Daiwa Food Co Pty Ltd v MIMIA - [2005] FMCA 1651

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DAIWA FOOD CO PTY LTD & ANOR v MINISTER FOR IMMIGRATION & ANOR

[2005] FMCA 1651

MIGRATION – Migration Review Tribunal – standard business sponsor – whether criteria met – temporary business entry visa – whether error.

Migration Act 1958, s.359(2)

Hiromi Masuoka and Chuji Ishizaki v Immigration Review Tribunal and Minister for Immigration and Ethnic Affairs (Unreported) 6 June 1996
Nice Shoes Australia Pty Ltd v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 252
MM International (Australia) Pty Ltd v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 323
Nassif v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 481
Lace Holdings Pty Ltd v Minister for Immigration and Multicultural Affairs (2002) 117 FCR 79

Applicants:

DAIWA FOOD CO PTY LTD AND
YOUNG HUN CHOI

First Respondent:

Second Respondent:

MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS

MIGRATION REVIEW TRIBUNAL

File Number:

MLG 1012 of 2004

Judgment of:

McInnis FM

Hearing date:

24 February 2005

Delivered at:

Melbourne

Delivered on:

16 November 2005

REPRESENTATION

Counsel for the Applicant:

Mr G. Gilbert

Solicitors for the Applicants:

Joseph Italiano & Associates

Counsel for the Respondents:

Mr C. Horan

Solicitors for the Respondents:

Australian Government Solicitor

ORDERS

The application be dismissed.
The Applicant shall pay the Respondents’ costs fixed in the sum of $6,500.00.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1012 of 2004

DAIWA FOOD CO PTY LTD and YOUNG HUN CHOI

Applicants

And

MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS

First Respondent

And

MIGRATION REVIEW TRIBUNAL

Second Respondent

REASONS FOR JUDGMENT

In this application judicial review is sought of a decision of the Migration Review Tribunal (the Tribunal) dated 7 July 2004. In its decision the Tribunal affirmed a decision under review finding that the review applicant does not meet the criteria for approval as a standard business sponsor. The review applicant is Daiwa Food Co Pty Ltd (Daiwa). The Tribunal had also affirmed the decision to refuse to grant a temporary business entry (class UC) visa to the second applicant, Mr Young Hun Choi (Mr Choi).

