Wyse v Minister for Immigration
[2006] FMCA 1362
•28 September 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WYSE & ANOR v MINISTER FOR IMMIGRATION & ANOR | [2006] FMCA 1362 |
| MIGRATION – MRT decision – on‑shore independent executive visa – whether business ‘of benefit to Australia’ – effect of definition of that term – Tribunal failed to address every alternative – net assets ‘to conduct the business’ – Tribunal wrongly excluded equity in home – matter remitted. |
Federal Magistrates Court Rules 2001 (Cth), r.44.15(1), Sch.1 Pt 2 item 1(c)
Migration Act 1958 (Cth), ss.474(1), 476(1)
Migration Regulations 1994 (Cth), regs.2.02(1), 2.03(1), Sch.1 items 1223A(3)(ad), 1223A(3)(ae), Sch.2 cll.457.111(2), 457.111(2)(a), 457.111(2)(a)(ii), 457.111(2)(a)(iii), 457.111(2)(b), 457.111(2)(b)(i), 457.223(7), 457.223(7A), 457.223(7A)(a), 457.223(7A)(c), 457.223(7A)(c)(i), 457.223(7A)(c)(iv)
Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Immigration & Multicultural Affairs v Yusuf (2001) 206 CLR 323
Minister for Immigration & Multicultural & Indigenous Affairs v VOAO [2005] FCAFC 50
Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476
SFGB v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 231
Vanstone v Clark (2005) 147 FCR 299
| First Applicant: | JAMES SYDNEY WYSE |
| Second Applicant: | BADHRUNNISA WYSE (also known as BADHRUNNISA MAIDIN) |
| First Respondent: | MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS |
| Second Respondent: | MIGRATION REVIEW TRIBUNAL |
| File Number: | PEG77 of 2006 |
| Judgment of: | Smith FM |
| Hearing date: | 30 June 2006 |
| Hearing place: | Perth |
| Date of Last Submission: | 31 July 2006 |
| Delivered at: | Sydney |
| Delivered on: | 28 September 2006 |
REPRESENTATION
| Counsel for the Applicants: | Mr D Smith |
| Solicitors for the Applicants: | David Smith, Barrister & Solicitor |
| Counsel for the First Respondent: | Mr J Allanson |
| Solicitors for the Respondents: | Australian Government Solicitor |
ORDERS
A writ of certiorari issue directed to the second respondent, quashing the decision of the second respondent dated 22 February 2006 in matter W04/05864.
A writ of mandamus issue directed to the second respondent, requiring the second respondent to determine according to law the application for review of the decision of the delegate of the first respondent dated 10 September 2004.
The first respondent must pay the applicants’ costs in the sum of $5,000.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG77 of 2006
| JAMES SYDNEY WYSE |
First Applicant
| BADHRUNNISA WYSE (ALSO KNOWN AS BADHRUNNISA MAIDIN) |
Second Applicant
And
| MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS |
First Respondent
| MIGRATION REVIEW TRIBUNAL |
Second Respondent
REASONS FOR JUDGMENT
This is an application filed on 28 March 2006 under s.476(1) of the Migration Act 1958 (Cth) (“the Migration Act”) which seeks orders by way of judicial review of a decision of the Migration Review Tribunal (“the Tribunal”) dated 22 February 2006. The Tribunal affirmed a decision of a delegate made on 10 September 2004, which refused to grant a further temporary Class UC subclass 457 Business (Long Stay) visa to the first applicant and secondary visas to members of his family, including his wife who is the second applicant.
Under s.476(1) the Court has “the same original jurisdiction in relation to migration decisions as the High Court has under paragraph 75(v) of the Constitution”, but its powers are confined by s.474(1) if the Tribunal’s decision is a “privative clause decision”. It is such a decision unless I am satisfied that it was affected by jurisdictional error (see Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476). I do not have power myself to decide whether the applicants qualify for visas.
The visa criteria
The first applicant first entered Australia in 1992, and was granted two previous subclass 457 visas before making the present application on 7 April 2004. Information before the delegate and Tribunal showed that these had been granted on 10 December 1997, and 8 April 2002 respectively. However, the Department’s files did not reveal whether they were granted under cl.457.223(7) or under the separate criteria in (7A). Although both of these subclauses presented criteria for “independent executives” proposing to conduct, or conducting, business activities of benefit to Australia, the distinction was important to the applicants. This is because, as the Tribunal said:
[40]Current policy provides that the subclause 457.223(7A) stream offers the holder of an Independent Executive visa granted offshore under subclause 457.223(7) with a “once only” opportunity for a temporary business stay of up to two years to maintain ownership of an existing business in Australia conducted by them as a principal.
