KINGSTONE BUILDING MATERIAL SUPPLIES PTY LTD (Migration)

KINGSTONE BUILDING MATERIAL SUPPLIES PTY LTD (Migration) [2018] AATA 4925 (23 October 2018)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  KINGSTONE BUILDING MATERIAL SUPPLIES PTY LTD
CASE NUMBER:  1722214
DIBP REFERENCE(S):  BCC2016/3843124
MEMBER:Mr S Norman
DATE:23 October 2018
PLACE OF DECISION:  Sydney
DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 23 October 2018 at 12:05pm
CATCHWORDS
MIGRATION – nomination approval – standard business sponsor – direct entry nomination stream – genuine need for a full time position – General Manager – nominator’s financial capacity – downturn in the construction industry – decision under review affirmed
LEGISLATION
Migration Act 1958 (Cth), s 245AR

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 31 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 Department delegate’s decision was lodged with the Tribunal.
The applicant applied for approval on 16 November 2016. 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 that the applicant’s nomination did not satisfy r.5.19(4)(a)(ii) of the Regulations.
The applicant (represented by their Director, Ms Ying YE) appeared before the Tribunal on 31 August 2018 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages. 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.
The application is compliant: r.5.19(4)(a)
Regulation 5.19(4)(a) requires that the application for approval must be in the approved form, must be accompanied by the prescribed fee, and, where applicable, must include the required written certification relating to conduct that contravenes s.245AR(1). The application must also identify a need for the nominator to employ a paid employee to work in the position under their direct control.
On 16 November 2016, Kingstone Building Material Supplies P/L (hereinafter the ‘nominator’ or the ‘applicant’), lodged a nomination application under the Direct Entry stream. The nominator proposed the position of General Manager (ANZSCO: 111211); and the proposed base salary was $185,000 per annum.
For nominations made before 1 July 2017, r.5.19(4)(a)(ii) requires that the application for approval ‘identifies a need for the nominator to employ a paid employee to work in the position under the nominator’s direct control’. The Tribunal understands it is unclear whether this requirement is directed just at first, a statement to this effect[1] or second, something of a more qualitative nature.[2] However, and for the purposes of this decision, the Tribunal proposes to accept that the second interpretation of r.5.19(4)(a)(ii), should be accepted. That being said, the evidence lodged in support included:
[1] It may be argued that r.5.19(4)(a) as a whole is directed towards requirements for the application form / process of a more administrative nature, such that r.5.19(4)(a)(ii) could be met by a simple statement or certification of need.
[2] The wording ‘identifies a need’ arguably suggests more is required to meet this criterion than simply a statement or declaration that there is such a need. This appears to reflect Department policy (PAM3: Migration Regulations – Divisions – Div 5.3 – General > Approval of nominated positions (employer nomination) > Part C - Criteria applicable to Direct Entry stream nominations > Need for a paid employee > Applicability and overview (reissued 12/05/17 – last reissue prior to 1 July 2017).
·ABN/ASIC registration[3]
[3] See also Tribunal – folio 40.
·Various BAS statements
·Financial statements for the year ended 30 June 2015 and 30 June 2016
·Employment contract
·Position description
·Market information
·Training tax invoices
·Letter from an accountant
·Submission from the nominator
·Various pamphlets about the nominator’s business profile and promotional material
·List of employees
·Organisation chart.
The evidence indicated the nominator’s business had been established in NSW in September 1999. The delegate noted the nominator’s business had (then) been increasing their turnover as shown in the Financial Statements lodged for the year ending 30 June 2015 and 30 June 2016. Further, a submission from the nominator said the business had recently formed a “sales agent agreement with [another business] and had registered a [named] sister company.” It was claimed the nominator’s business would “like to use their strong connections and well-known reputation in the building construction industry to explore new business opportunities by selling and maintaining the Hitachi residential use elevator”. The nominator had also said that “due to the specialised nature of the nominator’s products and services and the need to ensure that business processes are managed effectively across all three branches, the business requires personnel with both technical and business management skills.” The nominator was and is seeking to recruit an experienced General Manager who can effectively assess the existing management team, run the nominator’s business (across all branches), and achieve business goals.
The delegate was not satisfied that any material evidence had been provided about the three branches mentioned in the nominator’s business. Further, after checking the publicly available ABN Look up website, the delegate said this indicated the business (Hitachi Elevators Australia) was registered, but no evidence of any connection with the nominator’s business was located.
