Palmerin and Victoria Pty Ltd ATF Horse and Jockey Hotel Motel Unit Trust (Migration)

Palmerin and Victoria Pty Ltd ATF Horse and Jockey Hotel Motel Unit Trust (Migration) [2019] AATA 471 (11 February 2019)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Palmerin and Victoria Pty Ltd ATF Horse and Jockey Hotel Motel Unit Trust
CASE NUMBER:  1810040
DIBP REFERENCE(S):  BCC2016/2266847
MEMBER:Bridget Cullen
DATE:11 February 2019
PLACE OF DECISION:  Brisbane
DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 11 February 2019 at 2:22pm
CATCHWORDS
MIGRATION – Employer Nomination – approval of nominated position – Direct Entry Nomination –Cook – need for employee not identified – no other employees – hiring arrangements – related and associated entities – labour-hire payroll processor – decision under review affirmed
LEGISLATION
Corporations Act 2001 (Cth), ss 50,50AAA
Migration Regulations 1994 (Cth), r 5.19
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 21 March 2018 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations).
The applicant applied for approval on 5 July 2016. The requirements for the approval of the nomination of a position in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination (r.5.19(3)) stream and a Direct Entry nomination (r.5.19(4)) stream. If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).
In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Direct Entry Nomination stream.
The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(a)(ii) of the Regulations because the Applicant had not identified a need to employ a paid employee to work in the position under the applicant’s direct control.
The applicant appeared before the Tribunal on 29 October 2018 to give evidence and present arguments, represented by Angelo Pippos, Director. The Tribunal also received oral evidence from Mr Chandra Prakash Siwakoti, the employee and nominee in this matter.
The applicant was represented in relation to the review by its registered migration agent, who did not attend the hearing.
For the following reasons, the Tribunal has decided to affirm the decision under review refusing the nomination.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.
The application is compliant: r.5.19(4)(a)
Regulation 5.19(4)(a) requires that the application for approval must be in the approved form, must be accompanied by the prescribed fee, and, where applicable, must include the required written certification relating to conduct that contravenes s.245AR(1). The application must also identify a need for the nominator to employ a paid employee to work in the position under their direct control.
The Tribunal has cited the original application form lodged to the then Department of Immigration and Border Protection on 5 July 2016. The Tribunal is satisfied that the applicant has lodged their application on the approved form and paid the accompanied prescribed fee.
The Tribunal has also cited the written certification related to conduct that contravenes s.245AR(1), provided to the then Department of Immigration and Border Protection the day after the original application was lodged.
For the purposes of subparagraph 5.19(4)(a)(ii), the Tribunal finds that the identified occupation in the application is Cook (ANZSCO 351411). The applicant operates the Horse and Jockey Hotel-Motel, located at Warwick. The business offers accommodation, a bar, bistro, and bottlemart.
In relation to the 'direct control' element of subparagraph 5.19(4)(a)(ii), the Tribunal notes that along with other documentation, the applicant has supplied a letter outlining the duties and responsibilities of the position, photographs of the nominee working in the position, and a newspaper article form the Warwick Daily News, dated 19 November 2016, about the “Horse and Jockey Hotel-Motel” entitled Icon’s International Crew, in which the nominee, Chandra Siwakoti, features.
The delegate refused the nomination on the basis the delegate was not satisfied the applicant met r.5.19(4)(a)(ii). The delegate noted that the information provided in the application form states that the applicant employs zero employees. The applicant had also provided an organisational chart indicating there were numerous employees within the business. The delegate, in the absence of information being provided by the applicant, was unable to determine how the position of Cook fits within the business.
At the hearing, the Tribunal queried the basis on which the applicant required a Cook, if it had no other employees. Further, the information provided by the applicant indicates that the nominee is not paid by the applicant, but by a company called Megaptera Pty Ltd, ACN 079 743 463. Mr Pippos explained that he, along with a business partner, control a group of entities in which both the applicant, and Megaptera Pty Ltd, are included. As there was limited evidence about the relationship between the applicant and Megaptera at the time of hearing, the Tribunal provided the applicant with a period of time following the hearing within which to submit further information.
The applicant explains the following:
Megaptera, has operated since 1997, and over this period has employed staff from various entities – the purpose of this structure is to facilitate a simpler administration, as well as provide ease for reporting for Payroll tax, PAYG, Workcover, etc.
