Zhang (Migration)

[2022] AATA 1901

Zhang (Migration) [2022] AATA 1901 (28 January 2022)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Qiuyue Zhang
Miss Amber Xinhui Lang
Ms Yunni Dai

REPRESENTATIVE:  Ms Karen Wong

CASE NUMBER:  1909672

HOME AFFAIRS REFERENCE(S):  BCC2017/1897191 BCC2017/2248551 BCC2017/2248568 BCC2017/2248583 BCC2018/5832173 BCC2019/2748750

MEMBER:P Ranson

DATE:28 January 2022

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal affirms the decisions not to grant the visa applicants Subclass 892 Business Skills (Residence) (Class DF) visas.

Statement made on 28 January 2022 at 12:05pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Sponsored Business Owner) – ownership interest in the main business – indicators of ‘actively operating’ – health deterioration – business paused for 18 months – ‘continues to satisfy’ – decision under review affirmed

LEGISLATION
Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), rr 1.11, 1.11A; Schedule 2, cls 892.211, 892.214, 892.221

CASES
1504781 (Migration) [2016] AATA 3125
Liang v MIAC (2009) 175 FCR 184
Yang v MIBP [2014] FCCA 1576

STATEMENT OF DECISION AND REASONS

Table of Contents

APPLICATION FOR REVIEW

CONSIDERATION OF CLAIMS AND EVIDENCE

What evidence was considered by the Tribunal?

Why did the delegate refuse the application?

What does this decision deal with?

Ownership interest in main business

Does the applicant have an ownership interest in each business relied on at all relevant times?

Was each business relied on actively operating at all relevant times?

The quiet period (December 2017 to October 2019)

What does ‘continues to satisfy’ mean?

DECISION

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03  Definitions

1.11  Main business

1.11A Ownership for the purposes of certain Parts of Schedule 2

Migration Act 1958

134  Cancellation of business visas

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 3 April 2019 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) subclass 892 visas under s.65 of the Migration Act 1958 (Cth) (the Act).

2. The applicants applied for the visas on 26 May 2017. Certain criteria must be satisfied during the two-year period ending immediately before the date of application, that is, 26 May 2015 to 25 May 2017 (the Application Period).

3. At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Business Owner) visas, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.

4. The delegate in this case refused to grant the visas on the basis the first named visa applicant, Ms Qiuyue Zhang (the Applicant) did not satisfy the requirements of cl.892.221 of Schedule 2 to the Regulations because the nominated business was inactive for an extended period due to the poor health of the Applicant. Ms Yunni Dai (Ms Dai) is the daughter of the Applicant and Miss Amber Xinhui Lang is the daughter of Ms Dai and the granddaughter of the Applicant.

5. The secondary applicants applied based on being members of the family unit of the Applicant. The delegate found the secondary applicants could not be granted Subclass 892 visas, as they did not meet the primary criteria in their own right nor did they meet the secondary visa criterion (cl.892.311) requiring them to be members of the family unit of a person who met the primary visa criteria.

6. The Applicant and Ms Dai appeared before the Tribunal on 8 November 2021 to give evidence and present arguments. The Representative attended the Tribunal hearing and assisted the Tribunal when requested.

7. The Representative and all parties attended the Hearing by video link facilitated by the Tribunal utilising Microsoft Teams. The hearing was held during the COVID-19 pandemic. The Tribunal determined it was reasonable to hold a hearing by video conference, having regard to the nature of this matter and the individual circumstances of the applicant. The Tribunal also had regard to the Tribunal’s objective of providing a mechanism of review that is fair, just, economical and quick, and the delay to the matter if the hearing was not to be conducted by video conference. The Tribunal is satisfied the applicant was given a fair opportunity to give evidence and present arguments.

8. For the following reasons, the Tribunal has concluded the decision under review should be affirmed.

CONSIDERATION OF CLAIMS AND EVIDENCE

What evidence was considered by the Tribunal?

1. The Tribunal had before it the following evidence:

Department File	Digitised file of 961 pages provided by the Department of Home Affairs.
Tribunal File	Digitised file of 811 pages comprising various documents provided to the Tribunal including
ASIC Search	Search of the records of the Australian Securities & Investments Commission (ASIC) in relation to Resilient Bond Australia Pty Ltd ACN 605 351 086 conducted by the Tribunal on 8 November 2021.
Movement Records	Search of the records of the Department of Home Affairs in relation to Ms Qiuyue Zhang conducted by the Tribunal on 9 November 2021 to ascertain the days onshore and offshore during the Application Period.
Pre-Hearing Submission	Submission for the Representative dated 26 September 2021 with numerous attachments.

