Khana Peena Pty Ltd as trustee for RSA Family Trust v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs
[2024] FedCFamC2G 1039
•15 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Khana Peena Pty Ltd as trustee for RSA Family Trust v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] FedCFamC2G 1039
File number(s): BRG 437 of 2021 Judgment of: JUDGE EGAN Date of Judgment: 15 October 2024 Catchwords: MIGRATION LAW – Whether the Tribunal had conducted a proper hearing – whether the Tribunal had made an illogical decision – whether the decision of the Tribunal was unreasonable – no jurisdictional error established – application for review dismissed. Legislation: Migration Regulations 1994 r. 19(3), r. 5.19(3)(d)(i) Cases cited: CQG15 v Minister for Immigration and Border Protection (2016) 253 FCR 496
Minister for Immigration and Border Protection v SZVFW [2018] HCA 30
Minister for Immigration and Citizenship v SZNVW [2010] FCAFC 41
SZBEL v Minister for Immigration and Multicultural Affairs [2006] HCA 63
Division: Division 2 General Federal Law Number of paragraphs: 23 Date of hearing: 14 October 2024 Place: Brisbane Counsel for the Applicant: Mr L. Boccabella Solicitor for the Applicant: AJ Torbey & Associates Solicitor for the First Respondent: Ms Helsdon of Sparke Helmore Solicitor for the Second Respondent: Submitting appearance, save as to costs ORDERS
BRG 437 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: KHANA PEENA PTY LTD ATF RSA FAMILY TRUST
Applicant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP, MIGRANT SERVICES AND MULTICULTURAL AFFAIRS
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
15 OCTOBER 2024
IT IS ORDERED THAT:
1.The name of the First Respondent be changed to “Minister for Immigration and Multicultural Affairs”.
2.The Originating Application for Review filed on 27 September 2021 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE EGAN
INTRODUCTION
The applicant company applied for approval of a nomination for an employment position in the Temporary Residence Transition Nomination Stream under Regulation 5.19(3) of the Migration Regulations 1994 (“the Regulations”) on or about 28 June 2017.
It was a requirement that the person nominated for employment would be employed on a full-time basis for at least two years.
On 19 May 2018, a delegate of the Minister refused to approve the nomination application.
After having made application to the Administrative Appeals Tribunal (“the Tribunal”) for review of the decision of the delegate, the Tribunal affirmed the decision of the delegate by written decision dated 24 August 2021.
On 27 September 2021, the applicant filed an Originating Application for Review of the decision of the Tribunal.
At the hearing before the Court the applicant relied upon the following Grounds of Review:
1.…
2.…
3.(a) On the issue of external funding (paragraph 24 of the reasons), the AAT was in breach of the principle in Minister for Immigration and Citizenship v Li [2013] HCA 18 (8 May 2013), (2013) 249 CLR 332:
[100]….Thus, while it has been held that the MRT has no general duty to make inquiries, it has been accepted that “a failure to make an obvious inquiry about a critical fact, the existence of which is easily ascertained, could, in some circumstances, supply a sufficient link to the outcome to constitute a failure to review”.
(b) An oral inquiry by the AAT at the hearing would have revealed that Walk in Wax Trust was capable of injecting further funds into the business of KHANA PEENA PTY LTD sufficient to ensure the employment of the nominated employee for a further 2 years.
4.
The fact that the nominated employee had already been working for the applicant’s
business for many years was not regarded as material and as such the AAT failed to conduct a proper review.
5.The AAT not being an expert body, failed to appreciate and understand the accounting evidence before the AAT and as such failed to conduct a proper review.
6.The AAT committed the type of error identified by Brennan J in Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 61, as follows:
The facts to be brought to mind are the salient facts which give shape and substance to the matter: the facts of such importance that, if they are not considered, it could not be said that the matter has been properly considered.
7.The decision of the second respondent was unreasonable.
8.…
9.…
10.The second respondent’s decision was an improper exercise of power.
11.Further and/or in the alternative, the AAT did not conduct a proper review under and in accordance with ss. 348, 349, 360 and generally under Part V of the Migration Act.
