Shen (Migration)

[2020] AATA 6032

Shen (Migration) [2020] AATA 6032 (16 September 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Ms Weiping Shen

Miss Zhenfei Gu

CASE NUMBER:  1918244

HOME AFFAIRS REFERENCE(S): BCC2017/1479284 BCC2017/1535931 BCC2019/3143208 BCC2019/3143223

MEMBER:P Ranson

DATE:16 September 2020

PLACE OF DECISION:  Brisbane

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

Statement made on 16 September 2020 at 1:16pm

CATCHWORDS

MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) – beneficial owner of a residential property – net business and personal assets – property purchased in the name of the secondary applicant – secondary applicant was financially independent – no evidence of Declaration of Trust being stamped or registered – resulting trust – decision under review affirmed

LEGISLATION

Migration Act 1958, s 65
Migration Regulations 1994, Schedule 2, cls 890.215; rr 1.03, 1.05, 1.11

CASES

Yu v MIMIA (2004) 140 FCR 126

STATEMENT OF DECISION AND REASONS

Table of Contents

APPLICATION FOR REVIEW

CONSIDERATION OF CLAIMS AND EVIDENCE

Requirements relating to Applicant’s business and personal assets

The George Street Property

The Declaration of Trust

Does the Declaration of Trust satisfy reg 1.11A requirements?

Does reg 1.11A(4) apply?

Has a resulting trust been created?

DECISION

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 19 June 2019 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 April 2017. Certain criteria must be satisfied during the two years immediately before the application is made, that is, 21 April 2015 to 20 April 2017 (the Application Period).

3. At the time of application, Class DF contained four subclasses: 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 890 (Business Owner) visas, as set out in Part 890 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 890.2. The others need only to satisfy the secondary criteria set out in Subdivision 890.3.

4. The delegate in this case refused to grant the visas on the basis the first named visa Applicant, Ms Weiping Shen, (the Applicant) did not satisfy the requirements of cl.890.215 of Schedule 2 to the Regulations because she could not establish she was the beneficial owner of a property she sought to include as part of the value of her net business and personal assets in Australia. Miss Zhenfei Gu is the daughter of the Applicant (the Second Visa Applicant).

5. The Applicant appeared before the Tribunal on 9 July 2020 to give evidence and present arguments. The Tribunal was to receive oral evidence from the Second Visa Applicant, and Mr Yuyu Shen who the Tribunal understands is a brother of the Applicant. There were some communication difficulties encountered in the call with Mr Yuyu Shen. The Applicant agreed to proceed and conclude the hearing without the oral evidence of Mr Yuyu Shen or the Second Visa Applicant. The Applicant was represented in relation to the review by Mr Ziting Lei[1] of Longton Legal (the Representative) who attended the Tribunal hearing. All parties attended the Hearing by video link facilitated by the Tribunal utilising Microsoft Teams.

   [1] Migration Agent Registration Number: 1572416

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 and her spouse have beneficial ownership of a residential unit in Sydney, wholly paid for by them and purchased in the name of the Second Visa Applicant, and subject to a Declaration of Trust dated 16 February 2017 between Zhenfei Gu (the Second Visa Applicant) as trustee and Yuming Gu and Weiping Shen (the Applicant) as purchasers.

2. The property in question is Unit 1503/710-722 George Street, Sydney NSW 2000 (the George Street Property).

3. In accordance with the President’s Direction[2], the Tribunal will address only those elements of the criteria on which the delegate made an adverse finding, being the satisfaction of cl 890.215 in this case.

   [2] Presidents Direction for Conducting Migration and Refugee Reviews dated 1 August 2018

Requirements relating to Applicant’s business and personal assets

1. Clause 890.215 requires the Applicant meet certain requirements relating to their business and personal assets. Throughout the period of 12 months immediately before the application is made and as at the time of application, the net value of the business and personal assets in Australia of the Applicant, or the Applicant’s spouse or de facto partner or their assets combined, had been at least A$250,000.

2. The Tribunal must consider whether the substantive requirements of this criterion are met. The Applicant submitted the requirements concerning business and personal assets are met by the combination of the net assets of the nominated business, Australian N Power International Pty Ltd ACN 163 913 737 (Australian N Power), some cash and beneficial ownership of the George Street Property.

3. Whilst the Tribunal has not tested the net business assets of the Applicant, it notes the net assets of Australian N Power may not exceed A$100,000 once related party loans are eliminated, and the Applicant’s loan to the company is added.

