Andradi (Migration)

[2020] AATA 472

Andradi (Migration) [2020] AATA 472 (14 January 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  

Mr D M A M Don Sisath Frank Lakshman Andradi

Miss Lashini Menushika Andradi

Mrs Kirindage Anusha Lourdes Ruwanthi Andradi

CASE NUMBER:  1720817

HOME AFFAIRS REFERENCE(S): BCC2016/2038186 BCC2016/2050214 BCC2016/2050255 BCC2017/2285502 BCC2017/3790342 BCC2017/3790349

MEMBER:Alison Mercer

DATE:14 January 2020

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal remits the applications 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) visa:

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

Statement made on 14 January 2020 at 5:15pm

CATCHWORDS
MIGRATION – Business Skills (Residence)(Class DF) visa – Subclass 892 (State/Territory Sponsored Business Owner) – direct and continuous involvement in managing business for 2 years before application – continued management duties while overseas – lawfully and actively operating business – 70% ownership interest – qualifying business – business purpose to make profit through residential construction for public – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), ss 65, 134(10), 359(2)
Migration Regulations 199 (Cth), rr 1.03, 1.11, Schedule 2, cl 892.211



CASES
Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328
Shahpari v Minister for Border Protection [2016] FCCA 513
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576

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 and Border Protection on 24 August 2017 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visas on 10 June 2016. At the time of application, Class DF contained four subclasses: subclass 890 (Business Owner), subclass 891 (Investor), subclass 892 (State/Territory Business Owner) and subclass 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of subclass 892 (State/Territory Business Owner) visas, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.

3. The delegate in this case refused to grant the visas on the basis that the first named visa applicant (the applicant) did not satisfy the requirements of cl.892.211(1) of Schedule 2 to the Regulations, which required that the applicant had 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. The delegate noted that ‘main business’ was defined in r.1.11 and required, amongst other things, that if a business was not publicly listed and had a turnover of less than AUD $400,000, then the applicant had to have an ownership interest of at least 51%. The delegate further noted that the applicant also had to demonstrate that he maintained, or had 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.

4. The delegate found that the relevant 2 year period was 10 June 2014 to 9 June 2016, in relation to which applicant had nominated 2 businesses in his visa application: T2 Square Construction Pty Ltd (‘T2’) and Sunhill Construction Pty Ltd (‘Sunhill’). The delegate found that the applicant had a 33% ownership interest in T2 from 10 June 2014 to 12 June 2015, when his ownership interest increased to 50%. Based on T2’s financial statements, the delegate found that its turnover was nil for 2013/14, $28,545 for 2014/15 and nil for 2015/16, which was below AUD $400,000 at each point in time. The delegate found that the applicant therefore needed to demonstrate that he had an ownership in T2 of at least 51% for the 2 years immediately before the visa application was made on 10 June 2016, but could not do so.  The delegate therefore found that T2 could not be considered a main business of the applicant for the purposes of r.1.11 and cl.892.211.

5. In relation to Sunhill, the delegate accepted that the applicant’s ownership interest in this company was 70% in the relevant 2 year period but was not satisfied, from the documentary evidence provided, that the applicant maintained a direct and continuous management involvement for the period prior to 1 September 2015.  The delegate therefore found that Sunhill could not be considered a main business of the applicant for the purposes of r.1.11 and cl.892.211. The delegate therefore found that the applicant could not satisfy cl.892.211(1) in respect of either nominated business and did not meet cl.892.211 as a whole.

6. The delegate also refused to grant subclass 892 visas to the second and third named applicants (the applicant’s wife and child) on the basis that they did not meet the secondary visa criteria to be members of the family unit of a person who met the primary visa criteria, and there was no evidence that they met the primary visa criteria in their own right.

7. The Tribunal received a review application from the applicants on 6 September 2017.  It was accompanied by a copy of the delegate’s decision and an authority by which the applicants appointed a registered migration agent, Mr Don Katugampala, as their representative and authorised recipient for correspondence.

8. The matter was constituted to a Tribunal Member on 18 September 2019.  On 23 September 2019, the Tribunal wrote to the applicants via their agent, pursuant to s.359(2) of the Act, to invite them to provide information demonstrating how the applicant satisfied cl.892.211 at the time of application, and how he continued to meet it at the time of the Tribunal’s decision. The information was due by 7 October 2019.

9. On 7 October 2019, the Tribunal received the following information from the applicants’ agent:

• Business Activity Statements (BAS) for Sunhill for period 1 July 2013 to 1 July 2019; and

• financial statements for Sunhill for the 2013/14, 2014/15, 2015/16, 2016/17, 2017/18 and 2018/19 financial years.

