Oosthuizen v Minister for Immigration, Citizenship and Multicultural Affairs
[2023] FedCFamC2G 584
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Oosthuizen v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FedCFamC2G 584
File number(s): PEG 192 of 2022 Judgment of: JUDGE LADHAMS Date of judgment: 5 July 2023 Catchwords: MIGRATION – application for judicial review of decision made by delegate of the Minister refusing to grant applicants Business Skills (Provisional) (Class EB) Business Innovation and Investment (Provisional) (Subclass 188) visas – whether delegate erred in calculating the applicants’ ‘net business and personal assets’ for the purposes of cl 188.226 in Sch 2 to the Migration Regulations 1994 (Cth) by including losses or liabilities of corporate entities wholly owned by the first applicant – whether delegate denied the applicants procedural fairness or acted unreasonably in not granting additional time to provide documents – no jurisdictional error – application dismissed. Legislation: Migration Act 1958 (Cth) ss 51A, 55, 56, 63, 476, 477
Migration Regulations 1994 (Cth) Sch 2 cl 188.226, Sch 7 Pt 7A.8
Cases cited: Fattah v Minister for Home Affairs (2019) 268 FCR 33; [2019] FCAFC 31
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18
Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16
Monika v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FedCFamC2G 798
Soegianto v Minister for Immigration & Multicultural Affairs [2001] FCA 1612
Division: Division 2 General Federal Law Number of paragraphs: 76 Date of hearing: 14 March 2023 Place: Perth Counsel for the Applicants: Mr J Kotze Solicitor for the Applicants: Kotze Law Counsel for the First Respondent: Mr T Liu Second Respondent: Submitting appearance, save as to costs Solicitor for the Respondent: Sparke Helmore Lawyers ORDERS
PEG 192 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JACOBUS CHRISTIAAN OOSTHUIZEN
First Applicant
ALDRINE ESTRALITA OOSTHUIZEN
Second Applicant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP AND MULTICULTURAL AFFAIRS
Respondent
order made by:
JUDGE LADHAMS
DATE OF ORDER:
5 July 2023
THE COURT ORDERS THAT:
1.The application is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LADHAMS:
INTRODUCTION
The applicants are non-citizens who applied offshore for Business Skills (Provisional) (Class EB) Business Innovation and Investment (Provisional) (Subclass 188) visas (business skills visa). A delegate of the Minister made a decision refuse to grant the applicants business skills visas and the applicants now seek judicial review of that decision. The application invokes the Court’s jurisdiction under s 476 of the Migration Act 1958 (Cth) (Migration Act).
The applicants pressed four grounds at the hearing. The main complaints advanced by the applicants are that the delegate erred in his approach to calculating the assets of the applicants, by including losses or liabilities of corporate entities in the calculation of the applicants’ net personal and business assets, and that the delegate denied the applicants procedural fairness or acted unreasonably in not granting them further time to provide additional information.
For the reasons explained below, the applicants have not established that the delegate’s decision is affected by jurisdictional error. It follows that the application for judicial review must be dismissed.
VISA APPLICATION AND PROCESSES BEFORE THE DELEGATE
On 8 May 2020, in response to an expression of interest by the first applicant for skilled migration to Australia, the Department of Home Affairs (Department) invited the first applicant to apply for a business skills visa. The applicants then applied for the business skills visas on 26 May 2020. The first applicant is the primary visa applicant and the second applicant, who is the spouse of the first applicant, was included in the application as a member of the same family unit.
On 8 June 2021 a delegate of the Minister purported to make a decision not to grant the applicants business skills visas. The applicants lodged an application in this Court for judicial review of the delegate’s decision of 8 June 2021 and on 22 November 2021, I made an Order by consent issuing a writ of certiorari to quash the decision and a writ of mandamus to require the Minister to determine the visa application according to law. The Minister conceded that the decision was affected by jurisdictional error because the delegate proceeded on an erroneous understanding of the applicable law in determining that five related companies could not comprise one ‘main business’ for the purposes of Part 7A.8 of Schedule 7 to the Migration Regulations 1994 (Cth) (Regulations) because they each had their own business registration numbers and tax reference numbers.
On 6 May 2022 the Department wrote to the applicants requesting further information, including financial information to demonstrate that as at 8 May 2020 (being the date of the invitation), the business and personal assets of the applicants that can be applied to the establishment or conduct of a business in Australia have a net value of at least $800,000. The applicants requested an extension of time to respond. A further request for the same information was sent to the applicants on 24 June 2022.
The applicants provided some additional information in response to this request on 22 July 2022 and sought a further extension of time to provide the balance. Amongst the information provided was a statement of assets and liabilities position (SALP) suggesting an asset value of $946,668.
On 23 August 2022 a different delegate of the Minister made a decision refusing to grant the applicants business skills visas. The applicants did not have any merits review rights in relation to the decision.
On 27 September 2022 the applicants filed an application in this Court to seek judicial review of the delegate’s decision.
DELEGATE’S DECISION
The delegate refused to grant the visa because he was not satisfied that the requirements of cl 188.226 in Schedule 2 to the Regulations were met. That clause relevantly provides:
(1)At the time of invitation, the business and personal assets of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, that can be applied to the establishment or conduct of a business in Australia have a net value of:
(a)if the time of invitation was before 1 July 2021 – at least AUD800,000; or
(b)if the time of invitation was on or after 1 July 2021 – at least AUD1,250,000.
The delegate recognised that as the invitation was issued on 8 May 2020, the first applicant would need to show that the business and personal assets of him, his spouse, or him and his spouse together, had a net value of at least $800,000 as at 8 May 2020.
