Minister for Immigration v Hart - [2008] FMCA 1067

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MINISTER FOR IMMIGRATION v HART & ANOR

[2008] FMCA 1067

MIGRATION – Review of decision by Migration Review Tribunal – whether Migration Review Tribunal’s decision affected by jurisdictional error – whether the Migration Review Tribunal asked itself the wrong question.

Migration Regulations 1994 – clause 845.213 of Schedule 2, Part 845 of Schedule 2, Regs. 1.11(1)(a) and 1.03.
Migration Act 1958 – s.134(10)

CTP Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724
Ng v The Minister [2002] FCA 1146

Applicant:

MINISTER FOR IMMIGRATION & CITIZENSHIP

First Respondent:

TRACEY KIM HART

Second Respondent:

MIGRATION REVIEW TRIBUNAL

File Number:

BRG 126 of 2008

Judgment of:

Jarrett FM

Hearing date:

28 May 2008

Date of Last Submission:

12 June 2008

Delivered at:

Brisbane

Delivered on:

30 July 2008

REPRESENTATION

Counsel for the Applicant:

Mr Brady

Solicitors for the Applicant:

Clayton Utz

Counsel for the First Respondent:

Mr Steele

Solicitors for the First Respondent:

Drakopoulos Lawyers

Solicitors for the Second Respondent:

Australian Government Solicitor

ORDERS

The application be dismissed;
The applicant pay the respondent's costs of and incidental to the application fixed in the sum of $5000.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 126 of 2008

MINISTER FOR IMMIGRATION & CITIZENSHIP

Applicant

And

TRACEY KIM HART

First Respondent

MIGRATION REVIEW TRIBUNAL

Second Respondent

REASONS FOR JUDGMENT

Northside Cabinets Pty Ltd carries on a cabinet-making business in Brisbane under the trading name "Northside Cabinets". It is also the trustee of the Yates Family Trust and it conducts the business as trustee of the Trust.
Tracey Hart, the respondent to this application, owns 20 per cent of the issued shares in Northside Cabinets Pty Ltd. She plays a part in the management of Northside Cabinets business but is not a director or other office-holder of Northside Cabinets Pty Ltd. The other shareholders are her mother, Beryl Yates, and a person who may be either her father or step-father, Richard Yates.
The Yates Family Trust is a discretionary trust. There are a number of classes of beneficiaries but, according to the terms of the deed that establishes the Trust, none are entitled to any particular part of the trust estate. The Trustee retains an absolute discretion as to the distribution of income and the trust assets both in terms of who might receive those distributions and in what sum.
Ms Hart is a citizen of the United Kingdom and a non-citizen of this country. She applied for a Business Skills-Established Business (Residence) (Class BH) visa. Her 8 year old son was a second applicant. On 27 March, 2007 a delegate of the Minister refused to grant Ms Hart the visa. She sought a review of that decision by a migration review tribunal.
Her review application was successful. On 1 February, 2008 a migration review tribunal handed down reasons for decision and remitted Ms Hart’s visa application for reconsideration by the Minister, with a direction that Ms Hart had met the relevant criteria for the claimed visa.
In this application the Minister seeks that the decision of the Migration Review Tribunal be set aside; that the matter be remitted to a differently constituted tribunal for reconsideration and determination according to law; and for an order that Ms Hart pay the Minister's costs of the application.

