1508766 (Migration)

1508766 (Migration) [2016] AATA 3715 (11 April 2016)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:  Ms Mizuki Hiroe
Miss Miho Hiroe
Miss Saho Hiroe
CASE NUMBER:  1508766
DIBP REFERENCE(S):  BCC2014/1820693
MEMBER:Bruce Henry
DATE:11 April 2016
PLACE OF DECISION:  Brisbane
DECISION:The Tribunal affirms the decision not to grant the visa applicant a Business Innovation and Investment (Class EB) visa.

Statement made on 11 April 2016 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 17 June 2015 to refuse to grant the visa applicant a Business Skills (Provisional) Subclass 188 visa under s.65 of the Migration Act 1958 (the Act).
The applicants applied for the visa on 25 July 2014. The application indicated that the application was made under the Investor stream of the subclass 188 visa.
The delegate refused to grant the visa on the basis that she was not satisfied on the basis of the documents provided that the first named applicant (the applicant) had at least three years’ experience of direct involvement in managing one or more qualifying businesses or eligible investments, or that she had demonstrated a high level of management skill in relation to the eligible investment or qualifying business. Consequently, the delegate found that the applicant did not satisfy clause 188.243 in Schedule 2 of the Regulations.
The delegate refused the applications of the second and third named applicants (the daughters of the applicant) as they did not meet the secondary criteria to be members of the family unit of a person who held a subclass 188 visa and there was no evidence to indicate that they met the primary visa criteria in their own right.
The applicants appeared before the Tribunal on 29 January 2016 to give evidence and present arguments.
The applicants were represented in relation to the review by their registered migration agent.
For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.
THE RELEVANT LAW
The issue in the present case is whether the applicant satisfies cl.188.243 of Schedule 2 of the Regulations.
Clause 188.243 states:
(1) The applicant has overall had a successful record of eligible investment activity or qualifying business activity.
(2) The applicant has had a total of at least 3 years experience of direct involvement in managing one or more qualifying businesses or eligible investments.
(3) The applicant has demonstrated a high level of management skill in relation to the eligible investment or qualifying business activity.
Relevant definitions of the key terms in cl.188.243 are attached.
Clause 188.244 provides:
For at least one of the 5 fiscal years immediately before the time of invitation to apply for the visa:
(a) both of the following apply:
(i) the applicant maintained direct involvement in managing a qualifying business;
(ii) the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, had an ownership interest of at least 10% of the total value of the business; or
(b) both of the following apply:
(i) the applicant maintained direct involvement in managing eligible investments of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together;
(ii) the total net value of the eligible investments was at least AUD1 500 000.
CLAIMS AND EVIDENCE
Documents on the departmental file confirm that the qualifying business upon which the applicant relies in this application is EMA International Co Ltd, a company established on 7 November 2001 operating out of the head office in Tokyo, Japan. The documents provided to the Department by the applicant indicate that the business managers a number of beauty salons. A company overview provided to the Department by the applicant states that as at August 2013 the business had 21 different premises employing a total of 200 employees. In addition to 18 Japanese premises, the business has 2 premises in Hong Kong and one in Guangzhou.
Company documents provided with the application state that as at 30 September 2013 the shareholders in the business were Takuya Hiroe with 35 shares and the applicant with 15 shares. The company documents also show that the applicant was appointed as a director of the company on 26 December 2006.
The Statement of Assets and Liabilities Position (SALP) provided by the applicant with the application states that the total value of the applicant’s assets as at 30 June 2014 was AUD1 748 357.50 in cash deposits and real estate of AUD2 450 000. The SALP provided by the applicant as at 30 June 2013 stated that her assets totalled AUD 1 204 244.20 in cash and AUD 2 350 000 in real estate. Supporting documents were provided to support the valuations of these assets.
A document headed ‘Role and position in the Company’ provided with the application states:
Mrs Mizuki Hiroe, the applicant, is a director and 30% shareholder of the company EMA International Co Ltd.
Mrs Hiroe has also been employed in the role of general manager of EMA International Co Ltd., Japan since December 2006.
EMA International Co Ltd owns and operates Grace Beauty … Which specialises in professional hair removal both in Japan and Hong Kong and has an annual turnover of approximately AUD$12 million. The business currently operates 32 salons in Japan.
We are advised that Mrs Hiroe’s duties have included, but were not limited to, the following:
1.     Setting Company development strategies;
2.     Setting the Company’s management and internal control systems;
3.     Regularly met with management team in relation to daily administration and operation of the company including pricing structures, hiring and dismissal of staff;
4.     Reviewed and approved financial statements and financial analysis prepared by the financial department;
5.     Review marketing and advertising/sales campaigns, complaints and training of staff with division managers.
During the review the applicant provided further supporting documents including a statement in which she said (errors in original):
I was very interested in the beauty industry from the time I was in high school. That's why I took in Management and Marketing of Cosmetics in high school. After graduating, I also worked in the beauty related business. Even I chose to study abroad in Japan; I majored in the same department in Ryukyu Beauty Colleague as well.
When I studied in Japan, I had a lot of experience of internship. Because of that I was very confident of running my own beauty business.
I was then appointed as a director of the company in November 2005.
Since then I have been continuously involved to our company as a director of the business.
Until about August 2010, I actively involved to the business. I have moved to Australia in September 2010, I have been still involved to the business by using Skype or LINE in order to save communication costs.
