Gutta (Migration)

[2020] AATA 2377

Gutta (Migration) [2020] AATA 2377 (18 June 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Iqbal Yoosuf Gutta

Nadia Gutta

Altaz Iqbal Gutta

Zidaan Iqbal Gutta

Tariq Iqbal Gutta

CASE NUMBER:  1905386

HOME AFFAIRS REFERENCE(S): BCC2018/743567

MEMBER:Peter Ranson

DATE:18 June 2020

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal remits the applications for Business Skills - Business Talent (Permanent) (Class EA) visas for Iqbal Yoosuf Gutta, Nadia Gutta, Zidaan Iqbal Gutta and Tariq Iqbal Gutta for reconsideration, with the direction the first named visa Applicant meets the following criteria:

·cl.132.226 of Schedule 2 to the Regulations.

The Tribunal finds it does not have jurisdiction to review the application for Business Skills - Business Talent (Permanent) (Class EA) visa for Altaz Iqbal Gutta.

Statement made on 18 June 2020 at 12:26pm

CATCHWORDS
MIGRATION – Business Skills - Business Talent (Permanent) (Class EA) visa – Subclass 132 (Business Talent) – Significant Business History stream – net value of business and personal assets – Tribunal’s valuation approach – lawful acquisition – availability for transfer – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), Schedule 2, cl 132.226

STATEMENT OF DECISION AND REASONS

Table of Contents

APPLICATION FOR REVIEW

OVERVIEW OF THE RELEVANT PRIMARY CRITERIA

Common criteria

Criteria for Significant business history stream

CONSIDERATION OF CLAIMS AND EVIDENCE

Why did the delegate refuse the application?

What does clause 132.226 require?

The Applicant’s net business and personal assets

Verification of business and personal assets

Were the assets lawfully acquired?

Availability for transfer

Finding regarding cl.132.226

REQUEST TO COMBINE REVIEW APPLICATIONS - ALTAZ IQBAL GUTTA

DECISION

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 20 February 2019 to refuse to grant the visa Applicants a Business Skills - Business Talent (Permanent) (Class EA) visas under s.65 of the Migration Act 1958 (the Act).

2. The Applicants were invited to apply for the visa on 22 December 2017 and applied for the visas on 14 February 2018. At the time of application, Class EA contained one subclass: Subclass 132 (Business Talent). The criteria for a Subclass 132 visa are set out in Part 132 of Schedule 2 to the Migration Regulations 1994 (the Regulations). An Applicant seeking to satisfy the primary criteria for the visa must satisfy the Common Criteria set out in Subdivision 132.21 and one of the stream specific criteria set out in the two alternative streams: subdiv 132.22 for the Significant Business History stream or subdiv 132.23 for the Venture Capital Entrepreneur stream as applicable. At least one member of the family unit must satisfy the primary criteria. Other members of the family unit who are Applicants for the visa need only satisfy the secondary criteria. In this case, the first named Applicant, Mr Iqbal Yoosuf Gutta (the Applicant) is seeking to satisfy the primary criteria for the grant of the visa in the Significant Business History stream.

3. The delegate in this case refused to grant the visas on the basis the Applicant did not satisfy the requirements of cl.132.226 of Schedule 2 to the Regulations because at the time of the delegate’s decision the Applicant had not responded to a request for additional information made by the delegate on 15 January 2019. The Applicant advised the Tribunal he provided the requested documents at the time to his previous Representative and she failed to forward this material to the delegate.

4. The Applicant appeared before the Tribunal on 22 May 2020 to give affirmed evidence and present arguments. The Applicant was represented in relation to the review by Ms Athina Stephanou[1] (the Representative), who attended the Tribunal hearing.

   [1] Migration Agent Registration Number: 0103875.

5. For the following reasons, the Tribunal has concluded the matter should be remitted for reconsideration.

OVERVIEW OF THE RELEVANT PRIMARY CRITERIA

1. The primary criteria for the grant of the visa, including the common criteria and the relevant stream specific criteria, must be satisfied at the time a decision is made on the application.

