Zhang (Migration)

Zhang (Migration) [2019] AATA 6152 (21 October 2019)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:  Mrs Huilan Zhang
Mr Youzhong Jiang
Master Jianxin Jiang
Miss Xiuying Jiang
CASE NUMBER:  1716895
DIBP REFERENCE(S):  BCC2015/2765242 BCC2015/2765530 BCC2015/2765531 BCC2017/3098760
MEMBER:Keith Kendall
DATE:21 October 2019
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal remits the applications in respect of the first, second and third named applicants for Business Skills (Residence) (Class DF) visas, with the direction that the first named visa applicant meets the following criteria for a Subclass 892 (State/Territory Sponsored Business Owner) visa:
·cl.892.211(1) of Schedule 2 to the Regulations
The Tribunal has no jurisdiction to consider the application for the fourth named applicant.

Statement made on 21 October 2019 at 10:22am

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Business Owner) visa – maintaining direct involvement in the business management – applicant’s lack of Korean language skills – operating an authentically Korean restaurant – main business – site visit report – manager’s awareness of staff identities in small business – involvement in employment and lease agreements – decision under review remitted
LEGISLATION
Migration Act 1958, ss 65, 134
Migration Regulations 1994, Schedule 2, cl 892.211; 1.03, 1.11
CASES
Lobo v MIMIA [2003] FCAFC 168
Shahpari v Minister for Border Protection [2016] FCCA 513
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576
STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Immigration on 24 July 2017 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) Subclass 892 visas under s.65 of the Migration Act 1958 (the Act).
The applicants applied for the visas on 22 September 2015. 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.
The delegate in this case refused to grant the visas on the basis that the first named visa applicant (‘the applicant’) did not satisfy the requirements of cl.892.211(1) of Schedule 2 to the Regulations because the delegate was not satisfied that the applicant had maintained direct and continuous involvement in management of the business and, therefore, the business did not qualify as a ‘main business’ for the purposes of cl.892.211(1).
The applicant appeared before the Tribunal on 9 July 2019 to give evidence and present arguments. The Tribunal also received oral evidence from Miss Xiuying Jiang (referred to in documents as Coco), the applicant’s daughter. The applicant prior to the hearing also provided details of an additional witness, Chunqing Ruan, who was identified as a friend of the applicant who had assisted the applicant in finding a suitable business in Melbourne in which to invest. However, after taking evidence from the applicant and Miss Jiang, the applicant’s authorised representative indicated that this additional witness would not provide any further evidence other than to corroborate evidence that had already been received. In light of this acknowledgement, the authorised representative agreed that it was unnecessary to take evidence from this witness. This matter was put to the applicant directly, who agreed that it was unnecessary to take evidence from this witness in light of the evidence that had already been received.
The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.
The applicant was represented in relation to the review by their registered migration agent. The representative attended the Tribunal hearing.
At the hearing, the applicant provided a detailed account of the history of the business that she was operating, being a Korean barbecue restaurant located in South Yarra. This history included the preparatory steps leading up to the decision specifically to open a Korean barbecue restaurant, based on her history in the food business in China and her market research as to the likely success of this business in Melbourne. The applicant described her involvement, in terms of identifying trends that could increase revenue growth, promotions, customer service, staff training, cost controls and her direct interaction with particular suppliers. The applicant acknowledged that her lack of English and Korean language skills resulted in her being reliant to a large degree on Miss Jiang and her former head chef (Mr In Lee) to communicate with suppliers and staff. The applicant emphasised that part of her strategy for establishing the business was to staff the restaurant predominantly with staff with a Korean background, at least those who would have direct contact with customers, in order to promote the authenticity of the Korean restaurant (rather than having, for example, staff of a Chinese background that may detract from the impression that the restaurant was authentically Korean). Given the applicant’s lack of Korean language skills, this gave rise to her reliance on Mr Lee and others to communicate with staff directly.
In written evidence provided by the applicant, the concern was raised a number of times that the applicant was sensitive to the impression that a person of Chinese background would not be in a position to operate an authentically Korean restaurant.
The majority of the remainder of the applicant’s oral evidence focused on a site visit to the restaurant conducted by the Department of Immigration and Border Protection (‘the Department’) on 2 April 2015. In recalling this event and the surrounding circumstances (where the applicant stated that her and her husband had been having significant difficulties in closing down a factory business in China, requiring her to travel periodically), the applicant was clearly emotional, but was able to explain her evidence to the Tribunal’s satisfaction. This evidence in respect of the site visit is considered in further detail below.
