First Nova Pty Ltd (Migration)

First Nova Pty Ltd (Migration) [2017] AATA 386 (9 March 2017)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  First Nova Pty Ltd
CASE NUMBER:  1603843
DIBP REFERENCE(S):  BCC2015/3813781
MEMBER:Christopher Smolicz
DATE:9 March 2017
PLACE OF DECISION:  Adelaide
DECISION:The Tribunal affirms the decision not to approve the nomination.
Statement made on 09 March 2017 at 11:53am

CATCHWORDS
Migration – Nomination – Genuine position – Written contract of employment – Employment with another company on consultancy basis – Salary paid by other company
LEGISLATION
Migration Act 1958, s 140GB
Migration Regulations 1994, r 2.72

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 8 March 2016 to refuse to approve the applicant’s nomination under s.140GB of the Migration Act 1958 (the Act) and r.2.72 of the Migration Regulations 1994 (the Regulations).
The applicant applied for approval on 11 December 2015. A nomination of an occupation for a Subclass 457 visa is made under s.140GB of the Act and r.2.73 of the Regulations. Regulations 2.72(3) to (12) prescribe the criteria that must be satisfied for the Minister to approve a nomination by a person. These criteria are extracted in the attachment to this decision. For nomination applications made from 23 November 2013, additional criteria are specified in s.140GBA.
The delegate decided not to approve the nomination on the basis that the applicant did not satisfy r.2.72(10)(f) because the delegate was not satisfied that the position associated with the nomination is genuine. As a consequence the Department refused the related subclass 457 visa application of the nominee, Mr Charles Kwok Leong Wong (AAT file Ref. 1603935).
On 28 February 2017 the Tribunal conducted a combined hearing with Mr Pedicini, the General Manager of First Nova Pty Ltd (First Nova) and the nominee Mr Wong.
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
First Nova is a renewable energy and solar company which commenced trading in September 2014. The business focus is offering in-home installation services including solar photovoltaic (PV) systems, solar hot water systems and LED lighting systems. It was submitted that over the past 24 months the business has evolved from a small energy retailer into a mid-size operation that also offers installations, service, maintenance works.
According to First Nova’s 2016 income tax return the business generated sales of $1,113,699 and recorded a profit of $4,694. The business carried forward tax losses of $85,026.
Mr Pedicini said that the cost of equipment was the biggest investment for the business. He made some poor decisions which resulted in the company purchasing infrastructure which resulted in a loss for the business. Mr Pedicini said that the company is currently operating below its targets and but he expects to generate sales of $1.7 in the next financial year.
It was submitted that to date solar PV systems have been the main focus of the business with the intention to pursue Solar Power Purchase Agreements (SPPA) in the future for commercial retailers. Mr Pedicini said that at present the business has about 150 SPPA installed.
A SPPA agreement allows a business to purchase renewable energy without the cost of ownership. The agreement enables a business to install solar PV without having to pay up front. The SPPA provider installs, owns, operates and maintains the solar PV system at the customer’s premises and in return the customer pays for the electricity produced by the system. It was submitted that SPPA are capital intensive with First Nova effectively having stock allocated only when it is required for installation. Another aspect of this position is to ensure that First Nova and its affiliated entities have a supply agreement in place with overseas suppliers to ensure credit terms are provided for a growing business.
Mr Pedicini said that there was a need for a Program/Project Administrator to assist him in the business. He said that Mr Wong spoke Mandarin and had worked in the solar industry which made him a valuable employee who could negotiate contracts with Chinese suppliers.
The Tribunal asked Mr Pedicini how Mr Wong was selected for the position. Mr Pedicini said that the position was not advertised. He had previously worked with Mr Wong at Great Solar Solutions Pty Ltd and Planet Safe Energy. Unfortunately both businesses went into receivership and he had a number of business debts which he had to personally repay.
The representative submitted that previous nominations were approved by the Department with Mr Wong as the nominee for the position of Program or Project Administrator with Planet Safe Energy Pty Ltd on 15 January 2015 and with the Solar Shop Group Pty Ltd on 14 March 2014. The Tribunal also notes that reports confirm that both companies went into receivership. The Tribunal notes the Mr Wong was also the Director of Great Solar solutions and media reports confirm the business was also placed under administration in November 2013.
The Tribunal questioned Mr Pedicini about the current structure of First Nova. Mr Pedicini said that he reports to Mr Quoc Dinh who is the Director of the business. Mr Dinh is an active director who takes part in the day-to-day running of the business and is based in South Australia. Mr Pedicini said that he is responsible for the day-to-day operations and is responsible for high level decision making. He ensures that stock is on hand, looks after billing and facilitates customer orders among other duties. The company has an accounts manager, accounts officer, about 15 electricians and trade assistants, roofers and five full time sales consultants.