10.    No information was provided in relation to T2.

11.    The applicant appeared before the Tribunal on 12 November 2019 to give evidence and present arguments. The Tribunal also received oral submissions from the applicant’s agent.

12.    The applicant gave details of his business background prior to coming to Australia, indicating that he has a construction qualification (Diploma) and over 20 years of experience in the commercial construction industry in Sri Lanka, where he ran his own construction company. Most recently, prior to coming to Australia, he was the local liaison person for a Danish harbour construction project in Sri Lanka worth approximately AUD $950 million, and was also heavily involved in a water project in Kandy. The applicant confirmed that he sold his Sri Lankan construction company to generate the funds to migrate to Australia and establish a business here.  He retained an ownership interest, with his brother, in a hotel in Sri Lanka: the Lourdes Hotel in Nurwara Eliya. They acquired this hotel in 2008 and up until November 2018, he and his brother in Sri Lanka managed it. However, in November 2018, they signed a contract with the Sri Lankan Jetwing Group (a hotel management business) for the Group to manage the Hotel on their behalf, for a commission, with profits to be split between the applicant and his brother and the Jetwing Group. The applicant’s company still owns the Hotel itself. The decision to outsource the Hotel’s management was made as the applicant needed to spend more time in Australia, where the majority of his ties now were, and his brother could not manage the Hotel on his own.

13.    The applicant told the Tribunal that when he came to Australia, his plan was to work in residential construction, and then expand into commercial construction (his main area of expertise). He outlined to the Tribunal that he still had significant funds and/or assets in Sri Lanka earmarked to do this, but his lack of permanent residence in Australia had affected these plans. This was partly because he was subject to currency export restrictions by the Sri Lankan Central Bank until he became an Australian permanent resident, and partly because he was unwilling to invest substantially more funds than he already had in an Australian business when his visa status was uncertain. In response to the Tribunal’s query, the applicant said that he and his wife became interested in migrating to Australia after visiting their daughter, who was studying here at Victoria University.

14.    The applicant said that he intended to obtain an Australian builder’s licence but was unable to do so as he was not a citizen or permanent resident.  He knew Mr Upul Ranasinghe from Sri Lanka, and they agreed to go into business together, as Mr Ranasinghe was an Australian citizen and held an Australian builder’s licence. Mr Ranasinghe ran his own company, 218 Pty Ltd but worked with the applicant in Sunhill, which the applicant set up from scratch. This company undertook residential building and renovations. The applicant said that he provided all of the financial backing for Sunhill and took a 70% shareholding. Mr Ranasinghe was given a 30% shareholding in recognition of his builder’s licence, but did not invest any funds in Sunhill.

15.    In relation to T2, the applicant told the Tribunal that this was an existing residential construction company run by Mr Trajan Curukovski, a colleague to whom the applicant was introduced by Mr Ranasinghe. The applicant said that he became a shareholder of this company as well, but was never more than a 50% shareholder in it.  He noted that Trajan was involved in 5 or 6 other businesses, so it was more difficult to work within him in relation to T2 than it was with Mr Ranasinghe in Sunhill. The applicant said that he and Trajan eventually had a financial dispute which resulted in the applicant leaving T2 after about 2 years.  The applicant and his agent conceded that, due to the fact that the applicant’s shareholding in T2 never exceeded 50%, it was ineligible (due to its turnover being less than $400,000 at the relevant points in time) from being counted as a ‘main business’ of the applicant.

16.    In relation to Sunhill, the applicant said that both he and Mr Ranasinghe sourced clients for it. The applicant said that he was able to find clients who were in similar circumstances to himself: migrants to Australia who wished to build a new house here. The applicant said that he, Mr Ranasinghe and another part time employee (who was a temporary resident) all undertook site management for Sunhill’s construction jobs. The applicant conceded that up until about mid 2016, he had spent a fair amount of time in Sri Lanka, dealing with his hotel business, but from 2016 onwards he was mostly in Australia and heavily involved in Sunhill and its operations.

17.    In response to the Tribunal’s query, the applicant said that he (as principal of Sunhill) decided what subcontractors it would use, and he confirmed that Sunhill had deeds of agreement with Mainstream Construction Pty Ltd (the principal of which was Don Kemp) and Aycan Constructions Pty Ltd to undertake aspects of the construction jobs booked by Sunhill. The applicant noted that this was typical of the residential construction industry and confirmed that he (and not Mr Ranasinghe) was responsible for selecting subcontractors and authorising payment to them. He confirmed that the screen shots of text messages throughout 2016 were between him (he is known as ‘Lucky’) and Don Kemp of Mainstream Constructions over various jobs in which they were both involved. The applicant said that his other management responsibilities included sourcing and ordering materials, and liaising with Sunhill’s accountant to prepare its financial statements, tax returns and BAS. In response to the Tribunal’s query, the applicant said that during the periods he was in Sri Lanka, he was in daily contact with Mr Ranasinghe and the other part time employee.  He was the person who dealt with any client complaints and had a strong commitment to quality work, as he knew this was the best means by which to secure ongoing work.

