1414821 (Migration)

[2015] AATA 3954

1414821 (Migration) [2015] AATA 3954 (24 December 2015)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Hui Shen
Ms Xue Zhang
Mr Ning Zhang
Mr Hengzhi Shen

MRT CASE NUMBER:  1414821

DIBP REFERENCE(S):  CLF2013/274400 CLF2013/274402

TRIBUNAL MEMBER:  Mary-Ann Cooper

DATE:24 December 2015

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal remits the application for Business Skills (Residence) (Class DF) visas for reconsideration with the direction that the first named applicant meets the following criteria for a subclass State/Territory Sponsored Business Owner (Residence) visa.

· cl.890.211(1) of Schedule 2 of the Regulations.

The Tribunal has no jurisdiction in respect of the third and fourth named applicants.

Statement made on 24 December 2015 at 3:09pm

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 20 August 2014 to refuse to grant the visa applicants a Business Skills (Residence) (Class DF) Subclass 890 visa under s.65 of the Migration Act 1958 (the Act).

2. The visa applicants applied for the visas on 7 November 2013. The delegate refused to grant the visa on the basis that the first named applicant (the applicant) did not satisfy cl.892.211 of Schedule 2 to the Migration Regulations 1994 (the Regulations). The delegate found that the applicant did not meet cl.890.211(1) because the delegate was not satisfied that the Australian Chinese Age Group Pty Ltd (ACAG Pty Ltd) was a ‘main business’ in relation to the applicant within the definition in Regulation 1.11 of the Regulations. Specifically, the delegate was not satisfied that the applicant had maintained direct and continuous involvement in the management of the business in the manner specified (r.1.11(1)(b)).

3. The applicant appeared before the Tribunal on 29 April 2015 to give evidence and present arguments. The Tribunal also received oral evidence from the applicant’s business partner and an employee of the business. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

4. The applicants were represented in relation to the review by their registered migration agent who also attended the hearing.

5. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

   CONSIDERATION OF CLAIMS AND EVIDENCE

   JURISDICTION

6. A threshold issue arose regarding the Tribunal’s jurisdiction in respect of the third and fourth named applicants, the husband and son of the applicant. Specifically, that they were absent from Australia at both the time of the visa application and review application. It was put to the applicant at hearing that by operation of s.347(3A), the Tribunal may not have jurisdiction in relation to them as they were outside the migration zone at the time of the application to the Tribunal. In a later submission, the applicant did not dispute this assessment.

7. The Tribunal therefore finds that, given that they were both outside the migration zone at the time of review application, the third and fourth named applicants do not satisfy s.347(3A) and they have not made a valid application for review under s.347 of the Act.

8. It follows that the Tribunal does not have jurisdiction in respect of their review applications.

9. The Tribunal also notes that another review applicant, the second named applicant, withdrew her application.

890.211

1. Clause 890.211(1) of Schedule 2 to the Regulations is one of the criteria which must be satisfied at the time of the visa application. It provides as follows:

   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. Regulation 1.11 defines a main business as follows:

   (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;

   (b)and 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 spouse 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 AUD400 000;

   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 AUD400 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.

3. In the context of this application however, it falls within certain exceptions and the relevant value of the ownership interest is just 10% of the total value of the business (see paragraphs 54-57 below).

4. Qualifying business is defined in Reg. 1.03 to mean 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.

5. Regulation 1.03 also provides that “ownership interest” has the meaning given to it in section 134(10) of the Migration Act, namely:

   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.

   Is the business a main business in respect of the applicant?

6. As noted above, Clause 890.211(1) 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 before the application is made.

7. The issue in the present case is whether ACAG Pty Ltd is a main business in relation to the applicant according to the definition in r.1.11 over the relevant periods. Specifically, whether 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 over the relevant period as required by r.1.11(1)(b).

8. As the visa application was lodged on 7 November 2013, the relevant two year period immediately before the application is 7 November 2011 to 6 November 2013. 

9. The business is a newspaper publishing company which targets the Chinese community. Considerable material regarding the business’ establishment, registration and operations was provided to the Department which demonstrated that the business is an actively trading enterprise.

10. As recorded in the delegate’s decision, a copy of which was provided with the review application, the Department conducted a site visit to the premises on 2 May 2013. On the basis of the report of this visit, the delegate was not satisfied that the applicant had the required  involvement in the day-to-day running of the business as well as in making decisions affecting the overall direction and performance of the business.  Consequently the visa applications were refused.