The delegate noted that in the first applicant’s initial submission, he claimed to hold 100% ownership in the Safe Working Practice Group (SWPG) which comprised five business entities. The first applicant and his spouse also claimed to collectively hold ownership in personal assets, which included several properties via their family trust.
Given the applicants’ asset claims made reference to multiple business entities, the delegate gave consideration to the method of determining net business assets outlined in the Procedures Advice Manual 3 (PAM3) GenGuideM – Business ownership and assets – Net business assets (GenGuide M). The delegate set out an extract of the GenGuide M, including, but not limited to, the following parts (emphasis added)[1]:
[1] This extract is taken from the delegate’s decision, not the original GenGuide M.
Net business assets
The net value of the assets of a business is the amount attributable to the business after deducting financial claims upon the business by third parties (that is, total assets - total liabilities = net asset/liability).
…
As a general rule, to calculate the net value of an applicant’s assets in a business in any given year, it is necessary to:
•establish the net value of the assets of the business (or owners’/shareholders’ equity or funds) then
•calculate the share/portion of those assets attributable to the applicant based on ownership interest and personal investment in the business.
To determine the net value of the assets of an applicant, and/or the applicant’s spouse or de facto partner in a business:
•calculate the proportionate share of the assets held by the applicant and/or spouse or de facto partner, then:
add
•the balance of any loans advanced to the business by the applicant (if the directors or major shareholders have made any loans to the company, these should be itemised in the financial statements or in the notes to the accounts) and
deduct
•the balance of any loans the business may have advanced to the applicant and
•the value of any other loans the applicant may have taken out to finance their investment in the business not based on personal assets pledged as collateral…
It is possible for the net value of the assets of an applicant, and/or the applicant’s spouse or de facto partner in a business to be a negative value as a loss or liability.
Financial statements are only a snapshot of the business/businessses’ financial position on a particular day. Officers may request additional information if they have doubts that the applicant meets this criterion.
The delegate referred to the requests for information sent to the applicants and the information provided in response to those requests. The delegate noted that in the requests for information, the Department raised with the first applicant that it appeared that he had incorrectly calculated the net assets of the businesses in the SWPG. The delegate acknowledged that the applicants challenged the Department’s views on the calculations. In particular:
(a)The applicants claimed that the methodology adopted by the Department would not provide a true reflection of an individual’s equity in business as the assets were determined on a cost basis and therefore did not provide a true reflection of their current market value. The delegate accepted that accounting standards allow for the adoption of a cost basis or fair value basis to measure a class of non-current assets, but noted that in the absence of updated financial statements re-evaluating the non-current assets at the current market rates, the delegate was unable to consider the claim further.
(b)The applicants also claimed that the loans between the various entities of the SWPG and the family trust impacted the applicants’ overall net asset claims. The delegate accepted that a liability between one entity to another will have an overall impact on the entity’s net asset claims. However, the delegate considered that where those loans were between entities owned by the same individual, as in the present case, the overall impact to the applicant’s net assets was minimal, as a liability in one balance sheet would be balanced out by the same loan being declared as an asset in the balance sheet of the other entity.
While the delegate considered the applicants’ position, the delegate concluded that his assessment of the net assets in the business could only be based on the adopted methodology outlined in GenGuide M and the evidence before him at the time of his decision. The delegate summarised the methodology used as:
…the applicant’s net assets in each business entity of the SWPG is based on the applicant’s equity in that entity (i.e. difference between assets and liabilities), plus any loans made by the applicant to that entity.
Applying this methodology, the delegate was not satisfied that the business and personal assets of the applicant, the applicant’s spouse, or the applicant and his spouse together were at least AUD 800,000 as at 8 May 2020. Rather, the delegate calculated the net value of the personal and business assets of the applicants as $76,482.
The delegate considered the applicants’ request for additional time to provide further documentary evidence, including a re-evaluation of the non-current assets declared in the respective financial statements of entities within the SWPG. The delegate did not agree to this request, noting that two requests for further information had already been made and the applicants had not provided any further information since requesting more time in July 2022.
JUDICIAL REVIEW APPLICATION
The applicants filed an application for judicial review on 27 September 2022, which is within 35 days of the day on which the delegate’s decision was made, as required by s 477(1) of the Migration Act.
In the written application, the applicants advanced five grounds. Counsel for the applicants did not make any submissions addressing ground 5 and confirmed at the hearing that the applicants abandoned that ground. I therefore do not address ground 5 in these reasons. Grounds 1 to 4 are set out below.
The parties filed written submissions ahead of the hearing in accordance with orders made on 28 November 2022 and 8 March 2023.
The applicants also filed supplementary written submissions on 13 March 2023. I made an order at the hearing on 14 March 2023 granting leave to the applicants to rely on these submissions. I also granted leave to the Minister to file supplementary submissions in response to the applicants’ supplementary submissions, and matters raised for the first time in oral submissions. However, the Minister did not file further submissions and was content to rely on the oral and written submissions already advanced.
The evidence before the Court comprises of the court book and the affidavits of Mr Jacobus Christiaan Oosthuizen and Ms Aldrine Estralita Oosthuizen filed on 27 September 2022.
GROUNDS 1-3: DID THE DELEGATE ERR BY INCLUDING THE LOSSESS AND LIABILITIES OF CORPORATE ENTITIES OWNED BY THE FIRST APPLICANT IN THE CALCULATION OF THE APPLICANTS’ NET BUSINESS AND PERSONAL ASSETS?
The applicants did not in their submissions address each separate ground advanced in their application. Rather, they addressed ‘issues’ which were distinct from, but which overlapped with, the grounds. Taking into account the application and submissions, it appears that grounds 1-3 all relate to the same complaint in the approach to the calculation of business assets adopted by the delegate. It is therefore convenient to address these grounds together.
