Nong (Migration)

Nong (Migration) [2019] AATA 6802 (6 December 2019)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:
Mrs Shuli Nong

Mr Zihai Lin

Master Jiheng Lin

Miss Yinghui Lin
CASE NUMBER:  1818467
HOME AFFAIRS REFERENCE(S): BCC2017/259605 BCC2017/430558 BCC2017/430659 BCC2018/4129517
MEMBER:Mary Sheargold
DATE:06/12/2019
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 892 (State/Territory Sponsored Business Owner) visa:
·cl.892.211(1) of Schedule 2 to the Regulations.

Statement made on 06 December 2019 at 3:58pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Business Owner) visa – direct and continuous involvement in the management of the main business – applicant acquired 70% shareholding in the business at all relevant times – business was actively operating – limited business operations moved to a shopfront – applicant’s business plans post-retirement of business founder – growth in annual turnover – decision under review remitted
LEGISLATION
Migration Act 1958, ss 65, 134
Migration Regulations 1994, Schedule 2, cls 892.211, 892.221; rr 1.03, 1.11
CASES
Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328
Shahpari v Minister for Immigration and Border Protection [2016] FCCA 513
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576
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 Home Affairs on 6 June 2018 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).
The applicants applied for the visas on 19 January 2017. At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Business Owner) visas, 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 others need only to satisfy the secondary criteria set out in Subdivision 892.3.
The delegate in this case refused to grant the visas on the basis that the first named visa applicant did not satisfy the requirements of cl.892.211 of Schedule 2 to the Regulations because the delegate was not satisfied that the first named visa applicant had maintained direct and continuous involvement in the management of the main business relied on in the visa application during the relevant period.
The applicants appeared before the Tribunal on 6 December 2019 to give evidence and present arguments. The Tribunal also received oral evidence from Mr He-Ming (Peter) Huang. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.
The applicants were represented in relation to the review by their registered migration agent, Mr Harry Song. The representative attended the Tribunal hearing.
For the following reasons, the Tribunal has decided that the matter should be remitted for reconsideration.
Non-disclosure certificate issued pursuant to s.376 of the Act
At the hearing, the Tribunal informed Ms Nong that the Department had placed a non-disclosure certificate issued pursuant to s.376 of the Act in relation to a document it had received on 20 July 2018. The non-disclosure certificate stated that s.376(1)(b) of the Act applied to the source information received in the Border Watch Allegations Team via mail on 20 July 2018, and stated that, as this information was given to the Department of Home Affairs, in confidence, s.375A of the Act did not apply. The non-disclosure certificate noted that the Tribunal’s use and disclosure of the information was subject to the provisions of s.376(3) of the Act.
The Tribunal informed Ms Nong that it found the non-disclosure certificate to be valid, and invited her to make comments on the validity of the non-disclosure certificate. After consultation with Mr Song, Ms Nong stated that she did not wish to comment on the validity of the non-disclosure certificate, but that she did wish to obtain a copy of the document the subject of the non-disclosure certificate.
The Tribunal decided to exercise its discretion, and pursuant to s.376(3)(b), it disclosed the matter contained in the document the subject of the non-disclosure certificate to the applicant. In doing so, the Tribunal noted that the matter so contained in that document was only peripherally relevant to the current issue, and noted that the information in that document was consistent with the reasoning of the delegate in refusing to approve the visa applications.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the first named visa applicant has had, and continues to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately before the application for a Subclass 892 visa was made.
Ownership interest in main business
Clause 892.211(1) requires that the applicant had 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 continued 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.
The business relied on by the applicant to satisfy these requirements is operated through a proprietary company, MWM Co Pty Ltd. The business sells, manufactures, and installs curtains and drapes. Accordingly, the Tribunal must consider the nature of the applicant’s interest in this business, whether the business was actively operating and whether it 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 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).
Does the applicant have an ownership interest in each business relied on at all relevant times?
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 (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 of the Regulations, set out in the attachment to this decision: r.1.11A(1).
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. The business the subject of this application is operated through MWM Co Pty Ltd, a proprietary company. Therefore, the issue for consideration is whether the applicant had an ownership interest as a shareholder in MWM Co Pty Ltd at the relevant times.
