1407455 (Migration)

[2016] AATA 3248

1407455 (Migration) [2016] AATA 3248 (15 February 2016)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Witty Swiftly Pty Ltd

CASE NUMBER:  1407455

DIBP REFERENCE(S):  BCC2013/854160

MEMBER:Sue Raymond

DATE:15 February 2016

PLACE OF DECISION:  Adelaide

DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 15 February 2016 at 4:35pm

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 3 April 2014 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations).

2. The applicant applied for approval on 14 June 2013. The requirements for the approval of the nomination of a position in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination (r.5.19(3)) stream and a Direct Entry nomination (r.5.19(4)) stream. If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).

3. In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in Direct Entry Nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(a)(ii) of the Regulations because the delegate was not satisfied that there was a need for a full-time fashion designer within the nominator’s business. In the delegate’s decision she referred to a site visit by two officers from the Department on 7 November 2013. The delegate noted that the officers found that the small size, structure and nature of the business, as well as the limited range of stock claimed to be designed in-house, do not support the claim that a full-time fashion designer is required in the business. Following this site visit the department wrote to the nominating company on 11 December 2013 in order to provide the company an opportunity to comment on the adverse outcome of the site visit. The delegate noted that numerous design sketches were provided but indicated that the nominator had not provided any evidence that the designs have been put into production, for example photographs of prototypes, contracts with manufacturer, invoices from component/materials suppliers, employment of in-house seamstresses or photographs of the final products for sale in the boutique. The delegate noted that during the site visit, the nominee did not claim to have designed any of the clothing and footwear on display. The delegate was of the opinion that without evidence of the design-to- production process, she was not satisfied that the role of fashion designer is, or will be contributing to business outputs, nor that it is required by the business.

5. In the primary decision record the delegate made reference to the nominated position facilitating the expansion of the business into the wholesale fashion market and to this end that the nominator had provided evidence of the registration of an additional business name “Jova Fashion Wholesale” and a website domain in April 2011. No evidence was provided to the delegate to demonstrate that the trading name was actively trading. The migration agent’s submission indicated that the wholesale online store would be launched by March 2014 but the delegate commented that the inactive website (as at 2 April 2014) does not support this claim. The delegate indicated that, in the absence of any concrete evidence that the business has expanded, has made significant steps towards the proposed expansion or has the financial capacity to put its expansion plans into action, the delegate was not satisfied that the business had demonstrated it genuinely intends to realise the aspirations mentioned in the business plan and submissions provided.

6. Two hearings of the Tribunal were held, one on 29 April 2015 and the second on 30 July 2015. Ms Ng, one of the three directors of the applicant company, appeared on its behalf before the Tribunal on 29 April 2015 to give evidence and present arguments. At that hearing, The Tribunal also received oral evidence from the nominee, Mr Kah Hui Ng, and from Ms Melissa Sainoska, who is an employee of the business.

7. After reviewing the evidence following the first hearing, the Tribunal determined that it would afford the applicant the opportunity of providing evidence from the company’s accountant. At the second hearing, the applicant’s accountant, Ms Foong, appeared to give oral evidence.

8. The first hearing took place by video link with the applicant and witnesses appearing in Perth and the Tribunal in Adelaide. The second hearing took place by conference telephone. The applicant was represented in relation to the review by its registered migration agent.

9. For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

2. The Tribunal focused on the basis of refusal of the matter before the Department of Immigration. This particular issue is as to the need for the nominator to employ a paid employee to work in the position, in this case of fashion designer under the nominator’s direct control. The delegate was not satisfied that there was a need for a full-time fashion designer within the nominator’s business. The Department of Immigration dealt with this aspect of the matter under reg.5.19(4)(a)(ii).

3. At the hearing the Tribunal indicated that it regards this issue as more squarely considered under reg.5.19(4)(h)(ii)(B) which indicates that “there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control[1].” The wording of the two provisions is very similar. The former provision (reg.5.19(4)(a)(ii)) refers to the application for approval being made in accordance with a particular sub regulation and it “identifies a need” for the nominator to employ a paid employee to work in the position under the nominator’s direct control. The latter provision (reg.5.19(4)(h)(ii)(B)) is one of a number of elements which must be satisfied if the position is located in regional Australia. It requires that there is a “genuine need” for the nominator to employ a paid employee to work in the position under the nominator’s direct control. In the Tribunal’s view, the former criterion is dealing with matters of form in the application whereas the latter criterion requires an assessment of substance as to the genuineness of the need.  In any event, regardless of which provision is adopted, in essence the matter on review is essentially the same as the issue considered by the primary decision-maker.

