Cheng v Minister for Immigration and Citizenship

[2013] FCA 405

FEDERAL COURT OF AUSTRALIA

Cheng v Minister for Immigration and Citizenship [2013] FCA 405

Citation:		Cheng v Minister for Immigration and Citizenship [2013] FCA 405
Appeal from:		Cheng & Ors v Minister for Immigration & Anor [2012] FMCA 911
Parties:		JU CHEN CHENG, HUNG CHANG CHEN and POYU CHEN BY HIS LITIGATION GUARDIAN JU CHEN CHENG v MINISTER FOR IMMIGRATION AND CITIZENSHIP and MIGRATION REVIEW TRIBUNAL
File number:		NSD 1920 of 2012
Judge:		COWDROY J
Date of judgment:		6 May 2013
Catchwords:		MIGRATION – definition of the word ‘turnover’ for the purpose of granting a subclass 892 visa – the use of ministerial policy by the Migration Review Tribunal when interpreting migration regulations
Legislation:		Migration Act 1956 (Cth) Migration Regulations 1991 (Cth), sch 2
Cases cited:		An v Minister for Immigration (2007) 160 FCR 480 Aris-Bainridge v Turner Manufacturing Ltd [1951] 1 KB 563 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 El Ess v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 142 FCR 43 Gliksten & Son Ltd v Green [1929] AC 381 Minister for Immigration, Local Government & Ethnic Affairs v Gray (1994) 50 FCR 189
Date of hearing:	26 February 2013
Date of last submissions:	18 February 2013
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	31
Counsel for the Appellants:	Mr. L. Karp
Counsel for the First Respondent:	Mr. J. Smith
Solicitor for the Appellants:	Christopher Levingston & Associates
Solicitor for the First Respondent:	Sparke Helmore Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1920 of 2012

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:

JU CHEN CHENG
First Appellant

HUNG CHANG CHEN
Second Appellant

POYU CHEN BY HIS LITIGATION GUARDIAN JU CHEN CHENG
Third Appellant

AND:

MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent

MIGRATION REVIEW TRIBUNAL
Second Respondent

JUDGE:	COWDROY J
DATE OF ORDER:	6 MAY 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.The Appellants pay the costs of the First Respondent.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1920 of 2012

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:

JU CHEN CHENG
First Appellant

HUNG CHANG CHEN
Second Appellant

POYU CHEN BY HIS LITIGATION GUARDIAN JU CHEN CHENG
Third Appellant

AND:

MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent

MIGRATION REVIEW TRIBUNAL
Second Respondent

JUDGE:	COWDROY J
DATE:	6 MAY 2013
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an appeal from the orders and decision of Federal Magistrate Driver (as he then was) dated 16 November 2012 dismissing an application for judicial review of a decision of the second respondent, the Migration Review Tribunal (‘the Tribunal’). In doing so, his Honour found that the Tribunal had not erred in affirming the decision of a delegate to the Minister of Immigration and Citizenship (‘the Minister’) to not grant visas to the appellants.

   BACKGROUND

2. The appellants are citizens of the Republic of China. On 19 May 2009 the first appellant applied for a Business Skills (Residence) (Class DF) (Subclass 892 visa) (‘the visa’) on the basis that she was conducting a business in Australia. The second and third appellants are the first appellant’s husband and son respectively, whom sought to satisfy the secondary criteria to the visa as members of the first appellant’s family unit.

3. To be granted a subclass 892 visa, an applicant must meet the requirements of Subclass 892 of Schedule 2 to the Migration Regulations 1991 (Cth) (‘the Regulations’). The only relevant requirement to this proceeding is that in the 12 months immediately prior to a visa application being made the applicant’s main business in Australia, or main businesses together, must have an annual turnover of at least AUD 200,000: see cl 892.213.

4. The first appellant nominated her main business as Nisi Group (Australia) Pty Ltd (‘Nisi’), owned solely by her and her husband. In order to show that Nisi had an annual turnover of at least $200,000 in the 12 months preceding the visa application, the appellants led evidence of two export transactions, being on 20 May 2008 and 20 November 2008.

