Koak (Migration)

[2019] AATA 5334

Koak (Migration) [2019] AATA 5334 (27 November 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Jounglim Koak
Mr Jinpyung Kim
Miss Nahyun Kim
Master Suhong Kim

CASE NUMBER:  1613478

DIBP REFERENCE(S):  BCC2015/729633, BCC2015/4039347, BCC2015/4039366, BCC2016/1618064, BCC2016/3438249

MEMBER:Ian Berry

DATE:27 November 2019

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal affirms the decision not to grant the visa applicant a Business Skills (Residence) (Class DF) visa.

Statement made on 27 November 2019 at 4:18pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Business Owner) – ownership interest in actively operating main business for two years prior to application – ‘repetitive continuous and permanent’ business activity – employment of at least one full-time employee or equivalent part-time employees – business and personal assets – decision under review affirmed

LEGISLATION

Migration Act 1959 (Cth), ss 65, 134(10)

Migration Regulations 1994 (Cth), rr 1.03, 1.11(2), Schedule 2, cl 892.211(1), (2), 892.212, 892.214, 892.221(a)

CASES

Shahpari v Minister for Border Protection [2016] FCCA 513

Yang v Minister for Immigration and Border Protection [2014] FCCA 1576

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 8 August 2016 to refuse to grant the visa applicant a Business Skills (Residence) (Class DF) Subclass 892 visa under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visa on 6 March 2015. At the time of application, Class DF contained four subclasses: Subclass 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and subclass 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of a Subclass 892 (State/Territory Business Owner) visa, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The second, third and fourth applicants (the secondary applicants) need only to satisfy the secondary criteria set out in Subdivision 892.3.

3. The first named applicant (the applicant) appeared before the Tribunal on 12 April 2018 to give evidence and present arguments. The Tribunal received oral evidence only from the applicant.

4. The applicant was represented in relation to the review and at the hearing by her migration agent.

5. The delegate refused to grant the visa on the basis that the applicant did not satisfy the requirements of cl.892.211 because the applicant acquired a franchised interest in a cleaning business in partnership with Mr Choi. Without a written partnership agreement, the ownership of the partnership was considered to be equally shared. To comply with regulation 1.11(c)(ii), (to be a main business, the applicant must have an interest of more than 50% if the business’ annual turnover is less than $400,000. The business’ annual turnover is substantially less than $400,000.

6. The applicant appeared before the Tribunal on 12 April 2018 to give evidence and present arguments. The Tribunal did not receive evidence from any other person.

7. The applicant was represented in relation to the review. The representative attended the Tribunal hearing.

8. For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. The issues in this case is whether or not the applicant has employed one full-time employee or the equivalent part-time employees as required by regulation 892.212(a); if not, whether or not the applicant satisfies at least two of the criteria in regulation 892.212.

   Ownership Interests in each of the main businesses

10. Clause 892.211(1) requires that the applicant have an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the visa application was made and continues to have that interest at the time the visa application was made. The applicant must continue to satisfy this requirement at the time of this decision: cl.892.221(a). No more than two businesses can be nominated for this purpose (r.1.11(2)) and only one or both of the businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion: Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.

11. The applicant nominated two entities in her visa application. P&L Korea Mart Foodville is a grocery store predominately selling Asian grocery items and is owned by P&L Australia Pty Ltd (P&L). The second business is Jounglim Koak (K Cleaning) a home cleaning business where the applicant is the sole trader. The Tribunal must consider the nature of the applicant’s interest in these businesses, including whether the businesses were actively operating and whether they meet the definition of ‘main business’ in the period commencing two years immediately prior to the date of application and as at the date of application. The Tribunal must also consider these issues as at the date of this decision on whether the applicant continues to satisfy cl.892.211(1).

    ISSUE ONE

    Does the applicant have an ownership interest in each business relied on at all relevant times?

12. An ‘ownership interest’, in relation to a business, means an interest in the business as:

    a.A shareholder in a company that carries on the business, or

    b.A partner in a partnership that carries on the business, or

    c.The sole proprietor of the business;

    including such an interest held indirectly through one or more interposed companies, partnerships or trusts: r.1.03 of the Regulations and s.134(10) of the Act. Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A(1).

13. In order to meet cl.892.211(1), the Tribunal must be satisfied that the applicant had an interest of this kind in the relevant business or businesses both at the time of making that application and for the two years immediately before. In order to meet cl.892.221(1), the Tribunal must be satisfied that the applicant continues to satisfy this requirement at the time of the decision.

14. The businesses relied on by the applicant to satisfy these requirements are P&L purchased by the applicant by acquiring two of the three shares (67%) issued by the owning entity P&L Entity. The applicant is the sole proprietor of K Cleaning. Accordingly, the Tribunal must consider the nature of the applicant’s interest in these businesses, whether the businesses were actively operating and whether they met the definition of ‘main business’ in the period commencing two years immediately prior to the date of application, and as at the date of the application. The Tribunal must also consider these issues as at the date of this decision and whether the applicant continues to satisfy cl.892.211(1).