The Tribunal’s decision

The Tribunal's findings in the matter are of relatively short compass and can be set out in full. At page 8 of the reasons the Tribunal said:
Overall, the available documentation, together with the evidence of Ms Hart, Mr Yates, and Mr Cabrera provided at hearing satisfied the Tribunal that Ms Hart has a 20 per cent shareholding in Northside Cabinets Pty Ltd and that she is actively involved in the operations of that business, both in the management of the business, its overall direction, and its day-to-day operations.
Northside Cabinets Pty Ltd is owned by the Yates Family Trust. Northside Cabinets Pty Ltd is the trustee of the Yates Family Trust and Mr Yates in the principal of the trust. Also, during the relevant period Mr Yates was the only director of the company. However, the Tribunal is satisfied that the company was structured in this way for asset protection purposes and it is not how the business is managed on a day-to-day basis. It was clear to the Tribunal that Ms Hart's role in the business during the relevant period involved her directly managing the business day-to-day and making decisions affecting the overall direction and performance of the business.
The Tribunal is therefore satisfied that Ms Hart has had, and continues to have an established main business in Australia, being Northside Cabinets Pty Ltd, for the period 18 months immediately before the making of the application. The business is a qualifying business as it is operated for the purpose of supplying goods to the Australian markets. The applicant has a 20 per cent shareholding, above the required 10 per cent and the Tribunal is satisfied that she is actively involved in all relevant aspects of the business. As a result, the Tribunal is satisfied that Ms Hart satisfies the provisions of clause 845.213.
There is inaccuracy of expression used by the Tribunal when describing the relevant legal entities and their relationships with each other in the relevant passages to which I have just referred. For example, it is not the case that Northside Cabinets Pty Ltd is owned by the Yates Family Trust. The material before the Tribunal clearly demonstrated that the shareholders of Northside Cabinets Pty Ltd at the relevant times were Ms Yates and her mother and her (step) father. To the extent that the Tribunal made such a finding, then it was clearly wrong.
However, the critical findings of the MRT appear to be that:
a)Ms Hart owned 20% of the shares in Northside Cabinets Pty Ltd;
b)implicitly, Northside Cabinets Pty Ltd carried on business as Northside Cabinets;
c)Ms Hart therefore had an ownership interest in the business Northside Cabinets; and
d)thereby she was able to satisfy the provisions of cl.845.213 of the second schedule of the Migration Regulations 1994.
According to the Minister’s submissions those findings, and particularly the finding that Northside Cabinets Pty Ltd carried on business as Northside Cabinets, were wrong as a matter of law. The Minister submits that the Tribunal, in concluding that Ms Hart’s 20 per cent shareholding in Northside Cabinets Pty Ltd amounted to an “ownership interest”, involved a clear error in application of the relevant statutory test. It was submitted that the Tribunal had erroneously equated a shareholding in the trustee of a discretionary trust with an ownership interest in the assets of the trust. Therefore, it is said, the Tribunal failed to properly understand the nature of the discretionary trust in this case. The Tribunal’s approach resulted in it failing to apply itself to the question which the law prescribed and which are jurisdictional in nature.

