Chengdu Di'ao International Investment Pty Ltd (Migration)

[2017] AATA 658

Chengdu Di'ao International Investment Pty Ltd (Migration) [2017] AATA 658 (28 April 2017)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Chengdu Di'ao International Investment Pty Ltd

CASE NUMBER:  1509383

DIBP REFERENCE(S):  BCC2014/3294078

MEMBER:Rania Skaros

DATE:28 April 2017

PLACE OF DECISION:  Sydney

DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 28 April 2017 at 12:11pm

CATCHWORDS
Migration – Approval of nominated positions (employer nomination) – Direct Entry nomination stream – Genuine position – Nominator did not demonstrate a genuine need to employ a paid employee – Limited supporting evidence

LEGISLATION
Migration Regulations 1994, r 5.19

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 on 23 June 2015 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).

2. The applicant applied for approval on 23 June 2015. 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).

3. In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in Direct Entry Nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(a)(ii) of the Regulations because the delegate was not satisfied that the there was a genuine vacancy of the nominated position in the applicant’s business and that the nominated position is under the applicant’s direct control.

5. The applicant’s accountant and former migration agent, Mr Yeung appeared before the Tribunal to give evidence and present arguments on behalf of the applicant. Prior to the hearing, the Tribunal received advice that a new representative had been appointed. At the hearing Mr Yeung informed the Tribunal that he had authority from the directors to give evidence on behalf of the applicant. The Tribunal agreed to proceed with hearing on this basis.   

6. The applicant was represented in relation to the review by its registered migration agent who attended the hearing.

7. For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.

   CONSIDERATION OF CLAIMS AND EVIDENCE

8. 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.

9. The nomination was refused on the basis that the requirement in r.5.19(4)(a)(ii) was not met. This remained an issue of concern before the Tribunal.

   Background evidence

10. Chengdu Di'ao International Investment Pty Ltd (the Company or nominating entity) was registered with ASIC in September 2011. Its principal place of business is noted on the ASIC documents as being the same address as its accountants’ office, Cabot Square in Sydney NSW. The Company has two directors, Ms Su and Mr Yi. The Company is wholly owned by Chengdu Di’ao Mining Industry and Resources Co. Ltd (the parent company) located in Sichuan Province, China.  The parent company also wholly owns Panda Mining Pty Ltd whose principal place of business is in East Freemantle WA. The nominee, Mr Deng, is noted on the ASIC company details as one of the directors of Panda Mining.

11. In support of the nomination, a number of documents were provided to the Department, they relevantly included the following:

    ·ASIC company details for the Company.

    ·Organisational chart.

    ·Financial statements for the Company for the year ended 30 June 2014.

    ·ASIC company details for Panda Mining.

    ·Financial statements for Panda Mining Pty Ltd for the year ended 30 June 2014 and for the period from 1 July 2014 to 30 September 2014.

    ·Report for Panda Mining Pty Ltd together with tenement schedule.

    ·Copies of emails between representatives from the parent company and other persons regarding project/proposal.

    ·Exploration licence and renewals issued in respect of Panda Mining Pty Ltd.

    ·Business proposal document regarding coal trading entitled Strategic Alliance – Square Trading and Chegdu Diao – June 2014.

12. It was submitted that the parent company wanted to relocate Mr Deng (the nominee) to Australia and employ him to establish and operate a coal trading company which will be achieved through joint venture negotiations with resources entities in Australia. The submissions referred to negotiations between Square Trading which aims to establish a joint venture. It was submitted that Mr Deng will also be directly involved in the operation of Panda Mining, as he has been appointed as director, and will be participating directly in its future exploration and project management via the Company. Details were provided about Panda Mining’s projects and Mr Deng’s role in raising capital from the shareholders of Panda Mining and for other exploration projects. In further submissions to the Department it was submitted that the position was a genuine one and that the nominee was required to be in Australia to manage the Company’s operations and conduct face to face negotiations with prospective joint venture partners.

13. On review, the Tribunal requested current information about the Company and its operations in Australia. In written submissions from Mr Yeung, it was stated that the Company’s core work in the past few years was to collect mining business information and that it had engaged consultants to collect information upon which it conducted various site visits and negotiations. It was submitted that in 2015, due to the volatility in the mining industry, there was a change of strategy and that the company began looking at other sectors, including real estate, agricultural products, new resource mining and medical.  It was submitted that the Company has had talks with agricultural companies in view of developing business ties and has begun talks with real estate companies.