On a monthly basis the labour costs of each entity are charged back to Megaptera Pty Ltd, these are detailed in the financials, as Service fee. In addition, an Administration fee, is also charged Monthly. This Administration fee is a reimbursement towards the running costs of the various Head Office provided services.
The applicant has provided a letter from its accountant, Nicholas Amarandos, Certified Practising Accountant, confirming that this is the arrangement between Megaptera, which in essence, is performing a service for the applicant. The payslips provided by the nominee indicate that the nominee is paid by “Megaptera ABN 81 079 743 463”, and that tax is withheld from his pay.
Megapatera charges a service fee to the applicant. It is not clear on what basis the service fee is calculated, beyond what is paid to the employees. The Tribunal notes that if the service fee includes an amount referable to payroll tax, it would have the effect of reducing the applicant’s tax. Payroll tax is, on the information before the Tribunal, claimed as an expense by Megaptera. The applicant does not, other than claiming the cost of the “service fee” payable to Megaptera, address the issue of payroll tax. The applicant pays an administration fee to Megaptera. This means that according to the financial statements for both companies, between the companies, they are in effect, writing off the payroll expense twice.
The Tribunal has considered whether Megaptera Pty Ltd is a labour-hire payroll processor, in which case the applicant may not satisfy r.5.19(4)(c). If Megaptera Pty Ltd and the applicant are a related or associated entity, as the applicant asserts, the Tribunal would not need to consider the labour-hire issue further.
The departmental policy guidelines for assessing “Related and associated entities under the Corporations Act” provide:
Related and associated entities under the Corporations Act
Entities are considered 'related' if a relationship may be established between them under section 50 of the Corporations Act and are considered 'associated' if the relationship is established under s50AAA of the Corporations Act.
Section 50 of the Corporations Act provides that, if a body corporate is:
·a holding company of another body corporate
·a subsidiary of another body corporate, or
·a subsidiary of a holding company of another body corporate
the 2 bodies are related to each other.
Section 9 of the Corporations Act defines a holding company:
·'a holding company in relation to a body corporate means a body corporate of which the first body corporate is a subsidiary'.
Section 46 of the Corporations Act provides that a body corporate (“the first body”) is a subsidiary of another body corporate if, and only if:
·the first body is a subsidiary of a subsidiary of the other body
or
·the other body:
ocontrols the composition of the first body's board
ois in a position to cast, or control the casting of, more than half the maximum number of votes that might be cast at a general meeting of the first body or
oholds more than half the issued share capital of the first body (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).
Although the Corporations Act does not define this, “the other body” (which controls the subsidiary) is commonly referred to as the “parent” company.
Section 50 relationships, where the parent owns more than 50% of the shares in a subsidiary, may be easily established based on information recorded with ASIC (as evidenced in an ASIC Extract for the subsidiary).
Where claimed, the nominator should be asked to provide an ASIC extract for the appropriate entity. If the subsidiary of a subsidiary is involved, ASIC extracts should be obtained for both subsidiary entities.
Note:
·Section 50AAA of the Corporations Act is interpreted as including government agencies. As such, if the standard business sponsor was a government agency (e.g. Department of Health), but the TSS visa holder undertook some work for an entity related to that government agency (e.g.National Blood Authority), this period of work may be counted.
·A section 50 relationship can exist only between companies incorporated under the Corporations Act 2001. Other entities (such as sole proprietorships, partnerships, businesses operating under trust arrangements) cannot have such a relationship with a company or between themselves.
·The definition of an associated entity in s50AAA of the Corporations Act is complex. Where there are concerns, delegates may wish to request nominators source a legal opinion from a qualified corporations lawyer and submit this as evidence of a relationship with an associated entity under s50AAA of the Corporations Act.
The applicant has provided ASIC searches for the applicant, and Megaptera Pty Ltd. The searches reveal that Palmerin & Victoria Pty Ltd has the following officeholders:
·Angelo Pippos, Director
·Nicholas Amarandos, Director and Secretary; and
·Trevor Francis Perrin, Director.
The company share structure consists of 2 shares – one share is held by Nicholas Amarandos, and 1 is held by Trevor Francis Perrin.
