Chen (Migration)

[2023] AATA 216

Chen (Migration) [2023] AATA 216 (27 January 2023)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Miss Ting Chen

REPRESENTATIVE:  Ms Yanling Huang (MARN: 1801309)

CASE NUMBER:  1935572

HOME AFFAIRS REFERENCE(S): BCC2019/2380449 BCC2019/6782508 BCC2019/6782540

MEMBER:Robyn Anderson

DATE:27 January 2023

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal remits the application for a Business Innovation and Investment (Provisional) Subclass 188 visa in the Significant Investor stream for reconsideration, with the direction that the applicant meets the following criteria:

· Regulation 5.19C(3) for the purposes of cl 188.252(1) of Schedule 2 to the Migration Regulations 1994.

Statement made on 27 January 2023 at 5.15pm.

CATCHWORDS
MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional) – significant investor stream – complying significant investment – funds unencumbered and lawfully acquired – bank loans by applicant and brother secured by property owned by them, with brother giving rights and interest in his loan to applicant – other funds from applicant’s father – father’s funds sourced from repayment of private business loan – original investment withdrawn, with intention to make another complying investment when allowed – decision under review remitted

LEGISLATION

Migration Act 1958 (Cth), s 65

Migration Regulations 1994 (Cth), r 5.19C(3), Schedule 2, cl 188.252(1)

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 Home Affairs on 12 December 2019 to refuse to grant the visa applicant a Business Innovation and Investment (Provisional) Subclass 188 visa in the Significant Investor stream, under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The visa applicant had been residing in Australia on a temporary graduate visa when she applied for the Subclass 188 visa on 4 May 2019.  Having completed a master’s degree in business and marketing, Miss Chen told the Tribunal that she is now doing an internship with a Chinese accounting firm in Australia.

3. Miss Chen was invited to make an acceptable investment on 4 September 2019. She invested AUD5,000,000 with Moelis Australia Asset Management (Moelis) on 18 November 2019. While the investment in Moelis appears to have been an acceptable investment for the purposes of the significant investment stream, the delegate refused to grant the visa on the basis that all of the requirements under cl 188.252 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations) were not met.

4. In particular, the delegate was not satisfied that the applicant had made, on or after the time of application, a “complying significant investment”, as defined in reg 5.19C.  More specifically, the delegate was not satisfied that the funds used to make the AUD5,000,000 investment in Moelis were unencumbered and lawfully acquired, as required by reg 5.19C(3).

5. The applicant was represented in relation to the review. The matter was constituted to a Tribunal Member on 26 October 2022. 

6. On 18 November 2022, the Tribunal wrote to the applicant to invite her to attend a hearing on 5 December 2022. The applicant appeared before the Tribunal in person and gave evidence and presented arguments on affirmation.  The Tribunal also took evidence on affirmation from Mr Xiaolin Chen (Mr Chen senior), the applicant’s father, and Ms Joanne Zhou, a family friend. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

7. On 5 December 2022 the Tribunal deferred making a decision in this matter to allow additional time for the applicant to provide further evidence and submissions.  Additional information was provided to the Tribunal on 19 December 2022.

8. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. Relevantly, cl 188.252 of Schedule 2 to the Regulations provides as follows:

   (1)  The applicant has made, on or after the time of application, a complying significant investment (within the meaning of regulation 5.19C as in force at the time of application) of at least AUD 5 000 000.

   (2)  If the time of invitation to apply for the visa was before 1 July 2021, the applicant has a genuine intention to hold the complying significant investment for at least 4 years.

10. The issue in this matter is in relation to the definition of a complying significant investment under reg 5.19C, as applicable to cl 188.252(1) of Schedule 2 to the Regulations.

11. Regulation 5.19C(1) provides that all of the requirements set out must be met.  That is, the investment requirements in reg 5.19C(3) to reg 5.19C(10) must all be met.  They are not mutually exclusive. 

12. While reg 5.19C(3) relates to the source of the funds used for the investment, in that they must be unencumbered and lawfully acquired, reg 5.19C(4) to reg 5.19C(6) relate to the actual investment, reg 5.19C(7) to reg 5.19C(8) relate to switching of complying investments and reg 5.19C(9) to reg 5.19C(10) relate to the actual investor.