During the course of my active involvement, we opened and currently operate 18 salons. …
How I involved to the management - How I conduct R&D prior to opening salon and day today opration [sic]
At beginning, I surveyed a lot of information and sought assistance from the professional Creative Strategic Advertising Agency which knows much about all aspects of professional beauty service business. I also took many beauty courses in person at other different salons to refer the real process of the whole service.
After we collected all the information, I estimated that Ikebukuro was the best choice to start our first step. Because Ikebukuro is one of the most commercial and entertainment district in Tokyo Japan, there are millions of visitors and consumers.
For creating the biggest commercial interests at Ikebukuro, I checked all of the leasing cases which were provided by real estate agency. I surveyed the environment and the amount of the flow of passengers by myself. I was standing on the street at each of those leasing cases for the whole week to get the real numbers and situation.
After deciding on the place, I put my entire mind in the decoration. I tried to stand on the sight of the customers; I preferred the warm colors to make customers feel more comfortable. I especially focus on the rest room. There are perfume and female supplies for free to use.
I also designed a personal space for the V.I.P. They can freshen up themselves in a large, comfortable and luxurious space.
According to the analysis of the questionnaire, it shows the most of the women are tired of using too many different kinds of facial skin care products every day.
They prefer that many effects can be all in one. That's why Mr. and Mrs. Ishikawa (The Managing Director of Sen Co Ltd - Reference letter has been provided to the AAT) and I spent a half year uprating [sic] our new whitening moisturizer cream - 'Becreat" (the product name) which included toners; cream, sunscreen, lotion and essence. Our new Five in One product can make consumers save much more time on daily skin care than before.
All of my company staff involved for the creation of this particular product by using samples and provide numerous feedback before reaching to the stage when it can be formally introduced to the market.
As it was limited edition, we sold approximately 50,000 items. During the course of marketing we launched TV appearance in order to attract customers.
In October 2009, in conjunction with "Optec Lab Co Ltd — Reference letter is also provided to the AAT", we jointly produced "IPL Beauty Skin Care and hair removal equipment" it took nearly 8 months before we launched this special equipment.
Ordinary hair removal equipment only removes hair however, this particular equipment further protects from "burning skin" during the course of hair removal, it produces certain level of laser signal which enhances the substance in the deeper skin to re-produce collagen and elastin, and therefore it gives additional value to our service.
Since the launch of this equipment, our business volume was dramatically increased which leads us to open additional salons.
Followed by the success of this equipment, in particular in 2010, we were able to open 5 additional salons even supported by the reference letter produced by Shaping Room Co Ltd dated November 2015.
For the part of human resource management, we request our team workers to send a daily report to us after every single business day. That's the best way to let me handle my entire business, even when I was not in Japan. I am in charging of hiring and firing salon managers.
And we also set the sales target of the company at the beginning of every month and every year. Through the daily reports and meetings, I can figure out the whole situation more easily, and I can discuss with my team workers online to make sure that every decision will be suitable and successful.
Reporting system - I give direction to the head person of various departments in the company and make sure the each department meet its own goal.
Management meetings are held at least once in every month, and I will then give directions to each department and further such directions will be given to all of the staff members in each salon.
I go to many beauty exhibitions around the Asia to look for the new beauty machine and new tech.
Because of the hard working and suitable judgement throughout my involvement in the management, we are successful to copy this modal to our other salons in Japan.
My agent has provide the AAT with various reference letters in support of third party confirmation as to what I have been doing in the business so I wish you to read this statement together with these reference letters.
The attached reference letters were:
·A letter dated 5 November 2015 from an advertising company which referred to their involvement with EMA International Co Ltd since 2007 ‘where Ms Mizuki Hiroe serves as Director’. The letter enclosed two ‘examples of proofreading of data’, dated 14 April 2009 and 23 July 2010 respectively;
·A letter dated 29 October 2015 from a beauty products company stating that they had been dealing with the applicant as a Director of EMA International Co Ltd since February 2010 ‘relating to cosmetics and beauty treatment’ and had jointly developed and marketed a product with her ‘that performs five functions in one cosmetic product’;
·A letter dated 2 November 2015 from an architectural company based in Tokyo which said they had been dealing with EMA International Co Ltd ‘where Ms Mizuki Hiroe serves as Director’ since 2008. The letter states that they were ‘engaged in design and supervision under the supervision of Ms Hiroe’ in the establishment of 9 shops from March 2008 to November 2010; and
·A letter dated 6 November 2015 from a real estate company stating that they had been dealing with the applicant as a Director of EMA International Co Ltd ‘for tenancy agreements of aesthetic salons since 2009’, and attaching evidence of her involvement in negotiations on tenancies in September 2009.
At the hearing the applicant told the Tribunal that the qualifying business she relied upon is EMA International, a Japanese business. She confirmed that she does not currently have an Australian business. She said that EMA International was established in Tokyo in 2001 by her husband. She joined the business in 2005. The business currently has several shops in the central business district of Tokyo.
The applicant said that she did not join the business until 2005 because prior to that she was looking after the children of herself and her husband. She said that when she first joined the business her main task was to supervise the advertising of the shops.