This policy of “once only” qualification under cl.457.223(7A) was given legislative effect by cl.457.223(7A)(a), which required that the visa applicant’s current or last substantive visa was a subclass 457 visa “granted on the basis that the applicant met the requirements of subclause (7)”, that is, not subclause (7A). It was also reflected in a criterion going to the validity of the visa application found in Sch.1 item 1223A(3)(ad) and (ae). It is unnecessary for me to explore these provisions, since the Tribunal gave the applicants the benefit of some doubt as to the nature of the previous decision to grant them subclass 457 visas. It assumed that this was the first occasion upon which they had sought visas under the (7A) criteria.
Other requirements they were obliged to satisfy were found in cl.457.223(7A)(c). This provided:
(7A) …
(c)the Minister is satisfied that:
(i) the business is of benefit to Australia; and
(ii) the applicant has a genuine and realistic commitment:
(A)to maintain an ownership interest in the business; and
(B)to maintain a direct and continuous involvement in the management of the business; and
(C)to make decisions that affect the overall direction and performance of the business from day to day; and
(iii) nothing adverse is known to Immigration about the applicant’s business background; and
(iv) the applicant has net assets of:
(A)not less than AUD250,000; or
(B)a lesser amount that is adequate;
to conduct the business; and
(v) the applicant has demonstrated that there is need for the applicant to be temporarily resident in Australia to conduct the business.
The test of “benefit to Australia”, was subject to a definitional provision in cl.457.111(2):
(2)For the purposes of this Part, a business activity is of benefit to Australia if:
(a)the conduct of the activity contributes to:
(i) the creation or maintenance of employment for Australian citizens or Australian permanent residents; or
(ii) expansion of Australian trade in goods or services; or
(iii) the improvement of Australian business links with international markets; or
(iv) competitiveness within sectors of the Australian economy; and
(b)the operator of the business:
(i) introduces to, or utilises or creates in, Australia new or improved technology or business skills; or
has a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents in the business in Australia.
In the present case, the Tribunal said that it was satisfied as to subparagraphs (ii), (iii) and (v) in cl.457.223(7A)(c). It was not, however, satisfied as to any “benefit to Australia” under subparagraph (i), nor as to “net assets” under subparagraph (iv).
Each of these conclusions was challenged in argument before me, and I shall examine the Tribunal’s reasoning on them below. I shall first sketch the factual background shown in the material before me.
The background circumstances
The application for visas relied upon a business conducted in Bunbury, Western Australia, by a company, Nisa Pty Ltd, which was incorporated in 1994 and was owned and operated by the first and second applicants. The application said that the company’s business activities were “publishing, promotions and design work”, and listed a number of people who had been employed for short periods or on a casual basis since 1996. It referred to three of the company’s publications: a tourism periodical called “The Guest WA” which “has provided considerable promotions for the South West in the ASEAN region for more than four years”; a book called “Everyone loves good … but do we hate bad enough?” which promoted religious and cultural tolerance; and “The Sunnyside Children’s Series”.
The applicants said that the first and last of these publications had been “shelved temporarily” due to local and economic problems. They said that they were working on new projects, including “Feeding Good – Book on recipes promoting Australian produce”, a children’s reading series, a book on child rearing, and a study guide for Asian students of business management. They said that they also planned “to set up a multidisciplinary clinic/workshop … [which] will provide a platform for Biomedical and medical researchers as well as experienced and qualified educators to merge their efforts and develop new theories that will benefit children with special needs”. The application was supported with various letters of endorsement, some of which I shall refer to below.
The applicant husband told the Tribunal at a hearing conducted on 8 December 2005 that he and his wife were responsible for separate projects. He took care of projects relating to tourism and trade, and his wife was responsible for projects involving food and catering.
The company’s business comprised producing brochures for local companies (15‑20% of total income), and publishing of books (70% of total income). The business was run from their home, “where they are well set‑up with computers, a photocopier, office furniture and an extensive reference library”.
The applicant husband presented evidence that he had journalism experience and qualifications comparable to those of a senior journalist in Australia. His wife had experience managing restaurants in Singapore, and had acquired Australian degrees and qualifications in education and management. They told the Tribunal that the company “has introduced the latest publication programs to Australia”, and had trained Australians in office procedures.
Financial information presented to the Department and Tribunal included the company’s balance sheets and profit and loss statements between 1 July 2001 and 30 June 2005. These showed the company remaining solvent with the assistance of diminishing loans from the applicants, with no significant bank borrowings or trade creditors, and with reducing accumulated losses. It showed small outgoings for directors’ fees and contract services. Their accountant reported in a letter dated 2 December 2005:
We have watched the business grow during the nine years they have been with us. The past two years the business has shown profits of $48,879 and $52,789 with the projections for 2006 showing a profit of over $100,000. The 2006 income year will be the first year the business will be taxable after using up prior year losses.
The applicants are to be congratulated on overcoming the early setbacks associated with their business and building it into a viable enterprise.
Evidence before the Tribunal suggested that the applicants may also have other sources of income, with the applicant wife lecturing at a local TAFE and their son completing a biomedical science course. They presented valuation evidence of their home in Bunbury, showing a value in March 2004 of $281,800 and $370,000 in August 2005, with the applicants’ equity at about $200,000. They also claimed to have other assets, including the wife’s superannuation and family resources in Singapore.
Clause 457.223(7A)(c)(i) - benefit to Australia
The applicants initially contended that the Tribunal erred in its consideration of this criterion, by treating the definitional provision in cl.457.111(2) as an exhaustive statement of the considerations required to be satisfied. The Tribunal said that this provision “sets out the ways in which a business might be of benefit to Australia”, and it was common ground that the Tribunal purported to address only the considerations raised under the paragraphs of the definition.
It was argued for the applicants that it was open to the Tribunal to consider broadly whether the applicants’ business was “of benefit to Australia”, even if the decision‑maker were not satisfied as to the tests under cl.457.111(2)(a) and (b).
In reply, counsel for the Minister referred to the structure of the relevant regulations. In particular, the cumulative requirements of paragraph (a) and (b), with alternative subparagraph tests.
He submitted that this was a structure showing an intention to control decision‑making about “benefit to Australia”, and not merely to guide or assist an understanding of that concept.
In relation to the reference to “Part” in the opening words: “for the purposes of this Part”, he referred me to reg.2.02(1) of the Migration Regulations 1994 (Cth) (“the Migration Regulations”), which again reveals how “user‑unfriendly” is the drafting of the Schedules to the Migration Regulations. This states:
(1)Schedule 2 is divided into Parts, each identified by the word “Subclass” followed by a 3‑digit number (being the number of the subclass of visa to which the Part relates) and the title of the subclass.
Reg.2.03(1) then states:
(1)For the purposes of subsection 31 (3) of the Act (which deals with criteria for the grant of a visa), the prescribed criteria for the grant to a person of a visa of a particular class are:
(a)the primary criteria set out in a relevant Part of Schedule 2; or …
In effect, this requires a reader of the visa criteria set out in relation to each subclass, to read a reference to “this Part” as a reference to “the criteria for this subclass”. Thus, the opening words in cl.457.111(2) should be read as “for the purposes of the criteria for this subclass”. The prescription of the considerations determining whether “a business activity is of benefit to Australia” is therefore incorporated into any of the ensuing subclass criteria which require satisfaction that a business “is of benefit to Australia”.
I accept the submissions of counsel for the Minister. I consider that the structure of the relevant regulations shows that cl.457.111(2) is intended to be an exhaustive and mandatory definition which sets up the issues required to be addressed by a decision‑maker when considering whether “the business is of benefit to Australia” for the purposes of cl.457.223(7A)(c)(i).
As well as the structural indications that its tests are exhaustive of this criterion, the nature and context of the criterion of “benefit to Australia” suggests this interpretation. The cl.457.223(7A) subcategory carries an array of additional criteria, many of which might also appear to be addressing issues going generally to “benefits to Australia” from the grant of the visa. In this context, it is unlikely that it was intended that the decision‑maker would be allowed to have an additional, extremely vague, discretion, when deciding whether an applicant’s business was “of benefit to Australia” under the first of the criteria.
I therefore do not accept that the Tribunal was in error by treating the definition as the exhaustive source of the considerations required to be addressed in relation to cl.457.223(7A)(c)(i).
I therefore turn to consider whether the Tribunal failed to address issues raised by one or more of the subparagraphs contained in each of the paragraphs 457.111(2)(a) and (b). The applicants’ counsel accepted that, if he lost his “non‑exhaustive” definition argument, he must establish such an error in relation to each of these paragraphs, before I could find a material error in the Tribunal’s decision on the “benefit to Australia” criterion in cl.457.223(7A)(c)(i). For his part, counsel for the Minister accepted that it would be enough for error to be found in the Tribunal’s consideration of only one of the four subparagraphs in par.(a) and only one of the two subparagraphs in par.(b).
Clause 457.111(2)(a)(ii) and (iii)
It will be recalled that these subparagraphs provide two of the four alternative pathways for satisfying the first element in the definition. They require a decision‑maker to address whether “the conduct of the [business] activity contributes to … (ii) expansion of Australian trade in goods or services; or (iii) the improvement of Australian business links with international markets”.
The Tribunal’s reasons for finding that the applicants did not satisfy either of these subparagraphs are contained in one sentence in [57] of its statement of reasons:
[57]There is insufficient evidence before the Tribunal to support the applicants’ claims that the business’ travel and food books, which are based on Western Australian locations and produce, will lead to an expansion of Australian trade in goods or services and an improvement of Australian business links with international markets.
The applicants argue that the Tribunal’s reasoning reveals significant misconception of criterion (ii), which resulted in the Tribunal failing correctly to apply it to relevant evidence. In particular, the Tribunal overlooked or misunderstood that “Australian trade” could be “expanded” at a local or regional level within the Australian economy. The Tribunal’s error is suggested by its dismissive description of the applicants’ books as “based on Western Australian locations and produce”, which appears to have been given by way of explanation of its conclusion as to why this criterion was not satisfied. It is also suggested by its failure to consider the applicants’ evidence that the business provided promotional services to local businesses. It is further suggested by the Tribunal’s “rolling up” of this criterion with subparagraph (iii) in one conclusion addressing foreign trade.
