He v Minister for Immigration & Anor
[2015] FCCA 2915
•29 October 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HE v MINISTER FOR IMMIGRATION & ANOR | [2015] FCCA 2915 |
| Catchwords: MIGRATION – Business Visa – the effect of policy where policy is different to the legislation – application allowed – costs. |
| Legislation: Migration Act 1958 (Cth) Migration Regulations 1994 (Cth) cl.890.212 |
| Lobo v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 168 Re: Drake(No 2) (1979) 2 ALD 634 |
| Applicant: | PING HE |
| First Respondent: | MINISTER FOR IMMIGRATION & BORDER PROTECTION |
| Second Respondent: | ADMINISTRATIVE APPEALS TRIBUNAL |
| File Number: | BRG 359 of 2015 |
| Judgment of: | Judge Vasta |
| Hearing date: | 26 October 2015 |
| Date of Last Submission: | 26 October 2015 |
| Delivered at: | Brisbane |
| Delivered on: | 29 October 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms Julian-Armitage |
| Solicitors for the Applicant: | Milner Lawyers |
| Counsel for the Respondents: | Mr Richardson |
| Solicitors for the Respondents: | Clayton Utz |
ORDERS
The name of the Second Respondent be amended to the “Administrative Appeals Tribunal” (formerly known as the Migration Review Tribunal).
A writ of certiorari issue quashing the decision of the second respondent made on 31 March 2015.
The Applicant’s application for a Business Skills (Residence) (Class DF) visa be remitted to the second respondent for re-determination according to law.
The Respondent pay the costs of the Applicant fixed in the sum of $6,850.00.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 359 of 2015
| PING HE |
Applicant
And
| MINISTER FOR IMMIGRATION & BORDER PROTECTION |
First Respondent
| ADMINISTRATIVE APPEALS TRIBUNAL |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By application filed on 28 April 2015 and by amended application filed on 27 July 2015, the Applicant desires this court to review a decision of the former Migration Review Tribunal affirming the decision of the delegate for the Minister to refuse the Applicant a Visa.
The Applicant applied for a subclass 890 Visa on 10 February 2014. Such a Visa is a “business owner” Visa. Certain criteria have to be satisfied that the time of application for such a Visa to be issued.
Relevantly, in this case, the provisions of cl.890.212 of the Migration Regulations 1994 (Cth) had to be met before a Visa could issue. The provisions are as follows:-
“890.212
The assets of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:
(a)have a net value of at least AUD100 000; and
(b) had a net value of at least AUD 100 000 throughout the period of 12 months ending immediately before the application is made; and
(c) have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.”
The resolution of this matter turns upon the proper construction of this clause.
The Evidence
The Applicant is a citizen of China. When making her Visa application, the Applicant informed the Department that she was part owner of a business and had been so since 1 April 2010. The business was “Australian Mirror News Media Group Pty Ltd (Mirror)” and the premises were located at Upper Mount Gravatt Brisbane. The Applicant said she had a 49% interest in the business.
That business had a net asset position of $41,903.00 as at 31 December 2012 and $78,618.00 as at 31 December 2013
The Applicant provided evidence that she had purchased a bank cheque of $104,000.00 payable to Mirror on 25 May 2012. On the same day, Mirror opened a 24 month term deposit using the $104,000.00. Also on the same day, the Applicant and Mirror signed a loan agreement. That agreement was that the Applicant would loan $104,000.00 to Mirror and such loan would be interest-free. Mirror promised to repay the loan in full in 5 years.
On the basis of that evidence, the Applicant claimed that the calculation of net assets that she had in Mirror was, at 31 December 2012, the sum of $124,532.00 and, at 31 December 2013, the sum of $142,523.00.
These sums are calculated by adding 49% of the net asset positions of the company as at those respective dates together with $104,000.00 as a shareholder loan. It is obvious that without the addition of the shareholder loan, the Applicant would not be able to meet the criterion in cl.890.212.
The Findings of the Tribunal
In a very thorough analysis of the evidence, the Tribunal found that the sum of $104,000.00 was nothing more than a device used by the Applicant so as to be able to fulfil the criterion of cl.890.212. There was ample evidence for the Tribunal to make this finding of fact.
The $104,000.00 was never actually used by the business other than for it sitting in a term deposit. There was evidence that a printer, Mr Doran, wanted to see proof that there was such a term deposit before he extended credit to the business. Apart from that, there was no evidence of this sum of money being in any way used by the company in the course of running the business.
The loan was repaid upon the term deposit ending, notwithstanding that there was still three years left of the loan agreement.
A reasonable inference from the evidence is that the loan agreement was made on the advice of a migration agent. The Tribunal also had a number of concerns as to the credibility of the Applicant. The Applicant tried to convince the Tribunal that the $104,000.00 was in fact something that was created out of a necessity for the business to keep operating.
