Trustee for Saanjh Unit Trust v Minister for Immigration, Citizenship and Multicultural Affairs
[2023] FedCFamC2G 597
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Trustee for Saanjh Unit Trust v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FedCFamC2G 597
File number(s): BRG 323 of 2022 Judgment of: JUDGE EGAN Date of judgment: 6 July 2023 Catchwords: MIGRATION LAW – Finding by Tribunal that it was not satisfied that the applicant had the financial viability to continue to employ a nominee for at least a two (2) year period – whether such decision was irrational or illogical – where applicant failed to provide evidence to the Tribunal that it had fully repaid a tax debt out of its own funds – no jurisdictional error established – application dismissed. Legislation: Migration Regulations 1994 (Cth) r. 5.19. Cases cited: BSE17 v Minister for Home Affairs [2018] FCA 1926.
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611.
Division: Division 2 General Federal Law Number of paragraphs: 18 Date of last submission/s: 3 July 2023 Date of hearing: 3 July 2023 Place: Brisbane Solicitor for the Applicant: Guru Legal Solicitor for the Respondent: Sparke Helmore ORDERS
BRG 323 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: THE TRUSTEE FOR SAANJH UNIT TRUST
Applicant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP AND MULTICULTURAL AFFAIRS
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
order made by:
JUDGE EGAN
DATE OF ORDER:
7 July 2023
IT IS ORDERED THAT:
1.The Originating Application for Review filed on 1 August 2022 be dismissed.
2.The Applicant pay the First Respondent’s costs of and incidental to the application for review fixed in the amount of $8,371.00.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE EGAN
Introduction
On 30 January 2018, the applicant company sought approval for the nomination of the position of restaurant manager pursuant to the provisions of r. 5.19 of the Migration Regulations 1994 (Cth) (‘the Regulations’).
On 24 June 2019, a delegate of the Minister rejected the applicant’s application under r. 5.19(4)(h)(ii)(D), on the ground that the tasks to be performed in the position nominated did not correspond with the tasks which were required to be carried out.
The applicant sought review of the decision of the delegate by the Administrative Appeals Tribunal (the Tribunal).
On 27 June 2022, the Tribunal affirmed the decision of the delegate on the ground that the Tribunal did not consider that the nominee employee would be employed by the Applicant on a full-time basis in the nominated position for at least a 2 year period as required under r. 5.19(4)(d)(i).
On 1 August 2022, the applicant filed an Application for Review of the decision of the Tribunal.
Grounds of Review
The Application for Review filed on 1 August 2022 had the following ground of review, which ground was relied upon by the applicant at the hearing before the Court:
1.It was not open for the Second Respondent to conclude that the Applicant would not meet the requirements of Regulation 5.19 (4)(i) based on unsubstantiated assumptions and conjectures in relation to the Applicant's financial circumstances. The Second Respondent praises the Applicant for discharging an outstanding debt to the Australian Tax Office but at the same time made an unsubstantiated assumption that the debt was discharged from unknown funds. The Second Respondent further assumed the source of funds to be a loan which would place severe pressure on business viability as the "loan" could be called in at any time, without a to comment or supporting evidence of how it arrived at this assumption.
Particulars
At paragraph 38 of the decision record, the Second Respondent stated that:
The Tribunal has considered the repayments of the debt to the ATO which stood at end of December 2021 at some $71,049. While it is laudable that these repayments were made, the source of funds to make the repayments is not clear. The Tribunal has examined the bank statements provided to establish if these payments were made out of operating funds of the business and although two withdrawals could match two of the payments made to the ATO on or about the relevant dates they are not listed as repayments to the A TO or similar that would identify them. There is also scant indication in the projected financial statements for FY 2022 that these payments to the ATO were made from operating funds of the business. It is noted that the director has a well-paying position with a solar firm however there is scant information on the encumbrances or otherwise that he has over his personal finances and as such the Tribunal can give little weight to this information. The only reasonable conclusion is that if the funds were not sourced from the business then they must have been borrowed as a loan from an unknown source at unknown terms and conditions.
