Offord (Migration)

[2019] AATA 921

Offord (Migration) [2019] AATA 921 (18 March 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Jonathan Leslie Richard Offord
Ms Glynis Margaret Offord

CASE NUMBER:  1705318

DIBP REFERENCE(S):  BCC2015/3603096

MEMBER:Susan Trotter

DATE:18 March 2019

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal remits the application for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the applicants meet the following criteria for a Subclass 892 (State/Territory Sponsored Business Owner) visa:

• cl.892.212 of Schedule 2 to the Regulations; and

• cl.892.221(b) of Schedule 2 to the Regulations.

Statement made on 18 March 2019 at 5:43pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Sponsored Business Owner) – minimum net asset requirement – value of business assets – value of personal assets – loan arrangement with son for purchase of property – unsecured loan – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), Schedule 2, cls 892.212, 892.221

CASES
G v MIBP [2018] FCA 1229

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 and Border Protection (the Minister) on 2 March 2017 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 first-named visa applicant is a 63-year-old citizen of the United Kingdom and the husband of the second-named visa applicant, a 62-year-old citizen of the United Kingdom. They have been present in Australia continuously since September 2013, initially as the holders of Subclass 163 (State/Territory Sponsored Business Owner) (Provisional) temporary visas granted on 7 July 2011 and are the co-owners and proprietors of the business ‘Jon’s Helping Hand’ which has been registered as a business since 4 January 2012.

3. The visa applicants applied for the visa on 30 November 2015. The delegate refused to grant the visa on the basis that cl.892.212 of Schedule 2 to the Migration Regulations 1994 (the Regulations) was not as required. In particular, the delegate found that as at 31 August 2014 the applicants’ net business and personal assets totalled AUD194,555 and was therefore below the required minimum of AUD250,000.

4. The applicants lodged an application for review of the delegate’s decision with the Tribunal on 20 March 2017.

5. The applicants appeared before the Tribunal on 12 March 2019 to give evidence and present arguments. The Tribunal also heard evidence form Simon Offord.

6. The applicants were represented in relation to the review.

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

   ISSUES

8. At the time the visa application was lodged, the Business Skills (Residence) (Class DF) visa contained four subclasses: Subclass 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Sponsored Business Owner) and Subclass 893 (State/Territory Sponsored Investor). The visa applicants have only made claims in relation to Subclass 892, and there is no evidence or claim that they could meet essential criteria pertaining to any of the remaining three subclasses.

9. The visa class was introduced on 1 March 2003 as part of a two-stage visa processing scheme for the business skills visa scheme whereby the majority of applicants initially apply for a four- year provisional business skills visa (Class UR) and, after providing satisfactory evidence of a specified level of business activity in Australia, may apply for an onshore permanent business skills visa (Class DF).

10. The Business Skills (Residence)(Class DF) visa is the second stage of this two-staged processing structure, and provides Australian permanent residence for successful and eligible business persons.

11. The criteria for a Subclass 892 visa are set out in Part 892 of Schedule 2 to the Regulations. At least one member of the family unit must satisfy the primary criteria.

12. Clause 892.212 relevantly provides:

    892.212

    Unless the appropriate regional authority has determined that there are exceptional circumstances, the applicant meets at least 2 of the following requirements:

    (a)in the period of 12 months ending immediately before the application is made, the main business in Australia, or main businesses in Australia, of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together:

    (i)     provided an employee, or employees, with a total number of hours of employment at least equivalent to the total number of hours that would have been worked by 1 full-time employee over that period of 12 months; and

    (ii)provided those hours of employment to an employee, or employees, who:

    (A)    were not the applicant or a member of the family unit of the applicant; and

    (B)were Australian citizens, Australian permanent residents or New Zealand passport holders;

    (b)the business and personal assets in Australia of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together:

    (i)     have a net value of at least AUD250 000; and

    (ii)    had a net value of at least AUD250 000 throughout the period of 12 months ending immediately before the application is made; and

    (iii)    have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together;

(c)the assets owned by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:

(i)have a net value of at least AUD75 000; and

(ii)    had a net value of at least AUD75 000 throughout the period of 12 months ending immediately before the application is made; and

(iii)    have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.

