When asked at the hearing how he obtained the data about the stores’ customers per hour and the average cost of their purchases, he said he sat outside the stores and counted. When the Tribunal raised its concern that this would not allow him to calculate the average purchase price the applicant appeared to modify his evidence, claiming he stood near the cash registers. The Tribunal finds this explanation problematic. It does not accept that the applicant stood near the cash registers and watched numerous transactions over 10 day periods to calculate an average purchase amount per store. It considers his oral evidence on this issue has been manufactured. It is of the view that this raises concerns about the reliability of his claims.
The Tribunal also notes that the applicant’s written submissions about the problems he initially identified with the business are far more detailed that his oral evidence. He also provided written evidence regarding multiple suppliers with whom he claimed he undertook numerous negotiations on behalf of the business in the 2 year period. However his oral evidence about his negotiations with the suppliers and the items purchased was lacking in detail and unpersuasive. The Tribunal accepts that he may have had some limited involvement with suppliers but certainly not to the extent claimed in the written submissions.
The Tribunal is also concerned that in the 2 year period the applicant spent a significant number of days (197) offshore. The Tribunal accepts that the applicant returned to China at times because his elderly parents were ill. However it is not persuaded that he maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business during those absences. It has taken into account the submissions that he did this by delegating to his wife and that he relied on the other directors. He claims he continued to be involved in the management by email, electronic chatting and telephone. The Tribunal has considered the content of the emails exchanged during his absence and is of the view that, in the main, they contain minimal information. In the Tribunal’s view they are not reflective of direct and continuous involvement in management of the business from day to day. The Tribunal notes from the information in the delegate’s decision record that the applicant was outside Australia in the 2 year period on 9 occasions, on average for about 3 weeks each time. There are only a few emails and chat records for each of those periods. There are records of telephone calls however the Tribunal has no way of confirming the substance of those conversations. The Tribunal accepts that the applicant may have visited manufacturers in China during those periods, as the written and photographic material indicates, however on the written material provided it is not satisfied these visits took up much of his time while he was in China. Overall the Tribunal is not satisfied the applicant maintained direct and continuous involvement in management of the business from day to day while he was offshore in the 2 year period.
The Tribunal also finds it concerning that the applicant appeared not to be aware that the premise’s lease was about to expire. He knew that the rent increased by 4% per year but said he had no direct contact with the landlord. The Tribunal notes his evidence that this part of the business is dealt with by ‘Wendy Tu’ who is in charge of the ‘daily stuff’. While the Tribunal accepts that it is not a requirement that the applicant manage every aspect of the business, it considers the imminent expiry of the lease to be a significant issue and is of the view that it is reasonable to expect that the applicant would have some knowledge of this issue, if it is the case that he maintains direct and continuous involvement in management of the business from day to day.

The applicant provided to the Tribunal a written description of his duties as the general manager. In comparison his oral description was lacking in detail. He did not describe the formulation of the company’s business development strategy and the supervision of its implementation, except to say that he improved the range, price and quality of the products sold. He said that he built relationships with existing customers but, apart from stating that he addressed issues concerning quality and price, his evidence on this issue was minimal. His evidence about the wholesale arm of the business was vague, limited and unpersuasive. The Tribunal accepts that he had some liaison with suppliers but his written material indicates he had dealings with up to 45 suppliers in Australia and his oral evidence on this issue lacks reasonable detail. The applicant’s oral evidence about the supervision of staff suggests that he did little in the way of supervising. When asked about this issue he indicated all of the employees supervise each other. In his oral evidence he did not discuss his role in reviewing the business’ financial status, ensuring the business operated within its budget, seeking advice from the accountant or ensuring tax and entitlements were paid. He did not describe the conduct of any customer surveys and his evidence about the recruitment of staff was somewhat confused and unimpressive. He did not refer to arranging rosters in his oral evidence, and the Tribunal is not satisfied he was responsible for monitoring staff and shop activities during his periods offshore.
Overall the Tribunal considers the applicant’s oral evidence on his involvement in various aspects of management to be unpersuasive and not reflective of a person who maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business. While it accepts that during the 2 year period he had some involvement in the business it is of the view his written claims about his involvement in the day to day management of the business are significantly embellished. It has formed the view his involvement was limited to investing money in the business, and dealing with some suppliers in Australia and in China. He may have spent some time in the shop and he may have suggested the business broaden its range of products and improve the quality but his evidence regarding his introduction of a wholesale arm during the 2 year period is unpersuasive. The Tribunal does not accept his evidence that he was responsible for supervising staff. It finds his evidence regarding recruitment to be unpersuasive. It is not satisfied he was particularly engaged in the business’ financial status. It is not satisfied he was responsible for ensuring tax and entitlements were properly paid. While he appears to have some awareness of the operations of the business, the Tribunal does not accept that the applicant maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business. The Tribunal considers that Jian Hua Feng was largely responsible for managing the business from day to day and many of the tasks the applicant claims to have been doing were either not performed or undertaken by someone else. The Tribunal finds that the applicant’s involvement in the business during the 2 year period was minimal. It is not satisfied he is currently involved in the day to day management to the extent claimed. It is of the view Wendy Tu appears to be managing the business from day to day.
On the evidence before it, the Tribunal is not satisfied, at the time of application, that the applicant maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business as required by r.1.11(1)(b). The Tribunal therefore finds the applicant does not meet the r.1.11(1)(b) and he does not satisfy the ‘main business’ requirement in r.1.11 for the period 2 July 2011 to 2 July 2013, at the time of application.
The Tribunal accepts that the applicants may have purchased another business, a café, and property. It accepts that the third named applicant is doing well at school. However these factors do not overcome the problems in relation to the applicant’s evidence about his management of the business.
The Tribunal therefore finds that the applicant did not have, and did not continue to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately preceding the making of the application or at the time of application. Therefore, the Tribunal finds the applicant does not meet cl.890.211 at the time of application.
The applicants have only made claims in relation to Subclass 890 visas. The applicants have not made claims against the criteria of Subclasses 891, 892, or 893. The Tribunal finds on the material before it that the applicants do not satisfy the requirements of the other subclasses in Class DF.
DECISION
The Tribunal affirms the decisions not to grant the applicants Business Skills (Residence) (Class DF) visas.
Denise Connolly

Member

[2015] AATA 3476

7 October 2015

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