This appears in the words “and an improvement of Australian business links with international markets” (emphasis added). It was argued that the Tribunal erroneously required the applicants’ business to show benefits to Australian overseas trade and business links, before it could satisfy subparagraph 457.111(2)(a)(ii).
It was also submitted that the Tribunal erroneously imposed a test which required an inquiry whether a contribution to an expansion of trade would occur in the future, and failed to consider whether the business currently contributed to an “expansion of” trade.
The Tribunal asked whether the applicants’ books “will lead to an expansion … and an improvement” (emphasis added). It overlooked that the criterion of “benefit to Australia”, when applied in the context of the visa category addressed in cl.457.223(7A), presented tests in the present tense, and was concerned with visa applicants who claimed to have already established a business. In this context, it is significant that the definition in cl.457.111(2)(a) required an assessment of whether the business “contributes”, rather than “will contribute”.
It was therefore argued that the Tribunal required the applicants to demonstrate that in the future their books would lead to an expansion of trade going beyond the local region. By doing this, it put out of consideration significant evidence before the Tribunal that the applicants’ over‑all business activities had already reached a level where they could be found to contribute to Australian trade in goods and services in the local region and overseas.
I was taken to evidence before the Tribunal which contained, at least, opinion evidence deserving of respect and consideration as to whether a present contribution to the local economy was established. Thus, the Chief Executive Officer of the WA Government’s South West Development Commission gave the opinions in March 2004:
Letter of Support
I would like to thank you for having presented your established and proposed business activities to the South West Development Commission.
The Commission values members of the community, such as yourself, with a strong connection to overseas markets. The Commission actively facilitates the settlement of skilled and business migrants, who enhance growth and the export potential for the local business community through their expertise and international connections.
I understand your recent publications have already received considerable interest from overseas markets. I would like to congratulate you on that.
With this letter I acknowledge your family’s contribution to the South West Region. I would also like to take the opportunity to wish you and your family all the best in future endeavours to grow existing and establish new business activities that benefit the development of this region.
An executive of the South West Regional College of TAFE, Faculty of Hospitality and Tourism, gave these opinions at the same time:
It is our pleasure to be able to give by way of a letter for a business such as yours that is contributing towards the economy for the region through the projects that you undertake.
I applaud you in your ability to identify areas where prospects can benefit from your publications and their businesses eventuate into financial driven projects.
A project such as yours will benefit the tourism and educational courses that we run at TAFE. Hence, with this letter, I acknowledge your contributions to the South West Region and would like to take this opportunity in wishing you and your colleagues the best for the future.
Other similar opinions were given by leaders of the local community which deserved careful consideration by the Tribunal in relation to this criterion. These included opinions given in writing and orally to the Tribunal by the applicants’ solicitor, in his capacity as a locally elected representative, including as Mayor of Bunbury. The Tribunal recorded his evidence given at the hearing:
33.Mr Smyth [sic: Smith] stated that he is the mayor of Bunbury and met the applicants when they approached him for advice on setting up their business in the area. He stated that the applicants’ ambitions were too grand for the local area when they first started and their methods were not cost effective. The review applicant’s friend stated that the applicants’ business has become more cost effective over time and they have diversified their interests to improve profitability. He stated that if the books are successful, there will be a direct benefit for WA.
Counsel for the Minister accepted that the Tribunal’s reasons were inadequate in their expression. He accepted that the Tribunal did not make findings expressly framed in correct terms addressing subparagraph (ii). However, he argued that the Tribunal’s reference to the local nature of the applicants’ travel and food books was merely descriptive, and did not illuminate the Tribunal’s reasoning.
He submitted that the use of “and” rather than “or” in its conclusion “expansion of Australian trade … and an improvement of Australian business links ...” was merely an unfortunate slip of language, and did not reveal the Tribunal combining two alternative criteria (he cited Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 277 and 291). He also sought to persuade me that the Tribunal had not required proof of a future expansion of trade, and that I could not be satisfied that the Tribunal had overlooked significant evidence relevant to this criterion.
His further submission was that the Tribunal would not have erred in its construction of the regulations, even if it did exclude consideration of local or regional economic benefits when considering contribution to an “expansion of Australian trade in goods or services”. In written submissions presented after the hearing, he submitted that these words would be correctly construed as a reference “to the benefit to Australia from expansion of trade in goods and services, by import to or export from Australia of those goods and services”.