Megaptera Pty Ltd has the following officeholders:
·Angelo Pippos, Director
·Alexandra Amarandos, Director; and
·Nicholas Amarandos, Director and Secretary.
The company share structure consists of 4 shares – two shares are held by A&G Hotels Pty Ltd (ACN 009961988) and two shares are held by Nicholas Amarandos Holdings Pty Ltd (ACN 010 726 780).
The Tribunal has obtained an ASIC search for A&G Hotels Pty Ltd (ACN 009961988). The officeholders are:
·Angelo Pippos, Director; and
·Nicholas Amarandos, Director and Secretary.
The company share structure consists of 2 ordinary shares – both of which are held by Angelo Pippos.
The Tribunal has also obtained an ASIC search for Nicholas Amarandos Holdings Pty Ltd (ACN 010 726 780). The officeholders are:
·Alexandra Amarandos, Director; and
·Nicholas Amarandos, Director and Secretary.
The company share structure consists of 199 ordinary shares, held as follows:
·George James Amarandos – 1 share, beneficially held;
·Alexandra Amarandos – 99 shares, beneficially held; and
·Nicholas Amarandos, 99 shares, beneficially held.
Common directorship alone is not sufficient to satisfy the test. It is clear that there is no “holding company” or “subsidiary relationship” between the two companies. The companies are therefore not “related” in accordance with s50 of the Corporations Act 2001.
The definition of an associated entity in s.50AAA of the Corporations Act 2001 is as follows:
Associated entities
(1) One entity (the associate ) is an associated entity of another entity (the principal ) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and (c) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and (c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:
investment in the second entity and has control over that asset.
The Tribunal considers s50AAA(7) is potentially the most applicable provision. On 25 January 2018, the Tribunal invited the Applicant to comment in writing, as follows:
In conducting the review, we are required by the Migration Act 1958 to invite Palmerin and Victoria Pty Ltd ATF Horse and Jockey Hotel Motel Unit Trust to comment on or respond to certain information which we consider would, subject to any comments or response it makes, be the reason, or a part of the reason, for affirming the decision under review.
Please note, however, that we have not made up our mind about the information.
The particulars of the information are:
·Attached with this correspondence are company searches for A & G Hotels Pty Ltd, and Nicholas Amarandos Holdings Pty Ltd.
·On the basis of the company searches, that Nicholas Amarandos owns 50% of Palmerin & Victoria Pty Ltd, and ultimately controls slightly less than 25% of the shareholding in Megaptera Pty Ltd.
The information is relevant to the review because the Tribunal may find that Palmerin
and Victoria Pty Ltd and Megaptera Pty Ltd are not related or associated entities in
accordance with section 50, or section 50AAA of the Corporations Act 2001 (Cth).
If we rely on this information in making our decision, we may find that, on the evidence in front of it, that Megaptera Pty Ltd is a labour-hire payroll processer.
If the Tribunal finds that Palmerin and Victoria Pty Ltd and Megaptera Pty Ltd are not
related or associated entities, or that Megaptera Pty Ltd is a labour-hire payroll
processor, it may consider that the applicant does not satisfy 5.19(4)(a)(ii) or
5.19(4)(c), and affirm the decision under review.
On 26 January 2019, Nicholas Amarandos, Director, Megaptera Pty Ltd, replied to the Tribunal as follows:
“In your letter you state
‘On the basis of the company searches, that Nicholas Amarandos owns 50% of Palmerin & Victoria Pty Ltd. and ultimately controls slightly less than 25% of the shareholding in Megaptera Pty Ltd.’
In this regard, I have attached an ASIC company search for Megaptera Pty Ltd which shows that A&G Hotels Pty Ltd holds 2 shares and that Nicholas Amarandos Holdings Pty Ltd holds the remaining 2 shares in the company – effectively each company holds 50% of the issued capital of Megaptera Pty Ltd.
This being the case, I can not understand how the “slightly less than 25% of the shareholding in Megaptera Pty Ltd” can be correct.”
The applicant has not replied to the Tribunal’s invitation to provide further information in relation to whether Megaptera Pty Ltd is a labour-hire payroll processor.
In assessing this application, the Tribunal considers that Nicholas Amarandos owns 50% of the principal company, the applicant Palmerin & Victoria Pty Ltd.