4. Absent net business assets reaching A$250,000, it is necessary to consider the Applicant’s personal assets, which means testing the Applicant’s claim to beneficial ownership of the George Street Property. The Applicant asserts the George Street Property is hers as she paid the deposit and all loan repayments plus all holding costs since acquisition and it was only purchased in the name of the Second Visa Applicant because of poor advice at the time of purchase.

The George Street Property

1. On 30 March 2012, Miss Zhenfei Gu, the Second Visa Applicant, signed a contract to purchase the George Street Property for $625,000 (the Contract). Settlement occurred on 10 May 2012. A copy of the contract (stamped by the then NSW Office of State Revenue), and Settlement and Adjustments Sheet prepared by Yau & Wang Lawyers, were provided in response to a request for information received by the department on 25 September 2018. Relevantly, there is no indication on the Contract to indicate the purchaser is anyone other than the Second Visa Applicant, for example, the purchaser is not shown as: ‘Zhenfei Gu as trustee for …’ or ‘Zhenfei Gu as nominee for …’ or similar. This omission is relevant later in the discussion about resulting trusts and the presumption of advancement, see paragraph [34].

2. A valuation report prepared by Jason Wang AAPI of Aussets Pty Ltd[3] was provided to the delegate. It records the inspection date as 3 April 2017 and in the opinion of the valuer shows the current market value of the George Street Property as at 1 April 2016 was $720,000 and as at 1 April 2017 $750,000.

   [3] Australian Property Institute, Certified Practising Valuer, No. 69046

3. The purchase of the George Street Property was financed by a cash contribution from the Applicant and her husband[4] and an investment loan of $500,000, drawn down to $499,207, from Westpac Bank in the name of the Second Visa Applicant. The balance of the investment loan as at 3 February 2017 was $462.073.44.[5]

[4] Affidavit of Weiping Shen dated 26 June 2020, paragraph [5]

[5] Westpac Rocket Investment Loan statement for account number ending 7550 for the period 4 November 2016 to 3 February 2017.

1. Further, the settlement documents provided by Yau & Wang Lawyers includes a copy of an e-mail dated 27 March 2012 from the Foreign Investment Review Board (FIRB) granting approval for the Second Visa Applicant to purchase the George Street Property with no mention of any other party. Similarly, the loan offer from Westpac Bank dated 20 March 2012 and the associated mortgage documentation only refers to the Second Visa Applicant as the party to the transaction and neither the Applicant nor her spouse, nor anyone else, are listed as guarantors.

2. The loan application provided to Westpac Bank only lists the Second Visa Applicant as the borrower who states she had been employed full time as a programmer by Shanghai Weisheng Trading Co Ltd since 1 May 2010 and her annual gross income before tax was $55,005. The loan application also reports assets of $180,500 including cash of $112,500. The Tribunal finds the Second Visa Applicant was financially independent at the time she applied for the loan because of the information she included on the Westpac Bank loan application.

The Declaration of Trust

1. A document titled Declaration of Trust dated 16 February 2017 between Zhenfei Gu, the Second Visa Applicant, as Trustee, and Yuming Gu and Weiping Shen, the Applicant, was provided to the department as evidence of the asserted trust arrangement between the parties (the Declaration of Trust). The terms of the Declaration of Trust are reproduced below:

INTRODUCTION

A.    At the request of the Purchasers, the Trustee have agreed to:

(a)  Enter into a Contract to purchase from Hui Xiao & Xike Hu the property known as 1503/710-722 George Street, Sydney in the State of New South Wales being the land in Certificate of Title Folio Identifier 137/SP 84868 (property).

(b) Complete the Contract and on completion to become registered as a proprietor of the property under the provisions of the Real Property Act 1900 (NSW).

B. The purchase of property was made in the name of the Trustee who will be the registered proprietor of the Property under the provisions of the Real Property Act 1900 (NSW).

C.   The whole of the purchase price for the property is being provided by the Purchasers jointly and the purchase is being made by the Trustee as the registered proprietor of the Property, for the Purchasers jointly.

D.   The purpose of the Trustee's involvement in the purchase of the Property is to assist the Purchaser's in securing finance to purchase the whole 'of the Property.

E.    The Purchaser's shall be responsible for paying for all of the costs (not limited to principal amount and pay interest) which the Trustee financed from other financial institutions for the purchase of property.

