Richardson (Migration)

[2020] AATA 3727

Richardson (Migration) [2020] AATA 3727 (7 July 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Hayley Richardson

Shaun Leander Richardson

Isabella Richardson

Rorke Skye Richardson

CASE NUMBER:  1831210

HOME AFFAIRS REFERENCE(S):  BCC2017/2308076

BCC2017/2206598;

BCC2017/2308064; and

BCC2018/5164209.

MEMBER:Peter Ranson

DATE:7 July 2020

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal affirms the decision not to grant the visa Applicants Business Skills (Residence) (Class DF) visas.

Statement made on 07 July 2020 at 8:56am

CATCHWORDS

MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Business Owner) visa – ownership interest in an actively operating main business – shares held equally among family members – beneficial ownership interest in the shares of a Trust – ownership proven by authenticated documents – ownership of discretionary trusts before vesting date – retrospective amendments to the original trust deeds – ownership interest at all relevant points in time – decision under review affirmed    

LEGISLATION

Migration Act 1958, ss 65, 134
Migration Regulations 1994, Schedule 2, cls 892.211, 892.212; rr 1.03, 1.11

CASES

Gartside v IRC [1968] AC 553
MIAC V Hart [2009] FCAFC 112
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576
Yu v Minister for Immigration & Multicultural & Indigenous Affairs [2004] 140 FCR 126

STATEMENT OF DECISION AND REASONS

Table of Contents

APPLICATION FOR REVIEW

CONSIDERATION OF CLAIMS AND EVIDENCE

Ownership interest in main business

Does the Applicant have an ownership interest in each business relied on at all relevant times?

Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?

How does the Applicant hold her ownership interest?

Group Structure

1.11A Ownership for the purposes of Schedule2 of the Migration Regulations

What do the deeds of Ahimsa Trust and Harmony Trust say?

How do the 2017 Declarations and 2020 Deeds of Ratification affect the construction of the original trust deeds?

The 2017 Declarations

Deeds of Ratification

South African trusts

Redchip legal opinions

Representative’s submissions

Final submissions

SUMMARY OF FINDINGS

POST-APPLICATION CHANGES TO THE FRY GROUP STRUCTURE

Change of shareholders in Ahimsa Nominees and Harmony Capital

Transfer of ownership of FIH

MINISTERIAL INTERVENTION

DECISION

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03  Definitions

1.11  Main business

Migration Act 1958

134  Cancellation of business visas

APPLICATION FOR REVIEW

1. This is an Application for review of a decision made by a delegate of the Minister for Immigration on 11 October 2018 to refuse to grant the visa Applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).

2. The Applicants applied for the visas on 21 June 2017. Certain criteria are required to be satisfied during the two-year period immediately prior to the date of Application, that is, 21 June 2015 to 20 June 2017 (the Application Period).

3. At the time of Application, Class DF contained four subclasses: Subclass 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The Applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Business Owner) visas, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.

4. The delegate in this case refused to grant the visas on the basis the first named visa Applicant, Mrs Hayley Richardson, (the Applicant) did not satisfy the requirements of cl.892.211 of Schedule 2 to the Regulations because she did reach the required level of ownership interest in the business nominated as the main business for the purpose of the Application.

5. The Applicant and her husband, Mr Shaun Leander Richardson (Shaun), appeared before the Tribunal on 7 May 2020 to give evidence and present arguments. The Tribunal also received oral evidence from Mr Ian Tindale of Redchip Lawyers who appeared as a witness (Mr Tindale). The Applicant was represented in relation to the review by Mr Cecil Bass of Hitchcock and Associates who also attended the Tribunal Hearing (Mr Bass)[1]. All parties attended the Hearing by video link facilitated by the Tribunal utilising Microsoft Teams.

   [1] Migration Agent Registration Number: 0004497.

6. For the following reasons, the Tribunal has concluded the decision under review should be affirmed.

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue in this case is whether the Applicant meets the requirements of cl.892.211(1) and the requirements of the main business test which requires a certain level of ownership interest in an actively operating main business or businesses during the Application Period. Clause 892.221(a) requires the Applicant continues to satisfy this requirement at the time of decision.

2. The Applicant nominated Fry Group Foods Pty Limited ACN 166 974 607 (FGF) as the main business and she holds an ownership interest in the main business through a corporate structure by I Skye Nominees Pty Limited ACN 602 751 468 (I Skye Nominees) as trustee for I Skye Trust (I Skye Trust). FGH is a wholly owned subsidiary of Fry’s International Holdings Pty Limited ACN 602 814 862 (FIH). FGH supplies and distributes vegetarian food products to the retail trade in Australia.

1. Until 2 August 2019, I Skye Nominees was the registered holder of 50 out of 200 issued ordinary shares in FIH, which represented 25% of the issued capital.

2. On 2 August 2019, FIH issued a further 100 fully paid ordinary shares including 40 to I Skye Nominees as trustee, which lifted its shareholding in FIH to 30%, however that was well after the Application Period. On 10 April 2020 the entire 300 issued shares in FIH were transferred to The Livekindly Company Inc. (Livekindly).

3. The Applicant and her family contend it was their clear intention in setting up business in Australia in 2014 for the 50% interest in FIH held by the parents of the Applicant to be held in five equal shares between the parents and their three daughters, which includes the Applicant. Mr Bass said this was consistent with the ‘one for all and all for one’ approach of the Fry family to business and personal life.[2] The delegate found the Applicant did not hold any further legal or beneficial interest in the assets of FIH beyond the 25% held by I Skye Nominees. The delegate’s decision was made before 2 August 2019.

Ownership interest in main business

Clause 892.211(1) requires the Applicant to have an ownership interest in one or more actively operating main businesses in Australia during the Application Period. The Applicant must continue to satisfy this requirement at the time of this decision.[3] No more than two businesses can be nominated for this purpose[4] and one or both of the businesses relied on to meet the time of Application criterion can be relied on to meet the time of decision criterion.[5] There are two parts to the assessment, viz, does the Applicant have an ownership interest in each business relied on at all relevant times and does each business relied on satisfy the definition of ‘main business’ at all relevant points in time.

[2] Letter dated 13 January 2020 from Mr Bass to the Tribunal; page 2.

[3] cl.892.221(a).

[4] r.1.11(2)

[5] Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.

Does the Applicant have an ownership interest in each business relied on at all relevant times?

1. An ‘ownership interest’, in relation to a business, means an interest in the business as:

   (a)a shareholder in a company that carries on the business, or

   (b)a partner in a partnership that carries on the business, or

   (c)the sole proprietor of the business;

   including such an interest held indirectly through one or more interposed companies, partnerships or trusts.[6] Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations.[7]

   [6] r.1.03 of the Regulations and s.134(10) of the Act.

   [7] r.1.11A(1).

2. In order to meet cl.892.211(1) the Tribunal must be satisfied the Applicant had an interest of this kind in the business both at the time of making the Application and during the Application Period. In order to meet cl.892.221(a) the Tribunal must be satisfied the Applicant continues to satisfy this requirement at the time of this decision.

Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?

1. The term ‘main business’ is defined in Regulation 1.11 and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.

2. Firstly, the Applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in s.134(10) of the Act.[8] If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met.[9]

   [8] r.1.03.