The applicant had also provided written evidence in the form of a statutory declaration dated 6 October 2016, which is also considered further below. The contents of this evidence are consistent with the applicant’s oral evidence received at the hearing.
Miss Jiang provided evidence that her involvement in the business was to support the applicant, particularly in assisting the applicant communicating in English with suppliers and customers as the need arose. Miss Jiang also indicated that she assisted the applicant in discussions regarding supply costs. Most of Miss Jiang’s remaining evidence related to the Department’s site visit and the subsequent effects that that event had had on the applicant. Miss Jiang’s evidence was consistent with that taken from the applicant.
The Tribunal is satisfied that both the applicant and Miss Jiang are credible witnesses and regards the evidence as reliable.
For the following reasons, the Tribunal has concluded that the matter should be remitted.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in the present case is whether the applicant maintained a direct and continuous involvement in the management of the business, such that that business qualifies as a ‘main business’ for the purposes of cl.892.211(1) of the Regulations.
Ownership interest in main business
Clause 892.211(1) requires that the applicant had an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the visa application was made and continued to have that interest at the time the visa application was made. No more than two businesses can be nominated for this purpose (r.1.11(2)) and only one or both of the businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion: Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.
The business relied on by the applicant to satisfy these requirements is Melbourne Kingdom Group Pty Ltd (ACN 154 673 604) (‘the Company’) trading as Zen Charcoal BBQ. Accordingly, the Tribunal must consider the nature of the applicant’s interest in this business, whether the business was actively operating and whether it met the definition of ‘main business’ in the period commencing two years immediately prior to the date of application and as at the date of application.
Does the applicant have an ownership interest in each business relied on at all relevant times?
An ‘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: r.1.03 of the Regulations and s.134(10) of the Act. 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: r.1.11A(1).
In order to meet cl.892.211(1) the Tribunal must be satisfied that the applicant had an interest of this kind in the relevant business or businesses both at the time of making that application and for the two years immediately before.
As noted above, the business in question (Zen Charcoal BBQ) is operated through the Company. Therefore, this criterion is satisfied if the applicant has maintained an ownership interest in the Company at all relevant times.
Records obtained from the database maintained by the Australian Securities and Investments Commission (ASIC) indicate that the Company was incorporated on 7 December 2011. These records currently list the applicant as the sole director and shareholder of the Company. These records further indicate that there have been no other directors or shareholders during the Company’s history.
Accordingly, the Tribunal is satisfied that the applicant did have an ownership interest in the nominated business at all relevant points in time.
Was each business relied on actively operating at all relevant times?
In order to meet cl.892.211(1) the Tribunal must be satisfied that the relevant business or businesses were actively operating both at the time of making the visa application and during the two years immediately before.
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: Shahpari v Minister for Border Protection [2016] FCCA 513 at [71].
The applicant provided a number of documents establishing the business’ trading history, including:
·Extract from the Australian Business Register indicating that the Company obtained an Australian Business Number (ABN) effective from 7 December 2011;
·Certificate of business name registration indicating that the business name Zen Charcoal BBQ has been registered since 18 April 2012;
·Comprehensive business activity statements (BAS) from the September 2013 Quarter until the March 2016 Quarter;
·Financial reports for the years ended 31 August 2012, 2013, 2014 and 2015;
·Lease agreement relating to the business premises (306 Toorak Road, South Yarra) dated 7 May 2012; and
·Numerous supplier invoices indicating the purchase of supplies during 2013, 2014, 2015 and 2016.
In her statutory declaration dated 6 October 2016, the applicant stated that she had registered the Company on 7 December 2011, registered the business name on 18 April 2012 and signed the lease over the business premises on 7 May 2012. These statements are corroborated by the documents identified above.
The applicant further stated in that statutory declaration that the business commenced trading on 22 June 2012 after renovations had been conducted at the business premises. This assertion is corroborated in an email received from the authorised representative received on 19 July 2019, which provided, amongst other documents, the financial report for the year ended 31 August 2012. In that email, the authorised representative explained the low turnover for that year as being attributable to the business commencing trading on 22 June 2012, that is, shortly before the end of that reporting period.
The report from the site visit conducted on 2 April 2015 makes reference to trading taking place during the time the Department officers were in attendance. The Tribunal also notes that the Department has not raised any suggestion in its own documents forming the Department’s file or the primary decision that the business was not trading at this time.
Accordingly, the Tribunal is satisfied that the nominated business was actively operating at all relevant points in time.
Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?