Common criteria

1. The common criteria for both streams of Subclass 132 visa are set out in cl.132.21. Clause 132.211 requires the Applicant and the Applicant’s spouse or de facto partner not to have a history of involvement in business Activities of a nature not generally acceptable in Australia. -Clause 132.212 requires the nominating State or Territory government agency has not withdrawn the nomination. Clauses 132.213 and 132.214 require the Applicant and each member of the family unit of the Applicant, including those who are not an Applicant for a Subclass 132 visa, satisfy certain public interest and special return criteria as applicable.

Criteria for Significant business history stream

1. The criteria for the Significant Business History stream are set out in sub-div 132.22. Clauses 132.221, 132.222 and 132.223 require the Applicant to have been invited in writing by the Minister to apply for the visa; to have not turned 55 at the time of the invitation, or alternatively the Applicant is proposing to establish or participate in a business the nominating state or territory government agency has determined is of exceptional economic benefit to the state or territory; and to have had overall a successful business career.

2. Further, for at least two of the four fiscal years immediately before the time of invitation to apply for the visa:

• Clause 132.224 requires the net value of the assets of the Applicant, the Applicant’s spouse or de facto partner, or their assets combined, in a qualifying business or businesses in which the Applicant had an ownership interest was at least A$400,000. If the qualifying business was operated by a publicly listed company the shareholding of the Applicant, the Applicant’s spouse or de facto partner, or their shareholding combined was at least 10% of the total issued capital of the company. This necessitates consideration of the elements of ‘qualifying business’ as defined in reg 1.03 of the Regulations and ‘ownership interest’ as defined in s 134(10) of the Act; and

• Clause 132.225 requires the Applicant’s main business, or the Applicant’s main businesses together, had an annual turnover of at least A$3,000,000. This necessitates consideration of the elements of ‘main business’ as defined in reg 1.11 of the Regulations.

10.  Clause 132.226 requires the business and personal assets of the Applicant, the Applicant’s spouse or de facto partner, or their assets combined to have a net value of at least A$1,500,000, are lawfully acquired and are available for transfer to Australia within two years after the grant of a subclass 132 visa.

11.  Clause 132.227 requires the Applicant to genuinely have a realistic commitment to:

• establish a qualifying business in Australia or to participate in an existing qualifying business in Australia; and

• maintain a substantial ownership interest in the qualifying business and maintain direct and continuous involvement in the management of the qualifying business from day-to-day and in making decisions that affect the overall direction and performance of the qualifying business in a manner that benefits the Australian economy.

CONSIDERATION OF CLAIMS AND EVIDENCE

Why did the delegate refuse the application?

12.  The issue in this case is establishing to the satisfaction of the Tribunal the value of the net business and personal assets of the Applicant and his spouse and the ability of the Applicant to transfer at least A$1,500,000 to Australia within two years of the grant of his visa.

13.  As the delegate made an adverse finding on cl.132.226 alone, in accordance with the President’s Direction on Conducting Migration and Refugee Reviews dated 1 August 2018, the Tribunal will restrict its review to that matter.

What does clause 132.226 require?

14.  Clause 132.226 requires the business and personal assets of the Applicant, the Applicant’s spouse or de facto partner, or their assets combined have a net value of at least A$1,500,000. Further, these assets must have been lawfully acquired and available for transfer to Australia within two years after the grant of a Subclass 132 visa.

15.  In order to test the Applicant’s compliance with this criterion it is necessary for the Applicant to provide the most recent financial statements for all businesses relied on, whether they are qualifying businesses, main businesses or otherwise. The Tribunal considers it is  preferable for the Applicant to provide audited financial statements, or as a minimum, financial statements which have been prepared by a third party such as an external accountant as they are independently verified and usually presented in a format consistent with international accounting standards. If unaudited financial statements are provided, the financial statements should at least be in auditable form.

The Applicant’s net business and personal assets

16.  The Applicant’s business is TAG Cash & Carry (TAGCC) conducted by Yooham Investments (Pty) Ltd (Yooham) in which he holds a 50% interest via his family trust; Iqbal Yoosuf Gutta Family Trust.

