SUGLANI BROTHER PTY LTD (Migration)

SUGLANI BROTHER PTY LTD (Migration) [2023] AATA 1504 (25 May 2023)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  SUGLANI BROTHER PTY LTD
REPRESENTATIVE:  Ms Desislava Hristova (MARN: 0401223)
CASE NUMBER:  1925395
HOME AFFAIRS REFERENCE(S):          BCC2018/839818
MEMBER:Amanda Mendes Da Costa
DATE:25 May 2023
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal affirms the decision under review.
Statement made on 25 May 2023 at 9.21am

CATCHWORDS
MIGRATION – application for approval of nomination of position – direct entry nomination stream – retail manager – duties of position closer to supervisor than manager – financial capacity to employ nominee – documentary and oral evidence from director and nominee – financial losses in last three years – COVID restrictions, franchise fee and rent – director’s decision not to renew franchise agreement and plans for new business in new premises – debt to tax office – decision under review affirmed

LEGISLATION
Migration Regulations 1994 (Cth), r 5.19(4)(d), (h)(i), (ii)

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Home Affairs on 21 August 2019 to reject the applicant’s application for approval of the nomination of a position in Australia under reg 5.19 of the Migration Regulations 1994 (Cth) (the Regulations).
The applicant applied for approval on 21 February 2018. The requirements for the approval of the nomination of a position in Australia are found in reg 5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination stream (reg 5.19(3)) and a Direct Entry nomination stream (reg 5.19(4)). If the application is made in accordance with reg 5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: reg 5.19(5).
In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Direct Entry nomination stream.
The delegate refused the application on the basis the applicant’s nomination did not satisfy reg 5.19(4)(h)(i) and (ii) of the Regulations because the duties of the nominated position are more closely related to the tasks of a Retail Supervisor (ANZSCO 621511) than a Retail Manager (General) (ANZSCO 142111).
Via an internet-enabled audio-visual platform, Mr Harprit Singh Sangar Shuglani Ram (Mr Harprit Singh) the director of the company, appeared for the applicant before the Tribunal on 20 April 2023 to give evidence and present arguments. The Tribunal also heard evidence from the nominee (Mr Sarvjit Singh).
The Tribunal determined it was reasonable to hold the hearing by video, having regard to the nature of this matter and the individual circumstances of the applicant/s. The Tribunal also had regard to the Tribunal’s objective of providing a mechanism of review that is fair, just, economical and quick, and the delay to the matter if the hearing was not be conducted by video. The Tribunal was satisfied that the applicant, representative and the Tribunal could satisfactorily see, hear and understand each other throughout the hearing. The Tribunal is satisfied that the applicant was given a fair opportunity to give evidence and present arguments to the Tribunal.
At the commencement of the Tribunal hearing, the Tribunal explained to the applicant the determinative issues before the Tribunal, the Tribunal’s role and how the hearing would proceed including that the Tribunal is independent of the Department and is not bound by the delegate’s primary decision. The Tribunal also explained the role of the applicant’s representative during the hearing. The Tribunal informed the applicant that it would seek submissions from both of the applicant and the representative toward the end of the Tribunal hearing on any matter they considered relevant to the applicant’s review.
The applicant was represented in relation to the review.
The documentation provided to the Tribunal for the purpose of the review includes the following:
·Company taxation returns for the financial years ended 30 June 2019, 2020 and 2021.
·ASIC Current and Historical Company Extract.
·Letter, DuBar Business Services, dated 29 October 2019.
·ABN historical details for ABN 45615813888.
·ASIC Current and Historical Company Extract extracted 20 October 2022.
·Franchise agreement, Michel’s Patisserie.
·Financial statements for the years ended 30 June 2020, 30 June 2021 and 30 June 2022.
·Profit and Loss Statement for the period July 2022 to September 2022.
·Variation of lease agreement and letter dated 21 October 2022 regarding leasing arrangements for the business property.
·Organisational chart.
·Salary survey documents.
·Photographs of menu items and the nominee’s work.
·Employment agreement dated 16 February 2018.
·Further offer of employment dated 27 October 2022.
·Product list for Michel’s Patisserie.
·Position description.
·Accountant’s letter, Chris DuBar, dated29 October 2019.
·Australian Community Media invoices.
·Regional Certifying Body Advice dated 13 November 2019.
·Australian Bureau of Statistics information for Retail Managers (ANZSCO 1421).
·Commercial lease for Shop 1, 99-101 Horton Street, Port Macquarie dated 15 February 2023.
·Statement of salary payments to employees.
The Tribunal has considered the information in the Departmental and Tribunal files in making its decision.
For the following reasons, the Tribunal has decided to affirm the decision under review.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in reg 5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.
Term of employment of the visa holder: reg 5.19(4)(d)
Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years full time, and the terms and conditions of that employment do not expressly exclude the possibility of an extension.
The Tribunal notes that at the time the nomination application was lodged, the applicant was a franchisee, operating a cake shop and café as one of the Michel’s stores. The applicant’s café was located at Shop 45, Port Central Shopping Centre, Port Macquarie, New South Wales. The café provided predominately eat in with some take away food to customers. The menu included cakes, parties, salads, soups, sandwiches, salads and hot and cold drinks.
During the hearing, Mr Singh (who is the director of the applicant company) told the Tribunal that the business initially employed the nominee in 2018 (on a full-time basis) in the position of Retail Manager (General). He further explained that the nominee had continued in this role to date.
Mr Singh explained that the reason for employing a full-time manager was that he wished to devote more time to his wife and young children and the employment of the nominee meant that he was not required to commit himself to the day-to-day operation of the business.
Mr Singh further explained that whilst the nominee was responsible for the day-to-day supervision and management of staff, he was responsible for maintaining payroll records, compiling information for business activity statements, taxation matters, rental payments, salary payments, overall financial management of the business. Mr Singh said the nominee consulted him in relation to the hiring and disciplining of staff and any decision to terminate their employment. This evidence was confirmed by the nominee.