   [9] r.1.11A.

3. Secondly, the Applicant must maintain or have maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business.

4. Thirdly, the value of the Applicant’s ownership interest, or the total value of the ownership interests of the Applicant and the Applicant’s spouse or de facto partner, in the business must meet certain thresholds:

   (a)If the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;

   (b)If the business is not operated by a publicly listed company and the annual turnover of the business is at least A$400,000, the value of the ownership interest must be at least 30% of the total value of the business;

   (c)If the business is not operated by a publicly listed company and the annual turnover of the business is less than A$400,000; the value of the ownership interest must be at least 51% of the total value of the business.

5. Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise operated for the purpose of making a profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public, and is not operated primarily or substantially for the purpose of speculative or passive investment.[10]

   [10] r.1.03.

6. The third element of the main business test, viz, the value of the Applicant’s ownership interest is the reason the delegate refused the visa Application.

7. The business relied on by the Applicant to satisfy these requirements is described by Mr Bass in his submission to the Tribunal of 13 January 2020 as the supply and distribution of vegetarian food products to the retail trade in Australia (the Business), which is conducted by FGF. The Tribunal notes FIH acquired a UK business in 2016. It was not included on the application and there is no evidence before the Tribunal the UK business is a business in Australia. Accordingly, it has not been considered as a main business for the purpose of this Application as it was not acquired 2 years or more before the application.

1. The Business is not operated by a publicly listed company and its annual turnover is greater than A$400,000, so the value of the Applicant’s ownership interest in it must have been at least 30% either at the time of Application (21 June 2017) or at some time prior to that.

2. That is, reading r.1.11 and cl.892.211 together, at time of Application (emphasis added) cl.892.211 requires a person to (1) have had an ownership interest in a main business in the last 2 years; (2) continue to have an ownership interest in a main business; (3) have maintained involvement; and (4) in this case the ownership interest must have been at least 30% at some point at the time of or prior to the Application. The operative words being at the time of Application, that is, 21 June 2017.

3. Accordingly, the Tribunal must consider the nature of the Applicant’s interest in the Business, whether the Business was actively operating and whether it met the definition of ‘main business’ during the Application Period. The Tribunal must also consider these issues as at the date of this decision and whether the Applicant continues to satisfy cl.892.211(a).

How does the Applicant hold her ownership interest?

1. In Re: Hart[11] the majority (2:1) held that PAM3 was inconsistent with the Act and the Regulations and held a shareholder in a company which carries on a business in its capacity as trustee of a trust holds an ownership interest in the business operated by the trust equivalent to their interest in the shares of the company, for example, holding 50% of the shares in the trustee carrying on business equates to 50% ownership interest in that business. This confirms the Applicant and Shaun hold 25% of the Business through I Skye Nominees Pty Limited as trustee for I Skye Trust.

   [11] MIAC V Hart [2009] FCAFC 112

Group Structure

1. As discussed above, the structure through which the Applicant obtains her ownership interest in the Business consists of two companies, viz, the operating company FGF, the holding company FIH and four trusts as set out below. Each of the trusts has a corporate trustee. FGF, FIH, the four trusts and the four corporate trustees collectively comprise ‘the Fry Group Structure’. The Applicant’s parents are Walter Aubrey Fry (Walter) and Deborah Bernice Fry (Deborah). The Applicant’s sisters are Tamaryn Kelly (Tamaryn) and Stacey Steinbach (Stacey). Walter, Deborah, the Applicant, Tamaryn and Stacey are collectively referred to as ‘the Fry Family’.

2. An ownership interest held indirectly through one or more interposed companies, partnerships or trusts is contemplated by the regulations and the Fry Group Structure adopted by the Fry Family falls within those regulations.

3. Until 10 April 2020, four trusts owned the shares in FIH. FIH owns 100% of FGF consisting of 1 ordinary share. The trusts (and their trustees) and their shareholding in FIH are shown below:

Entity	12/11/2014	02/08/2019	10/04/2020
Harmony Trust (Harmony Capital Pty Limited ACN 602 764 769 as trustee). One ordinary share held each by Walter and Deborah. The default beneficiaries include Walter and Deborah (cl.1.1(w) & Schedule 2).	75 Ord 37.5%	75 Ord 25%	Nil
Ahimsa Trust (Ahimsa Nominees Pty Limited ACN 602 764 750 as trustee). One ordinary share each held by Walter and Deborah. The default beneficiaries include Walter and Deborah (cl.1.1(w) & Schedule 2).	25 Ord 12.5%	45 Ord 15%	Nil
I Skye Trust (I Skye Nominees Pty Limited ACN 602 751 468 as trustee). One ordinary share each held by the Applicant and Shaun. The default beneficiaries include the Applicant and Shaun (cl.1.1(w) & Schedule 2).	50 Ord 25%	90 Ord 30%	Nil
Macaranga Trust (Macaranga Nominees Pty Limited ACN 602 751 351 as trustee). One ordinary share each held by Tamaryn and her husband.	50 Ord 25%	90 Ord 30%	Nil

1. The Tribunal notes Stacey does not hold any interest in the Fry Group Structure other than as a potential beneficiary of all four trusts although this decision does not turn on that.

2. It is uncontroversial the Applicant together with her husband held a 25% interest in the Business because I Skye Nominees was the legal owner of 50 shares in FIH until 2 August 2019 when that interest increased to 30% as a result of an allotment of shares by FIH. The Applicant and her representative, supported by legal opinions provided by Mr Tindale, contend the Applicant holds a beneficial ownership interest in the assets of the Harmony Trust and Ahimsa Trust. They imply this interest equates to 20% of the assets of those two trusts which collectively held 50% of FIH until 2 August 2019 and then 40% of FIH until 10 April 2020. By this reasoning, they assert the Applicant held a further 10% interest in FIH, which when added to the 25% held through I Skye Nominees provides her with an interest in the Business in excess of 30% and later a 30% interest by direct shareholding through I Skye Nominees. Numerous submissions, documents and opinions in support of this contention have been provided to the Tribunal and are discussed below including those described as the 2017 Declarations and the Deeds of Ratification.

1.11A Ownership for the purposes of Schedule2 of the Migration Regulations

1. The requirements of regulation 1.11A are pivotal in this decision and so the regulation is reproduced below:

   (a)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an Applicant, or the Applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

   (b)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the Applicant must show to the Minister:

   (a)a trust instrument; or

   (b)a contract; or

   (c)any other document capable of being used to enforce the rights of the Applicant, or the Applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

   stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

   (c)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

   (d)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the Applicant, or the Applicant’s spouse or de facto partner, has beneficial ownership:

   (a)is a dependent child of the Applicant; and

   (b)made a combined Application with the Applicant; and

   (c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.

2. Regulation 1.11A has the effect of excluding from an Applicant’s assets claims to ownership which cannot be substantially proven by reference to authenticated documents.[12] That is, the apparent intention of regulation 1.11A is to ensure only registerable documents are relied on to evidence beneficial ownership. If a document is not in registrable form, there is doubt as to whether it can meet the requirements of regulation 1.11A.