17.  The Applicant also holds a 1/3^rd interest in a partnership with his mother and brother trading as Bombay House. Until the 2019 fiscal year, there were two partnerships, viz, Bombay House Trading Partnership (Bombay Trading) and Bombay House Property Partnership (Bombay Property). According to the annual financial statements for the 2019 fiscal year, the assets of Bombay Property were transferred to Bombay Trading during that year.

18.  The Representative’s submission of 5 June 2020 included a draft statement of assets and liabilities of the Applicant as at 28 February 2020, which is set out below. The ‘Evidence considered’ column provides a legend which references to the following paragraph:

Item	R	Evidence considered
Business Assets:
Yooham	23,793,377	a
Personal Assets:
Bombay Trading– capital account	(732,790)	c
Bombay Property – capital account	1,789,832	c
Listed Shares – Old Mutual PLC (6951)	108,853	d
Listed shares – Quilter PLC (2317)	67,263	b
Listed shares – Nedbank Group Ltd (223)	39,384	b
Old Mutual and Momentum Investment Policies	3,817,785	e
Unlisted shares – Welkom Yizani (430)	4,300	b
Unlisted shares – Assonge Scheme (744)	89,421	b
Standard bank access account	5,050	b
Walnut – SYZ account	5,369,378	f
Australian bank accounts	29,521,387	g
Loan from Yooham Investments Pty Ltd	(2,441,052)	h
Loan from Bombay House Property Partnership	(4,000,000)	h
Net Business and Personal Assets	57,422,187

Verification of business and personal assets

19.  The evidence presented by the Applicant in support of the above statement of business and personal assets is discussed below:

a.    The Tribunal adopts a conservative approach to the valuation of privately held entities. Related party loans are generally disregarded unless they are documented on commercial terms, including security, in a legally binding loan agreement. The Tribunal has analysed the audited financial statements of Yooham for the years 2015 to 2019 and the draft unaudited financial statements for the 2020 year and notes the related party loans whilst bearing interest at market rates, are unsecured with no fixed repayment term and so the related party loans have been adjusted out of the net assets of the company.

As a result, the Tribunal assesses the value of the adjusted net assets of Yooham as R48,475,093 and the Applicant’s 50% interest as R24,237,547. As this is greater than the amount shown above, the Tribunal accepts the lesser value.

b.    Any amounts of less than R100,000 have been disregarded as not material to the assessment of net business and personal assets because at current exchange rates they are individually less than A$10,000 and collectively they are not needed in order for the Applicant to meet the threshold of A$1,500,000.

c.     The Applicant provided copies of the financial statements for Bombay Trading for the 2016 to 2019 fiscal years. No financial statements were provided for Bombay Property however, as mentioned above, the Tribunal notes the assets of Bombay Property were transferred into the partners’ capital accounts in Bombay Trading during the 2019 fiscal year. Applying the same treatment of related party loans to Bombay Trading as the Tribunal applied to Yooham (see a above) results in small negative balance, which has been disregarded (see b above). Accordingly, the Tribunal assesses the Applicant’s interest in Bombay Trading and Bombay Property as Nil. The Tribunal notes the Applicant has a negative (overdrawn) current account balance as at 28 February 2019 with Bombay Trading.

d.    The Applicant provided a letter dated 28 May 2020 from Link Market Services addressed to him confirming the holding of 6,951 ordinary shares in Old Mutual Limited (JSE:OMU) together with a web extract of the share prices of OMU at R15.66. The Tribunal has checked the price currently and found it to be R12.40. Accordingly, the Tribunal values the Applicant’s shares in Old Mutual Limited at R86,192. As this is less than R100,000 its value has been disregarded.

e.    The Applicant provided a list of policies held by him with Old Mutual and Momentum. All policies on the list are supported by web extracts showing the owner of the investment is the Applicant and the surrender value as at various dates in May 2020. The Tribunal has tested the larger balances and finds it to be a reliable indicator of the value of these investments.

