1512041 (Migration) - [2016] AATA 4253

1512041 (Migration) [2016] AATA 4253 (16 August 2016)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:  Mr Peter Alcock
Mrs Gwen Denise Alcock
CASE NUMBER:  1512041
DIBP REFERENCE(S):  CLF2014/119972
MEMBER:Sue Raymond
DATE:16 August 2016
PLACE OF DECISION:  Adelaide
DECISION:The Tribunal affirms the decision not to grant the applicants a Business Skills (Residence) (Class DF) visa

Statement made on 16 August 2016 at 2:07pm

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

The issue in this matter is the turnover of a business run by the applicants.
The applicants are citizens of South Africa. The visa applicants applied for Business Skills (Residence) (Class DF) Subclass 892 visas on 8 September 2014. The delegate refused to grant the visas on 14 August 2015. The decision was made on the basis that the delegate was not satisfied that the annual turnover requirement of AUD 200,000 was established during the relevant 12 month period.
The applicants appeared before the Tribunal on 30 March 2016 via videolink from Perth, Western Australia to give evidence and present arguments. Ms Alida Prinsloo, the applicants’ accountant, spoke briefly to the Tribunal at that hearing.
The applicants again appeared before the Tribunal on 14 June 2016 via videolink from Perth, Western Australia to give evidence and present arguments.
The applicants were represented in relation to the review by their registered migration agent who also attended the hearing on each occasion.
Following the first hearing further documentation was received on 21 April 2016 together with a letter from the applicants’ accountant. The Tribunal also received documentation, dated 7 June 2016 and 12 June 2016, respectively, prior to the second hearing, which documentation has been taken into account. Additional documentation was received on 11 July 2016 which has also been taken into account.
For the following reasons, I have concluded that the decision under review should be affirmed. This is based on a conclusion that certain money received for procurement of goods does not amount to “turnover” in the ordinary meaning of that word for the purpose of the Migration Regulations.
In reaching the conclusion I have relied to a significant degree on two authorities of Cheng[1], one of the Federal Circuit Court of Australia and the other of the Federal Court of Australia, which dealt with the issue of “turnover” in the context of this class of visa.
[1] Cheng & Ors v Minister for Immigration & Anor [2012] FMCA 911; and Cheng v Minister for Immigration and Citizenship [2013] FCA 405
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in the present case is the turnover of the applicants’ nominated business during the 12 months prior to the lodgement of the visa application. The Tribunal is expressly not examining or making a determination about whether the business is a business or satisfies the definition of a “main business”. It has considered whether it should do so but it would involve canvassing in some detail evidence which has not been considered at first instance by the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] AATA 4253
Decision Date: 16 August 2016

CaseChat Overview and Summary

This matter concerned an application for review of a decision to refuse subclass 892 visas. The applicants, Mr and Mrs Alcock, nominated All Rice Co Pty Ltd as their main business in Australia. The primary criterion under consideration was cl.892.213(2) of the Migration Regulations, which requires the applicant's main business to have an annual turnover of at least AUD200,000 in the 12 months immediately preceding the application.

The legal issue before the Tribunal was to determine the annual turnover of All Rice Co Pty Ltd, specifically whether certain transactions with a company named IIMS constituted "turnover" for the purposes of the visa criterion. The Tribunal considered the ordinary meaning of "turnover" in the context of business activity, drawing on relevant case law, including decisions in *Cheng* and *He*. The Tribunal also had regard to departmental policy guidelines regarding turnover.

The Tribunal found that All Rice Co Pty Ltd acted as an intermediary between suppliers and IIMS for specialised goods. All Rice was invoiced by suppliers, paid the suppliers, and then invoiced IIMS for the same amounts. Crucially, IIMS ordered the goods directly from suppliers and arranged for their direct delivery, meaning All Rice did not take possession of, insure, or source the goods. The Tribunal concluded that these transactions were artificial and not in the ordinary course of All Rice's business, as the company merely served as a conduit. The Tribunal affirmed the decision to refuse the visas, finding that the applicants had not met the turnover requirement.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