In order to satisfy the requirements of cl.892.211(1), the business or businesses relied on by the applicant must meet the definition of ‘main business’ at the time of application and during the two years immediately before. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.
Firstly, the applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in s.134(10) of the Act: r.1.03. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met: r.1.11A. These provisions are set out in full in the attachment to this decision.
As noted earlier, the applicant has been the sole shareholder (and director) of the Company conducting the business since incorporation on 7 December 2011. ASIC records indicate that this state of affairs continues to the date of this decision.
Therefore, the Tribunal is satisfied that the applicant has and has had an ownership interest in the business at all relevant times.
Secondly, the applicant must maintain or have 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.
This is the primary issue of contention and the basis on which the Department refused the visa application in its primary decision.
The Department’s concerns principally derive from the site visit described earlier that took place at the business premises (306 Toorak Road, South Yarra) on 2 April 2015.
Department’s report
The circumstances surrounding that site visit are that two officers arrived at the business premises unannounced just prior to 10.30am on 2 April 2015. According to the Department’s report, the business was closed notwithstanding the advertised opening time being 10.30am. The officers returned just prior to 11am and were advised by a person (identified as Dominic, who was an employee at that time) that the business would open at 11.30am. Dominic advised the officers that the manager of the restaurant is a person named Chelsea Kim (who is Mr Lee’s wife and a friend of the applicant).
The officers returned at 11.20am and observed that the restaurant was open at that time. The officers approached and interviewed another employee, identified as Clara. The officers reported that Clara advised them, inter alia, that:
·She had been employed at the restaurant for two months;
·Ms Kim and Mr Lee are the managers of the restaurant;
·The restaurant’s opening hours are 11.30 to 2.30pm and 5pm to 10pm (dinner only on Sundays);
·Absences due to illness are to be called in to Ms Kim; and
·She believed that Ms Kim was responsible for ordering stock.
When shown a photograph of the applicant, Clara did not recognise the person in the photograph.
The officers interviewed another employee, identified as Hyo (also known as Jenny), initially identified as a chef (Hyo’s position was clarified in a subsequent interview with Mr Lee during this visit as second chef). The officers reported that Hyo advised them, inter alia, that:
·She had been employed at the restaurant part time for a year;
·She identified the owner/manager as ‘Zhang boss’, although could not recall the applicant’s full name;
·She was under the impression that the applicant had been the owner for two to three years;
·She had been hired by Mr Lee and Jenny (in their capacity as chefs) (notes from the interview with Mr Lee indicate that another employee by the name of Jenny worked as a chef at the restaurant);
·The applicant paid her wages; and
·The applicant often attended at the restaurant.
When shown a photograph of the applicant, Hyo recognised the applicant and could not recall the last time she saw the applicant at the restaurant.
After this interview concluded, Hyo was observed speaking to Clara. Clara was again asked if she recognised the person in the photograph and stated that it may be the owner, but was uncertain.
Shortly after, Mr Lee arrived at the restaurant and was interviewed. He advised the officers, inter alia, that:
·He was employed as the head chef for the restaurant on a full time basis;
·The restaurant’s operating hours are 11.30am to 2.30pm and 5pm to 10pm, Sundays dinner only;
·He had worked at the restaurant since it opened in June 2013;
·Staff call in absences to Ms Kim (identified as Mr Lee’s wife);
·Ms Kim works part time at another restaurant in Hawthorn and staff call in absences to her as she assist the applicant due to their friendship;
·The applicant pays Mr Lee’s salary;
·The applicant was last in the restaurant the previous Friday, where she assisted with monitoring staff, assisted in the kitchen washing dishes and bought some items for the restaurant;
·The applicant usually attends the restaurant three or four times a week;
·Mr Lee purchases items for the restaurant in the applicant’s absence;
·The applicant’s involvement with the restaurant was paying bills, checking quality of food and purchasing stock;
·Mr Lee manages the staff roster and reports staff absences to the applicant;
·Mr Lee is responsible for managing staff and ordering stock; and
·Mr Lee would hire kitchen staff with the applicant.
Mr Lee was able to identify four other employees by name.
The officers noted that Mr Lee was able to list two suppliers with contacts as well as a supermarket from which groceries and vegetables were purchased.
During the course of the interview, the applicant arrived at the restaurant with Ms Jiang and attempted to join the interview with Mr Lee. The officers requested that the applicant and Ms Jiang allow the officers to continue the interview with Mr Lee in their absence, to which they agreed and left the immediate area.
