1504781 (Migration)

[2016] AATA 3125

1504781 (Migration) [2016] AATA 3125 (21 January 2016)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Zekun Li
Ms Jian Chen
Mr Mingjun Li

CASE NUMBER:  1504781

DIBP REFERENCE(S):  CLF2008/166396 CLF2009/104926 CLF2009/105011 CLF2009/18222 CLF2009/282 CLF2015/14545 CLF2015/23145

MEMBER:Kate Millar

DATE:21 January 2016

PLACE OF DECISION:  Adelaide

DECISION:The Tribunal remits the applications for  Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets:

·cl.892.221 of Schedule 2 to the Regulations.

Statement made on 21 January 2016 at 8:56am

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. Mr Li operates an import/export business, Kun Jian Pty Ltd (Kun Jian), and he and his wife Ms Chen are directors of Kun Jian.  Mr Li, Ms Chen and their son Mr Mingjun Li applied for Business Skills (Residence) (Class DF) Subclass 892 visas on 10 August 2009.

2. This is the second time Mr Li, Ms Chen and Mingjun have had this same visa application refused. Their visa applications were first refused because a delegate of the Minister for Immigration and Border Protection was not satisfied that at the time of the visa application Mr Li had an ownership interest in one or more actively operating main businesses in Australia for at least two years before the application as made. The definition of main business includes a requirement that, broadly speaking, the person is involved in the day to day management of the business, and the delegate was not satisfied Mr Li had this involvement. Mr Li applied to the Migration Review Tribunal for a review of this decision, and the Migration Review Tribunal (as it then was and differently constituted) remitted the matter for reconsideration in accordance with the direction that Mr Li met cl.892.211 of Schedule 2 of the Migration Regulations 1994 (the Regulations).

3. In reconsidering the application for the visa on 27 March 2015, a delegate of the Minister again refused the visa application, finding that Mr Li did not meet the requirements of cl.892.221, in particular the requirement that the business continued to be actively operating at the time of the decision and the requirement that that Mr Li and Ms Chen continued to have assets with a net value of at least AUD250,000. As a result, the delegate refused the applications for the visas under s.65 of the Migration Act 1958 (the Act).

4. Mr Li, Ms Chen and Minjun applied for a review of the decision. 

5. Mr Li appeared before the tribunal on 11 November 2015 to give evidence and present arguments, and was represented by his registered migration agent. The tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

6. For the following reasons, the tribunal has concluded that the matter should be remitted for reconsideration.

   CONSIDERATION

7. The Business Skills (Residence) (Class BS) visa is a visa for successful business people and provides Australian permanent residence. The criteria for the grant of this visa are set out in Part 892 of Schedule 2 of the Regulations, and at least one applicant must meet the primary criteria. There are criteria that must be met at the time of the application, and criteria that must be met at the time of this decision.

8. The criteria in issue before me relate are those that must be met at the time of this decision. Clause 892.221 requires that the applicant continues to satisfy the criteria in cl.892.211 and cl.892.214 and that if the applicant met the requirements of paragraph 892.212(b), continues to meet those requirements.

9. I have considered each of cl.892.211, 892.214 and 892.212(b) in turn, keeping in mind that the time I am considering is the time of this decision.

Clause 892.211

1. This clause requires the applicant to continue to meet the requirement that:

   ·     The applicant has an ownership interest in one or more businesses

   ·     The business or businesses are actively operating.

   ·     The businesses meet the definition of main business in r.1.11.  This in turn requires that:

   o   The applicant has an ownership interest in the business

   o   The applicant maintains 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;

   o   The value of the ownership interest of the applicant and his or her spouse is at least 10% of the business; and

   o   The business is a qualifying business as defined in r.1.03.  This requires that it is operated for the purpose of making a profit through the provision of goods, service or goods and services (other than the provision of rental property) to the public and it is not operated primarily or substantially for the purpose of speculative or passive investment. 

   ·     For each business an Australian Business Number has been obtained; and

   ·     All Business Activity Statements (BAS) required by the Australian Taxation Office (ATO) have been submitted to the ATO.