Next, the nominator had stated that one of the reasons the business offered the nominee (visa applicant) a salary of $185,000 per annum was to secure his interest in taking the position. It was said the nominee’s then current earnings in China were around CNY580,000 (approximately AUD$120,000).[4] However, no verifiable evidence had been provided (including of the nature and extent of job advertisements in Australia). Given the lack of verifiable evidence supporting the above claims, the delegate gave little weight to same. The delegate believed that for a business committing to recruit a senior manager from overseas with a high salary package, it is commonly expected that material and verifiable evidence would be lodged in support.
[4] Tribunal – folio 154.
The delegate was also not satisfied the nominator had demonstrated how the nominated position fit into the nominator’s business activities, and neither did the nominator establish how the nominated position would be required to support the ongoing business activities.
After considering all the evidence, the delegate was not satisfied the nominator had demonstrated a need for a Corporate Gen Manager on an annual salary (for at least two years) of $185,000, and under the direct control of the nominator. Therefore, the delegate was not satisfied the nominator met r.5.19(4)(a)(ii); and that r.5.19(4) has not been satisfied.
The delegate then noted the applicant had only provided claims against r5.19(4); and that as insufficient evidence had been provided against r.5.19(3), the applicant also had not met this alternative sub-regulation.
By s.359(2) letter of 13 February 2018 (dispatched by email to the authorised recipient), the Tribunal wrote to the applicant and requested further information that they met the relevant criteria in r.5.19(2) & (4). The applicant then had provided further information, including:
·Various invoices for training and other materials dated between February and May 2016[5]
·An undated statement titled “Statement Regarding Training” (signed by a named Director[6]) – that stated the nominator attempts to employ Australian employees; that job training is provided to Australian employees; that in the year 2016, the nominator’s business had a total payroll / superannuation of $699.388 and they paid $13,400 for training (around 2% of payroll); that in 2017 the payroll was $729,878 and training expenses were $8.360 (more than 1% of payroll).
·A document titled “Employment Offer Letter”[7]; which provided some general information about terms and conditions of employment
·A document titled “Information about the roles and duties of the nominated position and how they correspond to the nominated position description in ANZSCO”[8] - amongst other things, that said the position would oversee daily operations; recruit, select and counsel managers and senior staff; accomplish subsidiary objectives by establishing plans, budgets and results of measurements; co-ordinate efforts by establishing production, marketing and service policies and practices; maintain quality service; report key results to the corporate director; perform regular administration and management activities; represent the organisation and act on their behalf before business partners, customers and governing authorities.
·An Organisation Chart dated 14 February 2018[9] - showing 21 staff (two temporary residents – 18 permanent residents – and one position located in China).
·A document titled “Notes to Financial Statements – for the year ended 30 June 2017”[10]
·A “Trading and Profit and Loss Statement – for the year ended 30 June 2017”[11] – which indicated an amount called “Total Available for Appropriation” of $758.978; and total wages of $625.378.62.
[5] Tribunal – from folio 26.
[6] Tribunal – folio 28.
[7] Tribunal – from folio 30.
[8] Tribunal – folio 31.
[9] Tribunal – from folio 33.
[10] Tribunal – from folio 36.
[11] Tribunal – from folio 37.
The above information was lodged by the applicant’s migration agent. Further and materially similar information was lodged at hearing that was certified (and the Tribunal had regard to same prior to drafting this decision).
By migration agent submissions dated 12 August 2018, the following information was also lodged:
·     Photographs, including of the business premises[12]
[12] Tribunal – from folio 152.
·     Certificate of Registration of the business[13]
[13] Tribunal – folio 131.
·     Certificate of Registration of Trademark “Naturelite”[14] & “SoalSky”[15] & “SolaGlaze”[16]
·     Advertising material[17]
·     A Certificate of Origin – relating to conducting business[18]
·     Miscellaneous evidence of conducting business[19]
·     An Authorised Distributor Certificate[20]
·     Evidence of job advertising (created “22 June”[21])
·     Curriculum vitae of the visa applicant[22] and the educational qualifications of visa applicant[23]
·     A Tax Payment Statement of Individual Income Tax for the visa applicant from China[24] - which states inter alia “Thank you for your contribution to China’s flourishing and prosperity!”[25]
·     An undated letter from the nominator’s accountant, advising the nomination has the ‘financial capacity to meet all employment obligations in regard to employing the nominee for a period of at least two years”[26]
·     Bank statements.[27]
[14] Tribunal – from folio 137.