In written submissions in reply, the applicants’ solicitor argued against so reading the qualifying adjective “Australian”. He argued:
13.The word “Australian” in this context is not a reference to the whole of the country but merely an adjective to describe “the trade” or “service” that is relevant. As long as the “trade” or “service” is a produce of Australia, then it does not matter whether the expansion is minor or from a particular region or place as long as that region or place is within Australia. The adjective is similar to an “Australian Judge” or “Australian cricketer or person”. It matters not whether the person comes from Melbourne or Bunbury, or whether they were born in Australia, as long as they can be legitimately called “Australian.” “Australian trade in goods or services” should be given a similar meaning.
I reject the construction submitted by the Minister. Reading this subparagraph with regard to its context and purpose, I can see no reason for giving “Australian” an effect which confines relevant “trade” to transactions involving transfers of goods and services from Australia or into Australia. Rather, I consider that “Australian” requires no more than that there be a contribution to trade which has a connection to Australia which allows it to be characterised as “Australian” trade. Necessarily, in my opinion, trade conducted within Australia and benefiting a local region in Australia must be “Australian trade”.
In my opinion, to exclude consideration of the local benefits to a region of Australia when considering whether a visa applicant’s current business was benefiting Australia by contributing to “expansion of Australian trade in goods or services” would give this element an effect which could not have been intended. The other subparagraphs in cl.457.111(2) show that benefits in relation to various aspects of the Australian domestic economy are to be taken into account, and I can see no reason for not giving the adjective “Australian” the broad meaning which it would ordinarily invite.
I am also satisfied that the Tribunal probably did give this subparagraph an erroneously confined effect, and did fail to address considerations relevant to its proper application.
I am conscious that brevity in a Tribunal’s reasoning and the absence of discussion of an element in a statutory criterion, or of significant evidence relevant to that element, might not, of itself, establish jurisdictional error. It is necessary to decide whether, reading the Tribunal’s reasons as a whole, it should be inferred from the inadequacy in its reasons that it has failed to address the criterion according to its true construction (Minister for Immigration & Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [10], [35], [69] and [75], and c.f. Vanstone v Clark (2005) 147 FCR 299 at 359‑360).
In the present case, I am satisfied that the Tribunal did not properly address the criterion, and that it overlooked elements in subparagraph (ii) which might have been satisfied by the applicants. The Tribunal’s paraphrasing of the statutory language is, in my opinion, plainly erroneous and shows that it thought that subparagraphs (2)(a)(ii) and (iii) both addressed the expansion or improvement of Australia’s foreign trade. Its failure to address clearly relevant evidence concerning the applicants’ contributions to local trade, confirms in my mind that the Tribunal did not address the language of the regulation, and therefore failed to consider matters legally relevant to cl.457.111(2)(a)(ii). Its adverse conclusion in relation to this criterion was, therefore, vitiated by legal error which would entitle the applicants to relief if the error can be found to have been material to the ultimate decision.
Clause 457.111(2)(b)(i)
The two criteria in par.(b) of the definition of “a business activity … of benefit to Australia”, require a decision‑maker to address “the operator of the business”, whereas par.(a) addresses “the conduct of the [business] activity”. Clause 457.111(2)(b) requires satisfaction that the operator either: “(i) introduces to, or utilises or creates in, Australia new or improved technology or business skills; or (ii) has a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents in the business in Australia”. The present issue is whether the Tribunal’s reasoning in relation to subparagraph (i) reveals jurisdictional error.
It can be seen that subparagraph (i) contains at least six separate ways in which it can be satisfied:
i)The operator “introduces to … Australia new or improved technology”.
ii)The operator “introduces to … Australia … business skills” or, depending on an issue of interpretation which I shall address below, “new or improved … business skills”.
iii)The operator “utilises … in Australia new or improved technology”.
iv)The operator “utilises … in Australia … business skills” or, on the narrower interpretation, “new or improved … business skills”.
v)The operator “creates in Australia new or improved technology”.
vi)The operator “creates in Australia … business skills” or, on the narrower interpretation, “new or improved … business skills”.
The parties submissions addressed whether the adjectives “new or improved” were intended to qualify “business skills” as well as “technology”. This is an issue which is difficult to decide by reference to either the context or the policy of the provision.
Grammatically, the adjectives are positioned so as to appear to qualify only “technology”, and I can see some force in the submission of the applicants’ solicitor that they are not intended also to qualify “business skills”. He argued that in ordinary language it is less usual to talk of “new or improved business skills” than “new or improved technology”. He submitted that “‘technology’ is a word of art that relates to a quantitative as well as a qualitative element. A ‘skill’ is much more qualitative and ‘business skill’ does not imply a particular trade or qualification, but more about the person’s experience and knowledge”.
I am inclined to consider that a theme to be found in both of the subparagraphs of par.(b) is that a benefit to Australia is to be identified which goes beyond the economic contribution of the business itself.
It is intended that the operators of the business, themselves, will bring to Australia a personal background which will bring indirect benefits to the Australian economy which might not otherwise be available.
