Zhang (Migration)

[2019] AATA 3058

Zhang (Migration) [2019] AATA 3058 (6 May 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Hui Zhang
Mrs Fang Qi
Mr Pei Zhang
Ms Qixin Zhang

CASE NUMBER:  1720740

DIBP REFERENCE(S):  BCC2016/2490288, BCC2017/3556513

MEMBER:K. Chapman

DATE:6 May 2019

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 892 State/Territory Sponsored Business Owner (Residence) visa:

·cl.892.212(c) of Schedule 2 to the Regulations.

Statement made on 06 May 2019 at 12:10pm

CATCHWORDS

MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 State/Territory Sponsored Business Owner (Residence) – held lawfully acquired net assets in main business to the value of at least AUD 75,000 at the time of application and for 12 months prior to that – credibility issues – two sets of inconsistent financial records –main business with turnover less than 20,000 – director loan of 80,000 to main business account using mortgage on property – decision under review remitted

LEGISLATION

Migration Act 1958 (Cth), ss 65, 359(2)
Migration Regulations 1994, Schedule 2, cl 892.212(c)

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 25 August 2017 to refuse to grant the applicants Business Skills (Residence) (Class DF) Subclass 892 visas under s.65 of the Migration Act 1958 (‘the Act’). The first named applicant, Mr Hui Zhang, applied for the visa on 27 July 2016. He included the second, third and fourth named applicants (his wife and children respectively) in that application.

2. The delegate refused to grant the visas due to a lack of satisfaction that the first named applicant (hereafter ‘the applicant’) held lawfully acquired net assets in UDA Motion Parts Pty Ltd (‘the main business’) to the value of at least AUD 75,000 at the time of application and for 12 months prior to that time. Accordingly, the delegate determined that the applicant did not satisfy cl.892.212(c). The delegate also determined that the applicant made no claims against cl.892.212(a), therefore he was not eligible for the grant of the visa. The delegate did not assess the requirements of cl.892.212(b).

3. On 6 September 2017, the applicant applied to the Tribunal for review of the nomination decision, providing a copy of that decision with his application for review. On 26 October 2017, the Tribunal received written submissions and financial records from the applicant. On 31 October 2018, the Tribunal wrote to the applicant pursuant to subsection 359(2) of the Act inviting him to provide information in support of his claims that he satisfies the requirements of cl.892.212. In response, the Tribunal received written submissions, further financial records and documents pertaining to the sale of residential property. On 29 December 2018, the Tribunal received further material including revised financial records for the main business.

4. The applicant appeared before the Tribunal on 8 January 2019 and 2 April 2019 to give evidence and present arguments. The Tribunal also took oral evidence from the second named applicant. The Tribunal hearings were conducted with the assistance of an interpreter in the Mandarin and English languages. The Tribunal notes that at the first review hearing the applicant submitted several hundred pages of documents including invoices, purchase orders, financial records and other commercial information. Following the first review hearing, the Tribunal also received material on 15 January 2019 including financial records and information pertaining to real property. All submitted material has been duly considered by the Tribunal.

5. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

   CONSIDERATION OF CLAIMS AND EVIDENCE

6. The issues in the present case are whether the applicant, the applicant’s spouse (the second named applicant), or the applicant and his or her spouse together, in the main business or main businesses in Australia owned assets to the net value of at least AUD 75,000 at the time of application; whether such assets had a net value of at least AUD 75,000 throughout the period of 12 months ending immediately before the application is made; and whether such assets have been lawfully acquired by the applicant and/or his spouse.

7. The provision of the Regulations which is relevant to the review is as follows:

   892.212

   Unless the appropriate regional authority has determined that there are exceptional circumstances, the applicant meets at least 2 of the following requirements:

   (a) in the period of 12 months ending immediately before the application is made, the main business in Australia, or main businesses in Australia, of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together:

   (i)      provided an employee, or employees, with a total number of hours of employment at least equivalent to the total number of hours that would have been worked by 1 full-time employee over that period of 12 months; and
   (ii)      provided those hours of employment to an employee, or employees, who:

   (A)      were not the applicant or a member of the family unit of the applicant; and
   (B)      were Australian citizens, Australian permanent residents or New Zealand passport holders;

   (b)      the business and personal assets in Australia of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together:

   (i)      have a net value of at least AUD250 000; and
   (ii)      had a net value of at least AUD250 000 throughout the period of 12 months ending immediately before the application is made; and
   (iii)      have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together;

   (c)      the assets owned by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:

   (i)      have a net value of at least AUD75 000; and
   (ii)      had a net value of at least AUD75 000 throughout the period of 12 months ending immediately before the application is made; and
   (iii)      have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.