2. The previous decision of the Migration Review Tribunal found this criterion was met at the time of the visa application. 

3. Kun Jian continues to have an Australian Business Number and Mr Li provided BAS to the end of the most recent quarter after the hearing. There is no dispute that Mr Li continues to have an ownership interest in Kun Jian of over 10% of the business. He is the director and the person who runs the business. I find that these elements of cl.892.211 and the definition of main business are met at the time of this decision. The elements in 892.211 that that are in issue at the time of this decision issue are whether the business continues to actively operate and whether it continues to be a qualifying business.

   Is the business actively operating?

4. The term “actively operating” is not defined in the legislation.  Mr Li’s representative submits this is the same as “carrying on” a business, meaning repetition and activities undertaken as a commercial enterprise in the nature of an ongoing concern, and cites the High Court in Hope v Bathurst City Council (1980) 144 CLR 1.

5. I do not think terms that are substantially different such as “actively operating” and “carrying on” can be used interchangeably, particularly when they are being considered in a different context.  Terms used in legislation must be read consistently with the legislation and that particular legislative scheme  as a whole.  In Hope the term “carrying on” a business occurred in the context of the Local Government Act 1919 (N.S.W.), whereas the term “actively operating” occurs in the context of the Migration Act 1958 (Cth) and Migration Regulations 1994.

6. The term “active” is defined in the Shorter Oxford Dictionary as “given to action rather than contemplation or speculation” and in the Macquarie Dictionary “active” is in a state of action, in actual progress or motion”.  “Operate” in this context is defined in the Shorter Oxford as being in action or functioning, and in the Macquarie Dictionary as to act effectively, use force or influence.   

7. As such, on a plain reading I consider the phrase “actively operating” means that Mr Li must be taking action to progress the business.  This does not necessarily mean that he must be making sales or trading, although this would be a clear indicator that a business is actively operating. 

8. Mr Li said that when he established the company in 2006 it was trading in imports and exports, mostly in red wine but also paper, paint and some health products and the raw materials for bubble tea.  He said that from 2011 the business stopped because previously his customers had ordered every three to four months but then it became hard to sell the wine.  He said he needed to do research to find out why sales had stopped and went to China to talk to his customers and found the problem was competition.  He said he wound back the business after his visa was refused.  His evidence regarding the fall in export of wine to China is supported by the Austrade website, which said wine exports slowed at the end of 2012 due to austerity measures introduced by the government.[1]

   [1] Accessed 10 January 2016

9. On being asked what would show me that Kun Jiang was actively operating, he said business was slow so he changed his strategy and moved his customers to Hong Kong and Macau and now has a more stable customer base.  He said he has also been exploring other business with the import of bubble tea, with one shop opened in Chinatown and another to be opened in Rundle Mall in December.  He says he will supply all the raw materials for the bubble tea shop at $40,000 to $50,000 per quarter.  Next year if the business is promising he says he will become a shareholder and open other shops.  He clarified later he does not have a current interest in this business. 

10. Mr Li said he started to sell wine in Hong Kong and Macau because this market was more highly regulated and the intellectual property in the wine was better protected so less fake copies are sold.  He changed the varieties he sold as in Hong Kong and Macau he could sell at the higher end of the market whereas in China he sold lower/middle end products.

11. Mr Li said he also set up a website in 2012 in Macau to sell honey and olive oil.  On being asked to clarify whether it was his website or someone else’s website, he said it belongs to his friend and that he used his friend’s website, called One-Step, as a platform.  He sells products to OneStep and OneStep pays the company for the products.  On being asked if OneStep then sells the products to others, he said One-Step sells through the website and his friend Mr Feng works in a casino and helps him sell to customers. 

12. On being asked if I should be able to find the website, Mr Li said it was fine two weeks before the hearing but in the last two weeks the server had been hacked and it was not available.  He said they are trying to fix the website, and he would let me know when it is available.  He has not advised that the website is available, and I have been unable to locate it using a google search. 