13. It is noteworthy that Miss Chen withdrew the investment with Moelis following rejection of her visa application and invested in a non-complying investment with a higher rate of return.  She told the Tribunal at hearing that she is willing to withdraw the funds and invest in a complying investment if and when directed to do so by the Department to allow her to proceed with her Subclass 188 visa application.  Therefore, the Tribunal will focus on the issue at hand in respect of reg 5.19C(3).

14. It was apparent from the Department record and confirmed by Miss Chen at hearing, that the source of funds for the AUD5,000,000 investment in Moelis was from two different sources.  Miss Chen submitted that the original intention was to source 100% of the AUD5,000,000, or approximately RMB25,000,000, through a loan with China Minsheng Bank secured against a residential property in Pudong, a district of Shanghai, China (the Pudong property), owned by Miss Chen and her brother (Mr Chen junior). Ownership was evidenced by a Real Estate Registration Certificate.  This property was purchased by Mr Chen senior for Miss Chen and Mr Chen junior in April 2010. 

15. However, in the meantime, China Minsheng Bank changed its policies.  Consequently, Miss Chen and Mr Chen junior approached Jiangmen Rural Commercial Bank Co. Ltd. who agreed to a maximum loan in the amount of RMB20,000,000, or approximately AUD4,000,000.  Personal loan contracts between Miss Chen and Jiangmen Rural Commercial Bank Co. Ltd and Mr Chen junior and Jiangmen Rural Commercial Bank Co. Ltd for RMB10,000,000 each were before the Tribunal.  The maximum mortgage guarantee contract between Jiangmen Rural Commercial Bank Co. Ltd. and Miss Chen and Mr Chen junior was also before the Tribunal.

16. Mr Chen junior gifted his loan funds to Miss Chen, as evidenced by an agreement signed and dated by Miss Chen and Mr Chen junior, dated 29 April 2019. The agreement states that Mr Chen junior has “irrevocably and unconditionally” given all rights and interest in the funds to Miss Chen.  Furthermore, the funds are gifted free of any security, mortgage or other encumbrance and are not required to be repaid, nor any interest accrued or payable.  The Tribunal accepts that this is so.

17. The loan issued by Jiangmen Rural Commercial Bank Co. Ltd. to Miss Chen and Mr Chen junior in the amount of RMB10,000,000 each was evidenced by bank documents dated 1 November 2019.  Miss Chen submitted that remittance of the loan was complicated due to the fact that she and her brother were both residing in Australia and her father was busy with work commitments.  Therefore, it was decided to remit the loan amounts to relatives.  Bank documents dated 1 November 2019 record the transfer of RMB10,000,000 to relatives Daiming Yang and Yusheng Zu respectively.  Further bank documents record the transfer of RMB10,000,000 each from Daiming Yang and Yusheng Zu to Mr Chen senior on 1 November 2019. 

18. Given that the loan is secured by an asset owned by Miss Chen and Mr Chen junior, it is essentially a loan to themselves.  It is undisputed that the RMB20,000,000 sourced from the loans secured by the property owned by Miss Chen and Mr Chen junior was lawfully acquired and unencumbered and based on the evidence provided, the Tribunal concurs.

19. The remaining AUD1,000,000 was sourced from Mr Chen senior.  A statutory declaration signed by Mr Chen senior on 29 October 2019 stated clearly that the RMB5,165,470 repaid by Ms Lyu to Mr Chen senior was to be gifted to Miss Chen and he reiterated the same at hearing. It was the source of these funds that is the central issue in this matter.

20. It was submitted that Mr Chen senior sold a property in 2012 for RMB3,569,600. The property was acquired by Mr Chen senior in 2008.  Evidence of the purchase and sale of this property were before the Tribunal.  He subsequently used the sale funds and some additional savings to engage in an agreement with a business friend, Ms Lyu, to provide her with a business loan in the amount of RMB4,200,000.  The loan agreement was signed by both parties on 28 October 2012 and provided for the repayment of the principal and interest at the rate of 3% per annum upon demand.  Mr Chen senior called on the principal loan amount of RMB4,200,000 plus accumulated interest in the amount of RMB965,470, totalling RMB5,165,470, in October 2019. The payments to Mr Chen senior on 29 October 2019 were evidenced by receipts from Online Banking Construction of China Bank (RMB5,000,000) and Industrial and Commercial Bank of China (RMB165,470).