On this reading, the adjectives would appear to qualify both “technology” and “business skills”. However, I accept that the point of construction is difficult, and that often it might not be of any real significance.
Regardless of this issue, the applicants submit that the Tribunal’s reasons for finding that they could not satisfy any of the tests in par.(b)(i) are so inadequate as to show a failure to appreciate the alternative issues which it requires a decision‑maker to address.
The Tribunal purported to explain its reasoning in a one sentence paragraph:
[58]The Tribunal is not satisfied that the applicants will introduce new or improved technology or business skills into Australia and finds that they do not satisfy paragraph (b)(i) of the definition of benefit in clause 457.111(2).
The applicants submit that, in particular, this reasoning does not show the Tribunal addressing whether they already were “utilising … in Australia … new or improved … business skills”. They point out that the Tribunal addressed only whether in the future the applicants would “introduce” one of the two benefits “into” Australia, thus again revealing that the Tribunal overlooked that a visa claimant for a subcategory visa covered by cl.457.223(7A) might already have a business in operation, and may be able to satisfy this criteria by showing the present “utilising” of “new or improved business skills” in Australia.
The applicants argue that the material they presented to the Tribunal did raise this issue for consideration by the Tribunal, and that it therefore failed to address a relevant consideration. I have referred above to their evidence that both of the applicants held significant qualifications and experience in journalism, publishing and business management, and to their explanations to the Tribunal of how they were currently utilising these skills. The applicant wife claimed to be teaching relevant business skills, and some of their publications were directed at this. They both claimed to use new methods of publishing.
Counsel for the Minister accepted that the Tribunal’s reasons for being dissatisfied as to this criterion were inadequate, both in its reference to the language of the regulation and in the absence of relevant findings. However, he submitted that this was mere “looseness of language”, and contested whether the material before the Tribunal raised any duty on its part to address the element of “utilises … new or improved business skills in Australia”.
However, in my opinion, the failure of the Tribunal to address whether the applicants utilised or created “new or improved business skills”, and its apparent confining of its consideration to the future introduction of skills into Australia, causes me to conclude that the Tribunal did not address significant issues and evidence relevant to cl.457.111(2)(b)(i).
I therefore consider that the applicants have established a failure by the Tribunal properly to address issues raised under both paragraphs of cl.457.111(2). It therefore failed to exercise its jurisdictional requirement to consider according to law the matters raised by the criterion in cl.457.223(7A)(c)(i). Its decision to uphold the delegate’s decision cannot be supported by its finding that the applicants did not satisfy the criterion of “the business is of benefit to Australia”.
However, the Tribunal also upheld the delegate’s decision upon a separate finding that the applicants did not satisfy the additional criterion in cl.457.223(7A)(c)(iv), and it is necessary for the applicants to establish that it also erred in that part of its reasons, before they can make out an entitlement to the relief they seek from the Court.
Clause 457.223(7A)(c)(iv) – the assets test
It will be recalled that this provision required:
(7A) …
(c) the Minister is satisfied that:
(iv) the applicant has net assets of:
(A)not less than AUD250,000; or
(B)a lesser amount that is adequate;
to conduct the business; …
The Tribunal’s discussion of this criterion commenced with reference to a “relevant policy” whose actual contents and derivation was not identified by it. This was said to require “that an applicant’s net assets is calculated by deducting the value of any liabilities from the applicant’s personal and business assets”. From the policy, the Tribunal identified various directions concerning how overseas and local assets could be evidenced, and as to how a decision‑maker should proceed. It also purported to guide a decision‑maker in non‑exhaustive terms as to how the “adequacy” of assets less than $250,000 might be addressed.
Both counsel accepted that some parts of the policies identified by the Tribunal might reflect a proper interpretation of the language of the regulation. In particular, they both accepted that “assets” could be taken into account whether or not they were in fact used or required to be used in the business, and regardless of whether they were owned by the entity which conducted the business. Counsel for the Minister accepted that, for a business conducted by a corporation, the regulation required that an applicant proprietor’s uncommitted personal assets should be regarded as assets which the applicant “has … to conduct the business”, regardless of whether they had been set aside or secured for business purposes or in any way brought into the business.
Upon this accepted interpretation, counsel for the applicants submitted that the Tribunal’s error in its application of this criterion appeared starkly by analysing its reasoning about the evidence which it accepted. In particular, he submitted that there was no justification shown by the Tribunal for putting out of its consideration the fact (which it accepted) that the applicants “had” uncommitted equity in their Australian home of $210,000. He submitted that, although the applicants had not needed to draw upon this equity to support their business, it was necessarily an asset which they “had … to conduct the business”.
Counsel for the applicants also criticised the Tribunal’s reasoning in relation to other assets which the applicants claimed they could call upon if this became necessary. However, it is unnecessary for me to examine these arguments.