The Tribunal asked the applicant to explain her main duties as a Director of the business, and she said that of the company’s six sections, she was involved primarily in three, being training and education, marketing and website design, and the selection of locations and interior fit-out of new premises. She said that she would look at reports from the various shops, and would meet every month with management and staff from 18 of the shops to consider whether they had met their targets and qualified for bonuses.
The applicant told the Tribunal that she was involved in all of these activities before she came to Australia in September 2010. Since that time she has continued to be involved in managing the business through contact with her husband via Skype. She said she speaks to him every day about the business as he is the President of the company.
The Tribunal pointed out to the applicant that all of the references she had provided concerning her work in managing the business related to the period in 2009-2010 before she came to Australia. She said that this was because she had started to be directly involved with the management of the business in 2008.
Submissions received from the applicant’s representative after the hearing stated:
The company operates 18 beauty salons in Tokyo, Osaka and Okinawa regions in Japan. Additionally the company operates Salons in Causeway Bay and Mong Kok in Hong Kong and Guangzhoa in China. The information provided during the course of Ms Hiroe's subclass 188 visa application in particular various documents such as Certificate of Historical Records together with Shareholders' list confirms the applicant shareholdings and the fact she is a director of the company. Further the Organization chart had provided explaining the level of management in the company. Further various business references were provided to the AAT during the course of the application process for the purpose of providing third party confirmations in relation to the applicant's involvement to the business.
The applicant was directly involved in the management of the company since December 2006. …
In addition to being a Director the applicant is General Manager and her tasks and duties are:-
·planning policy, and setting standards and objectives for the organisation
·providing day-to-day direction and management of the organisation, and directing and endorsing policy to fulfil objectives, achieve specific goals, and maximize profit and efficiency
·assessing changing situations and responding accordingly by issuing commands and directives to subordinate staff
·consulting with immediate subordinates and departmental heads on matters such as methods of operation, equipment requirements, finance, sales and human resources
·authorising the funding of major policy implementation programs including opening new salons or acquiring existing salons and fitouts where required.
·representing the organisation at official occasions, in negotiations, at conventions, seminars, public hearings and forums, and liaising between areas of responsibility
·preparing, or arranging for the preparation of, reports, budgets and forecasts, and presenting them to governing bodies
·selecting and managing the performance of senior staff
·as required may undertake responsibility for some or all of accounting, sales, marketing, human resources and other specialist operations
The applicant has had an overall successful record of eligible investment activity or qualifying business activity. The applicant together with her husband established EMA International Co Ltd and until the end of December 2013 but in particular from July 2007 until December 2010 these being the relevant three years.
Please refer to the attached the Minutes of Director meetings for this period are attached in order to demonstrate the applicant's high level of management skills and decisions of the business. The relevant information was provided in April 2015 by the previous agent referred as (Attachment 19) however such information as the Minutes of Shop Manager's Meeting where I agree, such information was not sufficient demonstrating the applicant's high level of management skills.
CONSIDERATION OF CLAIMS AND EVIDENCE
On the basis of the documents provided by the applicant with the application under review, the Tribunal accepts that she and her husband owned 100% of the business EMA International Co Ltd. Having regard to the attached definitions of the relevant terms, the Tribunal is satisfied that the applicant has an ownership interest in the business EMA International Co Ltd which is thus an eligible investment for the purposes of cl.188.112 of Part 188 of Schedule 2 of the Regulations.
Accordingly, having regard to the evidence concerning her involvement in EMA International Co Ltd, for the purposes of cl.188.243 the Tribunal must determine whether the applicant has:
·     A successful record of eligible investment activity or qualifying business activity.
·     A total of at least 3 years experience of direct involvement in managing one or more qualifying businesses or eligible investments.
·     Demonstrated a high level of management skill in relation to the eligible investment or qualifying business activity.
On the evidence before it, including the financial accounts of EMA International Co Ltd for the 2009 and 2010 financial years, and the evidence of the applicant’s ownership and directorship of the business, the Tribunal is satisfied that she has a successful record of eligible investment activity and meets cl.188.243(1).
The documentary evidence of the applicant’s business activities in Japan that was produced to the Tribunal relates almost entirely to the period before the applicant came to Australia in 2010. On the basis of that evidence, and the evidence of the applicant at the hearing, the Tribunal is satisfied that the applicant was directly involved in some aspects of the management of the business from 2008 until she came to Australia.
The Tribunal does not accept that the applicant was directly involved in the management of the business from December 2006 as asserted by the representative in their post hearing submissions, as that is contrary to the applicant’s evidence at the hearing that she had started to be directly involved with the management of the business in 2008. The applicant made that statement in response to the Tribunal’s questions about the reference letters that she had supplied from Japanese businesses to support her claimed involvement in the management of the salons operated by her business. As noted above, each of those reference letters referred only to activities undertaken by the applicant in 2009 and 2010.