Discussion

The visa sought by Ms Hart and the statutory framework against which her eligibility for that visa is to be assessed is set out in the outline of submissions for the Minister. It was not suggested that that outline was wrong. I adopt that outline for the purposes of these reasons.
Relevantly, to secure the grant of the visa in this case, Ms Hart needed to establish that at the time of her application she had an ownership interest in 1 or more main businesses in Australia for a period of 18 months immediately preceding the making of the application and that she continued to have an interest of that kind[1].
A business is a main business in relation to an applicant for a relevant 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 in the business is or was at least 10 per cent of the total value of the business; and
d)the business is a qualifying business[2].
Ownership interest for the purposes of the Act and Regulations is defined to mean an interest in the relevant 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[3].
Having regard to the findings of the Tribunal and the statutory framework identified by the Minister, the issue at the kernel of this case is whether Northside Cabinets Pty Ltd "carries on the business" of Northside Cabinets. It was not suggested that the other matters to be established by the applicant were not established on the evidence or that the Tribunal was not entitled to make the findings about those matters that it did.
In my view, Northside Cabinets Pty Ltd "carries on the business" of Northside Cabinets. That it does so as trustee of a trust does not detract from that conclusion.
The Trust itself is not a legal entity and cannot hold the assets which are deployed in the business. Northside Cabinets Pty Ltd is entitled to the income of the business and liable for its debts subject at all times to its rights, duties and obligations pursuant to the deed that establishes the trust. By reason of the terms of the trust deed, the beneficiaries of the trust have no interest in the trust assets. The nature of the Trust is such that they cannot have any interest in the Trust other than a right to due administration of it. I accept the submissions of the Minister to that effect.
As the decision of the High Court of Australia in CTP Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 demonstrates, however, the Trust does not own the business. It does not have a proprietary interest in it, but rather it is owned, both legally and beneficially, by the trustee.
In CPT Custodians, at paragraph 25, the High Court said this:
Glenn v Federal Commissioner of Land Tax
25. In that case, Griffith CJ said of an argument for the Revenue that it was:
"based on the assumption that whenever the legal estate in land is vested in a trustee there must be some person other than the trustee entitled to it in equity for an estate of freehold in possession, so that the only question to be answered is who is the owner of that equitable estate. In my opinion, there is a prior inquiry, namely, whether there is any such person. If there is not, the trustee is entitled to the whole estate in possession, both legal and equitable."
That statement was a prescient rejection of a "dogma" that, where ownership is vested in a trustee, equitable ownership must necessarily be vested in someone else because it is an essential attribute of a trust that it confers upon individuals a complex of beneficial legal relations which may be called ownership. The current state of authority, exemplified by Commissioner of Taxation v Linter Textiles Australia Ltd (In liq), bears out what was said in Glenn by Griffith CJ. General remarks in Chief Commissioner of Stamp Duties v ISPT Pty Ltd, a case referred to extensively in Arjon, may be at odds with what was said in Glenn to the extent that they go beyond construction of the particular New South Wales stamp duty legislation, but it is unnecessary to pursue the question here.
(footnotes omitted).
The relevant inquiry in the case before me is whether the company in which there is the necessary shareholding carries on the relevant business. In Ng v The Minister [2002] FCA 1146 Dowsett J was dealing with a case not dissimilar to the present. In that case his Honour said at paragraph 32:
[The applicant] was a shareholder in the trustee, but that share gave him an interest only in that company. The trustee had no interest in the trust business. Its own business may have been that of acting as trustee or of managing a business. In the event of a liquidation, the applicant's shareholding would have entitled him to participate in the distribution of any surplus of the trustee's own assets after payment of debts. However, that would not have entitled him to participate in any distribution of the trust assets, save to the extent that the trustee was entitled to any indemnity from them. It is therefore difficult to see how, as a shareholder in the trustee, he had any interest in the trust business. It is true that in a sense the company was "carrying on" that business, but I doubt whether that was the intention of the definition. The definition as a whole relevantly reads:
Ownership interest, in relation to a business, means that interest in the business as … a shareholder in a company that carries on the business …
Clearly, the "interest" is an interest in a business and the business, in this case, was a trust asset, not an asset of the trustee. The better view is that the words "carries on the business" describe involvement as a proprietor rather than merely being employed in the administration of the business, which appears to have been the involvement of the trustee.
According to his Honour, a mere "carrying on" of a business, without having a proprietorial interest in it, is not sufficient to meet the relevant definition of "ownership interest". But as the passage in his Honour’s reasons immediately following that extracted above makes clear, his Honour’s remarks were obiter.
Ng was decided before CTP Custodians and as CTP Custodians makes clear, where legal title to an asset is vested in a trustee in circumstances where a holder of a relevant beneficial interest cannot be identified, the trustee holds both the legal and equitable title to the asset. That is to say it is, in all senses, the owner of the relevant asset (the business in this case); subject at all times however to the terms and conditions of the trust.
If that view is correct, then the Tribunal was clearly correct in concluding that Ms Yates had an ownership interest in Northside Cabinets. Having regard to the nature of the discretionary trust in this case it cannot, and was not suggested, that the beneficiaries of that trust retained any beneficial interest in any of the trust assets. That being so, it seems to me that, as a matter of principle, Northside Cabinets Pty Ltd was at all times the legal and beneficial owner of Northside Cabinets.
Ordinarily, a Federal Magistrate will accord significant weight and rarely depart from a judgment of a single Judge of the Federal Court of Australia, but in this case I feel comfortable in doing so, having regard to the ratio of the decision in CTP Custodians, the fact that decision was delivered after the decision of in Ng and that the court’s remarks in Ng were obiter.
The Minister submitted that the ratio in CTP Custodians ought to be confined to revenue cases for it was one of those types of cases, but I accept the submissions for the respondent that the High Court was talking in terms of general principle rather than simply the application of more limited principles to the facts of the particular revenue case that was before it.
There is nothing in the judgment of the High Court in CTP Custodian, or in any of the other judgments referred to by the Court in the extract referred to above that suggests that the principle referred to by the Court ought to be confined as the applicant suggests.
In those circumstances, whilst there are some errors of fact in the Tribunal's findings and infelicity of expression, those errors do not amount to a jurisdictional error. Nor is the decision arrived at by the Tribunal plainly or manifestly unreasonable or wrong.
In those circumstances, the application is dismissed.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Associate: J Witenden

Date: 30 July 2008

[1] clause 854.213, Part 845 of Schedule 2 to the Migration Regulations 1994

[2] reg. 1.11(1)(a) of the Regulations

[3] reg. 1.03 of the Regulations and s.134(10) of the Migration Act 1958