[15] Tribunal – folio 133.
[16] Tribunal – from folio 129.
[17] Tribunal – from folio 134.
[18] Tribunal – folio 112.
[19] Tribunal – from folio 123.
[20] Tribunal – folio 109.
[21] Tribunal – from folio 105.
[22] Tribunal – from folio 102.
[23] Tribunal – from folio 92.
[24] Tribunal – from folio 83.
[25] Tribunal – folio 82.
[26] Tribunal – folio 59.
[27] Tribunal – from folio 58.
Also lodged was a statement from the applicant, dated 8 August 2018. Amongst other things, that said with the expansion of the business and the fierce competition in the industry, the position was “essential and critical” for the business; that the business proposed to first, increase the current building material sales and to this end they had opened two offices and warehouses in Sydney and will open an additional branch in Sydney’s northern suburbs; second, in order to expand business profits they are planning to buy machines to start to process and produce products instead of buying them; third, they are also planning to use strong connections and their well-known reputation in the building construction industry to explore new business opportunities by selling other products relevant to the construction or renovation industry. The nominator then set out the duties of the nominated position as including:
·     oversee daily operations for the business, maximise the organisation’s ability to achieve its strategic goals
·     recruit, select, counsel and discipline managers and senior staff to increase management effectiveness
·     accomplish subsidiary objectives by establishing plans, budgets and results of measurements, allocating resources, reviewing progress, making mid-course corrections
·     coordinate efforts by establishing procurement, production, marketing and service policies and practices, and coordinating actions with corporate staff
·     maintain quality service by establishing and enforcing organisation standards
·     ensure the creation and implementation of a strategy designed to grow the business
·     report key results to corporate directors
·     perform regular administration and management activities for the Corporation
·     represent the organisation and act on their behalf before business partners, customers and governing authorities, whether throughout the country or abroad.[28]
[28] See also Tribunal – from folio 106.
At the Tribunal hearing, the applicant said the nominating business presently employed around 15 employees. Eight were full time employees and seven were part time employees. Of the 15 employees, the applicant believed five were Australian citizens, seven permanent residents, and three temporary residents. The applicant had also said the position was ‘urgently’ required to pursue the expansion of the nominator’s business. However, the nomination approval was lodged on 16 November 2016 and as at the date of the Tribunal hearing (24 August 2018), and even prior to lodgement, the duties of the General Manager position had been undertaken part time and or on occasion by a named employee of the nominator’s business. Though not conclusive of the issue, this is one of the reasons that eventually satisfied the Tribunal the applicant’s claim that the position needed to be ‘urgently’ filled, was not plausible; otherwise, I am satisfied the tasks of the position would have been more fully engaged with prior to the Tribunal hearing.
Next, the nominating business (described as a medium sized business[29]) then said they had been committed to hiring Australian employees and had invested in numerous advertising and recruitment campaigns. However, it ‘proved hard’ to find a suitable and qualified Gen Manager who had both management experience and knowledge of the relevant industry in the Australian labour market. It was said the nominee had more than 20 years of business management and process management experience (principally if not solely in China); that he had a strong engineering background with extensive experience in project management, structure designs, steel construction and materials sourcing; that he had extensive knowledge and understanding of steel construction and products developed from his experience working in China’s ship manufacturing industry (which in terms of transferable skills, the applicant believed was only ‘slightly different to the construction industry’); and that he had qualifications in both engineering and Management and Mechatronics.[30]
[29] Tribunal – folio 153.
[30] Tribunal – folio 155.
At hearing, and after noting there did not appear to be substantial evidence of advertising for the nominated position (particularly if the position was urgently needed to expand the business), when then asked about how the nominated position had been advertised, the applicant said they had advertised in a Chinese language newspaper in Australia, in an online employment site (Indeed.au.com), and on the nominator’s business website. When asked whether the nominating business had (ie) sought the services of a recruitment agency or ‘head hunter’ agency, the applicant said that some three years prior to the Tribunal hearing, they had spoken with a recruitment agency. However, they had not been successful previously and had not pursued this approach. However, the Tribunal understands that on one view, only the top 10% of salary earners in Australia earn more than around AUD$130-140K,[31] and that positions offering high remuneration are commonly highly sought after. Therefore, the Tribunal believes that if the position was (ie) urgently needed to expand the business, it is more probable the services of (ie) a recruitment agency (and evidence of such efforts) would have been more seriously pursued. This is one reason that satisfied the Tribunal there was not an identified need for the nominator to employ a paid employee to work in the position under the nominator’s direct control.
