Zhang (Migration) - [2019] AATA 1009

Zhang (Migration) [2019] AATA 1009 (10 January 2019)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Miss Wen Zhang
CASE NUMBER:  1701901
DIBP REFERENCE(S):  BCC2014/2351710
MEMBER:Alison Mercer
DATE:10 January 2019
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal affirms the decision not to grant the applicant a Class EB subclass 188 (Business Skills (Provisional)) visa.
Statement made on 10 January 2019 at 4:20pm

CATCHWORDS
MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 Business Innovation and Investment (Provisional) – Federal Circuit Court remittal – complying investment of at least AUD $5,000 – complying investment unencumbered and lawfully acquired – funds transferred through company bank accounts – evidence of dividend payment – Tribunal allowing time to make the complying investment – lack of financial evidence – holding the investment for at least 4 years – decision under review affirmed
LEGISLATION
Migration Act 1958, ss 65, 359, 360
Migration Regulations 1994, Schedule 2 cl 188.252; r 5.19
CASES
Minister for Immigration and Citizenship v Saba Bros Tiling Pty Ltd [2011] FCA 233
Singh v Minister for Immigration and Border Protection [2014] FCCA 1403
Yang v Minister for Immigration and Citizenship [2010] FMCA 890
Zhang v Minister for Immigration and Border Patrol [2017] FCCA 134
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 27 February 2015 to refuse to grant the visa applicant a Business Skills (Provisional) subclass 188 visa in the Significant Investor stream under s.65 of the Migration Act 1958 (the Act).
The visa applicant applied for the visa on 17 September 2014. The delegate refused to grant the visa on the basis that she found that the applicant did not satisfy cl.188.252(1) of Schedule 2 to the Migration Regulations 1994 (the Regulations) and r.5.19B of the Regulations. The delegate noted that cl.188.252(1) required that the applicant had made a complying investment of at least AUD $5,000, which was defined in r.5.19B, and included the requirement that the funds used to make the investment were unencumbered and lawfully required (r.5.19B(3)(a) and (b)). The delegate found that the applicant indicated that her complying investment would consist of cash assets of RMB 28 million held in a Chinese bank account and AUD $230,000 in an Australian bank account, to be invested in an eligible managed fund (as per r.5.19B(2)(c)). The delegate further noted that the applicant indicated the source of these assets was a gift from her father, Mr Zhang Anpu, who had run a successful construction business in China since 2003.
The delegate noted that the applicant was requested to clarify aspects of her father’s company’s financial distributions, and to provide evidence of the transfer of funds by him to her. The applicant responded by explaining that the dividends to which her father was entitled were not paid directly into his personal bank account, but was rather retained in the company until May 2014, when he had funds transferred from the company bank account in Chengdu into his personal bank account in Chengdu. Further financial documents and explanatory letters were provided, detailing a complicated series of financial transactions between the applicant’s father’s personal and company accounts, third party accounts and the applicant’s accounts.
The delegate considered the available evidence but stated that she was unable to be satisfied that the assets that the applicant nominated for making the complying investment were unencumbered and lawfully acquired (as required by r.5.19B(3)), for the following reasons:
·    it was claimed that the applicant’s father derived the cash forming the applicant’s nominated assets from his entitlement to dividend income from the Sichuan Xiangpu Construction Group Ltd. However, this was not supported by the financial statements provided, as the retained profits of the company as at 31 December 2011, 2012 and 2013 did not indicate that any dividend had been distributed. Although the applicant explained that her father, while entitled to a dividend distribution, did not receive an actual payment until recently, there was no explanation of why then there was not a corresponding entry substantiating the dividends owing, but not paid, to the applicant’s father. The absence of such a proper recording of the amount cast doubt on the veracity of the dividend resolutions later provided;
·     although it was claimed that all the assets nominated by the applicant were gifted to her by her father, many of the bank transfer evidence provided related to transfers from third parties to the applicant, and only a few showed direct transfers from the applicant’s father to her. Therefore, the delegate did not accept that the entire amount claimed to be given by the applicant’s father actually was gifted by him;
·    the majority of funds forming the applicant’s nominated assets were transferred by 2 companies, Chengdu Shuanghuan and Sichuan Xiangpu. Although it was claimed that these companies were making payments on the instructions of the applicant’s father, as the shareholder of their parent company, the delegate was not satisfied that these funds were unencumbered and lawful, as although each company in the group might be a subsidiary of the parent company, they were still legal entities in their own right and their financial books had not been provided. Accordingly, the delegate found she could not assess the circumstances and validity of the funds transfers. More specifically, the delegate found that insufficient/no evidence had been provided to show how/whether these companies had the financial capacity to make these payments, and whether the other shareholders in the parent company (in relation to which the applicant’s father was the 51% shareholder) authorised these transfers;
·    the transfer of RMB 14 million from Mr Chen Tao to the applicant was not accepted by the delegate, as insufficient evidence had been provided to establish how and why these payments were made from Mr Chen’s personal bank account, even though it was claimed that he was acting on the instruction of the applicant’s father as the shareholder of his employer company; and
· given the above, the delegate was not satisfied that the applicant had established through acceptable evidence that the assets she nominated for making her complying investment were unencumbered and lawfully acquired. Accordingly, the delegate found that the applicant did not meet cl.188.252(1).
The Tribunal received a review application from the applicant on 16 March 2015. The review application was accompanied by a copy of the delegate’s decision and an authority by which the applicant appointed a registered migration agent, Ms Betty Zhang, as her representative and authorised recipient for correspondence.
The applicant attended a hearing via telephone conference on 27 July 2016. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages. The applicant’s agent did not attend the hearing.
On 27 July 2016, the Tribunal made a decision to affirm the decision under review. In reaching this decision, the Tribunal gave the following reasons (in summary):
·the applicant stated at the hearing that she wanted to migrate to Australia and the subclass 188 visa was the only visa that did not require her to pass an English proficiency test. She further said that she understood that the visa had been refused due to the delegate’s doubts about the source and legitimacy of the funds that she claimed her father had transferred to her;
·the applicant gave evidence that her father’s company had been making a profit but needed cash flow and that was why the funds had not come through in time. She reiterated that all funds were provided from her father’s company, that sometimes her father just transferred money to his company’s CFO’s account and that was why some money had come from him personally. She reiterated that the company was making a profit but needed the cash flow and that was why funds were not withdrawn until 2014, when her father sent them to her as a gift;
·the Tribunal raised with the applicant what it considered to be the threshold issue; that is, that cl.188.252(1) required that the applicant had actually made the relevant complying investment of at least AUD $5,000,000. On the evidence before the Tribunal, it found that the bulk of the applicant’s funds claimed to comprise the ‘complying investment’ were in her bank account in China. The applicant responded that the investment would be made in Australia in August 2016, and was nearly ready;
·the evidence before the Tribunal indicated that:
othe applicant held $229,895.49 in a bank account in Australia as at August 2014;
othe applicant held RMB 28,000,000 in a bank account China as at August 2014;
oher father had made a statutory declaration in October 2014 indicating that these funds were a gift from his earnings from his construction business which were ‘lawfully obtained and unencumbered;’
·overall, the Tribunal found the applicant’s oral evidence at hearing inconsistent and unconvincing. Given that the applicant made the visa application in 2014, and received the Department’s refusal in February 2015, the Tribunal had significant reservations as to both the applicant’s capacity to make the complying investment and the lawful and unencumbered nature of the funds;
·the applicant had not made a relevantly complying investment of at least AUD $5,000,000 and therefore she did not meet cl.188.252(1). The Tribunal affirmed the decision under review on that basis.
