Lebedev (Migration)

[2024] AATA 1603

Lebedev (Migration) [2024] AATA 1603 (23 May 2024)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Alexander Lebedev
Ms Thi Thuy Van Ha
Master William Lebedev Van
Mr Nguyen Lebedev German
Miss Nguyen Gerda Lebedeva
Master Ha Michael Lebedev

REPRESENTATIVE:  Mr Mark Sekerin (MARN: 1383419)

CASE NUMBER:  2116521

HOME AFFAIRS REFERENCE(S):          BCC2019/79835

MEMBER:Susan Hoffman

DATE:23 May 2024

PLACE OF DECISION:  Perth

DECISION:The Tribunal remits the applications for Business Skills (Provisional) (Class EB) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa:

·cl 188.225 of Schedule 2 to the Regulations.

Statement made on 23 May 2024 at 10:22am

CATCHWORDS
MIGRATION – Subclass 188 (Business Innovation and Investment (Provisional)) visa – Subclass 188 – applicant had an ownership interest in the nominated business for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa – the business was a qualifying business – decision under review remitted

LEGISLATION
Migration Act 1958, ss 65, 134
Migration Regulations 1994, rr 1.11, 1.03, Schedule 2, cl 188.225

CASES

Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328

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 Home Affairs on 9 November 2021 to refuse to grant the applicants Business Skills (Provisional) (Class EB) visas under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The applicants applied for the visas on 9 January 2020. Class EB contains Subclass 188 (Business Innovation and Investment (Provisional)). The criteria for the grant of a Subclass 188 (Business Innovation and Investment (Provisional)) visa are set out in Part 188 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations). The primary criteria must be satisfied by at least one applicant. Other members of the family unit who are applicants for the visa need satisfy only the secondary criteria. The primary criteria include common criteria, and criteria set out in streams. In this case, the first named visa applicant (‘the applicant’) applied for the visa in the Business Innovation stream.

3. The delegate in this case refused to grant the visas on the basis that the applicant did not satisfy the requirements of cl 188.225 of Schedule 2 to the Regulations because the delegate was not satisfied that the nominated business was a main business of the applicant for at least two years during the relevant period.

4. The applicant lodged a comprehensive submission with supporting documents on 9 May 2024.

5. As the Tribunal was able to make a favourable decision on the papers, the applicants did not attend a hearing to give evidence and present their case.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

7. The applicant is seeking to satisfy the primary criteria for a Subclass 188 visa in the Business Innovation stream which include the criteria in Subdivisions 188.21 and 188.22 of Schedule 2 to the Regulations. The issue in the present case is whether the applicant meets cl 188.225.

   Ownership interest in main business – cl 188.225(1)

8. Clause 188.225(1) requires that for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant had an ownership interest in one or more established main businesses that had an annual turnover, in each of those years, of at least AUD500,000 (if the time of invitation was before 1 July 2021) or at least AUD750,000 (if the time of invitation was on or after 1 July 2021). No more than two businesses can be nominated for this purpose (reg 1.11(2)). ‘Fiscal year’, in relation to a business or investment, means, if there is applicable to the business or investment by law an accounting period of 12 months – that period; or in any other case – a period of 12 months approved by the Minister in writing for that business or investment: reg 1.03.

   Cl 188.225

   (1)  For at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant had an ownership interest in one or more established main businesses that had an annual turnover of at least AUD 500 000 in each of those years.

   (2)  If the applicant was engaged in one or more businesses providing professional, technical or trade services for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant was directly engaged in the provision of the services, as distinct from the general direction of the operation of the business, for no more than half the time spent by the applicant from day to day in the conduct of the business.

9. The business relied on by the applicant to satisfy these requirements was Novosin Holdings Pte Ltd (Novosin), a company registered in Singapore. Accordingly, the Tribunal must consider the nature of the applicant’s interest in this business and whether the business met the definition of ‘main business’ for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, as well as the annual turnover of the business in the relevant years.