14. The Tribunal also received financial reports for the financial year ended 30 June 2016, business activity statements for the period from July 2015 to October 2016, 2016 PAYG Payment Summaries in respect of Mr Gao and Ms Su, payslips for Mr Gao and bank statements for the Company from 2014 up to October 2016. Prior to the hearing the Tribunal also received print-outs from the website for the parent company.

15. At the hearing Mr Yeung confirmed that the Ms Su and Mr Yi, who are spouses, are the Directors of the Company. Ms Su lives in Australia but is not an active director and Mr Yi is in China.

16. Initially Mr Yeung stated that at the moment the Company is not active, but clarified his evidence to state that it was running low. The Tribunal expressed its concern that there was limited evidence to suggest that the Company is operating. Mr Yeung stated that it was because it had a business development manager, Mr Lawrence Gao Fung, who is currently in Australia on a 457 visa.  

17. Mr Yeung confirmed that the Company was registered in 2011. He gave evidence that it was not active until 2013. When asked about the Company and its current operations, Me Yeung stated that it is a subsidiary of a big company in China and that the parent company has a lot of investment in Australia. The Tribunal pointed out that the financial reports for the Company show that its income was derived only from interest. In response, Mr Yeung stated that the Company had not done any investments in Australia and that the investments are done through the parent company who want Mr Deng to come to Australia and look after their investments through the Australian registered Company. He stated that until Mr Deng gets his Australian residence, all the investments will be held in the parent company’s name.

18. The Tribunal discussed with Mr Yeung the requirements in regulations which state that it is the nominator, which has an actively operating a business in Australia, that must demonstrate it has a need to employ someone. The Tribunal expressed its concern the nominating entity appears to be canvassing investments in Australia and that it was not the entity operating the current investments. Mr Yeung stated that the parent company had investments, including mining interests in Australia. The Tribunal noted that the mining rights had been granted to a different entity, Panda Mining, and not the nominator. Mr Yeung advised that the mining interest would be transferred to the Company. The Tribunal noted that this was somewhat speculative given there is no evidence before it to indicate that Panda’s Mining rights would be transferred.

19. Mr Yeung gave evidence that Mr Deng has to come to Australia to look after the business and asked how this could be done, to which the Tribunal explained that it must be done through one of the entities that is currently actively operating a business. The Tribunal noted that if Panda Mining’s operations required a senior person, as this was the company that had been granted the mining license, then perhaps that should have been the entity that nominated Mr Deng and not the nominator. The representative submitted that 3 million shares had been issued and that the funds had come into Australia and referred to the supporting letter provided to the Tribunal regarding the Company’s current activities. 

20. The Tribunal put to Mr Yeung that even if it was to accept that the Company was actively operating on the basis that it is involved in some negotiations, the concern is that much of what has been claimed about the business’ investments is speculative. The Tribunal noted that given the current nature of the business operations, it does not appear that the Company currently has a need for a CEO.

21. Relevantly, Mr Yeung gave evidence that the Company has been involved in negotiations relating to mining projects and that the mining licence held by Panda Mining would be transferred should Mr Deng get the visa. The Tribunal again indicated that this was speculative and it would need to be satisfied that the Company would have the rights/license to undertake mining projects in Australia. The Tribunal also referred to the claims made regarding the Company proposal to enter into a joint venture and noted that it required evidence that such an agreement was in place. Mr Yeung indicated that those agreements are worth millions of dollars. The Tribunal noted that the claim about the joint venture was made at the time of application and that to date no evidence of the joint venture had been provided, and that in light of this, the Tribunal had little confidence that the joint venture would be established in future. The Tribunal put to Mr Yeung that the claims made about the business’ operations were largely speculative.

22. Mr Yeung requested further time to get an update from the Company and to obtain further evidence that the business development manager is actually working with some companies and to see if some licences can be transferred to the Company.

23. The Tribunal also had discussions with Mr Yeung about the role of the business development manager and the tasks of the nominated position, however, that evidence was ultimately not relevant to the issue on which this case turned.

24. The Tribunal agreed to grant until 3 March 2017 for Mr Yeung to provide further supporting documents, however no information was received. On 5 April 2017 the Tribunal wrote to the applicant noting that no information had been provided and enquiring as to whether the applicant wished to continue with the review application. The Tribunal advised that if it did not receive a response by 10 April 2017 it would proceed to a decision on the information before it. The representative promptly advised the Tribunal that he has contacted the applicant and would advise the Tribunal accordingly. A further follow up call was made with the representative on the same day. He advised the Tribunal officer that the applicant in Australia was waiting to hear back from their bosses in China. He requested the Tribunal to hold off making a decision and undertook to contact the Tribunal the following day, namely by 11 April 2017.  