The grounds read:
1.The Respondent erred in its consideration of whether the Applicants met clause 188.226 in Schedule 2 of the Migration Regulations 1994 (Cth) (“Regulations”) by failing to apply competent adjudication, failure to apply his mind to the evidence and facts, and lawfully consider the legal principles.
Particulars
1.1The Applicants provided all the necessary evidence to adequately substantiate that the Applicants satisfy the requirements of clause 188.226 of the Regulations in that the business and personal assets of the applicant, the applicant’s spouse, or the applicant and his spouse together were at least AUD 800,000 as at date of invitation.
1.2In calculation if business and personal assets of the applicant, the applicant’s spouse, or the applicant and his spouse assets together were at least AUD 800,000 as at date of invitation the Respondent added all retained losses of the various companies to the applicant’s personal balance sheet.
1.3The Respondent mingled the assets and liabilities base of an individual with an asset base and losses or retained losses of a company.
1.4The Respondent incorrectly considered evidence of retained losses of a company as part of liability of the applicant.
1.5The Respondent’s reasoning demonstrates that the Respondent confused the legal persona of a limited company with the Applicant.
2.The Respondent erred in law by engaging in a reasoning process that is irrational and/or illogical and not supported by legal principles and the evidence.
Particulars
2.1 The Respondent’s finding:
Based on my assessment of the evidence before me, I am not satisfied the business and personal assets of the applicant, the applicant’s spouse, or the applicant and his spouse together were at least AUD 800,000 as at date of invitation (i.e. 8 May 2020).
demonstrates that the Respondent:
2.1.1 lacks an appropriate understanding of the evidence provided;
2.1.2lacks an appropriate understanding of the difference between the legal persona of a limited company and the applicant;
2.1.3approached its consideration of whether the Applicant met clause 188.226 in Schedule 2 of the Regulations on an unreasonable and/or illogical basis;
2.1.4engaged in a path of reasoning that does not logically support legal principles with regards to the difference between the legal persona of a company and of an individual.
2.1.5Made an illogical finding that an individual or the director or a shareholder of the company bear the liabilities of the company
2.2The connection between the facts as found and the conclusion drawn from the evidence is illogical and irrational. The Respondent errs by adding all retained losses of the various companies to the Applicants’ personal balance sheet.
2.3The Respondent’s reasoning is illogical and unreasonable as it is affected by contradictory consideration and interpretation of the evidence and of the law. The erroneous consideration and interpretation of the evidence further show that the Respondent has failed to weigh the factors provided within the evidence and legal principles appropriately.
2.4The Respondent’s reasoning demonstrates that the Respondent failed to engage in an active intellectual process, not only due to the Respondent’s aforementioned illogical and contradictory consideration of the evidence and legal principles, but the Respondent’s failure to apply the law and to consider the various integers contained in the evidence.
2.5The Respondent’s reasoning further exposes an unreasonable approach to the consideration of the Applicant’s claims which resulted in the Respondent failing to afford the Applicants any procedural fairness.
3. The Respondent erred in law as it failed to interpret policy correctly.
Particulars
3.1The Respondent adjudicated the assets and liabilities of the applicant by using policy constructed to adjudicate assets and liabilities of a business, or a company
Applicants’ submissions
The applicants submitted that the formula expressed in GenGuide M and used by the delegate to calculate net business assets, namely that the net value ‘is the amount attributable to the business after deducting financial claims upon the business by third parties (that is, total assets – total liabilities = net asset/liability)’, does little to explain, justify or inform adding separate legal entity losses from the businesses to the applicants’ personal liabilities and that this addition substantially, inaccurately and materially derives an inaccurate and wrong net personal net asset value for the applicants.
The applicants’ submissions focused on the separate legal identity of the companies, distinct from their directors and shareholders (in all cases, the first applicant was the sole shareholder of the five entities comprising the SWPG).
The applicants submitted that the delegate erred by determining the applicants’ net assets by adding the company losses from separate legal entities to the applicants’ personal assets and liabilities statement and that, as a result of this error, the delegate’s calculations of the applicants’ personal and combined net assets was inaccurate and inconsistent with cl 188.226 in Schedule 2 to the Regulations, and comprises jurisdictional error.
In their supplementary submissions, the applicants submitted that the approach that the delegate should have adopted was to consider:
(a)the personal assets of an applicant, minus any personal liabilities;
(b)adding, if there is value, the personal assets of the applicant’s spouse or de facto partner, minus any personal liabilities of the spouse or de facto partner; and
(c)adding, if there is value, business assets.
However, in assessing the value of business assets, the applicants submitted that any interest or shares that an applicant holds in a company or business with negative equity or with retained losses does not amount to an asset and therefore cannot be added to the value of the assets. The amount of any loss or liability of a company should not, on the applicants’ view, be subtracted in calculating the net assets of the business.
Noting that the delegate relied on the policy in GenGuide M, the applicants submitted that while policy can be a useful starting point, the Court is not bound to follow policy guidelines. Further, the applicant submitted that on the proper construction of GenGuide M, the net assets of an individual or their spouse could include assets in a business, but should not include retained losses or liabilities of separate legal entities whether or not the applicant has a beneficial interest in the entities.