When asked directly, Mr Lee denied being the owner (with Ms Kim) of the restaurant. The officers indicated that information on the internet suggested otherwise and cautioned him about providing false information. There is no record of Mr Lee’s response to this caution other than he indicated that he understood.

The officers then interviewed the applicant with the assistance of an interpreter (Mandarin) via telephone. Relevantly, the applicant told the officers that:
·She had researched the idea for the business for six months prior to opening;
·The restaurant had commenced trading in June 2012;
·She had previously operated a restaurant in China;
·She met Mr Lee through a friend and hired him in May 2012;
·Mr Lee does not have any ownership interest in the restaurant and was unaware of any other business interests that he may have;
·She pays Mr Lee his salary;
·She is friends with Ms Kim but was uncertain whether Ms Kim was employed (the report is not clear whether this statement is referring to employment in the restaurant or elsewhere); and
·Her duties for the restaurant include ordering stock, purchasing food, making and receiving payments and “that she does everything for the business”.
The officers noted that the applicant was unable to respond coherently when asked to identify the restaurant’s suppliers. It was further noted that the applicant asserted that she was unable to say the names in English and was able to identify Costco as the grocery supplier for the restaurant and that vegetable were purchased from Footscray Market (although was unable to provide the address for Footscray Market).
The officers asked the applicant to name the restaurant’s employees. Extensive notes of this part of the interview formed part of the report. The officers reported that the applicant’s answers were vague and unclear. There were also inconsistencies in respect of queries with respect to specific employees with information provided on the applicant’s visa application form and information obtained from other employees earlier in the site visit. The officers’ concerns regarding the applicant’s responses to queries regarding employees (including their names) formed a significant element in the ultimate recommendations emanating from this report.
The officers also queried the applicant’s attendance at the restaurant. According to the report, the applicant’s answers were somewhat inconsistent as to the previous time attending and those attendances were for no more than two hours each.
The report also indicates that the applicant provided information as to the opening hours of the restaurant that was inconsistent with information obtained from other employees and their own observations during the site visit. In particular, the applicant was insistent that the restaurant was open from 10.30am each day, whereas other information indicates that the restaurant opened at 11.30am. The applicant, in the report, described this opening time as her expectation that customers could be received by 10.30am and that staff were expected to be there at that time to receive deliveries. The applicant indicated that the opening hours are 10.30am to 2.30pm and 5.30pm to 10.30pm every day (no mention of restricted operating hours on Sunday was mentioned). The Tribunal notes that these times, aside from the first opening time, varies by half an hour compared with the other information recorded in the report.
At this point in the interview, the interpreter’s phone cut out and Miss Jiang took over the role of interpreter. During this part of the interview, the officers queried the applicant about various financial aspects of the business, such as turnover, profit and expenditure in the previous three years.
When the connection with the interpreter was re-established, the applicant provided further information regarding her role in the business, specifically training employees. The applicant also indicated that Miss Jiang and Mr Lee took care of the restaurant’s website and social media presence.
The officers then conducted a second interview with Mr Lee. Queries were raised in respect of the restaurant’s website promoting Mr Lee (and not the applicant) as the owner of the restaurant and his interests in other restaurants. Mr Lee explained that he had made up a story for promotional purposes only. Further queries were raised as to Mr Lee’s involvement with the restaurant’s establishment and concerns as to other employees identifying Ms Kim as the restaurant’s manager.
The officers ultimately concluded that, while the applicant may be financially responsible for the restaurant, the applicant was not responsible for the management of the daily operations of the business. Rather, the tasks that the applicant claimed to undertake were more plausibly performed by Miss Jiang and Mr Lee.
Concerns were raised about the ownership of the restaurant as described on the restaurant’s website (in which Mr Lee was described as the owner), which was inconsistent with the information provided during the site visit. The officers also noted the overlap in items used, such as placemats, bearing the same branding as that used by another restaurant associated with Mr Lee and Ms Kim.
The officers emphasised the applicant’s inability to provide staff and supplier details and her inability to recall the accurate opening hours of the restaurant as evidence that she in fact attends the restaurant rarely. Rather, the officers concluded that it is more likely that the applicant relies variously on the direction of Miss Jiang and Mr Lee in respect of hiring and managing staff and suppliers. They rejected the applicant’s explanation that it was due to her lack of English language skills that she was unable to name staff and suppliers on the basis of the availability and use of an interpreter during her interview.
Applicant’s response
The site visit described above was in relation to the applicant’s initial visa application, which had been lodged in August 2014. As the information and consequent recommendations constituted adverse information, the Department sent a letter on 22 May 2015 inviting the applicant to comment on the information derived from the site visit. The applicant withdrew the initial visa application on 5 June 2015. The current visa application to which this decision relates was lodged on 22 September 2015 after having engaged a new authorised representative.