   [12] Yu v Minister for Immigration & Multicultural & Indigenous Affairs [2004] 140 FCR 126 at [35]

3. Further, a document which is in registrable form and has been submitted to the relevant authority for stamping, cannot be effective for any period earlier than the date of registration or stamping by that authority. In other words, a document produced at one time and purporting to have effect from an earlier time may be unacceptable for the purpose of regulation 1.11A.

What do the deeds of Ahimsa Trust and Harmony Trust say?

1. The wording of the deeds of Ahimsa Trust and Harmony Trust are similar, and their meaning is considered together. Clause 2 deals with trust income and clause 3 deals with trust capital. Clause 7 deals with the methods of distribution of trust assets and clause 8 deals with the categorisation of income with reference to assessable income for taxation purposes and the trustees right to selectively treat income as capital and apportion costs and expenses among all categories of income and capital. Clause 15 deems the exercise of the Trustees discretions and powers as absolute and uncontrolled and the indemnity thereof.

1. Clause 2 relies on the definition of Distributable Income which means the amount in respect of a Financial Year determined in compliance with that clause. Once Distributable Income has been credited to or set aside for a beneficiary it is referred to as Applied Income. Clause 2.2(b) allows the trustee at any time in relation to all or any part of the Distributable Income to credit, set aside or otherwise apply that income to or for any beneficiary without payment and such decisions are irrevocable. Clause 2.3(b) gives the Trustee the power to make any payment to any beneficiary to the exclusion of any other beneficiary and may apportion such a payment between the beneficiaries in any amount, share, proportion or manner it chooses. Relevantly, cl.2.3(d) gives the trustee the power, in its absolute discretion (emphasis added), to decide any one or more beneficiary may have a life interest in the Distributable Income of the trust fund. Clause 2.6(b) provides any beneficiary to whom the trustee has applied Distributable Income has an immediate vested indefeasible interest in and is presently entitled to that income.

2. The Tribunal finds the deeds of Ahimsa Trust and Harmony Trust grant the trustee largely unfettered freedom as to the distribution of income to eligible beneficiaries because the trustee has complete discretion as to the distribution of trust income.

3. Clause 3 relies on the definition of Applied Capital which means an amount of capital credited, set aside or otherwise applied or vested by the trustee for the benefit of a beneficiary. Clause 3.1, which has the descriptor ‘Discretionary distributions’, confirms the definition of Applied Capital by allowing the trustee at any time prior to the vesting date to pay or otherwise distribute, credit or set aside any capital of the trust fund to or for any beneficiary as the trustee may decide and the manner on which such capital is to be held. Like cl.2.3(d) in relation to income, cl.3.1(g) grants the trustee the right to decide any one or more beneficiaries have a life interest in the capital of the trust fund determined at the absolute discretion of the trustee (emphasis added). Such decisions of the trustee may be in favour of any beneficiary and may exclude any beneficiary, are generally irrevocable and the recipient beneficiary has a vested interest in the capital so applied. Importantly, cl.3.6 requires the trustee to hold the capital of the trust for each applicable default beneficiary as tenants in common in equal shares absolutely, however that only applies as and from the vesting date.

4. The vesting date is 80 years from the date of the deed or such earlier date as is required by law or the trustee so determines. There is no evidence before the Tribunal to suggest the trustee has determined the vesting date, so the Tribunal finds the vesting date of the Ahimsa Trust and Harmony Trust has not yet arrived.

5. The Tribunal finds the deeds of Ahimsa Trust and Harmony Trust grant the trustee largely unfettered freedom as to the distribution of capital to eligible beneficiaries because the trustee has complete discretion as to the distribution of trust capital and the requirement for the trustee to hold the capital for the default beneficiaries as tenants in common in equal shares has not yet arisen because the vesting date has not yet arrived.

6. The Tribunal further finds it useful to use the term ‘discretionary’ as a shorthand way of describing the interest conferred by the deeds of Ahimsa Trust and Harmony Trust because every discretion authority or power conferred on the trustee is an absolute and uncontrolled discretion power or authority and the trustee is not held liable for any loss or damage occurring as a result of its concurring or refusing or failing to concur in the exercise of any such discretion authority or power.[13]

   [13] Clause 15.1 of the deed of Ahimsa Trust and Harmony Trust

7. Applying the reasoning discussed in the previous paragraphs it follows as Ahimsa Trust and Harmony Trust are discretionary trusts, viz, distributions of income and capital are entirely at the discretion of the trustee. The Tribunal finds the Applicant does not hold any beneficial ownership interest in the assets of either Ahimsa Trust or Harmony Trust because they do not confer beneficial ownership in the trust assets to any beneficiary.

8. The Tribunal finds the only beneficial interest a beneficiary may have in these trusts is to the balance of an account created by the trustee exercising its discretion to distribute income and or capital to that beneficiary and the evidence says that has not occurred. They also have a right to compel proper administration of the trust.[14]

How do the 2017 Declarations and 2020 Deeds of Ratification affect the construction of the original trust deeds?

[14] Gartside v IRC [1968] AC 553

1. As discussed above, distributions of income and capital in Ahimsa Trust and Harmony Trust are not fixed but entirely at the discretion of the trustee and so they do not confer a beneficial ownership interest in their assets to any beneficiary. Such trusts only confer on a beneficiary a mere expectancy the discretion to distribute, which is expressed to be absolute, must be exercised reasonably. Reading together the deeds of Ahimsa Trust and Harmony Trust, the 2017 Declarations and the Deeds of Ratification, the Applicant argues the trustee, acting reasonably, would have to give her a fixed 20% share of the assets of those trusts.

The 2017 Declarations

1. On 31 May 2017, Walter and Deborah signed declarations addressed ‘To whom it may concern’ in respect of Ahimsa Trust and Harmony Trust (the 2017 Declarations). The wording of the declaration for Ashima Trust is as follows:

   This letter serves to confirm that we as the appointers of the above-mentioned trust and as the sole directors and shareholders of the Trustee company Ahimsa Nominees Pty Limited are responsible for the day-to-day affairs of the trust. We act in the interest of the beneficiaries of the trust at all times. The principal beneficiaries of the trust are Walter and Deborah Fry and our three children Hayley Richardson (Nee Fry), Tamaryn Kelly (Nee Fry) and Stacey Steinbach (Nee Fry). We clearly take into account the interests of the beneficiaries of the trust at all times as they are the beneficial owners of all the assets of the trust and we hold the assets of the trust for their benefit at all times.

2. A similarly worded declaration exists for Harmony Trust.

3. The Tribunal understands the term ‘principal beneficiaries’ used in the 2017 Declarations is a reference to the Fry Family. The 2017 declarations state inter alia: ‘they [the principal beneficiaries] are the beneficial owners of all the assets of the trust’.

4. Walter and Deborah acknowledge they prepared and signed the 2017 Declarations to assist the Applicant meet the criteria for the subclass 892 visa Application. The 2017 Declarations are silent as to the respective interests of the principal beneficiaries and vague as to when they became beneficial owners of the assets of the trusts, notwithstanding several references to ‘at all times’. The Applicant implies the Fry Family hold an equal and fixed interest in the assets of Ahimsa Trust and Harmony Trust and have done so from their commencement in 2014. Whilst it may have been the intention of Walter and Deborah for this be the case the 2017 Declarations are vaguely worded and do not specify that.

