ANNILAX ENTERPRISES PTY LTD (Migration)

ANNILAX ENTERPRISES PTY LTD (Migration) [2020] AATA 211 (31 January 2020)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  ANNILAX ENTERPRISES PTY LTD
CASE NUMBER:  1816423
DIBP REFERENCE(S):  BCC2016/1628774
MEMBER:Mr S Norman
DATE:31 January 2020
PLACE OF DECISION:  Sydney
DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 31 January 2020 at 11:53am
CATCHWORDS
MIGRATION – application for approval of nomination of position – Direct Entry Nomination stream – employment for at least two years – financial capacity – annual wage expenditure for current full-time and part-time employees – closure of one restaurant – plans for expansion – current staffing levels and need for further staff at subject restaurant – employer’s multiple applications to department and tribunal – decision under review affirmed
LEGISLATION
Migration Act 1958 (Cth), ss 359(2), 359AA
Migration Regulations 1994 (Cth), r 5.19(3), (4)(d)(i)
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 May 2018 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations). The Department delegate’s decision was lodged with Tribunal.
The applicant applied for approval on 3 May 2016. The requirements for the approval of the nomination of a position in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination (r.5.19(3)) stream and a Direct Entry nomination (r.5.19(4)) stream. If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).
In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Direct Entry Nomination stream. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(d) of the Regulations.
The applicant (represented by its Director, Mr Anand GOPINATH) appeared before the Tribunal on 21 January 2020 to give evidence and present arguments. The Tribunal also received oral evidence from Mrs Baljit KAUR (the associated visa applicant). The applicant was represented in relation to the review by its registered migration agent.
For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.
Term of employment of the visa holder: r.5.19(4)(d)
Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years full time, and the terms and conditions of that employment do not expressly exclude the possibility of an extension.
On 3 May 2016, the applicant/nominator (Annilax Enterprises Pty Ltd T/A Namaste Cuisine), lodged a nomination application under the Direct Entry stream for the position of Cook (ANZSCO: 141111). The visa applicant/nominee was Ms Baljit Kaur. The visa applicant was to be located at the Cooma[1] restaurant and the base rate of pay per annum was $59,021.
[1] PDF – p.12 (‘PDF’ refers to the merged Department file on the Tribunal CASEMATE database).
In their decision, the delegate referred to the applicant having lodged, amongst other things, Financial Statements for the period 1 July 2016 to 30 June 2017; and organisation charts provided on 8 November 2017. The delegate also noted this application was (then) one of 17 Direct Entry nomination applications lodged by the applicant and before the Department. As a result of this, the delegate decided to consider the nomination applications both individually and holistically in order to determine both the need and financial capacity for the nominator’s business to support the additional 17 sponsored positions applied for.
By letter of 11 April 2018,[2] the Department put concerns they had about inconsistency between wages declared in Financial Statements for the period 1 July 2016 to 30 June 2017; and the number of staff employed in the business based on information on the organisation charts provided on 8 November 2017.
[2] PDF – from p.
The Department letter of 11 April 2018, also noted the following information:[3]
Dividing the annual wage expenditure of $658,359 between the [then] 13 full-time employees, gives an average annual earnings of $50,643 per staff member. I note this figure is lower than the majority of proposed annual wages the business intends to pay the nominated positions … I also note that this does not take into account the wages of the additional 34 part-time staff members that the business purported to employ during that time.
In addition, based on the organisational charts submitted, of the 17 pending nominations 12 nominees are already working in the business part-time. Therefore, the business is also proposing to support these persons in a full-time capacity, along with an additional five fulltime positions.
As it does not appear that the business currently has financial capacity to support its current declared workforce, it is put to you, the nominator, that you do not have the ability to support the additional guaranteed annual earning of $54,500 for a period of two years as required by regulation 5.19(4)(d).
Therefore regulation 5.19(4)(d) may not be met.
[3] PDF – p.132.
By response of 9 May 2018, the applicant had provided:
·     Submission letter from the business and company Director, Mr Gopinath, dated 7 May 2018[4]
·     Organisation charts for the businesses Head Office and Campbelltown, Jindabyne, Young, Camden, Cooma and Goulburn branches[5]
·     Lease[6]
·     Financial Statements for the period 1st July 2016 – 30th June 2017
·     Interim Financial Statements for the period 1st July 2017 – 31st December 2017
·     Copy of the restaurant menu[7]
[4] PDF – from p.139.
[5] PDF – from p.91; Tribunal – from folio 85.
[6] Tribunal – from folio 59.
[7] Tribunal – folio 22.