At the hearing, Ms Nong gave evidence, which the Tribunal accepts, that she invested $180,000 in MWM Co Pty Ltd on 26 June 2014, for which she acquired 70% of the shares in MWM Co Pty Ltd. A statutory declaration made by Mr He-Ming Huang on 26 November 2019 and provided to the Tribunal prior to the hearing confirms that Mr Huang sold 70% of the company to Ms Nong for the sum of $180,000. The Tribunal notes that the current and historical company extract from the Australian Securities and Investments Commission for MWM Co Pty Ltd sighted by the Tribunal at the hearing confirms that Ms Nong became a director and secretary of MWM Co Pty Ltd on 26 June 2014.
The applicants applied for the visa on 19 January 2017, which means that Ms Nong’s ownership interest in MWM Co Pty Ltd, which began in June 2014, existed for more than 2 years prior to making the visa applications. The Tribunal accepts the evidence before it that Ms Nong has maintained a 70% shareholding in MWM Co Pty Ltd since 26 June 2014.
Accordingly, the Tribunal is satisfied that the applicant did have and does have an ownership interest in the nominated business at all relevant points in time.
Was each business relied on actively operating at all relevant times?
In order to meet cl.892.211(1) the Tribunal must be satisfied that the relevant business or businesses were actively operating both at 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.
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 derived some financial gain for its activities in the relevant period: Shahpari v Minister for Immigration and Border Protection [2016] FCCA 513 at [71].
The current and historical extract from ASIC provided by the applicants to the Department dated 4 May 2018, as well as the copy sighted by the Tribunal at the hearing, show that MWM Co Pty Ltd has been operating continuously since 18 September 2002. The Tribunal notes the significant body of evidence contained in the Departmental file in the form of bank statements and detailed financial reports demonstrating that MWM Co Pty Ltd was actively operating for the 2 years prior to the lodgement of the applications, being from 19 January 2015 to 19 January 2017. The oral evidence from both Ms Nong and Mr Huang given at the hearing is consistent with the documentary evidence contained on the Departmental file. The Tribunal notes that the first named visa applicant provided a significant body of written references from clients and suppliers to demonstrate that they had engaged with her as the general manager of MWM Co Pty Ltd in the 2 year period leading up to the lodgement of the applications.
Based on all the evidence before it, the Tribunal is satisfied that the nominated business was and is actively operating at all relevant points in time.
Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?
In order to satisfy the requirements of cl.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 years immediately before. 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.
First named visa applicant’s ownership interest in the business
Firstly, the applicant must have or have had an ownership interest in the business. In considering this issue, the ownership interest does not need to be continuous or exist at a particular time: Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328 at [32], considering similarly worded criteria in cll.845.213 and 845.221. ‘Ownership interest’ is defined in s.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.
As set out in paragraph 17 above, the Tribunal is satisfied that the first named visa applicant has had (and continues to have) an ownership interest in the business.
First named visa applicant maintains/maintained direct and continuous involvement in the management of the business from day to day
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.
This is the basis on which the delegate reached the conclusion that the first named visa applicant could not satisfy cl.892.211(1) of the Regulations.
By way of background, the Tribunal notes that according to his evidence at the hearing, which the Tribunal accepts, Mr Huang established MWM Co Pty Ltd in 2002 after working as a curtain maker for 5 years. He told the Tribunal that his employer was retiring, and so he saw an opportunity to start his own business. Mr Huang told the Tribunal that the business operated primarily out of his residence at [specified address] and that he would attend customers’ premises to show samples of curtains prior to taking orders.
Mr Huang gave evidence that his business grew via word of mouth from his previous employer’s clients, and that he rarely engaged in any form of advertising. Mr Huang told the Tribunal that only some of his clients were of Chinese background, and he relied on his “poor English” to communicate with the majority of his customers. Mr Huang told the Tribunal that as a family business, it was necessarily on a small scale.
The Tribunal notes Ms Nong’s evidence both at the hearing and contained in a statutory declaration made by her on 26 November 2019, that upon acquiring a 70% shareholding in MWM Co Pty Ltd, and in seeking to assert herself as the general manager of the company, Ms Nong made several major decisions affecting the operation of the business. In summary, these were:
·to focus on growing the business into the Chinese investor market; and