Further, at paragraph 57, the Second Respondent stated that:
The Tribunal drew the applicant's attention to an outstanding debt owed to the Australian Tax Office and gives some weight to the fact the applicant commenced repaying the total debt of some $71,049 within the last six months however it gives more weight to the fact that the source of these funds is undisclosed, and it is reasonable to find they are a loan from an unknown source, with unknown terms and conditions, which could call this loan in at any time and place severe pressure on the businesses viability. Taking all these matters into account the Tribunal cannot be satisfied that the employee will be employed on a full-time basis in the position for at least 2 years.
In its submissions relied upon at the hearing, it was asserted on behalf of the applicant that the decision of the Tribunal was one which no rational or logical decision maker could arrive at based upon the evidence before it, and that the decision was illogical. Reliance was placed upon the decision of the High Court in Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611. It is of note that at [130] of the reasons of Crennan and Bell JJ in SZMDS that their Honours held that when one makes an allegation of illogicality or irrationality, it must be demonstrated that the decision under review was one which was clearly unjust, or arbitrary, or capricious, or unreasonable in the sense that the state of satisfaction mandated by the statute imported a requirement that the opinion as to the state of satisfaction must be one that could be formed by a reasonable person. It was further held that a court should be slow, although not unwilling, to interfere in an appropriate case.
Paragraph 19 of the applicant’s written submissions was as follows:
We submit that the Second Respondent’s decision is one at which no rational or logical decision maker could arrive based on the same evidence. It was not open to the Second Respondent to conclude that the ATO debt payments were sourced from funds from a loan as it did not offer any evidence or reasoning on how it arrived at that conclusion, other than to state that the payments did not come from the operating funds. This is not correct as the evidence has indicated.
As was correctly submitted on behalf of the first respondent, the Tribunal had clearly flagged to the applicant in its correspondence of 7 June 2022 that it was concerned that the applicant was not financially viable so as to ensure that the nominee for the position would remain employed by the applicant for at least a two (2) year period. The letter sent to the applicant relevantly provided as follows: [1]
[1] Court Book (CB) pp. 395 - 396
In conducting the review, we are required by the Migration Act 1958 to invite The Trustee for Saanjh Unit Trust to comment on or respond to certain information which we consider would, subject to any comments or response it makes, be the reason, or a part of the reason, for affirming the decision under review.
Please note, however, that we have not made up our mind about the information.
Financial statements show that for the financial year that ended on 30 June 2021, the ATO ICA Running account balance is $40,751, the GST Control Account is $10,016 and these amounts have increased respectively from $24,413 and $8,305 for the financial year that ended on 30 June 2020.
This information is relevant to the review because it is a requirement of r.5.19 (4)(d)(i) that a nominated employee will be employed on a full-time basis in the position for at least 2 years.
If we rely on this information in making our decision, we may find that The Trustee for Saanjh Unit Trust is not financially viable, and it cannot ensure that the nominated employee will be employed on a full-time basis in the position for at least 2 years. If we make this finding, it may be the reason, or part of the reason, for affirming the decision under review.
The Trustee for Saanjh Unit Trust is invited to give comments on or respond to the above information in writing. You may wish to provide information such as a current copy of the Integrated Client Account to the present day from the Australian Taxation Office portal.
The comments or response should be received by 21 June 2022. If the comments or response are in a language other than English, they must be accompanied by an English translation from an accredited translator. If The Trustee for Saanjh Unit Trust cannot provide written comments or response by 21 June 2022, it may ask us for an extension of time in which to provide the comments or response. If The Trustee for Saanjh Unit Trust makes such a request, it must be received by us by 21 June 2022 and The Trustee for Saanjh Unit Trust must state the reason why the extension of time is required. We will carefully consider any request for an extension of time and will advise whether or not the extension has been granted.