11. ‘Main business’ is defined in r.1.11 of the Regulations, and the Tribunal has considered whether each element of the definition is met during the relevant period.

12. In the present case, the applicant has identified ACAG Pty Ltd as a relevant 'main business'.

    Ownership interest  – r.1.11(1)(a)

13. Regulation 1.11(1)(a) requires that the applicant has or has had an ‘ownership interest’ in a main business. As noted above, the phrase “ownership interest” in cl.890.211(1) is defined in regulation 1.03 as having the meaning given to it in s.134(10) of the Migration Act 1958 (the Act) and includes a shareholder in a company that carries on the business.

14. According to documents on the Department’s file, including ASIC records, the applicant has a 15% shareholding in ACAG Pty. Ltd., which was established in 1996. The ABN and GST registration for the company demonstrate it has been active since 2000.   Financial reports, bank statements and BAS records demonstrate that the company was at the relevant time actively carrying on a business.

15. Accordingly, the Tribunal finds, for the purposes of cl.890.211(1), that the review applicant, as a shareholder in a company, ACAG Pty Ltd, that carries on a business, has an “ownership interest” in it as defined in reg.1.03 and s.134(10) and therefore she meets the requirements of r.1.11(1)(a).

    Direct and continuous involvement in management – r.1.11(1)(b)

16. Regulation 1.11(1)(b) requires that 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

17. For the reasons below, based on the evidence and documents provided by the applicant, and the evidence at hearing, the Tribunal finds at the time of application that the applicant maintains, or has maintained, direct and continuous involvement in the management of ACAG Pty. Ltd. from day to day and in making decisions affecting the overall direction and performance of that business for the relevant period.

18. As noted above, officers of the Department attended the premises of ACAG on 2 May 2013, within the relevant two year period, and interviewed the applicant and staff present. In summary, it was found that applicant had difficulty using the computer, was unable to provide business documents and gave the incorrect name of the chief editor. A number of inconsistencies were noted between what had been claimed and what was observed. The officers formed a view that the applicant did not have had relevant involvement in the business.

19. At the hearing the Tribunal asked the applicant about her educational and employment background. She advised that she had a Diploma in Pharmacy and had worked in a hospital pharmacy and had her own medical equipment business. She claimed that in 1987 she changed careers and worked as a Quarantine Officer in a Chinese government department. She said she came to Australia in June 2010 on a subclass 163 visa and in 2009 was looking for an investment so she could gain permanent residency. She said she had known one of the partners/directors of ACAG Pty. Ltd. in China since 2001 and had met the other partner/director through her husband who has a printing related business in China. She said that she decided to invest in Chinese language publishing because she knew the language and the culture. She confirmed that she maintained a 15% shareholding in the business.

20. The Tribunal noted the shareholder agreement she and the other two directors signed which stated that her role was responsible for the development of overseas markets. She said that she went back to China for one year, with that role in mind, but that the other directors had become very busy and told her that they needed her in Australia. She said she came back in 2010 and quickly became involved in management of the company.

21. The Tribunal queried the applicant’s apparent lack of management experience to assume such a role. She said she had management experience from China, that she had been involved in running a medical practice and assisting the management of her husband’s printing business. The Tribunal asked about her claim to have been given comprehensive daily management of the company. She responded that her other two partners/directors have 4 or 5 other businesses, so she is required to manage everything to do with ACAG Pty. Ltd.. When asked to outline what this was, during the period leading up to November 2013, she outlined the structure of the business, that it produced 4 newspapers and made its money from advertising, that she was responsible for design, auditing, publishing and marketing as well as overseeing the business’ finances. After taking over she said she discovered that the business was decreasing, largely due to increasing electronic media. She said   revenue was down 35% in 2011, 19% in 2012 and 25% in 2013 however she has implemented some changes and the business is returning to its 2011 revenue levels. She said that the business only employs one journalist because most of the newspaper content is advertising. She said the chief editor was also one of the partners and that the company used a designer for the advertising content. She said she usually works 10 am to 6 pm and her main role is supervising, dealing with complaints and following up debtors. When asked what strategies she had devised and how she made decisions affecting the business, she spoke about her initiation and delivery of the Melbourne Property Expo, also run by the business. She explained the event and how it made money over the period 2013/14. She claimed she suggests pricing for advertising and develops long-term strategies for the company in this regard.

