Shahpari (Migration)

[2015] AATA 4032

Shahpari (Migration) [2015] AATA 4032 (30 July 2015)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs Nahid Shahpari
Miss Popak Bafekr
Mr Arta Bafekr

CASE NUMBER:  1404673

DIBP REFERENCE(S):  CLF2012/218603 CLF2012/218604

MEMBER:Fraser Syme

DATE:30 July 2015

PLACE OF DECISION:  Brisbane

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

Statement made on 30 July 2015 at 3:30pm

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 25 February 2014 to refuse to grant the visa applicant a Business Skills (Residence) (Class DF) Subclass 890 visa under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visa on 26 October 2012. The delegate refused to grant the visa on the basis that the first named applicant did not meet the requirements of cl.890.212 as the delegate was not satisfied that the first named applicant and/or her spouse had net assets of at least $100,000 in the main business Karamadan Overseas Pty Ltd (“Karamadan”) and throughout the period of 12 months ending immediately before the application was made.

3. The first and second named applicants appeared before the Tribunal on 13 July 2015 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Persian and English languages.

4. The applicants were represented in relation to the review by their registered migration agent. The migration agent provided several submissions attaching supporting documents before the hearing and attended the hearing in person. At the hearing, the Tribunal agreed to a request the applicants provide further evidence and submissions on or before 20 July 2015.

5. For the following reasons, the Tribunal has concluded that the [decision under review should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

6. The issue in the present case is whether the first named applicant had an ownership interest in one or more actively operating main businesses in Australia in the 2 years immediately before the application was made for the purpose of cl.890.211. An extract of the relevant legislation is annexed to this decision.

7. Main business is defined in r.1.11, and the requirements include:

   a.The first named applicant has an ‘ownership interest’ in the business;

   b.The first named applicant has maintained a direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business;

   c.The value of the ownership interest of the first named applicant and the second named applicant in the business was at least 10% of the total value of the business; and

   d.The business is a ‘qualifying business’.

8. The meaning of ‘ownership interest’ in r.1.03 and s.134(10) includes a shareholder in a company that carries on the business.

9. The definition of qualifying business is set out in r.1.03 and the requirements include that the first named applicant’s business is operated for the purpose of making a profit through the provision of goods and/or services and is not speculative or passive investment.

   Did Karamadan actively operate a main business for two years?

10. To meet the requirements of cl.890.211(1), Karamadan must be a qualifying business and the first named applicant must have actively operated Karamadan  for at least 2 years immediately before the application is made. To meet the requirements of cl.890.211(2)(b) at the time of making the visa application, Karamadan must have: an ABN; submitted to the ATO all BAS required by the ATO and included those BAS in the application.

11. On the basis of the ASIC documents provided to the delegate, the Tribunal accepts the first named applicant has an ownership interest in and is a director of Karamadan and that Karamadan has an ABN. The question before the Tribunal is whether Karamadan was an actively operating business during the period 26 October 2010 to 26 October 2012. The evidence before the delegate was Karamadan undertook an initial shipment of saddles from Australia to Iran in 2009. The next recorded turnover is in the July-September quarter 2011 BAS.

12. At the hearing, the Tribunal indicated whether Karamadan is a main business was a different issue to the one on which the delegate made the decision under review. The Tribunal noted the applicants had since provided further evidence regarding their shareholder loans to Karamadan. The Tribunal further noted that the financial statements and ASIC records of Karamadan were messy. The second named applicant explained their reliance Mr H, a former director of Karamadan, was the reason why the ASIC records were confusing. He further explained the accounts were confused due to their first accountant and then their bookkeeper being inexperienced.

13. The Tribunal discussed with the applicants too that there are the above mentioned definitions of main business and qualifying business in the legislation, but there is no definition of the word ‘business’. Business is a word which takes its content from its context.[1] Other case law identified indicators of a business to include continuity and repetition of trading activity over a reasonable period is a relevant consideration in determining whether an entity is a ‘business’.[2] 

    [1] Lu v MIAC (2009) 112 ALD 125 at [39], citing Mason CJ, Gaudron and McHugh JJ in Re Australian Industrial Relations Commission and Others; Ex parte Australian Transport Officers Federation and Others (1990) 171 CLR 216 at 226.

    [2] Kushner v MIAC [2009] FMCA 390 (Driver FM, 28 May 2009) at [48]. Although the Court was considering a cancellation under s.134(1), the reasoning appears equally applicable in relation to the meaning of “business” in the context of “main business” and “qualifying business”.