Background

On 17 April 2003 Daiwa applied for approval as a standard business sponsor and for approval of its nomination of an activity in which Mr Choi was proposed to be employed in Australia. On the same date Mr Choi, a citizen of Korea, applied for a long-stay temporary business visa. On 5 August 2003 a delegate of the first respondent refused to approve Daiwa as a standard business sponsor.
The delegate found that Daiwa did not meet the criterion set out in regulation 1.20D(2)(f) of the Migration Regulations (the regulations) which had required the Minister to be satisfied that the applicant for approval is able to comply with the visa undertakings given by the applicant in accordance with form 1067.
In the decision record of the delegate the following relevantly appears:
“The standard form and level of evidence sought by the Department as demonstrating whether an applicant satisfies this criterion, is either (i) audited financial reports contained in the latest annual reports for the company or (ii) the company's latest audited balance sheet and profit & loss statement. Such evidence should also show comparative data for the most recent two financial years to enable the decision-maker to ascertain the current financial standing of the applicant and its ability to meet the financial obligations towards its subclass 457 visa holder/s.
The applicant supplied one unaudited financial report for the year ended June 2002 and two Business Activity Statements for the period 01/07/02 to 31/12/02. Based on the financial information provided by the applicant, I find the applicant has failed to demonstrate an ability to fulfil its financial obligations under the sponsor's undertaking towards a subclass 457 visa holder. Accordingly, I am satisfied that the applicant fails to meet the requirements of subregulation 1.20D(2)(f).” (Court book page 66)
Regulation 1.20C of the Migration Regulations provides that a person may apply to the Minister for approval as a standard business sponsor. Regulation 1.20D which provides as follows:
“REG 1.20D Approval as standard business sponsor
(1) …
(2)The Minister must approve the application if:
…
(c) the Minister is satisfied that the applicant for approval:
(i)     will introduce to, or utilise or create in, Australia new or improved technology or business skills; or
(ii)     has a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents in the business operations of the applicant in Australia; and
…
(f)the Minister is satisfied that while there is in effect a Subclass 457 visa granted on the basis that:
(i)     the applicant for approval is the employer referred to in subclause 457.223 (4) of Schedule 2 in relation to a visa application; and
(ii)     the visa holder satisfies the requirements of that subclause;
the applicant for approval is able, in relation to each visa holder, to comply with the undertakings given by the applicant in accordance with approved form 1067, 1196 or 1196 (internet); and
…”
Regulation 4.02(4)(a) provides that a decision to reject a person's application under regulation 1.20D is a decision which is reviewable by the Tribunal.
The refusal of the business sponsor application meant that the nomination application could not be approved and was deemed to be an unnecessary application and the first applicant was advised that that application was therefore withdrawn. The applicants applied to the Tribunal to review the delegate's decision on 3 September 2003.
By letter dated 25 November 2003 (court book page 84) the Tribunal invited the first applicant to provide further information pursuant to s.359(2) of the Migration Act 1958 (the Act). Specifically, the Tribunal invited the applicant to provide the following additional information:
·Audited financial statements, or tax returns and tax assessments, for the last two financial years including: profit and loss statements, expenditure on wages and salaries, expenditure on training;
·Copies of the company's BAS statements for the previous six months;
·Evidence that company will introduce to, or utilise or create in Australia new or improved technology or business skills; or has a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents in their business operations;
·Evidence of the training of Australian citizens and permanent residents, this could include (but is not limited to): apprenticeship agreements, training programs, expenditure on training courses;
·Details of the company's structure, history, number of employees; and
·evidence of the employment of Australian citizens or permanent residents.
It will be noted that the evidence requested, as set out above, is largely pursuant to the requirements set out in 1.20D(2)(c) of the regulations.
In brief terms as stated by the Tribunal, the review applicant claims to be a business operating as a wholesale and retail supplier of fresh, frozen and prepackaged Japanese grocery foods and Korean and Chinese products and Japanese takeaway.
In response to the Tribunal's invitation, further information was provided by the applicant's migration agent by letter dated 31 December 2003, which included the audited financial statements of Daiwa for the financial year ended 30 June 2003 (court book 121-134, 135-136) and various documents claimed to provide evidence of Daiwa's commitment to training and its training program (court book pp.87-108, 117-120, 136-140).

