X.W Xu & Z.C Xu v Minister for Immigration

[2017] FCCA 2330

FEDERAL CIRCUIT COURT OF AUSTRALIA

X.W XU & Z.C XU & ANOR v MINISTER FOR IMMIGRATION & ANOR [2017] FCCA 2330

Catchwords:
MIGRATION – Application for approval of a nominated position under reg.5.19 of the Migration Regulations 1994 – refusal – review of Migration Review Tribunal (“Tribunal”) decision.

ADMINISTRATIVE LAW – Allegation that the Tribunal’s decision affected by jurisdictional error by reason that the Tribunal breached s.353 of the Migration Act 1958, was biased and made an incorrect finding of fact.

Legislation:

Migration Regulations 1994, reg.5.19

Tribunals Amalgamation Act 2015, item 15AG of sch.9

Migration Act 1958, ss.357A, 474

X.W Xu & Z.C Xu & Anor v Minister for Immigration & Anor [2017] FCCA 2329
Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476

First Applicant: X.W XU & Z.C XU (ABN 81 615 588 627)

Second Applicant: ZAN CHUN XU

First Respondent: MINISTER FOR IMMIGRATION & BORDER PROTECTION

Second Respondent: ADMINISTRATIVE APPEALS TRIBUNAL

File Number: SYG 3526 of 2014

Judgment of: Judge Cameron

Hearing date: 12 September 2017

Date of Last Submission: 12 September 2017

Delivered at: Sydney

Delivered on: 29 September 2017

REPRESENTATION

The Applicants appeared in person

Counsel for the First Respondent: Mr J. Kay Hoyle

Solicitors for the Respondents: Clayton Utz

ORDERS

1. The application be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3526 of 2014

X.W XU & Z.C XU (ABN 81 615 588 627)

First Applicant

ZAN CHUN XU

Second Applicant

And

MINISTER FOR IMMIGRATION & BORDER PROTECTION

First Respondent

ADMINISTRATIVE APPEALS TRIBUNAL

Second Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. This proceeding was heard immediately after matter SYG 3525 of 2014, X.W Xu & Z.C Xu & Anor v Minister for Immigration & Anor [2017] FCCA 2329, which involved the same parties and raised essentially the same issues. The two matters were not heard together but because of their considerable similarity the reasons in this matter are substantially the same as those in SYG 3525 of 2014.

2. The first applicant (“Country Noodles”) is a partnership which operates a number of Asian takeaway restaurants in regional New South Wales under the trading name “Country Noodles”.  The second applicant (“Mr Xu”) is a proprietor of the business.

3. On 18 May 2011 Country Noodles lodged a Form 1054 application for approval of a nominated position under reg.5.19 of the Migration Regulations 1994 (“Regulations”). That application was refused by a delegate of the first respondent (“Minister”) on 17 April 2012. Country Noodles subsequently applied to the Migration Review Tribunal (“Tribunal”), a predecessor of the second respondent, for a review of that departmental decision. It was unsuccessful before the Tribunal and the applicants have applied to this Court for judicial review of the Tribunal’s decision: item 15AG of sch.9 to the Tribunals Amalgamation Act 2015.

4. In these judicial review proceedings the Court cannot rehear the applicants’ nomination application. Its task is to determine whether the Tribunal’s decision is affected by jurisdictional error as that is the only basis upon which it can be set aside: s.474 of the Migration Act1958 (“Act”); Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476.

5. For the reasons which follow, the application will be dismissed.

RELEVANT LEGISLATION

1. Regulation 5.19 of the Regulations sets out the requirements for the approval of a nominated position. At the time of the delegate’s decision, the regulation contained two alternative streams: an employer nomination stream (reg.5.19(2)) and a regional sponsored migration nomination stream (reg.5.19(4)), otherwise referred to as the Regional Sponsored Migration Scheme (“RSMS”). In this case, Country Noodles sought to satisfy the criteria in the RSMS.

2. The version of reg.5.19 which applied to the applicants, including before the Tribunal, relevantly provided as follows:

   5.19      Approval of nominated positions (employer nomination)

   (1)An employer may apply to the Minister for approval of a nominated position as an approved appointment.