5. The Tribunal considered the 2017 Declarations and finds they cannot be relied upon as trust instruments for the purpose of the Application because they have not been stamped or registered as required by r.1.11A, and are unlikely to be in registrable form nor do they amend the original trust deeds, which is consistent with the evidence of Mr Tindale as discussed later. That is, the Applicant asserts the 2017 Declarations enable a reinterpretation of the original deeds, which the Tribunal does not accept.

6. Further, the Tribunal does not find the 2017 Declarations are distribution resolutions because they are vaguely worded and do not identify themselves as such.

Deeds of Ratification

1. On 16 February 2020, Walter and Deborah signed Deeds of Ratification in respect of Harmony Trust and Ahimsa Trust (the Deeds of Ratification). The Deed of Ratification for Ahimsa Trust was also signed by the Applicant as trustee. The wording of the Deeds of Ratification is similar for each trust except for the inclusion of the Applicant as a trustee in Item 2 of Schedule 1 to the Deed for the Ahimsa Trust. Because of that difference in wording the Deeds of Ratification individually will be referred to as the Ahimsa Deed of Ratification and the Harmony Deed of Ratification respectively.

2. The recitals to the Deeds of Ratification state the trustees wish to confirm the intentions of the trust by way of deed. Clause 2.1 of the Deeds of Ratification, which is headed ‘Beneficiaries’, states:

   The Original Trustee ratifies their execution of the Trust Deed and confirm that:

   (a)regardless of how the Trust Deed was drafted, the intention of the Trust Deed was that since the Settlement Date, the following Beneficiaries were to have a fixed interest in the Trust Fund, Distributable Income and Trust Net Income:

   (i)    Walter Aubrey Fry;

   (ii)   Deborah Bernice Fry;

   (iii)  Hayley Richardson;

   (iv)  Tamaryn Kelly; and

   (v)   Stacey Steinbach

   (b)The Trustee’s intention was that the Beneficiaries named in 2.1(a) above held fixed interests from the Settlement Date, as evidenced by the letter dated 31 May 2017, a copy of which is annexed to this Deed in Annexure A.

3. In summary, the Deeds of Ratification state at clause 2.1 the beneficiaries hold a fixed interest without specifying what their respective interests are. The Second Redchip Opinion and the submission by Mr Bass notes the Principal Beneficiaries, being Walter, Deborah, Hayley, Tamaryn and Stacey, have an equal (emphasis added) fixed interest yet the Deeds of Ratification do not specify that. Without specifying the fixed percentage each has, to say they have equal fixed interest is only an inference. The absence of such specification makes it difficult to accept they really do have equal fixed shares.

4. Mr Tindale, who prepared the Deeds of Ratification, was asked at the Hearing whether the Deeds of Ratification amended the original deeds of Ahimsa Trust and Harmony Trust and did so retrospectively. He was adamant they did not and because of that said the question of retrospectivity does not arise. However, in clause 2 the Deeds of Ratification are said to apply fixed interests from the settlement date and twice in clause 4 the Deeds of Ratification clearly state the terms of the trust deed, being the deeds of Ahimsa Trust and Harmony Trust respectively, are amended (emphasis added) by the Deed of Ratification.[15] The wording of the Deeds of Ratification is at odds with the oral evidence of their author Mr Tindale. Clause 4 of the Deeds of Ratification is discussed further below.

   [15] Ahimsa Deed of Ratification and Harmony Deed of Ratification clauses 4(a) and 4(c).

5. Case law suggests there is no absolute rule against retrospective changes to trust deeds. The amendment powers in cl.18 of the Ahimsa Trust and Harmony Trust Deeds of Settlement are very broad, and they don’t appear to prohibit a retrospective variation of this kind.

6. The Tribunal considers the problem with retrospectivity is why amend the original deeds if they always granted an equal fixed interest to the Fry Family. According to the 28 February 2020 submission from Mr Bass, there have been no distributions. Therefore, why make the amendments retrospective if there is nothing to undo, and if there was, there’s a question as to whether cl.18(c), which says no variation shall affect the beneficial entitlement to any amount set aside before the variation, would allow it. Further, if the Applicant has been added as a trustee (discussed below), cl.18(a) would mean such a variation could not result in any benefit to her.

7. On 27 February 2020, Mr Tindale wrote to Mr Bass setting out his legal opinion about the Deeds of Ratification and the 2017 Declarations (the First Redchip Opinion). On 29 April 2020, Mr Tindale wrote again to Mr Bass setting out his further legal opinion about the Deeds of Ratification and the 2017 Declarations (the Second Redchip Opinion). Collectively they are referred to as the Redchip Opinions.

8. The First Redchip Opinion says on page 2 the Deeds of Ratification do not amend the Trusts, ‘but merely ratifies these intentions’ being the Trustee’s intention for the Principal Beneficiaries to have fixed interests.

9. While it is possible to amend a trust deed retrospectively with a subsequent deed, there are difficulties in accepting it did in this case, not the least being both Redchip Opinions asserting the Deeds of Ratification didn’t and if they did, does that mean the original trust deeds are not evidence of beneficial ownership when the Application was made, but later became evidence as required by r.1.11A(2), retrospectively to the time of Application.

10. Such an action may be theoretically possible however to vary a trust retrospectively when the only apparent purpose of the retrospectivity is to comply with r.1.11A(2) seems contrary to the legislative intention.

11. Mr Tindale was asked at the Hearing whether the Deeds of Ratification amounted to a resettlement of Ahimsa Trust and Harmony Trust respectively by converting them from discretionary trusts to fixed trusts. Mr Tindale was adamant there was no resettlement of those trusts as a resettlement would involve new trusts, which he asserted had not occurred. Mr Tindale pointed out the Deeds of Ratification had been submitted to Revenue NSW and had been returned with the advice they were not dutiable. This may suggest Mr Tindale is correct when he says the Deeds of Ratification do not amend the original deeds, even though they say they do, in which case the original deeds stand.

12. Mr Tindale was asked at the Hearing whether the Ahimsa Deed of Ratification appointed the Applicant as a trustee of Ahimsa Trust jointly with Ahimsa Nominees Pty Limited, which is named as the ‘Original Trustee’. His response was the Applicant had been considered for the role of joint trustee with the Original Trustee and this was later discounted, noting it was a typographical error in the drafting of the Ahimsa Deed of Ratification for her name to be so included. Mr Tindale asserted the Applicant was not a trustee as she had not signed a consent to act nor had her appointment been ratified by the Original Trustee. Nonetheless, the Applicant is named as a trustee of Ahimsa Trust in the Ahimsa Deed of Ratification and she signed the Deed in that capacity (emphasis added) and initialled each page of it including Schedule 1.

13. Further, the submission from Mr Bass on 13 January 2020 states in the first paragraph on the third page: ‘In addition, in order to further support this submission, Hayley Richardson has recently been appointed a Trustee of the AHIMSA Trust, thereby providing further evidence that the statement signed by Wally and Debbie on 31 May 2017 in support of the 892 visa Application was genuine … ‘.