5. The transactions were of the same nature. Engagement Manufacturing and Trading Co Ltd (‘Engagement Manufacturing’) produces crayons in Taiwan, an essential ingredient of such production being stearic acid. Nisi was engaged by Engagement Manufacturing to source stearic acid. For both transactions, Nisi sourced the stearic acid from an Australian company called Symex Holdings Limited (‘Symex’). Symex shipped the required quantity of stearic acid directly to Engagement Manufacturing without Nisi taking receipt of the acid at any stage. Symex issued invoices to Nisi, who in turn invoiced Engagement Manufacturing. Engagement Manufacturing would then deposit the invoice price in Nisi’s nominated bank account, with Nisi withdrawing the majority of those funds to pay the relevant invoice issued to Nisi by Symex. Depending on the quantity of stearic acid purchased, Nisi would retain approximately US$100-150 per unit.

6. There was no doubt before the Tribunal that should the total of invoice value of the goods from the relevant transactions be considered for the purposes of determining the visa application, the turnover amount of $200,000 would have been satisfied. The Tribunal found however that Nisi had acted as an agent for Engagement Manufacturing for the relevant transactions, and as such the Tribunal only took into account the associated service revenue for the purposes of determining the turnover amount. The total service revenue for the transactions amounted to $27,250, falling below the $200,000 threshold. This being the case, the Tribunal affirmed the decision of the delegate to the Minister, albeit on different grounds, not to grant visas to the appellants.

7. Crucially for this appeal, the Tribunal referred to the Procedures Advice Manual (‘PAM3’) of the Minister’s Department before finding that Nisi had acted as an agent for Engagement Manufacturing. PAM3 sets out guidelines for the determination of visa applications. It relevantly states in relation to agency that:

   Agents provide goods and services on behalf of an independent entity. The goods/services remain the property of the principal entity and the agent normally receives a commission or fee for any sales.

   Merchants are experienced international traders who buy from a supplier/manufacturer and sell overseas. They take full possession of the commodity and are responsible for onward trading of the stock.

   Agents seek out potential customers and may be used to facilitate and promote a product in their respective markets but do not take legal title of the goods. Agents may be paid a salary, retainer, commission or a combination of all three. See also the definition of a commission agent in business skills legislated & policy terms.

   The key difference between a merchant and an agent is whether at some stage the business takes legal title to the goods. See section 29.2 Legal title.

   If a business operates as a commission agent, service agent or export agent who is engaged in the provision of services instead of sale of goods to the public only the amount of the service revenue (ie. as opposed to the sale value or invoice value) is to be counted towards the turnover of the business.

8. The issue of legal title to goods is further referred to in the PAM3 as follows:

   An agent may arrange the transfer of goods or services from one entity to another without taking legal title. For example, a business in Australia may arrange for the transfer of goods from an Australian business to a single overseas business without taking possession or having legal title of the goods.

   To have legal title to goods or services the business must:

   ŸAcquire them for payment;

   ŸTake possession or intend to take possession of the goods or services; and

   ŸHave the right to consume, sell, rent, mortgage, transfer or exchange those goods or services.

9. The Tribunal made important findings of fact that supported the finding of agency on the part of Nisi, namely:

   ·         That the transactions were not entered into at arms-length. The Chief Executive Officer of Engagement Manufacturing is the first appellant’s father, and the first appellant and her husband had previously worked for Engagement Manufacturing for a ‘lengthy’ period of time.

   ·         That legal title of the stearic acid had not passed to Nisi.

   ·         That Engagement Management had not sought quotes for the stearic acid from sources other than Nisi, despite claims to the contrary by the appellants.

10. The appellants unsuccessfully challenged the Tribunal’s decision in the Federal Magistrates Court (now the Federal Circuit Court), relying upon two primary submissions. First, the appellants submitted that the Tribunal had erred in interpreting and applying the word ‘turnover’. The crux of this argument was predicated upon the assertion that Nisi was not the agent of Engagement Manufacturing. Secondly, the appellants’ submitted that if the Tribunal did not consider the question of agency in a legal sense, it erred in assessing the turnover of the first appellant’s business in Australia by failing to consider the effects of the contracts by which property in the goods supplied by Symex was passed.

11. His Honour found that the ordinary meaning of the word ‘turnover’ was a matter of fact to be decided by the Tribunal. At [30], his Honour said:

    Although the meaning of a technical legal term is a question of law, the ordinary meaning of a word or its non-legal technical meaning is a question of fact (Collector of Customs v Agfa-Geveart Ltd (1996) 186 CLR 389 at 395). The word “turnover” has not acquired a legal meaning and the applicant has not suggested that the word “turnover” has acquired a secondary meaning through trade usage that differs from its ordinary meaning (Voxson Sales Pty Ltd v Collector of Customs [1993] FCA 609 at [34]). Accordingly, in the absence of a definition of “turnover” in the Migration Regulations, the ordinary meaning of the word “turnover”, and the consideration of which amounts fall within the expression “turnover” in the particular context, was a question of fact to be decided by the Tribunal (Pepsi Seven-Up Bottlers Perth Pty Ltd v Commissioner of Taxation (1995) 62 FCR 289 at 299). [References inserted].