   Did the applicant have an ownership interest in each business relied on for at least 2 of the 4 fiscal years immediately before the time of invitation?

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

    ·a shareholder in a company that carries on the business, or

    ·a partner in a partnership that carries on the business, or

    ·the sole proprietor of the business;

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

11. In order to meet cl 188.225(1) the Tribunal must be satisfied that the applicant had an interest of this kind in the relevant business or businesses for at least 2 of the 4 fiscal years immediately before the time of the invitation.

12. The visa application was lodged on 9 January 2020. The invitation to make an application was dated 23 December 2019. The applicant provided the Department with financial statements for financial years ended 31 December 2012, 2013, 2014, 2015, 2016, 2017 and 2018. The Tribunal finds that the four fiscal years immediately before the invitation was made were years ending 31 December 2015, 2016, 2017 and 2018.

13. In his visa application form, the applicant submitted that during financial years 2016 and 2017, his ownership interest in Novosin was 65%.

14. Documents provided to the Department include a Certificate of Incorporation of Private Company dated 2 November 1995 in relation to Novosin and a business profile for Novosin which recorded that Novosin was registered in Singapore on 2 November 1995 and was an exempt private company limited by shares. One million shares were issued, and the applicant held 950,000 ordinary shares.

15. Submissions to the Tribunal included a letter dated 26 April 2024 from Singapore-based accountants K. S. Ng and Co to the applicant’s representative. This letter set out that the applicant’s shareholding in Novosin from 1995 to at least 2018 was as follows:

    Before 14 May 2001                nil

    From 14 May 2001                 The applicant held 153,000 or 51% of 300,000 shares

    From 26 September 2001         The applicant held 75,000 or 25% of 300,000 shares

    From 26 December 2002         The applicant held 231,000 or 77% of 300,000 shares

    From 12 June 2012                The applicant held 770,000 or 77% of one million shares

    From 17 April 2015                The applicant held 650,000 or 65% of one million shares

    From 30 November 2018         The applicant held 950,000 or 95% of one million shares

16. Accordingly, the Tribunal is satisfied that the applicant had an ownership interest in the nominated business for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa.

    Did the business relied on have sufficient annual turnover?

17. In order to meet cl 188.225(1) the Tribunal must be satisfied that the relevant business or businesses had an annual turnover, in each of the 2 fiscal years identified above, of at least AUD500,000 (if the time of invitation was before 1 July 2021) or at least AUD750,000 (if the time of invitation was on or after 1 July 2021).

18. As the time of invitation was 23 December 2019, the threshold figure relevant to this review is AUD500,000.

19. The financial statements for fiscal years 2015, 2016, 2017 and 2018 recorded the following annual turnovers in Singaporean dollars. The Tribunal has converted the figures into AUD using the OANDA currency converter at 31 December of the relevant year.

    SGD              AUD

    2015              18,293,318      17,744,427

    2016                2,871,529        2,746,841

    2017                   121,412          116,330

    2018  nil

20. The Tribunal finds that the business had the relevant annual turnover in 2015 and 2016 but not in 2017 or 2018. 

21. Accordingly, the Tribunal is satisfied that the nominated business had an annual turnover, in each of 2015 and 2016, of at least AUD500,000 and it is these years that are the relevant years.

22. Given evidence already set out, the Tribunal is satisfied that the applicant’s share of ownership was either 65% or 77% during 2015 and 2016.

    Did the business relied on satisfy the definition of ‘main business’?

23. The business or businesses relied on by the applicant to satisfy cl 188.225(1) must also have been an established ‘main business’ for the relevant 2 fiscal years identified above. The term ‘main business’ is defined in reg 1.11 of the Regulations.

    Reg 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 interestin 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.

24. There are therefore four elements to the definition of main business, each of which must be satisfied for a business to be a main business.

25. Firstly, the applicant must have, or have had, an ownership interest in the business. ‘Ownership interest’ is defined in s 134(10) of the Act: reg 1.03. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met: reg 1.11A.