8. Clause 892.212 is a criterion which must be satisfied at the time of application for the visa (in this case 27 July 2016). The criterion has three components as outlined above. The applicant must satisfy at least two of the three requirements, unless the appropriate regional authority has determined that there are exceptional circumstances. There are no exceptional circumstances relevant to the criterion with respect to this review. Further, the applicant has made no claims against cl.892.212(a) and he does not satisfy the requirements of that sub-clause.

9. As previously outlined, the delegate determined that the applicant did not satisfy the requirements of cl.892.212(c) regarding the value and acquisition of net assets in the main business, UDA Motion Parts Pty Ltd, at the time of the visa application. The delegate did not assess the applicant’s claims against cl.892.212(b) regarding the net business and personal assets of the applicant and his spouse, the second named applicant. Accordingly, the Tribunal has confined its review to the delegate’s decision regarding cl.892.212(c) concerning the net assets of UDA Motion Parts Pty Ltd at the time of the visa application.

   Main business assets

10. Sub-clause 892.212(c) requires that the applicant demonstrate the required net assets in the main business, UDA Motion Parts Pty Ltd, during the 12 months before the time of the visa application and also at the time of the visa application itself. The Tribunal notes that the time of the visa application was 27 July 2016. Accordingly, the Tribunal has assessed the net asset requirement with respect to the main business during the period 27 July 2015 to 27 July 2016 (‘the relevant period’).

11. The applicant contends that the main business was incorporated in October 2012, with him owning 90% of the shares and being the director of the company at that time. Additionally, his late first wife held 10% of the company shares when it was incorporated. The applicant’s first wife passed away in September 2013 and he subsequently married the second named applicant in April 2014. In July 2014, the second named applicant became a 10% shareholder in the main business, with the applicant retaining his 90% shareholding. The aforementioned ownership interests existed at the time of the visa application on 27 July 2016 and remain at the time of this decision. The Tribunal notes that during the relevant period, the applicant and the second named applicant were the only owners of the main business.

12. The applicant submits that the main business was trading during the relevant period with its physical base located in the State of Victoria. The applicant confirmed that only one main business is relevant to the Subclass 892 visa application, that is, UDA Motion Parts Pty Ltd. The commercial activity of the main business during the relevant period concerned the importation and distribution of automotive parts. The applicant advised the Tribunal that he retains an ownership interest in a Chinese registered company named Qingdao USN Control System Co. Ltd. (hereafter ‘USN Control’) and that he ran that company when he resided in China prior to relocating to Australia in 2012 (holding a Subclass 163 visa at that time). USN Control was also involved with the export of automotive parts when the applicant resided in China.

13. The applicant explained that the the main business imported automotive parts from USN Control and then sold them to distributors in Australia during the relevant period. He advised that USN Control and the main business are separate entities, although they had a business relationship regarding the importation of automotive parts during the relevant period. The applicant also confirmed to the Tribunal that USN Control and the main business continue to have a business relationship, although the type of goods imported from offshore has now changed. This is a matter to which the Tribunal shall later return.

14. The applicant submitted a significant volume of receipts, purchase orders and other financial documentation indicating that the main business was importing automotive parts from USN Control then selling them to Australian distributors throughout the relevant period. The aforementioned Australian distributors were located in the State of Victoria during the relevant period. The oral evidence of the applicant also indicated that the main business derived its income during the relevant period primarily from the sale of automotive parts to Australian distributors in the State of Victoria and that the warehouse and business premises of the main business were also located in that State during that time. The Tribunal notes that the applicant submitted with his visa application a Form 949 sponsorship signed by an Officer of the Victorian Department of Economic Development, Jobs, Transport and Resources on 8 July 2016. It is noted on that Form that no exceptional circumstances apply to the sponsorship and that the main business will conduct is business activities in the auto parts industry in the State of Victoria.

15. As previously indicated, the applicant must demonstrate that he and the second named applicant (either individually or jointly) owned assets in the main business to the net value of at least AUD 75,000 during the relevant period and that those assets were lawfully acquired. Departmental policy[1] indicates that owner equity in an incorporated business and certain loans made by an applicant (and/or their spouse or de facto partner) to the main business may be counted towards the AUD 75,000 net asset amount. Loan proceeds sourced from bona fide financial institutions, which are secured by personal assets, may also be counted for this purpose. There is no cogent reason for the Tribunal to depart from Departmental policy in the present matter.