The Tribunal Decision

In its decision dated 7 July 2004 the Tribunal had affirmed each of the delegate's decisions referred to earlier in this judgment.
The Tribunal stated that it was “not satisfied that the review applicant has the financial capacity to meet the additional demand of compliance with the undertakings given by the applicant in accordance with Form 1067.”
The Tribunal further stated that it found “that at this stage the requirements of paragraph 1.20D(2)(f) are not met.”
Under the heading "Findings" after referring to the requirements of 1.20D(2)(f) of the regulations the Tribunal relevantly states the following:
“33.The undertakings on Form 1067 include the ability to pay the visa applicant's repatriation costs, the salary of the visa applicant and any medical expenses for the visa applicant. Also the review applicant must pay superannuation contributions, comply with Australian industrial relations laws, levels of remuneration and conditions of employment.
34. The financial reports provided by the review applicant indicate that Daiwa Food Co Pty Ltd showed an increase in sales from 2001/2 to 2002/3 but there was fall in net profit from $26,091 in 2001/2 to $16,675 in 2002/3. In the hearing Mr Cho put the cost higher. There was no entry for expenditure on training.
35. By the review applicant's further reckoning employment of Mr Choi would cost $42,676 annually. Additionally, the review applicant estimated repatriation costs for the visa holders to be $5000.
36. On the evidence presented the Tribunal is not satisfied that the review applicant has the financial capacity to meet the additional demand of compliance with the undertakings given by the applicant in accordance with form 1067. The Tribunal finds that at this stage the requirements of paragraph 1.20D(2)(f) are not met.
37. Even if the review applicant had satisfied the requirements of paragraph 1.20D(2)(f) the Tribunal is not satisfied on all the evidence presented, including the evidence in the hearing, that the requirements under paragraph 1.20D(2)(c) are met….”
After setting out paragraph 1.20D(2)(c) of the regulations the Tribunal goes on to state the following:
“38.Departmental policy as outlined in PAM 3 is that 1.20D(2)(c)(i) caters only for leading-edge technology or business skills. The Tribunal finds that the evidence presented does not establish that the applicant will introduce, or utilise or create in Australia, new or improved technology and business skills. There is evidence of Mr Sae Chula Cho going to Japan but this appears to be no more than in the course of carrying out his existing role rather than training. The claims of other training are vague and the training documentation appears to have been left with Mr Sae Chula Cho and not had wider application to employees of the company. In the financial records of the company there is no item for training and there is no evidence of apprenticeships or formal traineeships. On the overall evidence presented the Tribunal finds that the requirements of subparagraph 1.20D(2)(c)(ii) are not satisfied.”

The Application

The application for review dated 3 August 2004 broadly asserts jurisdictional error in relation to the findings by the Tribunal that Daiwa did not satisfied regulations 1.20D(2)(c) and (f) of the regulations.

Regulation 1.20D(2)(c)(ii)