18.    The Tribunal noted that the available financial statements for Sunhill from 2013/14 to 2018/19 show that it started off not making a profit, then made a modest profit, then by 2017/18 it was making a significant profit, but this had decreased significantly in the most recent financial year, 2018/19. The applicant said that at the beginning, he did not expect the company to be profitable as it was a start up, and he recognised it would take a while for it to become profitable.  The company then showed what it was capable of in a good year by having a turnover of around $200,000 in 2017/18 but due to an overall slump in the construction industry, its profitability had declined in the most recent financial year. However, the applicant remained confident it would increase again, and he reiterated that his ultimate plan was to expand into commercial construction and civil engineering projects.  In response to the Tribunal’s query, the applicant said that the main subcontractors that Sunhill currently worked with were Melbourne Trusses and 5 Star Rendering.  The applicant confirmed that Mr Ranasinghe was still involved in Sunhill, but was still running his own business, which took up more of his time. Hence, the applicant was the person managing Sunhill.

19.    At the conclusion of the hearing, the Tribunal agreed to defer its decision to enable the applicant and his agent to provide additional material in support of the case.

20.    On 25 November 2019, the Tribunal received the following additional supporting documents from the applicants’ agent:

·BAS statements for July – September 2019 as evidence that the applicant’s business continues to actively operate;

·business plan for Sunhill Pty Ltd;

·selection of email correspondence and invoices, variously dated, demonstrating that the applicant continues to actively operate his business;

·profiles of projects in which the applicant was involved in Sri Lanka, including Oluvil Port Development, Sadivinda Sealand International Profile and Project Manager for the Danish Muthojgaard Sea Port Plant.

21.    For the following reasons, the Tribunal has decided that the matter should be remitted for reconsideration.

CONSIDERATION OF CLAIMS AND EVIDENCE

Ownership interest in main business

22.    Clause 892.211(1) requires that the applicant had an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the visa application was made and continued to have that interest at the time the visa application was made. The applicant must continue to satisfy this requirement at the time of this decision: cl.892.221(a). No more than two businesses can be nominated for this purpose (r.1.11(2)) and only one or both of the businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion: Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.

23.    The businesses relied on by the applicant to satisfy these requirements are T2 and Sunhill. Accordingly, the Tribunal must consider the nature of the applicant’s interest in these businesses, whether the businesses were actively operating and whether they met the definition of ‘main business’ in the period commencing two years immediately prior to the date of application and as at the date of application. The Tribunal must also consider these issues as at the date of this decision and whether the applicant continues to satisfy cl.892.211(1).

Does the applicant have an ownership interest in each business relied on at all relevant times?

24.    An ‘ownership interest’, in relation to a business, means an interest in the business as:

·     a shareholder in a company that carries on the business, or

·     a partner in a partnership that carries on the business, or

·     the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts (r.1.03 of the Regulations and s.134(10) of the Act). Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations, set out in the attachment to this decision: r.1.11A(1).

25.    In order to meet cl.892.211(1) the Tribunal must be satisfied that the applicant had an interest of this kind in the relevant business or businesses both at the time of making that application and for the 2 years immediately before. In order to meet cl.892.221(a) the Tribunal must be satisfied that the applicant continues to satisfy this requirement at the time of this decision.

Relevant past period

26.    The Tribunal finds that the relevant period for consideration is the 2 years immediately before the visa application was made on 10 June 2016, being 9 June 2014 to 9 June 2016.

T2

27.    The evidence before the Tribunal from the Australian Securities and Investments Commission (ASIC) indicates that this company was registered on 4 November 2010, at which time it was known as T & A Construction Pty Ltd, then T2 Square Construction Pty Ltd, then Sterjcon Pty Ltd, before again becoming T2 Square Construction Pty Ltd. It retained the same Australian Company Number (ACN) throughout (147 201 410).  Its trading name remained T & A Construction Pty Ltd throughout (Australian Business Number, or ABN 97 147 201 410).

28.    ASIC’s records indicate that as at 9 June 2014, of the total 12 shares, 4 were held by the applicant, and 8 by 2 other shareholders (each holding 4 shares each). The Tribunal finds that the applicant therefore had a 33% ownership interest at that point.