   …

   (1B)The Minister may, in writing, approve or reject an application.

   (1C)However:

   (a)     the Minister must approve an application if:

   (i)     the application is made in accordance with subregulation (1A); and

   (ii)     the nominated position is the subject of an employer nomination that:

   (A)…

   (B)if the application was made using form 1054 — meets the requirements of subregulation (4); and

   (iii)the employer is not the subject of an action that is described in section 140L of the Act (as in force immediately before 14 September 2009) or section 140M of the Act; and

   (b)the Minister must reject an application if any of the requirements in paragraph (a) is not met.

   …

   (4)An employer nomination meets the requirements of this subregulation if:

   (a)the employer nomination is made by an employer in respect of a need for a paid employee in a business that is:

   (i)     actively and lawfully operating in regional Australia; and

   (ii)     operated by that employer; and

   (b)     either:

   (i)     the appointment:

   (A)will provide the employee with full‑time employment; and

   (B)will be for at least 2 years; and

   (C)will be located in regional Australia; or

   (ii)     if the employer nomination relates to a person designated under regulation 2.07AO — the appointment:

   (A)will provide the employee with either continuing full‑time employment or seasonal employment that will continue; and

   (B)is in accordance with the employment the employee has undertaken in regional Australia over the previous 12 months; and

   (C)will be located in regional Australia; and

   (c)unless the appointment is exceptional, the work to be performed requires the appointment of a person who has a diploma (within the meaning of subregulation 2.26A (6)) or higher qualification; and

   (d)the employee is to be employed or engaged in Australia in accordance with the standards for wages and working conditions provided for under relevant Australian legislation and awards; and

   (e)a body specified by Gazette Notice for this paragraph certifies that the employer nomination meets the requirements of paragraphs (a), (b) and (c); and

   (f)the Minister is satisfied that nothing adverse is known to Immigration about the business background of:

   …

   (iii)any individual who is a member of a partnership that is 1 of the entities that constitutes the employer; and

   (g)the Minister is satisfied that the employer has a satisfactory record of compliance with the immigration laws of Australia; and

   (h)the Minister is satisfied that the employer has a satisfactory record of compliance with workplace relations laws …

BACKGROUND FACTS

Visa application

1. Country Noodles’ application of 18 May 2011, together with its supporting documentation, relevantly revealed the following:

   a)Country Noodles began trading in April 2006;

   b)the business operated six takeaway restaurants which were located in Batemans Bay, Bowral, Mudgee, Muswellbrook, Nowra and Ulladulla;

   c)approval was being sought for the nominated position of “Cook” for Country Noodles’ restaurant in Mudgee;

   d)the nominee for the position, a Mr Zanqin Xu, had been employed as a cook at the Mudgee restaurant since February 2009;

   e)Country Noodles proposed to employ Mr Zanqin Xu in the nominated position for a term of not less than two years at an annual salary of $47,480;

   f)Country Noodles submitted that it was difficult for the business to find qualified cooks, given the national shortage of skilled cooks and the regional location of the restaurant.  Mr Zanqin Xu was a highly experienced and skilled cook and Country Noodles hoped to employ him on a permanent basis; and

   g)the nominated position was advertised in June and July 2010.  No suitable candidates were identified.

2. The documents which were submitted in support of the application relevantly included:

   a)financial statement for the year ended 30 June 2010;

   b)quarterly business activity statements for the period July to September 2010 and October to December 2010;

   c)advertisements for the nominated position;

   d)a signed contract of employment dated 15 November 2010 between Mr Zanqin Xu and Mr Xu in respect of the nominated position; and

   e)a certification issued on 17 January 2011 pursuant to reg.5.19(4)(e).

3. Country Noodles’ application was refused by the Minister’s delegate on the basis that it did not satisfy the requirements of reg.5.19(4) of the Regulations. An employer nomination application lodged by Country Noodles in April 2011 in respect of its restaurant in Ulladulla was also refused by the delegate on the same day and is the subject of proceeding SYG 3525 of 2014.

Tribunal proceedings

1. Country Noodles subsequently applied to the Tribunal for review of the delegate’s decisions to refuse its employer nominations. 