12.…
First, the criticism of the Tribunal lacking expertise in assessing financial documentation relating to the affairs of the applicant is without merit and unnecessary. The Tribunal must be taken to have accumulated expertise over time when dealing with matters such as the present. Further, there is not a scintilla of evidence before the Court which could constitute a reasonable basis for the making of such a claim. It was entirely without merit.
At [33] of its reasons, when finding that it was not satisfied that the applicant had the financial viability to enable the nominated person to be employed for at least two years, the Tribunal found as follows:
33.The Tribunal has weighed all the evidence carefully and finds that in FY 2019the applicant had a loss in their FY 2019 tax return of $55,050. Subsequently, the applicant has claimed in interim FY 2020 statements that they have made a profit of $167,804 and this is given some weight however this is largely predicated on savings in expenditure which are not ongoing, such as rent waivers and wage and salary cuts, and more weight is given to the substantial blowout in their debt in the ICA to the ATO of $200,631 for which there is no repayment agreement in place or scant evidence of how any such repayment could be serviced by the applicant. As such, the Tribunal finds the applicant cannot satisfy the Tribunal that it has the financial viability such that the person (the nominee) will be employed on a full-time basis in the position for at least 2 years and does not satisfy r.5.19(3)(d)(i).
As to Ground 3, it was submitted on behalf of the applicant that during the course of the hearing before the Tribunal there had been no discussion about any possibility of a further cash injection into the business being made by a related trust called the Walk in Wax Trust. The relevance of such submission was based upon what the Tribunal had found at [24] of its reasons which relevantly was as follows:
24.The Tribunal carefully considered the evidence provided including the post hearing submissions and noted the Financial Statement FY 2019 figures show a Net Profit/Loss of $130,938 before tax however this was predicated on a loan/cash injection from the Walk in Wax Trust of $145,732 and had it not relied on this cash injection it would have made a loss in FY 2019 of some $14,794. There is no evidence that this external source of funds will continue into the future to support the business and as such the Tribunal can place little weight on this source of funding for the business. As such it places limited weight on the profit shown in the Financial Statement for FY 2019 but rather places weight on the Tax Return for 2019 showing a loss of $55,050.
It was submitted that the failure of the Tribunal at the hearing to address with the applicant’s representative the possibility of further cash injections being made by the Walk in Wax Trust constituted error on the part of the Tribunal. Reliance was placed upon the decision of the High Court in SZBEL v Minister for Immigration and Multicultural Affairs [2006] HCA 63 where at [47] it was said:
47.First, there may well be cases, perhaps many cases, where either the delegate's decision, or the Tribunal's statements or questions during a hearing, sufficiently indicate to an applicant that everything he or she says in support of the application is in issue. That indication may be given in many ways. It is not necessary (and often would be inappropriate) for the Tribunal to put to an applicant, in so many words, that he or she is lying, that he or she may not be accepted as a witness of truth, or that he or she may be thought to be embellishing the account that is given of certain events. The proceedings are not adversarial and the Tribunal is not, and is not to adopt the position of, a contradictor. But where, as here, there are specific aspects of an applicant's account, that the Tribunal considers may be important to the decision and may be open to doubt, the Tribunal must at least ask the applicant to expand upon those aspects of the account and ask the applicant to explain why the account should be accepted.
It was submitted on behalf of the first respondent that the Tribunal was not obliged to conduct an inquiry to discover whether the applicant’s case might be better put, or whether the applicant ought to have put further material before the Tribunal for its consideration. Reliance in that regard was placed upon Minister for Immigration and Citizenship v SZNVW [2010] FCAFC 41 at [36] and [49].
It was further submitted on behalf of the first respondent that the applicant was represented at the hearing before the Tribunal, and that it was the responsibility of the applicant to adduce any evidence of an intention on the part of the applicant to have further cash injections made into the business to convince the Tribunal of the ongoing viability of the business. The applicant failed to do so. Indeed, at [23] of its reasons, the Tribunal set out the relevant information contained in financial statements provided by the applicant for the financial years ending 30 June 2018, 2019, and 2020. Such financial statements which had been provided to the Tribunal showed that as at the date of the hearing before the Tribunal on 9 April 2021, there had been no cash injection by way of trust distribution from Walk in Wax Trust for the financial year which ended on 30 June 2020. The Tribunal was entitled to rely upon the material which it had before it when deciding whether the applicant’s business was or was not viable for the purpose of the ongoing employment of the nominee for at least a two-year period. Such viability was central to the applicant’s nomination application, and it must have been appreciated by it and its representative that there was a requirement for it to establish the ongoing viability of the business at the hearing before the Tribunal. It failed to produce any such evidence.
