Zhen (Migration)

[2017] AATA 555

Zhen (Migration) [2017] AATA 555 (13 April 2017)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Qingbo Zhen
Mrs Shoufeng Wang
Mr Ming Zhen

CASE NUMBER:  1607853

DIBP REFERENCE(S):  BCC2016/1481869

MEMBER:Sue Raymond

DATE:13 April 2017

PLACE OF DECISION:  Adelaide

DECISION:The Tribunal affirms the decision to cancel the first named applicant’s Subclass 457 (Business (Long Stay)) visa.

The Tribunal has no jurisdiction with respect to the other applicants.

Statement made on 13 April 2017 at 1:22pm

CATCHWORDS

Migration – Cancellation – (Business (Long Stay)) visa – Subclass 457 (Temporary Work (Skilled)) – Ceased employment exceeding 90 consecutive days – Bricklayer – Company restructure – Nomination by new company – Not an associated entity – Nomination not approved – Consideration of discretion

LEGISLATION

Migration Act 1958, s 48, 116, 140(1), 348
Corporations Act, ss 50AA, 50AAA
Migration Regulations 1994, Condition 8107, r 2.12

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision dated 26 May 2016 made by a delegate of the Minister for Immigration to cancel the first named applicant’s Subclass 457 (Temporary Work (Skilled)) visa under s.116 of the Migration Act 1958 (the Act).

2. The delegate cancelled the visa under s.116(1)(b) of the Act on the basis that the first-named applicant had not complied with condition 8107 which was imposed on his visa, specifically that he ceased employment with his sponsoring employer, Melbourne Kent Town Pty Ltd (MKT), for a period in excess of 90 consecutive days. The issue in the present case is whether that ground for cancellation is made out, and if so, whether the visa should be cancelled.

3. For the purposes of the Tribunal’s jurisdiction under s.348 of the Act, the only decision that is before the Tribunal is the decision with respect to the first named applicant. The other applicants’ visas were automatically cancelled as a consequence of that cancellation. That occurred by force of the operation of s.140(1) of the Act. This provision made the cancellation of those visas self-executing on the cancellation of the first named applicant’s visa. As no decision was involved in the visa cancellations under s.140(1), the Tribunal has no jurisdiction with respect to them.

4. The first and second-named applicants appeared before the Tribunal in Perth on 22 November 2016 to give evidence and present arguments. A second hearing was conducted via conference telephone on 31 January 2017. The Tribunal also received oral evidence from Mr Mengruo (Simon) Sun, Company Director.

5. At hearing it was asserted that the first-named applicant had not breached the 90 day requirement in visa condition 8107 as he had, within that time period, worked for AP Constructions Pty Ltd (APC) which it was asserted was an ‘associated entity’ of the sponsor, MKT.  This issue had not been raised before the Department of Immigration and Border Protection.

6. The Tribunal hearings were conducted with the assistance of an interpreter in the Mandarin and English languages.

7. The applicants were represented in relation to the review by their registered migration agent who attended the hearing on each occasion.

8. For the following reasons, the Tribunal has concluded that the decision to cancel the first-named applicant’s visa should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. Under s.116 of the Act, the Minister may cancel a visa if he or she is satisfied that certain grounds specified in that provision are made out. Relevantly, to this case, these include the ground set out in s.116(1)(b) of the Act. If satisfied that the ground for cancellation is made out, the decision maker must proceed to consider whether the visa should be cancelled, having regard to all the relevant circumstances, which may include matters of government policy.

   Does the ground for cancellation exist?

   s.116(1)(b) - non-compliance with conditions

10. A visa may be cancelled under s.116(1)(b) if the Minister or the Tribunal is satisfied that the holder did not comply with a condition of their visa. The Tribunal is satisfied that condition 8107 is attached to the applicant’s subclass 457 visa which was granted on 12 February 2015. The Tribunal notes that clause (3)((b) of that condition states “if the holder ceases employment – the period during which the holder ceases employment must not exceed 90 consecutive days”.

11. The Tribunal held a second hearing to consider a further aspect of a breach of Condition 8107(3). That is subclause (a)(ii)(B)[1]. It requires that the visa holder must work only in the occupation listed in the most recently approved nomination for the holder and (b) if the sponsor is, or was, a standard business sponsor who was lawfully operating a business in Australia at the time of the sponsor’s approval as a standard business sponsor, or at the time of the last approval of a variation to the sponsor’s term of approval as a standard business sponsor-must work only in the position in the business of the sponsor or an associated entity of the sponsor.