[31] ‘What salary in Australia puts you in the top 10, the top 5, the top 2, and the top 1 percent in terms of salary?’, Quora, accessed 24 August 2018; and ‘How much do you need to earn to be rich in Australia?’, news.com.au, accessed 24 August 2018.
Next, and as stated above, the nominator stated that one of the reasons the nominating business offered the nominee (visa applicant) a salary of $185,000 per annum was to secure his interest in taking the position. The nominator had referred to comparative salaries (the average pay for a general manager in Australia being $140,491 per year[32]). It was also said the nominee’s then current earnings in China were around CNY580,000 (approximately AUD$120,000).[33] At hearing, the Tribunal put to the applicant there may be other reasons a person may wish to travel to and reside in Australia, including other work opportunities and health and education opportunities. The Tribunal had said that ‘dual Australia/Chinese citizenship’ may be possible, but as noted by the agent, this is not correct. Be that as it may, an ex-Chinese citizen or a Chinese citizen with permanent residence in Australia, would commonly be able to travel and reside in China, as they wished.
[32] Tribunal – folio 154; and see folio 84.
[33] Tribunal – folio 154.

When then asked why the visa applicant was selected for the position, it was claimed he could speak Mandarin (virtually all the nominating business employees were said to speak Mandarin and English), that though he only had achieved a Diploma level in his education (though the Tribunal understands he had obtained a Degree in China), he had substantial experience (over 20 years) in the ship building industry; and he was therefore skilled in steel framework and had the mechanical and engineering skills. Also, and as stated above, it was claimed the nominating business was proposing to expand in a number of ways. However, at hearing the Tribunal noted that information before it suggested there was a substantial downturn in the property market[34] (which industry the nominator’s business principally serviced), and it may not appear the nominating business would continue to be capable of paying the nominee the nominated salary for at least two years. After conceding the domestic property market had fallen, the applicant said she believed the profitability of the business would be enhanced by the skills of the visa applicant, and the future development of the business. The applicant also said that both she and the nominating business were financially capable of paying the visa applicant’s proposed base salary.
[34] For instance, see ‘Plotting Recent Housing Market Downturns’, CoreLogic, Cameron Kusher 23 April 2018, - accessed 10 July 2018; and ‘Sydney and Melbourne property prices predicted to fall by up to 4 per cent, David Chau, 8 May 2018, - accessed 10 July 2018.
However, and even if the Tribunal accepts the nominating business or the applicant believed they had the capacity to pay the proposed base salary for the visa applicant for (at least) a two year period, given the current downturn in the industry Australia, and the consequential increase in unemployment of persons engaged in the industry in Australia, the Tribunal is not satisfied the applicant had identified a need to engage the services of the visa applicant/nominee (who was residing in China at the time of the hearing), or that they had identified a need to engage the services of the visa applicant at the substantially increased salary offered (compared to what he was earning in China). Further, if filling the nominated position was ‘urgent’ as claimed, the Tribunal may have anticipated further effort would have been made to explore other candidates for the position who were resident in Australia.
Next, the applicant provided a “Trading and Profit and Loss Statement – for the year ended 30 June 2017”[35] – which identified total wages of $625.378.62; and profit from ordinary activities after income tax of $132,699.10, being less than the proposed salary (and down from $149,917.61 in 2016). At hearing, when then asked why the nominating business proposed to pay the visa applicant around one third of the total business salary paid for the year ended June 2017 (at which time it was said there were approximately 20 employees), the applicant said it was because it was inter alia hoped the visa applicant could expand the nominator’s business. Given the downturn in the construction industry in more recent times, the Tribunal would commonly anticipate more information, and more specific information, about how the visa applicant was to achieve this in the current economic climate. In the circumstances of this case, this is a further reason that satisfied the Tribunal the applicant had not identified a need for the nominator to employ a person to work in the nominated position under their direct control.
[35] Tribunal – from folio 37.
Accordingly, the requirement in r.5.19(4)(a)(ii) is not met.
For the above reasons the Tribunal is not satisfied 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 4925

23 October 2018

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction

Procedural Fairness