   [1] The Tribunal notes at folio 274 of the departmental file there is a certification by the Regional Certify Body and the Tribunal is satisfied that (h)(ii) is the applicable provision.

4. Ms Peng Ling Ng was nominated on the visa application as the contact person for the organisation. She is one of the directors of the company and indicated that she was authorised to speak on its behalf. She does not work at the business as she is employed elsewhere as a solicitor.

5. A great deal of documentary evidence was sent to the Tribunal including new customer forms, lists of contact names and email addresses, hand-drawn sketches of many different items, including shoes. There were also photographs, a DVD, and other documentation, including some invoices and financial statements of the nominating company. There was a red bag containing 12 bags of tax invoice receipt dockets. The Tribunal has had regard to the documentation in reaching its decision.

6. The Tribunal notes that there was a site visit carried out by the departmental officers in November 2013, but given the lapse of time and the fact that the applicant has since moved to new promises the Tribunal has not placed any weight on it.

7. The Tribunal notes that the particular issue under consideration is whether there is a genuine need for the nominator, Witty Swiftly, to employ a paid employee to work in the position, of fashion/industrial designer, under the nominator’s direct control.

Background

1. The business Witty Swiftly Pty Ltd (Witty Swiftly) has nominated Kah Hui Ng to work as a fashion /industrial designer (Fashion Designer ANZSCO 232311) at its retail store ‘Shero Fashion” in Perth, Western Australia. The Tribunal notes, from the information in the departmental file, that the company was registered on 27 March 2010 and the trading name was registered from the same date. Ms Ng gave evidence that, in addition to herself, there are two other directors of the company, Chun Rong Pan and Chunhua Pan, who is the partner of the nominee. Ms Ng indicated that, in addition to the nominee, there are two full time staff in the shop. Chun Hua Pan also helps out when needed. In addition to the full-time staff there are part-time and casual staff engaged during peak season.

2. In terms of the history of the company, the Tribunal notes a document on the departmental file dated 19 December 2013 which was a submission provided by a previous migration agent. It recounted that originally the company started operations in late 2009 with ready-made products, which were 100% imported from Hong Kong or China. The submissions indicated as follows: – at that time, the business sold only formal wear and dress. The business experienced keen competition in growing the market in the period 2009 to 2011. The nominator decided to have a unique product and services to enable them to be different from other fashion providers in Western Australia. The nominator has appointed the nominee to work as a fashion designer with a view to creating a series of new products for the nominator. In 2012, the nominee designed a series of products for wedding and bridal accessories. The new products were made in Perth “by a local couture”. At that time, the business products are stated to be 80% imported from overseas and 20% locally made in Australia. The plans were to have 60% imported products and 40% locally made products by 2014 and slowly increasing the locally made products in Australia to 80% by 2015.

3. At hearing evidence was given about the fact that the business had moved to larger premises (which were different from those it operated from at the time of the departmental decision) where there are different levels to incorporate showrooms as well as rooms where the designer works.

4. Ms Ng and the other witnesses gave evidence to the effect that approximately 60% of the stock was made to designs from the nominee and 40% was ready-made and imported. Ms Ng indicated that the design is done locally and it is sent to China to for the designs to be manufactured there. They are sold in the shop. A video was made designed by the nominee. Evidence was to the effect that there were three to four designs every month and a  website was launched. Ms Ng indicated that most of the items were manufactured offshore- approximately 80% of items designed by the nominee were manufactured offshore and the other 20%, which are in the nature of one-off ballgowns, would be designed by the nominee who would make the prototypes and the manufacture would be contracted out.

5. Ms Sainoska gave evidence that she works there five days a week from 11 till 5 o’clock. She helped customers choose and try on dresses. Her evidence was to the effect that the nominee was there working full-time upstairs. She indicated that he did not talk to customers much. She gave evidence that most of their bridesmaid collection is the nominee’s designs and she knows that because he has told her which are his designs. She mentioned that they were designed here but made in China.

Financial aspects of the Business

1. Initially, there was no documentary evidence before the Tribunal of the offshore manufacture of any items. Ultimately, in May 2015, tax invoice documents were supplied to the Tribunal which showed the name “Obride Dress Manufacturer”. It notes Shero Fashion as the “Customer Name” on the invoice and the payment is given in Chinese RMB.  Eight such invoices were provided to the Tribunal covering a period from 8 May 2013 to 3 April 2015.