14. The status of the Deeds of Ratification is vague. On the one hand, cl.4 twice says it amends the Trust Deed, and on the other, both Redchip Opinions say the Deeds of Ratification do not amend the Trusts, and this may be reflected in cl.2. This vagueness, together with the failure to specify what each beneficiary’s fixed interest is, and the absence of a clause after cl.4, which is said to be ‘subject to the following clause’, may result in the deed not being legally binding. Mr Tindale says cl.4 is superfluous as discussed below.

15. Mr Tindale drew the Tribunal’s attention to clauses 2.3(c) and 2.3(d) and 3.1(g) of the deeds of Ahimsa Trust and Harmony Trust. The wording of those clauses is reproduced below:

    2.3(c): The Trustee may make a decision (revocably or irrevocably) pursuant to this clause in respect of the whole or any part of the Distributable Income of the Trust Fund derived or to be derived in any one or more Financial Years ending after the date of the decision (and whether by express reference to such Financial Years or by reference to a life or lives or otherwise) and is not required to make a separate and independent determination in respect of that Distributable Income for each Financial Year.

    2.3(d): In particular, the Trustee may decide that any one or more Beneficiary shall have an interest in the Distributable Income of the Trust Fund for life in accordance with such formula or method of determination of that interest in Distributable Income as the Trustee may in its absolute discretion determine.

    3.1(g): In making a decision under this clause 3.1 the Trustee may decide that any one or more Beneficiary shall have an interest in the capital of the Trust Fund for life in accordance with such formula or method of determination of that interest in the capital of the Trust Fund as the Trustee may in its absolute discretion determine.

16. Clause 2.3 of the original deeds deals with income decisions. Clause 3.1 of the original deeds deals with discretionary distributions of capital. In the opinion of Mr Tindale, clauses 2.3(c), 2.3(d) and 3.1(g) permit the trustees of Ahimsa Trust and Harmony Trust to make resolutions about the distribution of income and capital. In the case of income such resolutions are said to be capable of being both prospective and retrospective and in respect of capital such resolutions are said to be prospective. Without saying so, Mr Tindall thereby asserted the Deeds of Ratification and the 2017 Declarations amount to distribution resolutions.

17. Mr Tindale commented on the legal effect of the Deeds of Ratification in the Redchip Opinions, which are discussed below. The Tribunal finds the Deeds of Ratification purport to amend the original deeds, because they twice say they do in clause 4. The Deeds of Ratification have not been stamped or registered in accordance with r.1.11A. As discussed above, Mr Tindale advised at the Hearing the Deeds of Ratification had been submitted to Revenue NSW for stamping and were returned unstamped with an e-mail advice they were not registerable.

18. Even if the Deeds of Ratification had been stamped or registered, they could only be effective from 16 February 2020 being the Deed Date as set out as Item 1 in Schedule 1 of each Deed because r.1.11A(3) makes that stipulation. This means for the purposes of the Application they could not be relied on by themselves as trust instruments evidencing beneficial ownership for any period prior to 16 February 2020, whereas the ownership interest test must be satisfied at some point up to 21 June 2017.

19. The Applicant argues reading the 2017 Declarations and Deeds of Ratification together, a reasonable exercise of the trustee’s discretion does result in an equal distribution between the five beneficiaries named in cl.2 of the Deed of Ratification. However, the Tribunal has considered the argument and is not satisfied the trustee’s discretion is as confined as the applicant argues in this case. Case law generally suggests beneficiaries in a discretionary trust only have a ‘mere expectancy’ the discretion of the trustee will be exercised reasonably. There may be cases in equity where the requirement of a trustee to act reasonably will necessarily result in fixed shares. That is, there is no ‘bright line’ between fixed and discretionary trusts. The extent of discretion available to a trustee acting reasonably will vary from case to case, and in some cases may be so confined it approaches the lack of discretion in a fixed trust. Even if such a position is possible in equity, it is arguable r.1.11A has modified that position, as it has for general law ownership.

South African trusts

1. Mr Bass provided copies of financial statements for various years from 2017 to 2019 showing the distribution decisions of two South African trusts (Fry Family Trust and Mabengwane Trust) associated with the Fry Family. They show an equal distribution of income to the Applicant, Tamaryn and Stacey and their children.

1. In the absence of evidence of prior year distribution resolutions of Ahimsa Trust and Harmony Trust, the distribution decisions shown in Fry Family Trust and Mabengwane Trust financial statements are evidence of what the parties understand their relative shares are.

2. However, if the duty of the trustee to act reasonably must result in this understanding being respected, as discussed above, then arguably it could be enforced by a remedy in equity, and even if it did, the Tribunal does not consider it confers ownership interest as contemplated in the definition of that in the legislation and regulations.

3. The Tribunal has considered the financial statements of Fry Family Trust and Mabengwane Trust and whilst they are evidence of the distribution intentions of the trustees of those trusts the Tribunal finds they do not translate into a legally binding obligation on the trustees of Ahimsa Trust and Harmony Trust.

Redchip legal opinions

1. The Tribunal notes Mr Tindale was not involved in the establishment of or provision of advice concerning the Fry Group Structure and only became involved shortly before providing the First Redchip Opinion.

2. In the First Redchip Opinion, Mr Tindale advises he was instructed to assist in the provision of information and advice in response to the Tribunal’s letter to the Applicant dated 22 January 2020. He states he was further instructed by the trustees of the trusts, which the Tribunal assumes to mean the four trusts which form part of the Fry Group Structure, that as and from the date of settlement of the trusts, being 11 November 2014, it was the trustee’s understanding and intention that Walter Fry, Debra Fry, Hayley Richardson, Tamaryn Fry and Stacey Steinbach, referred to as the Principal Beneficiaries of each of the trusts, would have an equal interest in the trust fund.

3. The First Redchip Opinion notes no distributions of either income or capital have been made from the trusts since the settlement dates so there has been no reason for the trustees to have regard to the terms of the trust deeds to consider the rights of the beneficiaries. To reinforce their stated position, Walter and Deborah could have made distribution resolutions of five equal shares in the net income of Harmony Trust and Ahimsa Trust prior to the end of each financial year from 30 June 2015 to 30 June 2019, being the completed financial years since the trusts were established. They did not do so even though it was open to them to make such resolutions to confirm their stated intentions even if there was no income to distribute in any one year.

4. The first such action by Walter and Deborah to record their distribution intentions was in May 2017 around the time the Applicant was lodging her Application for subclass 892 visa when it became apparent there may be some doubt as to whether the Applicant had held the requisite level of ownership interest in FGF at some time up to the time of Application and the 2017 Declarations resulted.

5. The 2017 Declarations have been discussed in detail above and in the First Redchip Opinion Mr Tindale asserts: ‘The 2017 declarations do not purport to amend the terms of the trust deeds or grant to the principal beneficiaries a fixed interest in the trust fund as it was the trustee’s understanding and intention that the principal beneficiaries had that interest from the 2014 settlement dates.’ Mr Tindale goes on to say: ‘In order to reinforce the Trustees’ understanding and intention, we have prepared 2 Deeds of Ratification, confirming the Trustee’s intention regarding the interests of Principal Beneficiaries”

6. The First Redchip Opinion refers to an attached email correspondence from Revenue NSW dated 24 February 2020. This email was not attached to the submission and has yet to be provided to the Tribunal. Nonetheless, the Tribunal accepts the existence of the email and its purported contents and finds its existence to be irrelevant.

