Wanniarachchi (Migration)

Case •

[2018] AATA 5974

•

26 September 2018

Wanniarachchi (Migration) [2018] AATA 5974 (26 September 2018)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Lalindra Wanniarachchi
Ms Senali Nichola Wanniarachchi
Ms Thiyasha Vithika Wanniarachchi

CASE NUMBER:  1604317

DIBP REFERENCE(S):  BCC2015/630167 BCC2015/630892

MEMBER:Denise Connolly

DATE:26 September 2018

PLACE OF DECISION:  Sydney

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

Statement made on 26 September 2018 at 11:16am

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) – ownership interest in main business for two years before application – continued interest at time of tribunal’s decision – unsecured loan to related company cannot be claimed as business asset – relationship between companies and their finances – applicant’s day-to-day involvement in company and knowledge of its procedures and finances – residence and existing business in home country, with occasional visits to Australia – members of a family unit – decision under review affirmed

LEGISLATION

Migration Act 1958 (Cth), ss 65, 134(10)(a)

Migration Regulations 1994 (Cth), rr 1.03, 1.11(1)(a), (b), Schedule 2, cls 890.211, 890.212, 890.221, 890.311

CASES

He v Minister for Immigration [2015] FCCA 2915

Lobo v MIMA [2003] FCAFC168

Yao v Minister for Immigration [2016] FCCA 3164

Any references appearing in square brackets indicate that information has been omitted from this decision pursuant to section 378 of the Migration Act 1958 and replaced with generic information.

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 10 March 2016 to refuse to grant the applicants Business Skills (Residence) (Class DF) Subclass 890 visas under s.65 of the Migration Act 1958 (the Act).

  2. The applicants applied for the visas on 26 February 2015. The first named applicant (the applicant), Mr Lalindra Wanniarachchi, claimed to have an ownership interest in 21st Century Property Developments Pty Ltd. The delegate refused to grant the visas on the basis that the applicant did not meet the criteria in cl.890.212 of Schedule 2 to the Migration Regulations 1994 (the Regulations) which requires in part that the assets of the applicant in the business have a net value of at least AUD100,000 and had a net value of at least AUD100,000 throughout the period of 12 months ending immediately before the application was made.  The applicant sought to rely on a loan by 21st Century Property Developments Pty Ltd to a related company, 21st Century Property Constructions Pty Ltd, as an asset of the business. The delegate found it was an unsecured loan and could not be counted towards the applicant’s net business assets. She concluded that the total value of the net business assets as at 31 December 2014 and 31 December 2015 were both below the required level of at least AUD100,000. She was therefore not satisfied that the applicant met the requirements of cl.890.212.

  3. The applicants appeared before the Tribunal on 16 April 2018 and 16 August 2018 to give evidence and present arguments. The Tribunal also received oral evidence from Mr Glen Wambeek, his business partner and Mr Andrew Monckton, the accountant.

  4. The applicants were represented in relation to the review by their registered migration agent. The representative also attended the hearings.

CONSIDERATION OF CLAIMS AND EVIDENCE

  1. The Tribunal will consider whether the applicant had an ownership interest in one or more established main businesses in Australia in the 2 years immediately before the application was made (cl.890.211) and continues to have an interest of that kind at the time of the Tribunal’s decision (cl.890.221). As the visa application was lodged on 26 February 2015, the relevant 2 year period immediately before the application is 26 February 2013 to 25 February 2015. 

  2. For reasons set out below the Tribunal has not considered whether the applicant meets the criteria in cl.890.212 of Schedule 2 to the Regulations.

Relevant law

  1. Clause 890.211 provides in part:

    890.211

    (1)      The applicant has had, and continues to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately before the application is made.

  2. ‘Ownership interest’ is defined r.1.03 and provides that ‘ownership interest’ has the meaning given to it in s.134(10) of the Act as follows:

    "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;

  3. The term ‘main business’ is defined in r.1.11:

1.11      (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 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 AUD 400000;

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 AUD    400 000;

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.

  1. ‘Qualifying business’ is defined in regulation 1.03 as follows:

    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.

  2. Clause 890.212 requires:

    The assets of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:

    a)have a net value of at least AUD100,000; and

    b)had a net value of at least AUD100,000 throughout the period of 12 months ending immediately before the application is made; and

    c)have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.

Background

  1. The applicant has provided to the Tribunal a copy of the delegate’s decision record. It records that when the applicant applied for the Subclass 890 visa it was on the basis of claims in relation to one nominated main business, 21st Century Property Developments Pty Ltd (the main business). The applicant provided evidence of a 30% interest in the main business. 21st Century Property Development Pty Ltd is a subsidiary of 21st Century Group Pty Ltd, an Australian property investment company. The applicant does not claim to have an interest in any other business.

  2. The applicant claimed to have begun his involvement in the business in July 2011. He claimed that in the financial years 2013 and 2014 he held a 30% interest in the business. He claimed to be the business’ senior manager and described the business as specialising in obtaining premier investment sites that meet the requirements of clients. He claimed that, as a senior manager of the business, he was responsible for the development and maintenance of new and existing business relations as a means of improving business associations with the overseas clients. He also claimed he was to introduce the managing director to new referral sources and clients and bring foreign investors to Australia to widen the client base and extend services abroad.

  3. The applicant stated that in 2014 the business held net assets of $505,482. He calculated therefore that his ownership share of those assets was $151,644.60. For the 2013 financial year he claimed that the business had net assets of $499,028 and that his interest was $149,708.40.

  4. The applicant provided a financial statement as at 31 December 2014. The balance sheet records loans as non-current assets with outstanding balances. One of the loans was for $472,903 to 21st Century Property Constructions Pty Ltd. There were two other loans listed.