While the applicants’ original submissions and the Minister’s submissions referred only to the extracts of the GenGuide M extracted in the delegate’s decision, in their supplementary submissions and in their submissions to the Court the applicants referred to other parts of the GenGuide M, which they attached to their supplementary submissions. The applicants relied on these extracts of policy to support their propositions. For example:
(a)The applicants relied on the following passage in the GenGuide M to support a proposition that the applicants did not need to show positive equity in a business, but that positive equity in a business may be included as an asset (emphasis in applicants’ submissions)[2]:
[2] This extract is taken directly from the extract as set out in the applicants’ submissions, and is said in the submissions to be part of 3.9.20 of GenGuide M. It differs in some minor ways to the equivalent paragraph in GenGuide M attached to the applicants’ submissions.
When assessing the net value of business and personal assets combined, assets or loans held in business/businesses may be included regardless of whether the applicant has had an active role in the management of those businesses. Assets in a business/businesses other than the applicants nominated main or qualifying business/businesses would be considered as personal assets for the purposes of assessing the net value of business and personal assets.
(b)The applicants relied the following extract at 6.5.1 of the GenGuide M to support a proposition that it is clear that only personal liabilities, and not business liabilities, are to be deducted (emphasis in applicants’ submissions)[3]:
6.5 Net business and personal assets
6.5.1 Overview
For 188.226, the net business and personal assets of the applicant and/or the applicant’s spouse or de facto partner are the value of the assets of the applicant and/or the applicant’ spouse or de facto partner after deducting any liabilities of the applicant and/or the applicant’s spouse or de facto partner.
For 188.226 purposes, net business assets are not restricted to main businesses.
In establishing the applicant’s net assets, officers may take into consideration the net assets of the applicant and/or the applicant’s spouse or de facto partner, refer to: GenGuideM – Business visas – Visa application and related procedures – Business ownership and assets – Net business and personal – Overview.
[3] Again, the extract is taken directly from the extract as set out in the applicants’ submissions, which differs in some minor ways to the equivalent paragraph in GenGuide M attached to the applicants’ submissions.
The applicants in their further submissions to the Court and in their oral submissions also submitted that the extract of GenGuide M relied on by the applicant was for the purposes of a different provision and therefore was taken out of context by the delegate. The applicants relied on the cover page of Form 1139A Statement of Assets and Liabilities Position to support their submissions.
The policy and purpose of cl 188.226, in the applicants’ submission, is to ensure that the applicants have sufficient funds capable of being transferred to Australia, and does not require consideration of liabilities or losses of a company. The applicants submitted that the final words of the chapeau to cl 188.226(1)(a), namely, ‘that can be applied to the establishment or conduct of a business in Australia’, indicate that business losses or liabilities are not to be included.
The applicants submitted that the error was material as there is no basis for concluding from the decision that no other decision could have been made on the basis of the material available to the delegate. The applicants relied on the delegate having accepted all the other assets in the SALP and submitted that if the losses are subtracted, on the accepted assets, the applicants’ assets would amount to $930,808 which meets the requirements of cl 188.226 in Schedule 2 to the Regulations.
The applicants submitted that, but for the legal error, the delegate could readily have found that the applicants met cl 188.226 and satisfied all of the relevant criteria for the minimum net asset value of AUD 800,000.
Minister’s submissions
The Minister submitted that the delegate did not err by considering the assets and liabilities of the first applicant’s companies in assessing the applicants’ business and personal assets for the purposes of cl 188.266 in Schedule 2 to the Regulations, and emphasised that the clause requires consideration of ‘business and personal assets’. The Minister submitted that the applicants’ reliance on the corporate veil to emphasise the separate legal personality of a company from its director is misplaced in the present context regarding an application for a business investment visa. In advancing this submission, the Minister noted that the applicants do not directly challenge the applicability of the formula and extract of GenGuide M relied on by the delegate as being inconsistent with the criterion in cl 188.266(1) in Schedule 2 to the Regulations.
The Minister also submitted that the delegate’s finding about the relevant business and personal assets was based on the financial information provided by the applicants themselves. The applicants have not challenged the delegate’s finding that the first applicant held 100% ownership in the five SWPG entities. There was plainly a logical connection between the evidence and inference drawn by the delegate in reaching its findings, and the applicants’ argument of illogicality and irrationality should be rejected.
In oral submissions, Counsel for the Minister took the Court to the delegate’s calculation of the applicants’ net value of their business and personal assets set out in a table in the delegate’s reasons and the financial statements of the applicants’ companies provided to the delegate. Counsel for the Minister submitted that the numbers in the set of financial statements marry up with the assessment of the net value of the assets in the table set out in the delegate’s decision. Counsel for the Minister submitted that the assessment of the net value of the applicants’ business and personal assets and the ultimate conclusion reached by the delegate that the applicants did not meet the minimum threshold of $800,000 was unexceptional and was a conclusion that was open to the delegate to make on the evidence before him.
Counsel for the Minister also submitted that in circumstances where the delegate’s analysis of the net value of the applicants’ business and personal assets corresponds to the financial information provided by the applicants to the delegate, there was a logical connection between the delegate’s findings and the evidence upon which the delegate made that finding. Therefore, any allegation of illogicality or irrationality should be dismissed.
In relation to ground 3, Counsel for the Minister submitted that the starting point of the analysis in a judicial review application is the wording of the relevant clause, not the policy. In the present case, it is the wording of cl 188.226 that provides for an assessment of the net value of business and personal assets. Policy created by the Department is not extrinsic material that can be used for the purposes of interpreting legislation. Based on the statutory language used, the delegate was permitted to make the findings of fact that he made and in the way that he made them.