Prior to the hearing the Tribunal requested all PAYG Payment Summary statements for employees of the business for the 2016 financial year. The Tribunal noted that PAYG Payment Summary statements provided by the applicant in relation to the employees were all issued by Savawatt Pty Ltd (ABN 59 609 029 316) which was different entity from the nominating business. The Tribunal questioned Mr Pedicini about why the PAYG Payment Summary statements were issued by a third party and not the applicant, First Nova.
Mr Pedicini said that Savawatt Pty Ltd employed and paid all employees who then worked as contractors for First Nova. Mr Pedicini said that this was a business model with provided security for the First Nova. The Tribunal asked Mr Pedicini which entity would employ the nominee if the nomination was approved. Mr Pedecini said that the nominee would be employed by Savawatt Pty Ltd and work as a consultant for First Nova.
The Tribunal questioned Mr Pedicini about Mr Wong’s current duties at First Nova. Mr Pedicini said that Mr Wong had not commenced working for First Nova because his visa was refused. Mr Pedicini said that he was not aware the contract was executed and thought it was now void because the visa was refused.
The Tribunal referred Mr Pedicini to the employment contract between First Nova and the nominee dated 24 August 2015. The Tribunal told Mr Pedicini it was surprised that the visa applicant was not employed in the business in terms with the contract and given his claim that there was a need for the position of Program/Project Administrator.
It was submitted that Mr Wong is the holder of Bridging visa condition (8107) prevents him from working. He is currently not working and said that his able to financially support himself from his inheritance.
The Tribunal referred Mr Pedicini to correspondence issued by his migration agent which stated that First Nova is expecting a financial due diligence for a merger acquisition for expansion. The Tribunal told Mr Pedicini that an acquisition of the business may have ramifications on the nomination application and its sponsorship obligations. Mr Pedicin said that he was not aware of the merger. The Tribunal provided Mr Pedicin with further time after the hearing to provide further information on this issued and how it will impact on the nomination application. In post hearing submissions the Tribunal received correspondence from Mr Dinh suggesting that the merger acquisition for expansion saw no change in the structure of business. Mr Dinh did not provide any further details about when or how the expansion took place or the name of the investing entities or the new or proposed structure.
Mr Wong is citizen of Malaysia. He has completed a Diploma in Business Studies at Disted Stamford in Malaysia in 2004. He has travelled to Australia as a holder of a student visa but did not complete any of his studies in Australia and commenced working for Great Solar Solutions in April 2011.
The Tribunal questioned Mr Wong about the circumstances in which he became a director of First Nova. Mr Wong said he was a personal friend of Mr Dinh. Mr Dinh needed a person to act as a guarantor on lease agreement. Mr Wong said he only became a director for the purpose of assisting Mr Dinh and was issued with “waiver of liability” letter a copy of which was provided to the Tribunal.
The issue in the present case is whether the applicant meets the criteria for approval of the nomination. The Tribunal must approve the nomination if the applicable requirements in r.2.72 and, for nomination applications made from 23 November 2013, s.140GBA have been met: s.140GB(2).
Engage the nominee only as an employee under a contract
Regulation 2.72(10)(h) requires that the applicant will engage the nominee only as an employee under a written contract of employment and give a copy of that to the Minister, unless the nominated occupation is specified in the instrument IMMI.
There is not relevant instrument specifying occupations for r.2.72(10)(e)(iii)(B) and therefore r.2.72(10)(h)(ii) is not satisfied.
A signed contract of employment between First Nova and the nominee was provided to the department with the nomination application.
The Tribunal considers that the requirement that the contract be provided to the Minister is so that the Minister may have and keep a copy of the executed contract, the terms of which are relevant to various nomination criteria, and relevant to other ‘compliance’ matters and the sponsor’s obligations during the validity period of the Subclass 457 visa. In the Tribunal’s view Regulation 2.72(10)(h) requires the contract to be valid and reflect the nature of the employment relationship which is the basis of the nomination and the sponsors obligations as an employer.
The Tribunal has had regard to Mr Pedicini’s evidence and finds that Savawatt Pty Ltd (a separate legal entity) employs and pays all the people who work as contractors for First Nova. The Tribunal has no reason to doubt the veracity of Mr Pedicini’s evidence. The Tribunal was not provided with any evidence that First Nova employs any workers
The Tribunal was not provided with any evidence about the contractual relationship between First Nova Pty Ltd and Savawatt Pty Ltd.