The Tribunal’s reasoning was (emphasis in original):
[66]The applicants provided documentary evidence that their combined personal assets include the secondary visa applicant’s $100,000 superannuation, the review applicant’s superannuation of $22,000 as well as equity of $210,000 in the family home. The Tribunal finds that the applicants have personal assets totalling $332,000. The Tribunal notes that the applicants have not considered borrowing against their family home. The Tribunal has already noted that there is no evidence from CPFB to confirm that the secondary visa applicant has access to her funds for investment in the business. The review applicant has not provided evidence that he is entitled to access his own superannuation funds for investment in the business. The Tribunal is not satisfied that the applicants’ personal assets of $332,000 are available to the applicants to conduct the business.
[67]The Tribunal must determine whether the applicants’ business assets are assets available to conduct the business at the time of decision. The applicants’ two cars, office furniture and equipment and trade debtors are included as assets in the financial statements. However, the 2005 financial statements for Nisa P/L indicate that the business carried a net liability of $48,312 as at 30 June 2005. The Tribunal finds, therefore, that the applicants had no net assets available to conduct the business.
[68]The Tribunal is not satisfied on the evidence before it that either the review applicant or the secondary visa applicant has net assets of not less than $250,000 to conduct the business.
[69]The Tribunal must also consider whether the review applicant or the secondary visa applicant have net assets in an amount less than $250,000 that is adequate to conduct the business. The Tribunal takes into account the recent improvement in the business’ financial position, but notes that the business is yet to record a profit for taxation purposes, and that it continues to carry liabilities of $48,312. The Tribunal notes that the applicants have expressed an intention to hire three full‑time staff in 2006, which would place a further financial burden on a business which is struggling to reach profitability after three years of operation. The Tribunal is not satisfied that the review applicant or the secondary visa applicant have net assets in an amount less than $250,000 that is adequate to conduct the business. The Tribunal finds that the review applicant and the secondary visa applicant both fail to satisfy paragraph (7A)(c)(iv) of clause 457.223.
[70]The Tribunal finds that the review applicant fails to satisfy clause 457.223(7A) and therefore fails to satisfy clause 457.223 at the time of decision.
Both counsel accepted that the Tribunal’s reason for putting out of consideration the house equity in relation to both clause 457.223(7A)(c)(iv)(A) and (B) can only be found in the Tribunal’s statement in its [66] that: “The Tribunal notes that the applicants have not considered borrowing against their family home”.
This led to a debate about what evidence had actually been given by the applicants on this topic. The Tribunal when narrating their evidence at the hearing said:
[27]The review applicant was invited to provide evidence in relation to the business’ assets and liabilities. He stated that $8,000 in cash is used for personal and business expenses. The review applicant stated that two cars are used in the business, and are therefore business assets, along with all office furniture and equipment. He stated that there are 2,000 books remaining to be sold. The review applicant stated that the family home is not owned by the business and they have not contemplated borrowing against the home for business purposes. The review applicant stated that the secondary visa applicant’s superannuation of $300,000 is also available for approved investments until the secondary visa applicant turns 55 years, when it becomes available for any purpose. He stated that they also have access to $100,000 which is held by the secondary visa applicant’s sister. The review applicant stated that the secondary visa applicant and her sister purchased a residential property in Australia, which will be left to their son. He stated that the secondary visa applicant’s sister told them recently that they could sell the property for around $320,000 and use the funds in the business.
[28]The review applicant stated that when he first arrived in Australia he was not familiar with local business practices and made mistakes. He stated that Nisa P/L is now progressing well and they are realistic in their expectations that the business will continue to improve. He stated that he and the secondary visa applicant have put $130,000 into the business and want to remain in Australia to realise the results of their investment.
[29]The secondary visa applicant stated that she has an insurance policy in Singapore which will be valued at $45,000 when it matures in March 2006. She stated that she has personal savings of $15,000. The secondary visa applicant stated that the Central Provident Fund Board (CPFB) in Singapore will release up to 80% of her own contributions for investment. She stated that she can only access the ordinary account, which represents her personal contributions, and an interest charge applies. She stated that CPFB will release funds to be invested in Nisa P/L, and how the funds are used within in the business is of no concern to that organisation.
The applicants filed affidavits which were unsatisfactorily prepared, but which were admitted into evidence subject to relevance and weight. A transcript of the Tribunal’s hearing was not tendered, but the applicant husband said:
17.On some other aspects she seemed not able to understand me or wanted to put her own construction on what I said.
18.An example of this was about whether I was willing to borrow on my house.
19.I thought the answer to this was obvious, because I had already borrowed on the house, and if we were not successful in getting a visa I would have to sell the house anyway.
20.I Sydney Wyse, initially answered this question by saying that at this stage I had a positive cash flow and this was likely to continue, and I had unsold stocks of books that were selling well, and that therefore I did not believe I needed to borrow more money, because the cash flow was providing the funds to pay any new commitments or outgoings as they arose.