2. A number of matters arising from the financial reports were raised at the second hearing with the applicant’s accountant, Ms Foong. She holds an Advanced Diploma of Accounting and is a member of the Institute of Public Accountants. She has held her qualification for approximately 20 years and has undertaken work for the nominating company since approximately 2010. She indicated that she had worked for two different accounting firms carrying out this work, one until March 2014 and then Harts Financial group until 30 June 2015. As part of her duties as an accountant for the nominating company, she undertook all the compliance work including preparation of the taxation returns, company returns and BAS statements. Another person completed the data entry into MYOB application to create a management set of accounts. She explained that the client company provides the source documents and the accounts are prepared from that documentation.

3. The Tribunal indicated its concern about the fact that the financial reports produced for the financial year ended 30 June 2014 show a carry forward loss at the end of that year of $306,244.  Further, the company tax return indicates that there have been successive losses of the business over the last five financial years and the total losses are shown in the tax returns as $330,355. On the basis of the documentary evidence, the Tribunal finds that the carry forward loss (cumulatively for the last five years) is over $300,000.

4. The Tribunal raised with Ms Foong the cumulative carry forward loss for the financial year ended 30 June 2014. Given the size of the carry forward loss the Tribunal was concerned about the viability of the business.

5. Ms Foong said that the carry forward loss would not be viable but for two factors:

   ·    the first being that sales for the past six months of the business have increased. She indicated that they averaged $15 to 16,000 total sales for each month for the last six months December –June 2015.

   ·    secondly, the directors in China are happy to make capital injections to the company.

6. On the basis of the financial accounts for the year ended 30 June 2014, the Tribunal finds that the viability of the company over the next two years will depend on the injection of capital into the company for the purpose of meeting the expenses of Shero Fashion. The Tribunal accepts the evidence given that this capital will be provided and that there is not any doubt in this regard. The Tribunal’s assessment is that the business is being propped up by the injection of capital from overseas.

7. In addition, there is a further aspect of the business which renders its financial position better than otherwise might be the case. The Tribunal noted that there did not appear to be expenses in the financial accounts for the business covering the overseas tax invoices provided to the Tribunal [from “Obride Dress Manufacturer”]. Evidence was given to the effect that certain expenses of the nominating company in relation to the manufacture of clothing are being incurred offshore. The expenses incurred offshore are being met by another company, and are not being met by Witty Swiftly. Ms Foong indicated that the nominating company is meeting those costs which are incurred in Australia but not the expenses incurred overseas. Consequently, the company’s financial position is better than it otherwise might have been as the overseas manufacturing expenses are not recorded as expenses against the company’s income in Australia. 

8. Ms Foong indicated that the nominee’s full-time role is not just confined to Australia but he is able to deal with suppliers in their local language and if he were not undertaking the duties then two to three different people would be performing those roles. She gave evidence that he had built up the business and she described him as developing the brand name and the Internet part of the business. She was aware of his involvement in designing logos and branding but was not aware of his involvement in clothes design.

9. It was submitted to the Tribunal that the fact that the accountant wasn’t aware of the nominee’s involvement with the design for the clothing did not mean it did not occur and she also wish to stress that the future capital injection was not speculative but guaranteed.

10. The representative submitted that the financial viability of the business was guaranteed; the nominee was developing a brand, which was quite important for the future of the company. She indicated that there is a following of customers and that the goodwill will increase. She submitted that, if the associated visa is refused, the business will fold.

11. Given the delay in finalising this matter, which the Tribunal regrets, the Tribunal requested information as to whether or not there was any material change to the facts and financial position of the company, from the facts previously provided. The accountant provided a letter dated 2 February 2016, which indicated that the company’s sales “have increased since July 2015, in particular the sale of evening gowns designed by Mr Kah Hui Ng. On average the sales have increased over 21% per month from July to December 2015.” The accountant indicated that she believes that the company is financially viable and capable of sponsoring Mr Ng as its permanent employee. The Tribunal has taken this further information into account.

Analysis and Conclusion

1. The issue is whether there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control.

2. Whilst there is a great deal of documentary evidence provided to the Tribunal, much of it did not greatly assist the Tribunal. For example, there were many new customer information forms but they just contained names and contact details with comments from people about a store on letterhead of “Shero fashion”. There was also a customer list. Other evidence was consistent with the business undertaking advertisements, incurring catering expenses, lease documentation and there was an invoice from June 2010, which appeared to indicate that 52 items of clothing have been shipped to the company.

3. The Tribunal has more evidence before it in the form of additional oral evidence and documentary evidence than was before the delegate. The exact parameters of the applicant’s position are not entirely certain given the statements contained in the curriculum vitae about the nature of his duties as against other evidence. The Tribunal accepts that the nominee is involved in the business and accepts that the nominee does engage in some design work and that some items, including clothes, are produced from his designs. The difficulty is in gauging the extent of that activity and the relationship of it to the sales of the business.