The Tribunal finds that Mr Pedicini’s evidence is not consistent with the employment contract provided to the Department. Firstly, the employment contract was signed by the nominee and Mr Dinh as Director of First Nova. The contract states that the nominee will receive $80,000 per annum and that First Nova will contribute the requirement amount of superannuation into this nominated fund. The contract is set to commence when the 457 visa is approved. The Tribunal is not satisfied that First Nova will pay the nominee’s salary, superannuation and engage the nominee only as an employee under a written contract. The Tribunal has had regard to Mr Pedicini’s evidence and finds that the applicant’s intention is that the nominee will be employed by Savawatt Pty Ltd on a consultancy basis and that Savawatt Pty Ltd will pay the nominees salary.
The Tribunal has regard to Mr Pedicini’s evidence and is not satisfied that the applicant will engage the nominee only as an employee under a written contract of employment.
For these reasons the requirements of r.2.72(10)(h) are not met.
For the reasons given above, the Tribunal is not satisfied that the applicant meets the applicable criteria for the nomination to be approved. Accordingly, the decision under review must be affirmed.
DECISION
The Tribunal affirms the decision not to approve the nomination.
Christopher Smolicz
Member

ATTACHMENT - EXTRACTS FROM THE MIGRATION REGULATIONS 1994
2.72 Criteria for approval of nomination — Subclass 457…
(1)This regulation applies to a person who is:
(a)a standard business sponsor; or
(b)a party to a work agreement (other than a Minister);
who, under paragraph 140GB (1) (b) of the Act, has nominated an occupation in relation to a holder of, or an applicant or a proposed applicant for, a [Subclass 457 visa].
(2)For subsection 140GB (2) of the Act, the criteria that must be satisfied for the Minister to approve a nomination by a person are set out in subregulations (3) to (12).
(3)The Minister is satisfied that the person has made the nomination in accordance with the process set out in regulation 2.73.
(4)The Minister is satisfied that the person is:
(a)a standard business sponsor; or
(b)a party to a work agreement (other than a Minister).
(5)The Minister is satisfied that the person has identified in the nomination the visa holder, or the applicant or proposed applicant for the visa, who will work in the nominated occupation.
(6)If the person identifies a holder of a [Subclass 457 visa] (the visa holder) for subregulation (5), the Minister is satisfied that the person:
(a)has listed on the nomination each other holder of a visa of that kind who was granted the visa on the basis of having the necessary relationship with the visa holder as mentioned in clause 457.321 of Schedule 2; and
(b)if the Minister requires the visa holder to demonstrate that he or she has the skills necessary to perform the occupation — the visa holder demonstrates that he or she has those skills in the manner specified by the Minister.
(7)For paragraph (6) (a), the Minister may disregard the fact that 1 or more persons required to be listed on the nomination are not listed, if the Minister is satisfied it is reasonable in the circumstances to do so.
(7A)In addition to subregulation (6):
(a)if:
(i)     the person identifies a holder of a [Subclass 457 visa] (the visa holder) for subregulation (5); and
(ii)    the [Subclass 457 visa] was granted after the Minister had waived the requirements of paragraph 4006A (1) (c) of Schedule 4 on the basis of a written undertaking made by the current sponsor of the visa holder (as set out in subclause 4006A (2) of that Schedule);
the Minister is satisfied that the person has provided, in writing, an undertaking that is equivalent to the undertaking made by the current sponsor of the visa holder; and
(b)if:
(i)     the person identifies a holder of a [Subclass 457 visa] (the visa holder) for subregulation (5); and
(ii)    the person has listed on the nomination a person described in paragraph (6) (a); and
(iii)     the [Subclass 457 visa] was granted to the person described in paragraph (6) (a) after the Minister had waived the requirements of paragraph 4006A (1) (c) of Schedule 4 on the basis of a written undertaking made by the current sponsor of the visa holder (as set out in subclause 4006A (2) of that Schedule);
the Minister is satisfied that the person has provided, in writing, an undertaking that is equivalent to the undertaking made by the current sponsor of the visa holder.
(8)If the nomination was made before 1 July 2010 — the Minister is satisfied that the person has provided the following information as part of the nomination:
(a)if there is a 6‑digit ASCO code for the nominated occupation — the 6-digit ASCO code;
(b)if there is no 6-digit ASCO code for the occupation, and the person is a standard business sponsor — the name of the occupation as it appears in the instrument in writing made for the purposes of paragraph (10) (a);
(c)if there is no 6-digit ASCO code for the occupation and the person is a party to a work agreement — the name of the occupation as it appears in the work agreement;
(d)the location or locations at which the nominated occupation is to be carried out.