22. The Tribunal asked her how often the Board met and where its minutes were kept, she said that they do not have time for many formal meetings, that some records are kept but there is not a formal book. She said if it is a big decision then a record will be made. The Tribunal noted that the minutes of one meeting indicated that she had presented the business strategy for 2013. It asked her if she could recall and/or provide a copy of that strategy. She could not recall the strategy at the hearing.

23. When asked what about the business transactions in which she had been involved, she responded that her focus was on the costs and finances. She gave a detailed explanation of her strategy in this regard, explaining that she had not been able to reduce printing costs so had commenced networking in order to seek more advertising.  She said she had recruited staff but acknowledged that the company accountant had determined the wages and conditions that applied to them. She said the sales people used by the company are contractors and her role was to organise payment of their commissions but that the accountant oversaw these records and payments.

24. When the Tribunal asked her to respond to the Department’s assessment of their visit, as reflected in the delegate’s decision, she claimed that she had a late night the previous night and had been flustered when asked questions. She said because of the late night, no staff had been present at the time and she acknowledged that the staff spoken to by the Department were from another company run by one of the other ACAG partners. She acknowledged that her answers were unsatisfactory but claimed that she had needed ACAG staff to assist her in relation to the particular information sought by the Department.

25. The Tribunal asked her to comment on the suggestion that she did not have the relevant management or involvement in the business but invested solely purpose of acquiring a permanent visa for herself and her family. She frankly acknowledged that the investment was planned to help her meet the migration laws but also claimed that, from the beginning, she had intended her engagement with the business to be successful and long-term. She said she had left everything in China to come to Australia and had put all her energy into the business for the last 4 years and had tried her best to manage it successfully.

26. The Tribunal then spoke to one of the other ACAG partners/directors. He confirmed that he had known the applicant since around 2001 through a mutual friend. When asked how she became a shareholder in the business, he said that he had become very busy with his other businesses and need someone to assist with the management of ACAG. He said he knew the applicant and knew he could trust her, and believed she had the necessary experience to manage the business. The Tribunal queried this claim on the basis that she was working as a quarantine officer with the government when he had hired her. He responded that his knowledge of her was as a business person, that her husband manages a print related business in China and she has been involved in running that business. He also said that, because he knew her, he believed he could trust her to run the business.

27. The Tribunal asked him what the applicant did in the periods 2011-2013 that affected the overall direction performance of the business. He responded that she had taken over the role at an unfortunate time because the rise of electronic media meant print media business was decreasing. He said she was active in developing future plans for the company, including engaging with electronic media and that she had proposed and implemented steps to focus on sales. He said she introduced customer discounts, worked effectively to ensure cash flow and that debts were collected. He claimed that she oversaw HR issues and confirmed that she had maintained direct and continuous involvement in management of the business from day to day and had made decisions affecting the overall direction and performance of the business.  He told the Tribunal that during 2011-2013 he had not been involved in the management of the business and had relied totally on the applicant. He confirmed that another partner was chief editor of the publications.

28. The Tribunal also spoke to one of the employees of ACAG. She confirmed that she had worked with the applicant for 3-4 years and that the applicant dealt with all financial and employee problems, organised and managed the advertising, and, if staff had questions, they would go to her. She said  the applicant is a good person  and a good manager.

29. As noted above, to meet the definition of ’main business‘, the applicant must maintain, or have 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. A mere passive shareholder in a company that carries on the business would not satisfy r.1.11(1)(b), nor would a silent partner in a partnership that carries on the business.[1]

    [1] MIAC v Hart (2009) 179 FCR 212, per Spender J at [17].

30. Departmental guidelines (PAM3) state that, to meet the requirement for direct and continuous involvement in management the applicant must demonstrate that they have been actively managing and operating the business, which requires that the business be ongoing and for the applicant to consistently spend a significant portion of their time managing the business on an ongoing basis. Management involves planning, organising, directing and controlling the resources of the business. PAM3 provides further details as to what is meant by the terms “planning”, “organising”, “directing” and “controlling” and also provides various examples of the types of decisions that may affect the overall direction and performance of the business.[2] The Tribunal acknowledges that the guidelines should not be raised to the level of legislative requirement and its findings have been in consideration of the terms of r.1.11(1)(b). In this context the Tribunal has had regard to the individual circumstances of the applicant, the documentary and oral evidence provided, the submissions made and to relevant case law.