For all of those reasons, the Tribunal came to the conclusion that the transactions regarding the $104,000.00 were shams and only occurred so as to be able to put the Applicant in a better position for her migration matters.
Much of the submissions of the Applicant before me concerned this finding by the Tribunal. As I said at the hearing, such an examination of the whys and wherefores of the Tribunal’s findings is no more than an impermissible merits review.
The Effects of Policy on the Tribunal
The Tribunal, upon concluding the facts before it, then applied the policy of the Department. The relevant provision of the Procedure Advice Manual (PAM 3) is as follows:-
“[PSch2.890] Sch 2 Visa 890 – Business Owner
PAM3: Sch 2 Visa 890 – Business Owner
…
[P Sch2.890.6] 6 Net business assets
6.1 Purpose
The policy intention of 890.212 is to establish that the applicant has or the applicant and their spouse or de facto partner together have, by investing a substantial amount of money from their own funds, a record of financial commitment to settling and establishing a business in Australia. To demonstrate that assets have been held throughout a 12 month period it is necessary for applicants to provide evidence covering the beginning and the end of the specified period.
6.5 Calculating the applicant’s net assets in business.
For guidelines on calculating net assets and related business factors, see PAM3:GenGuide M – Business ownership and assets.
Net business assets
[P GenGM-34] 34 Net business assets – overview
Criterion
132.223 (Applications made after 1 July 2012). Applications for 132 made prior to 1 July 2012 should look at the requirement in [pre-1/7/2012] stack, 845.215, 846.214, 888.225, 890.212, 892.212:
[P GenGM-34.1] 34.1 Policy intention
The policy intention of the various ‘net value of assets in business’ criteria is to establish that the applicant has, by investing a substantial amount of money sourced from their own funds, a record of financial commitment to business through personal financial involvement and exposure to risk.
If the criterion specifies ‘qualifying businesses’, the assets of all ‘qualifying businesses’ may be included when calculating the net value of the business assets.
If the criterion specifies ‘main businesses’, the assets of up to two main businesses may be included when calculating the net value of business assets. If more than one business is used to satisfy any visa requirement the same two businesses must be used in assessing all other ‘main business’ visa requirements.
…
[P GenGM-35] 35 Loans – Source of funds and collateral
[P Gang- 35.1] 35.1 Loans to the business
It is common for companies or other incorporated businesses to initially be financed by loans from the owner/s, a business loan from a financial institution and sometimes by loans from independent investors. These loans are liabilities to the business, and which are later repaid.
Trusts are initially financed by loans, gifts or bequeaths to the trust. See also section 39 Trusts. Loans cannot legally be made by the owner to a sole trader business because they are not separate legal entities (that is, persons cannot legally loan money to themselves).
Loans made to partnership businesses must be formally evidence in the partnership agreement, loan agreement or otherwise.
Under policy, it is intended that loans made to a business by an applicant should have been used to fund the activities of the business (as opposed to inactive investments held in a business bank account). Loans made to incorporated business by independent parties, including financial institutions, are liabilities of the business and cannot be included in the net value of an applicant’s assets in the business. Loans made to businesses from the applicant’s personal asset base (for example, from funds transferred from overseas) are full attributable to the net value of the assets of an applicant in business.”
(underlining emphasis added)
The Tribunal noted at paragraph 43:
“As noted above, the policy states that a term deposit, because it is not an active investment, should not be included when calculating the value of net assets of the first named applicant and her spouse in Mirror. Such an approach is consistent with the broader policy guidelines that an applicant demonstrate, by investing a substantial amount of money, of (sic) a record of financial commitment to the business through personal financial involvement and exposure to risk. The Tribunal considers that policy to be consistent too with the definition of asset according to the Australian Accounting Standards Board, namely a resource controlled by entity from which future economic benefits are expected to flow.
While the Tribunal is guided by relevant Department policy, the Tribunal notes that it is not bound by it and must take account any relevant factors which arise. The Tribunal has had regard to the comments of Brennan J in Re Drake (No.2) as to the role of the departmental policy should ordinarily play in the determinations of the Tribunal. His Honour’s view was to the effect that it is a matter for the Tribunal itself to determine the part which policy plays in the context of the particular case; the Tribunal needs to balance the need for compromise between, on the one hand, the interests of good government and the desirability of consistency in the treatment of citizens under the law and, on the other hand, the ideal of justice in the individual case. In Chow v MIMIA the Court reiterated that if policy requires more than the legislation states, then that policy will be unlawful and it would be an error on the part of the Tribunal to apply it.”
The final ruling of the Tribunal was in line with the policy and was to the effect that the $104,000 was only used for the business when Mr Doran needed proof of its existence. As that occurrence was less than 12 months before the application for a Visa, cl.890.212(b) was not met. Therefore, a Visa could not issue.