21.When the Presiding Member began to question whether this was so, and I responded, that difference became the issue, and she seems to have inferred from that, that I would not borrow further on the house to support the business, when of course I would have. I repeat that I had previously borrowed on the security of the house, and had the equity to borrow another $210,000 when the original decision was made, and if I could not stay in Australia to run the business I would not need to keep the house and it would be sold. (In fact the equity in the house now is about $350,000).
On the Tribunal’s own findings as to what the applicants said about their equity in the home, they said nothing more than that they “have not considered” putting more funds into the business by borrowing upon their home. Yet this fact could not justify the Tribunal’s exclusion of this asset when making the assessments required under either sub-paras.(A) or (B) in cl.457.223(7A)(c)(iv).
This is because, on the company accounts which were before the Tribunal, it was clear that the applicants did not need to draw on this asset in the business as it was currently being conducted.
The applicants’ evidence was open to only its literal and neutral interpretation. The certified accounts of the business showed that it had successfully operated for nine years, without any significant external borrowings, and without the applicants being required to inject more capital from their own assets. It had shown a profit on revenue account for the last two years, and its accumulated losses were about to cease to be available for income tax purposes. Its deficit on balance sheet was almost entirely accounted for by diminishing loans from the proprietors. In the face of this evidence it was not, in my opinion, open to the Tribunal to overlook that the applicants “had” this asset, nor to find that it would in law and fact not be available to them “to conduct the business”.
On the evidence which the Tribunal has accepted, the only explanation for the Tribunal’s exclusion of the home equity from the accounting process required under cl.457.223(7A)(c)(iv), is that it must have construed the reference to “has net assets of … to conduct the business” as meaning “has committed or set aside net assets of … to conduct the business”. However, in my opinion, this would be an erroneous construction, which reads qualifications into the plain language of the regulation. In my opinion, this requires no more than the possession of assets at the level described which are capable of being applied to support the business, even if they are not currently required, or committed, or set aside for that purpose.
Counsel for the Minister sought to explain the Tribunal’s exclusion of the home equity by referring to a part of the policy cited by the Tribunal which said:
[62]… The ‘net assets’ claimed by the applicant do not have to be in Australia, but have to be available to the applicant in order to conduct or establish the business. Applicants are expected to be able to demonstrate how they plan to make the assets available to the business. This could include whether they plan to sell an asset, borrow against an asset, transfer cash or use funds already in Australia. They are also required to demonstrate that they can legally transfer the assets to Australia.
He submitted that it was open to the Tribunal to rely upon this policy, by excluding the applicants’ equity in their Australian home on the basis that they had not shown a “plan” to use that asset in their business in the future.
It is unclear to me that this, in fact, explains why the Tribunal thought it could exclude the home equity. However, in my opinion, if the Tribunal did reason in the manner suggested, it applied requirements which are not capable of being found in the language of cl.457.223(7A)(c)(iv). This does not require, for an applicant currently conducting a business in Australia, that they show a financial plan for the future use of their Australian personal assets in the business.
It requires no more than he or she “have” assets exceeding $250,000 or such lesser “adequate” sum, which would be available – if and when needed – “to conduct the business”.
I accept the applicants’ submission that the evidence before the Tribunal did not leave it open to it to exclude the applicants’ home equity from its assessment of their assets for the purposes of cl.457.223(7A)(c)(iv). I consider that the Tribunal’s exclusion of this asset must have been the result of a misapprehension of the legal requirements of this regulation, and that it has resulted in its failing to take into consideration a very material part of the applicants’ evidence supporting a conclusion that they might satisfy either subparagraphs (A) or (B) in cl.457.223(7A)(c)(iv). The Tribunal’s error may have affected its conclusion that the applicants could not establish assets exceeding the $250,000 standard. It clearly, in my opinion, would have affected its failure to be satisfied that they had lesser assets “adequate” for them to continue the business which they were successfully running in Australia.
If necessary, I would find that, as a matter of law, it was not open to the Tribunal to conclude at the end of [67] that “the Tribunal finds, therefore, that the applicants had no net assets available to conduct the business”, and that this gave rise to jurisdictional error (c.f. Minister for Immigration & Multicultural & Indigenous Affairs v VOAO [2005] FCAFC 50 at [5] and [13], and SFGB v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 231 at [19] and [28]).
Conclusion
For the above reasons, I consider that the Tribunal’s decision was materially affected by jurisdictional errors affecting its failure to be satisfied in relation to both cl.457.223(7A)(c)(i) and (iv).
The applicants are therefore entitled to the relief claimed.
This conclusion means that I do not need to consider other arguments presented on behalf of the applicants. These ranged very widely over the fairness of the procedures followed by the Tribunal, and the merits of many of its factual findings.
The applicants sought costs, and I consider that it is appropriate to award these in the amount fixed under r.44.15(1) and item 1(c) of Part 2 of Sch.1 of the Federal Magistrates Court Rules 2001 (Cth).
I certify that the preceding sixty‑nine (69) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 28 September 2006
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