Resolution
Words used in cl 188.226(1)(a)
It is convenient to commence the consideration of this ground by considering the wording of cl 188.226(1)(a), which is set out at [10] above. There are two matters in particular that should be noted about the wording used in the Regulations. First, it is clear from the words ‘business and personal assets’ that the assessment of the assets is to include business assets. Second, it is clear from the words ‘have a net value of’ that the value of the business and personal assets is the net value. There is nothing in the wording of the relevant clause that supports the applicants’ submissions to the effect that the personal assets should be assessed on a net value basis, but that business assets should only be included in the assessment if they have a positive value. Rather, on a plain reading of the clause, read as a whole, the whole of the applicants’ assets, both business and personal, should be assessed on a net value basis.
The applicants’ reliance on the requirement that the assets can be applied to the establishment or conduct of the business in Australia does not support their preferred construction. The main reason advanced by the applicants as to why that part of cl 186.226(1)(a) supports their construction is based on their interpretation of policy in relation to the transferability of assets for the purposes of a subclass 132 visa, without any clear elaboration based on legal principles as to why that construction is supported. Nothing in the requirement that the assets can be applied to the establishment or conduct of a business in Australia is contrary to the interpretation that it is the net value of business and personal assets which is to be assessed. Rather, the requirement that the value of the net business and personal assets can be applied to the establishment or conduct of a business in Australia appears to support the construction adopted by the delegate. It is difficult to see how, for example, the value of a director’s loan to a company with a negative asset value owned by the first applicant, can be applied to the establishment or conduct of a business in Australia if the negatively valued company has no capacity to repay that loan.
Separate legal status of companies
The applicants’ submissions in relation to grounds 1-3 rely on the separate legal status of companies as distinct from their directors and shareholders (albeit only insofar as the grounds address how company losses are to be treated – the applicants’ submissions overlook any distinction in the legal status of companies distinct from their shareholders and directors for the purposes of treating any positively valued assets of the company as business assets of the applicants). The applicants referred in their supplementary submissions to s 19(2) of the Companies Act 2008 (South Africa) (Companies Act) which states that a person is not, solely by reason of being an incorporator, shareholder or director of a company, liable for any liabilities or obligations of the company, except to the extent that the Companies Act or the company’s Memorandum of Incorporation provides otherwise. I have no information before me in relation to how this clause has been interpreted in South African law, other provisions of the Companies Act that may provide an exception to the general principle or whether the Memorandum of Incorporation of any of the SWPG entities ‘provides otherwise’. In these circumstances, citing a provision of South African law is of little assistance in resolving the ground. Notwithstanding this, I am prepared to proceed on the assumption, for the purposes of considering the application to this Court, that in general, a director or shareholder will not ordinarily be liable for the losses of a company.
It should be borne in mind, however, that the purpose of cl 188.226(1)(a) is not to ascertain whether a director should be liable for the losses of a company, but rather to determine whether an applicant for a business skills visa has the requisite net value of assets that can be applied to the establishment or conduct of a business in Australia.
The companies in question in the present matter are solely owned by the first applicant. The delegate’s finding to that effect was not challenged by the applicants. The companies are business assets of the applicants and the delegate was required to assign a net value to those assets. The formula adopted by the delegate, namely, assets minus liabilities equals net assets/liability, is not controversial and is rather orthodox, and I accept that it is an appropriate formula to use for the purposes of calculating the net value of the applicants’ business and personal assets for the purposes of cl 188.226(1)(a). The figures used by the delegate in calculating the net value of the applicants’ personal and business assets were derived from the evidence submitted by the applicants.
Delegate’s use of policy
The formula used by the delegate was consistent with what was set out in the relevant policy, being GenGuide M.
The applicants made a number of submissions about the policy, primarily in supplementary and oral submissions, which I will address in this judgment. Before doing so, however, it is appropriate to make a few observations about the way in which these submissions were advanced to the Court. First, it can be seen from the grounds set out above that only ground 3 refers to policy and the ground simply asserts in very general terms that the delegate failed to interpret policy correctly. The only particular to the ground suggests that the way in which it is asserted that the delegate failed to interpret policy correctly is by using policy relevant to adjudicate the assets and liabilities of a business in assessing the assets and liabilities of the applicant. These particulars do not meaningfully put the Minister on notice of the case that he has to answer. The applicants did not then advance any submissions that did meaningfully put the Minister on notice of the case he had to answer until the day prior to the hearing. I made an order granting leave to the Minister to file supplementary submissions after the hearing to endeavour to mitigate the procedural unfairness to the Minister as a result of the manner in which the applicants conducted their case, but it remains unsatisfactory that the Minister was not properly put on notice of the case to answer at an earlier time.
Further, the applicants have attached an incomplete version of the policy to their supplementary submissions. I infer from the content of the submissions that the document attached to their submissions (or at least part of it) is the GenGuide M. However, it is possible that the policy pages attached to the applicants’ further submissions are from two separate policy documents. The reason I have this concern is that the numbering of paragraphs or sections on the first printed page proceeds in the order of 3.1, 3.2, 4, 4.1, 4.2, 4.3, suggesting that there are only two numbered sections in part 3. However, later I have extracts from a document with paragraph numbers commencing with ‘3.9’. Also, I have nothing before me to indicate the date of the document in question or whether it is the same version that was in effect at the time of the delegate’s decision. There are cross-references throughout the policy document to other parts of policy which do not refer to paragraph numbers, but rather to headings and subheadings (see for example, the final sentence of the extract at [30(b)] above). It is difficult to properly understand these cross references without a full copy of the policy before me. It would have been preferable for the applicants to adduce the policy as evidence, for example by attaching it to an affidavit, clearly indicating what the policy is, how it was obtained, the date on which this version of the policy was in effect.
Notwithstanding these concerns, I will endeavour to address the applicants’ submissions in relation to policy.