29.    On 12 June 2015, 1 of the other shareholders sold 2 of his shares to the applicant, and 2 to the remaining shareholder. The Tribunal finds that from that date, the applicant had a 50% ownership interest (6 out of 12 shares).

30.    The financial statements provided for T2 show that its turnover (rounded to the nearest dollar) for the relevant financial years covering the period 9 June 2014 to 9 June 2016 was:

·    2013/14: $18,500;

·    2014/15: $434; and

·    2015/16: $nil.

31.    As noted by the delegate, T2’s turnover was therefore less than AUD $400,000 in the 2 year period prior to lodgment of the visa application. As T2 is not a publicly listed company, and had a turnover of less than $400,000 in the relevant period, r.1.11(1)(c)(iii) provides that the applicant’s ownership interest must be at least 51% of the total value of the business.  It was not.

32.    Accordingly, the applicant cannot satisfy r.1.11 in relation to T2, and thus that company cannot be counted as a ‘main business’ for the purposes of cl.892.211(1).

Sunhill

33.    The evidence before the Tribunal from ASIC indicates that this company was registered on 20 May 2013. 

34.    ASIC’s records indicate that the shareholding in the company as at incorporation was that 7 shares were held by the applicant, and 3 by another shareholder.  This remained the case throughout the relevant period. The Tribunal finds that the applicant therefore had a 70% ownership interest in this company.

35.    The financial statements provided for Sunhill show that its turnover (rounded to the nearest dollar) for the relevant financial years covering the period 9 June 2014 to 9 June 2016 was:

·     2013/14: $67,730;

·     2014/15: $23,553; and

·     2015/16: $205,630.

36.    As with T2, Sunhill’s turnover was less than AUD $400,000 in the 2 year period prior to lodgment of the visa application. As Sunhill is not a publicly listed company, and had a turnover of less than $400,000 in the relevant period, r.1.11(1)(c)(iii) provides that the applicant’s ownership interest must be at least 51% of the total value of the business.  The Tribunal is satisfied that the applicant’s ownership interest was 70% and he thus meets r.1.11(1)(c)(iii), and r.1.11(1)(c) as a whole. The Tribunal finds that this establishes that the applicant had, and has, an ownership interest in Sunhill which satisfies r.1.11(1)(a).

Was each business relied on actively operating at all relevant times?

37.    In order to meet cl.892.211(1), the Tribunal must be satisfied that the relevant business or businesses were actively operating both at the time of making the visa application and during the two years immediately before. In order to meet cl.892.221(a) the applicant must continue to satisfy this requirement at the time of this decision.

38.    The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period: Shahpari v Minister for Immigration and Border Protection [2016] FCCA 513 at [71].

39.    As noted above, the Tribunal is only considering Sunhill for the purposes of this assessment. Having regard to the financial information provided (including financial statements, company bank and tax records, BAS and building contracts for Sunhill), the Tribunal is satisfied that the applicant was lawfully and actively operating a construction business via Sunhill in Australia at the time that the visa application was made on 10 June 2016, and that the business had been lawfully and actively operating in the 2 years immediately prior that date (9 June 2014 to 9 June 2016). In reaching this conclusion, the Tribunal notes that in the 2013/14 and 2014/15 financial years, Sunhill had relatively low turnovers (approximately $56,100 and $46,200 respectively) but it accepts the applicant’s evidence at hearing that the business was established in May 2013 and was thus in its early stages for these financial years.

40.    From the recent material provided, which includes Sunhill’s 2018/19 financial statements and its BAS for up to 30 June 2019, the Tribunal is satisfied that the business continues to be actively and lawfully operating as a construction business, albeit its work has decreased in the last financial year, as acknowledged by the applicant at hearing.

41.    Accordingly, the Tribunal is satisfied that the nominated business was actively operating at all relevant points in time.

Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?

42.    In order to satisfy the requirements of cl.892.211(1), the business or businesses relied on by the applicant must meet the definition of ‘main business’ at the time of application and during the two years immediately before. Clause 892.221(a) requires that the applicant continues to satisfy this requirement at the time of decision. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.

43.    Firstly, the applicant must have or have had an ownership interest in the business. In considering this issue, the ownership interest does not need to be continuous or exist at a particular time: Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328 at [32], considering similarly worded criteria in cll.845.213 and 845.221. ‘Ownership interest’ is defined in s.134(10) of the Act: r.1.03. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met: r.1.11A. These provisions are set out in full in the attachment to this decision.

44.    Secondly, 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.

45.    Thirdly, 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 must meet certain thresholds:

·if the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;

·if the businesses is not operated by a publicly listed company and the annual turnover of the business is at least AUD400 000, the value of the ownership interest must be at least 30% of the total value of the business;

·If the business is not operated by a publicly listed company and the annual turnover of the business is less than AUD400 000; the value of the ownership interest must be at least 51% of the total value of the business.