1. Clause 892.221(b) further requires that if an applicant met the requirements of cl. 892.212(b), that those requirements continue to be met.

2. The Tribunal notes that some guidance is provided in the Department’s Procedures Advice Manual (PAM3). The Tribunal is not bound by policy. However, in the recent case of G v MIBP [2018] FCA 1229, the Federal Court observed that it is clear from earlier authorities[1], that in the absence of any statutory indication to the contrary, any lawful executive policy enacted to guide the exercise of a statutory power is a relevant factor for the Tribunal to take into account in performing its review task.

   [1] Drake and Minister for Immigration and Ethnic Affairs [1979] 24 ALR 577 and Minister for Immigration, Local Government and Ethnic Affairs v Gray [1994] 50 FCR 189

3. In relation to the requirement to assess the assets of the business and the applicants ‘throughout the period of 12 months ending immediately before the application was made’, PAM3 states:

   Second stage Business visas require financial statements to cover a specified period immediately before the application is made. Under policy, the term ‘immediately before the application is made’ means the three month period immediately prior to the date the visa application was made. Further documentation must be sought if financial statements cover periods ending more than three months prior to the date the visa application was made.

   …

   As a balance sheet gives a view of the net assets of a business at a single point in time, financial statements must be provided at the beginning and end of a given period to support that the net business assets over the period have maintained a certain value for Business visa purposes.

4. The applicants do not dispute that the appropriate regional authority has not determined that there are exceptional circumstances and that they do not meet cl.892.212(1). It follows that the issues to be determined by the Tribunal are as follows:

   Clause 892.212(b)

   (a)  Did the business and personal assets in Australia of either applicant individually or the applicants together, have a net value of at least AUD250,000 throughout the period of 12 months ending immediately before the visa application was made? And, if so,

   (b)  At the time of the visa application, did the business and personal assets in Australia of either applicant individually or the applicants together have a net value of at least AUD250,000? And, if so,

   (c)  Were those assets lawfully acquired? And, if so,

   Clause 892.212(c)

   (d)  Did the assets owned by the applicant individually or the applicants together in their main business or businesses in Australia have a net value of at least AUD75,000 throughout the period of 12 months ending immediately before the visa application was made? And, if so,

   (e)  At the time of the visa application, did the assets owned by the applicant individually or the applicants together in their main business or businesses in Australia have a net value of at least AUD75,000? And, if so,

   (f)    Were those assets lawfully acquired? And, if so,

   Clause 892.221(b)

   (g) Do the applicants continue to meet the requirements of cl.892.212(b)?

   CONSIDERATION OF CLAIMS AND EVIDENCE

5. The Form 1217 dated 25 November 2015 submitted with the visa application states that:

   (a)The net assets of the business ‘G.M. Offord & J.L. Offord/ Jon’s Helping Hand’ in Australia in the last 12 months were:

   (i)    AUD104,992 in the Year 2015; and

   (ii)   AUD99,815 in the Year 2014.

   (b)The net assets of the applicants in Australia were:

   (i)    AUD301,342 (being personal net assets of AUD196,350 and net assets in business of AUD104,992) at the time of application; and

   (ii)   AUD296,165 (being personal net assets of AUD196,350 and net assets in business of AUD99,815) at 12 months prior to lodgement.

6. Evidence provided to the Department of Immigration and Border Protection[2] (the Department) in support of the Form 1217 information included as follows:

   (a)  An Unsecured Loan Agreement dated 5 December 2011 (the 5 December 2011 Agreement) between the applicants and Simon Offord acknowledging the loan of AUD196,350 from the applicants to Simon Offord, including a requirement that Simon Offord provide security for the loan at any time as requested.

   (b)  Title deed for Lot 31 on Registered Plan 858747 in the County of Lennox, Parish of Widgee (the title deed for the property situated at 61 Kiabora Drive, Widgee) (the Kiabora property) showing 100% ownership by Simon Jonathan Brian Offord (the applicants’ son) registered on 21 February 2013, with a mortgage to the Commonwealth Bank of Australia noted on the title.