(8A)If the nomination is made on or after 1 July 2010 – the Minister is satisfied that the person has provided the following information as part of the nomination:
(a)if there is a 6-digit ANZSCO code for the nominated occupation - the name of the occupation and the corresponding 6-digit ANZSCO code;
(b)if:
(i)     there is no 6-digit ANZSCO code for the nominated occupation; and
(ii)    the person is a standard business sponsor;
the name of the occupation and the corresponding 6-digit code as they are specified in the instrument in writing made for paragraph (10)(aa);
(c)if:
(i)     there is no 6-digit ANZSCO code for the nominated occupation; and
(ii)    the person is a party to a work agreement;
the name of the occupation and the corresponding 6-digit code (if any) as they are specified in the work agreement;
(d)the location or locations at which the nominated occupation is to be carried out.
(9)The Minister is satisfied that either:
(a)there is no adverse information known to Immigration about the person or a person associated with the person; or
(b)it is reasonable to disregard any adverse information known to Immigration about the person or a person associated with the person.
(10)If the person is a standard business sponsor — the Minister is satisfied that:
(a)if the nomination was made before 1 July 2010 - the nominated occupation corresponds to an occupation specified by the Minister in an instrument in writing for this paragraph; and
(aa)if the nomination is made on or after 1 July 2010 – the nominated occupation and its corresponding 6-digit code correspond to an occupation and its corresponding 6-digit code specified by the Minister in an instrument in writing for this paragraph; and
(b)if required by the instrument mentioned in paragraph (a) or (aa) — the nomination of an occupation mentioned in the instrument is supported, in writing to the Minister, by an organisation specified by the Minister in an instrument in writing for this paragraph; and
(c)the terms and conditions of employment of the person identified in the nomination will be no less favourable than the terms and conditions (including, if applicable, the terms and conditions provided by an enterprise agreement under the Fair Work Act 2009) that are provided or would be provided to an Australian citizen or an Australian permanent resident for performing equivalent work at the same location; and
(cc)the base rate of pay, under the terms and conditions of employment mentioned in paragraph (c), that:
(i)     are provided; or
(ii)    would be provided;
to an Australian citizen or an Australian permanent resident, will be greater than the temporary skilled migration income threshold specified by the Minister in an instrument in writing for this paragraph; and
(d)if the nomination was made before 1 July 2010 - the person has certified as part of the nomination, in writing, that:
(i)     the tasks of the position include a significant majority of the tasks of:
(A)the nominated occupation listed in the ASCO; or
(B)the nominated occupation specified in an instrument in writing for paragraph (a); and
(ii)    if the person is lawfully operating a business outside Australia but does not lawfully operate a business in Australia:
(A)the nominated occupation is a position in the business of the standard business sponsor; or
(B)the nominated occupation is an occupation specified by the Minister in an instrument in writing for this sub-paragraph; and
(iii)     if the person lawfully operates a business in Australia:
(A)the nominated occupation is a position with a business, or an associated entity, of the person; or
(B)the nominated occupation is an occupation specified by the Minister in an instrument in writing for this sub-paragraph; and
(iv)    the qualifications and experience of the visa holder, or the applicant or proposed applicant for the visa, identified in relation to the nominated occupation are commensurate with the qualifications and experience specified:
(A)for the occupation in the ASCO; or
(B)if there is no ASCO code for the nominated occupation — for the occupation in the instrument in writing made for the purpose of paragraph (a); and
(e)if the nomination is made on or after 1 July 2010 – the person has certified as part of the nomination, in writing, that:
(i)     the tasks of the position include a significant majority of the tasks of:
(A)the nominated occupation listed in the ANZSCO; or
(B)the nominated occupation specified in an instrument in writing for paragraph (aa); and
(ii)    if the person is lawfully operating a business outside Australia but does not lawfully operate a business in Australia:
(A)the nominated occupation is a position in the business of the standard business sponsor; or
(B)the nominated occupation is an occupation specified by the Minister in an instrument in writing for this sub-subparagraph; and
(iii)     if the person lawfully operates a business in Australia:
(A)the nominated occupation is a position with a business, or an associated entity, of the person; or
(B)the nominated occupation is an occupation specified by the Minister in an instrument in writing for this sub-subparagraph; and
(iv)    the qualifications and experience of the visa holder, or the applicant or proposed applicant for the visa, identified in relation to the nominated occupation are commensurate with the qualifications and experience specified:
(A)for the occupation in the ANZSCO; or
(B)if there is no ANZSCO code for the nominated occupation - for the occupation in the instrument in writing made for paragraph (aa).