1. The Tribunal has considered all the material supplied to it and the evidence produced by the Applicant and the witnesses. Not all the evidence is referred to at length in this decision record. That does not mean it has not been considered in determining the outcome. It is sometimes impractical or unnecessary to canvass all aspects, arguments, and history of a case in the decision record.

2. This decision record relies on departmental policy where applicable. The Tribunal is not bound by policy but must take it into account and will usually follow it unless there are cogent reasons not to do so.[1]

   [1] Drake and Minister for Immigration and Ethnic Affairs [1979] AATA 179 (21 November 1979).

Why did the delegate refuse the application?

1. The Applicant experienced significant health problems starting in 2016, and from December 2017 she paused the business operations to enable her to recuperate until October 2019 when, feeling well enough to do so, she returned to China to restart the business. The Applicant argues she maintained control of the management of the business and Ms Dai attended to the day-to-day activities during the pause period from December 2017 to October 2019.

2. The issue in this case then is whether the nominated main business was actively operating from the time of application until the time of this decision.

What does this decision deal with?

1. In accordance with the President’s Direction,[2] the Tribunal will only address those elements of the criteria on which the delegate made an adverse finding, being the satisfaction of cl.892.221(a).[3] Ordinarily that would mean the Tribunal must also consider cl.892.211 and cl.892.214 as they are referred to in cl.892.221(a).

   [2] Presidents Direction for Conducting Migration and Refugee Reviews dated 1 August 2018.

   [3] The delegate’s decision only tests cl.892.221(a) and in respect of continuing to satisfy cl.892.211(1).

2. As the issue in this case is whether the business continued to satisfy cl.892.211(1), that is, whether the business was actively operating throughout the period from time of application to time of decision, this decision will only test cl.892.221(a) in respect of cl.892.211(1).

3. Whilst the Tribunal makes no finding about the Applicant meeting the requirements of cl.892.211(1), as that is not tested in this decision, the Tribunal observes from the contents of the Department File the possibility it may make such a finding. For this decision, the Applicant is given the benefit of the doubt about meeting the requirements of cl.892.211(1) for the purpose of this decision.

4. That said, it is important to understand the elements of cl.892.211(1) because it is those elements, apart from those of cl.892.211(2) and cl.892.214, which the applicant must continue to satisfy to meet cl.892.221(a). There are three elements to cl.892.211(1), which are considered in this decision:

   ·Main business definition met,

   ·Ownership interest in the main business (as distinct from the entity which operates it), and

   ·Actively operating in Australia.

Ownership interest in main business

1. Case law has established a business is not a legal entity but rather an enterprise or undertaking. It is therefore important for the Tribunal to identify the business to which the definition of main business must be applied. It is also important to note that one business can be owned by multiple entities and conversely, multiple businesses can be owned by one entity. For the avoidance of doubt, an Australian Business Number (ABN) attaches to an entity, not to a business.

2. The business relied on by the Applicant to satisfy the requirements for a subclass 892 visa is exporting Australian wine to China under her own label (Le Peony Wines), which is owned and operated by Resilient Bond Australia Pty Ltd ACN 605 351 086 (Resilient Bond). Accordingly, the Tribunal must consider the nature of the Applicant’s interest in this business, and whether the business was actively operating and continued to satisfy cl.892.211(1) from the date of application to the date of this decision.

Does the applicant have an ownership interest in each business relied on at all relevant times?

1. An ‘ownership interest’, in relation to a business, means an interest in the business as:

   ·a shareholder in a company that carries on the business, or

   ·a partner in a partnership that carries on the business, or

   ·the sole proprietor of the business.

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.[4] Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations, set out in the attachment to this decision.[5]

[4] r.1.03 of the Regulations and s.134(10) of the Act.

[5] r.1.11A(1).

1. To meet cl.892.221(a), and cl.892.211(1) if that were tested, the Tribunal must be satisfied the Applicant had an interest of this kind in the relevant business or businesses both at the time of making the application and continues to satisfy this requirement at the time of this decision.

2. The ASIC Search reveals Resilient Bond was registered on 17 April 2015 with 100 fully paid ordinary shares issued to the Applicant who has been the sole director and secretary since registration. The evidence of the Applicant in her undated submission included in the Department File was she started Le Peony Wines in May 2015 following her successful completion of Australia Wine School Level 2 Certificate, rather than purchased it.

3. The Tribunal finds the Applicant has a 100% interest in the Le Peony Wines and has done so continuously since it commenced in May 2015, because the Applicant has a 100% interest in Resilient Bond which operates Le Peony Wines.

4. Accordingly, the Tribunal is satisfied the Applicant did have and does have an ownership interest in Le Peony Wines at all relevant points in time because she has been the sole shareholder since registration and Resilient Bond operates the Le Peony Wines.