   (c)  Market Appraisal for the Kiabora property dated 19 February 2015 appraising the value of the property as AUD200,000.

   (d)  Title deed for Lot 31 on Registered Plan 858747 in the County of Lennox, Parish of Widgee showing 9/10 ownership by the applicants registered on 9 June 2015, with a mortgage to the Commonwealth Bank of Australia noted on the title.

   (e)  Deed of Acknowledgment of Loan and Loan Agreement between the applicants and Simon Offord dated 24 November 2015, acknowledging that on or about 5 December 2011, the applicants lent Simon Offord AUD196,350 to be used for the purchase of a house and land at Kiabora Drive, Widgee (the Kiabora property) and the applicants’ claim by way of equitable tracing in the Kiabora property as a legally enforceable right to protect the loan of AUD196,350 to Simon Offord acknowledging that he was ready, willing and able to execute a Bill Mortgage over the Kiabora property in favour of the applicants in order to more fully secure the loan and agreeing that the loan was to be re-paid on sale of the property.

   (f)    Balance Sheet of G.M. Offord & J.L. Offord as at 31 August 2015 showing total equity of AUD104,992 as at 31 August 2015 and total equity of AUD99,815 as at 31 August 2014.

   [2] Now the Department of Home Affairs

7. Further documentation provided to the Tribunal by the applicants included as follows:

   (a)  Registered valuation dated 1 November 2015 valuing the Widgee property at AUD275,000.

   (b)  Registered valuation dated 19 November 2018 valuing the Widgee property at AUD300,000.

   (c)  Letter from the Commonwealth Bank dated 13 November 2018 confirming the balance outstanding on the loan associated with the mortgage encumbering the Kiabora property as AUD132,376.28 as at 12 November 2018.

   (d)  Commonwealth Bank Account statement for the loan associated with the mortgage encumbering the Kiabora property showing an opening balance of AUD159,200 as at 1 July 2015 and a closing balance of AUD74,677.26 as at 31 December 2015.

   (e)  Balance Sheet of G.M. Offord & J.L. Offord as at 30 June 2016 showing total equity of AUD61,005 as at 30 June 2016 and total equity of AUD64,868 as at 30 June 2015.

   (f)    Balance Sheet of G.M. Offord & J.L. Offord as at 30 June 2017 showing total equity of AUD53,714 as at 30 June 2018 and total equity of AUD61,005 as at 30 June 2014.

   (g)  Balance Sheet of G.M. Offord & J.L. Offord as at 30 June 2018 showing total equity of AUD60,323 as at 30 June 2018 and total equity of AUD53,714 as at 30 June 2017.

8. The applicants’ and Simon Offord’s evidence at hearing included as follows:

   (a)  Their son has been living in Australia since 2006. They came to Australia in 2011 for his wedding and loved the place and decided to stay.

   (b)  They ran two businesses in the United Kingdom (a merchandising business and a secondary business making garden planters and ponds) with a GBP1.8 million turnover at its peak. When they came to Australia, there was nothing like that here so they started putting together a similar business and worked out it was feasible. They put in an application for a temporary business visa. It took two years for the application to go through with the application granted in mid-2011. There was some delay for Mrs Offord to have surgery but they then came to Australia in late 2011. They started going down the road of manufacturing of ponds and garden beds but found that the price of timber and transport had tripled and it was not a feasible business anymore. They changed focus and had some involvement in relocatable homes with another person. They had a very good turnover in the first year, however problems with their business partner made them change direction and focus on a handyman business. They have been making a comfortable living for the last few years. They expect gross sales of AUD150,000 for this financial year. That makes for a reasonable living for them as they have no debts and no bills.