12. In determining the ordinary meaning of ‘turnover’, the Federal Magistrate found that the Tribunal had not erred in its approach to PAM3. Further, his Honour found at [53] that the Tribunal did not err by ‘looking behind the superficial appearance of the transactions to examine the substance of the business’.

13. In their appeal to this Court, the appellants rely on one ground of appeal, namely that the Federal Magistrate erred in failing to find jurisdictional error in the Tribunal’s finding that the ‘turnover’ of Nisi was limited to the difference between the money it received from Engagement Manufacturing and that which it paid to Symex Holdings Pty Ltd.

    CONSIDERATION

14. It became clear in the appellants’ submissions that the sole ground of appeal in fact contains two distinct issues. The first is whether the Tribunal erred in its construction of the word ‘turnover’. The second is whether, having determined the meaning of ‘turnover’, the Tribunal erred in its application of that meaning to the facts. Each issue will be considered in turn.

    Construction of ‘turnover’

15. This proceeding turns on the proper construction of the word ‘turnover’ for the purposes of cl 892.213 of the Regulations. The Court observes that no definition for ‘turnover’ is provided by the Migration Act 1956 (Cth) or the Regulations.

16. The principles of construction relied upon by the Federal Magistrate are set out at [11] above. The appellants do not challenge the authorities cited by his Honour, but do draw attention to the caution expressed by Lindgren J in An v Minister for Immigration (2007) 160 FCR 480 in applying such principles too strictly. At [4], his Honour said:

    …although the ordinary meaning or common understanding that a simple non-technical English word conveys in the community is a matter of fact (Re Minister for Immigration and Multicultural Affairs; Ex parte Cohen (2001) 75 ALJR 542; 177 ALR 473 at [35] per McHugh J and cases there cited), indeed, a matter of fact of which judicial notice may be taken, this is often an insufficient proposition on which cases can be decided. The reason is that associated questions of law often arise, such as whether the word is used in its ordinary non-technical sense, and, most importantly, whether, and if so how, the meaning of the word in a particular case is affected by the statutory context in which it occurs: see the discussion in Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 395 ff. The “statutory context” refers not only to the immediately surrounding text, but also to the piece of legislation as a whole, and its purpose or object.

17. This statement does not run contra to the general proposition that the ordinary, or non-technical, meaning of a word is a matter of fact. Rather, the extent that the statutory context of a word affects its meaning is a question of law. Where an appellant seeks to challenge a finding as to the ordinary meaning of a word through judicial review, it may do so by showing that the statutory context of that word evinces a meaning different from the ordinary meaning found by the court below.

18. The appellants’ primary submission concerns their claim that the word ‘turnover’ means that all monies received by Nisi should have been considered as part of the annual turnover of the company. The appellants relied upon the discussion of turnover in two English cases, being Aris-Bainridge v Turner Manufacturing Ltd [1951] 1 KB 563 and Gliksten & Son Ltd v Green [1929] AC 381.

19. The above authorities are but examples of the interpretation of ‘turnover’ in different factual contexts. In Aris-Bainridge, the plaintiff had war-time contracts with the government. Those contracts continued to run when the hostilities had ceased. When the government terminated the contracts, the plaintiff received a series of lump sum payments as compensation for hardship. The Court was required to consider whether such lump sum payments formed part of the plaintiff’s turnover. McNair J held at 564:

    The question whether the commission ought to have been paid on the whole of the company's receipts or only on selected receipts turns primarily on the meaning of the phrase "turnover of the company's annual business". Giving to this phrase its ordinary grammatical meaning, I consider that it includes all sums received and receivable in the year in question as the result of the company's trading, whether normal or abnormal; in other words, it means all the money which the company turns over in the year for the purpose of making its gains or losses.

20. The question in Gliksten & Son Ltd was whether a timber company was required to count a large sum of money they had received under a fire insurance policy as part of its turnover. Lord Dunedin said at 385:

    The whole question comes to be whether [the money received under the fire insurance policy] is a turnover in the ordinary course of their business. I think it was. They had that amount of timber, which they got rid of and for which they got a certain price, and then they could begin again. The more times you have a turnover - that is to say, the more sales you can get, provided that you are carrying on business at remunerative prices - the better for you. The result of this fire was that they got rid of so much timber and got the insurance money at that figure, and that seems to me precisely in the same position as if they got rid of it by giving it to a customer.