F.    The parties have agreed to enter into this Deed.

IT IS AGREED

1.    The Trustee acknowledges that:

(a)  it is purchasing the property as nominee for the Purchasers;

(b)  on completion of the purchase the Purchasers will be beneficially entitled to the property; and

(c) the Purchasers will be entitled to be registered as proprietors of the property as joint tenants under the provisions of the Real Property Act 1900 (NSW).

2.    At the request of the Purchasers, the Trustee will execute a Transfer and other documents required to have the Purchasers or any assignee from them registered as proprietors of their respective interests in the property.

3.    The Purchasers for themselves, their executors, administrators and assigns jointly and severally will indemnify the Trustee from aid against all liability which the Trustee incurs or may have already incurred because of having purchased the property in its name. In particular, the Purchasers will punctually pay:

(a)  all rates, taxes and other outgoings for the property; and

(b)  the principal, interest and all other money due and payable under any mortgage or other charge which at the request of the Purchasers the Trustee executes over the property.

1. The Tribunal observes the Declaration of Trust is written in future tense, that is, it appears to have been drafted as though the purchase of the George Street Property is contemplated rather than had already occurred. For example, Introduction A says: ‘the trustee have [sic – has] agreed to’ and Introduction D which says: ‘The purpose of the Trustee's involvement in the purchase of the Property is to assist …’. Paragraph 1(a) says: ‘The Trustee acknowledges that it is purchasing the property as nominee for the Purchasers’. Curiously, Introduction B says: ‘The purchase of property was made in the name of the Trustee …’ which is past tense. The Applicant was asked about the drafting of the document in future tense and it became apparent tense does not feature in the Mandarin language, so she was unable to assist the Tribunal. Nonetheless, the Tribunal must deal with the evidence before it.

2. The Declaration of Trust appears to record the asserted intentions of the parties regarding beneficial ownership of the George Street Property, that is, the Second Visa Applicant entered into the Contract and applied for the loan on behalf of her parents, the Applicant and her husband.

Does the Declaration of Trust satisfy reg 1.11A requirements?

1. Ownership of an asset includes ‘beneficial ownership’. Regulation 1.11A of the Migration Regulations 1994 (Cth) (the Regulations) prescribes the evidentiary requirements to be met for an asset, which is subject to beneficial ownership arrangements, to be included in the asset calculation for Business visa purposes. Ownership by an Applicant, or the Applicant’s spouse or de facto partner, of an asset includes beneficial ownership only if the beneficial ownership is evidenced in accordance with reg 1.11A(2).

1. Regulation 1.11A(2) provides (emphasis added):

   (2)    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.

1. The purpose of reg 1.11A was described in Yu v MIMIA (2004) 140 FCR 126 at [35] as follows:

   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. Claims to beneficial ownership are easily made. There may often be little or no documentation of the contract or other arrangement which is said to create the ownership interest, leaving the decision-maker to determine the veracity of a claim based upon an oral arrangement with no objective evidence to assist that determination. And when documentation is provided it may be difficult to assess its authenticity. In the context of migration and visa applications there are added difficulties for the decision-maker in verifying documents put forward, since they may be in a foreign language or reflect aspects of a foreign legal system. It is these difficulties which the regulation addresses.

2. The copy of the Declaration of Trust provided by the Applicant does not record any form of stamping or registration and as such does not appear to satisfy reg 1.11A(2). At the hearing the Applicant was requested to provide a copy of the Declaration of Trust showing it had been stamped or registered as required by reg 1.11A(2). The Applicant did not do that. The Representative’s submission of 7 August 2020 included a reference to this request by the Tribunal however this was not dealt with in the submission. Relevantly, beneficial ownership can only be evidenced from the date of registration or stamping, pursuant to reg 1.11A(3).

3. Accordingly, while the Applicant’s claims of beneficial ownership in the George Street Property in the context of trust law might be correct, and the Tribunal expresses no opinion about that, for the purpose of satisfying the visa criteria under Part 890 of Schedule 2 to the Regulations, the Applicant still needs to meet the evidentiary requirements in reg 1.11A(2). This requires the trust instrument, that is, the Declaration of Trust, be stamped or registered by the appropriate authority. The location of the property in question is NSW. Therefore, in order to satisfy reg 1.11A a trust document, such as the Declaration of Trust, needs to be registered with the NSW Land Registry Services.

4. The Tribunal finds the only acceptable documentary evidence of the ownership of the George Street Property is the Contract because the copy of the Declaration of Trust provided to the Tribunal has not been stamped or registered as required by reg 1.11A(2).