The applicant lodged an application for judicial review of the Tribunal’s decision with the Federal Circuit Court of Australia (FCCA) on 28 August 2016. The applicant claimed that the Tribunal had made jurisdictional errors by (amongst other things) raising a new issue at the hearing (being the issue of whether the applicant had actually made the complying investment as at the time of the Tribunal’s decision) and/or by unreasonably failing to allow the applicant more time after the hearing to make the complying investment, particularly where Departmental policy provided applicants with 70 days to make the relevant investment after being invited to do so.
On 31 January 2017, the FCCA set aside the Tribunal’s decision with a direction that it be remitted back to the Tribunal for reconsideration and determination according to law, in Zhang v Minister for Immigration and Border Patrol [2017] FCCA 134. In its judgment, the FCCA (as per Riley J) held that:
·   the Tribunal’s refusal to allow the applicant a few weeks to make the complying investment was unreasonable in the Li sense. The time limit appeared to be arbitrary, and the Tribunal did not identify any harm in allowing the applicant a few weeks to make the complying investment;
·   it was unreasonable, arbitrary and capricious for the Tribunal not to have at least partially applied the policy and give the applicant a few weeks to make the complying investment, in circumstances in which the delegate decided the case on a different basis to the basis on which the Tribunal proposed to make its decision; the applicant had never been asked to make the complying investment;
·   the Tribunal did not identify the harm in granting the applicant a few weeks to make the complying investment and instead made its decision on the same day as the hearing, whereas the Departmental policy of allowing 70 days for the investment to be made after a request to do so was a rational approach to assessing cl.188.252;
·   however, the Tribunal did not fall into jurisdictional error by raising a new issue (that is, whether the complying investment had in fact been made) at the hearing, as it clearly identified the issue to the applicant at that hearing, and it was not required to hold another hearing in relation to this issue.
On 6 February 2017, the Tribunal wrote to the applicant to confirm that the matter would be reconsidered and the Tribunal would write to her in due course as to the next steps in her review. In the meantime, the applicant was asked to confirm whether Ms Betty Zhang remained her representative and authorised recipient for correspondence for the purposes of the review. On 17 February 2017, the Tribunal received confirmation from the applicant and her agent that Ms Zhang remained the applicant’s representative and authorised recipient for correspondence for the purposes of the review.
The matter was constituted to a different Tribunal Member on 30 August 2018.
On 5 October 2018, the Tribunal wrote to the applicant via her agent pursuant to s.359(2) of the Act to invite the applicant to provide information. Specifically, the Tribunal invited the applicant to provide information that demonstrated that she met cl.188.252: that is, that she had made a complying investment of at least AUD $5,000,000 and that she had a genuine intention of holding that investment for at least 4 years. The Tribunal provided the descriptions of the defined ‘complying investments’ set out in r.5.19B(2) for the applicant’s reference. It also invited her to provide information that demonstrated how her complying investment satisfied the requirement in r.5.19B(3); that is, that the funds used to make the investment were (a) unencumbered; and (b) lawfully acquired.
The Tribunal advised the applicant that the requested information had to be received by 19 October 2018, but that if she were unable to do so, she could request an extension of time to do so. She was advised that any request for an extension of time to provide the required information should be made prior to 19 October 2018. She was further advised that if the Tribunal did not receive the requested information by the due date (either the original due date, or as extended), then the applicant would lose any entitlement she might otherwise have had to have a Tribunal hearing, and that the Tribunal might proceed to make its decision on the available evidence without taking any further action to obtain the information.
On 17 October 2018, the applicant’s agent advised the Tribunal by email she had contacted the applicant but had not received any instructions from her yet. The Tribunal received another email in the same terms from the applicant’s agent on 19 October 2018.
The Tribunal did not receive the requested information from the applicant by 19 October 2018. Nor did it receive a request for an extension of time to do so by that date. To date, it has received no further communications from the applicant or her agent. The Tribunal is satisfied that its s.359(2) letter was sent by email to the correct address nominated by the applicant’s agent, who is in turn the applicant’s authorised recipient for correspondence. The Tribunal is further satisfied that its email of 5 October 2018 was received by the applicant’s agent and nominated recipient for correspondence. There is no indication in the Tribunal's electronic records that its email was not delivered, or was undeliverable.