·the establishment of a retail premises/showroom for the business to support the authenticity of Ms Nong’s role within the business.
Mr Huang gave evidence that he did not agree with Ms Nong’s decision to move part of the business into a shopfront, but that as he had allowed her to become the majority shareholder, he was obliged to follow her wishes in this regard. Ms Nong’s evidence in both her statutory declaration and at the hearing, which the Tribunal accepts, indicates that she was somewhat reliant on the advice of her previous migration agent in making the decision to lease a shopfront, as that agent had advised her that it may create a positive impression for the Department if she had a business premises that was separate from Mr Huang’s residential address.
In the primary decision, the delegate stated:
The applicant “arranged for the business to move on 1^st November 2015 to (the) current business address at shop 9, 54 Kilby Rd, Kew East 3102.” Investigations by the Department identified that the commercial premises leased by the applicant is a small retail space, unable to support the scale of manufacturing carried out by the business. Photographs provided by the applicant of leased premises show minimal signage to identify the business and minimal fabric samples or other paraphernalia that might reasonably be associated with a relatively large curtaining business. In addition, information obtained from neighbouring businesses indicated that the premises were rarely attended.
When this was put to [Ms Nong], [she] claimed the space was primarily leased to complete book keeping duties and occasionally meet clients to discuss their curtain needs. Whilst noted, I am unconvinced of this argument and I am of the view the business continues to operate primarily from the residential address of its minority shareholder, He-Ming HUANG. This view is supported by a large volume of documentation on file, including bank statements and supplier invoices that are addressed to He-Ming HUANG’s residential address.
On balance, I accept after becoming the business’s majority shareholder, the applicant may have taken on board some tasks within the business. However, I am of the view that the business continues to operate from the residential address of its minority shareholder and is managed and operated by He-Ming HUANG. The claim in the applicant’s submission that the “business was then relocated to commercial premises” at shop 9, 54 Kilby Rd, Kew East is misleading and does not reflect its true position. Whilst I accept that the applicant uses this space from time to time, the business has not relocated as claimed.
Based on the above, I am of the view that it is more likely than not, that He-Ming HUANG, despite being the business’s minority shareholder, continues to manage the business’s operations and activities from day to day.
At the hearing, both Ms Nong and Mr Huang strongly refuted the allegation that Mr Huang manages the business’s operations from day to day. Their oral evidence is supplemented by their statutory declarations dated 26 November 2019. Ms Nong told the Tribunal that ultimately, she realised the leased premises in Kew East were not of any benefit for the business, as clients preferred her to visit their homes so they could see curtain samples in the correct context. Mr Huang’s evidence was that curtain businesses do not need retail premises because clients preferred to have meetings at their homes rather than a shopfront. Ms Nong told the Tribunal that she has given up the lease at Shop 9, 54 Kirby Rd, Kew East, and that the business infrastructure and all manufacturing remains at Mr Huang’s home in Camberwell.
The Tribunal questioned Ms Nong as to what she intended to do when Mr Huang retires, noting that her acquisition of 70% of MWM Co Pty Ltd was meant to be the catalyst for Mr Huang’s gradual retirement. She stated that she intends to acquire 100% of the shares, hire new curtain makers and sales staff, and move into large commercial premises where manufacturing can be undertaken. Ms Nong told the Tribunal that until her visa application has been determined, she is not prepared to take serious consideration of the most suitable location for the business in the future.
While the Tribunal appreciates the delegate’s hesitation to accept Ms Nong’s submissions that she had relocated the business to Kirby Rd, Kew East, given that by her own admission, the majority of labour still took place at Mr Huang’s residential address, the Tribunal notes that this is largely irrelevant to the question of whether or not Ms Nong has had continuous involvement in the business on a day to day basis since she took on the role of General Manager. The Tribunal notes Ms Nong’s evidence that the company pays an annual licence fee to Mr Huang for the use of his premises for the manufacture of curtains and the storage of materials and equipment.
Further, the Tribunal accepts Ms Nong’s evidence, as did the Department, that the premises in Kirby Rd, Kew East, were used for the storage and management of paperwork, and accepts that Ms Nong realised the futility of maintaining a shopfront, which is itself the reason that she was rarely in attendance. The Tribunal notes that a business with a shopfront does not have to be open during regular trading hours in order for it to be actively operating. This is especially so in the context of a business such as curtain making, where in-home consultations followed by made-to-measure manufacture and installation takes place.