46.    Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise that 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 is not operated primarily or substantially for the purpose of speculative or passive investment: r.1.03.

Ownership interest – r.1.11(1)(a)

47.    For the reasons set out above, the Tribunal is satisfied that the applicant had the required ownership interest in Sunhill at the relevant points in time, and thus meets r.1.11(1)(a).

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 – r.1.11(1)(b)

48.    The delegate was not satisfied that the applicant met r.1.11(1)(b), as he was not satisfied that the applicant had maintained a direct and continuous involvement in the management of Sunhill and in making decisions affecting the overall direction and performance of that business.

49.    In particular, the Tribunal notes that on 2 June 2017, the delegate sent a letter to the applicant requesting evidence of his management activities in relation to Sunhill in the relevant period, as up until that point, the only documentary evidence provided in relation to Sunhill’s activities was its BAS from 30 June 2014 to 31 March 2016 and its financial statements for the 2013/14, 2014/15 and 2015/16 financial years.

50.    The delegate considered that the documents provided by the applicant in response did not establish that the applicant had an active management role in the business for the relevant period, as they included only some business documents dated from September 2015 onwards (with only an accountant bill being issued prior to that date). Although the delegate noted that the applicant’s accountant provided a reference attesting to the applicant’s claimed management activities, he found that this alone was not sufficient to demonstrate that the applicant had had direct and continuous involvement in the management of Sunhill for all of the 2 years prior to the visa application date.

51.    The Tribunal notes that the delegate made a further request for evidence relating to the applicant’s managerial role on 10 July 2017, but that he found that the documents that he received in response to this request also did not predate September 2015.

52.    The Tribunal is satisfied that the material provided to the Department by the applicant and his agent in 2016 and 2017 indicates that Sunhill is a residential construction and renovation company, of which the applicant is a director and 70% shareholder and that a third party (Upal Ranasinghe) is the other director and 30% shareholder.  In a statutory declaration dated 21 June 2017, the applicant stated (amongst other things) that he was largely outside Australia between 10 June 2014 and 9 June 2016 in order to attend to a hotel business he continued to run in Sri Lanka. The applicant states that he visited Australia between 12 October 2014 and 4 November 2014, 2 December 2014 to 21 January 2015, 10 January 2015 to 9 May 2015 [sic], 23 June 2015 to 14 July 2015 and from 2 December 2015 to 20 February 2016 during this period, spending approximately 200 days in Sri Lanka.  He further states that ‘the builder’ is responsible for the day to day running of Sunhill, who in turn reports directly to the applicant on a daily basis to keep the applicant up to date with company business.  The applicant states that his accountant was in charge of preparing BAS every 3 months and monitoring the company’s financials.

53.    A letter dated 26 May 2016 from the applicant’s accountant states that Sunhill has operated profitably since its establishment and that it has multiple contractors. The accountant states that the applicant’s role includes project management, ensuring all subcontractors are paid, ensuring that all the company’s legal obligations are met, liaising with the accountant and ensuring all projects run smoothly. He further states that Sunhill’s turnover has been $458 (2013/14), $722 (2014/15) and $265,818 for 9 months of 2015/16. 

54.    The Department also received contracts between Sunhill and clients for construction of a residential home dated 2 June 2015 and between Sunhill and different clients for residential construction dated 23 May 2015, both of which are signed on behalf of Sunhill by Upul Ranasinghe, listed as the builder.  The Department was also provided with copies of screen shots of texts and emails between the applicant and what appear to be clients and/or subcontractors in the period March - April 2016.

55.    The Department file also contains an undated statement by Mr Upul Ranasinghe, who states that he is a 30% shareholder and director of Sunhill and can confirm that the applicant had invested quite substantially in the company. Mr Ranasinghe further states that he has been assisting the applicant with the company’s operations since its inception, and that his (Mr Ranasinghe’s) duties as director under the supervision of the applicant included bringing in new clients, liaising with new and existing clients, assisting with project supervision, assisting with quality control, and other ad hoc duties as and when required.  Mr Ranasinghe states that his role had always been to overlook the technical work as a builder and construction project manager, and that when he initially joined the company, he gave his builder’s licence to the applicant to be used within the company as his share, but later, the applicant engaged more experienced builders, and the company was now using their building licence, such that Mr Ranasinghe’s role within the company had reduced. He stated that he still remained as a director as the company needed at least 1 director who was an Australian citizen. He confirmed that the applicant was responsible for most of the business’ managerial and business decision making.