2. Relevantly for this proceeding, on 18 May 2014 Country Noodles provided the Tribunal with a letter from its accountant dated 16 May 2014.  The accountant advised that it was his opinion that the business had sufficient financial capacity to employ Mr Zanqin Xu in the position of cook for two years after the RSMS visa was granted.  Written submissions which addressed the delegate’s findings were provided on 23 October 2014.

3. On 24 October 2014 the Tribunal conducted a combined hearing of the two review applications (together with the nominees’ related applications for subclass 857 visas which had also been refused).

4. On 29 October 2014 Country Noodles’ representative wrote to the Tribunal asking that the review application be reconstituted to another member and transferred to Sydney. In this regard, the representative referred to comments made by the Tribunal at the hearing about the weight which it would give to the certification issued in January 2011. It was also submitted that the Tribunal had refused to watch a video which showed the nominees working and training local Australians in English. Referring to s.357A of the Act, it was submitted that these matters indicated that Country Noodles’ applications would not be assessed by the Tribunal fairly. The representative also enclosed correspondence from Mr Xu, who repeated Country Noodles’ request for reconstitution by another Tribunal member.

5. The applicants’ requests were refused by the Tribunal on 30 October 2014.

6. On 11 November 2014 Country Noodles submitted evidence that the department had approved two other RSMS nominations which it had lodged for the position of a cook.  It was submitted that the documents which had been provided in connection with the approved applications were the same documents which had been provided by Country Noodles in relation to the application the subject of the review.  It was submitted that these two approvals indicated that the business was qualified as a subclass 857 visa sponsor.

7. On 28 November 2014 Country Noodles submitted further documents to the Tribunal, including:

   a)financial statements for the year ending 30 June 2011 and 30 June 2013;

   b)business activity statements covering the period April to December 2010, 2011, 2012, 2013 and the period January to June 2014;

   c)an updated contract of employment signed by Mr Zanqin Xu  and Mr Xu dated 27 October 2014.  The contract specified a four year appointment commencing on the date of Mr Zanqin Xu’s visa grant, and on an annual salary of $55,000; and

   d)submissions relating to the exceptional nature of the appointment.

Tribunal decision

Request for reconstitution of the Tribunal

1. The Tribunal addressed, as a preliminary issue, its reasons for refusing Country Noodles’ request for reconstitution of the Tribunal by another member. 

Operation of reg.5.19(4)

1. The Tribunal was not satisfied that reg.5.19(4) was drawn in a manner that prohibited a decision-maker from assessing the requirements in reg.5.19(4)(a), (b) and (c) once a certificate from a regional certifying body has been issued under reg.5.19(4)(e). In the Tribunal’s view, reg.5.19(4) incorporated a two-fold process: an assessment by the relevant decision-maker of sub-regs.5.19(4)(a) to (h), and an assessment by the relevant regional certifying body of sub-regs.5.19(4)(a), (b) and (c).

2. Secondly, the Tribunal observed that the courts have generally held that the question of weight is a matter for the Tribunal.

3. Thirdly, in relation to the video evidence, the Tribunal noted that this evidence had not been submitted in a form which would have assisted the Tribunal to view the material prior to or at the time of the hearing.  It noted, however, that that video evidence had since been provided and that it had viewed the evidence “for the purposes of this and the related review applications before it”.

4. Finally, the Tribunal observed that it was a matter for the Court to determine whether the Tribunal had complied with its statutory obligations under the Act to afford Country Noodles procedural fairness, but rejected any suggestion that its conduct of the hearing had in any way been inappropriate.

Nomination criteria

1. The Tribunal then considered whether Country Noodles satisfied the criteria in reg.5.19.

Sub-regulation 5.19(4)(a) 

1. The Tribunal was satisfied that Country Noodles was actively and lawfully operating a business in Australia as required by reg.5.19(4)(a)(i).