I do not agree with the reasoning of the Tribunal. There has been nothing differently done with the money in the 24 months in which it was in the term deposit. Just because Mr Doran, upon seeing proof of its existence, extends credit to the business cannot change the nature of the asset. The money remains in the term deposit and has not been used differently.
At paragraph 47 of its reasons, the Tribunal noted:-
“The Tribunal has considered the proper role of policy and whether the departmental policy in this instance puts an impermissible gloss on the legislative criteria. The Tribunal considers a blanket denial of all term deposits due to their nature as a passive investment does go further than the legislative requirement that an applicant demonstrate assets of a net value of $100,000, for 12 months and that the assets were lawfully acquired. The Tribunal’s own findings above that after entering the printing contract with Mr Doran’s company in May 2013 is an example of how a ‘passive’ investment term deposit can be used to advance or fund the business operations of a main business – therefore, deriving an economic benefit. The Tribunal does place weight though on the AASB standards and that an asset is a resource from which there is an expectation of future economic benefit.”
As I have said earlier, I cannot agree with this reasoning. The Tribunal is saying that the nature of asset changes upon how a third party views the asset rather than from anything that the business has actually done with the asset. This just cannot be correct. However, I do not see that this itself amounts to a jurisdictional error..
The error in the Tribunal’s reasoning was, in my view, an attempt to reconcile the words of the legislation with the policy. It is whether this can actually be done that will determine whether there has been a jurisdictional error
In Lobo v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 168, the Full Court was dealing with circumstances in which the policy of the Department was different from the statutory criterion. In that case a finding was made that the Tribunal had been diverted by the policy into an examination of something different than what was required by the statutory criterion.
The question for me is whether the policy used in determining the issue was such that it assisted in the application of the legislation or whether the policy requires more than the legislation actually states and therefore becomes unlawful.
The Submissions of the Respondent
The Respondent submitted that it was unnecessary to resolve whether the policy was narrower than the criterion. This is because the Tribunal was alive to this issue. This latter observation is undeniable.
The Respondent submits that the Department’s policy, material to the disposition of this matter is a lawful policy and one which leaves the range of discretion intact while guiding the exercise of the power as contemplated in Re: Drake(No 2) (1979) 2 ALD 634.
Discussion and Conclusion
Part of the Tribunal’s reasoning was that the Tribunal interpreted the word “asset” as defined by the Australian Accounting Standards Board as a resource from which there is an expectation of future economic benefit. The Tribunal doubted whether the $104,000.00 fitted into this definition because it was never used as a resource before Mr Doran needed proof of its existence.
The term asset is not defined in the clause and there are no interpretation provisions specific to that clause. The fact is that the company could have called upon the $104,000.00 at any time but chose not to do so.
For this reason I do not think that anything turns upon the definition of the word “asset” because the Tribunal was only utilising such a definition so as to reinforce the idea that the policy and the legislation were compatible.
The real question is whether the policy itself goes beyond what is in the statute.
To my mind, the policy does go beyond what is in the clause. There are no qualifications upon the term “assets”. There are no qualifications upon the term “in the main business”. While the policy may spell out how the Department wishes to interpret this clause, such is not reflected in the plain words of the cause itself.
To illustrate this point, I will add the word “genuinely” to the clause so that it reads:
“890.212
The assets of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, genuinely in the main business or main businesses in Australia:
(a)have a net value of at least AUD100 000; and
(b) had a net value of at least AUD 100 000 throughout the period of 12 months ending immediately before the application is made; and
(c) have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.”
In such a scenario, the policy would then match the words of the clause. The policy would be lawful and reflect the words of the clause.
But as the clause stands at the moment, the policy overreaches the words of the clause. The underlined words of the policy give to the words of the clause a meaning that cannot be imputed by mere reference to the words of the clause. Those words in the policy connote a necessity for the investment to be genuine whereas there is no such necessity in the clause itself.
Therefore, in considering the policy in the way that it has, the Tribunal has fallen into jurisdictional error.
I have come to this view rather reluctantly. I accept everything the Tribunal has said about the character of the transactions involving the $104,000.00. I accept that the Tribunal was correct in its view that the provision of the $104,000.00 was a device created solely to subvert the spirit of cl.890.212. But I must apply the law as it is and not how I would like it to be. It is a matter for the Executive and the Legislature to close this loophole if they so wish.
I make the following orders:-
The name of the Second Respondent be amended to the “Administrative Appeals Tribunal” (formerly known as the Migration Review Tribunal).
A writ of certiorari issue quashing the decision of the second respondent made on 31 March 2015.
The Applicant’s application for a Business Skills (Residence) (Class DF) visa be remitted to the second respondent for re-determination according to law
The Respondent pay the costs of the Applicant fixed in the sum of $6,850.00.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge Vasta
Date: 29 October 2015.
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