26. The Tribunal has already found that the applicant had an ownership interest in the business during the relevant years. The first element is satisfied.

27. 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.

28. The Tribunal will return to this element below.

29. 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 businesses is not operated by a publicly listed company and the annual turnover of the business is at least AUD400 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 AUD400 000, the value of the ownership interest must be at least 51% of the total value of the business.

30. The business was not operated by a publicly listed company. As the applicant’s shareholding exceeded 51% during the relevant years, the Tribunal is satisfied that the ownership percentage threshold is met.

31. 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: reg 1.03.

32. In a letter to the Department dated 27 July 2021, the applicant described Novosin as a Singapore based company involved in engineering, offshore and subsea construction, design, project management, ship management, chartering, consultancy, surveying and inspection. On 28 July 2021, the applicant provided the Department with a 12-page company profile booklet for Novosin, noting that it was designed for promotional purposes.

33. The applicant submitted to the Tribunal statutory declarations and letters from business associates and a former employee:

    ·Mr Andrey Bogachev, general director of PVGAZPROM

    ·Mr Li tri Thanh, from 2014 to 2020, the director of the branch of Petrovietnam Technical Services Corporation – PTSC Marine

    ·Mr Nikolay Zolkin, a retired Maritime Operations Manager living in Vietnam. He wrote that between 2008 and 2017 he worked for Novosin.

    ·Mr Paul Colley, director and CEO of Total Marine Technology, Fremantle. The business relationship between Total Marine Technology and Novosin started in 2006.

34. The company profile booklet together with the statutory declarations/letters from the business associates and the former employee provide information consistent with the applicant’s description of the business activities.

35. The Tribunal is satisfied that the business was operated for profit through the provision of goods and/or services, and was a qualifying business.

36. This leaves the question as to whether 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. The Tribunal considered whether the applicant was required to have maintained involvement in the management of the business for the entirety of the two relevant years.

37. Here, the Tribunal had regard to Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328 at [32] and [33]. The Court considered the phrase “the applicant has, or has had” in relation to an ownership interest in the business and stated:

    … if the Tribunal required an ownership interest at a particular time when deciding if a business is a main business, the Tribunal would err. But nothing in the statute prohibits the Tribunal from considering the ownership arrangements of any relevant entity at any time for the purpose of identifying “the business” forming part of the definition of the “main business”.

    In the present case, the Tribunal recognised that it had to identify “the business” before it could apply the definition of “main business”. the Tribunal thus did not conflate the ownership interest and main business questions.

38. The Tribunal observes that cl 188.225(1) states that “For at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant had an ownership interest in one or more established main businesses …”. This clearly requires that the applicant had an ownership interest for at least two years before the time of invitation.

39. Cl 188.225 does not include a requirement that the applicant maintained direct and continuous involvement in the management of the business for at last two of the four fiscal years before the time of invitation.

40. The definition of a main business (reg 1.11) does not require that the applicant had an ownership interest of at least two years or any other specified duration, merely that the applicant had, or has had, an ownership interest in the business (reg 1.11(a)). Consistent with that, reg 1.11(c) which sets out requirements to do with the value of the ownership states “the total value of the ownership interests … in the business is or was …”.

41. Similarly, there is nothing in reg 1.11(b) that specifies the length, or timing, of the period during which the applicant maintains, or has maintained, direct and continuous involvement in the management of the business.

42. The delegate was satisfied that the applicant had demonstrated that he satisfied reg 1.11(b) in relation to calendar year 2015 but not for 2016.

43. The Tribunal considers that if the applicant can show that he 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 for the entirety of 2015, then r 1.11(b) is satisfied.

44. In his visa application form, the applicant stated that he had obtained a bachelor’s degree with honours in science, business or technology. The course he studied from 1981 to 1986 was Bachelor of Naval Mechanical Engineering which was provided by Far East Technical University in the Russian Federation. Between 1973 and 1978, he had obtained a diploma in a course titled Marine Power Plants Engineer at Lomonosov Maritime College, also in the Russian Federation.