    ISSUE TWO

    Was each business relied on actively operating at all relevant times?

15. In order to meet cl.892.211(1) the Tribunal must be satisfied that the relevant businesses were actively operating both of the time of making the visa application and during the two years immediately before. In order to meet cl.892.221(a) the applicant must continue to satisfy this requirement at the time of this decision.

16. The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and arrived some financial gain for its activities in the relevant period: Shahpari v Minister for Border Protection [2016] FCCA 513 at [71].

17. The two-year period immediately prior to the making of the applicant’s visa application on 6 March 2015, was from 4 March 2013 to 5 March 2015 (two-year period).

18. The applicant acquired her shareholding in P&L on 23 December 2013[1]. It was first registered for GST on 17 December 2013. In summary, P&L was operating under an ABN[2] on or prior to the beginning of the two-year period. Therefore P&L could not have fulfilled the criteria in cl.892.211(1) or (2).

    [1] P&L was the subject of a contract of sale dated 18 December 2013, with settlement of the contract on 23 December 2013.

    [2] Australian Business Number

19. Accordingly, the Tribunal is not satisfied that the applicant held an ownership interest in  P&L at all relevant points in time.

20. K Cleaning was established in May 2012. It was registered for GST on and from 1 May 2012.

21. The Tribunal is satisfied the applicant held an ownership interest in K Cleaning at all relevant points in time.

    ISSUE THREE

    Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?

22. In order to satisfy the requirements of clause 892.211(1), the business or businesses relied on by the applicant must meet the definition of ‘main business’ at the time of application and during the two-year period. Clause 892.221(a) requires that the applicant continues to satisfy this requirement at the time of decision. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.

23. Firstly, the applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in section 134(10) of the Act: r.1.03. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met: r.1.11A. These provisions are set out in full in the attachment to this decision.

24. Secondly, the applicant must maintain or have maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business.

25. Thirdly, the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the business must meet certain thresholds:

    •If the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;

    •If the business is not operated by a publicly listed company and the annual turnover of the business is at least $400,000, the value of the ownership interest must be at least 30% of the total value of the business;

    •If the business is not operated by a publicly listed company and the annual turnover of the business is less than $400,000; the value of the ownership interest must be at least 51% of the total value of the business.

26. Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise that is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public, and is not operated primarily or substantially for the purpose of speculative or passive investment: r.1.03.

27. The applicant’s remaining main business is K Cleaning, in which she has a 100% ownership interest since 1 May 2012. The applicant valued her business in her visa application (Form 1217) for $12,935.63 (at the time of lodgement of her visa application on 6 March 2015).

28. The applicant has had a direct and continuous involvement in the management of K Cleaning. It is a qualifying business in that it supplies goods and services to household customers by providing cleaning services.

29. Accordingly, the Tribunal is satisfied that the applicant’s business (K Cleaning) meets the definition of main business at all relevant points in time.

30. The Tribunal is not satisfied that the P&L meets the definition of main business at all relevant points in time.

    Australian Business Number and Business Activity Statements

31. Clause 892.211(2) must be satisfied at the time of the visa application. It requires that, for each business to which cl.892.211(1) applies:

    •An Australian Business Number has been obtained, and

    •all Business Activity Statements required by the Australian Taxation Office (ATO).

32. K Cleaning has provided both the Australian business number on 1 May 2012 and given all business activity statements required by the ATO, to the Department.

33. For the reasons set out in paragraphs 20 and 21 in this decision, P&L has not provided BAS[3] for the two-year period.

    [3] Business Activity Statements

34. The Tribunal finds that K Cleaning has satisfied the criteria in cl. 892.211(2). The Tribunal has previously made the finding that P&L has not satisfied cl.892.211(2): Paragraph 21.

    Business activities

35. Clause 892.214 requires that, at the time of the visa application, neither the applicant nor his or her spouse or de facto partner (if any) has a history of involvement in business activities that are of a nature that is not generally acceptable in Australia.

36. There is not any evidence of the applicant or the applicant’s spouse having a history of involvement in business activities that are of a nature not generally acceptable in Australia.

37. Given the findings above, the Tribunal is satisfied that cl.892.214 is met. The Tribunal has gone on to also consider clause 892.212.

    Requirements Relating to the Applicant’s Assets

38. Cl.892.212 requires the applicant to meet certain requirements broadly relating to their assets. This provision does not need to be met if the appropriate regional authority has determined that there are exceptional circumstances. Otherwise, at least two of the following three criteria must be met.