  5. In January 2016 the delegate sought further information from the applicant in relation to evidence demonstrating he satisfies the requirement that his net assets in the business in Australia were at least AUD100,000 in the 12 months preceding the application. She formed the view that the nominated period was 12 months from 31 December 2013 to 31 December 2014. She asked for evidence to support the claim that there were non-current assets labelled “Loan - 21st Century Property Constructions Pty Ltd” and “Loan - 21st Century Property Investments Unit Trust”. She sought the loan agreement between the companies and bank statements showing transfers of funds from the business account to the recipient of the loan.

  6. The applicant provided information which suggested that the loan was secured by an unregistered mortgage over a property in New South Wales. The applicant provided a mortgage document for property folio [number] recording the mortgagor as Vernon Glen Wambeek (Director and shareholder of the main business) and the mortgagee of 21st Century Property Developments Pty Ltd.  He also provided a Deed of Loan Agreement dated 30 June 2013 between the main business (the lender) and 21st Century Property Constructions Pty Ltd (the borrower) and Glen Wambeek (the guarantor) indicating the lender had advanced $400,000 to the borrower. It was claimed that to secure the loan a mortgage was taken over Glen Wambeek’s property.

  7. In February 2016 the applicant also advised the Department that his residential address had changed to Sri Lanka.

  8. The delegate records that on 3 March 2016 the Department conducted a title search for Glen Wambeek’s property through the Land and Property Information Division of NSW Department of Finance and Services, and the title search showed there was no mortgage over the property to 21st Century Property Developments Pty Ltd.

  9. The delegate was not satisfied that the loan is secured by a mortgage over the property as claimed.  The delegate explained that the Department holds the position that unsecured loans advanced to third parties cannot be claimed as assets. She explained that, unlike secured loans, where a financial institution will take possession of the title of the assets used as collateral for the loan, unsecured loans are provided without any collateral. She explained that in the case of a failure to meet the terms for repayment, the unsecured creditor may not be able to recover the debt or may only realise a small proportion of their claims. She explained that because of this inherent risk associated with unsecured loans, the Department does not count towards the applicant’s net business assets general obligations that are not collateralised.

  10. The delegate also noted that the applicant has not claimed any loan to the company. She noted that no evidence had been provided regarding the other loans listed in the financial statements as non-current assets. Taking into account the applicant’s shareholding of 30% she found that the applicant’s net business assets as at 31 December 2014 was AUD9,773 and as at 31 December 2015, AUD16,167. She concluded that the total value of net business assets as at 31 December 2014 and 31 December 2015 were both below the required level of at least AUD100,000. She was therefore not satisfied that the applicant met the requirements of cl.890.212.

Hearing on 16 April 2018

  1. On the day of the hearing the applicant provided the following documents:

    ·Written submission from the representative arguing that the Department erred in its interpretation by not considering an unsecured loan as an asset. The representative refers to the case Yao & Ors v Minister for Immigration & Anor (2016) FCCA 3164 where the Court held that the words of the clause are deliberately broad and must be read to attach any number of possible types of asset. It is submitted that it is common practice for companies to express loans as assets in their financial records, including both secured and unsecured loans. The representative referred to the Deed of Loan Agreement and the letter from the accountant explaining that the main business invoiced 21st Century Property Consultants Pty Ltd (sic – the Tribunal assumes this should read 21st Century Property Constructions Pty Ltd) for services rendered as it was not practical for the debt to be paid immediately. Therefore a loan was created which complies with the relevant accounting procedures and regulations. The Deed provided a security by way of an unregistered mortgage and a right to register a caveat on Mr Wambeek’s residential property, and a personal guarantee by Mr Wambeek. It is also submitted that the Department erred in taking the view that, in the case of a failure to pay, the creditor may not be able to recover the debt. It is submitted that the loan was in fact paid.

    ·A Summary of Arguments in which the representative submitted there was no risk of non-repayment because of the relationship between the two companies; Mr Wambeek being the sole Director of both. The submission also refers to the judgement in He v Minister for Immigration & Anor (2015) FCCA 2915 (29 October 2015) in which it was observed that the Department’s policy goes beyond what is expected of cl.890.212. The representative explained that the applicant has sought sponsorship from the NSW Department of Trade and Investment, and the financial statements provided with that application were prepared in accordance with the Australian Accounting Standards for the financial year ending 30 June 2014. Those financial statements included the same loan in question and the sponsorship was granted. This demonstrates that the Department of Trade and Investment accepted the unsecured loan is an asset.

    ·A copy of a Form 949 State/Territory sponsorship: Business Skills class completed by the applicant and the NSW Trade and Investment agency dated 4 June 2015, and evidence from the State Government of Victoria dated 13 October 2014 relating to the grant of a Subclass 163 visa.

    ·Letter from the Director Mr Glen Wambeek stating he is the sole Director of both the main business and 21st Century Property Constructions. He has known the applicant for over 30 years. The applicant bought shares worth $150,000 on 5 April 2012. On 30 June 2013 the main business issued an invoice to the construction arm amounting to $426,650. The construction arm was not in a position to pay the invoice. The loan agreement was contracted between the main business and the construction arm. The two companies are sister companies so there was no need to establish a security on the loan. The applicant was in agreement with this however Mr Wambeek still thought it was better to place his property at Glenmore Park as a security. Taking into account the normal policy on loans, the company’s capacity to pay the loan and the applicant’s belief in the personal guarantee, a mortgage was not registered on the property at Glenmore Park. As a guarantor, Mr Wambeek’s personal assets exceeded $500,000 as at 30 June 2013.

    ·Information showing that the applicant purchased three shares in the main business on 5 April 2012 in the amount of $50,000 each share.

    ·The main business’ Financial Statements for the 2014 financial year showing non-current assets in the amount of $483,430 and other assets in the amount of $350,014. The income for that financial year is $426,650. There are expenses of only $1110 in relation to costs of sales.