In a logical and considered way, the Tribunal at [24] – [32] inclusive considered not only cost savings experienced by the business as a result of Covid downturns, but also the fact that as at the date of the hearing the applicant owed to the Australian Tax Office an amount of $200,631.00. The nominee’s wage was said to be $53,000.00. The Tribunal noted that as at the date of the hearing, repayment of the tax debt had not been the subject of any concluded agreement between the applicant and the ATO. The Tribunal’s reasons at [24] – [32] were as follows:
24. The Tribunal carefully considered the evidence provided including the post hearing submissions and noted the Financial Statement FY 2019 figures show a Net Profit/Loss of $130,938 before tax however this was predicated on a loan/cash injection from the Walk in Wax Trustof$145,732 and had it not relied on this cash injection it would have made a loss in FY 2019 of some $14,794. There is no evidence that this external source of funds will continue into the future to support the business and as such the Tribunal can place little weight on this source of funding for the business. As such it places limited weight on the profit shown in the Financial Statement for FY 2019 but rather places weight on the Tax Return for 2019 showing a loss of $55,050.
25. The Tribunal is left with the financial statement for FY 2020 and the accountant's letter and their statement that the FY 2020 Financial Statements are interim but that they reconcile with the BAS statements lodged with the ATO for FY 2020. The accountants state that the major difference between FY 2019 and 2020 is the downturn due the COVID-19 Pandemic but the applicant has made major changes to their cost structure to produce a cost saving of $390,000 which together with Job Keeper has resulted in overall profitability not being affected in FY 2020. The accountant states that the applicant can meet any repayment obligations.
26. The Tribunal notes that the interim financial statement for FY 2020 shows a profit of $167,804. However, as raised during the hearing the cost savings are largely generated from rent waivers and a reduction in wages and salaries as shown below.
Table 3 – Comparative cost saving FY 2020 and FY 2019
Expenditure
FY 2020
FY 2019
Cost Saving
Rent
277,140
371,114
-
93,974
Rent WG
16,443
18,312
-
1,869
Rent GC
65,666
94,815
-
29,149
Wages
613,591
764,578
-
150,987
Total
Saving- 275,979 27.The Tribunal notes the accountant's letter states ''with our assistance and advise (sic), made significant changes to the cost structure within their business in order to generate cost savings of over $390,000 as reflected in the interim financial statements provided”. However, the Tribunal notes that $275,979 of these cost cuts or some 70% of the $390,000 are in rent waivers and wages and salary cuts. These rent waivers due to COVID-19 are not ongoing as is evidenced from the lease agreements and the wage and salary cuts cannot be considered ongoing either as they would reduce the number of staff able to service the clientele and thus reduce income. While these cost cuts have reduced expenditure in the FY 2020, the Tribunal considers the majority of them are not permanent "changes to the cost structure" such that it would satisfy the Tribunal that the applicant will be profitable and financially viable for at least the following two years.
28. More concerning the Tribunal notes the Integrated Client Account (ICA) provided by the applicant at the Tribunal's request showing a debt to the Australian Tax Office (ATO)asof1 April 2021of $200,631. It is noted that this debt as stated by the accountants in their letter of 19 April 2021 has included credits for Australian Government payments of Cash Flow Boosts accumulatively of some $54,552 so the balance owing to the ATO is $200,631. It is noted that the accountants state that the debt to the ATO for PAYG Win the balance sheet is shown as $93,169. The Tribunal does not find the accountant's statements wholly reflective
of the debt facing the applicant as the applicant has a debt to the ATO as at 1 April 2021 of $200,631 including credits for the Cash Flow Boost payments from the Australian Government.