    •Australian employment (cl.892.212(a)): In the 12 months ending immediately before the visa application was made, the main business K Cleaning of the applicant, the applicant’s spouse or de facto partner, or the applicant and spouse or de facto partner together employed at least one full-time employee over the 12 month period (or employed a number of employees for a total number of hours equivalent to that which would have been worked by one full-time employee) who is not the applicant or a member of their family unit and who is an Australian citizen, Australian permanent resident or New Zealand passport holder;

    •Business & personal assets (cl.892.212(b)): At the time of the visa application and throughout the 12 month period immediately before the time of application, the net value of the business and personal assets in Australia of the applicant, or the applicant’s spouse or defective partner or their assets combined had a net value of at least $250,000. Further, these assets must have been lawfully acquired;

    •Assets in main business (cl.892.212(c)): At the time of visa application and in the 12 months immediately before the time of application, the total value of the net assets in the main business in Australia of the applicant, or the applicant spouse or de facto partner, or the applicant and her spouse or defective partner together have a net value of at least $75,000. Further, these assets must have been lawfully acquired.

    Clause 892.212(a)

39. There is no evidence before the Tribunal that the appropriate regional authority has determined that there are exceptional circumstances in this case. Accordingly, the Tribunal has considered whether the substantive requirements of this criterion are met. The applicant has submitted that the requirements concerning Australian employment and business and personal assets and assets in the main business are met.

40. The applicant’s business K Cleaning has been operating as a home cleaning business since 1 May 2012. There is not any evidence of the business employing staff who are employees, have Australian citizenship, or Australian permanent residency or the hours worked.

41. The Tribunal is not satisfied that the applicant has met clause 892.212(a).

    Clause 892.212(b)

42. The applicant’s K Cleaning business had a value of $12,935.63 as at the date of the application. There is not any evidence as to the assets owned by the applicant’s husband.

43. During the course of the applicant’s visa application, the applicant purchased another business from Mr Choi[4], for $6,500 which is evidenced by receipt issued 30 May 2013[5]. Immediately following that purchase by the applicant, both the applicant and Mr Choi entered into a partnership for the purpose of purchasing or acquiring Mr Choi’s franchise interest in that business. A franchise agreement was entered into between, on the one hand, Mr Choi and the applicant, and on the other, VIP Home Services Pty Ltd (VIP) made 26 June 2013[6]. The value of this business is taken as $6,500.

    [4] Department file 2: folio 197 – purchase of business agreement (VIP Home Service Franchise Business) dated 30 May 2013 between Ki Jeong Choi and the applicant.

    [5] Department file 2: folio 107.

    [6] Department file 2: folio 191 – franchise agreement between VIP, applicant and Mr Choi. Item 5 – commencement date 17 June 2013 for a term of seven years.

44. Given the above findings, the Tribunal is not satisfied the applicant has complied with cl.892.212(b).

    Clause 892.212(c)

45. At the time of the applicant’s visa application made on 6 March 2015 the total value of the net assets of the applicant including the franchise business is a value less than $20,000.

46. Given the above findings, the Tribunal is not satisfied the applicant has met the criterion in clause 892.212(c)

    DECISION

47. The tribunal affirms the decision not to grant the visa applicant a Business Skills (Residents) (Class DF) visa

    Ian Berry

    Member

    The definitions which are relevant to the visa application under review are set out:

    Definition of main business

    1.11 Main business

    (1) For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:

    (a)    the applicant has, or has had, an ownership interest in the business; and

    (b)     the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

    (c)    the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the business is or was:

    (i)if the business is operated by a publicly listed company—at least 10% of the total value of the business; or

    (ii)if:

    (A)the business is not operated by a publicly listed company; and

    (B)the annual turnover of the business is at least AUD400 000; at least 30% of the total value of the business; or

    (iii) if:

    (A)the business is not operated by a publicly listed company; and

    (B)the annual turnover of the business is less than AUD400,000; at least 51% of the total value of the business; and

    (d)     the business is a qualifying business.

    (2)If an applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the applicant, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.

    Definition of ownership interest:

    Subsection 134(10)

    ownership interest, in relation to a business, means an interest in the business as:

    (a)a shareholder in a company that carries on the business; or

    (b)  a partner in a partnership that carries on the business; or

    (c)the sole proprietor of the business;

    including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

    Definition of qualifying business:

    qualifying business means an enterprise that:

    (a)   is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

    (b)  is not operated primarily or substantially for the purpose of speculative or passive investment.

    .

    Definition of Ownership for the purposes of certain Parts of Schedule 2

    1.11A Ownership for the purposes of certain Parts of Schedule 2

    (1) Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an applicant, or the applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

    (2) To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:

    (a)     a trust instrument; or

    (b)     a contract; or

    (c)      any other document capable of being used to enforce the rights of the applicant, or the applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

    stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

    (3) A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

    (4) Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the applicant, or the applicant’s spouse or de facto partner, has beneficial ownership:

    (a)     is a dependent child of the applicant; and

    (b)     made a combined application with the applicant; and

    (c)           has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.