  2. At the hearing the Tribunal explained the requirements of the relevant law. It discussed with the applicant the nature of the business, the history of his involvement in the business, the business’ financial records and various other relevant matters. The following is a summary of the oral evidence provided at the hearing.

  3. The Tribunal asked the applicant how he became involved in the business. The applicant indicated he started a business relationship with Mr Wambeek who had been a family friend for 30 years. Mr Wambeek migrated to Australia about 30 years ago. He is the sole Director of the main business. The applicant visited Australia about 10 years ago as the holder of a visitor visa. He wanted to invest in Australia so met with Mr Wambeek to discuss various options.  In 2011 he returned to Australia as the holder of a Subclass 163 visa (a temporary business visa) to join Mr Wambeek in the property business. The Tribunal asked about his intention when he was granted the Subclass 163 visa. He indicated he wanted to be involved in the business with Mr Wambeek. He had bought two properties in Springfield (QLD) from Mr Wambeek before he was granted the Subclass 163 visa.  He used his own funds for the first property and borrowed $550,000 from AIMS to buy the second property. He was and is financially comfortable in Sri Lanka where he has had a successful furniture business.

  4. The Tribunal asked the applicant about his actual involvement in the management of the business. He indicated he first became involved in May 2012 when he invested $150,000 into the business. He transferred $100,000 via a bank in Singapore and paid $50,000 in cash.  He provided a document showing a transfer from Sri Lanka to Singapore, and from Singapore to Australia, of $50,000. He also provided a printout of a deposit into an ANZ bank account of $10,000, and a cash amount of $15,000 into the ANZ account. The Tribunal explained that those documents do not show that the amounts were deposited by the applicant into the business’ bank account. The Tribunal asked the applicant to provide the ANZ bank statements showing the transfer from Singapore to the business in Australia and the relevant deposits into the business account. The Tribunal questioned why he paid his investment in cash. He said he could bring $10,000 in cash when he visited. The Tribunal noted there is a cash deposit of $15,000. He said his friends also brought the money.

  5. The applicant is not a Director of the business; he is just a 30% shareholder. Mr Wambeek holds 70% of the shares. The applicant does not have any interest in the other related businesses.

  6. The Tribunal asked if the applicant has been working for the business. He claimed he has been working continuously for the business. He indicated he is paid wages by the business, about $2000 net on a monthly basis. The Tribunal noted this is a relatively low income given his claim to be a senior manager of the business. The applicant indicated he is also still involved in his furniture manufacturing business in Sri Lanka. He has been living in Sri Lanka since applying for the visa.  He visits Australia from time to time as the holder of a visitor visa. He most recently arrived in Australia on about 10 April 2018. He had been outside Australia for several months. Most of the time he is in Sri Lanka.

  1. The Tribunal asked the applicant whether he is actively involved in the business given that he appears to be living in Sri Lanka. He indicated he looks after the international clients. Since joining the business he has sold three or four properties for the business, all based in Brisbane. He wants to be in Australia and work full-time but he does not have work rights in Australia.

  2. The Tribunal asked the applicant about his work arrangements with the business, what he knows about the business in Australia, and whether he is only a retainer given he is paid on a monthly basis. He indicated he has a contract of employment. He thinks he signed it in 2012 or 2013. The Tribunal asked about its terms. He could not remember.  The Tribunal questioned why he does not know the terms of his own employment. He indicated the terms are that he does the senior management of the main business. He has to look after the clientele and attend meetings with office staff. The Tribunal asked how he does this if he is offshore. He claimed he does this by Skype. The Tribunal asked what sort of meetings he attends. He stated that they are office meetings. The Tribunal asked about the number of staff. He claimed there are ‘nearly four’. When asked for clarification he indicated there are four but some are casual. The Tribunal asked about the staff names. He said there is Chantal, whose surname he could not remember, the PA to the Chair, Mr Wambeek. Brittany does marketing and posts leaflets, and Trinkal the client coordinator looks after projects in Brisbane. The Tribunal asked why the applicant does not know the surnames of the staff, given he described himself as their senior manager and there are so few.  He said for the last few years he has been out of Australia because he does not have work rights. When he was in Australia he was involved in the day to day management. He lost work rights after he made the visa application and he went on a bridging visa. He has however continued to work and receive income. He works from offshore by Skype. He pays tax in Australia but does not know his taxable income.  He is currently in Australia on a Subclass 600 visitor visa.  He is currently working for the business. The Tribunal asked if the applicant has work rights given he is on a visitor visa. He said he is not certain.

  3. The Tribunal asked the applicant about his role and involvement in the business when he joined. He said he attended meetings and helped improve the business by reducing costs. When asked to expand on this evidence, he claimed he introduced marketing, leaflets sent to accountants in Australia to get more clients.

  4. The applicant confirmed $150,000 was transferred from Sri Lanka to Australia for investment in the business (after the hearing he provided bank statements confirming this).  The Tribunal asked the applicant what the business did with the $150,000 he invested. He said he does not really know. He has no idea what was done with that money. The accountant and Mr Wambeek, the chair and the financial controller know.  The Tribunal raised its concern with the applicant that he does not know what the business did with the investment. He indicated it would have been used for the business but does not know about the particulars. He claimed that, while he is a senior manager of the business, he does not know about the finances. The accounting part is handled by the accountant.  The Tribunal questioned whether the applicant is a senior manager of the business given he does not know about its finances. He asserted that he is.

  5. The Tribunal asked the applicant about his role as the international director for the business. The applicant said he has sold three properties; one two years ago and another three years ago. The clarified that the third property was sold in 2014. The Tribunal questioned whether the applicant has been the international agent for the business if his involvement has resulted in the sale of only three properties over several years.  He said it was not easy to sell properties overseas. The Australian government changed its rules and purchasers have to obtain foreign investment approval.  That is why he wants to come to Australia and start the business here.