13. On being asked if Kun Jiang sells products to people other than OneStep he said he does have other customers, but not as much, and he does not have invoices or receipts from other customers, only from OneStep.  He said he does not have receipts and invoices from other customers because they don’t want to do business with OneStep.  On again being asked if he had evidence of customers other than OneStep he said he stopped doing business with other customers.  He was then asked if he sells products to people other than OneStep and he said he does have other customers but only has communications with them.  Mr Li provided contracts for the sale of wine with OneStep.  He also provided a revised invoice from Alexander Liquor Wholesalers for Kun Jian’s purchase of wine.  Mr Li said a license is required to export wine, and he does not currently have a license because the volume he was exporting was 132 bottles and he can use an agent to export that amount.   He provided the card of the agent he says he uses to export the wine.  In the absence of supporting documents, I am not satisfied he sells wine other than to One-Step.

14. Mr Li said Kun Jiang sells bubble tea to WII Pty Ltd who has a franchise called Coco.  He provided an invoice from Kun Jian to WII Pty Ltd for $53,289.47 from Kun Jiang, and he says this is reflected in the BAS for this quarter.  The bank statements for Kun Jiang show a total payment of $48,444 from three transactions with the same  invoice number that appears on the invoice to WII Pty Ltd..  

15. Mr Li’s 2015 tax return shows consultancy fees of $10,472.  He said this for “after-service” for the sale of wine.  He says the wine dealer pays the consultancy fee.  He says he issued invoices for these costs but could not remember what he put on the invoices.  

16. Submissions on behalf of Mr Li argued that his activities in attempting to enter new markets constitute actively operating the business.  He provided his diary notes of meetings to support this submission.  These diary notes record discussions about wine, meat, and baby formula.  The diary entries are generally undated, with some dated 2012.

17. In regard to export of baby formula, Mr Li said he is still working on buying a license as it is a complicated procedure to import baby formula to China, so he can only put products on the website to let people know about the products.

18. In regard to the meat market, Mr Li said a Hong Kong friend asked him to buy meat products in Australia and supply them to him.  He said he is still seeking suppliers but hopes to find products and export to Hong Kong.  He said a license is required to export meat, and he does not have a license but will find an export agent for the meat.  On being asked who his export agent was, he said he has not found an export agent as he had not found a supplier yet. 

19. The delegate was not satisfied the business continued to actively operate because the BAS for the period 1 July 2009 until 30 June 2013 all recorded zero sales.  At the time of the delegate’s decision, the 2014 BAS were still being prepared.  The tax returns for the 2011, 2012, 2013 and 2014 financial years all showed losses, and the export expenses in these returns were recorded as zero, which the delegate found confirmed the zero sales in the BAS.

20. The 2015 tax return shows income for Kun Jian of $28,303 and expenses of $23,981 with a net profit of $4,322. 

21. BAS statements were supplied from the time of the application to the end of the September 2015.  These show zero sales for the period 1 July 2010 to until 30 September 2013, however as noted in the decision of the delegate the BAS do record expenses. The zero sales from 2010 do not reflect the downturn in the demand for wine exports to China, which occurred in 2012. 

22. The BAS show the following sales from September 2013:

    1 October 2013 to 31 December 2013          2,988

    1 January 2014 to 31 March 2014                 7,988

    1 April 2014 to 30 June 2014  0

    1 July 2014 to 30 September 2014                10,472

    1 October 2014 to 31 December 2014          0

    1 January 2015 to 31 March 2015                 0

    1 April 2015 to 30 June 2015  17,830

    1 July 2015 to 30 September 2015                60,430

23. The bank statements of Kun Jian do not match the BAS figures, as there are quarters where there are deposits in the bank accounts that do not match the sales amounts in the BAS.  The nature of these transactions is not evident to me.

24. It is apparent that the sales that appear the March 2014 and September 2014 quarters in the BAS relate to single transactions, as there is a single deposit of the same amount as the March and September BAS sales in the bank account of Kun Jian. 