4. The Tribunal heard evidence that the nominee is the brother of Ms Ng. The Tribunal accepts, as a matter of principle, that the fact of a personal relationship between the nominee and the employing company does not preclude a successful application. The Tribunal accepts the representative’s submission that just because there is a potential migration outcome does not mean that there is not a genuine position to be performed.

5. The nominating business has been proceeding for five years and is running at a carry forward loss of greater than $300,000. The nominee’s proposed salary is $70,000. I accept that the owners of the company, and the nominee, would like to see the business succeed. Nevertheless, it is able to continue operating because capital injections of funds are available and have occurred. In addition, certain expenses of the business are not incurred by the business, but by another company operating overseas. Whilst there is documentary material supplied to the Tribunal, it is difficult to determine what proportion of the sales are attributed to designs or work undertaken by the nominee.

1. In the final analysis, even allowing for the increase in business over the last six months, the Tribunal is simply not satisfied that there is a genuine need for the nominating company to employ a paid employee to work in the full-time position of fashion designer. Put simply, the Tribunal is not satisfied that the business can afford to employ an employee to work as a full-time fashion/industrial designer. The Tribunal’s conclusion is not altered by the fact that there has been and will continue to be, if required, capital injections of funds such that the business can meet its obligations. However, it is the Tribunal’s assessment that that fact does not make the need a genuine one. Significantly, certain expenses of overseas manufacture are not borne by the business, which renders the accounts not an accurate picture of the financial position of the business in Australia.

2. Leaving aside the financial situation of the business, the state of the evidence about the position and the nominee’s role in it, is such that the Tribunal is not positively satisfied about the genuine need to employ a paid employee in the position of fashion designer/industrial designer.

3. Accordingly the requirements of r.5.19(4)(h)(ii) and therefore r.5.19(4)(h) are not met.

4. For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of r.5.19(4). The applicant has not sought to satisfy the criteria in Temporary Residence Transition Nomination stream, and as such has not met the requirements in r.5.19(3). Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.

DECISION

The Tribunal affirms the decision under review to refuse the nomination.

Sue Raymond
Senior Member

ATTACHMENT  -  EXTRACTS FROM THE MIGRATION REGULATIONS 1994

5.19Approval of nominated positions (employer nomination)

…

1. The application must:

   (a)be made in accordance with approved form 1395…; and

   (b)be accompanied by the fee mentioned in regulation 5.37.

…

Direct Entry nomination

1. The Minister must, in writing, approve a nomination if:

   (a)the application for approval:

   (i)     is made in accordance with subregulation (2); and

   (ii)    identifies a need for the nominator to employ a paid employee to work in the position under the nominator’s direct control; and

   (b)the nominator:

   (i)     is actively and lawfully operating a business in Australia; and

   (ii)    directly operates the business; and

   (c)for a nominator whose business activities include activities relating to the hiring of labour to other unrelated businesses — the position is within the business activities of the nominator and not for hire to other unrelated businesses; and

   (d)both of the following apply:

   (i)     the employee will be employed on a full-time basis in the position for at least 2 years;

   (ii)    the terms and conditions of the employee’s employment will not include an express exclusion of the possibility of extending the period of employment; and

   (e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:

   (i)     are provided; or

   (ii)    would be provided;

   to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and

   (f)either:

   (i)     there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or

   (ii)    it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and

   (g)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations; and

   (h)either:

   (i)     both of the following apply:

   (A)the tasks to be performed in the position will be performed in Australia and correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

   (B)either:

   (I)the nominator’s business has operated for at least 12 months, and the nominator meets the requirements for the training of Australian citizens and Australian permanent residents that are specified by the Minister in an instrument in writing for this sub-sub-subparagraph; or

   (II)the nominator’s business has operated for less than 12 months, and the nominator has an auditable plan for meeting the requirements specified in the instrument mentioned in sub-sub-subparagraph (I); or

   (ii)    all of the following apply:

   (A)the position is located in regional Australia;

   (B)there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;

   (C)the position cannot be filled by an Australian citizen or an Australian permanent resident who is living in the same local area as that place;

   (D)the tasks to be performed in the position correspond to the tasks of an occupation at a skill level of ANZSCO skill level 1, 2 or 3;

   (E)the business operated by the nominator is located at that place;

   (F)a body that is:

   (I)specified by the Minister in an instrument in writing for this sub-subparagraph; and

   (II)located in the same State or Territory as the location of the position;

   has advised the Minister about the matters mentioned in paragraph (e) and sub-subparagraphs (B) and (C).