I have also had regard to the case of He[20] which the representative referred to in his submissions. I regard the cases of Cheng as directly relevant as they were dealing with the issue of “turnover” whereas the case of He dealt with term “asset”. I accept that the principle raised in He, as to whether the policy goes beyond what is in the statute, is one of general application about which the Tribunal needs to be cautious.Application of the facts to the term “turnover” [20] He v Minister for Immigration & Anor [2015] FCCA 2915 In the current case the applicants, through the company All Rice, paid for goods from various suppliers and then rendered invoices for the same amounts to IIMS. Essentially, the company had interposed itself as a middleperson between IIMS and its suppliers. However, IIMS still ordered the goods and the goods were directly despatched to IIMS. They were highly specialised goods and consequently the ordering of those goods took place directly between IIMS and its suppliers. The goods were not in the physical possession of All Rice. Essentially all that All Rice was doing was paying suppliers for the goods and then billing IIMS the same amounts for those goods. Based on the oral and documentary evidence before me, I reach the following conclusions:·There was not an arms-length relationship between IIMS and All Rice, each sharing a common director.·Officers of IIMS carried out the ordering of the goods direct with the suppliers and arranged for delivery of the goods direct with the suppliers. All Rice was not involved in the ordering or delivery of the goods. All Rice did not take possession of, or insure, the goods.·All Rice’s role was limited to being invoiced for the goods by the suppliers; paying the suppliers and then invoicing and receiving funds from IIMS in the same amount as the costs of the goods. It did not source alternative suppliers of the goods.·The documentation evidencing the arrangement comprise suppliers’ invoices which name All Rice as the entity billed and tax invoices from All Rice to IIMS. I conclude these ten transactions during the relevant period in relation to All Rice being invoiced for goods from suppliers and in turn invoicing IIMS for those goods are artificial, in that the applicants’ company was interposed as an intermediary between the suppliers and the purchasing company, and where the purchase and sales were for the same sum of money. They are artificial in the sense that I am not satisfied that they occurred in the ordinary course of the business of All Rice. The applicants had to expend money, by way of interest on their credit facility, to purchase the goods and then there is a delayed payment for them by IIMS. The fact that the applicants indicated that they hoped the transactions would lead to further business with the mining industry cannot render them to be “turnover” in circumstances where they are not. In my view All Rice was no more than a conduit for the purchase of the goods between the suppliers and IIMS. I find that the “IIMS” transactions have no plausible relevance to the operations of the ordinary business of All Rice.Substance over form

Evidence

Evidence Before The Court

In reaching the conclusion I have relied to a significant degree on two authorities of Cheng[1], one of the Federal Circuit Court of Australia and the other of the Federal Court of Australia, which dealt with the issue of “turnover” in the context of this class of visa.[1] Cheng & Ors v Minister for Immigration & Anor [2012] FMCA 911; and Cheng v Minister for Immigration and Citizenship [2013] FCA 405CONSIDERATION OF CLAIMS AND EVIDENCE The issue in the present case is the turnover of the applicants’ nominated business during the 12 months prior to the lodgement of the visa application. The Tribunal is expressly not examining or making a determination about whether the business is a business or satisfies the definition of a “main business”. It has considered whether it should do so but it would involve canvassing in some detail evidence which has not been considered at first instance by the department. Consequently, for the purpose of this application for review, the Tribunal accepts that the main business is that nominated in the visa application and accompanying forms lodged with the department. There was only one business named in the documentation and that is All Rice Co Pty Ltd (‘All Rice’). Cl.892.213 The criterion relevant to this application is that in cl.892.213. It provides as follows:892.213(1) The applicant meets the requirements of subclause (2) or (3).(2) An applicant meets the requirements of this subclause if, in the 12 months immediately before the application is made, the applicant’s main business in Australia, or main businesses in Australia together, had an annual turnover of at least AUD200 000.(3) An applicant meets the requirements of this subclause if:(a) the applicant meets at least 2 of the requirements set out in paragraphs 892.212(a), (b) and (c); and(b) the applicant resides in, and operates the applicant’s main business or businesses in Australia in, an area specified in an instrument in writing made by the Minister for this paragraph; and(c) the appropriate regional authority has determined that there are exceptional circumstances for this subclause. The relevant subparagraph is (2). The other paragraph is not relevant to this review. In considering the facts of this case I am mindful that the requirement in this subclause sets a particular minimum amount of annual turnover for the business in the context of the applicants’ application for a permanent business visa. The first named applicant, Mr Peter Alcock, is the main or primary applicant[2] for the visa. Mrs Gwen Denise Alcock is a secondary applicant, who is dependent on Mr Alcock satisfying the primary criteria for the grant of the visa.[2] Folio 1 of the departmental file On the basis of the information in the visa application and accompanying forms, I find that:·The main business nominated is All Rice Co Pty Ltd (‘All Rice’).·Mr Alcock is the Managing Director of the company.·His ownership share is 52% for the two years prior to lodgement of the application.·He began his involvement in the business on 17 August 2010. ·The major activity of the business is stated to be “Importation and distribution of Rice, other Food stuffs and the sourcing and sale of equipment for use in the mining industry sector of Australia.”