    [1] This condition is applicable unless the circumstances in subclause (3A) apply. Subclause (3A) is not applicable in the circumstances.

12. The conclusion of this matter has been delayed by virtue of addressing the second aspect of the asserted breach and in considering whether APC satisfied the requirements of an “associated entity”. It is necessary to reach a determination about this issue because, if the breach is not made out, there is no basis to cancel the visa as the ground to do so will not have been established.

13. Whilst this second aspect of the breach was not specifically referred to in the Notice of Intention to Consider Cancellation of the visa, it is appropriate that it be considered as it is the same condition 8107 (albeit a different aspect of it) and notice was given to the applicants that a breach of (a)(ii)(B) would be addressed at the second hearing. In the hearing invitation for the second Tribunal hearing the Tribunal sought submissions as to whether APC fulfilled the requirements of an “associated entity”. In relation to that definition, the Tribunal also referred to section 50AAA Corporations Act which defines that term.

14. The departmental policy relevant at the time of the grant of the visa makes it clear that 8107(3)(a)(ii)(B) enables a subclass 457 visa holder to work in a position in their nominated occupation for an associated entity of their sponsor without breaching 8107.

15. In the Tribunal’s view a summary of the effect of the relevant parts of cl.8107(3), in the context of this matter, are as follows:

    ·     the primary visa applicant must work only in the occupation listed in the most recently approved nomination [8107(3)(a)(i)]; and

    ·     if the sponsor was a standard business sponsor [lawfully operating in Australia], the primary visa applicant must work only in a position in the business of the sponsor or an associated entity of the sponsor [8107(3)(a)(ii)]; and

    ·     if the primary visa applicant ceases employment—the period during which he ceases employment must not exceed 90 consecutive days. [8107(3)(b)]

16. It is therefore essential to determine whether:

    ·    the primary visa applicant worked for APC, and

    ·    was APC an ‘associated entity’ of MKT.

17. Based on the oral and documentary evidence before the Tribunal, it makes the following findings in relation to uncontroversial matters:

    ·    The first-named applicant arrived in Australia in March 2015 on a subclass 457 visa to work as a bricklayer with MKT. MKT was a standard business sponsor which nominated the first-named applicant in the most recently approved nomination.

    ·    On about 18 December 2015 the first-named applicant ceased employment with MKT and did not work for MKT thereafter.

    ·    A new nomination was lodged by A.P.Constructions Pty Ltd (APC) in January 2016. There is no evidence before the Tribunal that that nomination has been approved.

    ·    The visa applicant commenced work with APC in approximately February 2016 and worked there until May 2016.

    ·    Had the visa not been cancelled it would have run until February 2019.

18. Whilst the documentary evidence of the first named applicant’s employment with APC was not strong, I accept that Mr Zhen was working as a bricklayer for APC from February 2016.

    The issue of whether APC is an “associated entity”

19. In the written submissions provided prior to the first hearing the representative asserted that APC is under the management of Mr Mengruo Sun and Mr Liang Xia. It is asserted that they are also “management” of  MKT. They submitted ASIC company extracts to the Tribunal and asserted that by virtue of the common management, APC is an ‘associated entity’.

20. In the second written submission, the representative also addressed s50AA Corporations Act dealing with the definition of “control” for the purpose of the Corporations Act. It is submitted that:

    ·    Mr Mengruo Sun had the capacity to decide the two companies’ financial and operating policies

    ·    he was the one who made the decision to close the business and re-open it. MKT has migrated all its business from MKT to APC.

    ·    from the applicant’s perspective he did not work for anyone other than the business sponsor.

21. At the second hearing, the evidence given was such that I formed the view that Mr Liang Xia and Mr Mengruo Sun each had some involvement in running the companies but that Mr Liang Xia was not involved any more.

22. The Tribunal is of the view that the relevant time as to whether APC is an ‘associated entity’ is when the applicant commences employment with APC. It is at that juncture the question arises as to whether he is employed by an ‘associated entity’ [in the context of whether there is a breach of condition 8107].

23. Based on the information before the Tribunal, the relevant chronology in relation to the two companies and the primary visa applicant is as follows:

    2/12/11   MKT registered

    8/10/12   Liang Xia appointed director of MKT

    1/8/14     Mengruo Sun appointed director of MKT

    9/12/14   APC registered

    9/12/14   Liang Xia appointed director of APC

    12/2/15   Qingbo Zhen granted visa to work for MKT

    25/11/15  Liang Xia ceased as director of MKT

    18/12/15  Qingbo Zhen ceased working for MKT 

    31/12/15  MKT ceased trading

    Feb /16   Qingbo Zhen commenced working for APC

    2/5/16     Liang Xia ceased director of APC and transferred 100% of shares to Mengruo Sun

    2/5/16     Mengruo Sun appointed director of APC and received 100% of shares from Liang Xia

    15/6/16   Mengruo Sun ceased director of MKT

    15/6/16   MKT deregistered

24. I had information before me in the form of letters from an accounting firm, J &J topsolutions, which stated that Liang Xia and Mengruo Sun of MKT had come to see the firm on 8 December 2014 regarding the migration of the business to a new entity, APC.  MKT lodged an application to de-register that company in March 2016.

25. The representative relied on subsections (4) and (7) of the definition of “associated entity” in s50AAA Corporations Act.  These provisions provide as follows:

    “(4) This subsection is satisfied if:

    (a) the associate controls the principal; and

    (b) the operations, resources or affairs of the principal are material to the associate.”

    …………………………………………………………………………………………………..

    “(7) This subsection is satisfied if:

    (a) an entity[2] (the third entity) controls both the principal and the associate; and

    (b) the operations, resources or affairs of the principal and the associate are both material to the third entity.”

    [2] By virtue of s.64A Corporations Act a natural person can be an “entity”.

26. I accept, on the basis of the ASIC company documentation provided to the Tribunal, that Mr Mengruo Sun and Mr Liang Xia have either held, or currently hold, directorships in MKT and APC. However I must be satisfied that APC meets the definition of ‘associated entity’ in s50AAA Corporations Act.

27. Based on the ASIC records supplied to the Tribunal, as at February 2016, the following shareholdings and directorships were in existence:

    ·Liang Xia held all of the shares of APC and was the sole director of APC.

    ·Mengruo Sun held all the shares of MKT and was the sole director of MKT.

28. The concept of “control” in s50AA Corporations Act is a relatively broad term based on accounting standards. An entity controls a second entity if it has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies. Whether an entity has the “capacity to determine” the outcome of decisions must be determined according to the practical influence the first entity can exert rather than the rights it can enforce[3]. What must be taken into account is any practice or pattern of behaviour affecting the second entity’s financial or operating policies[4].

    [3] S 50AA(2)(a) Corporations Act and CCH Australian Corporations and Securities Law Reporter at paragraph 45-140

    [4] S.50AA(2)(b) Corporations Act

29. I am mindful that in this case I have fairly limited information about the circumstances of the companies. In the context of s50AAA(4) and (7) Corporations Act, I have difficulty in determining that, at the relevant time in February 2016, the associate, APC, controls the principal, MKT, or that either Mengruo Sun or Liang Xia [as a third entity] controls both corporate entities. I am mindful that control is concerned with decision-making rather than proprietorship. I also note that in most cases “practical influence and enforceable rights will coincide”[5]. Mengruo Sun and Liang Xia did not have the ability to exercise legal control as neither of them held shares in both companies as at February 2016. In addition, the oral evidence as to the decision-making was not determinative.[6]

    [5] CCH Australian Corporations and Securities Law Reporter at paragraph 45-140

    [6] Whilst it may be arguable that during an earlier period, from 17 March 2015 until 18 December 2015, Liang Xia “controlled” both MKT and APC, this would depend on whether Liang Xia as a majority shareholder of MKT had the capacity to determine the outcome of decisions about MKT and APC’s financial and operating policies. However, the state of the evidence is not such that I could reach a concluded view. In any event, the relevant time for the consideration of this issue in this case is in February 2016 as discussed above.

30. I am satisfied that the applicant ceased working for his sponsoring employer, MKT, on about 18 December 2015 and has not resumed working for that employer. I find that he was working for APC from about February 2016. Based on the evidence before me, I am not satisfied that the requirements of ‘associated entity’ are met as at February 2016. I am not satisfied that APC is an associated entity at that time.  Consequently, the first named applicant has breached 8107(3) (a)(ii)(B) as the applicant had ceased working for the sponsor, MKT, and was working for a company which at the relevant time was not an ‘associated entity’.