In the material provided in response by the firm ‘Migration Guru’ on behalf of the applicant, in its letter dated 20 June 2022, it was asserted that the applicant had paid off the tax owed to the Australian Taxation Office, and that there was no balance owing to it. It was further asserted that the accountant for the applicant had predicted that substantial net profits would be earned by the business in the 2022 and 2023 financial years.
At the hearing before the Court, the lawyer for the applicant was unable to point to any evidence which demonstrated that the applicant business had paid off its tax debt out of the applicant’s own funds. The point made by the Tribunal in its reasons was that there was no evidence before it to enable it to make a finding that the applicant had satisfied the tax debt out of its own funds. The Tribunal had carefully considered the financial position of the company at [17] – [33] of its reasons. At [34] of its reasons, the Tribunal appropriately noted that the question before it was whether it was satisfied that the nominee for the position would be employed on a full-time basis for at least a 2 year period. At [38] of its reasons, the Tribunal held that on the evidence before it, the funds used to pay off the tax debt had not been sourced from the business, and that as such, there was a loan due for repayment to someone or some entity on unknown terms and conditions. Bank statements of the applicant provided to the Tribunal did not evidence payments to the ATO. When it was submitted at the hearing before the Court that the tax payments had been made by a credit held by the applicant instead of by direct bank transfer, the lawyer for the applicant was unable to point to any evidence to substantiate such submission. It would have been easy to substantiate the making of payments by the use of a credit card by providing credit card statements to the Tribunal, but that was not done. The Tribunal held as follows:
38.The Tribunal has considered the repayments of the debt to the ATO which stood at end of December 2021 at some $71,049. While it is laudable that these repayments were made, the source of funds to make the repayments is not clear. The Tribunal has examined the bank statements provided to establish if these payments were made out of operating funds of the business and although two withdrawals could match two of the payments made to the ATO on or about the relevant dates they are not listed as repayments to the ATO or similar that would identify them. There is also scant indication in the projected financial statements for FY 2022 that these payments to the ATO were made from operating funds of the business. It is noted that the director has a well-paying position with a solar firm however there is scant information on the encumbrances or otherwise that he has over his personal finances and as such the Tribunal can give little weight to this information. The only reasonable conclusion is that if the funds were not sourced from the business then they must have been borrowed as a loan from an unknown source at unknown terms and conditions.
At [39] – [49] of its reasons, the Tribunal considered the forecast earnings submitted to the Tribunal by ‘Migration Guru’ and the other material provided to it by the letter of 20 June 2022. Having considered all of that material, the Tribunal made reasoned findings at [50] – [58] of its reasons as follows:
50.Taking all this into account the Tribunal finds that the FY 2022 forecast financial figures can be given limited weight.
51.The Tribunal notes that the loss in FY 2021 was originally attributed by the applicant in the hearing to the COVID-19 restrictions which caused it to close in house dining however in later submissions it is attributed to the accelerated depreciation of $113,960. There is an inference that since the FY 2021 loss of $68,766 is due to the accelerated depreciation it can be disregarded, and the Tribunal will consider this argument.
52.The Tribunal noted the Australian Tax Office advice regarding depreciation calculations:
Methods of working out decline in value - You generally have the choice of two methods to work out the decline in value of a depreciating asset. These are: the prime cost method or the diminishing value method. Both these methods are based on a depreciating asset's effective life.