    [1] PAM3 -GenGuideM - Business Skills visas - Visa application and related procedures.

16. The applicant submitted financial statements for the main business prepared by SJ Accounting Services with his visa application. The applicant contended that a director loan had been made from him to the main business in the amount of AUD 259,432 as displayed in a Balance Sheet prepared by SJ Accounting Services for the financial year ending 30 June 2016. Following a request for further information by the Department, the applicant submitted a Ledger indicating that the aforementioned loan was comprised of several director loans made between 13 May 2013 and 22 June 2015. The delegate expressed concerns in the visa refusal decision regarding the veracity of the aforementioned director loans, however accepted that a deposit of AUD 80,000 on 2 July 2015 was sourced from the applicant and it was counted towards the required net asset figure.

17. The Tribunal notes that following the first review hearing, the applicant submitted a receipt from the Westpac Banking Corporation dated 2 July 2015 evidencing the transfer of AUD 80,000 from an account held by him at that bank to another account held by him at the Commonwealth Bank of Australia. Further, submitted bank records for the main business account held at the Commonwealth Bank of Australia demonstrate that the aforementioned amount was transferred from the applicant to the main business on 2 July 2015. The applicant in his oral evidence advised the Tribunal that the amount of AUD 80,000 was obtained by increasing his mortgage on a residential property and then transferring the amount into the bank account of the main business. The applicant also submitted a portion of a document from a financial institution demonstrating that he increased his home loan on 25 June 2016 in the amount of AUD 100,000.

18. The applicant made submissions to the Tribunal that the initial financial reports regarding the main business prepared by SJ Accounting Services, which were submitted to the Department, contained significant errors. Apparently, following the visa refusal decision, the applicant queried the financial reports with the accountant and lost confidence in their services. The applicant then engaged PG Accountants Pty Ltd who prepared a completely new set of financial records and they were submitted to the Tribunal. The applicant also submitted amended Business Activity Statements and taxation information to the Australian Taxation Office. A General Ledger prepared by PG Accountants Pty Ltd in respect of the main business for the period 9 October 2012 to 30 June 2016 was also submitted to the Tribunal. That Ledger makes reference to several director loans and repayments. Further reference is also made to 34 of the director loans, which are then identified in financial records as deposits into the bank account of the main business. The updated financial records apparently indicate that as at 30 June 2015 the main business had received AUD 195,385.67 by way of director loans and as at 30 June 2016 that figure was AUD 113,049.85. The applicant contends that the aforementioned updated financial records indicate he held the required assets in the main business during the relevant period.

19. During the review hearings, the Tribunal on several occasions asked the applicant to clarify the particulars of the financial matters pertinent to the main business, including the director loans, certain transactions and the source of funds. The Tribunal observed the applicant to give his oral evidence regarding these matters in a defensive and evasive fashion. In many instances the applicant claimed not to remember particulars, gave inconsistent evidence and provided minimal detail in response to the questions of the Tribunal. Due to this conduct, the Tribunal developed concerns with the credibility of the applicant. Such concerns were brought to the applicant’s attention during the review hearings and he attributed any confusion to him either not understanding the questions of the Tribunal or there being errors with the translator. The Tribunal does not accept these contentions given the professional conduct of the translator used in each review hearing and that no issue of misunderstanding was raised by the applicant until his prior inconsistent evidence was raised with him. On balance, the Tribunal finds the applicant to lack credibility regarding a significant portion of the evidence provided by him in relation to his personal finances and those of the main business. The Tribunal is also concerned that the applicant submitted two sets of inconsistent financial records in relation to the main business.

20. During the review hearings the Tribunal extensively questioned the applicant in relation to the particulars of the claimed director loans and certain financial transactions displayed in the bank statements of the main business. The applicant’s defensive and evasive provision of oral evidence saw the length of the review hearings become more extended than they otherwise might have been. Of great relevance to the present review is the deposit of AUD 80,000 on 2 July 2015 into the bank account of the main business, which is claimed to be a director loan by the applicant. It is recorded as the 22^nd director loan on the aforementioned General Ledger. Several of the Tribunal’s questions during the first review hearing were directed to clarifying the particulars of that deposit. The applicant in due course informed the Tribunal that the AUD 80,000 sum was sourced from a bank loan secured against one of his residential properties. He accepted that no formal loan documentation was created between the main business and himself regarding this claimed director loan, however he maintained that the funds are correctly recorded as such a loan in the General Ledger.