Mr Singh told the Tribunal that in January 2023 he decided not to renew the business’s lease agreement with the Port Central Shopping Centre, due to the high rental for the business premises. He also noted that during the Covid-19 pandemic in 2010 and 2021 the landlord had not been prepared to reduce the rent, even when there were restrictions place on the opening hours for the business by the NSW government.
Mr Singh further explained that he had also decided not to renew the business’s franchise agreement with Michel’s Patisserie and had signed a new rental agreement for another business premises in the main street of Port Macquarie which was not located in the Port central Shopping Centre. He said that the café in the Shopping centre had ceased trading in late January 2023 and would shortly open at its new premises after renovation works had been completed. Although he had anticipated opening the new café before the date of the Tribunal hearing, delays to the construction and decorating work meant that the café had been unable to open by now and he anticipated that the new café would commence trading in the next couple of weeks.
Mr Singh told the Tribunal that the nominee would continue to be employed in the new café in the same role as previously undertaken at the premises in the Port Central Shopping Centre.
The Tribunal discussed with Mr Harprit Singh its concerns about the financial position of the business as shown in the financial statements which indicate that in the financial year 2020 the business generated a total income of $309,249.20 with total expenses of $376,062.26 and therefore incurred a loss of $66,813.06; in the 2021 financial year the business generated total income $352,660.03 with total expenses of $408,568.74 and therefore incurred a loss of $55,908.71; and in the 2022 financial year generated a total income of $309,338.46 with total expenses of $481,462.01 and therefore incurred a loss of $172,123.55.
In response, Mr Singh acknowledged the losses made by the business during the last three financial years but pointed out that it had been paying a substantial franchise fee each year ($28,362.54 in 2020; $30,788.27 in 2021; and $33,335.01 in 2022). He further noted that the rental payments for the previous business premises were $105,634.72 in 2020; 4109,873.19 in 2021; and $159,947.28 in 2020. Mr Singh explained that the rental payments for the previous premises amounted to approximately $3,500.00 per week and in contrast, the business would only be paying 41,000.00 plus outgoings for the new premises. He further explained that there would be no franchise payments required for the new café and that this would save the business more than $30,000.00 each year. He told the Tribunal that he considered the business would now be able to make a profit in its new premises because the applicant would save in excess of $100,000 each year with franchise and increased rental payments to be made.
The Tribunal notes that the information in the commercial lease (dated 15 February 2023) is consistent with Mr Harprit Singh’s evidence in that it show that the rent for the new premises is $44,500.00 per annum.
The Tribunal further notes that following the hearing the applicant provided the Tribunal with a copy of an ATO Payment Plan for the business which shows that as of 24 April 2023 the applicant has an outstanding debt to the ATO of $173,187.75 and has been making weekly repayments of $500.00 since 14 September 2022. The total figure for repayment given in the Payment Plan (including interest) is $203,039.16.
Following the hearing, the applicant provided two receipts for payments of $12,237.50[1] to Raine and Home Commercial Trust and $5,502.64[2] for hospitality equipment, although the latter receipt contains a note that the payment may have failed. It also provided a receipt from Hunter Premium Funding which shows a loan amount of $3,096.06 to the applicant with a total repayment amount of $3,481.46. The Tribunal notes that these receipts are not dated.
[1] Receipt number N221635936800.
[2] Receipt number N242636466636.
Mr Chris DuBar is the applicant’s Bookkeeper. In his letter dated 24 April 2023 he states that:
·Due to the severe impact of the pandemic on the financial performance of the business, the decision was taken to downscale and relocate to smaller premises in order to operate.
·On 21 January 2023 the business ceased trading in its original premises and took up a new lease for alternate premises at Shop1, 99-101 Horton Street, Port Macquarie.
·The fit out of the premises has been taking place since then at Mr Singh’s personal expenses and the opening of the new café is anticipated to occur when he has taken delivery of a refrigerator which has been on order.
·Upon commencement of trade, some of the staff previously employed will be employed in the new café.
·Trade projections for the business for the next three years are that in 2023-2024 it will generate an income of $432,000 with total expenses of $239,600 and a net profit of $19,600; in 2024-2025 the business will generate an income of $468,000 with total expenses of $248,000 and a net profit of $37,200; and in 2025-2026, the business will generate an income of $486,000 with total expenses of $252,500 and a net profit of $40,800.
The Tribunal notes that Mr DuBar makes no reference to the applicant’s outstanding debt to the ATO.
The Tribunal acknowledges that the business was adversely affected by the Covi-19 pandemic and that until recently it was incurring significant expenses in rental and franchise payments. The Tribunal accepts that the business’s rental payments will be reduced in its new premises and that it will no longer be paying a franchise fee to Michel’s Patisserie. However, the Tribunal is concerned that the evidence before it does not show that the applicant is yet to commence trading in its new premises, and that the business has a significant outstanding debt to the ATO. It further notes that the business has not been trading or generating income since January 2023.
Whilst the Tribunal acknowledges that the applicant has employed the nominee in the nominated position since, 2018, it is not satisfied that the current financial position of the business supports the proposition that it has the financial capacity to employ him in the nominated position for at least two year on a full-time basis.
Accordingly, the requirement in reg 5.19(4)(d) is not met.
Based on the findings above, the Tribunal is not satisfied that the applicant meets the requirements of reg 5.19 for approval of the nomination of the position in Australia.
DECISION
The Tribunal affirms the decision under review.
Amanda Mendes Da Costa
Member

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

[2023] AATA 1504

25 May 2023

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction