General Real Estate Investment (Australia) Pty Ltd (Migration)

General Real Estate Investment (Australia) Pty Ltd (Migration) [2018] AATA 4321 (5 October 2018)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  General Real Estate Investment (Australia) Pty Ltd
CASE NUMBER:  1720109
DIBP REFERENCE(S):  BCC2017/2190726
MEMBER:Mr S Norman
DATE:5 October 2018
PLACE OF DECISION:  Sydney
DECISION:The Tribunal affirms the decision under review to refuse the nomination.
Statement made on 05 October 2018 at 12:05pm

CATCHWORDS
MIGRATION – Employer Nomination – approval of nomination – capacity to pay full time position – parent company’s financial support – losses by nominating business – downturn in Australian property market – owing interest and loans – decision under review affirmed
LEGISLATION
Migration Regulations 1994 (Cth), r 5.19
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 16 August 2017 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).
The applicant applied for approval on 21 June 2017. 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).
In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Direct Entry Nomination stream.
The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(d)(i) of the Regulations because the delegate was not satisfied the nominator/applicant had capacity to pay for a full time position (salary $198,000 per annum plus superannuation), for at least two years.
The nominating applicant (represented by Mr Jie LONG – the Director) appeared before the Tribunal on 2 October 2018, to give evidence and present arguments. The (principal) visa applicant (Mr Yue ZUO – the current General Manager) also appeared before the Tribunal on 2 October 2018, to give evidence and present arguments. The Tribunal was not assisted by an interpreter at hearing. However after hearing the evidence, the Tribunal was satisfied the applicant and the visa applicant, were provided with a real opportunity to put evidence and submissions in support of the case (including at hearing).
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
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.
Term of employment of the visa holder: r.5.19(4)(d)
Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years full time, and the terms and conditions of that employment do not expressly exclude the possibility of an extension.
The applicant (General Real Estate Investment (Australia) P/L), lodged an online application on 21 June 2017. The nomination type was listed as Direct Entry and the position was for a Corporate Gen Manager (ANZSCO – 111211). The base salary was listed as $198,000 per annum (plus superannuation). The ANZSCO code stated:
UNIT GROUP 1112 GENERAL MANAGERS
GENERAL MANAGERS plan, organise, direct, control and review the day-to-day operations and major functions of commercial, industrial, government and defence organisations through departmental managers and subordinate executives.
Indicative Skill Level: In Australia and New Zealand:
Most occupations in this unit group have a level of skill commensurate with a bachelor degree or higher qualification. At least five years of relevant experience may substitute for the formal qualification. In some instances relevant experience and/or on-the-job training may be required in addition to the formal qualification (ANZSCO Skill Level 1).
Tasks Include:
oplanning policy, and setting standards and objectives for organisations
oproviding day-to-day direction and management of organisations, and directing and endorsing policy to fulfil objectives, achieve specific goals, and maximise profit and efficiency
oassessing changing situations and responding accordingly by issuing commands and directives to subordinate staff
oconsulting with immediate subordinates and departmental heads on matters such as methods of operation, equipment requirements, finance, sales and human resources
oauthorising the funding of major policy implementation programs
orepresenting the organisation at official occasions, in negotiations, at conventions, seminars, public hearings and forums, and liaising between areas of responsibility
opreparing, or arranging for the preparation of, reports, budgets and forecasts, and presenting them to governing bodies
oselecting and managing the performance of senior staff
omay undertake responsibility for some or all of accounting, sales, marketing, human resources and other specialist operations
Occupations:
111211 Corporate General Manager
111212 Defence Force Senior Officer

111211 CORPORATE GENERAL MANAGER
Alternative Title: Chief Operating Officer
Plans, organises, directs, controls and reviews the day-to-day operations and major functions of a commercial, industrial, governmental or other organisation through departmental managers and subordinate executives.
Skill Level: 1
Specialisations:
Assistant Commissioner (Police)
Hospital Administrator
Managing Editor
[1] accessed 11 April 2018.
Trade Union Secretary[1]
The nominator’s business was registered and an “ABN” number was provided. On the application, the nominator said the business was established or commenced trading in Australia on 8 December 2015, that it employed two Australian employees and one foreign employee. The head office of the business was at 261 George Street Sydney NSW 2000 (at hearing, it was said to now be located in Clarence St, Sydney). By migration agent letter,[2] it was said the nominee (the visa applicant) was to be paid a salary consistent with marketing salary surveys; that though the business had a relatively small turnover this was typical of the industry that the nominator’s business operated within; and that the business had engaged local Australian staff since its inception in December 2015.
[2] Tribunal – from folio 132 (reverse side).
The nominator lodged the following documents with the Department:
·     Addsum Accountants tax training for employees invoice (a Tax invoice dated 21 June 2017 in the amount of $1,280.40 was lodged with the Tribunal[3])
·     A signed employment contract dated 1 January 2016[4] (remuneration blacked out[5]); and 4 December 2017[6] (remuneration $198,000 per annum[7])
·     Job description
·     English Course enrolment invoice (payment summary provided)
·     Tax invoice, on-site Accounting and taxation training (payment summary included)
·     Spreadsheet showing payroll for year 2016.
[3] Tribunal – folio 85.
[4] Tribunal – from folio 110.
[5] Tribunal – folio 106.
[6] Tribunal – from folio 126.
[7] Tribunal – folio 122 (reverse side).
The delegate noted that no further documents were lodged. The delegate then noted the applicant had not provided financial evidence indicating the business had the financial capacity to provide a permanent full-time position to the nominee for at least two years. Accordingly, the delegate was not satisfied the applicant met reg 5.19(4)(d)(i) or reg 5.19(4) of the Regulations. The delegate also found that that since insufficient evidence had been lodged with respect to reg 5.19(3), they had not met this alternate sub-regulation.
By s.359(2) letter of 13 February 2018 (dispatched by email to the authorised recipient), the Tribunal requested that the applicant provide updated and current information addressing the criteria in reg 5.19(2) or (4).
By migration agent response, it was claimed the current General Manager (the nominee), and the Director (Jie Long), were authorised to speak on behalf of the nominating business. The agent also lodged a range of documentary evidence including[8] Current & Historical Company Extract;[9] financial statements for the year ending June 2017; BAS statements for the period October 2016 to December 2017; ATO activity statements for the period July 2016 to January 2018; a lease agreement for one year (terminating dated 31 May 2018[10]); photographs of office space[11]; bank statements for the period January 2017 to January 2018; organisation charts[12]; evidence of overseas subsidiaries; a subclass 457 position nomination approval (approval dated 18 January 2018[13]); employment contract and market salary submission and market salary surveys; and evidence of having a training benchmark in 12 months prior to the lodgement of the nomination application.
[8] Tribunal – from folio 244.
[9] Tribunal – from folio 242.
[10] Tribunal – from folio 228 (reverse side).
[11] Tribunal – from folio 99.
[12] Tribunal – from folio 105 (reverse side).
[13] See Tribunal file – from folio 134 (reverse side).
Regarding the abovementioned subclass 457 visa, it was explained the nominee was currently employed by Robert Walters P/L (since early 2016), who then ‘on hired to the sponsoring employee as an urgent interim measure to address the immediate skill shortage within’ the nominator’s business. Further, the Tribunal understands the nomination approval relating to the subclass 457 visa was approved by the Department on 18 January 2018.[14]
[14] Tribunal – folio 133 (reverse side).
Also lodged with the Tribunal was a bank statement from China Merchants Bank dated 22 August 2017,[15] referring to the Beijing General Real Estate Development Co Ltd. It was claimed that company had an account holding RMB 201,152,791.30 (approximately AUD$41,305,564.44). At hearing it was explained this was the parent company and the nominating business would be able to rely on the support of the parent company for its business ventures in Australia. It was also said that loans from Australian financial institutions were approved with some support from the parent company. However, the Tribunal notes the parent company remains a separate legal entity and not responsible for all losses that may be borne by the nominating business.
[15] Tribunal – from folio 181.
Next, also lodged was a Westpac Business One account dated 31 July 2017,[16] referring to General Real Estate Investments (Australia) P/L (the nominating business), showing an amount of $110,572.95); and a second statement dated to 29 December 2017,[17] indicating a closing balance of $34,578.93; and a third statement to 31 January 2018,[18] indicating a closing balance of $22,125.42. Also, Australian Tax Office (ATO) Activity Statements were lodged; including one lodged 16 January 2018[19] indicating total salary wages and other payments of $15,125 (and an amount owing to the ATO of $3218); and one lodged 21 February 2018 indicating total salary wages and other payments of $24,244 (and an amount owing to the ATO of $5776).
[16] Tribunal – folio 179.
[17] Tribunal – folio 173 (reverse side).
[18] Tribunal – folio 165.
[19] Tribunal – from folio 240 (reverse side).
By email of 25 July 2018,[20] further evidence and submissions were lodged with the Tribunal. These included:
[20] Tribunal – from folio 338.
·Migration agent submissions claiming the nominator’s business had “recently undergone further business growth in Australia”[21]
·An Organisation Chart for GREI Australian Group Entities[22]
·BAS – including Jan-March 2018 showing total sales as ‘$0’; and salary as ‘$34,640’[23]
·Bank accounts[24]
·An invoice from the Macquarie Education Group Australia dated 8 October 2018 (sic) and in the amount of $7200[25]
·Payroll activity statements[26]
·An undated deed of assignment[27]
·A Lease[28]
·Photographs of office space[29]
[21] Tribunal – folio 336.
[22] Tribunal – folio 335.
[23] Tribunal – from folio 334.
[24] Tribunal – folio from 331.
[25] Tribunal – folio 304
[26] Tribunal – from folio 303.
[27] Tribunal – from folio 301.
[28] Tribunal – folio 295.
[29] Tribunal – from folio 257.
Also lodged was a Profit and Loss statement to 30 June 2016, indicating a ‘closing retained profit’, being a loss of ($185,987.50)[30]; and to 30 June 2017, indicating a ‘closing retained profit’, being a loss of ($717,095.94)[31]. As noted above, the migration agent claimed that though the business had a relatively small turnover this was typical of the industry the nominator’s business operated within.
[30] Tribunal – folio 145.
[31] Tribunal – folio 139.
At hearing, the Tribunal noted the substantial resources of the parent company (Beijing General Real Estate Development Co Ltd). The applicant said the parent company would ‘underwrite’ the nominating business in Australia, and provide relatively inexpensive loans, however, the Tribunal noted the parent company remained a separate legal entity and (based on the following evidence) I would need to consider the extent to which I was satisfied it may support the nominating business in Australia in the foreseeable future.
Regarding the Chinese economy, the country information included:
2.6 China is the world’s second-largest economy (after the United States), the largest exporter of goods, second-largest importer of goods, the third-largest exporter of services and second-largest importer of services. China’s economy averaged real annual GDP growth of 9.4 per cent between 1978 and the onset of the global financial crisis in 2008. Since then, economic growth has slowed with slowing capital and labour productivity. According to China's National Bureau of Statistics, China’s GDP grew 6.7 per cent in 2016.[32]
[32] DFAT COUNTRY INFORMATION REPORT PEOPLE’S REPUBLIC OF CHINA, 21 December 2017.
When discussed at hearing, it was said the nominating business was focussing on sale of Australian properties to local buyers and not overseas investors. The Tribunal noted the 2015 feasibility studies for some of the nominating businesses’ current projects (including a Newcastle apartment project) were made prior to the downturn in the Australian property market (and at a time when foreign investment in the Australian property market was substantial). The applicant said that their enquiries with local persons in Australia (in 2015), meant the nominating business focussed on projects outside the (Sydney) metropolitan area as they were (words to the effect) concerned about the possibility of a downturn in the local property market.
Be that as it may, regarding the property market in Australia, at hearing the Tribunal noted that information before it suggested that there had been a substantial (and ongoing) downturn in the Australian property market (including in NSW[33]). Further, that it may not appear the nominating business (whose ‘primary purpose was to invest in undeveloped real estate projects in Australia’) would continue to be financially capable of paying the nominee the nominated amount for at least two years. The applicant claimed the feasibility studies they had obtained indicated the two Newcastle projects (apartment development and townhouse development – and future projects at Leppington and other locations were mentioned) were anticipated to bring a 15-20% profit.