The Tribunal does not accept the applicant’s claim that she has continued to be involved in the management of the business since coming to Australia. The applicant said in the written statement that she provided to the Tribunal that ‘Until about August 2010, I actively involved to the business. I have moved to Australia in September 2010, I have been still involved to the business by using Skype or LINE in order to save communication costs.’ Her evidence at the hearing was that her main areas of involvement in the management of the salons were training and education of staff, marketing and website design, and the selection of locations and interior fit-out of new premises, and that she was involved in these activities until she came to Australia. She told the Tribunal that she had daily Skype conversations with her husband, and maintained her involvement in managing the business through these conversations.
The Tribunal accepts that the applicant speaks to her husband regularly via Skype, however does not accept her claim that this constitutes an ongoing involvement in the management of the business.
On the basis of the evidence, the Tribunal finds that the applicant was directly involved in the management of the business from 2008 until August 2010. The Tribunal does not accept the submissions of the representative listing management responsibilities attributed to the applicant and claiming that she undertook these activities from 2005, because as noted above the applicant’s own evidence at the hearing differed substantially from the claims made in those submissions.
For these reasons, the Tribunal is not satisfied that the applicant has at least 3 years’ experience of direct involvement in management of the business for the purposes of cl.188.243(2).
Given the applicant’s evidence at the hearing, the Tribunal also doubts whether she can be said to have demonstrated a high level of management skill in relation to the eligible investment, EMS International Co Ltd, as required by cl.188.243(3). The management tasks that she described having undertaken do not appear to the Tribunal to involve a high level of management skill. The Tribunal makes no finding on this matter, however, as it is unnecessary to do so having regard to the finding above.
For these reasons the applicant does not satisfy cl.188.243 and the decision under review must be affirmed.
DECISION
The Tribunal affirms the decision not to grant the visa applicant a Business Innovation and Investment (Class EB) visa.
Bruce Henry
Member

Extracts from the Migration Regulations
1.03    In these Regulations, unless the contrary intention appears: …
ownership interest has the meaning given to it in subsection 134(10) of the Act.
…
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.
Extracts from the Schedule 2 of the Migration Regulations
188.112     In this Part, each of the following is an eligible investment if a person owns it for the purpose of producing a return in the form of income or capital gain, and not for personal use:
(a) an ownership interest in a business;
(b) cash on deposit;
(c) stocks or bonds;
(d) real estate;
(e) gold or silver bullion.
188.113     In this Part, a loan to a business is an eligible investment if a person makes it for the purpose of producing a return in the form of income or capital gain.
Extracts from the Migration Act 1956
134(10) In this section: …
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 …

[2016] AATA 3715

11 April 2016

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