   (c)  When they arrived in Australia they had a net asset position of GBP250,000 (approximately AUD400,000). In 2011 they loaned their son monies so that he could buy the Widgee property to use as security for the purchase of his own home. They themselves, however, have always lived in the Widgee home and it is considered their property. They received advice from the government at the time as to the assets they had to show in their own name at the time of their permanent business visa application. In June 2015, 90% of the Widgee property was transferred to them. At all times the arrangement was that Simon Offord was responsible for the payments on the Widgee mortgage commensurate with the monies they had loaned him for the property to be (initially) held in his and his partner’s name and then to be transferred to them.

   (d)  Simon Offord has at all times been responsible for the mortgage payments and has at all times been able to service the mortgage. Further, at all times, Simon Offord has been in a position to repay the entirety of the loan if required on demand. The balance outstanding on the loan to Simon Offord from time to time has been commensurate with the outstanding mortgage (subject to an AUD20,000 draw down in equity from time to time).

   Issue 1 – Did the business and personal assets in Australia of either applicant individually or the applicants together, have a net value of at least AUD250 000 throughout the period of 12 months ending immediately before the visa application was made?

9. The visa application was made on 30 November 2015. The period of 12 months ending immediately before the application is therefore 30 November 2014 to 29 November 2015.

10. Based on the balance sheets of the business in evidence, the Tribunal finds that the value of the business assets as at 30 November 2014 was AUD99,815[3] and as at 29 November 2015 was AUD104,992[4].

    [3] Based on the Balance Sheet equity figure as at 31 August 2014 which is three months prior to 30 November 2014

    [4] Based on the Balance Sheet equity figure as at 31 August 2015, which is three months prior to 30 November 2015

11. The applicants in their visa application stated that they had personal net assets of AUD196,350, that is, the amount of the loan to Simon Offord as evidenced by the 5 December 2011 Agreement, both 12 months prior to lodgement and at the time of application. It is not in dispute that the monies loaned by the applicants to Simon Offord were for the purchase of the Widgee property. The evidence provided by the applicants shows that the valuation of the Widgee property as at 30 November 2014 was AUD200,000 and from 1 November 2015 was AUD275,000.

12. It is clear that the applicants have always been the intended owners of the Widgee property and that the loan arrangement with Simon Offord was an interim arrangement made to assist him in securing his own property. The delegate did not accept the loan to Simon Offord as an asset of the applicants on the basis that it was an unsecured loan. However, an unsecured loan is not excluded from consideration as an asset by the Regulations. As submitted, the Macquarie Dictionary definition of ‘asset’ includes an economic resource. The 5 December 2011 Agreement between the applicants and Simon Offord, at clause 7.1, enables the applicants to require security for the loan, failing which the whole of the loan is to be repaid. The Tribunal considers that the loan, as evidenced by the 5 December 2011 Agreement, is properly considered an economic resource, and is an asset in the amount of AUD196,350 of the applicants as at 30 November 2014.

13. The evidence shows that the legal interests of the applicants changed from 9 June 2015 when they became registered owners (as to a 90% share) of the Widgee property. The value of the property at that time was AUD200,000 (and later was valued at AUD275,000 from 1 November 2015) and therefore a 90% share is therefore quantified as AUD180,000 as at 9 June 2015[5] and AUD247,500[6] as at 1 November 2015). While the property was encumbered by a mortgage of AUD159,200 as at 9 June 2015, AUD160,200 as at 1 November 2015 and AUD160,200 as at 29 November 2015, the Tribunal is satisfied that the mortgage from time to time can be offset by the asset in the form of a loan to Simon Offord equivalent to the outstanding mortgage. The Tribunal is therefore satisfied that the personal assets of the applicants were AUD180,000 as at 9 June 2015, AUD247,500 as at 1 November 2015 and AUD160,200 as at 29 November 2015.

    [5] 90% of the AUD200,000 valuation

    [6] 90% of the AUD275,000 valuation

14. Taking into account the Tribunal’s findings as to the value of the business assets (paragraph 22) and the value of the applicants’ personal assets (paragraph 25), it follows that the business and personal assets of the applicants in Australia totalled at least AUD250,000 throughout the period of 12 months ending immediately before the application was made.