25. Overall Mr Li was not an impressive witness.  He gave evidence of trading over an internet site that cannot be located, and while apparently the website had been hacked and was in the process of being repaired, it could not be located between the hearing and the time of this decision. He asserted he had looked into a number of business areas, but had not acquired a license to export the goods or located an agent to do this on his behalf, other than for the wine exports.  There are significant gaps in time where there appears to have been little activity in the business.  Mr Li said he has wound down his business after the visa application was refused, and the more recent activity corresponding with the date the applications for review were lodged with the tribunal, with the applications being lodged on 9 April 2015

26. Despite his poor oral evidence, Mr Li provided evidence in the form of diary notes of action in 2011 and 2012 to meet with people to explore business options. While there is clearly a hiatus in Kun Jian trading and little action in relation to the business other than two sales of wine in 2014, and discussions with people about importing and exporting various goods, by the time of this decision Kun Jian has started importing ingredients for bubble tea and is being paid for these imports as shown by its bank accounts.   It is also selling wine to One-Step.

27. What is required from the legislation is that at the time of this decision Kun Jian is actively operating, and the renewed trading and importing show this is the case.  I find that discussions regarding business opportunities show activity, albeit very limited activity, to progress the business in the intervening period. As such, and despite the deficiencies in Mr Li’s evidence, I find the business is actively operating at the time of this decision.  

Is the business a qualifying business?

1. The aspect of the definition of qualifying business that was of concern is whether Kun Jian offers goods and services to the public if, as Mr Li said, it was trading through the OneStep website. In Teng & Ors v Minister for Imigration & Anor[2], it was found that the sale of goods, in this case oaten hay, to another company which then sold the goods to the public was not offering goods and services to the public.  

   [2] [2015] FCCA 1197

2. At hearing Mr Li said Kun Jian invoices OneStep for goods and is paid by OneStep who in turn sells the goods to the public.  There was some reference to the direct sale of goods through his friend to patrons of casinos in Macau, however Mr Li did not have any documentary evidence of transactions other than with OneStep. 

3. In submissions provided after the hearing, the representative sought to clarify his client’s responses to questions asked of his client at hearing about OneStep stating OneStep is an intermediary in the sales process and the website is a platform though which customers can place orders.  The submissions state Mr Li refers customers to place their orders through OneStep to reduce costs to the customer.  Mr Li referred at hearing to other customers, but said “this was just communications”.  The consignment notices show two different ultimate customers. 

4. As advised at hearing Kun Jian now also imports ingredients for bubble tea for Wii Pty Ltd, which then sells it on to others.

5. The ‘public’ is more than one person and in this case goods are offer to more than one entity.    As a result, I am find that Kun Jian offers goods to the public.

Clause 892.214

1. Clause.892.214 requires that neither the applicant nor the spouse of the applicant has a history of involvement in business activities that of a nature that is not generally acceptable in Australia. There is no information before me that Mr Li or Ms Chen has been involved in unacceptable business activities.

Clause 892.212(b)

1. This clause requires Mr Li and his spouse to have personal and business assets of at least AUD250,000.

2. The delegate was not satisfied they had assets to this value as they had sold their house in Hallett Cove and at the time of the decision had nil personal assets and $89,079 in the business.

3. Mr Li provided bank statements showing he and his spouse currently have $189.797 in their accounts.  They provided a list of personal property which they value at $181,675. The net assets of the business at 30 June 2015 are $72,210.

4. As a result of Mr Li and Ms Chen’s bank account balances and personal property, I am satisfied they have personal and business assets of at least AUD250,000 and that Mr Li meets cl.892.212(b) at the time of this decision.

Conclusion

1. As I have found Mr Li meets cl.892.211, 892.214 and 892.212(b) at the time of this decision, I find he meets cl.892.221 and the decision under review will be set aside and remitted for further consideration by the Minister.

2. As Mr Li may meet the primary criteria, it is also appropriate to remit Ms Chen and Mingjen’s visa applications to the Minister for further consideration of whether they meet the secondary criteria for the visa.

   DECISION

3. The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets:

   · cl.892.221 of Schedule 2 to the Regulations.

   Kate Millar
   Member