The Department wrote to the applicant inviting her to comment on the adverse information again on 5 August 2016 and on 8 September 2016. On both occasions, the invitation was in relation to the present visa application (and not the initial application).
The applicant has provided two statutory declarations, one dated 28 October 2015 and one dated 6 October 2016, as well as submissions from her authorised representative (dated 4 July 2019) and the evidence received at the hearing addressing the information in the site visit report.
The evidence received through these means in response to the Department’s site visit report is consistent. Broadly, the applicant explained that she was away from the restaurant purchasing supplies at the time that the Department officers arrived at the restaurant and was informed by an employee (Dominic) by telephone that two people were at the restaurant interviewing staff. At that time, the applicant stated at the hearing, she was told that the investigators were police officers. While this was confirmed not to be the case once the applicant arrived at the restaurant, this misapprehension was explained by Dominic mistaking the Department officers’ badge identification as police identification.
The applicant explained that she returned to the restaurant upon learning this news. Upon learning soon after arriving that Clara was not able to identify the applicant in the photograph shown, she was concerned as Clara had been an employee for a short time and the applicant had not had an opportunity to interact with her much due to a recent absence attending to the winding up of her business interests in China.
The applicant emphasised that she was in a heightened state of anxiety during the interview, as she was aware that the information that the officers had obtained, such as the inability of Clara to identify the applicant in the photograph, would likely be viewed negatively in the subsequent report. She stated that during her interview, she was constantly worried about the potential consequences for the refusal of her visa application, with the effects this would have on her family members (the secondary applicants) and the investment and effort that had been made into the restaurant.
The applicant pointed to this state of anxiety as well as her lack of English in explaining why her answers in the interview were not as direct as they otherwise may have been. This lack of English was identified as the reason why she was unable to name the suppliers when requested, although she maintains that she as able to identify the logos of each supplier and identify the supplies provided by each particular supplier.
At the hearing, the Tribunal asked the applicant to address the concerns raised in the site visit report. The applicant reiterated her statement that she was unprepared for a site visit and her lack of English coupled with the anxiety she was feeling due to her concerns about the implications of having her visa refused, all contributed to her inability to handle herself adequately during the interview.
The applicant stated that she was unable to name the employees immediately as the restaurant had had a high staff turnover and it was difficult for her to remember the correct names. In respect of Clara’s inability to identify her as the owner from a photograph, the applicant noted that Clara was quite new and, due to the applicant’s absence overseas, had not had much of an opportunity to attend the restaurant.
In respect of her not being able to recall the restaurant’s financial performance over the preceding three years, the applicant noted that it was at this point in the interview that the interpreter was unavailable and the applicant was relying on Miss Jiang for translation. T was suggested (and this was independently raised by Miss Jiang in her evidence at the hearing) that Miss Jiang had mistranslated accounting terms, such as turnover and profit, thereby leading to confusion.
When queried about the opening hours and the apparent inconsistencies, the applicant gave evidence consistent with her responses in the interview, in particular that the restaurant would open at 10.30am. When asked about the lack of activity that the Department officers had observed at that hour, the applicant’s answers were unclear and tended not to address the question directly, asserting that staff would have been there. The Tribunal eventually, after providing multiple opportunities, suggested that the staff may have been out the back working and not at the front of the restaurant where the officers were. The applicant agreed with this statement. While not decisive in itself, the Tribunal gives no weight to this answer since it was made only at the Tribunal’s suggestion (after the applicant had had multiple opportunities to provide a satisfactory answer), which was only suggested so that the hearing could proceed without undue problems arising from the applicant’s non-responsiveness.
The applicant explained (both in writing and at the hearing) that she withdrew the initial application in light of her recognition that the interview had not gone well and her belief that it was inevitable that an unfavourable decision would be made in respect of that application. By submitting a subsequent application (the one under consideration for this decision), the applicant was of the belief that this would provide a better opportunity for her to address the Department’s concerns arising from the site visit. The applicant’s authorised representative also made a submission that the applicant’s former authorised representative had given the applicant the misleading belief that by submitting a new application, the site visit report would not be relied upon in the Department’s assessment of that later application.
The applicant also explained at the hearing, at length, about her efforts in managing the restaurant, including staff training, customer promotions (both targeted advertising and efforts with customers in the restaurant), cost controls and management, and managing suppliers (which was also included in the cost management efforts).