Was each business relied on actively operating at all relevant times?

1. To meet cl.892.221(a) the Tribunal must be satisfied Le Peony Wines was actively operating both at the time of making the visa application and continued to satisfy this requirement until the time of this decision.

2. The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period.[6]

   [6] Shahpari v Minister for Border Protection [2016] FCCA 513 at [71].

3. The term ‘actively operating’ can be distinguished from the term ‘actively trading’ by reference to the efforts of the Applicant to develop and manage Le Peony Wines in Australia. In Li[7] at [16] the member states:

   ‘As such, on a plain reading I consider the phrase “actively operating” means that Mr Li must be taking action to progress the business. This does not necessarily mean that he must be making sales or trading, although this would be a clear indicator that a business is actively operating.’

   [7] 1504781 (Migration) [2016] AATA 3125.

4. As mentioned in Li, a reliable indicator of actively operating is making sales. Sales were made by Le Peony Wines as reported in the financial statements for Resilient Bond for the years ended 30 June 2017 to 2021 as shown below.

30-06-2017	30-06-2018	30-06-2019	30-06-2020	30-06-2021
Sales	227,833	36,810	0	0	57,960
Profit/(Loss)	3,823	(5,893)	(5,714)	(931)	3,470

1. The Tribunal agrees with the above quote from Li that active operation involves action to progress the business. However, as shown above after generating sales of $227,833 for the year ended 30 June 2017 (and $274,129 for the year ended 30 April 2017), Le Peony Wines generated sales of $36,810 for the year ended 30 June 2018 and no sales for the next two financial years. Business returned in the year ended 30 June 2021 with reported sales of $57,960 for that year. Nonetheless, there were two financial years when Le Peony Wines achieved no financial gain from its activities.

The quiet period (December 2017 to October 2019)

1. At the Hearing the Applicant explained her health deteriorated throughout 2017 and she suffered bad side effects from anti-depressants which prevented her from attending to the daily activities of life. She had to have help to get out of bed. By December 2017 she had no alternative but to pause the business due to her health issues.

2. She also said at the Hearing: ‘she never stopped planning my business’ and: ‘she didn’t do things as she spent time resting and looking after my health. There was nothing to see as it was all in my head’.

3. By October 2019 the Applicant said she had recovered her health enough to return to China and rebuild her customer base. It would take until 2021 before any sales were generated. The Business Activity Statements (BAS) provided with the Pre-Hearing Submission show nil sales from at least 1 July 2018 to 31 March 2021.

4. During this time the Applicant says Ms Dai took on the role of Administrative Assistant. Ms Dai provided a statutory declaration dated 17 September 2021 to support that assertion. Ms Dai’s statutory declaration says at paragraph 4 she took on the role of Administrative Assistant in November 2019, which coincides with the departure of the Applicant to China to rebuild the customer base of her business.

5. In her evidence at the Hearing, Ms Dai said she had been helping in the business since 2016 and only took on the role officially in November 2019. She also said she receives no pay for her work and usually worked from home (she lives with the Applicant), and if not at home she may take calls or respond to e-mails remotely.

6. Ms Dai’s statutory declaration also says at paragraph 6 her duties include ‘faxing’ however when asked about the fax number for the business she said it didn’t have one and she had not read the statutory declaration before signing it as it had been prepared by the Representative. As a result, the Tribunal concludes little weight can be placed on the statutory declaration of Ms Dai dated 17 September 2021.

What does ‘continues to satisfy’ mean?

1. Clause 892.211(a) says, inter alia, the applicant continues to satisfy (emphasis added) the criteria in cl.892.211. The expression ‘continues to satisfy’ is used in the context of a time of decision criterion for the grant of several visa subclasses and is not defined in the Act or in the Regulations so the nature of this requirement will vary depending upon the grammatical form and context in which it arises.

2. The Macquarie Dictionary (online on 19 January 2022) defines the word ‘continue’ in part as follows:

   1. to go forwards or onwards in any course of action; keep on. 2. to go on after suspension or interruption. 3. to last or endure. 4. to remain in place; abide; stay. 5. to remain in a particular state or capacity …

3. The definition includes the concept of going on or resuming after an interruption (in other words, continues to) as well as remaining in existence (in the sense of continuously, or without interruption). These two possible meanings affect the interpretation of relevant legislative requirements. The answer depends on the construction of the particular provision, but generally will fall within one of two possible scenarios:

   ·the applicant must satisfy these requirements both at the time of application and at the time of decision which contemplates an interruption, or

   ·the visa applicant must always satisfy the relevant criteria from the time of application to the time of decision without interruption.