7. Mr Tindale outlines seven reasons why the trustees would have significant difficulties in resisting an Application by any of the principal beneficiaries to realise their entitlements. In doing so he refers to 2 cases, viz, Saunders v Vautier and Re Smith. He summarises his opinion as follows: ‘Put simply the 2017 declarations confirmed that the Principal Beneficiaries had an interest in the trust assets meaning that they were not mere objects of the Trusts, but had an actual interest in the Trusts assets. This interest was confirmed by the Deeds of Ratification.’

8. The Second Redchip Opinion reiterates the views expressed in the First Redchip Opinion and continues to assert the Deeds of Ratification do not amend the terms of the original deeds of Ahimsa Trust and Harmony Trust as it was the Trustee’s understanding and intention the Principal Beneficiaries had that interest from the 2014 establishment dates.

9. Curiously, the Second Redchip Opinion states clause 4 of the Deeds of Ratification, which Mr Tindale describes as a boilerplate clause, does not apply as it is said to be superfluous. Nonetheless, clause 4 is included in the Deeds of Ratification on page 3, which has been initialled by its signatories. Superfluous or not clause 4(a) states: ‘The Trust Deed is varied, amended and/or altered by the terms of this Deed …’ Clause 4(a) cannot be clearer. It says the Deeds of Ratification amend (emphasis added) the original deeds.

10. Further, it states in clause 3(a): ‘Item 2 of schedule one of the Deed of Ratification for the Ahimsa Trust incorrectly stipulates that Hayley Richardson is a co-trustee. The clients did have an intention to appoint Hayley as a co-trustee, however, did not proceed with the appointment. Hence, this is a clerical error.’ The issue of whether the Applicant has been appointed a trustee of Ahimsa Trust has been discussed earlier in this decision.

11. Importantly, the Second Redchip Opinion concludes in clause 6(c) whether a beneficiary has a fixed interest is dependent not only on the terms of the trust, but the conduct of the trustee. In Mr Tindale’s opinion, the 2017 Declarations and the Deeds of Ratification are not dutiable documents as they merely confirm the trustee’s intentions and make it impossible for the trustee to: ‘ … resist an Application should it be made by a Principal Beneficiary to make a claim regarding its indefeasibility of title to an equal share of the trust assets.’

12. Mr Tindale continues at clause 7(d) to state: ‘Although the Trust Deeds are discretionary, the Trustee has expressed an intention to distribute the income and capital equally to the Principal Beneficiaries. The matter now is not how they will distribute but when they will distribute.’ He goes on to discuss the issue of takers in default in the absence of any distribution and the Tribunal notes the reference by Mr Tindale to the trust deeds being discretionary.

13. The Redchip Opinions assert the 2017 Declarations and Deeds of Ratification do not amend the original deeds of Ahimsa Trust and Harmony Trust despite the fact they say they do in clause 4, which Mr Tindale says is superfluous and which is nonetheless in the document.

14. Mr Tindale states the 2017 Declarations and Deeds of Ratification merely confirm the trustee’s intentions at the establishment date of the trusts and their intentions as to how they will distribute the income and capital equally to the principal beneficiaries.

1. For these reasons, he states the 2017 Declarations and the Deeds of Ratification are not dutiable documents and therefore not subject to r.1.11A yet he claims they are legally binding on the trustees who would have difficulty resisting an Application should it be made by a principal beneficiary for their share of the trust assets.

2. The 2017 Declarations and the Deeds of Ratification either amend the original deeds in which case they are subject to the requirements of r.1.11A, or they do not amend the original deeds, as Mr Tindale asserts, and merely confirm the trustee’s intentions as they are not distribution resolutions. If the former situation applies, that is, the 2017 Declarations and the Deeds of Ratification do amend the original deeds, they are subject to the requirements of r.1.11A and as this has not being complied with, they are not trust instruments which in themselves evidence beneficial ownership for r.1.11A. If the latter situation applies, the original deeds are the only trust instruments capable of evidencing beneficial ownership for r.1.11A(2). Ahimsa Trust and Harmony Trust have been found to be discretionary trusts, that is, their deeds grant the trustee largely unfettered freedom as to the distribution of income and capital to eligible beneficiaries because the trustee has complete discretion in that regard, which is not modified by either the 2017 Declarations and the Deeds of Ratification.

Representative’s submissions

1. On 13 January 2020 Mr Bass wrote to the Tribunal in response to its letter of 12 December 2019. This letter goes into detail about the background to the Fry Family and notes they operate on a ‘one for all and all for one’ approach to business and family life. His letter also notes the Applicant and her sister Tamaryn both applied for a subclass 892 visa, which were refused on the basis their respective holdings in the Business was limited to 25% whereas they require 30%  at some pint up to the time of application as set out in detail above.

2. Anticipating the difficulty in achieving the requisite ownership interest for the Applicant, Mr Bass states he had successfully used statements like the 2017 Declarations in previous Applications, and read with the ‘one for all and all for one’ approach of the Fry Family to business and family life should persuade the Tribunal the Applicant was the beneficial owner of at least 30% of the Business. The Tribunal finds the 2017 Declarations and the Fry Family approach to business and life does not confer beneficial ownership of trust assets.

3. He states in order to give weight to this view of the Applicant’s holding in the Business, additional shares were allotted in FIH on 2 August 2019. This has been discussed above and confirmed by the Tribunal. The Tribunal accepts the Applicant held a 30% interest in the Business from 2 August 2019. Whilst he acknowledges these actions were taken after the refusal of the subclass 892 visa Application, he asserts it clearly indicates at least in the minds of the Fry Family the Applicant had always been the de facto owner of at least 30% of the Business. He also refers to the appointment of the Applicant as a trustee of Ahimsa Trust.

4. Mr Bass asserts the Minister’s delegate in arriving at the refusal decision required more of the Applicant than the legislation states and departmental policy should not be relied on as it is neither the legislation nor the regulations. The Tribunal agrees s.134(10) and r.1.11 only require a visa Applicant to have beneficial ownership if they don’t have legal ownership.

1. Applicants can have beneficial ownership as beneficiaries of a trust, however in this case the Tribunal finds the Applicants do not have beneficial ownership because their interest is at the trustee’s discretion and is not fixed. In anticipation the decision is affirmed by the Tribunal Mr Bass submits the Richardson family would have the excellent prospects for a successful Ministerial intervention Application.

2. On 30 April 2020, Mr Bass made a further submission to the Tribunal in which he refers to the Second Redchip Opinion and the statutory declaration by Mr Jankelowitz, which are discussed below. Mr Bass continues to assert the Applicant had an ownership interest because she was always a beneficiary of Ahimsa Trust and Harmony Trust. He also refers to the amount of time the Applicant spent overseas in her involvement in the day-to-day management of the Business.

3. Mr Bass does not repeat his request for Tribunal recommendation for Ministerial intervention in the event of an affirmed decision although the Tribunal notes he did so in his closing remarks at the end of the Hearing.