21. Mr Chen senior subsequently transferred an amount of RMB6,000,000, or approximately AUD1,200,000, to Miss Chen’s China Minsheng Bank account between 6 and 12 November 2019.  Records from Miss Chen’s China Minsheng Bank account, Chang Jiang Financial Pty Ltd, a foreign exchange company registered with AUSTRAC, and Miss Chen’s Commonwealth Bank of Australia (CBA) account evidence the transfer of RMB16,000,000, or approximately AUD3,200,000. 

22. Mr Chen senior also transferred RMB9,000,000, or approximately AUD1,800,000 directly to Miss Chen’s Commonwealth Bank of Australia account, through Chang Jiang Financial Pty Ltd between 12 and 13 November 2019. 

23. Miss Chen gave oral evidence that her father has been involved in the construction and building industry in China for many years.  Various building contracts were provided to the Department bearing Mr Chen senior’s signature as an authorised agent or named as Project Manager in support of his significant involvement in the building and construction industry.  He currently owns several properties in China. The Tribunal accepts that Mr Chen senior had and continues to have the capacity to accumulate income and has had the opportunity to reap the benefits of capital gains on the sale of properties.

24. In response to a question from the Tribunal as to lack of evidence to verify that the transfer of funds in October/November 2012 were to Ms Lyu for the purpose of a business loan, it was submitted that the lapse of time has prevented the availability of such evidence from bank records.  After the hearing, it was submitted that attempts to locate Ms Lyu have been unsuccessful.  Mr Chen senior also explained to the Tribunal that the initial payment received in March 2012 in respect of the sale of his property, prior to the date the contract of sale was signed by the parties, was common practice in China when a purchaser is keen and wishes to secure the sale. 

25. Ms Zhou gave oral evidence on the basis of her experience living in both China and Australia for 30 years each, that the culture in China allows for private lending without security and legal documents.  People loan funds to others “just because they believe in each other”. Mr Chen senior told the Tribunal that he has not made any other business loans to Ms Lyu.  However, he has made loans to other friends without any written agreement.  He further stated that if loaning to a close friend, it is embarrassing to draw up an agreement and goes against the local culture.

26. The Tribunal notes that based on the bank statements of Mr Chen senior’s account with China Minsheng Bank in October 2019 and November 2019, the balance exceeded RMB12,000,000 prior to receipt of the repayment of the loan from Ms Lyu and prior to receipt of the RMB20,000,000 sourced from the loans secured against the Pudong property of Miss Chen and her brother. It is also evident from Mr Chen senior’s bank statements and the CBA statements for the same period in the name of Miss Chen that Mr Chen senior has transferred funds to Miss Chen and Mr Chen junior in addition to the funds gifted to Miss Chen for the purposes of making a significant investment in Australia.

27. The Tribunal accepts that time has made it difficult to provide extensive evidence in respect of the business loan funds transfer from Mr Chen senior to Ms Lyu in October/November 2012.  However, considering the overall circumstances of Mr Chen senior and the available evidence, the Tribunal is satisfied that the source of the AUD1,000,000 funds gifted to Miss Chen have been lawfully acquired and are unencumbered.

28. As the Tribunal is satisfied that the combined total of funds available for Miss Chen to invest in Australia, being AUD5,000,000, were lawfully acquired and unencumbered, the Tribunal finds that the criterion under reg 5.19C(3) has been met. 

29. Clause 188.252 of Schedule 2 to the Regulations allows for a “complying significant investment” to be made after the date of application. As noted above, while an initial complying investment was made with Moelis in November 2019, it is no longer current.  As a complying investment for the purposes of the Subclass 188 visa is not currently in existence, the Tribunal is unable to make findings in respect of the remaining requirements under reg 5.19C(4) to reg 5.19C(10). Noting Miss Chen’s willingness to make a complying investment when directed to do so by the Department, the Tribunal considers the appropriate course is to remit the matter to the Minister to consider the remaining criteria in reg 5.19C in relation to the imminent complying investment and the remaining criteria for the visa.

    decision

30. The Tribunal remits the application for a Business Innovation and Investment (Provisional) Subclass 188 visa in the Significant Investor stream for reconsideration, with the direction that the applicant meets the following criteria:

    ·Regulation 5.19C(3) for the purposes of cl 188.252(1) of Schedule 2 to the Migration Regulations 1994.

    Robyn Anderson
    Member