  6. The Tribunal discussed with the applicant the issue of whether the applicant can rely on the loan as an asset of the business. It noted that all it had seen regarding the reason for the loan is a one page tax invoice stating 21st Century Property Constructions owes the main business $426,650. The Tribunal asked about the background to the invoice, the services rendered and raised its concern that it had not seen any evidence regarding the background to the invoice. The applicant stated that the main business gives services to the other related companies including 21st Property Constructions. When asked about those services, he indicated it finds the clients. The Tribunal asked how many properties had been sold from the services rendered. He indicated it was about 10 per year. He claimed the main business issued the invoice only once per year.  The Tribunal asked who manages 21st Century Property Constructions. The applicant said that Mr Wambeek is the sole director of all of the related companies. The applicant claimed that 21st Century Property Constructions has built properties for sale. The Tribunal asked the applicant, from 2011 until the visa application was lodged, how many properties were actually built by the construction arm. The applicant was not sure but thought it was about 15 or 20 properties. 

  7. The Tribunal asked the applicant about 21st Century Property Constructions’ source of income. He said they build and sell the houses. The Tribunal observed that 21st Century Property Constructions’ financial documentation should show that the business has made income from the sale of 15 to 20 properties. It asked the applicant why, in those circumstances, the business was not in the position to pay the fee of $426,650. The applicant said the amount has now been paid.  He said the construction arm invests its income to continue construction.

  8. The Tribunal asked if the role of the main business was to act as the real estate agent. The applicant confirmed this. The Tribunal asked who is paid for the properties. The applicant indicated the main business is paid by the purchaser. The Tribunal asked the applicant to clarify who is the vendor and how the construction arm is paid for the construction of the properties. The applicant indicated he could not answer because he is not involved with the construction part of the business. He is working in the property development arm. He thinks once the land is purchased 21st Century Property Constructions builds the properties. He indicated the main business then pays 21st Century Property Constructions for construction of the properties. The Tribunal observed in that case that there should be financial documentation demonstrating that the development arm of the business has been paying the construction arm. It noted however that the only financial documentation it had seen about the relationship between the two arms is the tax invoice dated 30 June 2013. The Tribunal indicated it wanted to see further financial information about the financial transactions between the two companies. The Tribunal observed that the applicant’s oral evidence suggests that the development arm should be a debtor to the construction arm. The applicant indicated he does not get involved in the business’ financials. The Tribunal observed that the applicant has claimed to be a senior manager in the business and it may form the view it would be reasonable to expect him to know about the financial aspects of the business.

  9. The Tribunal decided that it needed to adjourn the hearing. It raised with the applicant with he would consider providing audited financial statements. It noted that it is concerned it has not seen evidence demonstrating why the invoice was issued as it is not clear what services were provided by the main business and when.  The representative raised his concern about the Tribunal’s suggestion that the applicant provides audited financial statements because of the expense involved. The Tribunal acknowledged the expense but raised the concern that the information provided to date does not demonstrate that the loan between the related companies has a genuine basis. 

Reconvened hearing on 16 August 2018

  1. The Tribunal sought to reconvene the hearing on 5 July 2018 however the representative wrote to the Tribunal and advised that the applicant was overseas and could not attend. The Tribunal agreed to reschedule the reconvened hearing and set it down for 12 July 2018.  The representative contacted the Tribunal and stated that the applicant would not be able to travel to Australia because he had lower back pain. He provided a medical certificate from his doctor in Sri Lanka. The Tribunal agreed to reschedule the reconvened hearing on 16 August 2018.

  2. The day before the reconvened hearing the applicant provided the following information:

    ·A letter from Andrew Monckton, the business’ accountant dated 14 August 2018, stating he has acted for Mr Glen Wambeek since 1993. He explained Mr Wambeek sells house and land packages in Queensland through 21st Century Property Constructions Pty Ltd. The construction of the property is subcontracted out to a Queensland builder and 21st Century Property Constructions Pty Ltd receives a commission from the builder for each property. The clients of this company come from a number of sources, including referral partners. Where a referral partner refers a client who purchases from the company, they are paid a commission for the referral. Mr Monckton explained that 21st Century Property Developments Pty Ltd is responsible for the management and administrative aspects of the construction business, including the employment of staff. In consideration for meeting these expenses, the company charges a fee to 21st Century Property Constructions Pty Ltd.  Mr Monckton explained that Mr Wambeek’s various entities continuously transfer money between them and such loans are recorded in the financial statements of the company as assets for loans between two companies. He noted there is no requirement under the Accounting Standards or the Income Tax Assessment Act for the loans to be repaid within a particular time frame. If, when preparing the financial statements, the opinion is formed that the company will be unable to repay its loan they write down the recoverable value of the loan. From an accounting point of view if 21st Century Property Constructions Pty Ltd was to have ceased trading as at 31 December 2014, and sold all of its assets in a businesslike manner, there would be have been sufficient funds to pay all of its liabilities and therefore be able to pay in full the loan from 21st Century Property Developments Pty Ltd.

    ·A copy of the Executive Employment Agreement dated 9 July 2011 between the main business and the applicant indicating the applicant’s appointment as International Director of New Business was to commence on 23 April 2012 and that he would be remunerated $40,000 per annum plus annual dividends of not less than $7500 per annum. The employment agreement indicates the applicant would work from 8:30 AM to 5:30 PM, Monday to Friday. The applicant’s duties are said to be listed in item 1 of the Schedule to the Agreement however the Tribunal notes that item 1 of the Schedule merely says ‘Position description’ and there are no particulars provided.