2. However, for the following reasons, it was not satisfied that at the time of its decision Country Noodles had a need for a paid employee in the nominated position in its Mudgee restaurant as required by reg.5.19(4)(a):

   a)the Tribunal formed the view that the position had been created to facilitate the migration of Mr Zanqin Xu and his family to Australia, noting that:

   i)the Mudgee restaurant employed a limited number of individuals and two out of the three individuals employed had a familial connection to Mr Xu;

   ii)the existence of a familial relationship between the employer (Country Noodles) and the visa applicant (Mr Zanqin Xu) indicated that the arrangement was not at “arm’s length” and detracted from Country Noodles’ claim that the Mudgee restaurant had a need for a paid employee;

   iii)Country Noodles’ efforts to recruit a cook to the nominated position were limited and narrow.  In this regard, Mr Xu’s evidence at the hearing did not suggest that he had looked beyond family in China to fill the nominated position.  Correspondingly, Mr Xu undertook limited efforts to advertise, recruit and train a suitably qualified cook to work in the nominated position both during 2010 and since then; and

   iv)Mr Xu indicated at the hearing that he was prepared, on behalf of Country Noodles, to close the Mudgee restaurant, despite his capital investment in the premises, if Mr Zanqin Xu was unable to secure permanent residency in Australia.  In the Tribunal’s view, this suggested that the Mudgee business represented a vehicle for a family member to migrate to Australia, rather than part of a plan to grow the business overall;

   b)Country Noodles’ financial position undermined its claim to need a paid employee.  In this connection:

   i)the Tribunal considered Mr Xu’s oral evidence that Country Noodles had never suffered a loss and had always generated sufficient profit to operate the business.  However, it placed greater weight on the business’s financial statements which indicated that in the period June 2010 (when the nominated position was first advertised) to June 2014, Country Noodles’ overall turnover had dropped by more than 60%;

   ii)the Tribunal noted that it was provided with financial information relating to Country Noodles’ overall business operations, rather than information specific to the Mudgee restaurant.  The Tribunal observed that when it apportioned the business’s net profits equally amongst its six shops, the share of the annual profit for the Mudgee restaurant for the year ending 30 June 2013 was $13,520, a “somewhat underwhelming” figure.  More importantly to the Tribunal, there was little in the business activity statements to suggest that Country Noodles was likely to maintain this level of net profit in 2014 or 2015, let alone increase it;

   iii)Country Noodles’ financial statements and business activity statements did not align with Mr Xu’s gross income and profit forecasts for the business.  Relevantly, Mr Xu had overestimated the profit forecasts for 2012, 2013 and early 2014.  In the circumstances, the Tribunal placed little weight on Mr Xu’s (optimistic) forecasts about the future cash flow of the business;

   iv)the Tribunal also placed little weight on the accountant’s expressed confidence that the business had sufficient financial capacity to employ Mr Zanqin Xu for two years as Country Noodles’ accountant had relied, in part, on Mr Xu’s forecasts to reach that opinion.  Importantly, the accountant stated that he did not conduct an audit or verify the financial information which had been provided to him by Country Noodles; and

   v)apart from Mr Xu’s claims, there was little in the evidence that specifically pointed to whether Country Noodles was operating successfully in Mudgee or suffering ongoing losses.  Further, given that two of the three employees at the restaurant had a familial connection to Mr Xu, his claim that the restaurant operated successfully was given less weight by the Tribunal;

   c)the Tribunal noted that the certification issued on 17 January 2011 represented the certifying body’s assessment of Country Noodles’ likely position for the next two years.  The Tribunal noted, however, that the relevant certifying body did not have the financial information that was before it.  Having regard to policy guidelines which stated that it was relevant to take into account changes in an applicant’s circumstances, the Tribunal found that the strength of the certification in January 2011 had since been diluted by Country Noodles’ declining performance.  The Tribunal therefore gave the certification less weight at the time of decision in 2014; and

   d)the Tribunal also gave little weight to the departmental decisions to approve Country Noodles’ other employer nominations in May and November 2013 as different financial information underpinned those approvals.