As revealed by the ASIC searches set out above, in the associate company, Megaptera Pty Ltd, Nicholas Amarandos Holdings Pty Ltd owns 50% of Megaptera Pty Ltd.
As Nicholas Amarandos personally controls just under 50% of Nicholas Amarandos Pty Ltd, it therefore follows that he ultimately controls slightly less than 25% of the shareholding in Megaptera Pty Ltd. There is no further link in the share membership between Palmerin & Victoria Pty Ltd and Megaptera Pty Ltd.
The Tribunal finds that Megaptera Pty Ltd and the applicant are not associated entities in accordance with s50AAA(7), or any other subsection of s50AAA, of the Corporations Act 2001 (Cth).
It appears that the applicant may be endeavouring to circumvent the need to address whether Megaptera Pty Ltd is a labour-hire payroll processor, in an effort to avoid the need to meet r.5.19(4)(c), which applies to nominators whose business activities include those relating to labour hire to an unrelated business.
As a result of the Tribunal’s finding that the applicant and Megaptera Pty Ltd are not closely related, it remains the case that the applicant only purports to employ one individual, the nominee. All of its other workers are employed elsewhere. It is not clear on what basis the applicant would need a solitary employee within its business structure when all of its operational needs appear to be met elsewhere. The Tribunal finds that the applicant has not identified a need to employ a paid employee to work in the position of Cook under the applicant’s direct control, within the applicant’s business structure. The Tribunal therefore finds that the applicant does not meet the requirements of r.5.19(4)(a)(ii).
Therefore, the applicant does not satisfy r.5.19(4)(a).
For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of r.5.19(4). The applicant has not sought to satisfy the criteria in Temporary Residence Transition Nomination stream, and as such has not met the requirements in r.5.19(3). Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.
DECISION
The Tribunal affirms the decision under review to refuse the nomination.
Bridget Cullen
Member

ATTACHMENT - EXTRACTS FROM THE MIGRATION REGULATIONS 1994
5.19Approval of nominated positions (employer nomination)
…
(2)The application must:
(a)be made in accordance with approved form 1395…; and
(aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; and
(b)be accompanied by the fee mentioned in regulation 5.37.
…
Direct Entry nomination
(4)The Minister must, in writing, approve a nomination if:
(a)the application for approval:
(i)       is made in accordance with subregulation (2); and
(ii)      identifies a need for the nominator to employ a paid employee to work in the position under the nominator’s direct control; and
(b)the nominator:
(i)       is actively and lawfully operating a business in Australia; and
(ii)      directly operates the business; and
(c)for a nominator whose business activities include activities relating to the hiring of labour to other unrelated businesses — the position is within the business activities of the nominator and not for hire to other unrelated businesses; and
(d)both of the following apply:
(i)       the employee will be employed on a full-time basis in the position for at least 2 years;
(ii)      the terms and conditions of the employee’s employment will not include an express exclusion of the possibility of extending the period of employment; and
(e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:
(i)       are provided; or
(ii)      would be provided;
to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and
(f)either:
(i)       there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or
(ii)      it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and
(g)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations; and
(h)either:
(i)       both of the following apply:
(A)the tasks to be performed in the position will be performed in Australia and correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;
(AAA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;
(B)either:
(I)the nominator’s business has operated for at least 12 months, and the nominator meets the requirements for the training of Australian citizens and Australian permanent residents that are specified by the Minister in an instrument in writing for this sub-sub-subparagraph; or
(II)the nominator’s business has operated for less than 12 months, and the nominator has an auditable plan for meeting the requirements specified in the instrument mentioned in sub-sub-subparagraph (I); or
(ii)      all of the following apply:
(A)the position is located in regional Australia;
(B)there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;
(C)the position cannot be filled by an Australian citizen or an Australian permanent resident who is living in the same local area as that place;
(D)the tasks to be performed in the position correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;
(DA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;
(E)the business operated by the nominator is located at that place;
(F)a body that is:
(I)specified by the Minister in an instrument in writing for this sub-subparagraph; and
(II)located in the same State or Territory as the location of the position;
has advised the Minister about the matters mentioned in paragraph (e) and sub-subparagraphs (B) and (C).

[2019] AATA 471

11 February 2019

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Jurisdiction