4. The first interpretation may apply where the word ‘continues’ refers to a status which has a temporal condition whereas the latter applies for an activity-based criterion carrying with it no temporal limitation.[8]

   [8] Xiang v MIMIA (2004) 81 ALD 301 at [9]–[10]; Liang v MIAC (2009) 175 FCR 184 at [42], [46]–[47], [50].

5. There is similarity between the criteria for a subclass 890 visa and a subclass 892 visa. The Court in Yang, which dealt with a subclass 890 visa application, also held reg 1.11 requires an applicant must continue to hold an ownership interest in the applicable main business over a period of two years.[9] In considering this issue, the Court looked at the purpose and overall statutory context of reg 1.11 observing at [68]:

   ‘It is, in my view, clear that the regulation is intended to ensure continuity in the holding of an ownership interest. Such continuity is emphasised by the requirements in regulation 1.11(1)(b) to maintain a direct and continuous involvement in the day-to-day management of those businesses. The requirement in clause 890.221 that an applicant continue to satisfy clause 890.211 at the time of decision, requires the applicant to continue to satisfy the requirement in light of the limitation on the number of main businesses which can be nominated for the purpose of the Regulations at the time of application. There is nothing ‘extreme’ or ‘arbitrary’ in such a construction. Rather, such a construction is consistent with the regulatory requirement for ownership continuity over a two-year period prior to application.’

   [9] Yang v MIBP [2014] FCCA 1576 at [68].

6. The decision in Yang suggests the construction of ‘continues to satisfy’ in this decision is activity based meaning the Applicant was required to satisfy cl.892.221(a) throughout the period from time of application to the time of this decision, without interruption.

7. The findings in Liang and Yang were both about ‘ownership interest’ in the old 845 visa context, and reg 1.11 for the purposes of an 890 visa. The term ‘actively operating’ is similar to the ‘ownership interest’ requirement and must be in existence throughout the period. The reasoning in Liang suggest the requirement for the business to be actively operating at time of application continues to time of decision. Accordingly, given that context, continuing to satisfy that criterion (actively operating) means satisfying it throughout the period.

1. Returning to the elements of cl.892.211(1) as discussed at [‎17], to satisfy cl.892.221(a) in respect of cl.892.211(1), the main business in which the Applicant held an ownership interest had to be actively operating in Australia throughout the period from the time of application to the time of this decision.

2. As discussed at length above, and through no fault of her own, the Applicant was not able to do that due to her poor health and the need for her to pause the business for 18 months to enable her to recuperate. Even once she was well enough to become actively involved in the business again in October 2019, it would take another 18 months for the business to generate sales.

3. The reality is the Applicant was not able to take action to progress the business (Le Peony Wines) from December 2017, and possibly earlier than that, until October 2019 because her poor health simply did not permit her to do so and the limited, if any, assistance of Ms Dai was administrative only. Even if she was planning the business in her head, see [‎31], that doesn’t mean the business was actively operating in the circumstances of this case.

4. Accordingly, the Tribunal is not satisfied the nominated business (Le Peony Wines) was actively operating throughout the period from the time of application to the time of this decision. In saying that, it appears to the Tribunal the business has been actively operating since October 2019.

5. Given the findings above, the decision under review must be affirmed.

6. The Tribunal must also affirm the decision not to grant the secondary applicants Subclass 892 visas as they do not meet the secondary visa criterion (cl.892.311) requiring them to be members of the family unit of a person who holds a Subclass 892 visa, and there is no evidence they meet the primary visa criteria for this subclass in their own right.

7. The Tribunal notes it is open to the applicants to apply for Ministerial Intervention if they believe they satisfy the requirements to do so.

DECISION

1. The Tribunal affirms the decisions not to grant the visa applicants Subclass 892 Business Skills (Residence) (Class DF) visas.

Peter Ranson
Member

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03  Definitions

In these Regulations, unless the contrary intention appears:

…

ownership interest has the meaning given to it in subsection 134(10) of the Act.

…

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.

…

1.11  Main business

(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 spouse 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 AUD400 000;

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 AUD400 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.

1.11A  Ownership for the purposes of certain Parts of Schedule 2

(1)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an applicant, or the applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

(2)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:

(a)a trust instrument; or

(b)a contract; or

(c)any other document capable of being used to enforce the rights of the applicant, or the applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

(3)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

(4)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the applicant, or the applicant’s spouse or de facto partner, has beneficial ownership:

(a)is a dependent child of the applicant; and

(b)made a combined application with the applicant; and

(c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.

Migration Act 1958

134  Cancellation of business visas

….

1. In this section:

….

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.