The applicant did not respond to the Tribunal's s.359(2) letter to either provide the requested information or to request an extension of time to do so by the due date. The Tribunal notes that the applicant’s agent advised the Tribunal on 17 and 19 October 2018 that she had not received any instructions from the applicant. The Tribunal considers that this falls short of being a specific request for an extension of time to respond (as per Singh v Minister for Immigration and Border Protection [2014] FCCA 1403 (Judge McGuire, 13 August 2014), in which the Court distinguished Minister for Immigration and Citizenship v Saba Bros Tiling Pty Ltd [2011] FCA 233 on the basis that Saba’s case was concerned with an invitation to ‘comment or respond’ pursuant to s.359C(2) and not an invitation to ‘give information’ pursuant to s.359C(1)). However, the Tribunal has considered whether it might constitute a ‘response’ by the due date set out in the Tribunal’s s.359(2) letter. There is some uncertainty as to whether s.359C(1) applies in circumstances where an applicant responds to a written s.359(2) invitation in time but does not provide the particular information requested, or does not provide all of the requested information. While a plain reading of those sections suggests that the applicant must provide ‘the’ specific information which has been requested, the Tribunal considers that a strict application of those sections might lead to an unfair or absurd result in some circumstances. For example, the Tribunal could give a written invitation to provide information that is not in fact in existence or cannot be accessed by the applicant. However, in this case, the Tribunal considers that the information requested of the applicant was capable of being provided (or alternatively, an extension of time could have been sought to do so).
In these circumstances, the Tribunal does not consider that the agent’s 2 emails stating that she had not received instructions from the applicant constitutes a ‘response’ for the purposes of s.359(2). It is satisfied that the applicant failed to comply with s.359(2) and therefore s.359C applies. As a consequence, and pursuant to s.360(3), the applicant is not entitled to appear before the Tribunal. The Tribunal has no power to permit an applicant to appear in these circumstances: see Yang v Minister for Immigration and Citizenship [2010] FMCA 890. In the circumstances set out above – where the applicant has been invited to provide additional information, but has not provided any response or information, or sought an extension of time to do so, and where the applicant is represented by a registered migration agent - the Tribunal has decided to proceed to a decision without taking further steps to obtain the requested information.
For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.
CONSIDERATION OF LAW, CLAIMS AND EVIDENCE
The issue in the present case is whether the applicant meets cl.188.252, which provided as follows at the relevant time:
188.252
(1) The applicant has made a complying investment of at least AUD5,000,000.
Note A complying investment may be based on one or more investments.
(2) The applicant has a genuine intention to hold the complying investment for at least 4 years.
‘Complying investment’ was relevantly defined as follows:
Reg 5.19B Complying investment
(1) An investment by a person (the investor) is a complying investment if all of the requirements in this regulation are met.
Description
(2) The investment must consist of one or more of the following:
(a) an investment in a government bond (however described) of the Commonwealth, a State or Territory; or
(b) a direct investment in an Australian proprietary company that meets the following requirements:
(i) the company is not listed on an Australian stock exchange;
(ii) the company has not been established wholly or substantially for the purpose of creating compliance with this paragraph;
(iii) the investment is an ownership interest in the company; or
(c) an investment in a managed fund (directly or through an investor directed portfolio service) for a purpose specified by the Minister in an instrument in writing for this paragraph.
(3) The funds used to make the investment are:
(a)      unencumbered; and
(b) lawfully acquired.
Investor
(4) The investor must be an individual.