    ·Business’ bank statements showing deposits of $49,988 on 30 September 2011, $49,988 on 18 November 2011, $25,000 on 10 January 2012, and $25,000 on 16 February 2012 (the applicant’s investment in the business).

  3. At the commencement of the reconvened hearing the Tribunal explained that it would be looking at whether the applicant meets the requirements of cl.890.211 and cl.890.221 as some of his oral evidence had raised concerns for the Tribunal regarding his involvement in the day-to-day management of the business and in making decisions affecting the overall direction and performance of the business.

  4. The Tribunal asked the applicant about the timing of his investment and the commencement of his employment. It noted he signed the agreement long before he actually commenced working in the business. The applicant indicated that he wanted a guarantee of employment before he invested in the business. He had not yet bought into the business when he signed the employment agreement. Once he had signed the employment agreement he agreed to invest. He made the last payment in February 2012. He then started working for the business. He believes he was in Sri Lanka at the time he invested in the business. He came to Australia about a year later, in July 2013. The Tribunal asked why the applicant did not come to Australia earlier given he was working for a business based in Australia. He indicated that he was still running his Sri Lankan furniture business and he needed to hand it over to his wife. He wanted to accustom himself with 21st Century Property Developments before he came to Australia. The Tribunal questioned why he would wait a year before coming to Australia if he genuinely intended to be involved in the business. He indicated that he was waiting for the right time. He was comfortable with Glen doing the marketing and flying clients in from Sri Lanka.

  5. The Tribunal asked the applicant how many clients he introduced to the business. He indicated there were about 25 or 30 clients. Glen flew them to Queensland from Sri Lanka to see the properties. The Tribunal asked how many sales eventuated from those introductions. The applicant indicated it was about three or four; he was not sure. His role was just to introduce prospective clients and convince them to buy. The Tribunal asked why he did not know exactly how many sales had eventuated from his introductions given his role in the business. He indicated he could not remember.

  6. The Tribunal asked the applicant how many houses the business has sold overall. He indicated it was more than 50 or 60. He does not know precisely. He then indicated it might have been more than 100. The Tribunal asked why he did not know how many houses had been sold by the business that he claims to manage at a senior level. He indicated he would need the documents to know precisely how many houses have been sold. The Tribunal asked about the most recent sale. He indicated it was at the beginning of 2018 but he did not know the price. The Tribunal asked about the business’ best year. He indicated it was in 2014 because he was in Australia and that gave Glen more free time. The Tribunal asked how many houses were sold that year. He could not remember.

  7. The Tribunal asked the applicant about the finances of the business, whether there are bank statements that record his investment and the transfers between the two companies, the property development arm in the construction arm. He indicated he did not know whether those documents are available. He indicated that the accountant does the bookkeeping; he does not look at the bank statements. The Tribunal asked why as a senior manager he does not know about the finances. He indicated that he has no reason to check those matters as the financial aspects of the business are managed by Glen and the accountant. The Tribunal asked, in relation to the loan he sought to rely on as an asset of the business, if there was actually a transfer of funds between the companies. He indicated he had no idea.

  8. The Tribunal noted that the 2014 financial statement records as an asset the loan to the construction company. However it could not identify where the GST, both paid and as a liability with respect to that loan, was recorded. The applicant indicated he had no idea if GST was paid for the loan.

  9. The Tribunal asked how the amount of $426,000, as invoiced, was calculated. He indicated he had no idea about the invoice. He thinks it was because the development company gave services to the construction company. He indicated that the development company managers the construction company. The Tribunal asked about his involvement in that management. He indicated that when he was in Australia, in 2013 and 2014, he looked after the other company’s staff. The Tribunal asked about the staff of the construction company. He indicated he thought there were three or four staff. The Tribunal asked why he did not know exactly how many staff the construction company had if his business manages that company. He indicated that there are three staff with his business but he had no idea about the construction staff. He indicated that the construction staff do construction work. His staff do the marketing and client coordination. His business gets the clients. He indicated he did not know about the construction company because Glen takes care of that. He only looks after the staff in 21st Century Property Development. The Tribunal noted his evidence that one of the things the 21st Century Property Development company does is provide services to the construction company, hence the invoice. The applicant indicated that his role is to find business and Glen looks after the other things.

  10. The Tribunal asked the applicant about his business’ turnover in the last financial year. He could not remember. It asked about the business’ strategy from making sure it is profitable. He indicated the business finds clients, sells houses and gets commission from builders. The Tribunal asked if the commission from builders was paid to the construction arm. He indicated he thought so.

  11. The Tribunal noted that the 2014 financial statement indicated that the only income for 2014 was the amount of the invoice discussed above. It asked if that was the only source of income for 21st Century Property Development in that financial year. The applicant indicated that he thought so. He indicated that the income was dealt with by the accounting part of the business and he has no involvement in that.

  12. The Tribunal asked the applicant to describe how he maintains and has maintained 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. The applicant indicated that when he was in Australia in 2013 and 2014 he worked full-time at the business. His main focus was to find new clients who mainly came from Sri Lanka. The Tribunal asked the applicant to expand on this. He said he worked with staff to find clients. The Tribunal asked how he found clients. He indicated that he decided they would distribute leaflets including by posting to accountants. He was responsible for marketing. The Tribunal asked the applicant to give more detail about his role in the business. He indicated he coordinated clients. The Tribunal asks him to explain what that meant. He indicated he updated the client list. The Tribunal asked the applicant to describe everything that he was doing as a senior manager in the business. He indicated he brought new ideas to the business. The Tribunal asked him to describe those. He indicated he introduced marketing over the phone and leaflets. The Tribunal asked if there was anything else that he did to demonstrate his direct and continuous involvement in the management of the business. He indicated that he managed contract agreements in the period 2013 to 2014. He thinks there are about 20 or 30 contract agreements signed. The applicant acknowledged that he was not working in the business in 2015 except for perhaps one month because his Subclass 163 visa expired in about March 2015 and he returned to Sri Lanka. He acknowledged that he was not really involved in the business in 2015.