In respect of the Department officers’ concerns regarding Mr Lee’s involvement with the ownership/management of the business, which was initially precipitated (as evidenced from the site visit report) by the observation that the business website indicated that Mr Lee was the owner, the applicant disavowed any knowledge of that narrative being authorised by her or being aware of that prior to the site visit and instructed Mr Lee to remove it immediately upon discovery (following the site visit). Mr Lee supported this account in a statutory declaration made on 3 October 2016 where he took responsibility for that advertisement, removed it as soon as possible, expressed regret for any difficulties that it may have caused the applicant and resigned his position as chef at the restaurant. Mr Lee explained that the reason for the “story” being advertised at all was in keeping with the concern to promote the restaurant as being authentically Korean and Mr Lee promoted himself as the owner due to his Korean ethnicity to support this purpose.
The applicant’s authorised representative, in their lengthy submission dated 4 July 2019, submitted that the Department had placed undue weight on the site visit report and had insufficient regard for the subsequent submissions made.
Findings in respect of the applicant’s involvement in the management of the business
Whilst not specifically raised as an objection by the applicant, the Tribunal notes that it was entirely appropriate for the Department to rely on the site visit report in making the primary decision. The site visit took place on 2 April 2015, which is within the two year period immediately preceding the application being lodged (being 22 September 2013 to 22 September 2015) and, therefore, bears directly upon the questions being raised by this criterion, notwithstanding that the site visit was motivated by a withdrawn application. To find otherwise would represent an undue burden on Departmental resources and be contrary to any reasonable application of the regulations.
In their submission dated 4 July 2019, the applicant’s authorised representative submitted that the primary decision gave undue weight to the site visit report and the recommendations emanating from that report. Concomitantly, it was submitted that no weight had been given to the applicant’s subsequent submissions addressing the concerns raised in that report.
The Tribunal acknowledges and appreciates the cogent and well reasoned submissions made by the applicant’s authorised representative on the issues addressed in that submission. Regarding the matters raised in the previous paragraph, the Tribunal respectfully rejects the contention that undue weight had been placed on the site visit report. In addressing the question raised by this criterion, specifically, whether the applicant has maintained direct and continuous involvement in the management of the business (which is distinct from mere ownership or financial responsibility), conducting a site visit constitutes direct evidence from which conclusions may be drawn. Such visits represent an essential option available to the Department in assessing applications for this visa subclass. Further, conducting such visits without prior warning has the advantage of obtaining relevant information through direct observation rather than having been filtered through prepared statements that may be designed to achieve a particular impression and without those observations being skewed by the opportunity for measures to be put in place (should notice of a visit be given) that may provide a misleading impression favourable to the applicant. As discussed below, this method is not without its drawbacks, however, the essential point remains that the site visit provided valuable and relevant information that the Department legitimately relied upon in reaching its conclusions in the primary decision. The Department did not place undue weight on the contents of the site visit report.
The submission that no weight was given to the applicant’s subsequent submissions has more force, although it would be more correct to characterise the submission that insufficient weight was afforded (rather than no weight). These submissions are detailed and are notable for their consistency. Whilst the submission that the Department gave no weight to these submissions is rejected, the Tribunal does acknowledge that the primary decision does appear to give them cursory acknowledgement only. The Tribunal also acknowledges that it is often impractical for the Department’s primary decisions to go through an exhaustive analysis of submissions that an applicant may make, particularly those of the detail submitted in the present case. As a matter of merits review, it is not for the Tribunal to make a finding as to whether the Department applied sufficient weight to these submissions, but, rather, to undertake a re-examination of this information and arrive at an independent conclusion. The Tribunal has also had the advantage of the submissions from the authorised representative as well as the oral evidence obtained at the hearing, neither of which were available to the Department, in reaching this independent conclusion.
The authorised representative also submitted that the Department was in error by considering evidence that ownership of the business lay with parties other than the applicant despite documentary evidence to the contrary. This submission is also rejected. While the site visit report did note on several occasions evidence obtained from the internet as well as from employees that the owner was a party or parties other than the applicant, this did not form part of the basis of the primary decision. To do otherwise would have been clearly in error, but this is not an error that was made in this case. The documentary evidence identified above, which was available to the Department, clearly identifies the applicant as the sole legal owner of the company through which the business was (and is) operated. On the matter of ownership alone (as distinct from the issue of management), the applicant’s position was not called into question either in the conclusions drawn from the site visit report nor in the primary decision itself. While the site visit report did discuss the information obtained contradicting the applicant’s claims of ownership to an extent that it may be understandable that an initial reading would lead to the conclusion that the recommendations relied upon this information, ultimately, the site visit report implicitly acknowledged the applicant’s ownership claim. Rather, the conclusion was drawn that “While [the applicant] may be financially responsible for the business operations (possibly providing the funds for the expenses) … she is not responsible for the management of the daily operations of the business”. This statement implicitly draws an appropriate distinction between ownership and management, effectively acknowledging the applicant’s claim of ownership whilst appropriately focusing on the pertinent issue of the applicant’s involvement in the management of the business.