14. The applicants sought to demonstrate before the Tribunal that Karamadan was an actively operating main business throughout the two years 26 October 2010 to the date of the visa application, 26 October 2012. The applicants correctly agreed that the first named applicant was not in Australia from 26 October 2010 to 24 August 2011. The applicants correctly agreed too as recorded in the BAS provided to the delegate that Karamadan recorded no sales until the July-September quarter 2011 (and then, only a modest figure of $4,186 for the quarter). The Tribunal acknowledged the business success the applicants had achieved through Karamadan in later years, particularly in winning contracts with the UN. That though is a separate issue to whether Karamadan was an actively operating main business prior to September 2011.

15. The evidence of the first named applicant and second named applicant was largely consistent. The both narrated the history of Karamadan’s business and difficulties it had encountered, including adversely high Australian dollar, economic sanctions against Iran and overall economic climate both in Iran and worldwide. The both described an initial business activity of shipping 10 horse saddles to Iran in 2009 (relevant documents are on the departmental file). The Tribunal noted there was a gap then in sales until 2011. The applicants explained during that period it was correct they achieved no sales. However they did receive inquiries and sent out a number of quotes. They requested additional time after the hearing to provide evidence related to that.

16. The second named applicant submitted that the business never stopped operating between the sale of the saddles in 2009 and sale of machinery parts in 2011. He and the first named applicant were always working toward the business success they have since achieved. The Tribunal commented it accepted the applicants had made genuine effort and had a genuine intent operate a business. It accepted too that for the reasons they provided, Karamadan had taken longer than they expected to become a success. It was mindful too that an export orientated business such as Karamadan may take longer than other businesses to be such a success. However, while these were reasonable explanations for the slower than expected success of Karamadan’s business, the Tribunal was focused on whether Karamadan was an actively operating main business, and not reasons why it was not.

17. The migration agent submitted that a proper company structure was set up, with Mr H as the representative in Australia, clearly therefore there was an established main business in Australia. He repeated the submission of the second named applicant that the success Karamadan enjoyed now was a product of all the hard work of the applicants in the past.

18. The Tribunal put to the applicants it considered Karamadan not achieving any sales for those activities weighed heavily on the Tribunal’s assessment of whether Karamadan had an actively operating a business prior during the period October 2010 to September 2011. Further weighing against the applicants was that the first named applicant was not in Australia between 26 October 2010 and 24 August 2011. Her absence for this period too called into question that even if Karamadan did have an actively operating business, whether the first named applicant had 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 in Australia.

19. The Tribunal discussed in length the first named applicant’s day to day management role in Karamadan, particularly while she was still in Iran. The Tribunal asked the first named applicant to discuss with it her day to day role in the management of Karamadan while she was in Iran. It explained that it must be satisfied she has maintained direct and continuous involvement in management of Karamadan from day to day making decisions which affect the overall direction and performance of the business. The first named applicant initially stated he was responsible for invoices and ordering. The Tribunal pointed out Karamadan had no sales during the period October 2010 to August 2011, while she was in Iran. She later said that she sourced products based on inquires. She said that happened more than 10-20 times. She agreed that much of the negotiating in Iran was done by the second named applicant and that Mr H was responsible for finding sources in Australia. She explained after deciding the saddle business could not succeed, she tried other horse related products without success. She and the second named applicant then changed strategies for Karamadan to export spare parts and heavy machinery. These activities became more successful in 2012, which are reflected in the financial statements and BAS for 2012.

20. The Full Court of the Federal Court in Lobo v MIMIA[3] held that there are a variety of ways in which a person might maintain direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance. A person involved in the ‘management of the business’ does not necessarily have to manage the whole of the business. The regulations require an applicant to have ‘involvement’ in the management and the Tribunal accepts that involvement in the management can be different to the role of a manager. However, the regulations do require an applicant to ‘maintain direct and continuous involvement in management on a day to day basis’.

    [3] [2003] FCAFC 168.