[33] For instance, see ‘Plotting Recent Housing Market Downturns’, CoreLogic, Cameron Kusher 23 April 2018, - accessed 10 July 2018; ‘Sydney and Melbourne property prices predicted to fall by up to 4 per cent, David Chau, 8 May 2018, - accessed 10 July 2018; ‘Buyers wait for bargains as Australia's housing market hits long slide’, The Guardian, 8 September 2018, accessed 2/10/2018; ‘That unfolding Australian house price crash’, Financial Times, 20 August 2018, accessed 2 October 2018; ‘Australian home price are falling faster and in more locations’, Business Insider, 2 October 2018, accessed 2 October 2018; and ‘Like frightened turtles”: Why everyday borrowers will suffer most in banking royal commission aftermath’, SMARTCOMPANY, 30 September 2018, accessed 2 October 2018.
The applicant did also say that bank loans were obtained by the nominating business in Australia. The applicant explained that a ‘soft approach’ was made to the banks in early 2017, and the loans were obtained in late 2017 – and the Tribunal understands the parent company provided some guarantee to ensure the bank loans were provided. After then noting the fairly substantial losses of the nominating business in the 2015/2016 & 2016/2017 financial years, the applicant said it was expected that settlements in the Newcastle apartment project would occur in early 2019 (though some settlements may occur in late 2018). However, the Tribunal also noted there were also substantial losses that needed to be repaid, interest on loans for construction as well as construction costs, and the applicant conceded there was also around AUD$10 million owed to the parent company.
The applicant also referred to future directions for the nominating business (including in joint ventures with Australian builders and developments) and it was hoped this would enhance the ‘long term’ profitability of the nominating business.
That being said, it was subsequently conceded the feasibility studies for the Newcastle project/s were obtained in 2015; and the Tribunal said it understood this was well before the significant downturn in the property market from around 2017. The applicant had said the parent company would ensure the financial viability of the nominating business, that the parent company wished to expand into the Australian market, and that it was hoped the business would be profitable within around two years. The applicant also said they felt confident the nominating business would succeed in Australia. However, the applicant also conceded the parent company had also questioned him fairly recently about the future profitability of the nominating business given the more recent substantial downturn in the Australia property market (and at hearing the Tribunal noted it would consider whether it accepted the parent company would continue to financially support the nominating business in Australia).
The Tribunal accepts the applicants remain ‘confident’ about the future profitability of the nominating business (as they claimed). However, based on the information before the Tribunal, (which includes financial records and the country information), I am not satisfied the nominating business would have the capacity to pay the nominating salary for at least two years. Based on the evidence before the Tribunal, I am also not satisfied it is plausible the parent company would be prepared to continue to suffer the losses which may likely arise in the ongoing downturn in the Australia property market (and the Tribunal notes the nominee had been working and being paid since early 2016). The Tribunal is therefore not satisfied the nominee will be employed in the nominated position for at least 2 years full time. Therefore, the applicant does not meet r.5.19(4)(d)(i) of the Regulations.

Accordingly, the requirement in r.5.19(4)(d) is not met.
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
The Tribunal affirms the decision under review to refuse the nomination.
Mr S Norman
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
(aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; 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;
(AAA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;
(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 specified by the Minister in an instrument in writing for this sub-subparagraph;
(DA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;
(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).

[2018] AATA 4321

5 October 2018

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction

Jurisdiction

Procedural Fairness