The delegate considered the applicant’s (Mr Gopinath) submission dated 7 May 2018. In the submission, it was claimed inter alia the restaurant chain needs to employ persons in the role of Cooks. It was claimed that seven former employees had left the organisation and one staff member had passed away. This claim was corroborated by seven resignation letters.[8] However, of the seven (now former) employees listed in the submission, only two were included in the organisation charts provided on 8 November 2017 and considered as part of the delegate’s aforementioned wages calculation (see following):
·     Kamalpreet Singh, full-time Chef – Camden Branch (annual salary $54,500 per PAYG payment summary provided)
·     Cheand Sukhchain Juara, full-time Cook – Campbelltown Branch (annual salary $40,875 per PAYG payment summary provided)
[8] PDF – from p.145.
The delegate continued that because of such inconsistencies between the detailed organisation charts and the response to the Department letter, they only gave ‘little weight’ to the Director’s statement that ‘the salaries that were being paid to the employees that have left the organisation will be used to pay the new nominees who will be replacing them’. If taken at face value, the resignation of seven employees had only freed up capacity to employ another five full-time staff. Neither did this appear to support the future wage cost of the 17 (now 22) pending nominations or the 34 part-time staff shown on the detailed organisation charts provided. The delegate then placed little weight on the seven resignation letters[9] and five PAYG payment summaries of the former employees provided.
[9] PDF – from p.145.
The applicant had also referred to the potential for more employees to leave the business during the time it may take the Department to process the current nomination applications on hand, and this would free up further wages to pay the nominated employees, once their visas had been granted. However, after noting their concern about the capacity of the business to pay the additional wages, the delegate was satisfied (words to the effect) this was little more than speculation[10], and they placed little weight on the submission. The Tribunal notes the number of persons employed in the applicant’s business had contracted since the application was made.
[10] See PDF – from p.
Further, the delegate was not satisfied the statement that ‘we are ready to invest…AUD $200,000.00 in the next 24 months, with a milestone based further injection of AUD $500,000.00’[11] was supported by material evidence and therefore little weight was placed on this claim. The delegate also found the projected cash flow information (see Namaste Cuisine – Strategic Business Plan – September 2016) and table provided referring to future predicted sales, did not reflect the businesses current financial position, or its ability to support its current stated workforce. At hearing, the applicant explained that no monies had been invested as same was dependent on the sale of part of premises in Young NSW, and which sale had not yet taken place.
[11] PDF – p.
The delegate continued that in their submissions, the applicant referred to a contingency plan to support the additional wages of the nominees, which included reference to the equity in his own home, personal bank account and the sale of the Young premise. However, no material evidence supporting the claims regarding his personal equity had been provided and therefore the delegate placed little weight on same. That being said, the applicant did say the following:
- I have reasonable equity 1,040,000.00 (approximately) in my house and the restaurant at Young (owned by the company).
- Besides I have reasonable personal cash holding 34,184.00 in the bank.
- My company is financially strong … [12]
The delegate was not satisfied the applicant’s submissions overcome the concerns expressed in the Department letter of 11 April 2018.
The delegate also considered the letter from the businesses external accountants, Taxwave, dated 16 April 2018[13] (and 5 October 2017[14]) which stated inter alia that the “company is making steady growth. The financial results of each period are better than the previous one”. In the 5 October 2017 letter, the accountant’s also had also said:
No audit or review has been performed and accordingly no assurance is expressed. [15]
[13] PDF – from p.
[14] PDF – p.86.
[15] PDF – p.86.
The delegate acknowledged that the business had recorded a better profit in the interim financial statements lodged, when compared to the Financial Statements for the period 1 July 2016 – 30 June 2017 ($21,159.45 before income tax compared to $0 profit before income tax in 2016/2017), though this figure was not considered sufficient to cover the additional wage cost. Therefore, little weight was placed on the Accountant letter dated 16 April 2018.
After issuing a s.359(2) letter dated 17 September 2019, and amongst other things, with the Tribunal (or with the Department) the applicant lodged:
·     Income Statement for the period ended 30 June 2015 – Profit from Ordinary Activities before income tax - $26,784.47[16]
·     Income Statement for the period ended 30 June 2016 – Profit from Ordinary Activities before income tax - $20,066.32[17]
·     Income Statement for the period ended 30 June 2017 – Profit from Ordinary Activities before income tax - $0[18]
·     Income Statement for the period ended 30 June 2018 – Profit from Ordinary Activities before income tax - $40,179.78[19]
·     Detailed Balance Sheet for year ended 30 June 2019 - Profit from Ordinary Activities before income tax - $219,734.99[20]
·     Company Tax Return 2016 – total income $20.066[21]
·     Company Tax Return 2019 – taxable net income $219,735[22]
·     Employment agreement dated 1 April 2016[23]
·     BAS statements[24]
[16] PDF – p.42.