4. As discussed above, reading together the deeds of Ahimsa Trust and Harmony Trust, the 2017 Declarations and the Deeds of Ratification, the Applicant argues the trustee, acting reasonably, would have to give her a fixed 20% share of the assets of those trusts. The Tribunal finds there is no legal requirement for the trustees of Ahimsa Trust and Harmony Trust to do so because of the vagueness and uncertainty around the 2017 Declarations and the Deeds of Ratification.

Final submissions

1. On 18 May 2020, Walter and Deborah signed Statutory Declarations which set out some of their business and family history and in which they attest their intention in setting up the Australian operation was always the Fry Family would have a fixed and equal interest in it.

2. These statutory declarations can best be summarised by the final paragraphs which state: ‘It was always our intention that all five members of our family should have an equal and fixed interest in the assets and income of both the Harmony and Ahimsa Trusts from the date of the establishment of these trusts and in perpetuity thereafter. This had always and still is our express intention.’

3. On 20 May 2020, Mr Stephen Jankelowitz, who identifies himself as Director of Ageis Accounting and Tax Pty Limited, signed a Statutory Declaration in which he states:

   ‘I confirm that I acted for the Fry Family when they established the Ahimsa and Harmony Trusts and their business structures in Australia in approximately 2014.

   To the best of my recollection, the discussion that I had with Walter and Deborah Fry at the time, was that they intended that all five principal beneficiaries (Walter Fry, Deborah Fry, Tamaryn Kelly, Hayley Richardson and Stacey Fry (now Steinbach)) were to have equal and fixed entitlements to the income and assets of both the Ahimsa and Harmony Trusts at the time of their establishment and permanently thereafter.’

4. Mr Jankelowitz is named in the original deeds of Ahimsa and Harmony Trusts as a joint appointor with Walter and Deborah. The Tribunal understands Mr Jankelowitz may no longer be a joint appointor of those trusts. Nonetheless he signed the original deeds and so the Tribunal concludes he was there at the time the trusts were established.

5. In the Second Redchip Opinion Mr Tindale states: ‘The Trustee made this resolution [that all distributions from the Trust would be made equally between the Principle Beneficiaries] at the time of the establishment of the Trusts’[16]. However, Mr Bass advises in his submission of 20 May 2020 Mr Jankelowitz is unable to locate any contemporaneous evidence to support the statements deposed in the Statutory Declarations of Walter and Deborah and himself.

   [16] Second Redchip Opinion paragraph 7(b).

6. It seems extraordinary to the Tribunal how Mr Jankelowitz could be so certain as to the instructions he received in 2014 from Walter and Deborah and yet the Fry Group Structure self-evidently does not achieve the outcome they assert they intended because the deeds of the four trusts included in it are discretionary as discussed above and not fixed and he has no file notes, correspondence or other supporting documentation for his assertion.

7. As Walter and Deborah depose in their Statutory Declarations: ‘We were not familiar with Australian Trust law and set up the trusts based on advice provided at the time’. It is totally understandable Walter and Deborah, newly arrived from another country, would not be familiar with Australian Trust law. They continue: ‘However, when the discretionary aspect of the trust was challenged, we, for the first time became aware that we had been wrongly advised, and that in fact our specific intention for the fixed interests to be incorporated were contradictory the scope of the actual trusts, in addition to which there were specific trusts available which would cater for the fixed interest nature of our intention.’ Whilst they do not identify the time this realisation came to them, it can reasonably be inferred from the timing of the 2017 Declarations this realisation was around May 2017.

8. It seems equally extraordinary to the Tribunal, Walter and Deborah, having such a firm view of their instructions and intentions from 2014 to now, nonetheless took no action, other than by making the 2017 Declarations, to have the discretionary aspect of the trusts included in the Fry Group Structure properly rectified in May 2017, presumably ‘when the discretionary aspect of the trust was challenged’, when it so clearly was not fit for their stated purpose. The Fry Group Structure was partially rectified in August 2019 by the change in shareholding of FIH yet even those changes did not include Stacey, as it did Hayley and Tamaryn, and in any event were made over two years after it became clear to Walter and Deborah their instructions had not been carried out.

SUMMARY OF FINDINGS

1. The Applicant was required to have held a 30% ownership interest in the Business at some point in time prior to lodging her Application on 21 June 2015 and to continue to hold an ownership interest until the time of this decision. The Applicant argues the deeds of Ahimsa Trust and Harmony Trust, when understood in the context of all the evidence, is contemporaneous evidence of an equal fixed interest by the Fry Family and by extension she held a 20% beneficial interest in the assets of those trusts from their establishment in 2014 and continues to do so. As Ahimsa Trust and Harmony Trust together held a 50% interest in FIH from 2014 to the time of Application the Applicant says that provides her with a further 10% interest in FIH, which combined with 25% held through I Skye Trust means she held at least a 30% ownership interest in the Business at some time prior to the Application.

1. The Tribunal finds the terms of deeds of Ahimsa Trust and Harmony Trust are clear in giving the trustee a largely unfettered discretion as to the distribution of the trust income and assets. There is no other contemporaneous evidence of a contrary intention for the purpose of interpreting the ownership interest of the beneficiaries. There is no evidence before the Tribunal the Applicant has any right or ability to enjoy or otherwise deal with any of the assets of Ahimsa Trust and Harmony Trust.

2. Absent that ability and even allowing a possible remedy in equity, The Tribunal considers the terms of the deeds of Ahimsa Trust and Harmony Trust, whilst clear in giving the trustee a largely unfettered discretion as to the distribution of the trust income and assets, do not provide for equal shares of the trust assets. Read with all the evidence, which is not sufficiently certain, they do not create a legal or equitable obligation on the Trustees of those trusts to distribute an equal share of the trust assets to the Applicant because the 2017 Declarations and the Deeds of Ratification are too vague and do not amend the original deeds.

3. Accordingly, the Tribunal finds the Applicant holds no beneficial ownership interest in the assets of Ahimsa Trust and Harmony Trust.

4. Whilst the Applicant has held an ownership interest in the Business throughout the relevant period, the Tribunal finds she did not hold a 30% ownership interest in the Business at some point in time prior to lodging her Application on 21 June 2015 and so she fails the ownership interest test because:

   (a)  there is no contemporaneous evidence, such as written instructions from Walter and Deborah or file notes of instructions received from them or the resolution asserted by Mr Tindale to have been made in 2014, to support the contention of the Applicant and her parents regarding the equal fixed interest requirement allegedly made at the time the Fry Group Structure was established.

   (b)  The 2017 Declarations are vaguely worded and do not amount to any more than a statement of intentions. The Tribunal considers they are not distribution resolutions, nor do they amend the original deeds of Ahimsa Trust and Harmony Trust.

   (c)   The Applicant held a 25% interest in the Business throughout the Application period and until 2 August 2019 when that interest increased to 30%. This occurs because the Applicant and Shaun own the shares I Skye Nominees, which is trustee of I Skye Trust, which held 50 shares in FIH and later 90 shares in FIH and so they had legal ownership of that part of the Business. The increase to 30% ownership interest did not occur until 2019, which was two years after the lodgment of the Application;

   (d)  On 10 April 2020 the entire issued capital of FIH was transferred to an overseas company, Livekindly. FGF remains wholly owned subsidiary of FIH and the business relied on by the Applicant is conducted by FGF. I Skye Nominees retains an ownership interest in Livekindly;

   (e)  The Applicant became a one third shareholder in Ahimsa Nominees and Harmony Capital on 29 April 2020, which by Application of the migration regulations means she has legal ownership of one third of the assets of those two trusts from that date. Ahimsa Nominees and Harmony Capital hold a 40% interest in FIH through Livekindly.