    [2] PAM3: GenGuide M – Business Skills visas – Visa application & related procedures – Other business-related requirements at [54] (compilation 2/6/2014).

1. The Tribunal accepts 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: Lobo v MIMA [2003] FCAFC 168 (French, Sackville, Hely JJ, 8 August 2003) at [63]. A person involved in the ‘management of the business’ does not necessarily have to manage the whole of the business.

2. The Regulations require an applicant to have ‘involvement’ in the management and the Tribunal accepts that involvement in the management can be different to the role of a manager. However, the Regulations do require an applicant to ‘maintain direct and continuous involvement in management on a day to day basis’.

3. The Court in Lobo further stated the question of whether an applicant has demonstrated an involvement in the management of that business from day to day and in making decisions that affected the overall direction and performance of that business, is a matter of fact for the Tribunal.  The factors which the decision maker is bound to consider are not expressly stated and must be determined by implication from the subject matter.  The wording of the test in r.1.11(1)(b) for the purposes of determining a main business is in ordinary words of the English language used in a non-technical sense. The Court did not provide any examples.

4. The Tribunal has also considered the decision of Commissioner for Corporate Affairs (Vic) v Bracht (1989) 7 ACLC 121 in which Justice Ormiston of the Victorian Supreme Court reasoned that “management” includes the following indicators:

   ·activities which involve policy and decision making;

   ·related to the whole or substantial part of the business affairs of a corporation;

   ·to the extent that the formulation of those policies or the making of those decisions may have some significant bearing on the financial standing of the corporation or the conduct of its affairs.

5. In addition the Tribunal has considered the decision of Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789, in which Justice Young of the NSW Supreme Court considered the issue of management of a corporation and noted:

   ... one looks to see somebody making decisions as to the direction of the corporation though one does not necessarily look for someone who is making decisions at the highest level, nor is it necessarily so that the manager's decision will not be subject to obtaining the approval of some higher officer.

6. The Tribunal has given particular consideration to the interpretation of the term “day-to-day management” in the decision of Re Lau & MIMIA (2002) AATA 703. That case involved the review of a decision to issue a Notice of Cancellation pursuant to section 134 of the Migration Act. In that decision, the AAT noted:

   While some of the activities undertaken by the applicant might be viewed as unsophisticated, there is nothing to suggest that they were inappropriate for the nature of the proposed business ... the use of the term day-to-day management does not require that activity be recorded every day, and the input at a senior level by someone of the experience of the applicant will often be intangible.

7. The applicant provided detailed, credible evidence of her operation of this business from an overall strategic perspective as well as on a day-to-day basis. She identified suppliers and daily systems, explained how she interacted with advertisers and dealt with financial matters as well as outlining why and how she had made decisions to increase revenue and expand the business. This evidence, as well as the documentary material provided, supports a conclusion that the applicant has the required level of involvement in the business, particularly in management of the business from day to day, for the two years immediately before the application was made. Specifically, the evidence of her business partner demonstrates that her influence and judgement were and are relied upon in running the business on a day-to-day basis.

8. Against this positive material however the Tribunal has had to weigh the contemporaneous evidence of the Department’s site visit which indicated that the applicant had the most limited knowledge of the operations of the business.

9. Overall however the Tribunal found the oral evidence spontaneous and convincing. In particular, the evidence of the applicant’s business partner was clear, measured and credible and the Tribunal gives it significant weight in its assessment. It also attributes weight to the consistent and frank evidence of the employee witness regarding the timelines and activity of the office which effectively explained why there were no other staff in the office when the Department arrived and, given her usual duties, why the applicant may have been flustered and unable to answer their questions.

10. While it was acknowledged in the evidence that chief editor was ultimately responsible for the actual content of the newspapers, the evidence established that the applicant had significant and substantial involvement in all other aspects of the business and the Tribunal considers that this this does not derogate, on the basis of Lobo, from her role in establishing the company's goals and ensuring its commercial viability through her other activities.

11. On balance, therefore, having regard to all the evidence, some of which was not available or provided at the time of the delegate’s decision, the Tribunal finds the applicant has demonstrated she has the responsibility for strategic policy development affecting the business.  The Tribunal is also satisfied that she is responsible for the planning, organising, and supervision of activity related to the business.