In their first set of written submissions, the applicants submitted that while policy is a useful starting point, courts are not bound to follow policy guidelines which are no more than an administrative advisory guide to decision-makers. In circumstances where the application before the Court is for judicial review, the Court is not engaging in administrative decision-making and is not called upon to apply or not apply any administrative policy. Rather, the question for the Court is whether the delegate’s use of the GenGuide M gives rise to jurisdictional error. As a general proposition, administrative decision-makers ought to have regard to any relevant policy but are not bound to apply it see: Monika v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FedCFamC2G 798 at [12]; Soegianto v Minister for Immigration & Multicultural Affairs [2001] FCA 1612 at [15]-[16]. In the present case, the delegate identified relevant policy in GenGuide M and applied that policy in determining the value of the first applicant’s business assets to calculate the net value of the applicants’ business and personal assets for the purposes of cl 188.226(1)(a). The applicants did not submit that the policy is inconsistent with the legislation, but rather submitted that the delegate inaccurately used the policy.
In their further submissions, the applicants raised for the first time that the delegate had taken the policy out of context and applied policy that related to different provisions. The applicants bear the onus of establishing jurisdictional error: see Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1 at [67]. The way in which they have presented their case to the Court makes it difficult to discharge this onus. I can see that paragraph 3.9.5.3 of the document annexed to the applicants’ submissions is in the same terms as the extract of the policy referred to in the delegate’s decision, and may be the part of the GenGuide M relied on by the delegate. In the earlier paragraph 3.9.5.1, a different visa criterion is referred to. However, I am unable to conclude, based on these two matters alone, that the delegate applied the incorrect policy or took the relevant policy out of its relevant context. For example, there may have been another part of the policy, identically worded, that expressly referred to cl 188.226, or there might have been a cross reference in another part of the GenGuide M to expressly confirm that it is appropriate to refer to that part of the policy in assessing the net business and personal assets for the purposes of cl 188.226. In any event, whether or not the policy cited by the delegate was expressly intended for the calculation of net business assets for the purposes of cl 188.226, it set out an appropriate formula for calculating net business assets for the purposes of the various business innovation visas.
Further, the approach taken by the delegate was not inconsistent with any of the other sections of the policy referred to by the applicants, whether or not they expressly refer to cl 188.226. No part of the policy expressly stated that business assets should only be included in the calculation of business and personal assets for the purposes of cl 188.266 where they have a positive value, and this cannot reasonably be implied into any of the sections referred to by the applicants. In any event, I accept the Minister’s submission that it is the legislation that should be the focus of any questions of interpretation, rather than the policy, and policy is not an extrinsic material that should be relied upon to determine the proper construction of legislation.
Appropriateness of the formula used by the delegate
Taking into account the discussion above, I am satisfied that the approach taken by the delegate was an appropriate method for determining the business and personal assets of the applicants for the purposes of cl 188.226. This is particularly so in circumstances where there were loans between different SWPG entities. This point was the subject of a submission advanced by the applicants to the delegate. The delegate acknowledged the submission but found that the loans between the various SWPG entities evened out in the consideration of the net value of assets because a loan that appeared as a liability for one entity was an asset for another entity in the same group. The calculation of the applicants’ net business and personal assets would be a very artificial exercise if, in circumstances where there are loans between companies that are all fully owned by the first applicant, the applicants were able to include the positive value assets held by one company while disregarding the negative value of a loan with a related company.
Application of above conclusions to the grounds as pleaded
With these views in mind I turn then to the grounds as pleaded.
By ground 1, the applicants assert that the delegate did not apply competent adjudication, failed to apply his mind to the evidence and facts and that he did not lawfully consider legal principles. This ground is not established because:
(a)for reasons discussed above, the formula adopted by the delegate was an appropriate formula for calculating the business and personal assets of the applicants for the purposes of cl 188.226;
(b)applying the formula for the specific purpose of calculating the applicants’ net business and personal assets that can be applied to the establishment or conduct of a business in Australia does not indicate that the delegate confused the legal persona of a company with the legal persona of an individual; and
(c)the figures used for the purposes of these calculations were based on the information provided by the applicants.
By ground 2, the applicants assert that the delegate’s decision was illogical or irrational. The principles for establishing whether a decision is illogical or irrational were summarised by Bell and Crennan JJ in Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16 at [131] and [135], where their Honours said:
[131]…The complaint of illogicality or irrationality was said to lie in the process of reasoning. But, the test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion.
…
[135]…Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn…
As the Full Court of the Federal Court explained in Fattah v Minister for Home Affairs (2019) 268 FCR 33; [2019] FCAFC 31 at [45], this requires that to establish illogicality or irrationality, the applicants must demonstrate that there is only one conclusion open on the evidence, or that there is no logical connection between the evidence and the inferences drawn. In the present case, the formula used by the delegate was an appropriate one and the figures relied on for the purposes of the calculation of the net personal and business assets of the applicants were those set out in the evidence provided by the applicants including the financial statements for each of the companies. There is a clear connection between the evidence before the delegate and the findings made by the delegate and it cannot be said that the conclusion reached by the delegate was not open to him. Ground 2 is therefore not established.
Ground 3 asserts that the delegate failed to interpret policy correctly. I have addressed this in detail above and it follows from that discussion that the applicants have not established that the policy relied on by the delegate was not the appropriate policy to apply or that it was not interpreted accurately by the delegate. Ground 3 therefore fails.
GROUND 4: DID THE DELEGATE DENY THE APPLICANTS PROCEDURAL FAIRNESS OR ACT UNREASONABLY IN NOT GRANTING ADDITIONAL TIME TO PROVIDE FURTHER INFORMATION?