21. The Full Court in Lobo further stated the question of whether an applicant has demonstrated an involvement in the management of that business from day to day and in making decisions that affected the overall direction and performance of that business, is a matter of fact for the Tribunal.  The factors which the decision maker is bound to consider are not expressly stated and must be determined by implication from the subject matter.  The wording of the test in r.1.11(1)(b) for the purposes of determining a main business is in ordinary words of the English language used in a non-technical sense. The Court did not provide any examples. PAM3 [4] does state examples of how the requirement in r.1.11(1)(b) can be met. It states that, to meet the requirement for direct and continuous involvement in management the applicant must demonstrate that they have been actively managing and operating the business, which requires that the business be ongoing and for the applicant to consistently spend a significant portion of their time managing the business on an ongoing basis. Management involves planning, organising, directing and controlling the resources of the business. PAM3 provides further details as to what is meant by the terms “planning”, “organising”, “directing” and “controlling” and also provides various examples of the types of decisions that may affect the overall direction and performance of the business.[5] While the Tribunal can have regard to the guidelines in PAM3, they are not the law.  It would not be appropriate to impose a narrower set of requirements, for example, by saying the requirement in r.1.11(1)(b) can only be met if an applicant demonstrates the exercise of responsibility within the business in terms of decision-making authority, responsibility for employees and/or responsibility for expenditure – all of which are examples set out in PAM 3.

    [4] PAM3: GenGuide M – Business Skills visas – Visa application & related procedures – Other business-related requirements at [54.4] (compilation 2/6/2014).

    [5] PAM3: GenGuide M – Business Skills visas – Visa application & related procedures – Other business-related requirements at [54] (compilation 2/6/2014).

22. While the Tribunal accepts there are a variety of ways in which a person might maintain direct and continuous involvement in the management of a business and regard must be had to the context of the business of Karamadan. The Tribunal retains concerns the first named applicant has maintained direct and continuous involvement in the management of Karamadan and in making decisions affecting the overall direction and performance of the business of Karamadan, particularly given she was not in Australia between 26 October 2010 and 24 August 2011.

23. After the hearing, the applicants advised the Tribunal in writing they did not intend to provide any further supporting documents. The migration agent made no further submissions.

24. The Tribunal accepts the first named applicant had the intention to and made genuine effort to establish Karamadan as an export business. It accepts too that the applicants considered other export opportunities between 2009 and 2011, but none of those queries or research efforts resulted in any sales or ongoing business. For the purpose of this decision, the Tribunal is willing to give the applicants the benefit of the doubt and accept that for the period between 2009 and 2011 they continued to seek business export business opportunities.

25. However, the Tribunal finds that for the period 26 October 2010 to around July-September 2011, Karamadan was not an actively operating main business in Australia. That finding is supported by the BAS of Karamadan showing nil sales figures for the period in question. As the Tribunal has found Karamadan was not actively operating for those months, it follows that the first named applicant did not have an ownership interest in one or more actively operating main businesses in Australia in the 2 years immediately before the application and does not meet the requirements of cl.890.211. As the Tribunal as found Karamadan was not actively operating, it is unnecessary for the Tribunal to make findings as to whether the first named applicant maintained direct and continuous involvement in the management of Karamadan in Australia during the period she remained in Iran.

26. As the first named applicant does not meet essential criteria for the grant of the visa, the Tribunal must affirm the refusal of the visa.

    Secondary applicants

27. From the identity documents on the departmental file, the Tribunal is satisfied the second named applicant and third named applicant each is a member of the first named applicant’s family. As the Tribunal has affirmed the decision in respect of the first named applicant, the second and third named applicants are unable to meet the secondary criteria. The Tribunal as such affirms the decisions in respect of the second and third named applicants.

    Minister’s public interest power

28. The Tribunal is particularly sympathetic to the circumstances of the applicants. It accepts they have acted in good faith and are clearly committed to making an economic contribution to Australia through their business endeavours. The Tribunal is mindful too of their social and educational ties to Australia.

29. As discussed during the hearing, the Tribunal has had regard to whether the applicants’ case is one which it should refer to the Department for consideration by the Minister pursuant to s.351 which gives the Minister a discretion to substitute for a decision of the Tribunal another decision that is more favourable to the applicant, if the Minister thinks that it is in the public interest to do so. The Tribunal has considered the applicant’s case and the ministerial guidelines relating to the discretionary power set out in PAM3 ‘Minister’s guidelines on ministerial powers (s345, s351, s391, s417, s454 and s501J)’ but has decided not to refer the matter. The Tribunal notes that the applicants can still make a request directly to the Minister.

    DECISION

30. The Tribunal affirms the decision not to grant the applicants Business Skills (Residence) (Class DF) visas.

    Fraser Syme
    Member