In relation to this regulation the applicant claims that the Tribunal erred by construing the regulation as requiring Daiwa to demonstrate a record or commitment to formal training. It was argued that the Tribunal failed to address and make findings on the evidence that Mr Sae Chula Cho went to Japan for the purpose of training and the Tribunal further erred by failing to address and make findings on the evidence that established that Mr Sae Chula Cho went to Japan for the purpose of training. It is further claimed that the Tribunal erred in the construction and application of the regulation by excluding from the concept of training any work done by an employee carrying out an existing role.
It was argued by the applicant that there are two limbs for the training component in relation to this regulation: first is whether there is a satisfactory record of training of Australian citizens and permanent residents in the business operation and the other is a demonstrated commitment towards those things. It was argued the second limb of the applicant's argument is the Tribunal did not address the alternative; that is, the demonstrated commitment. Reference was made to the brief findings of the Tribunal set out earlier in this judgment together with a history of Daiwa.
Reference was made to paragraphs 37 and 38 of the Tribunal decision set out earlier. No issue is taken with the first part of paragraph 38 which deals with regulation 1.20D(2)(c)(i). It was claimed, however, the reference to Mr Cho going to Japan in the course of carrying out "his existing role rather than training" failed to consider the wider application of training to work done by an employee carrying out an existing role. The Applicant referred the Court to a Full Court Decision of the Federal Court in the matter of Hiromi Masuoka and Chuji Ishizaki v Immigration Review Tribunal and Minister for Immigration and Ethnic Affairs (Unreported) 6 June 1996. That case although dealing with a different provision did deal with the question of training and referred to what is described as a breadth of training depending upon the nature of the particular business. Specific reference was made to the following passage which appears at paragraph 11 of the judgment:-
“11.… We think it clear that not infrequently on-the-job training can qualify as ‘adequate provision for training existing employees’.”
Relying upon the decision of the Full Court in Masuoka it was claimed that that decision should be preferred and the Court should find that in the present case the Tribunal has misconstrued the relevant provision.
The respondent, in dealing with the ground arising out of regulation 1.20D(2)(c) submitted that the finding by the Tribunal was a finding of fact in relation to this issue; namely whether it was satisfied that Daiwa had “a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents in the business operations of the applicant in Australia”.
Reference was made to the Federal Court decision in Nice Shoes Australia Pty Ltd v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 252 where Branson J stated the following at paragraph [16]:
“16 The Macquarie Dictionary (Rev 3^rd ed, 2001) relevantly defines ‘satisfactory’ as meaning ‘affording satisfaction; fulfilling all demands or requirements’. The New Oxford Dictionary of English (1998) may indicate a lesser standard. It relevantly defines ‘satisfactory’ as meaning ‘fulfilling expectations or needs; acceptable, though not outstanding or perfect’. The difficulty that attends the use of the term ‘satisfactory’ to qualify the record of training to which reg 1.20D(2)(c)(ii) refers is that the Migration Regulations 1994 provide no measure or standard against which a record of training is to be assessed in determining whether it affords satisfaction or is acceptable albeit not perfect. In the circumstances the necessary measure or standard must be found by implication from reg 1.20D read as a whole. Seen in that context, in my view, a ‘satisfactory record’ of training is a record that demonstrates that the applicant provides training to Australian citizens and Australian permanent residents to a degree reasonably commensurate with the nature and extent of its business operations in Australia. To put it in ordinary language, that the applicant makes a reasonable contribution to the training of the Australian workforce having regard to the nature and extent of its business operations in Australia.”
It was argued that that passage cited by the Full Court in MM International (Australia) Pty Ltd v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 323 included reference by the Full Court to the following:
“10 However, such a construction of the word ‘satisfactory’ does not advance the appellant’s case. The words ‘record’ and ‘demonstrated’ are unavoidably preterite in meaning. The Tribunal is obviously required to look to the past in making a determination under reg 1.20D(2)(c)(ii).”
Reference was made to the Nice Shoes Australia Pty Ltd decision of Branson J which involved "on the job" training and the following extract referred to:
“19 Similarly, in my view, the consideration given by the Tribunal to the nature of the training provided by the applicant does not disclose a misinterpretation or misapplication of reg 1.20D. Nor does it disclose that the Tribunal took into account an irrelevant consideration. As is mentioned above, the relevant issue for the Tribunal’s consideration was whether it was satisfied that the applicant has a satisfactory record of training Australian citizens and Australian permanent residents in its business operations in Australia. It is entirely understandable that the Tribunal might be less readily satisfied that a record of training is satisfactory where that record is of unquantifiable training all undertaken on-the-job than where that record is of quantifiable training undertaken, for example, at a training institution. That is not to say that on-the-job training that is not quantifiable can never provide the basis of a satisfactory record of training. It is just that a record of on-the-job training of a kind that is not quantifiable might prove difficult to evaluate for the purpose of determining whether that record of training is a ‘satisfactory record’. By contrast, a record of quantifiable training undertaken while free from the distraction of ordinary duties is likely to be more readily evaluated.”
It was argued that in the present case the Tribunal did not misconstrue the relevant regulation. It had regard to the evidence about the trip by Mr Sae Chula Cho to Japan and regard to more general matters concerning the applicant's record and commitment to training. It noted, amongst other things, claims of other training were vague and there was no evidence of formal training. It was argued that on the "overall evidence presented" it was open to the Tribunal to make the finding that the requirements of the regulation were not satisfied.
The Respondent submitted that the Tribunal did not exclude from the concept of training any work done by an employee in carrying out an existing role but rather found that it appeared Mr Cho had gone to Japan in the course of his existing duties rather than training. It was argued that in making that finding the Tribunal was seeking to draw the distinction between performance of existing duties and training in new skills. It was submitted that the applicant in the circumstances cannot seek a merit review of the Tribunal's finding of fact.
In my view the respondent's submissions in relation to this ground are correct. Although the reasons of the Tribunal are very brief, they cannot be interpreted as a failure to properly interpret the regulation. The Tribunal has indeed sought to consider claims of training and drawn a conclusion that those claims are "vague". It specifically, albeit briefly, considered the travel of Mr Cho to Japan, and by eliminating that travel as encompassing training, albeit in the course of carrying out his exiting role, it cannot be claimed the Tribunal has failed to consider at least the possibility that in carrying out the course of one's existing role, training may be a part of that process.
In this case the Tribunal in my view has made a finding of fact adverse to the applicant and has properly addressed that issue and eliminated the possibility that in this instance, performing the existing role did not include training. I do not see any error in relation to the way in which the Tribunal has interpreted and applied this regulation.