Sub-regulation 5.19(4)(b)

1. The Tribunal was not satisfied, at the time of its decision in 2014, that the appointment would provide Mr Zanqin Xu, as the proposed employee in the nominated position, with full-time employment for at least two years, as required by reg.5.19(4)(b). In this regard, the Tribunal noted that according to the updated contract of employment dated 27 October 2014, Country Noodles proposed to pay Mr Zanqin Xu an annual salary of $55,000 plus 9.5% superannuation for a period of four years (or $60,225 p.a.). However, for the reasons discussed in relation to reg.5.19(4)(a), the Tribunal found that Country Noodles’ financial capacity to provide Mr Zanqin Xu with full-time employment was far from obvious. In particular:

   a)the contract of employment proposed an increase to Mr Zanqin Xu’s annual salary of over $8,000, which represented approximately 63% of the annual profit apportioned to the Mudgee restaurant as an equal share in June 2013;

   b)Country Noodles’ business activity statements indicated a downward trend in the business’s total salary/wages payments during the previous four years;   

   c)for the reasons already discussed, the Tribunal placed little weight on the accountant’s expressed confidence that the business had sufficient financial capacity to sustain Mr Zanqin Xu’s employment.  Furthermore, the accountant’s statement of support was five months old as at the time of decision and did not include financial information regarding the business’s recent performance; and

   d)given Country Noodles’ declining sales and limited profitability, there was little evidence at the time of decision that objectively pointed to its ability to readily pay Mr Zanqin Xu the proposed annual salary and provide him with full-time employment for at least two years.

Sub-regulation 5.19(4)(c)

1. The Tribunal was satisfied that the work to be performed in respect of the nominated position was that of a “Cook” at Skill Level 3 of the Australian and New Zealand Standard Classification of Occupations (“ANZSCO”) (i.e. Certificate III qualification). As the work to be performed did not require the appointment of a person with diploma-level (or higher) qualifications, the Tribunal had to consider whether the nominated position was an exceptional appointment as required by reg.5.19(4)(c).

2. In considering whether the appointment was exceptional, the Tribunal noted that:

   a)the courts have held that the reference to “appointment” is a reference to the nominated position, not to the appointing of a particular visa applicant;   

   b)the Macquarie Dictionary defined “exceptional” to mean “forming an exception or unusual instance; unusual; extraordinary”;

   c)consideration had to be given to what was the usual or ordinary circumstance pursuant to the application being made under the Regulations;

   d)the concept of “exceptional circumstances” (which appear elsewhere in the Regulations) has been held by the courts to mean circumstances that are unusual or out of the ordinary, or which otherwise set the applicant apart from others in a comparable situation. The Tribunal considered it appropriate to adopt a similar approach; and

   e)relevant policy guidelines provided that where a nomination cannot be approved as a normal appointment, it “may” be approved as an exceptional appointment. 

3. Applying these considerations to the present case, the Tribunal found that it was not satisfied that the circumstances before it set the nominated position apart, in the sense of being unusual or atypical, from others in a comparable situation.  It found that the appointment was not exceptional, having regard to the following:

   a)in support of this aspect of the Regulations, it was submitted by Country Noodles that Mr Zanqin Xu had been employed in the nominated position for four years, that his skills as a cook were valued by the business and that County Noodles’ customers appreciated the food he prepared. However, these facts did not necessarily set the nominated position apart from similar positions elsewhere in regional Australia;

   b)Mr Xu did not specifically articulate how the nominated position differed from similar positions elsewhere within Australia and/or the hospitality sector.  In this regard, the Tribunal did not accept Mr Xu’s contention that the Mudgee restaurant and its menu were unique or that the business occupied a niche market;

   c)Mr Xu submitted (using calculations based on the business’s annual turnover) that Country Noodles made up 20% of the local food market in Mudgee.  However, the Tribunal’s own assessment of the business’s financial position, as discussed in connection with sub-reg.5.19(4)(a), did not support Mr Xu’s claims; and

   d)the Tribunal observed that what set this particular appointment apart from others in Australia was Country Noodles’ tenuous financial position.  It had regard to the submission that Country Noodles would have to close its Mudgee store if it could not retain Mr Zanqin Xu’s skills and that it would suffer consequential financial losses.  However, the Tribunal observed that the evidence that the business would suffer financial hardship because it was substantially reliant on the income generated by the nominated position was somewhat limited as the financial information provided in respect of the application related to Country Noodles’ overall business operations and not the Mudgee store specifically.  In addition, the financial information before the Tribunal confirmed a significant overall decline in the business’s operations that appeared to have had occurred irrespective of the nominated position. 