  13. The Tribunal raised its concern with the applicant that his oral evidence might suggest that he does not have a direct and continuous involvement in management of the business from day to day. It asked the applicant if he had any comment to make as to why it should not be concerned that he has not maintained direct and continuous involvement in the management of the business. He indicated that he only owns 30% of the business. His area is limited. He coordinates clients and is involved in marketing. He looks after the staff. Glen looks after everything else. The Tribunal asked the applicant why he has not been more involved in the management of the business and in making decisions affecting the overall direction and performance of the business. He indicated that he did not have work rights. The Tribunal asked why he did not apply for work rights. He indicated that, when the visa was refused, he did not apply for work rights because he had his business in Sri Lanka. He wanted to sell his business in Sri Lanka but not yet. He wanted to get a permanent visa first. He employs more than 100 people in his Sri Lankan business which is very profitable. The Tribunal indicated that it may form the view his main employment is in the Sri Lankan business and asked whether he has been genuinely engaged in the business in Australia. He indicated he wanted to migrate to Australia as his two daughters are studying medicine here.

  1. The Tribunal asked the applicant about his involvement in the business since returning to Sri Lanka in March 2015. He indicated that he has been back to Australia about three times since then to attend meetings. He meets with Glen and gives him ideas. He has returned to Australia on visitor visas but has not been working while he has been here. He indicated that he returned to Australia in about March 2018 and went back to Sri Lanka in April 2018. He did not think he was in Australia in 2017. He was in Australia for short periods in 2016 to visit his daughters who were studying at university.

  2. The Tribunal noted that the applicant’s evidence suggests he has not had much involvement with the business since March 2015 which raised a concern about whether he meets the requirements for the grant of the visa. He indicated that selling property from overseas is very difficult. The Tribunal asked why the business has been paying him $2000 a month since he made the visa application and returned to Sri Lanka. He indicated that he is still trying to find clients. The Tribunal raised its concern that he may not be or have been a senior manager in the business. He believes that he did a good job when he worked in the business in 2013 to 2014. The Tribunal indicated it may form the view that he has very little knowledge about the business, for example he did not know about the invoice issued to the construction arm (its main source of income), and this may suggest that his involvement in the business is not indicative of direct and continuous involvement in the management of the business from day to day. He had no further comment.

  3. The Tribunal asked the applicant which entity owns the property sold. He indicated that the vendor is the landowner in Queensland and then the purchaser has a relationship with 21st Century Property Constructions.

  4. The Tribunal took evidence from Mr Wambeek. When asked about the vendor /purchaser relationship he explained that the client buys the land and then the construction arm builds the houses. The land developer in most cases is Lend Lease. The purchaser buys the land from the land developer and then 21st Century Property Constructions is contracted to build. The purchaser has two contracts, one with the land developer and one with the construction arm.  The only source of income for the main business is invoicing the construction arm for services.

  5. The Tribunal also took evidence from Mr Monckton who explained a management fee is issued once a year by 21st Century Property Developments to 21st Century Property Constructions. There is no other source of income. The Tribunal asked why the construction arm could not pay the invoice in 2013.  He indicated that business had to use its funds for other purposes. He indicated the business’ bank statements will show that the loan was repaid. He explained that the GST was paid.

  6. The Tribunal asked the applicant if he had any other evidence to give to demonstrate the requirements of the relevant law are met. He had nothing further to add.

Assessment of the evidence

  1. Clause 890.211 requires the applicant to have had, and to continue to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately prior to making the visa application. Clause 890.221 requires the applicant to continue to have an interest of that kind at the time of the Tribunal’s decision. While the delegate refused to grant the visas on the basis that cl.890.212 was not met the Tribunal will consider these issues first.

  2. The Tribunal finds that the applicant has nominated 21st Century Property Developments Pty Ltd as the main business in this application. In considering whether the applicant meets the requirements of cl.890.211 in respect of the nominated main business, the Tribunal finds that the relevant 2 year period immediately before making the application is 26 February 2013 to 25 February 2015 (‘the relevant 2 year period’).

The ownership interest in the business: r.1.11(1)(a)

  1. Regulation 1.03 provides that ‘ownership interest’ has the meaning given in s.134(10) and includes a shareholder in a company that carries on the business. The Tribunal has seen evidence from ASIC provided by the applicant that as at 2 May 2012 the business had a total of 10 shares and the applicant held 3 shares, and therefore held a 30% share in the business. Mr Glen Wambeek, the sole Director of the main business, held a 70% share in the business. The Tribunal finds that at the time of application, the applicant had an ownership interest of 30% in the business, the remaining 70% being held by Mr Wambeek.  Therefore the applicant has an “ownership interest” in the business, as defined in s.134(10)(a) and meets r.1.11(1)(a).

Maintaining 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: r.1.11(1)(b)

  1. To meet the definition of “main business” in r.1.11(1)(b), the applicant must maintain, or have maintained, 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. The Tribunal is of the view that this criterion contains two requirements. First the applicant maintained direct and continuous involvement in the management of the business from day to day. Secondly the applicant maintained direct and continuous involvement in making decisions that affected the overall direction and performance of the business.

  2. In assessing whether the applicant satisfies the requirements of r.1.11(1)(b), the Tribunal has taken into account the judgement Lobo v MIMA [2003] FCAFC168 which discusses an equivalent provision in relation to the former Subclass 845 visa. The Court specified 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 Tribunal must have regard to all the circumstances and requirements of the individual business.