12. For the above reasons, the Tribunal finds that the applicant maintains, and 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. On this basis the Tribunal is satisfied that the requirements of r.1.11(1)(b) are met.

    Ownership value – r.1.11(1)(c) 

13. Reg.1.11(1)(c) requires that the value of the applicant's ownership interest, or the total value of the ownership interests of the applicant, and the applicant's spouse or de facto partner, in the business is or was at least 30% of the total value of the business where it is not a publicly listed company and its annual turnover is at least $AUD400,000.

14. The Tribunal refers to its finding above that the applicant has an ownership interest in ACAG Pty Ltd. of 15%.

15. In this context it notes that the above provisions do not apply to a visa application made on or after 19 April 2010 if:

    ·the application is for a Business Skills – Established Business (Residence) (Class BH) visa [Subclasses 845 and 846]; or the application is for a Business Skills (Residence) (Class DF) visa and the applicant is seeking to meet the primary criteria for grant of a Subclass 890 or Subclass 892 visa;  and

    ·the applicant held a temporary visa immediately before 19 April 2010; and

    ·while holding the temporary visa, the applicant purchased an ownership interest in a business in Australia before 19 April 2010.[3]

    [3] r.3(3), SLI 2010, 70.

16. For applications which fall within the exceptions above, the previous version of r.1.11(1)(c) applies and the relevant value of the ownership interest is just 10% of the total value of the business.

17. As noted above this application is for a Business Skills (Residence) (Class DF) visa.  Departmental records confirm that the applicant was grant and relevantly held a subclass UR-163 visa (a temporary visa) granted on 9 January 2009. ASIC documentation confirms that she purchased her shares (her ‘ownership interest’) on 19 October 2009. The Tribunal therefore finds the applicant’s circumstances fall within the above exception and she is only required to demonstrate an interest of 10% of the business.

18. Based on documents on the Department’s file demonstrating the business’ annual turnover of over $400,000 and the ASIC historical extract, which demonstrates that the value of the applicant’s ownership interest is 15% of the issued shares, the Tribunal is satisfied that the applicant meets the requirements of reg.1.11(1)(c).

    Qualifying business: r.1.11(1)(d).

19. Regulation 1.11(d) states that to be a ‘main business’, a business must be a ‘qualifying business’. A “qualifying business” is defined in r.1.03 of the Regulations to mean ‘an enterprise that is operated for the purpose of making profit through the provision of goods and/or services (other than the provision of rental property) to the public and is not operated primarily or substantially for the purpose of speculative or passive investment’.

20. The applicant’s claimed main business is a newspaper publishing company which is expanding into property promotion. As such it is evident, and the Tribunal finds, that it provides goods to the public. The Minutes provided of the various meetings make it clear that the purpose of the venture is to make a profit, although this has not always been achieved. This material and the evidence of the applicant and the witnesses persuades the Tribunal that the business was not at the relevant time operated for the purpose of speculative or passive investment.

21. Considering the evidence as a whole, the Tribunal is satisfied that the business was operated for the purposes of making profit from the provision of goods or services to the public over the relevant period.

22. The Tribunal therefore finds that the applicant’s business, ACAG Pty. Ltd., is a ‘qualifying business’ as defined and r.1.11(1)(d) is met.

    Conclusion

23. For the above reasons, the Tribunal finds that the business operated by the Australian Chinese Age Group Pty Ltd was a ‘main business’ in relation to the applicant as defined in r.1.11(1) of the Regulations for the two years prior to the application.

24. Accordingly, the Tribunal finds that that the applicant had, and continued to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately before the application was made and meets the requirements of cl.892.211(1) of Schedule 2 to the Regulations.

25. Given these findings, the appropriate course of action is to remit this matter with the finding that the first named review applicant meets cl.890.211(1) of Schedule 2 to the Regulations.

26. For the reasons given above the Tribunal does not have jurisdiction in relation to the third and fourth named applicants.

    DECISION

27. The Tribunal remits the application for Business Skills (Residence) (Class DF) visas for reconsideration with the direction that the first named applicant meets the following criteria for a subclass State/Territory Sponsored Business Owner (Residence) visa

    ·cl.892.211(1) of Schedule 2 of the Regulations.

    Mary-Ann Cooper
    Member