29.The accountant states that the applicant is presently "working” to set up a formal payment arrangement with the ATO to clear the ICA debt. The accountant states that the ATO accepted that GST and PAYGW payments could be suspended for the COVID-19 period however, while this may be the case, the debt is still owing to the ATO and must be repaid.
30.However, there is scant evidence that the applicant has put forward to the ATO a formal payment arrangement for the $200,631 debt or any indication that the ATO would accept any such arrangement.
31. The accountant states that the applicant can meet their re-payment obligations however it offers scant evidence that the applicant can do so and this is compounded by the fact the applicant had a Tax Return for FY 2019 showing a loss of $55,050. It is noted that the Financial Statement for FY 2020 is interim however no finalised financial statements for FY 2020 have been provided so the Tribunal must rely upon these interim statements which show a profit of $167,804 but this is predicated on cost cuts to wages and rent waivers that
cannot be ongoing. This profit for the FY 2020 must be weighed against the significant debt to the ATO of $200,631.
32.The Tribunal has considered the accountants assurance that the business will meet its repayment obligations however this must be weighed against the fact that the applicant had a loss in the FY 2019 tax return of $55,050.
The Court accepts the submissions made on behalf of the first respondent. The Tribunal was entitled to find that there was no persuasive evidence before it which justified a finding that the business would have been able to support the ongoing employment of the nominee over a two-year period. That was particularly so in circumstances where there was an unresolved tax debt far exceeding what was claimed to constitute the amount of net profit for the financial year ended 30 June 2020.
The Tribunal did not err in the way in which it approached the question of the past and ongoing employment of the nominee by the applicant. The Tribunal recognised that the nominee had been employed in the past by the business. The role of the Tribunal, however, was to assess whether it considered that the nominee would continue to be employed over a two-year period as at the time of the hearing before it. It had to consider the material placed before the applicant in that regard. It did not err in its consideration of such question. Grounds 3, 4, 5, 6 and 7 are without merit.
As to ground 7 of the application for review, it was submitted on behalf of the applicant that the Tribunal had failed to assess the income which the business might have been expected to generate post Covid, and that the Tribunal had focussed solely on expenses incurred and to be incurred by the business in the future. Reliance in that regard was placed upon [18] and [33] of the reasons of the Tribunal. It was submitted that it was illogical to ignore any expected increase in income post Covid.
The test for unreasonableness is necessarily strict as was said by Kiefel CJ in Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 at [10] – [11] as follows:
10. In the joint judgment in Minister for Immigration and Citizenship v Li it was explained that a decision made in the exercise of a statutory power is unreasonable in a legal sense when it lacks an evident and intelligible justification. That may be so where a decision is one which no reasonable person could have arrived at, although an inference of unreasonableness is not to be drawn only where a decision appears to be irrational. None of these descriptions could be applied to the Tribunal's decision in the present case.
11.Statements such as that made in the Wednesbury case, that a decision may be regarded as unreasonable if no reasonable person could have made it, may not provide the means by which a conclusion of unreasonableness may be arrived at in every case. But it serves to highlight the fact that the test for unreasonableness is necessarily stringent. And that is because the courts will not lightly interfere with the exercise of a statutory power involving an area of discretion. The question is where that area lies.
The applicant has failed to establish any extreme illogicality on the part of the Tribunal. In CQG15 v Minister for Immigration and Border Protection (2016) 253 FCR 496 at [60] the Full Court of the Federal Court (McKerracher, Griffiths and Rangiah JJ) set out the relevant principles relating to irrationality and illogicality at [60] – [61] as follows:
“[60] In Minister for Immigration and Border Protection v SZUXN (2016) 69 AAR 210, Wigney J collected the following relevant principles (at [52] and [54]-[56]):
[52] As Robertson J put it in Minister for Immigration and Citizenship v SZRKT (2013) 212 FCR 99 at 137 [148], for a decision to be vitiated for jurisdictional error based on illogical or irrational findings of fact or reasoning, “extreme” illogicality or irrationality must be shown, “measured against the standard that it is not enough for the question of fact to be one on which reasonable minds may come to different conclusions”. And as McKerracher J (with whom Reeves J agreed) emphasised in SZOOR v Minister for Immigration & Citizenship (2012) 202 FCR 1 (at 22-23 [84]), a decision cannot be said by a reviewing court to be illogical, irrational or unreasonable simply because one conclusion has been preferred to another possible conclusion.