53.The Tribunal considers that these depreciated assets are essential to a business and will have to be replaced when their effective life is over. As such, the business is allowed a depreciation deduction, each year to ensure funds are set aside so the business assets can be replaced when their effective life is concluded. The Tribunal does not accept the premise that depreciation can be included as expenditure and used by the business to lawfully minimise their tax, but that depreciation is then excluded as expenditure and used by the business to seek a migration outcome. The Tribunal considers if a business is not profitable and is using the depreciation reserves to cover this loss, then it will not have those reserves to replace essential business assets when their effective life ends. Without essential assets, a business cannot continue to operate so it is reasonable that the Tribunal consider the profitability with depreciation included. It is also noted that regardless of whether the depreciation was taken in FY 2021 or in FY 2022 or spread over both it would have reduced the profit in the relevant years
54.The Tribunal found the directors evidence shifted on important issues; initially in January 2018 he had a "desperate need' to fill the full-time position of Restaurant Manager, but the nominee did not work at all for the business during 2018 and 2019 and only commenced full time work in July 2020 some two and half years later. The loss in FY 2021 was initially attributed by the director to COVID-19 although the revenue figures for that year were better than for the previous two years and it was only later that the loss was attributed to accelerated depreciation.
55.The Tribunal gives some weight to the fact that the applicant made a profit in FY 2019 and FY 2020 but notes the loss of $68,777 in FY 2021. Despite the applicant claiming this is due firstly to COVID-19 and later to accelerated depreciation, the Tribunal gives significant weight to this loss because depreciation is a legitimate expense item and would have been deducted at some point in time. The Tribunal gives some limited weight to the rent abatement and reduction in royalty payments offered to March 2024 by the Franchisor and which were included in the forecast profits for FY 2022 and FY 2023, but this is countered by the fact there is scant evidence to support the income/revenue figures provided by the applicant for these forecasts because the documents provided such as BAS statements and generated documents are inconsistent and bank statements for one quarter of FY 2022 are inconclusive.
56.There is a concerning anomaly at the heart of the Franchisors offer of rent abatement and royalty reduction because the revenue in FY 2021 was greater than for the previous two years and on the figures provided to the Tribunal it is the accelerated depreciation that caused the loss which begs the question as to what information the Franchisor is privy to that has motivated them to offer significant financial support to the franchisee up to March 2024, worthy as that support is. The Tribunal places no weight on this observation.
57.The Tribunal drew the applicant's attention to an outstanding debt owed to the Australian Tax Office and gives some weight to the fact the applicant commenced repaying the total debt of some $71,049 within the last six months however it gives more weight to the fact that the source of these funds is undisclosed, and it is reasonable to find they are a loan from an unknown source, with unknown terms and conditions, which could call this loan in at any time and place severe pressure on the businesses viability. Taking all these matters into account the Tribunal cannot be satisfied that the employee will be employed on a full-time basis in the position for at least 2 years
58. Accordingly, the requirement in reg 5.19(4)(d)(i) is not met.
The Court finds that the reasoning of the Tribunal was not illogical or irrational. It was a decision which another reasonable decision maker could have arrived at. As was said by Crennan and Bell JJ in SZMDS at [135]:
135. On the probative evidence before the Tribunal, a logical or rational decision maker could have come to the same conclusion as the Tribunal. Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn. None of these applied here. It could not be said that the reasons under consideration were unintelligible or that there was an absence of logical connection between the evidence as a whole and the reasons for the decision. Nor could it be said that there was no probative material which contradicted the first respondent's claims. There was. The Tribunal did not believe the first respondent's claim that he had engaged in the "practice of homosexuality" in the UAE and accordingly it was not satisfied that he feared persecution if he returned to Pakistan.
The Tribunal properly weighed up the evidence and found that it was not satisfied that the applicant had demonstrated that it had the financial viability to continue to employ the nominee for at least a two year period. That was a finding which was open to the Tribunal.
The Tribunal was entitled to infer that the repayment of the tax debt was not made from funds generated by the applicant’s business, and that there was a resulting undisclosed loan by a third party to the applicant. The financial documents placed before the Tribunal founded the evidentiary basis for the making of such inference. There was substantial evidence before the Tribunal allowing it to make such inference. Even a skerrick would have sufficed. [2]
[2] BSE17 v Minister for Home Affairs [2018] FCA 1926 at [33] per Moshinsky J
The Applicant has failed to establish jurisdictional error on the part of the Tribunal.
The Application for Review is without merit and is dismissed.
The Court will hear the parties as to costs.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 6 July 2023
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