In my view the decision of the Court in the Nice Shoes case is more helpful than the decision dealing with the different provision in the Masuoka case relied upon by the Applicant. As indicated, I am not satisfied that in the present case the specific regulation has been misconstrued or interpreted incorrectly by the Tribunal.

Regulation 1.20D(2)(f)

The applicant claimed that in relation to this regulation the Tribunal had impermissibly confined its considerations to the net profit of Daiwa. Specifically, it was argued that the Tribunal erred in law by having regard only to the net profit of the first applicant and not to other considerations including “total cash on hand, turnover and total equity, each of which were relevant considerations on the capacity to meet compliance”.
It was further argued that it was never contended “by the applicant that it could meet the undertakings simply out of net profit”.
Hence it was argued that by confining its consideration to the question of whether net profit was sufficient to discharge the undertakings, the Tribunal misunderstood or failed to address the claims made by the first respondent during the course of argument, although it was acknowledged that the Tribunal referred earlier to other financial information. Specific reference was made to paragraph 29 of the Tribunal's decision which provides as follows:
“29.Mr Cho said that the pay level for the chef will be $50,000 to $60,000 plus superannuation and other costs. He was referred by the Tribunal to the financial records of the company for 2002/3 and it was pointed out that the net profit in that year appeared to be $16,675. He said that the sales are about $5million and said that the business has its highs and lows and there had been a lost of investment in the company. He said that the company has about $100,000 in the bank and there is about $5000,000 owing to the company. It was also pointed out that there was no item in the 2002/3 profit and loss for training expenses, to which he said that it was included in other expenses such as for wages.”
It was claimed that the Tribunal in setting out those details in the paragraph clearly relied upon net profit figures, and it was argued this was the basis upon which the Tribunal reached its decision, and to that extent, by confining itself to the question of net profit, the Tribunal had asked itself the wrong question. It was argued the Tribunal should have analysed the broader position in relation to the company and its ability to comply rather than simply looking at profit figures.
Reference was made to written submissions by the migration agent to the Tribunal (court book 135 and 136) where reference is made to what is described as substantial cash on hand claimed to be $114,024 in 2003.
Reference was further made to sales figures (court book page 140) where it is claimed that the company:-
“has not only achieved annual sales of approximately $4.9 million but has substantical cash assets (ie more than $114,000) on top of its net profit of $16,675.”
In support of the submissions for and on behalf of the applicant, reference was made to the Federal Court decision in Nassif v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 481 which, although it was a different type of visa application, reference was made to net assets of the main business needing to be at least $100,000. It was argued that although that case related to the definition of "main business", arguments were advanced that there were multiple businesses but that the Tribunal had only looked at one of those businesses.
It was argued by analogy in the present case that "net profit" was only one of the aspects raised but that the applicant was putting a much broader case before the Tribunal. Reliance was placed on the following paragraph from Branson J's judgment in Nassif where her Honour states:
“24 The applicant submits that the Tribunal equated `main business' with a single business entity. As a result, the Tribunal only inquired into whether the applicant had sufficient assets in Holdmark to fulfil the criterion in cl 845.215. The applicant submits that the Tribunal should have inquired into whether or not the applicant had sufficient assets to satisfy the requirement in the group of entities that the applicant submitted comprised the business.
….
28.A crucial issue to be determined on this application is the meaning of the expressions `main business' and `main businesses' in the context of cl 845.215. As is mentioned above, no statutory definition of `business' is available to assist the determination of this issue. The dictionary definitions of `business' are so numerous and so diverse that they provide little assistance for present purposes. I note, however, a few of the apparently more relevant definitions to be found in the Oxford English Dictionary, 2^nd edn, and the Macquarie Dictionary, 2^nd edn, respectively.”