56.    In a statement dated 16 July 2017, the applicant asserted that he was responsible for:

·     project management and costing for Sunhill;

·     authorising bank withdrawals for subcontractor payments;

·     mainly supervising of construction sites and monitoring job flow completion;

·     maintaining the company’s records for sales, payments and other outgoings;

·     liaising with the accountant;

·     signing and authorising BAS and tax returns for the company for lodgment with the company’s accountant;

·     liaising with the ATO and ASIC for all compliance and regulatory matters;

·     insurance matters for the company;

·     signing contracts with subcontractors and being responsible for financial arrangements for them on behalf of the company.

57.    The Tribunal had the opportunity to put questions and received detailed oral evidence from the applicant at hearing in November 2019.  The Tribunal found the applicant to be credible witness who was able to describe his business background and activities in Sri Lanka and Australia in detailed and consistent terms. From this, together with the documentary evidence set out above, the Tribunal is satisfied that:

·     the applicant has an extensive history in the commercial construction industry in Sri Lanka, and also has an interest in a hotel with his brother there;

·     the applicant registered Sunhill in Australia in July 2013, and has from that time been 1 of the 2 directors and the majority shareholder, as well as its Managing Director. The other director and 30% shareholder is Mr Upul Ranasinghe, an Australian citizen of Sri Lankan background whom the applicant first knew in Sri Lanka. Mr Ranasinghe is a registered builder in Australia;

·     the applicant understood that he was unable to register as a builder in Australia due to his lack of Australian permanent residence or citizenship;

·     the applicant therefore elected to take on Mr Ranasinghe as a director and minority shareholder in Sunhill, which is a residential construction business;

·     Mr Ranasinghe also runs his own residential construction company, 218 Pty Ltd;

·     the applicant also acquired a minority shareholding in another Australian construction company, T2 Pty Ltd, the principal director and majority shareholder of which was Trajan Curukowski. The applicant ceased his involvement with this company after about 2 years;

·     while the applicant was, on his own evidence, ‘largely outside Australia’ between 9 June 2014 and 9 June 2016 due to issues with his and his brother’s hotel business in Sri Lanka, the Department’s movement records indicate that he was in Australia between 2 July 2014 and 12 October 2014, 5 November 2014 and 2 December 2014, 22 January 2015 and 9 April 2015, 10 May 2015 and 22 June 2015, 15 July 2015 and 2 December 2015, 22 February 2016 and 4 July 2016, in the period 9 June 2014 to 9 June 2016; and

·     as Managing Director, the applicant approved the use of subcontractors for Sunhill and brought in clients. Mr Ranasinghe also brought in some clients. The applicant and Mr Ranasinghe both undertook site supervision and management. The applicant liaised with Sunhill’s accountant and signed off on the company tax returns, financial statements and BAS. He arranged insurance for Sunhill and was responsible for its strategic direction.

58.    The current version of the Department’s Procedures Advice Manual (PAM3) Generic Guide M – Business Visas (as at 1 January 2020) offers the following guidance for the assessment of whether an applicant has direct and continuous involvement in an Australian business:

…

Overview

Direct and continuous management involvement applies to subclasses 132, 160, 163, 188, 888, 890 and 892.

Business owners are required to demonstrate that they have had 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. This requirement is part of the definition of a main business and is a Schedule 2 criterion for the above stated visa subclasses.

This section covers the requirements to be met by those business owners who are required to demonstrate ownership in a ‘main business’. The requirements to be met by other category applicants are discussed in the PAM3: Sch2Visa instruction for the relevant subclass.

Direct involvement in management

An applicant is required to have been directly involved in managing a business. If the main business is a small business with no or few employees it is expected that the applicant has a dominant role and responsibility for managing the business. In the case of a larger business the applicant may not hold responsibility for a principal or dominant role, but it is necessary that they have been directly involved in managing at least one facet of a main business.

Direct involvement requires an applicant to be in charge of managing the whole or part of a business according to the size of the business. If a business has more than one person who might have responsibility for managing the business it is necessary to define the management role of the applicant.

If the main business is a small business with no or few employees it is expected that the applicant has a dominant role and responsibility for managing the business.

Management involves planning, organising, directing and controlling the resources of the business:

• planning includes setting the goals of the business, developing strategies for achieving the goals and determining the standards, or level of quality, that need to be met in completing tasks and includes:

ostrategic planning - the setting of long-range goals for the business

otactical or short range planning - the process of developing detailed strategies about what needs to be done, who should do it and how it should be done and

ocontingency planning - allows for alternative courses of action when the primary plans that have been developed do not achieve the goals of the organisation

• organising refers to the way the business allocates resources, assigns tasks, and goes about meeting its goals. In the process of organising, managers arrange a framework that links all workers, tasks and resources together so the business goals can be achieved

• directing is supervising or leading workers to accomplish the goals of the business

• controlling is the process of determining if the goals and objectives of the business are being met, setting performance standards for workers and monitoring their performance against standards.