  3. The Tribunal has considered the nature and size of the business. On the basis of the written and oral evidence provided the Tribunal understands that the business is involved in finding prospective buyers who will purchase land from a land developer, often Lend Lease, and then enter a contract with another of Mr Wambeek’s businesses, 21st Century Property Constructions Pty Ltd.  In written evidence provided to the Tribunal by the applicant, Mr Monckton explained that 21st Century Property Developments Pty Ltd is responsible for the management and administrative aspects of the construction business, including the employment of staff. In consideration for meeting these expenses, the company charges a fee to 21st Century Property Constructions Pty Ltd. That is the source of income for the main business.  On the basis of the applicant’s oral evidence the main business employed about 3 or 4 staff. The applicant also has an employment agreement with the main business.

  4. When asked about the main business’ income in the 2014 financial year, and whether the main source of income was the fee of $426,650 charged to the construction arm, the applicant indicated that he thought so but that the business’ income was dealt with by the accounting part of the business and he had no involvement in that. He indicated he is not familiar with the financial aspects of the business as he leaves this to Mr Wambeek and the accountant. He admitted he knew nothing about the invoice issued to the 21st Century Property Constructions. The Tribunal is of the view, given his investment in the business, if he was genuinely engaged in maintaining 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 he would have knowledge about that arrangement. The Tribunal has formed the view his weak understanding of the arrangement and the main business’ financial affairs casts doubt on his evidence that he is a senior manager of the business involved in its management from day to day and in making decisions affecting its direction and performance.

  5. The applicant’s oral evidence about his own engagement and employment with the business in the relevant 2 year period was somewhat vague.  Bank statements provided by the applicant at the time of application indicate he was paid wages of $2800 per month. In his oral evidence the applicant could not remember when he signed the employment agreement, suggesting it was in 2012 or 2013. On the basis of the employment contract provided by the applicant he signed it in July 2011. The Tribunal notes that according to his employment agreement he was to be paid a remuneration package of $40,000 per annum plus dividends of at least $7,500 per annum and superannuation as required by law. The applicant indicated at the hearing that he has continued to receive payments and that he pays tax in Australia however he does not know his taxable income.

  6. On the basis of the applicant’s evidence at the reconvened hearing, after signing an employment agreement on 9 July 2011, he did not commence his involvement in the business until April 2012. He claimed he had not yet bought into the business when he signed the employment agreement. Once he had signed the employment agreement he agreed to invest in the money. He made the last payment in February 2012 and claims he started working for the business soon after as a senior manager/ the International Director of New Business.

  7. The Tribunal has concerns about the nature and extent of the applicant’s involvement in the business in the relevant 2 year period.  It notes that he claims he started working for the business in about April 2012 however he was in Sri Lanka at the time and he did not come to Australia until about a year later, in July 2013, after the relevant 2 year period commenced. When asked why he delayed coming to Australia, given his employment in the main business, he explained that he was still running his Sri Lankan furniture business and that he wanted to accustom himself with 21st Century Property Developments before he came to Australia. When asked whether he genuinely intended to be involved in the business, he indicated that he was ‘waiting for the right time’ and that he was leaving it to Mr Wambeek to fly customers in from Sri Lanka.

  8. The Tribunal has taken into account that the applicant has claimed to have been employed as the International Director of New Business, looking after international clients and this may not have required his presence in Australia. The Tribunal notes however that the applicant was vague in his evidence regarding the number of clients he has introduced to the business and the number of sales that have resulted as a consequence of those introductions, suggesting it was only about three or four; he was not sure. Given this appeared to be such a small number the Tribunal questioned why he did not know exactly how many sales had eventuated from his introductions. He merely indicated he could not remember.  The Tribunal is also concerned the applicant’s evidence regarding the overall sales is vague and unpersuasive. When asked about this he indicated it was more than 50 or 60 but then indicated it might have been more than 100. When asked about the most recent sale he indicated it was at the beginning of 2018 but he did not know the price. When asked about the best year he indicated it was in 2014, because he was helping Mr Wambeek, but he could not remember how many houses were sold.  The Tribunal finds the applicant’s evidence regarding the business’ performance to be vague, unpersuasive and not indicative of a senior manager involved in the management of the business from day to day and in making decisions affecting its direction and performance.

  9. The Tribunal also notes that the employment contract states that the duties of his position are listed in item 1 of the Schedule to the Agreement. However the Tribunal notes that item 1 of the Schedule merely says ‘Position description:’ and there are no particulars provided. It also notes the applicant was to work from 8:30 AM to 5:30 PM Monday to Friday however on his own evidence his engagement with the staff (he has claimed to be responsible for staff doing marketing and client coordination) has been limited to Skype meetings and he did not arrive in Australia until July 2013, months after the relevant 2 year period commenced. The Tribunal is of the view this casts serious doubt over the claims that the applicant was a senior manager of the main business in the relevant 2 year period, involved in its day to day management and in making decisions affecting its direction and performance.

  10. The Tribunal also notes that while the applicant claims to have been the senior manager of staff he did not know the employees’ surnames, even though there were only three or four employees. He claims to have managed the employees by meetings held by Skype. When asked about this day to day management of the business he claimed that when he was in Australia he was involved in the day to day management. When asked to describe his involvement he merely said he attended meetings, helped improve the business by reducing costs and he introduced marketing: leaflets sent to accountants in Australia to get more clients. The Tribunal is not satisfied his evidence regarding his involvement in the day to day management of the business is sufficiently detailed to the extent that the Tribunal considers reasonable to expect from a genuine manager of a business of this nature. The Tribunal also notes he admits to knowing nothing about the financial aspects of the business.  While it acknowledges the applicant does not need to know about every aspect of the business it is of the view the financial arrangement between the main business and the construction arm is significant given it is the main source of the main business’ income and it is reasonable to expect that the applicant would have known about it.