1. Accordingly, the Tribunal is not satisfied the Applicant did have and does have an ownership interest at the required level in the Business at all relevant points in time as required by cl.892.211(1).

2. As one of the essential requirements for the visa is not met, the decision under review must be affirmed.

POST-APPLICATION CHANGES TO THE FRY GROUP STRUCTURE

Change of shareholders in Ahimsa Nominees and Harmony Capital

1. On 9 June 2020 Mr Bass provided a copy of a letter addressed to the Tribunal from KPMG dated 5 June 2020, which was in response to the Tribunal’s letter of 29 May 2020 (the first KPMG Submission). On 11 June 2020 KPMG provided another letter addressed to the Tribunal (the second KPMG Submission).

2. In Mr Tindale’s letter dated 29 April 2020 he says in paragraph 3(c): ‘We note that Hayley has since been appointed as a Director and holds one ordinary share in both Ahimsa Nominees Pty Limited and Harmony Capital Pty Limited as of 29 April 2020’ and paragraph 3(d) says: ‘Please see attached Minutes of Meeting of Directors, Consent to Act and allotment of shares dated 29 April 2020.’ Then paragraph 8(b) of that opinion says: ‘Hayley is now a shareholder and Director of Ahimsa Nominees Pty Limited and Harmony Capital Pty Limited.’ The attachments were not provided to the Tribunal at the time. They were requested from Mr Bass who provided them to the Tribunal on 28 May 2020.

3. The Applicant signed a consent to act as a director of both Ahimsa Nominees Pty Limited and Harmony Capital Pty Limited on 29 April 2020 and her appointment was ratified, at directors’ meetings that day, by Walter and Deborah being the other directors of those companies. At separate directors’ meetings of Ahimsa Nominees Pty Limited and Harmony Capital Pty Limited also on 29 April 2020, one ordinary share in each company was allotted to the Applicant.

4. On 28 May 2020 the Tribunal conducted searches at ASIC and found no record of the Applicant having been appointed a director nor an allotment of shares to her by either Ahimsa Nominees Pty Limited or Harmony Capital Pty Limited. The Tribunal was subsequently advised in the first KPMG Submission these changes have since been notified to ASIC and evidence of that was provided. The Tribunal finds the Applicant was validly appointed as a director of Ahimsa Nominees Pty Limited and Harmony Capital Pty Limited on 29 April 2020 and one ordinary share in each company was allotted to her that day.

Transfer of ownership of FIH

1. On 27 May 2020, the Tribunal undertook a search of the records of the Australian Securities & Investments Commission (ASIC) regarding Fry’s International Holdings Pty Limited ACN 602 814 862 (FIH). This was in response to a comment in the Representative’s submission of 13 January 2020, which states: ‘In order to give weight to this view [that Hayley’s trust has at least a 30% interest in the main business], the share capital of FIH was increased on 29 August 2019 from 200 shares to 300 shares and these shares were allocated to the trustee companies of the relevant trusts so that Hayley and Tamaryn from that date owned 30% of the issued capital of FIH.’

2. The search reveals on 2 August 2019 additional shares were allotted to Macaranga Nominees Pty Limited and I Skye Nominees Pty Limited and those trustees each then held a 30% interest in FIH. The search also reveals on 10 April 2020 the entire 300 issued shares in FIH were transferred to The Livekindly Company Inc. (Livekindly) which gives its address as Los Angeles CA, USA.

1. On 28 May 2020, the Tribunal undertook a search of the records of ASIC regarding FGF. That search reveals FGF remains a wholly owned subsidiary of FIH. The Tribunal notes the nominated main business for the purpose of the Application is the supply and distribution of vegetarian food products to the retail trade in Australia (the Business), which is conducted by FGF.

2. The transfer of the entire issued share capital in FIH to Livekindly suggested the Applicant no longer held any ownership interest in the Business. That being the case, the Tribunal could not be satisfied the Applicant met cl.892.221(a), which requires the Applicant to continue to have an ownership interest in an actively operating main business in Australia.

3. On 29 May 2020 the Tribunal wrote to the Applicant advising this information may be the reason, or part of the reason, for affirming the refusal of your visa Application. The Tribunal invited the Applicant to comment on or respond to this information.

4. The first KPMG Submission confirms the transfer of all the shares in FIH to Livekindly on 10 April 2020 on a scrip for scrip basis such that the four trusts in the Fry Group Structure held shares in Livekindly in the same proportion as they held them in FIH. It notes there are other shareholders in Livekindly, other than the four Fry Family trusts, and provided copies of share certificates for I Skye Nominees in Livekindly.

5. The Tribunal finds the Applicant continues to hold an ownership interest in the Business because I Skye Nominees holds an ownership interest in Livekindly, which in turn owns the whole of FIH which owns the whole of FGF.

6. The second KPMG Submission provides further documentation around the transfer of the shares in FIH and some commentary about ownership interest generally. The Tribunal has considered the second KPMG Submission and while it contains new arguments the Tribunal finds it does not address the critical criterion, which is the ownership interest of the Applicant at or prior to the time of Application.

MINISTERIAL INTERVENTION

1. In his submissions the Representative requested Ministerial intervention on the basis the Applicant and her family were in his opinion ideal candidates for such consideration. He reiterated this view at the end of the Hearing. The Tribunal will not be making such a recommendation noting the Applicant may make a request directly to the Minister.

DECISION

The Tribunal affirms the decisions not to grant the visa Applicants Business Skills (Residence) (Class DF) visas.

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03  Definitions

In these Regulations, unless the contrary intention appears:

…

ownership interest has the meaning given to it in subsection 134(10) of the Act.

…

qualifying business means an enterprise that:

(a) is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

(b)is not operated primarily or substantially for the purpose of speculative or passive investment.

…

1.11  Main business

(1)For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an Applicant for a visa if:

(a)the Applicant has, or has had, an ownership interest in the business; and

(b)the Applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

(c)the value of the Applicant’s ownership interest, or the total value of the ownership interests of the Applicant and the Applicant’s spouse or de facto partner, in the business is or was:

(i)if the business is operated by a publicly listed company—at least 10% of the total value of the business; or

(ii)if:

(A)the business is not operated by a publicly listed company; and

(B)the annual turnover of the business is at least AUD400 000;

at least 30% of the total value of the business; or

(iii)if:

(A)the business is not operated by a publicly listed company; and

(B)the annual turnover of the business is less than AUD400 000;

at least 51% of the total value of the business; and

(d)the business is a qualifying business.

(2)If an Applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the Applicant, the Applicant must not nominate more than 2 of those qualifying businesses as main businesses.

Migration Act 1958

134  Cancellation of business visas

….

1. In this section:

….

ownership interest, in relation to a business, means an interest in the business as:

(a)  a shareholder in a company that carries on the business; or

(b)  a partner in a partnership that carries on the business; or

(c)   the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.