Tribunal’s conclusion

1. Given its findings in respect of reg.5.19(4)(a), (b) and (c), the Tribunal was not satisfied that Country Noodles met the requirements for approval of a nominated position. It therefore affirmed the decision under review.

PROCEEDINGS IN THIS COURT

1. The second applicant, in his supporting affidavit, relevantly deposed as follows:

   …

   4.Under 353 Tribunal’s way of operating, the Tribunal shall, in carrying out its functions under this Act, pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick.  I believe this case is processed by an incompetent tribunal member.  I noted that the tribunal has a fatal misunderstanding of the regulation about the expiry date of Regional certify body’s approval.  The whole hearing was guided under the misunderstanding by the member.

   5.The tribunal member thought that Regional certify body’s approval is only valid for 2 years, which is not the case.  During the hearing I already knew the case officer intended to refuse our four cases.  Then I requested to change the tribunal member.  The tribunal just informed us that they decide not to do so, and did not give us any reasonable grounds as to why the tribunal has decided not to change the member after I have already pointed out that our cases were unfairly processed by the incompetent tribunal member.

   6.It is inappropriate for the tribunal member to say X.W Xu & Z.C Xu has suffered a reduction of more than 60% in turnover since June 2010, as indicated in the financial report for 2011 as provided, our sale has increased $50,000 compared with 2010.  Again this indicates that the tribunal member is incompetent.

   7.We are very disappointed and during the hearing we knew the tribunal intended to refuse us, as she spoke with bias and sometimes with the careless smile on her face.  We find our cases are unfairly processed.  We deserve a professional member to process our case. …

Grounds raised in affidavit

1. The applicants did not advance any arguments in relation to the allegations made in the second applicant’s affidavit which had not been raised in the earlier hearing of matter SYG 3525 of 2014, X.W Xu & Z.C Xu & Anor v Minister for Immigration & Anor [2017] FCCA 2329. Consequently, for the reasons expressed in the reasons for judgment in that matter at [32] – [40], those matters do not disclose a basis for the Tribunal’s decision to be set aside.

Submissions at hearing

1. The applicants filed no written submissions.

2. The applicants’ address to the Court focussed principally on the merits of their nomination application.  However, as noted earlier in these reasons, the Court cannot rehear that application and so those submissions do not identify a basis for setting the Tribunal’s decision aside.

3. Reference was also made to alleged inconsistences between what the Tribunal member said at the hearing and what was set out in the decision record.  However, no transcript or sound recording of the Tribunal hearing was made available to the Court notwithstanding the registrar’s order of 12 February 2015 that:

   The Applicants file and serve any affidavit containing additional evidence relied upon, including any transcript of the tribunal hearing, by 19 March 2015.

   As the applicants had not complied with that order, there was no evidentiary basis for the submissions in question. 

4. The applicants made submissions on the Tribunal’s decision to not transfer the review to Sydney additional to those made in SYG 3525 of 2014.  They submitted that it was unreasonable of the Tribunal to rely on a lack of resources as a reason for declining to transfer the matter.  This appears to have been a reference to the fact that there was no available video room in Sydney on the intended day and time of the hearing.  If so, that submission confused the facts.  The applicants were invited to attend a hearing in Adelaide on 24 October 2014.  Although the emails reproduced in the Court Book are not completely clear, it appears that after the applicants were invited to attend that hearing there was, at least, an implicit request to attend the hearing by video link from Sydney.  The emails reveal that the Tribunal could not provide a video room in Sydney on the day in question and advised the applicants that they could attend in Melbourne if they wished.  The applicants accepted that invitation and the hearing was held there.  The request to transfer the review to Sydney was not made until 29 October 2014, after the hearing, and the request was refused for reasons given in the Tribunal’s email to the applicants dated 30 October 2014, none of which involved a lack of resources or unavailability of hearing rooms.  Consequently, this submission did not identify any relevant error on the Tribunal’s part. 

5. It was also submitted that the Tribunal had not had regard to the evidence of their accountant regarding the business’s strength, but that is not correct as [12] and [25(b)(iv)] above demonstrate.

CONCLUSION

1. Jurisdictional error on the part of the Tribunal has not been demonstrated.

1. Consequently, the application will be dismissed.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Date: 29 September 2017