Accordingly, the Tribunal finds the value of these investments is R4,438,230 as shown on the list of policies.

f.   The Applicant provided a portfolio valuation from 1 January 2020 to 29 February 2020 for Walnut account number S2145800 showing a balance as at 29 February 2020 of US$1,031,442. Using current foreign exchange rates (USD to AUD: $0.70) this equates to A$1,479,194. The owner of the account is identified as the Applicant and Mr Bashir Ahmed Gutta by way of letter from SYZ dated 25 May 2020. The SYZ letter shows no address or contact details, is not signed (electronically or otherwise) and does not identify the author. In short it does not contain any of the detail expected on correspondence from a large international organisation and the Tribunal has concerns as to its authenticity. Accordingly, no weight is given to the letter and by extension to the ownership of the Walnut account. Accordingly, the Tribunal assesses the value of the Walnut account as Nil.

g.    The Applicant provided copies of statements for National Australia Bank (NAB) account number ending 4590 showing a credit balance as at 22 May 2020 of A$2,027,243.02 together with NAB term deposit account number ending 4763 showing a balance of A$900,314.09 due to mature on 31 July 2020. The total is A$2,927,557 which equates to approximately R34,305,432 at current exchange rates. As this is greater than the amount shown on the above schedule the Tribunal accepts the lesser amount.

h.    The related party loans have been disregarded as they have been excluded from the assessment of the net assets of Yooham and Bombay House (see a, b and c above).

20.  Substituting the above findings into the schedule of net business and personal assets shown above reveals the following net position:

Item	R
Business Assets:
Yooham Investments (Pty) Ltd	23,793,377
Personal Assets:
Bombay House – Trading partnership – capital account	0
Listed Shares	0
Old Mutual and Momentum Investment Policies	4,438,230
Unlisted shares	0
Standard Bank access account	0
Walnut – SYZ account	0
Australian bank accounts	29,521,387
Related party loans: Yooham & Bombay House	0
Net Business and Personal Assets	R57,752,994

21.  The Tribunal finds the Applicant has net business and personal assets in excess of A$1,500,000 because at current foreign exchange rates (ZAR to AUD: $0.085) R57,752,994 equates to A$4,927,029.

Were the assets lawfully acquired?

22.  The primary business asset of the Applicant is his 50% interest in Yooham held through his family trust, Iqbal Yoosuf Gutta Family Trust, which the Tribunal estimates at R23,793,377 as at 29 February 2020. His interest in Yooham represents over 40% of his net business and personal assets.

23.  Yooham was incorporated in 2012 and the Applicant provided externally prepared, audited financial statements for the fiscal years 2015 to 2019 plus unaudited financial statements for the 2020 fiscal year, which show consistent profitability.

24.  The Tribunal’s analysis of the financial statements provided by the Applicant for Yooham reveals a steadily increasing balance of ‘Cash and cash equivalents’ in the current assets each year, with a balance as at 29 February 2020 of R34,254,107.

25.  The Applicant provided a copy of a contract and settlement statement for the purchase of a childcare centre in Rochedale known as Kingston Kids Early Learning Centre (Kingston Kids). The buyer is listed as Targut Pty Ltd as trustee for YNE Family Trust. The Tribunal requested evidence of the connection of this entity to the Applicant. An unsigned copy of the deed of the YNE Family Trust (YNE) was provided which records the Applicant as a principal of YNE and a primary beneficiary of YNE. The purchase price was A$850,000, which was funded by a loan of that amount from Nexis Holdings Ltd, which is domiciled in the Seychelles. Evidence submitted by the Applicant shows settlement occurred on 23 August 2019 and assignment of the leased premises occurred that day. The Tribunal has assessed the value of Kingston Kids as Nil for the purpose of determining the Applicant’s net business and personal assets because the acquisition of this business was less than a year ago, was fully funded by a loan and the Applicant’s ownership interest has not been established.

26.  The primary personal asset of the Applicant are his cash holdings in Australia of R29,521,387, as per the above table, or A$2,927,557 as discussed above. This represents over 50% of his net business and personal assets. The Applicant states these funds were drawn from Yooham and Bombay House. The legitimacy of Yooham has been discussed above.

27.  The Applicant provided externally prepared, unaudited financial statements for Bombay House for the fiscal years 2016 to 2019 plus commentary from the accountant for the partnership as to the major assets and liabilities for the 2020 fiscal year. The Applicant’s evidence at the hearing was Bombay House is a trading business started by his great grandfather now owned equally by his mother, brother and himself.