(5) The investor must make the investment:
(a)      personally; or
(b) with the investor’s spouse or de facto partner; or
(c) by means of a company that has issued shares and in which:
(i)      the investor holds all of the issued shares; or
(ii) the investor and the investor’s spouse or de facto partner hold all of the issued shares; or
(d) by means of a trust:
(i)      that is lawfully established; and
(ii) of which:
(A) the investor is the sole trustee; or
(B) the investor and the investor’s spouse or de facto partner are the sole trustees; and
(iii) of which:
(A) the investor is the sole beneficiary; or
(B) the investor and the investor’s spouse or de facto partner are the sole beneficiaries.
(6) If:
(a) an investor withdraws money from a complying investment, or cancels the investment; and
(b) the investor makes an investment of at least the value of the withdrawn money or cancelled investment in one or more other investments mentioned in subregulation (2); and
(c) no more than 30 days passes between the events mentioned in paragraphs (a) and (b).
the investment is taken not to have ceased to be a complying investment during the period between the events mentioned in paragraphs (a) and (b).

As noted above, the criterion in dispute for the delegate was whether the applicant had produced sufficient documentary evidence to establish that the funds she held in China and Australia (and with which she proposed to make a complying investment in Australia) were lawfully acquired and unencumbered, as required by r.5.19B(3) of the definition of a ‘complying investment.’ It appeared that the documentary evidence provided did not support the applicant and her father’s claims that the funds were gifted to the applicant by her father, and that those funds were lawfully acquired by him and unencumbered. Rather, the documentary evidence provided showed that only some of the claimed funds were transferred directly to the applicant by her father, but that other funds were transferred by third parties and companies other than the one of which the applicant’s father was a 51% shareholder. As (part of) the definition of a ‘complying investment’ was not met by the applicant, the delegate found that she could not meet cl.188.252(1).
However, by the time that the matter was considered by the Tribunal upon review in July 2016, the Tribunal (differently constituted) identified another basis on which cl.188.252(1) appeared not to be able to be met. This was that the applicant had not in fact made a complying investment in Australia in one of the ways set out in r.5.19B(2). It is not disputed that, at the time of the Tribunal’s decision, this was the case (that is, the applicant had not made a complying investment). That decision was then overturned by the FCCA in 2017 on the basis that it was unreasonable of the Tribunal not to have given the applicant some time to do so, given that she had stated at hearing that she was intending to do so in the month after the hearing, and that the Department’s own policy was to allow applicants 70 days to make a complying investment after inviting them to do so.
Upon remittal, the Tribunal wrote to the applicant in October 2018 to invite her to provide information demonstrating that she had made a complying investment in Australia. She did not respond by the due date for the s.359(2) letter. Nor did she seek an extension of time to provide the information. Nor has she provided any information about whether she has made, or is still intending to make, a complying investment in Australia, and if the latter, the expected timeframe. The Tribunal notes that as at the time of its decision, more than 70 days has elapsed since the Tribunal invited the applicant to provide information demonstrating that she had made a complying investment as required by cl.188.252. The Tribunal further notes that the applicant has had the benefit of having a registered migration agent acting on her behalf throughout the processing of her subclass 188 visa application, including upon remittal to the Tribunal by the FCCA and to date.
Accordingly, the Tribunal is satisfied that the applicant has had an opportunity to address the concerns raised by the Tribunal (differently constituted) at the Tribunal hearing in July 2016; that is, that she had not yet made a complying investment in Australia. To date, she has not provided evidence to the Tribunal of having done so, and has no indication of whether she still intends to do so, and if so, within what timeframe.
Accordingly, the Tribunal is not satisfied that the applicant has made a complying investment, as per r.5.19B(2) and therefore does not meet cl.188.252(1) and thus does not meet cl.188.252 as a whole. There is no evidence before the Tribunal that the applicant applied for, or could meet, the criteria for any other stream within subclass 188. Accordingly, the Tribunal must affirm the decision under review.
DECISION
The Tribunal affirms the decision not to grant the applicant a Class EB subclass 188 (Business Skills (Provisional)) visa.
Alison Mercer
Member