25. To date no further advice or information has been received. The Tribunal considers that the applicant has had sufficient time to provide the supporting information and has decided to proceed to a decision on the evidence before it.

    Considerations

26. The issue in this case turned on whether the applicant meets r. 5.19(4)(a)(ii) which requires that the application identifies a  need for the Company to employ a paid employee to work in the position under its direct control.

27. The Tribunal has considered all of the evidence before it, but is not satisfied that, at this point in time, there is a need for the Company to employ a paid employee to work in the nominated position under the Company’s direct control.

28. Although the Company was registered in September 2011, Mr Yeung explained that it did not commence any operations until 2013. The evidence provided, including the written submissions and Mr Yeung’s oral evidence, indicates that the Company was established by the parent company in China to operate a coal trading company, and potentially other investment projects, in Australia.

29. Very limited supporting documentary evidence has been provided to the Tribunal regarding the current activities of the Company. Mr Yeung indicated at the hearing that no actual investments had been made in any projects and that the Company’s activities were quite low. In response to the Tribunal’s concern that the Company may not be actively operating a business in Australia, Mr Yeung stated that is operating because it has a business development manager and that the Company has been involved in talks and negotiations with businesses in Australia.

30. Accepting that the Company is actively operating a business in Australia because it has employees and is involved in talks and negotiations, there is nevertheless insufficient evidence before the Tribunal to establish that the Company, given its current level of activities, has a need to employ a Corporate General Manager under its direct control.

31. The Tribunal has considered Mr Yeung’s evidence that the Company has not undertaken any investments in Australia and that the parent company in China would not be utilising the Company for investments until Mr Deng is granted residency, and that until this occurred, all investments would be held in the parent company’s name. This evidence suggests that the parent company in China has been able to manage its investments in Australia, directly or through another Australian entity such as Panda Mining Pty Ltd, and that it would continue to do this in the event Mr Deng is not granted a permanent residence visa. This, in the Tribunal’s view, suggests that the Company, which does not control any investments in Australia, does not currently have a need for an employee to work under its direct control.

32. The Tribunal has also considered Mr Yeung’s evidence that the mining rights, which are currently held by Panda Mining Pty Ltd, would be transferred to the Company. The Tribunal notes however that there is no substantive evidence before it to suggest that the mining rights granted to Panda Mining Pty Ltd will be transferred to the nominating entity.

33. The Tribunal has also considered the written submission that Mr Deng would be involved in the operations of Panda Mining, including participating directly in its future explorations and raising capital. This, in combination with Mr Yeung’s oral evidence that Mr Deng would manage the parent company’s mining interests in Australia, and the fact that it is Panda Mining Pty Ltd that currently has the mining licence in Australia, suggests that it is not the nominating entity that currently has the need to employ Mr Deng but perhaps it is Panda Mining Pty Ltd.

34. The documentary evidence regarding Panda Mining Pty Ltd, including the financial statements, report to Chairman and the mining licence, indicate that Panda Mining is the entity currently operating the mining activities in Australia and not the Company. The Tribunal acknowledges that both entities are subsidiaries of the parent company however, the Tribunal considers that the wording of r.5.19(4)(a)(ii), which requires the employee to work in the position under the nominator’s direct control, suggests that the position must be within the business activities of the Company and not the activities of another entity, even if they are related through a common parent.

35. The Tribunal has also considered the submissions that there is a genuine need for the position because of the Company’s intention to establish joint ventures with entities in Australia. The Tribunal has had regard to the supporting evidence in relation to this claim, including the business proposal documents relating to an alliance with Square Trading that was provided with the application. The Tribunal notes however that the alliance document is dated June 2014 and no substantive supporting evidence has been provided to date to suggest that the Company has entered into a joint venture or that such an agreement is impending.  In the absence of such supporting evidence, the Tribunal is unable to be satisfied that the nominator currently has a genuine need to employ a person in the nominated position.

36. The Tribunal has considered the evidence overall but is not satisfied for the reasons detailed above that the Company has demonstrated to the satisfaction of the Tribunal that it has a need to employ a person to work in the position under its direct control.

37. Give the above, the Tribunal finds that the requirements in r.5.19(4)(a)(ii) is not met.

38. 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 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

39. The Tribunal affirms the decision under review to refuse the nomination.

    Rania Skaros
    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

    (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;

    (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 at a skill level of ANZSCO skill level 1, 2 or 3;

    (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).