It was argued in the present case that by confining itself to the question of net profit rather than the case being put by the applicant, the Tribunal had misunderstood the question of compliance with the undertakings and therefore had fallen in to error sufficient to constitute jurisdictional error.
During the course of submissions it was noted that paragraph 38 of the Tribunal's reasons set out earlier in this judgment does provide some more detail as to why it reached its conclusion.
The respondent argued that contrary to the applicant's contentions, the Tribunal did not impermissibly confine its consideration to the net profit of Daiwa. It referred in its reasons to the material accompanying the application and the documentation submitted by the applicant in response to the request for additional information, and this included the financial statement for 2001/02 and 2002/03.
The Tribunal's findings that Daiwa did not have the financial capacity to meet the additional demand of compliance with the undertaking was based, as it stated in the extract set out earlier in this judgment, "on the evidence presented. It was argued that there is nothing to indicate the Tribunal failed to take into account the other information set out in the financial statements, including turnover and cash on hand. In fact those matters were specifically referred to in the Tribunal's decision.
It was argued that it was open to the Tribunal to make its finding that the requirements of regulation 1.20D(2)(f) were not met. Given the reference to a drop in net profit from the previous year it was open to find that the business could not profitably take on the "additional demands" of complying the undertakings. Whether Daiwa could comply with the form 1067 undertakings in relation to Mr Choi was a question of fact for the Tribunal and not subject to review.
Reliance was placed on the decision of Nicholson J in Lace Holdings Pty Ltd v Minister for Immigration and Multicultural Affairs (2002) 117 FCR 79 at 86 [34] where the court states:
“... the Tribunal correctly interpreted and applied reg 1.20D(2)(f) of the Regulations. Satisfaction as to an applicant’s ability to comply with the undertakings is a finding of fact and degree for the Tribunal based on the circumstances of the case. The possibility that the Tribunal’s finding of fact is in error or that the court may have made a different finding of fact is not a permissible basis for review ...”
In my view the Tribunal has clearly referred to and analysed correctly the financial information provided by the applicant and has otherwise properly dealt with the requirements of this regulation. The reference to net profit is a valid reference and it should not be assumed that in considering whether or not Daiwa was able to comply with the undertakings, that by referring to net profit the Tribunal has ignored other material available to it.
Whilst a company may have significant turnover and claimed vast amounts of cash on hand, it is relevant in looking at that financial records that the Tribunal should have regard to a decline in profit from one year to the next. Significant turnover of itself or claimed cash in hand does not undermine or detract from an analysis of a decline in profit, and nor does it deprive the Tribunal from drawing a conclusion that the company could not profitably take on additional demands of complying with its undertakings required by the regulation.
It is clear that the Tribunal referred to the relevant statements for the financial years 2001/02 and 2002/03 and again, although providing brief reasons, has drawn conclusions reasonable open to it. Merely by failing to place emphasis on the broader issues relied upon by the applicant does not of itself mean that in this instance the Tribunal has fallen into error or committed what could be described as jurisdictional error for the purpose of judicial review.
The assessment of the facts, whilst unsatisfactory for the applicant, in this instance in my view does not provide a proper basis upon which the court should allow the application. Another Tribunal may place greater emphasis on factors including cash on hand or turnover, but that does not mean in this case that this Tribunal, having referred clearly to those matters, made any error in relying upon and drawing conclusions based on net declining profit from one financial year to the next.

Conclusion

It follows for the reasons given that the application should be dismissed with costs.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 16 November 2005