31. For these reasons, I am satisfied that the ground for cancellation in s.116(1((b) exists. As that ground does not require mandatory cancellation under s.116(3), I must proceed to consider whether the power to cancel the visa should be exercised.

    Consideration of discretion

32. There are no matters specified in the Act or Regulations that are required to be considered in relation to the exercise of the discretion to cancel the visa. However, in considering whether to exercise its discretion to cancel the applicant’s visa, the Tribunal has had regard to the relevant circumstances including but not limited to matters identified in the Department’s Procedures Advice Manual PAM3 ‘General visa cancellation powers’.

    The purpose of the visa holder’s travel and stay in Australia, whether the visa holder has a compelling need to travel to or remain in Australia

33. The applicant came to Australia on a temporary visa. The purpose of such a visa is to provide skills not available in the local labour market. The visa was current until February 2019. The applicant came to work with MKT in the capacity as a bricklayer. His family, comprising his wife and adult child joined him in Australia. The evidence did not suggest a compelling need to remain in Australia. He said that he likes it here but he has kept a house in China. He is currently living with his sister. The applicant is not working at present as there is a ‘no work’ condition on his bridging visa.

    The extent of compliance with visa conditions and past and present conduct of the visa holder towards the department

34. Aside from the lack of compliance with condition 8107, which I accept is not due to the fault of the first-named visa applicant, there is no evidence before it of any other breaches or non-compliance with visa conditions by the applicant. There is no evidence that the applicant has been uncooperative with the Department.

    Degree of hardship that may be caused (financial, psychological, emotional or other hardship)

35. At hearing when the first-named applicant was asked about hardship he mentioned that he cannot afford his legal expenses. He said that he cannot maintain his daily life.  I accept that a degree of hardship will be caused to the first-named applicant and his family by the early unexpected cessation of his subclass 457 visa.

    Circumstances in which ground of cancellation arose.

36. I accept that the circumstances relate to change of the sponsor’s company structure and is not within the visa applicant’s control. It is not clear exactly why the company re-structure took place but it was apparently at the instigation of the company directors.

    Whether there would be consequential cancellations under s.140

37. I find that there are consequential cancellations of visas flowing from the cancellation of the primary applicant’s visa. The consequential cancellations are for the visa applicant’s wife and his adult child.

    Whether any international obligations would be breached as a result of the cancellation

38. There is no evidence before the Tribunal to suggest any breach of international obligations. Mr Zhen indicated that the cancellation would cause him stress but he did not identify any particular issues other than a loss of face. I note that his child is an adult child and the cancellation will not cause the separation of the members of the family unit from each other.

    Whether there are mandatory legal consequences, such as whether cancellation would result in the visa holder being unlawful and subject to detention, or whether indefinite detention is a possible consequence of cancellation, or whether there are provisions in the Act which prevent the person from making a valid visa application without the Minister’s intervention

39. The first-named applicant is currently on a bridging visa as a result of the current review process. In the absence of another successful visa application being made or granted by the Minister ultimately the applicant will not have a visa status which will allow him to remain in Australia. If that is the case he and his family have the opportunity to depart Australia. Whilst their continued failure to do so may ultimately result in detention or removal action, it is not a necessary consequence of the decision.

40. The Tribunal is mindful that Section 48 Migration Act prescribes that a non-citizen who does not hold a substantive visa, and (relevantly) held a visa which was cancelled under section 116 of the Act, may apply for certain prescribed classes of visas but not others. Regulation 2.12 prescribes the classes of visas, which does not include business or skilled visas. Consequently, this limits what visa applications can be made by the applicant whilst onshore.

41. Considering the circumstances as a whole, the Tribunal concludes that the visa should be cancelled. In the final analysis, and noting the consequences are very unfortunate and beyond the control of the applicant, the visa is a temporary visa, the employment with the original sponsor has ceased and despite the nomination lodged by APC over a year ago there is no indication of approval of that nomination or any other, for work for the applicant in Australia.

    DECISION

    The Tribunal affirms the decision to cancel the first named applicant’s Subclass 457 (Business (Long Stay)) visa.

    The Tribunal has no jurisdiction with respect to the other applicants.

    Sue Raymond
    Senior Member