21. These authorities do not assist the appellants. The above statements only serve as examples of the interpretation of ‘turnover’ in particular business contexts in which companies receive funds for their own profit. These authorities do not consider the task before this Court, namely the interpretation of ‘turnover’ in the context of the Regulations. In particular, they do not assist in resolving whether the monies received by Nisi were by way of agency fees. They are not concerned with the critical issue of whether ‘turnover’ has acquired some technical or legal meaning. Whilst the appellants contend Nisi is not an agent, they do concede that it is at least a ‘middle-man’ in the process of transferring goods between Engagement Manufacturing and Symex.

22. As already noted, the Tribunal gave weight to the guidelines contained in PAM3 with respect to agency and legal title as set out at [7]-[8] above. The appellants argued that such guidelines should not be considered in preference to the English authorities as PAM3 is not binding on the Tribunal.

23. It is true that PAM3 is not a binding instrument (see El Ess v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 142 FCR 43 at [45]) as was acknowledged by the Tribunal. Rather than refer to PAM3 out of perceived obligation, the Tribunal referred to the guidelines contained in PAM3 as they were consistent with the Tribunal’s understanding of ‘turnover’ and ‘agency’ in construing the relevant regulation, and to maintain consistency in decision making.

24. The Tribunal’s approach is consistent with the authorities relating to the use of ministerial policy. In Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, Brennan J stated at 645:

    When the Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny.

25. In Minister for Immigration, Local Government & Ethnic Affairs v Gray (1994) 50 FCR 189, French and Drummond JJ said at 206:

    The proposition that government policy cannot bind the Tribunal does not imply that the policy can be ignored. It is reasonable to associate with the legislative intent that is taken to inform the construction of a wide statutory power, an acceptance of the likelihood that policies or guidelines will be developed by the Executive at either or both Ministerial or departmental levels to govern its application. As Bowen CJ and Deane J observed in Drake (at 420):

    “...the consistent exercise of discretionary administrative power in the absence of legislative guidelines will, in itself, almost inevitably lead to the formulation of some general policy or rules relating to the exercise of the relevant power.”

    This is particularly so in the case of a power which involves high volume decision-making or which may, in any event, because of its subject matter, be expected to attract policy guidelines. Certain classes of immigration decision are necessarily high volume, such as those relating to the grant of visas and entry permits.

1. No cogent reasons were provided by the appellants to suggest that the Tribunal should not have referred to the guidelines in PAM3. In doing so, the Tribunal, having regard to the policy contained in PAM3, found that the meaning of ‘turnover’ could only include service revenue for a business that operates as an agent in the provision of services. This approach is consistent with the authorities of Drake (No 2) and Minister for Immigration, Local Government & Ethnic Affairs v Gray. The Court finds no error in the Tribunal’s construction of ‘turnover’.

   Application of the meaning of ‘turnover’

2. The Court’s ability to review the Tribunal’s application of the meaning of ‘turnover’ to the facts of the proceeding is limited. As noted by Emmett J in An v Minister for Immigration and Citizenship at [83]:

   …once the meaning of a word is determined, the question of whether the particular circumstances of the case fall within that word is one of fact for the relevant decision-maker: so long as the finding made by the decision-maker is open to it on the material before it, there would be no error of law that could constitute jurisdictional error.

3. His Honour’s observation extends only to words that are used by the relevant statute in their ordinary sense: see Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 395; Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 288.

4. The appellants contend that the Tribunal’s finding that legal title to the stearic acid did not pass to Nisi was incorrect as the Tribunal had misconstrued the contracts between Nisi and Engagement Manufacturing, and Nisi and Symex. Crucially however, the appellants conceded in oral submissions that even if the Tribunal had found that legal title in the goods had passed to Nisi, the Tribunal still may not have found that Nisi’s turnover included all money received by it from Engagement Manufacturing rather than just the total of the commissions for the relevant transactions. The highest the appellants put their argument was that the Tribunal could have made the finding they sought.

5. On the basis of these submissions, it is not open to the Court to find jurisdictional error in the Tribunal’s application of the meaning of ‘turnover’ to the facts of this proceeding. By extension, the Federal Magistrate did not err in failing to find jurisdictional error in the Tribunal’s reasons.

6. For the reasons above, the appeal is dismissed with costs.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.

Associate:

Dated:       6 May 2013