Ms Nong provided significant evidence to the Department demonstrating her day to day management of the business, and this has been discussed in detail above. The Tribunal notes Ms Nong’s evidence that since acquiring a 70% shareholding in MWM Co Pty Ltd, she has dedicated her time to building the business in Australia, and has rarely returned to China. The Tribunal notes that when Ms Nong has returned to China, her evidence is that she travels for 2 to 3 weeks at a time. This evidence is supported by Departmental records that show Ms Nong travels once or twice per year to China, for the time periods she has indicated.
Mr Huang told the Tribunal that he is responsible for the manufacture of curtains, and that he assists Ms Nong when she is working with clients who only speak English. Mr Huang told the Tribunal that he sold 70% of the business to Ms Nong to facilitate his retirement, and that his intent had been to step away quickly if she demonstrated that she could manage and grow the business as required. Mr Huang stated that, “ironically,” Ms Nong’s management of the business had been so successful that he had “become greedy” and was now delaying his retirement as he was enjoying the work and the increased profitability of the business under Ms Nong’s management.
Ms Nong’s evidence is that she has always been responsible for sales and marketing in the business, and that she is succeeding in her goal of attracting business from Chinese investors in Australia. She told the Tribunal that 70% of the business’s clients now come from Chinese speaking backgrounds. The Tribunal accepts Ms Nong’s evidence, which is supported by the evidence of increased turnover of the business since she became involved with it.
The Tribunal has carefully considered all of the evidence before it, and accepts both Ms Nong’s and Mr Huang’s evidence that since acquiring 70% of the shareholding in MWM Co Pty Ltd and taking the role of General Manager, Ms Nong has indeed had continuous involvement in the management of the business, and accepts that it is Ms Nong who makes the decisions in relation to the operation and strategy for the business. The Tribunal accepts Mr Huang’s evidence that he is enjoying his role as a curtain maker without the pressure of making decisions within the business.
Based on all the evidence before it, the Tribunal finds that Ms Nong maintains and 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 since June 2014.
Value of the first named visa applicant’s ownership interest
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.
At the hearing, Ms Nong gave evidence that when she first met Mr Huang, MWM Co Pty Ltd had an annual turnover of approximately $180,000. She gave evidence that since acquiring a 70% shareholding in the company and taking on the role of general manager, the business has grown to have an annual turnover averaging approximately $300,000 per year.
Based on the evidence before it, the Tribunal finds that the value of Ms Nong’s ownership interest in MWM Co Pty Ltd meets the threshold set out in paragraph 41 above. The business has an annual turnover of less than $400,000, and Ms Nong’s shareholding is 70%.
Qualifying business
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.
All the evidence before the Tribunal indicates that MWM Co Pty Ltd operates a curtain sales and manufacturing business. There is substantial evidence in the Departmental file in the form of bank statements, utility bills, invoices, receipts, letters of recommendation, references and photographs and similar documents supporting a finding that the business actively provides products and services in return for the revenue it generates. There is no evidence before the Tribunal to suggest that the business is or was operated on a merely passive or speculative basis.
Therefore, the Tribunal is satisfied that the business is a qualifying business as it was operated for the purpose of making profit through the provision of goods and services.
Summary
Accordingly, the Tribunal is satisfied that the nominated business does meet the definition of main business at all relevant points in time.
Conclusion
Given the findings above, the Tribunal is satisfied that cl.892.211(1) is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa, including in relation to the secondary applicants.
DECISION
The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 892 visa:
·cl.892.211(1) of Schedule 2 to the Regulations.
Mary Sheargold
Member

ATTACHMENT - LEGISLATION
Migration Regulations 1994
1.03Definitions
In these Regulations, unless the contrary intention appears:
…
ownership interest has the meaning given to it in subsection 134(10) of the Act.
…
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.
…
1.11Main 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.
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.
Migration Act 1958
134Cancellation of business visas
….
(10)In this section:
….
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.

[2019] AATA 6802

6 December 2019

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction

Procedural Fairness

Jurisdiction