  11. The Tribunal has taken into account all of the evidence provided supporting the claim made in the visa application that he was the international director of the business since July 2011. It notes the applicant signed a letter of offer of employment address to Dee Radwan in February 2014. However it also notes that offer states that Dee Radwan will report to Glen Wambeek. It notes there is evidence indicating the applicant was paid income. It also notes email exchanges between the applicant, Mr Wambeek and a marketing co-ordinator.  However having read those exchanges it considers the applicant’s involvement to be somewhat rudimentary.  It notes there are client referral forms in the period February 2013 to February 2014 indicating the applicant referred a number of clients in Sri Lanka to the business. The information contained in those referrals is limited and on the applicant’s own evidence his referrals have resulted in only three or four sales over several years.  It accepts that the minutes of meetings for the period November 2012 to January 2015 indicate the applicant participated in meetings held about once a fortnight for between 15 minutes and 1 hour 15 minutes. The minutes indicate the applicant was assigned minor tasks such as “Lalindra to order more Mlesna tea pots for Glen”, “Lalindra to get his staff to pack Glen’s things and post them along with the tea pots”, “Lalindra to enquire about Glen’s boxes”, “Lalindra to forward Mr Gunasekara’s request (email) to Glen”, “Lalindra to assign a staff member from his organisation to tend to the e-marketing clients”, “Lalindra to assemble all client details in one folder”.  These are just some samples of the applicant’s tasks however, having considered overall the applicant’s tasks arising from these meetings, the Tribunal is not satisfied they are indicative of a manager’s responsibilities, as he has claimed he was, maintaining direct and continuous involvement in management of the business from day to day. Many of the tasks appear to be trivial and not reflective of a manager’s duties.

  12. The Tribunal also notes from the applicant’s oral evidence that since applying for the visa he has spent little time in Australia, and travels here on a visitor visa. He indicated that since March 2015 when he returned to Sri Lanka after lodging the visa application he has been back to Australia about three times. He claimed that when he visits he meets with Mr Wambeek’s and gives him ideas. He also claimed he has returned to Australia on visitor visas but has not been working while he has been here. He indicated that he returned to Australia in about March 2018 and went back to Sri Lanka in April 2018. He did not think he was in Australia in 2017. He was in Australia for short periods in 2016 to visit his daughters who were studying at university. He did not seek to remain in Australia to work after applying for the visa because he needed to return to Sri Lanka to attend to his furniture business which is quite lucrative.

  13. The Tribunal has considered all of the written and oral evidence provided in relation to the visa application. Overall the Tribunal accepts that the applicant has had some involvement in the business. It accepts he has some knowledge of the nature of the business and its staff but it is not satisfied the knowledge demonstrated is reflective of a person involved in maintaining direct and continuous involvement in management of the business. It accepts he referred some prospective clients to the business. It accepts he participated in fortnightly meetings, by Skype when he was not in Australia.  It also accepts he received income from the business at least up until the visa application was lodged. However, overall, on the basis of all the evidence before it, it does not accept that, in the relevant 2 year period and since, the applicant 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. It is of the view his involvement in the business has been limited to referring some prospective clients, having some input in the marketing, and in undertaking some tasks as described in the minutes discussed above. The Tribunal is not satisfied these duties are reflective of the range of management duties provided in the written evidence with the application. Nor is it satisfied his knowledge of the business is reflective of a senior manager as he has claimed to be.    

  14. On the evidence before it, the Tribunal is not satisfied, at the time of application and decision, that the applicant maintains 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 as required by r.1.11(1)(b). The Tribunal therefore finds the applicant does not meet r.1.11(1)(b) and therefore he does not satisfy the ‘main business’ requirement in r.1.11 for the period 26 February 2013 to 25 February 2015, at the time of application, or at the current time. The Tribunal therefore finds that the applicant did not have, and did not continue to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately preceding the making of the application or at the time of application. Therefore, the Tribunal finds the applicant does not meet cl.890.211 at the time of application.

  15. The Tribunal is not satisfied that the applicant continues to have an ownership interest in one or more actively operating main businesses in Australia at the time of the Tribunal’s decision. Therefore the applicant does not continue to satisfy the criterion in cl.890.211 and he fails to meet cl.890.221 at the time of decision.

  1. As the Tribunal is not satisfied the applicant meets mandatory requirements for the grant of the visa, it is not necessary for it to consider whether cl.890.212 is met.

  2. At the time of application the applicant indicated he was applying for the visa only under the category Business Owner (residence). However the applicant has provided evidence that he has state sponsorship, a copy of a Form 949 State/Territory sponsorship: Business Skills class completed by the applicant and the NSW Trade and Investment agency dated 4 June 2015. The Tribunal has therefore considered whether the applicant meets the criteria for the purposes of Subclass 892. It notes the requirements of cl.892.211 and c.892.221 are the same as those set out in cl.890.211 and cl.890.221. For the same reasons given above regarding the applicant’s 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, the Tribunal is not satisfied the applicant meets the requirements of cl.892.211 and cl.892.221.

  3. The applicants have not made claims against the criteria for the other subclasses in Class DF. The Tribunal finds on the material before it that the applicants do not satisfy the requirements of the other subclasses.

  4. As the secondary applicants are not members of the family unit of a person who satisfies the primary criteria in Subdivision 890.21 neither of the secondary applicants meets cl.890.311.

DECISION

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

Denise Connolly


Member

Key Legal Topics

Areas of Law

  • Immigration

  • Administrative Law

  • Statutory Interpretation

Legal Concepts

  • Judicial Review

  • Procedural Fairness

  • Statutory Construction

  • Jurisdiction

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He v Minister for Immigration & Anor [2015] FCCA 2915
Yao v Minister for Immigration [2016] FCCA 3164