The most significant information emanating from the site visit report in terms of its influence on the primary decision appears to be the applicant’s inability to recall the names of the restaurant’s employees. The primary decision notes that the Department regarded it as “implausible for a business manager not to know the names of the employees for a business that employs less than 10 people”. It was concluded that Mr Lee was, in fact, the manager of the business based on the information obtained from the site visit.
Whilst the Tribunal’s role in this merits review application is to assess the totality of the information and evidence provided and to reach an independent conclusion, in the interests of transparency, this aspect is dealt with directly.

At a basic level, the conclusion drawn in the primary decision is understandable and applicable in a wide range of circumstances. Counter to this position in the present case, though, is the high staff turnover that the applicant has described and one that may be expected in a restaurant business. Further supporting this position is the applicant’s lack of Korean and English language skills, which could be expected to have made it difficult to recall the names of staff (most, if not all of whom were of Korean background), including those who had adopted English language names.
The applicant’s inability to recall these names should also be considered in the context of the stressful position that she was in at the time of the interview. Supporting the applicant’s assertion that she was unable to focus on the questions at the interview and was overwhelmed by the circumstances and the prospective implications of an unfavourable outcome is a doctor’s letter dated 5 September 2015 indicating that the applicant had been suffering from a previously undiagnosed major depression condition over the previous six months, which includes the time of the site visit.
Both the site visit report and the primary decision conclude that Mr Lee was the real manager of the restaurant, based on his knowledge of the business and familiarity with staff and supplier details, with the applicant’s involvement being one primarily administrative in nature. While the information upon which the site visit report and the primary decision are based strongly indicates that Mr Lee was active in the restaurant’s management, this does not preclude the applicant also being involved in a management capacity to the degree required under the regulations.
The conclusion that Mr Lee was solely responsible for the management of the restaurant is undermined by events subsequent to the site visit, primarily Mr Lee’s resignation. In statutory declarations made by Mr Lee and Ms Kim, Mr Lee’s resignation was described as being motivated by the problems he felt he had caused the applicant through particular steps he had taken, such as the “story” that he had promoted on the website as being the owner and manager of the restaurant (which, as noted above, was designed to support the promotion of the restaurant as authentically Korean). While no date was given for this resignation, being described as taking place shortly after the site visit, it may be assumed that Mr Lee resigned some time in 2015. Therefore, the restaurant has continued to operate without apparent interruption for the last four years in Mr Lee’s absence. Given the applicant’s continuous involvement in the business both prior and subsequent to Mr Lee’s resignation, without any evidence of a new manager having been appointed, these events support the applicant’s contention that she has been directly and continuously involved in the management of the business over this timeframe as required by the regulations.
As the Full Federal Court notes in Lobo v MIMIA [2003] FCAFC 168 at [63], the criterion does “not import a requirement that [can] only be satisfied by demonstrating the exercise of responsibility within the business in terms of decision-making authority, responsibility for employees and/or responsibility for expenditure. There is a variety of ways in which a person might maintain direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance.”
While it is clear that the applicant was reliant on other parties, primarily Mr Lee and Miss Jiang, at least in the initial three years of the restaurant’s operations until Mr Lee’s resignation. As noted above, reliance on other parties does not preclude the applicant also being directly and continuously involved in the management of the business as required by the regulations, with the Full Federal Court acknowledging that such involvement may be displayed in variety of ways.
Evidence supporting the applicant’s direct and continuous involvement in the management of the business includes:
·All employment agreements are signed by the applicant;
·All PAYG payment summaries provided to employees are signed by the applicant;
·The lease over the business premises is signed by the applicant; and
·All supplier correspondence, when addressed to an individual (and not merely the company or business) is addressed to the applicant.