Decision

Reasons for decision

Consequently, I have determined that the decision to refuse the subclass 892 visas should be affirmed. There is no evidence before the Tribunal to suggest that the criteria for any of the other visa subclasses are made out by the applicants[25]. [25] Noting that cls. 891 and 893 required that certain visa be held by the applicants and that cl.890 also requires a specified annual turnover.DECISION The Tribunal affirms the decision not to grant the applicants a Business Skills (Residence) (Class DF) visaSue RaymondSenior Member

Ratio Decidendi

Legal Principle Established

Based on the bank documentation which was provided to the Tribunal, I note that significant interest charges were incurred by the applicants in relation to the credit facility in entering into these transactions. All Rice purchased the items from the suppliers for the same amount that it charged IIMS so no profit was made on the transactions and credit expenses were incurred by it. Whilst these facts are not determinative, they form part of the matrix of facts in this matter.Consideration of “Turnover” The term “turnover” is not defined in the Migration Regulations. I have had regard to the decisions of Cheng[17] in the Federal Magistrates Court of Australia and in the Federal Court of Australia, respectively. I note and am bound by the cases. In particular I note that Judge Driver states, [after noting that the word “turnover” has not acquired a legal meaning and noting that it has not been suggested that it has acquired a secondary meaning through trade usage which differs from its ordinary meaning]:“Accordingly, in the absence of a definition of ‘turnover’ in the Migration Regulations, the ordinary meaning of the word ‘turnover’, and the consideration of which amounts fall within the expression ‘turnover’ in the particular context, was a question of fact to be decided by the Tribunal.”[18][17] Cheng & Ors v Minister for Immigration & Anor [2012] FMCA 911[18] At paragraph 30 of Cheng & Ors v Minister for Immigration & Anor [2012] FMCA 911 I also note that Judge Driver looked at various dictionary meanings of “turnover,” at paragraph 48 of the decision. He notes that four of the seven definitions, which relate to business activity, might be available for the purpose of application of the visa criterion. They are:(a) “the number of times that capital is invested and reinvested in a line of merchandise during a specific period of time:(b) the turning over of the capital or stock of goods involved in a particular transaction or course of business;(c) the total revenue generated from the provision of goods or services for a particular accounting period; and(d) the total amount of business done in a given time.” The term “turnover” is referred to in the policy guidelines of the department[19] and in describing what turnover is it states; “Turnover is the revenue generated by an entity as a result of the ordinary activities of a business.” I do not regard myself as bound by policy but I should have regard to it in so far as it is consistent with the law. In this case I do not need to rely on it, but this description accords with my conclusion.[19] 2016>01/07/2016->PAM3-Migration Regulations-OTHER>PAM-GenGuideM-Business visas-Visa application and related procedures “Turnover” I have also had regard to the case of He[20] which the representative referred to in his submissions. I regard the cases of Cheng as directly relevant as they were dealing with the issue of “turnover” whereas the case of He dealt with term “asset”. I accept that the principle raised in He, as to whether the policy goes beyond what is in the statute, is one of general application about which the Tribunal needs to be cautious.Application of the facts to the term “turnover” [20] He v Minister for Immigration & Anor [2015] FCCA 2915