1. Accordingly, the Declaration of Trust cannot be used to evidence the Applicant’s beneficial ownership of the George Street Property and so that property cannot be included in the calculation of the net value of the business and personal assets in Australia for the purposes of cl.890.215 as the Contract is only in the name of the Second Visa Applicant the Tribunal finds she is the legal owner of that property.

Does reg 1.11A(4) apply?

1. Regulation 1.11A(4) provides an exception to meeting the evidentiary requirements in reg 1.11A(2) if the person who has legal ownership of the asset, in this case the Second Visa Applicant, in relation to which the Applicant claims 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.

1. The daughter is a secondary visa Applicant and satisfies reg 1.11A(4)(b), however the application of (a) and (c) still needs to be considered. For the purposes of reg 1.11A(4)(a) ‘dependent child’ is defined in reg 1.03 and means ‘the child or step-child of the person (other than a child or step-child who is engaged to be married or has a spouse or de facto partner), being a child or step-child who has not turned 18; or has turned 18 and is dependent on that person, or is incapacitated for work due to the total or partial loss of the child's or step-child's bodily or mental functions’. ‘Dependent’ has the meaning given by reg 1.05A which is limited to financial dependency. The Tribunal has already found the Second Visa Applicant was not financially dependent on her parents at the time the George Street Property was acquired, see paragraph [‎18]. As reg 1.11A(4)(a) is not met there is no requirement to consider reg 1.11A(4)(c).

Has a resulting trust been created?

1. The Applicant was asked at the hearing why the property was purchased in the name of her daughter. She said the real estate agent who sold the George Street Property to them told her she and her husband were not permitted to purchase property in Australia as they were non-residents. The Applicant was then asked if she had obtained a legal opinion confirming the advice from the real estate agent. She said she spoke with a lawyer in China who was familiar with Australian property law. The Tribunal is at a loss to understand why the Applicant and her husband would have been precluded from owing Australian property just because they were non-residents and why they accepted the advice of a real estate agent and a non-resident lawyer rather than a suitably qualified Australian lawyer. In any event the George Street Property was purchased only in the name of the Second Visa Applicant.

2. The Representative’s undated submission received by the Tribunal on or about 2 July 2020 seeks to make the case for a resulting trust to exist, that is, the Second Visa Applicant holds the George Street Property on trust for her parents, the Applicant and her husband, because the parents provided the initial deposit and since then have paid all costs including loan repayments. Said another way, the Representative asserts the Applicant and her husband have always had beneficial ownership of the George Street Property because they provided the means, in conjunction with the Loan from Westpac, by which it was acquired.

1. Even if the Representative’s assertion about a resulting trust is so, about which the Tribunal makes no finding, it does not relieve the Applicant from satisfying the requirements under migration law, in this case the evidentiary requirement in reg 1.11A, which the Tribunal has already found were not met.

2. Resulting trusts arise where property is disposed of in circumstances in which a provider of property does not intend to benefit the recipient. The recipient holds the property on trust for the provider. The property is said to ‘result back’ to the provider. This does not mean that the equitable interest in the property returns to the provider. When the legal interest in the property is transferred to the recipient a new equitable interest is created in favour of the provider. In the case of property transfers made within certain family relationships, such as by a husband to wife, or a parent to child, the presumption of resulting trust is not applied (emphasis added). Instead, the presumption is that transferor intended to advance (or make a gift of) the property to the transferee.[6] It is not the task of the Tribunal to determine whether a resulting trust or the presumption of advancement applies in this case.

   [6] Bryan, M., Vann, V., & Barkehall Thomas, S. (2017). Resulting trusts. In Equity and Trusts in Australia (pp. 353-367). Cambridge: Cambridge University Press. doi:10.1017/9781316758540.023

3. Given the findings above, the Tribunal is not satisfied cl.890.215 is met because the Tribunal is not satisfied the applicant has provided evidence of her beneficial ownership of the George Street Property as required by reg 1.11A(2) and so that asset cannot be included in the asset calculation for cl.890.215. Without the net equity in the George Street Property the net value of the business and personal assets in Australia of the Applicant, or the Applicant’s spouse or de facto partner or their assets combined throughout the period of 12 months immediately before the application is made and at the time of application, were not at least A$250,000. As one of the essential requirements for the visa is not met, the decision under review must be affirmed.

DECISION

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