Ground 4 reads:
The Respondent erred as it failed to afford the Applicants procedural fairness by not granting an extension.
Particulars
4.1The Respondent reasoning in refusing an extension is based on a flawed understanding of the nature of a balance sheet and also retained losses in a company’s financial statements.
4.2The Respondent’s reasoning exposes an unreasonableness denying the Applicants procedural fairness.
Applicants’ submissions
Counsel for the applicants submitted that the request for an extension was submitted because it was clear in the applicants’ mind that the delegate did not understand cl 188.226 and how to interpret the clause, the balance sheet or the financial statements. Counsel for the applicants submitted that the delegate had already made up his mind and that is why he denied the extension request. The applicants submitted that this is evident from the time taken to reach a decision by the Department, noting that:
(a)the visa application was lodged in May 2020;
(b)there was no correspondence for 13 months until the first visa refusal;
(c)after the decision was quashed and the matter remitted by the Court, there was no further action on the file for six months, until the applicants’ lawyer wrote to the Department; and
(d)then there was a letter sent on 6 May 2022 and three months later the visa application was refused.
In his reply submissions, Counsel for the applicant asserted for the first time that the delegate did not turn his mind to the fact that the representative had COVID-19 and that there are documents you cannot get within 21 to 28 days. Counsel further submitted that the delegate obviously did not see that they work in a financial world with accountants and auditors, and that auditing and re-evaluating balance sheets is a tedious process and needed to go back 10 years in this instance.
Minister’s submissions
The Minister submitted the delegate’s reasons did not exhibit any misunderstanding about ‘the nature of a balance sheet and retained losses in a company’s financial statements’. The Minister also submitted that the delegate provided an evident and intelligible justification for refusing to further delaying a decision and for not granting a further extension, being that the delegate had already provided the applicant with two s 56 requests and in circumstances where the last submissions received by the delegate from the applicant was on 27 July 2022, the delegate was not willing to delay the decision further or issue a third s 56 request after a further month had elapsed.
The Minister submitted that in any event, in circumstances where the time for which the applicant could provide information to the delegate pursuant to the second s 56 request had ended and the delegate provided the applicant with a reasonable period to respond to the s 56 request, s 63 of the Migration Act allowed the delegate to refuse to grant the visa.
Resolution
Although the ground is presented as an assertion that the applicants were denied procedural fairness, it is evident from particular 4.2 that the applicants also present the ground as an assertion of unreasonableness in the decision not to grant them a further extension of time. I will likewise assess the ground as asserting both a denial of procedural fairness and unreasonableness in the exercise of a discretionary power.
Relevant facts regarding the refusal to grant further time to provide additional information
The following factual background is relevant to the resolution of this ground:
(a)On 6 May 2022 the Department sent to the applicants, by their lawyer, a request for more information in relation to their visa. The first page of the request clearly indicated that the applicants had 28 days starting on the day after the request was emailed to them to provide the requested information. The request for information included, amongst other things, an observation that the applicants appeared to have incorrectly calculated the net assets for SWPG entities that have an associated director’s loan, by claiming the amount of the director’s loan in the SALP calculation but not including the net asset value of the same business in the SALP.
(b)On 3 June 2022 the applicants’ lawyer wrote to the Department to request an extension of time of 28 days. The reasons for this request included that most of the documents had been supplied by the applicants to the lawyers, but the lawyer still required time to peruse the documents and provide answers in a logical and proper format, some of the documents still needed to be translated, and that due to COVID-19, there were delays in obtaining police clearances for the applicants.
(c)On 24 June 2022, some 21 days after the request for an additional 28 days to provide further information, the Department issued a further request for the same information, which effectively gave the applicants a further 28 days, starting on the day after the further request for information was emailed, to provide the requested information.
(d)On 22 July 2022 the applicants, by their lawyer, provided some of the requested information and requested a further extension of time, without giving any indication of the length of any further extension of time requested. The reasons given for requesting the extension of time included that:
(i)the applicants’ lawyers had contracted COVID-19 and were required to isolate for a week and experienced further symptoms that prevented them from returning to work for a further week, and were therefore unable to attend the request in a timely manner;
(ii)the applicants were still awaiting a translation of one transfer deed;
(iii)the applicants were in discussions with the accountants in relation to a re-evaluation of the assets of the businesses; and
(iv)they were still awaiting the police clearance for the second applicant.
The delegate addressed the further request for an extension of time in his reasons and said:
I have also given consideration to the applicant’s request for additional time to assist in the provision of further documentary evidence, including the possible re-evaluation of non-current assets declared in the respective financial statements of entities within the SWPG of companies. In this case, the applicant has had the opportunity of two separate s56 requests for additional information. Section 56(2) of The Migration Act 1958 provides:
(2)Subsection (1) does not mean that the Minister is required to delay making a decision because the applicant might give, or has told the Minister that the applicant intends to give, further information.
As no further evidence has been provided since the applicant’s last submission on 27 July 2022, I am not willing to delay my decision on the possibility the applicant may furnish more documentation, nor am I willing to issue a third s56 request letter for such information.
Were the applicants denied procedural fairness?
Insofar as the ground is pleaded as a denial of procedural fairness, I note at the outset that the applicants have not submitted that the delegate breached any provision within Part 2, Division 3, Subdivision AB of the Migration Act or ss 494A to 494D of the Migration Act, which are exhaustive statements of the requirements of the natural justice hearing rule in relation to the matters that they deal with: s 51A of the Migration Act. The requests for further information made by the delegate were made in accordance with s 56 of the Migration Act and required a response to be provided within 28 days. Section 55(1) of the Migration Act allowed the applicants to continue to give any relevant additional information to the Minister up until the time of the delegate’s decision, and required that the delegate have regard to any such information given. However, s 55(2) made clear that this did not mean the delegate was required to delay making a decision because the applicants might give, or had indicated that they intended to give, further information. There is no basis in the present case for finding that the delegate failed to comply with any of the applicable provisions of the Migration Act.