[17] PDF – p.54.
[18] PDF – p.88.
[19] Tribunal – folio 71.
[20] Tribunal – folio 80.
[21] PDF – p.77.
[22] Tribunal – folio 76.
[23] PDF – from p.98.
[24] PDF – from p.29; from p.50; from p.50; Tribunal – from folio 69.
In the Market Salary Report,[25] it was stated:
The director recognises Mrs. Kaur as the perfect nominee for the position and an asset for the business. Hence, the director foresees that employing her as the Cook for Namaste Indian Cuisine ensures the stability and profitability of the business as it competes in the restaurant industry.
[25] PDF – from p.105.
At the Tribunal hearing, the applicant explained:
·     The applicant now operates five restaurants (not six – the Campbelltown restaurant closed in May 2018/9); but he hopes to commence two new restaurants in early 2020 (Sydney city and Wagga Wagga).
·     The applicant’s (total) business currently has a total of 6 full time and 15 part time staff (21 in total); which reduction appears related to inter alia the closure of the Campbelltown restaurant.
·     The Cooma restaurant (where the visa applicant is to be employed as a full time Cook), currently has inter alia one full time cook and two part time cooks. However, the applicant believed he needed three full time cooks per restaurant to run properly. When asked, the applicant also explained the full time cook had been employed since 2016; one part time cook had been employed for three months and the Tribunal understands the second part time cook had been employed for a longer period. The applicant also said one of the part time cooks worked in Jindabyne for the lunch period and Cooma (some 40kms distance) for the dinner period. The applicant said that subject to the NSW fires, this could be a dangerous journey. However, the Tribunal also notes the restaurants had appeared to manage effectively during their period of operation.
·     When asked about the substantial reduction in salaries between $822,276 (year ended 30 June 2018), and $360,391.66 (year ended 30 June 2019), the applicant said that he ceased the Campbelltown restaurant in May 2018/9, and this accounted for the drop in salary. However, when then asked, the applicant said the Campbelltown restaurant had previously employed four full time staff and three part time staff (and two of these staff now worked in other of the applicant’s five restaurants).
·     The Tribunal also notes the business commenced in 2011 and had a fairly steady (if modest) profit growth up to year ended 30 June 2018 (Profit before Income tax - $40,179,78). However, Profit before Income tax at year ended 30 June 2019 was $219,734.99. When asked why the sudden increase, the applicant said due to the savings in wages from the closed Campbelltown restaurant. He also said that it was his intention to expand his business in order to attract more sales, so that he could pay for all his new sponsored visa applicants. He also said that his business had continued to progress up until the NSW bushfires, but had then slowed since around December 2019.
·     When asked, the applicant said the visa applicant had not, and never did work for his business.
The applicant accepted that it was sometimes difficult to employ staff in regional areas, but it appeared the staff presently employed in the Cooma restaurant had worked for some time (the shortest being one part time cook who had been employed for three months). Accordingly, it did not appear the applicant’s Cooma restaurant has had substantial difficulty with staff movements.
Next, at hearing the applicant conceded that the claim he was (prepared) to invest ‘AUD $200,000.00 in the next 24 months, with a milestone based further injection of AUD $500,000.00’ had not taken place. He said he was hoping to sell a property in Young NSW and that had not yet occurred. The Tribunal also noted the personal equity the applicant had claimed he was able to invest in the business (though no investment of personal equity had taken place).
That being said, and notwithstanding the ‘projected cash flow’ information (see Namaste Cuisine – Strategic Business Plan – September 2016), or the more recent financial information lodged, or the applicant’s belief that by expanding his business he could improve sales, the Tribunal was not satisfied the confidence expressed reflected the current financial state of the business, with its largely modest growth (prior to the closure of the Campbelltown restaurant). Further, given the visa applicant did not work in the business, her nominated salary of $59,021 per annum, would appear to very likely put further financial strain on the business; and without an apparent credible need for the nominated position.
At hearing, the Tribunal also noted the delegate had referred to 17 nominations before the Department, all lodged by the same nominator. The Tribunal then put information to the applicant pursuant to s.359AA. That information was that the Tribunal was aware of 22 nominations before the Tribunal (lodged by the present nominator), and ten of those nominations had been withdrawn after a merits review application had been lodged. Therefore, given that each nomination application cost up to $500, and given that each merits review application cost up to $1,800, and given that each withdrawn nomination application had the assistance and cost of a migration agent, this appeared to be a very costly and unusual exercise (particularly where profits in the business appeared to be mostly modest). The Tribunal said (words to the effect) that subject to his comments, it may consider inter alia whether this exercise, and or the applicant, were credible. The applicant said he had ‘lost a lot of money’ and that he hoped by expanding his business he would improve business profitability. He also said that some visa applicants did not wish to commence work until the nomination was approved.