Whilst not as significant as the above evidence, further evidence of the applicant’s direct and continuous involvement in the management of the business includes:
·A letter from the business’ accountant, dated 14 September 2015 (which is substantially the same as a letter from the same accountant dated 16 July 2014) stating that the applicant “has devoted herself into the management of the business”;
·Testimonials from customers and suppliers acknowledging the applicant as the contact point for the business and with whom they conduct their dealings; and
·Statutory declarations from the applicant, Mr Lee and Ms Kim asserting that the applicant is involved in the management of the business (with varying degrees of detail as to the level of that involvement).
The Tribunal also notes the submissions made by the applicant’s authorised representative that may be summarised as the Department’s approach having been unfair. Whilst the Tribunal has drawn a different conclusion to the Department in this matter, this submission is rejected to the extent that the Department’s conduct could be impugned in any legal sense. As noted above, conducting site visits without prior notice is an invaluable tool available to the Department when conducting investigations in these matters and, in many cases, may be the only means to obtain genuine evidence of vague criteria such as that being considered here. Documentary evidence may be falsified, false statutory declarations made and submissions may be made with the benefit of time that can be constructed to create a misleading impression of a state of affairs. Consequently, the ability to obtain direct evidence through observation and interviews where the interviewees have not had the opportunity to rehearse their responses may provide a more accurate indication of the true state of affairs that needs to be assessed.
As with most investigatory approaches, though, this method is not without its drawbacks. Of relevance to this matter, site inspections and interviews without notice may produce information that is not reliable for one reason or another. One such plausible example in this case is the matter of the employee named Clara initially being unable to identify the applicant from a photograph. The applicant has explained this (and supported by a statutory declaration signed by Clara) as Clara not having been an employee for very long at the time of the site visit and, coupled with the applicant’s absence for part of that time, had not had a proper opportunity to become familiar with the applicant.
In this matter, the applicant’s consistent version of events and explanations across two statutory declarations, in submissions from her authorised representative and her evidence taken at the hearing, strongly counters the conclusions drawn in the site visit report and relied upon in the primary decision. The applicant has explained her emotional and mental state at the time of the site visit, which is supported by the letter from the doctor noted earlier, for providing answers during her interview that were unsatisfactory. In light of the abundant documentary evidence demonstrating the applicant’s involvement in the restaurant’s management, the Tribunal is satisfied, on the evidence before it, that the applicant has maintained direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business.
Based on the evidence obtained at the hearing and the consistency of this evidence with the documentary evidence identified above, the Tribunal is also satisfied that this direct and continuous involvement in the management of the business has continued to be maintained.
Remaining criteria
Thirdly, 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 must meet certain thresholds:
a.if the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;
b.if the businesses is not operated by a publicly listed company and the annual turnover of the business is at least AUD400 000, the value of the ownership interest must be at least 30% of the total value of the business;
c.If the business is not operated by a publicly listed company and the annual turnover of the business is less than AUD400 000; the value of the ownership interest must be at least 51% of the total value of the business.
As noted above, the applicant has been the sole shareholder in the Company since incorporation, equating to a 100% ownership interest. As this ownership interest exceeds all three thresholds set out in r.1.11(c), the Tribunal is satisfied that the applicant has and has had at all relevant times a sufficient ownership interest in the business.
Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise that 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 is not operated primarily or substantially for the purpose of speculative or passive investment: r.1.03.
The business is one of operating a Korean barbecue restaurant that obtains its clientele from the general public. All evidence received by the Tribunal and in the Department’s file, including the report of the site visit, are consistent with this conclusion and there is no evidence to contradict this finding.
Consequently, the Tribunal is satisfied that the business is a qualifying business.
Given the findings above, the Tribunal is satisfied that cl.892.211(1) is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.
Secondary applicants
On 22 May 2019, the Tribunal received a withdrawal application for the fourth named applicant. In light of this withdrawal, the Tribunal has no jurisdiction in respect of the fourth named applicant.
In light of the above findings, the appropriate course is to remit the applications for the second and third named applicants to the Minister with the direction set out below.
DECISION

100. The Tribunal remits the applications in respect of the first, second and third named applicants for Business Skills (Residence) (Class DF) visas, with the direction that the first named visa applicant meets the following criteria for a Subclass 892 (State/Territory Sponsored Business Owner) visa:
·cl.892.211(1) of Schedule 2 to the Regulations.

101. The Tribunal has no jurisdiction to consider the application for the fourth named applicant.
Keith Kendall
Member

ATTACHMENT - LEGISLATION
Migration Regulations 1994
1.03Definitions
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.

…
1.11Main 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.

1.11AOwnership 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
134Cancellation of business visas

….
(10) 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.

[2019] AATA 6152

21 October 2019

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