    Issue 2 – At the time of the visa application, did the business and personal assets in Australia of either applicant individually or the applicants together have a net value of at least AUD250,000?

15. Based on the balance sheets of the business in evidence, the Tribunal finds that the value of the business assets as at the date of the visa application on 30 November 2015 was AUD104,992.[7]

    [7] Based on the Balance Sheet equity figure as at 31 August 2015, which is three months prior to 30 November 2015

1. The outstanding balance on the Widgee mortgage as at 30 November 2015 was AUD160,200. On the basis canvassed earlier in these Reasons, the Tribunal is therefore satisfied that as at 30 November 2015, the personal assets of the applicants in Australia were in the amount of AUD160,200, being the outstanding loan balance owed by Simon Offord to the applicants. It follows that the business and personal assets of the applicants in Australia totalled AUD104,992 + AUD160,200 = AUD265,192, that is at least AUD250,000 at the time of the visa application on 30 November 2015.

   Issue 3 – Were those assets lawfully acquired?

2. On the evidence before the Tribunal, there is nothing to suggest that the assets of the business were not lawfully acquired. The Tribunal is therefore satisfied that the assets of the business and the applicants were lawfully acquired.

3. Clause 892.212(b) is therefore satisfied.

   Issue 4 – Did the assets owned by the applicant individually or the applicants together in their main business or businesses in Australia have a net value of at least AUD75,000 throughout the period of 12 months ending immediately before the visa application was made?

4. Based on the balance sheets of the business in evidence, the Tribunal finds that the value of the business assets as at 30 November 2014 was AUD99,815[8] and as at 29 November 2015 was AUD104,992.[9] The assets owned by the applicants in their business in Australia therefore had a net value of at least AUD75,000 throughout the period of 12 months ending immediately before the visa application was made.

   Issue 5 – At the time of the visa application, did the assets owned by the applicant individually or the applicants together in their main business or businesses in Australia have a net value of at least AUD75,000?

   [8] Based on the Balance Sheet equity figure as at 31 August 2014 which is three months prior to 30 November 2014

   [9] Based on the Balance Sheet equity figure as at 31 August 2015, which is three months prior to 30 November 2015

5. Based on the balance sheets of the business in evidence, the Tribunal finds that the value of the business assets as at 30 November 2015 was AUD104,992.[10] The assets owned by the applicants in their business in Australia therefore had a net value of at least AUD75 000 at the time of the visa application.

   [10] Based on the Balance Sheet equity figure as at 31 August 2015, which is three months prior to 30 November 2015

   Issue 6 – Were those assets lawfully acquired?

6. On the evidence before the Tribunal, there is nothing to suggest that the assets of the business were not lawfully acquired. The Tribunal is therefore satisfied that the assets of the business were lawfully acquired.

7. Clause 892.212(c) is therefore satisfied.

   Conclusion

   Based on its findings in respect of cl.892.212(b) and cl.892.212(c), the Tribunal finds that the applicants meet the requirements of cl.892.212 at the time of application.

   Issue 7 – Do the applicants continue to meet the requirements of cl.892.212(b)?

8. Based on the balance sheet of the business in evidence before the Tribunal, the Tribunal finds that the value of the business assets at the time of decision is AUD58,283 and that the value of the applicants’ assets in Australia is 90% of the value of the Widgee property, that is, AUD270,000,[11] such that the applicants continue to meet the requirements of cl.892.212(b) at the time of decision.

   Conclusion

   [11] Based on an updated valuation of AUD300,000 as at 19 November 2018

9. Accordingly, based on its findings that the requirements of cl.892.212 and cl.892.221(b) are met, the appropriate course is to remit the application for the visas to the Minister to consider the remaining criteria for Subclass 892 visas.

   DECISION

10. The Tribunal remits the application for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the applicants meet the following criteria for a Subclass 892 (State/Territory Sponsored Business Owner) visa:

    • cl.892.212 of Schedule 2 to the Regulations; and

    • cl.892.221(b) of Schedule 2 to the Regulations.

    Susan Trotter
    Member