That being said, the Tribunal is not satisfied the applicant needs or could afford a further cook at the Cooma restaurant. That is because of inter alia the apparent stability and effectiveness of the existing staff and the modest profit of the business.
The Tribunal also notes that at the time of the delegate’s 11 April 2018 letter there were claimed to be 13 full-time employees and 34 part time employees; but now there were claimed to be only 6 full time employees and 15 part time employees; and further, (notwithstanding the claim that two new restaurants were being ‘developed’ – and it was hoped they would commence in early 2020) one existing restaurant had already closed. The Tribunal believes this is one indicator of the business in probable decline.
The most recent claimed before tax profit was said to have arisen due to the closing of the Campbelltown business, but any consequent profit for so doing would very likely be adversely impacted by the (purportedly imminent) commencement of the two new restaurants the applicant is claiming to be developing. The Tribunal is also not satisfied the applicant will likely be (or soon be) in a position to invest the money he claimed, and based on the more modest recent profits, I am not satisfied that the investment of the applicant’s private equity would do more than provide a temporary relief for the business. Further, and in spite of the applicant’s confidence, given the recent modest growth of the business (since its commencement in 2011) and the fact there are now approximately 10-12 nominations before the Tribunal with related visa applicants, the Tribunal is satisfied his business may collapse under the financial strain placed on it, should all be successful.[26]
[26] The Tribunal notes some of the nomination applications have now been approved.

Be that as it may, given the findings and reasons herein, the Tribunal is not satisfied the applicant has the capacity to employ the visa applicant in the nominated position for at least 2 years full time. Accordingly, the requirement in r.5.19(4)(d) is not met.
For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of r.5.19(4). The applicant has not sought to satisfy the criteria in the Temporary Residence Transition Nomination stream, and as such has not met the requirements in r.5.19(3).
Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.
DECISION
The Tribunal affirms the decision under review to refuse the nomination.
Mr S Norman
Member

ATTACHMENT - EXTRACTS FROM THE MIGRATION REGULATIONS 1994
5.19Approval of nominated positions (employer nomination)
…
(2)The application must:
(a)be made in accordance with approved form 1395…; and
(aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; and
(b)be accompanied by the fee mentioned in regulation 5.37.
…
Direct Entry nomination
(4)The Minister must, in writing, approve a nomination if:
(a)the application for approval:
(i)      is made in accordance with subregulation (2); and
(ii)     identifies a need for the nominator to employ a paid employee to work in the position under the nominator’s direct control; and
(b)the nominator:
(i)      is actively and lawfully operating a business in Australia; and
(ii)     directly operates the business; and
(c)for a nominator whose business activities include activities relating to the hiring of labour to other unrelated businesses — the position is within the business activities of the nominator and not for hire to other unrelated businesses; and
(d)both of the following apply:
(i)      the employee will be employed on a full-time basis in the position for at least 2 years;
(ii)     the terms and conditions of the employee’s employment will not include an express exclusion of the possibility of extending the period of employment; and
(e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:
(i)      are provided; or
(ii)     would be provided;
to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and
(f)either:
(i)      there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or
(ii)     it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and
(g)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations; and
(h)either:
(i)      both of the following apply:
(A)the tasks to be performed in the position will be performed in Australia and correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;
(AAA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;
(B)either:
(I)the nominator’s business has operated for at least 12 months, and the nominator meets the requirements for the training of Australian citizens and Australian permanent residents that are specified by the Minister in an instrument in writing for this sub-sub-subparagraph; or
(II)the nominator’s business has operated for less than 12 months, and the nominator has an auditable plan for meeting the requirements specified in the instrument mentioned in sub-sub-subparagraph (I); or
(ii)     all of the following apply:
(A)the position is located in regional Australia;
(B)there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;
(C)the position cannot be filled by an Australian citizen or an Australian permanent resident who is living in the same local area as that place;
(D)the tasks to be performed in the position correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;
(DA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;
(E)the business operated by the nominator is located at that place;
(F)a body that is:
(I)specified by the Minister in an instrument in writing for this sub-subparagraph; and
(II)located in the same State or Territory as the location of the position;
has advised the Minister about the matters mentioned in paragraph (e) and sub-subparagraphs (B) and (C).

[2020] AATA 211

31 January 2020

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Jurisdiction