28.  Bombay House is located two kilometres from and operates in a different market to TAGCC. The Tribunal has analysed the financial statements and concluded Bombay house to be a consistently profitable business from which the Applicant has drawn income for many years.

29.  The Tribunal finds the net business and personal assets of the Applicant have been lawfully acquired because Yooham and Bombay House are long established, profitable businesses from which the Applicant has received substantial income.

Availability for transfer

30.  At the request of the Tribunal the Applicant provided statements showing substantial balances on deposit with Standard Bank in term deposit, money market call and current accounts in support of the balance of ‘Cash and cash equivalents’ on the balance sheet of Yooham as at 29 February 2020.

31.  The Applicant has cash available to him at present of A$2,927,557 as set out above. These deposits have short maturity dates and are enough of themselves to provide funds available for transfer within two years to meet the requirements of cl.132.226.

32.  The Tribunal finds the Applicant has enough funds already in Australia and funds available to transfer to Australia within two years because Yooham has the resources to pay out the Applicant’s interest over a two-year period if necessary.

Finding regarding cl.132.226

33.  Given the findings above, the Tribunal is satisfied cl.132.226 is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa. The Tribunal considers the applications of the second, fourth and fifth applicant’s should also be reconsidered by the Department and notes their applications will be determined by reference to the outcome the primary applicant’s application.

REQUEST TO COMBINE REVIEW APPLICATIONS - ALTAZ IQBAL GUTTA

34. An request to combine the application for the secondary Applicant, Altaz Iqbal Gutta (Altaz) with those of the applicant and the second, fourth and fifth applicant’s, was lodged with the Tribunal on 27 March 2019 for review of a decision by a delegate of the Minister for Immigration, dated 20 February 2019, to refuse to grant a Business Skills – Business Talent (Permanent) visa under section 65 of the migration Act 1958 (the Act). This refusal decision is reviewable under section 338 (7A) of the Act.

35.  For the following reasons, the Tribunal has no jurisdiction to review the decision as the application was not made in accordance with the relevant legislation.

36.  Section 347(2) of the Act specifies who has the right to apply for review of a decision which is reviewable under Part 5 of the Act. In the case of a decision described in s.338(7A), an application for review may only be made by the non-citizen who is the subject of the decision and who is physically present in the migration zone when both the primary decision and the application for review are made.[2] ‘Migration zone’ is defined in s.5(1) of the Act and generally speaking means the Australian States and Territories.

[2] Section 347 (2)(a) and (3A)

37.  The time for applying for the review application expired on 11 March 2019 and the Tribunal has no discretion to extend the time for lodgment and so the application is out of time.

38.  The Tribunal accepts Altaz was meant to be included with the original review application with the rest of the family and for study reasons had to remain in South Africa. This is a subclass 132 visa review application, which was applied for while the Applicants were offshore but at the time of the visa refusal most of the family was onshore, apart from the secondary Applicant Altaz. By s.347(3A), for the Tribunal to have jurisdiction, the Applicant Altaz must have been onshore at both the time of the visa refusal decision and at the time of the review application. The visa refusal date was 20 February 2019. The Representative’s submission of 27 March 2019 included a statement from the second named review applicant in which she concedes Altaz was not in Australia at the relevant times. The Tribunal has checked the movement records for Altaz and confirmed he was not onshore at that time. He was also not onshore at the time of the family’s review application dated 7 March 2019.

39.  On this basis the Tribunal finds the applicant was not in the migration zone at the relevant time. As such, the application for review is not an application properly made under section 347 and it follows the Tribunal does not have jurisdiction in this matter.

DECISION

The Tribunal remits the applications for Business Skills - Business Talent (Permanent) (Class EA) visas for Iqbal Yoosuf Gutta, Nadia Gutta, Zidaan Iqbal Gutta and Tariq Iqbal Gutta for reconsideration, with the direction the first named visa Applicant meets the following criteria:

• cl.132.226 of Schedule 2 to the Regulations.

The Tribunal finds it does not have jurisdiction to review the application for Business Skills - Business Talent (Permanent) (Class EA) visa for Altaz Iqbal Gutta.