45. The applicant stated in the form that he was the general manager/managing director of Novosin from 2001 to January 2019. He described his duties as project management: services (including subsea) construction provided to marine oil and gas companies.

46. In a letter to the Department dated 27 July 2021, the applicant wrote that Novosin was involved in engineering, offshore subsea construction, design, project management, ship management, chartering, consultancy, surveying and inspection.

47. As the majority owner of the business and its general manager/managing director, it follows that the applicant maintained direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business, over many years.

48. In a statutory declaration dated 7 May 2024, the applicant wrote that in his capacity as managing director, he was responsible for identifying business opportunities, negotiating orders and tenders, giving directions to the company’s employees, contractors and agents, managing the daily activities of the business, authorising expenses, and receiving and approving reports.

49. The applicant started a new position in 2016. He was employed as the Business Development Manager for a Fremantle-based company, Total Marine Technologies Pty Ltd, from 22 January 2016. His duties involved subsea construction and services.

1. In his statutory declaration, the applicant wrote that Novosin Holdings Pte Ltd was effectively dissolved at the end of 2018 and the last financial year it operated a business was year ended 31 December 2016.

2. The applicant referred to a consortium between POSH Semco, a Singaporean specialised ship owner and PTSC Marine. The consortium won a tender in 2015 for the provision of three support vessels and support services to offshore gas and oil exploration works conducted by Vietgazprom for Petrovietnam, the latter being a Vietnamese government owned enterprise.

3. As stated in the statutory declaration, the consortium was responsible for bringing necessary supplies to the drilling and well sites, transfer of personnel, stand-by duties, navigation safety, subsea remotely operated vehicles operations and provision of other support works. The work of the consortium continued through 2015 and part of 2016.

4. Novosin continued business operations until February 2016 and the remainder of the calendar year was devoted to the finalisation of works, end of work procedures and finalisation of the consortium’s affairs. These included termination of ship and warehouse leases, crew discharge, fuel usage reports, finalisation of payments from from and between the consortium parties. The finalisation processes continued until July 2016.

5. Even though the applicant’s involvement with Novosin reduced during 2016 compared with earlier years, the Tribunal is satisfied that the applicant did maintain direct and continuous involvement in the management of the nominated business  - Novosin - from day to day and in making decisions affecting the overall direction and performance of the business over many years.

6. Accordingly, the Tribunal is satisfied that the nominated business does meet the definition of main business for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa.

7. Given the findings above, the Tribunal is satisfied that cl 188.225(1) is met. The Tribunal has also considered cl 188.225(2).

   Direct engagement in provision of services – cl 188.225(2)

8. Clause 188.225(2) provides that if the applicant was engaged in one or more businesses providing professional, technical or trade services for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant was directly engaged in the provision of the services, as distinct from the general direction of the operation of the business, for no more than half the time spent by the applicant from day to day in the conduct of the business.

9. Departmental policy provides examples of applicants who may be found to have provided professional, technical or trade services. These examples are medical practitioners, dentists, or lawyers working in those professions or self-employed electricians or mechanics.

10. Given the description of business activities set out above, the Tribunal is satisfied that the nature of the services provided by Novosin were not professional, technical or trade services in the sense contemplated by cl 188.225(2). It is also satisfied that the applicant’s role was to manage and direct the operations of the business rather than him being directly engaged in the provision of those services.

11. Given that the applicant was not engaged in one or more businesses providing professional, technical or trade services, cl 188.225(2) does not apply.

12. Given the findings above, the Tribunal is satisfied that cl 188.225 is met.

    OVERALL CONCLUSION

13. Given the above findings, the appropriate course is to remit the application for the visa to the Minister to consider the remaining criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa.

    DECISION

14. The Tribunal remits the applications for Business Skills (Provisional) (Class EB) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa:

    ·cl 188.225 of Schedule 2 to the Regulations.