The size and nature of the business will influence the manner and method in which the above listed management responsibilities are exercised.

Continuous involvement from day to day

An applicant is expected to consistently spend a significant portion of their time managing the business on an ongoing basis from day to day. For a business to be considered a ‘main business’ it is intended that the visa applicant would be involved in actively exercising their claimed management role:

• without any significant or frequent breaks in their management involvement

• without any significant or frequent gaps in the activities of the business and

• on any ordinary business day.

Whether a break or gap is significant will depend on the nature of the business and the particulars of the applicant’s management role.

An ‘ordinary business day’ is a day on which most businesses would ordinarily be operating in the country in which the business is located. Whether Saturday or Sunday is considered an ordinary business day depends on local customs.

Decisions affecting the overall direction and performance of the business

An applicant is required to demonstrate that they were involved in making decisions affecting the overall direction and performance of the business. Examples of decisions that affect the overall direction and performance of the business may include decisions relating to:

• establishing the company’s goals of the business, position in the market, commercial viability, and competitive edge

• method of sales distributions and related distribution expenditures

• determining products and services sold - for example, in-house developed or other brands, assortment of products and services offered

• method of production including scale - for example, labour intensive versus automation, and cost structure

• performance measurement such as setting sales targets, pricing structure, profit margin

• recruitment and appointment of senior staff, the division of responsibilities between staff, and approval of remuneration and reward schemes

• directing funding and other resources including assessment of opportunities to make an acquisition, expand business, invest and launch a new product or conversely divest part of the business or discontinue a product

• exploring potential partnerships and management of suppliers including negotiating key supplier contracts, changing a supplier, outsourcing a service, activity or resource

• setting up a management structure and operational plan to enable efficient monitoring and supervision

• problem solving to address issues or complaints, contingency planning for unforeseen circumstances and making arrangements to combat difficult market conditions

Documentation

Evidence that may be used to assess whether the applicant meets these requirements includes:

• ownership documentation including partnership/trust/franchise agreements

• overview of business activities and assets in Australia (onshore visas)

• organisational chart identifying the applicant’s position within the business

• a statement from the business detailing the applicant’s duties and responsibilities within the business

• evidence of the applicant’s participation in the management of the business, for example, business correspondence, emails, meeting attendance and minutes, faxes showing active involvement in research, negotiations and decision-making

• signed business contracts

• documents authorised by the applicant providing evidence of management decisions

• reference statements from suppliers, service providers, contractors etc. that can comment on the applicant’s role in the business

• if the applicant has spent most of their time absent from the business, evidence of how the applicant managed their business during absences - for example, emails, faxes, minutes of meetings, evidence of attendance at meetings, presence at trade fairs and ongoing advertising.

General correspondence and similar addressed to the business entity with no reference to the applicant may not be sufficient to demonstrate that this requirement is met.

Evidence of unsuccessful business initiatives may also attest to the applicant’s involvement in business. For example, evidence of negotiations with new suppliers or customers, unfulfilled export transactions, new product development, unsuccessful recruitment campaigns etc. may all demonstrate an applicant’s involvement in managing a main business despite there not being a successful outcome.

Assessment

It is important to recognize that evidence pertaining to the direct and continuous management of a main business and/or for decisions affecting the overall direction and performance of the business should be appropriate to the nature of the business and to the applicant’s role in that business.

The following considerations will be taken into account when assessing continuous management requirements:

• whether the applicant has the authority to manage the business (for example, majority ownership)

• whether the applicant is the sole director, proprietor or manager of the business

• whether the applicant has spent significant periods of time absent from the business location (for example, overseas)

• whether there are any other individuals (other than the applicant’s spouse or de facto partner) who might have a management role in the business

• whether the activities of the business are regular and ongoing.

If any of the above considerations give rise to doubts concerning the applicant’s management, additional scrutiny should be undertaken to determine the true nature of the applicant’s management role in the business.

If doubts exist as to whether the applicant satisfies this requirement, officers may:

• refuse the visa

• request further evidence or

• interview the applicant (in person or by phone). An interview may test whether the applicant appears to have a full and cognisant understanding of how the business operates, the duties the applicant undertakes and the level of responsibility held.

• If there are doubts as to the claims made about the management involvement of the applicant, a site visit may be undertaken.