I have also considered whether the delegate’s refusal to grant more time might somehow be seen as a denial of procedural fairness under the common law rules of procedural fairness, to the extent (if any) that they are not excluded by s 51A of the Migration Act. The applicants have not addressed me on whether and to what extent the common law rules of procedural fairness apply in this matter, which makes that aspect of this ground difficult to assess. In any event, even if I were to proceed on the basis that the common law rules of procedural fairness applied, none of the matters raised in the applicants’ submissions establish that the applicants were denied procedural fairness.
I do not accept the applicants’ submission that the reason the delegate did not give them more time is because he had already made up his mind. This submission appears primarily to be based on earlier delays in the decision-making process. However, this does not show that the delegate had already made up his mind, or that the applicants were denied procedural fairness. To the contrary, as the summary of facts above shows, the delegate identified gaps in the evidence and gave the applicants an opportunity to address those gaps, as well as putting the applicants on notice of concerns the delegate had about the way in which the applicants calculated some of their net assets, effectively giving the applicants an opportunity to comment on those matters. The delegate then considered the applicants’ responses in reaching his decision.
There is nothing in the delegate’s apparent understanding of the material before it (as suggested in the particulars) or the previous delays in the decision-making process that would cause me to find that the applicants were denied procedural fairness. As discussed in relation to grounds 1-3 above, I am not satisfied that the delegate misunderstood the financial documents provided by the applicants or how net business and personal assets should be calculated. While the second request for an extension of time was not formally granted, the applicants effectively had over three months from when the first s 56 notice was sent on 6 May 2022 to when the delegate’s decision was made on 23 August 2022 to provide the requested information. The delegate was not required, as a matter of procedural fairness, to extend time indefinitely.
I do not accept that the applicants were denied procedural fairness.
Was the delegate’s decision unreasonable?
I then consider whether the delegate’s refusal to grant further time to the applicants to provide the information requested was unreasonable. I accept the Minister’s submission that in considering whether the delegate’s decision not to allow more time as legally unreasonable, the written reasons given by the delegate provide a critical starting point and that the relevant inquiry, based on what the High Court said in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [76], is to discern whether the reasons disclose an evident and intelligible justification for the course it was taken.
I am satisfied in the present case that the delegate’s reasons disclose an evident and intelligible justification for declining to grant further time or issuing a third request for information pursuant to s 56 of the Migration Act. Essentially, the delegate has assessed that the applicants have already had the benefit of further time because of the issue of the second request for information on 24 June 2022 and the weeks that had passed since the applicants last provided information to the delegate, which was the same day that they again requested further time, and the date of the delegate’s decision. In these circumstances, it was reasonably open to the delegate to refuse to grant additional time, notwithstanding that a different delegate may have made a different decision.
In the light of the reasons given by the delegate, the other matters referred to by Counsel for the applicant in his oral submissions do not establish that the delegate’s refusal to grant more time was unreasonable.
(a)While the delays in the Department’s decision-making might show that there was no urgency to the application, it does not follow that a refusal to grant an applicant more time will necessarily be unreasonable. The applicants gave no clear indication of when the further documents they were seeking would be available, and it was not unreasonable for the delegate not to grant indefinite extensions to the applicants just in case they might provide the further information in the future.
(b)While the delegate did not expressly refer to the applicants’ lawyer contracting COVID19, the delegate did refer to the time that had already been provided, which extends well beyond the comparatively short period for which the applicants’ lawyer was unable to work due to COVID-19. I do not find any unreasonableness on the basis that the delegate did not refer to the applicants’ lawyer having COVID-19.
(c)In relation to the submission advanced by Counsel for the applicants that 21 to 28 days is not sufficient time to provide the documents requested, this is again encapsulated in the delegate’s discussion of the opportunities that had a ready been given to the applicants to provide the requested information. The delegate referred to both the previous request for information and the time that had passed since the response to the second request for information. The upshot of these two matters is that the applicants effectively had the period from 6 May 2022, when the first invitation was issued, to about 23 August 2022, when the delegate made the decision, to provide the information. In other words, the applicants were not simply given only 21 to 28 days to provide information, but rather had approximately three and a half months to provide the information.
(d)Finally, the assertion that compiling the financial information and re-evaluating the audits was complex and required the accountants to review 10 years of records does not establish unreasonableness in the delegate’s decision. Counsel for the applicants did not identify any evidence showing that the applicants represented to the delegate the extent of work that was required or that they were seeking to review 10 years’ worth of records. Insofar as the request for an extension of time was based on the request from the accountants to provide the records, the request simply said:
20.Apart from above we are currently in discussion with the accountants for re-evaluation of assets. Assets are on historical value and not the current and true value.
21.Due to the reasons given above for a request for an extension, we were not able to finalise a detailed report on this and possible re-evaluation for correct and true values.
22.An extension is thus requested to put forward a report from the accountant.
It can therefore be seen that there was nothing in the request for an extension to indicate in any meaningful way the magnitude of the further work that the applicants were endeavouring to undertake or the time that was required to undertake that work. There is nothing unreasonable in the delegate not taking into account information that was not provided to him.
Ground 4 is not established.
CONCLUSION
The applicants have not established that the delegate’s decision is affected by jurisdictional error and therefore the application to this Court must be dismissed.
I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Ladhams. Associate:
Dated: 5 July 2023
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