…
[54] … The judgment of Crennan and Bell JJ in SZMDS reveals that jurisdictional error may be able to be established on the basis of illogical reasoning or illogical or irrational findings “on the way” to the final conclusion (see 648 [132]): see also SZRKT at 137-138 [151]-[153]; SZWCO v Minister for Immigration and Border Protection [2016] FCA 51 at [61]-[62].
[55] Nevertheless, allegations of illogical or irrational reasoning or findings of fact must be considered against the framework of the inquiry being whether or not there has been jurisdictional error on the part of the Tribunal: SZRKT at 137 [148]. The overarching question is whether the Tribunal’s decision was affected by jurisdictional error: SZRKT at 137-138 [151]. Even if an aspect of reasoning, or a particular factual finding, is shown to be irrational or illogical, jurisdictional error will generally not be established if that reasoning or finding of fact was immaterial, or not critical to, the ultimate conclusion or end result: Minister for Immigration and Citizenship v SZOCT (2010) 189 FCR 577 at 598-599 [83]-[84] (Nicholas J); SZNKO v Minister for Immigration and Citizenship [2013] FCA 123 at [113]. Where the impugned finding is but one of a number of findings that independently may have led to the Tribunal’s ultimate conclusion, jurisdictional error will generally not be made out: SZRLQ v Minister for Immigration and Citizenship (2013) 135 ALD 276 at 291 [66]; SZWCO at [64]-[67].
[56] An irrational or illogical finding, or irrational or illogical reasoning leading to a finding, by the Tribunal that the review applicant was not a credible or honest witness may in some circumstances lead to a finding of jurisdictional error. That would particularly be the case where the adverse credibility finding was critical to the Tribunal’s decision that it was not satisfied that the applicant met the criteria for the grant of a visa. Whilst it is frequently said that findings as to credit are entirely matters for the Tribunal, such findings do not shield the Tribunal’s decision-making processes from scrutiny: SZSHV v Minister for Immigration and Border Protection [2014] FCA 253 at [31]. Considerable caution must, however, be exercised before too readily acceding to a proposition that adverse findings as to credit expose jurisdictional error: SZVAP v Minister for Immigration and Border Protection (2015) 233 FCR 451 at 455-456 [14]-[15]. That is because assertions of illogicality and irrationality can all too readily be used to conceal what is in truth simply an attack on the merits of the Tribunal’s findings and decision. In SZMDS, Crennan and Bell JJ (at 636 [96]) made it plain that the deployment of illogicality or irrationality to achieve merits review should not be sanctioned.
[61] For present purposes, there is a difficulty for the appellant in demonstrating “extreme” illogicality. Even emphatic disagreement with the Tribunal’s reasoning would not be sufficient to make out illogicality, according to SZMDS (at [124]). Although the appellant contends that the implausibility and inconsistencies were only “minor”, his Honour disagreed (at [26]-[27]).”
At the time of the hearing before it, the Tribunal was not in a position to anticipate the future profitability or otherwise of the business, with any precision, one way or the other. The prevailing economic climate as at the date of the hearing before the Tribunal was one of uncertainty. For the Tribunal to find that the business would have necessarily returned to its pre Covid profit position, based upon the documentation forwarded to the Tribunal by the applicant, would have been an act of pure speculation on the part of the Tribunal.
The Tribunal correctly focused upon the provisions of r. 5.19(3)(d)(i) when considering the future employment of the nominee. The Tribunal had correctly noted that there had been cost savings on the part of the business, and it ought to be accepted that the Tribunal had weighed up that factor against all other factors – such as the ATO debt – before it arrived at its decision.
The applicant has failed to establish jurisdictional error on the part of the Tribunal.
The grounds of review are without merit and are dismissed.
The Court will hear the parties as to costs.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 15 October 2024
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