…

59.    The Tribunal notes the concerns expressed by the delegate about the lack of documentary evidence prior to September 2015 to substantiate the applicant’s claimed management role. It also raised with the applicant its own concerns about his management role given his absences from Australia during the period 9 June 2014 to 9 June 2016, particularly in light of the PAM3 statement that ‘it is intended that the visa applicant would be involved in actively exercising their claimed management role:

·     without any significant or frequent breaks in their management involvement

·     without any significant or frequent gaps in the activities of the business and

·     on any ordinary business day.’

60.    However, it also notes that PAM3 states that ‘[w]hether a break or gap is significant will depend on the nature of the business and the particulars of the applicant’s management role.’

61.    As noted above, the Tribunal considered the applicant to be credible at hearing, and it accepts his evidence that he was the Managing Director of Sunhill from its registration to date, and that he has been, and remains, the person who makes decisions affecting the overall direction and performance of the business.  This is consistent with his previous high level management experience in Sri Lanka and his explanation to the Tribunal about how he came to establish Sunhill, the process by which he did so, and his aims for the company. The Tribunal does not consider this finding to be incompatible with the fact that the applicant was simultaneously involved in 2 other businesses, 1 being T2 in Australia, and the other being the hotel business in Sri Lanka, as the Tribunal accepts that T2 was largely run by its Australian director, Mr Curukovski, while both the applicant and his brother ran the Sri Lankan business.

62.    In relation to the applicant’s direct and continuous management of Sunhill from day to day, the Tribunal acknowledges that the applicant was outside Australia for approximately 200 days out of the 730 days up to 10 June 2016, which raises the issue of whether this is a ‘significant’ break or gap in his day to day management of Sunhill.  The Tribunal notes that the applicant did spend significant periods in the 2 years prior to the date of application in Australia, usually for at least 1 to 4 months at a time, which renders it plausible for him to have undertaken day to day management of Sunhill directly in those periods.  The Tribunal also notes that in the financial years 2013/14 and 2014/15, the business was still building up, so the day to day activities were fewer than was the case from 2015/16 onwards.  Nevertheless, the Tribunal is ultimately satisfied that the applicant carried out the management duties that he described in his written and oral evidence, which included client marketing and site supervision (albeit that these were also carried out by Mr Ranasinghe as well), exercising authority concerning subcontractors’ selection and payment, liaising with the company’s accountant, and signing off on its financial statements, tax returns, BAS and insurance. The Tribunal notes that the nature of the residential construction and renovation business operated by the applicant through Sunhill involved the use of subcontractors for much of its building work, and the Tribunal accepts that (a) this is typical of the construction business in Australia, and (b) this generally means that the day to day building activities may in fact be carried out by the relevant subcontractor. However, for the purposes of Sunhill, the Tribunal is satisfied that the applicant did manage its affairs on a day to day basis, continuously, and that he remained in contact with Mr Ranasinghe while in Sri Lanka, to monitor these affairs.

63.    Having considered the available evidence, the Tribunal is satisfied that the applicant did have a 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 of Sunhill in the period 9 June 2014 to 9 June 2016 (and that he continues to do so).

Value of ownership interest – r.1.11(1)(c)

64.    For the reasons set out above, the Tribunal is satisfied that the applicant has had a 70% interest in Sunhill at the relevant points in time, and thus meets r.1.11(1)(c).

Qualifying business – r.1.11(1)(d)

65.    From the material provided, including financial statements, BAS and contracts, the Tribunal is satisfied that Sunhill was and is a qualifying business as it was and is operated for the purpose of making profit through the provision of residential construction services to the public, and was not operated primarily or substantially for the purpose of speculative or passive investment.

Conclusion

66.    Accordingly, the Tribunal finds that the applicant satisfies r.1.11 in relation to Sunhill, and thus it can be counted as a ‘main business’ for the purposes of cl.892.211(1).

67.    Given the findings above, the Tribunal is satisfied that cl.892.211(1) is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.

68.    As the second and third named applicants applied for visas on the basis of being members of the family unit of the applicant, their applications will be determined by reference to the outcome of the applicant’s application on remittal to the Department for reconsideration.

DECISION

69.    The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a subclass 892 visa:

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

Alison Mercer
Member

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03Definitions

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.

…

1.11Main business

(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; and

(b)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.

1.11A Ownership for the purposes of certain Parts of Schedule 2

(1)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an applicant, or the applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

(2)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:

(a)a trust instrument; or

(b)a contract; or

(c)any other document capable of being used to enforce the rights of the applicant, or the applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

(3)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

(4)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the applicant, or the applicant’s spouse or de facto partner, has beneficial ownership:

(a)is a dependent child of the applicant; and

(b)made a combined application with the applicant; and

(c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.

Migration Act 1958

1. Cancellation of business visas

….

1. 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.