21. As previously noted the applicant submitted documentation from the relevant financial institutions demonstrating that the AUD 80,000 sum was obtained from a portion of funds arising from an increased mortgage over one of his residential properties and then deposited into the main business bank account by him on 2 July 2015. Whilst developing the credibility concerns with the applicant outlined above, following careful consideration, the Tribunal accepts that he made a director loan to the main business in the sum of AUD 80,000 on 2 July 2015 and that those funds were obtained from a bona fide financial institution in relation to a loan secured over real property. For completeness, the Tribunal also notes that the delegate accepted the aforementioned sum to be a director loan from the applicant to the main business, whilst not accepting the balance of the initially claimed AUD 259,432 director loan.

22. The Tribunal has carefully considered the financial records and reports concerning the main business which were submitted by the applicant. Given the significant inconsistency between the reports prepared by SJ Accounting Services and PG Accountants Pty Ltd, combined with the general lack of credibility of the applicant himself, the Tribunal places low weight upon the aforementioned reports. However, the bank account statements of the main business, in conjunction with its trading documentation (such as tax invoices, delivery notes, purchase orders, consignment information, Bills of Lading and inventories) satisfy the Tribunal that the applicant owned lawfully acquired net assets in the main business of at least AUD 75,000 between 27 July 2015 and 27 July 2016 when the director loan of AUD 80,000 is accepted to be a component of such assets.

1. Therefore, the Tribunal finds that the applicant satisfies the requirements of cl.892.212(c).

   Other matters

2. The Tribunal notes that during the first review hearing the applicant provided vague and inconsistent evidence regarding the commercial activities of the main business following the time of application. He initially advised the Tribunal that the main business still derived income from the distribution of automotive parts, then later agreed that it no longer did so beyond June 2017. The applicant confirmed to the Tribunal that the main business has since that time sold wood products and office furniture. The applicant contends that the main business generated sales of AUD 15,876.45 in the financial year ending 30 June 2018 from the sale of wood products and office furniture. He confirmed that no income was derived from any connection with the automotive industry during that financial year.

3. The applicant also told the Tribunal during the first review hearing that he was employed on a part time basis at an automotive workshop assisting in the repair of vehicles. He advised that he also spends time conducting research on agricultural machines and monitoring guest rentals of a residential property using the ‘AirBnB’ platform. The applicant informed the Tribunal that whilst he and the second named applicant work in the main business, they do not presently derive income from it. At the second review hearing, the applicant advised that he is no longer employed part time in the automotive workshop but is working with several other companies involved in furniture delivery and installation. The applicant confirmed to the Tribunal that the annual turnover of the main business is currently less than AUD 20,000 and that its commercial activities only take place in Brisbane. The applicant told the Tribunal that the main business is not conducting business in the State of Victoria.

4. The second named applicant advised the Tribunal that she is involved with sales and warehouse management in the main business, although she mainly assists her husband (the applicant). She could not provide detailed information to the Tribunal regarding the net assets of the main business. The second named applicant informed the Tribunal that the main business is still genuinely doing business in Australia.

5. The Tribunal notes that the applicant was sponsored for the Subclass 892 visa by the Victorian Department of Economic Development, Jobs, Transport and Resources on 8 July 2016. It is noted in the sponsorship that the main business will conduct is business activities in the auto parts industry in the State of Victoria. It is apparent that the main business no longer conducts business activities in either the auto parts industry or the State of Victoria. Further, the current turnover of the main business is less than AUD 20,000, with neither the applicant nor the second named applicant appearing to derive income from it. Indeed, the applicant has been employed by others in recent times on his own evidence. The Tribunal notes the aforementioned matters for the sake of completeness. The Department may wish to consider them further when assessing the remaining criteria for the visa.  

   CONCLUSION

6. Given the above findings, the appropriate course is to remit the applications for the visas to the Department to consider the remaining criteria for the Subclass 892 visa.

   DECISION

7. The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 892 State/Territory Sponsored Business Owner (Residence) visa:

   ·     cl.892.212(c) of Schedule 2 to the Regulations.

   K. Chapman
   Member