(f)the position associated with the nominated occupation is genuine; and
(g)if the person has identified in the nomination the holder of a Subclass 457 (Temporary Work (Skilled)) visa in relation to whom the requirements in subclause 457.223(6) of Schedule 2 were met—one of the following applies:
(i)     the requirements in subclause 457.223(6) of Schedule 2 continue to be met;
(ii)    if:
(A)the holder would be required to hold a licence, registration or membership that is mandatory to perform the occupation nominated in relation to the holder; and
(B)in order to obtain the licence, registration or membership, the holder would need to demonstrate that the holder has undertaken a language test specified by the Minister under subparagraph 457.223(4)(eb)(iv) of Schedule 2 and achieved a score that is better than the score specified for the test by the Minister under subparagraph 457.223(4)(eb)(v) of Schedule 2;
the holder demonstrates that he or she has proficiency in English of at least the standard required for the grant (however described) of the licence, registration or membership;
(iii)     the holder is an exempt applicant within the meaning of subclause 457.223(4) of Schedule 2;
(iv)    unless subparagraph (ii) applies—the holder:
(A)has undertaken a language test specified by the Minister under subparagraph 457.223(4)(eb)(iv) of Schedule 2; and
(B)achieved within the period specified by the Minister in a legislative instrument for this subparagraph, in a single attempt at the test, the score specified by the Minister under subparagraph 457.223(4)(eb)(v) of Schedule 2; and
(h)either:
(i)     the person will:
(A)engage the visa holder, the applicant for a visa or the proposed applicant for a Subclass 457(Temporary Work (Skilled)) visa only as an employee under a written contract of employment; and
(B)give a copy of that contract to the Minister; or
(ii)    the nominated occupation is an occupation specified by the Minister in an instrument in writing for sub-subparagraph (e)(iii)(B).
(10AA)For paragraphs (10) (c) and (cc), if no Australian citizen or Australian permanent resident performs equivalent work in the person’s workplace at the same location, the person must determine, using the method specified by the Minister in an instrument in writing for this subregulation:
(a)the terms and conditions of employment; and
(b)the base rate of pay, under the terms and conditions of employment;
that would be provided to an Australian citizen or an Australian permanent resident to perform equivalent work in the person’s workplace at the same location.
(10AB)Paragraphs (10) (c) and (cc) do not apply if the annual earnings of the person identified in the nomination are equal to or greater than the amount specified by the Minister in an instrument in writing for this subregulation.
(10A)The Minister may disregard the criterion in paragraph (10) (cc) for the purpose of subregulation (2) if:
(a)the base rate of pay will not be greater than the temporary skilled migration income threshold specified for that paragraph; and
(b)the annual earnings are equal to or greater than the temporary skilled migration income threshold; and
(c)the Minister considers it reasonable to do so.
(11)If the person is a party to a work agreement (other than a Minister) — the Minister is satisfied that:
(a)the nominated occupation is specified in the work agreement as an occupation that the person may nominate; and
(b)if the nomination was made before 1 July 2010 - the person has certified as part of the nomination, in writing, that:
(i)     the tasks of the position include a significant majority of the tasks of:
(A)if the nomination is made using an ASCO code - the nominated occupation listed in the ASCO; or
(B)if the nomination is not made using an ASCO code -the nominated occupation specified in the work agreement; and
(ii)    the qualifications and experience of the visa holder, or the applicant or proposed applicant for the visa, identified in relation to the nominated occupation are commensurate with the qualifications and experience specified for the occupation in the work agreement; and
(c)if the nomination is made on or after 1 July 2010 - the person has certified as part of the nomination, in writing, that:
(i)     the tasks of the position include a significant majority of the tasks of:
(A)if the nomination is made using an ANZSCO code - the nominated occupation listed in the ANZSCO; or
(B)if the nomination is not made using an ANZSCO code -the nominated occupation specified in the work agreement; and
(ii)    the qualifications and experience of the visa holder, or the applicant or proposed applicant for the visa, identified in relation to the nominated occupation are commensurate with the qualifications and experience specified for the occupation in the work agreement.
(12)If the person is a party to a work agreement and the work agreement specifies requirements that must be met by the party to the work agreement — the Minister is satisfied that the requirements of the work agreement have been met.

[2017] AATA 386

9 March 2017

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Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction