Guo v Minister For Immigration & Multicultural Affairs

2 The two projects, to which Mrs Guo referred to in her application, were first, her investment in a vineyard, and secondly, her proposed investment in a company that would manufacture goats' milk tablets ("the milk tablets project"). 3 In her agent's letter that accompanied her application, and in some supporting documents that were annexed to her application, details of the vineyard project were set out. The relevant information was: "Nocton Park Development Pty Ltd has been established as a investment and management company located in Hobart, Tasmania, which has developed an establishment plan to pool funds from foreign investors to establish a vineyard in the Richmond area of Tasmania." 4 Mrs Guo deposited over AUD$100,000 with Perpetual Trustees Tasmania Ltd in June 1999. That company is handling the investment funds for the Nocton Park Development project. 5 The agent's letter continued: "Investors in the Nocton Park Development project will be involved and consulted in each step of the development and management decisions of the project and it is hoped that through the participants diverse business links in China the finished wine can be exported to China with participants all contributing to the marketing of the wine." 6 As to the milk tablets project, the agent said in its letter that "a decision has been made to establish a goat milk tablet factory in Nocton Park Farm within the Nocton Park development project". The letter continued that it was intended that a new company, to be called Nocton Park Goat Milk Tablets Co Pty Ltd "will be established and managed by Nocton Park Development Pty Ltd". The agent explained that Mrs Guo will be one of six Chinese shareholders and that each shareholder in the company will be responsible for certain areas of the business. The letter then listed six investors who were to be senior executives in the new company together with the positions that each of them would hold. They were: · Mr Han Siqi, General Manager · Mr Zhang Lei, Deputy General Manager · Ms Zhuang Jing Juan, Business Manager of milk tablet workshop · Mr She Ji Zhong, Vineyard Manager · Ms Tam Tak Ping, Trade Manager · Ms Guo Mei Feng, Accounting Manager 7 Details of Mrs Guo's duties as accounting manager of Nocton Park Goat Milk Tablets Co Pty Ltd were said to include: "prepare and process accounts receivable and payable dispatch workers' salary assist accountant to prepare fiscal financial report weekly report to the general manager in regards to the financial situation of the milk tablet workshop."

8 For some inexplicable reason, the respondent's delegate, in his reasons for rejecting the application, referred only to the vineyard project; he made no reference to the second project, the milk tablets.

9 In deciding that the application should be rejected, the delegate concluded that he did not accept that Mrs Guo "has the relevant work experience that would be required of a person who intends to establish and manage a vineyard in Australia". 10 He also added: "No evidence has been provided to show that Ms GUO has been involved in the management of an agricultural business. I also find that she has not shown experience or skills that would be expected of a person who intends to manage a vineyard as a principal on a day to day basis." 11 The accuracy of these comments was not tested in argument and it is not, therefore, appropriate for me to investigate them in depth. I should, however, make the observation that there would be many in the field of Business Management who would incline to the view that a person's management skills can extend to hiring experts with technical skills and it could appear from her application that Mrs Guo might possess the necessary management and accounting experience. 12 During the course of the argument, it became apparent that the application, to the extent to which it relied on the vineyard project, could not succeed and it was ultimately abandoned. It became clear that Mrs Guo would be no more than an investor in the project who, along with other investors, would be "involved and consulted". There was nothing in the papers that pointed to her having any managerial role in the project. As such, it could not be said that she would be "conducting" a business as a principal as required by reg 457.223(7)(a)(i).

13 The facts relating to this aspect of the application were materially different to those dealing with the vineyard project. In the first place, it will be limited to seven shareholders as against an unspecified number of investors in the vineyard project. Mrs Guo is nominated as a person who will have a role to play in the operation of the company, even though that role is somewhat ambiguous; it includes the obligation to "assist [the] accountant to prepare fiscal financial report". Presumably, that means that as Mrs Guo is a manager, the accountant would be subservient to Mrs Guo. But that is not clear. Ms Maharaj, counsel for the respondent, suggested that it could mean that Mrs Guo was answerable to the accountant.

14 Whilst conceding that the Minister's delegate had made a mistake in failing to address in his reasons the subject of the milk tablets project, Ms Maharaj nevertheless submitted that it would be an exercise in futility to send the matter back to the delegate for reconsideration. In any application of this nature one of the matters in respect of which the Minister must be satisfied is that the applicant: "proposes to develop in Australia a business activity that will be: (i) conducted by the applicant as a principal; and (ii) … ."(reg 457.223(7)(a)(i)

The applicant must also demonstrate that there is a need for her to be temporarily resident in Australia to conduct or establish the proposed business (reg 457.223(7)(f)).

15 Both counsel referred to the contents of the "Procedures Advice Manual 3", (Ex A1), a publication of the respondent's Department that sets out policy guidelines, and a document to which the delegate referred in his reasons for the purpose of addressing the meaning of the word "principal". As the manual pointed out, the word is not defined in the Regulations; its author therefore proceeded with the following observation: " … the ordinary dictionary meaning applies. Meanings given in the Macquarie Dictionary include: · "First or highest in rank"; · "chief or head" · "a person primarily liable for an obligation"." 16 Applying this rather limiting and singular role of the word "principal", Ms Maharaj submitted that the only person in the proposed milk tablet company that could fulfil the role of "principal" would be Mr Han Siqi, the general manager designate of the company. That restrictive interpretation is in my opinion inappropriate. It could restrict partnerships, joint ventures and companies to one of several persons, notwithstanding that the others were involved at a meaningful, albeit lower, level of management. Furthermore, such an interpretation is inconsistent with the subsequent contents of the manual. Paragraph 2 shows that there can be more than one principal and par 3 sets out some of the factors that a delegate may feel it necessary to consider. I consider that these two paragraphs are appropriate guidelines. They are in the following terms: "2. The number of principals in a business will depend primarily on three factors: · the form of ownership which could include sole proprietor, partnerships, trusts, private and public companies and companies listed on the stock exchange; · the equity or applicant's share of the business; and, · the role of the applicant in the business. 3. Minority shareholders (or shareholders who are employees of the business) could have difficulty substantiating claims that they are a principal. Officers may need to examine: · the number of other shareholders; · the comparative size of these shareholders' holdings; · the shareholder's roles in decision making; and · the structure and procedures of the business for allocating responsibility and decision making."

17 When one has regard to the contents of pars 2 and 3 and applies them to the circumstances of Mrs Guo the following observations may be made: · her form of ownership in the proposed project will be shares in a proprietary company; · her equity or share will be 15 per cent; · her role will be that of accounting manager; · there will be five other Chinese Nationals who will each hold 15 per cent of the issued capital and an Australian company that will hold 10 per cent; · the comparative sizes of the shareholders' holdings have been identified; · Mrs Guo's role in decision making is not clearly stated; the delegate may be prepared to make assumptions and draw inferences about the role of an accounting manager but that would be for him to decide; · the structure and procedures of the business for allocating responsibility and decision making are not spelt out in the application. The decision-maker might consider that fatal but, again, that would be his decision; he might feel that these matters would follow a routine that is common place in proprietary companies; · finally, the application is deficient in that it does not identify a board of directors nor does it identify whether Mrs Guo will be a director. I view that as a serious omission.

18 Mr Gibbons, counsel for the applicant sought to minimise these omissions by pointing to s 56 of the Migration Act 1958 (Cth) ("the Act") which allows the delegate to seek out and obtain additional information. But, in my opinion, that provision does not impose an obligation on the delegate to do that. The primary responsibility rests with the applicant, she should place all relevant information before the decision-maker. 19 Section 481(1) of the Act confers power on the Court, in its discretion, to make a number of orders including an order setting aside the decision that is the subject of the application for review and referring the matter back for further consideration. The failure on the part of the delegate to make any reference to the milk tablets project is an astonishing omission. It suggests that the speed with which the application was rejected shows that the matter was not given proper consideration. Prima facie, Mrs Guo has established reviewable error and the matter should be remitted back for further consideration, unless a valid reason exists for refusing that relief. 20 There are cases where, despite a finding that a particular error has been made, a decision has not been set aside or remitted for further consideration because it would be futile to do so; see for example, Lek v Minister for Immigration, Local Government and Ethnic Affair (1993) 43 FCR 100 per Wilcox J at 136, Rahim v Minister for Immigration and Ethnic Affairs (1997) 78 FCR 223 per Sackville J at 238, and Jaswal v Minister for Immigration and Multicultural Affairs (Tamberlin J, 24 September 1998, unreported). 21 However, as Beaumont J pointed out in Santa Sabina College v Minister for Education (1985) 58 ALR 527 at 540, the court ought not to exercise the discretion to refuse relief if it is "possible" that the end result might not be the same at a further hearing: (see also Nguyen v Minister for Immigration and Multicultural Affairs (1998) 158 ALR 639 at 647 per Merkel J. The Court will refuse to remit a matter, only if it is convinced that there is no possibility that an alternative view could have been arrived at by the delegate. 22 In my view, this Court cannot say with certainty that, upon a proper consideration of Mrs Guo's application with respect to the milk tablets project, her application will be rejected. For that reason the application is allowed; the decision of the delegate is set aside and the mater is referred to the delegate who made the decision for further consideration in terms consistent with these reasons.

23 There remains an additional matter that warrants strong comment. In the original application for review, one of the claimed grounds was that: "… the decision was induced or affected by fraud or by actual bias."

No particulars of this alleged fraud or bias were set out in the application. Instead there was a statement:

No such affidavit or particulars were supplied; no reference was made to this serious allegation in counsel's written submissions and at the end of counsel's oral submissions nothing had been said in respect of the allegation. As a result of my inquiry, I was told that the allegation would not be pursued. I regard that as an intolerable situation. No formal notice of abandonment of the allegation has been filed. The delegate is left with an allegation of fraud and actual bias having been made against him which, whilst not substantiated, has not been withdrawn. Counsel informed me that at the time of taking original instructions there was a possibility that fraud might be raised. As to that I say two things: there is nothing in the papers that would suggest the existence of any such possibility. Secondly, a "possibility" is not enough to warrant the making of such a serious allegation. Legal practitioners have a duty to the Court to ensure that unsubstantiated allegations of such import are not made. Indeed there are writings that suggest that, in appropriate circumstances, the indiscriminate allegation of fraud might even amount to unprofessional conduct and might warrant a costs order being made against the legal practitioner.

24 A legal practitioner must have specific instructions, and be in possession of sufficient evidence, to allege fraud. Such an allegation should not be made lightly: it has the potential to damage seriously a person's reputation. For this reason, a practitioner has a responsibility to the court to ensure that reasonable inquiries are carried out concerning his or her client's allegation of fraud: Minister Administering Crown Lands (Consolidation) Act & Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 (CA NSW) at 203-4 per Kirby P, Meagher and Handley JJA. Furthermore, general allegations are not sufficient; the nature of the fraud must be clearly and precisely formulated: Banque Commerciale SA (In Liq) Akhil Holdings Ltd (1990) 169 CLR 279 at 285 per Mason CJ and Gaudron J. 25 In Kavia Holdings Pty Ltd & Another v Wercog Pty Ltd & Another (Santow J, 18 August 1999, unreported), Santow J said: "the legal adviser should remain alert to the importance of ensuring he or she can fulfil the personal duty of candour he or she owes to the Court. If in doubt about the veracity of the instructions or their potential to mislead the court, the legal advisers should press the client until properly satisfied that such potential is removed and in the meantime must decline to put submissions to the Court while in doubt about their potential to mislead."

The facts upon which the fraud allegation are based must be specifically pleaded. In Minister Administering Crown Lands (Consolidation) Act & Western Lands Act v Tweed Byron Aboriginal Land Council (see above) the Full Court observed at 203:

"These requirements are not only rules of pleading and practice established by decisions of the courts. They are rules of ethical conduct binding on members of the legal profession. It is a serious matter to allege fraud against a party in pleadings to which attach the privileges incidental to court proceedings. Reports of such allegations may be recounted in the community and through the public media. They may do great harm to a party before a word of evidence has been offered and submitted to the searching scrutiny of cross-examination or to rebuttal. It is for this reason, amongst others, that legal practitioners must take care to have specific instructions and an appropriate evidentiary foundation, direct or inferred, for alleging and pleading fraud."

To make such an allegation which is not substantiated by evidence would also be an abuse of court process.

26 The Full Court in Minister Administering Crown Lands (Consolidation) Act & Western Lands Act v Tweed Byron Aboriginal Land Council (see above) proceeded to state at 204: "Professional discipline may follow if allegations of fraud are made where the foregoing conditions are not satisfied. By such means, courts protect their process from the abuse which would follow from the too ready assertion of fraud against a party, in circumstances where it could not be proved to the high standard required of such allegations".

It can amount to unprofessional conduct to make an allegation of fraud without sufficient basis or without reasonable grounds: Rondel v Worsley (1969) 1 AC 191 at 227 per Lord Reid; Y v M (1994) 3 NZLR 581 at 586 per Temm J; Minister Administering Crown Lands (Consolidation) Act & Western Lands Act v Tweed Byron Aboriginal Land Council (see above) at 204, 206.

27 In Y v M (see above), Temm J referred to his remarks in an earlier judgment that dealt with another aspect of the same litigation, saying: "It appears to be a misconception of some prevalence that a solicitor's only duty is to the interests of the client. That is not right. The lawyer undoubtedly has a duty to the Court that the Court be not misled. There is a wider public duty allied to that, by which a lawyer is under an obligation to refuse to make allegations that are not sufficiently based. It can be unprofessional conduct to make allegations of dishonesty without a proper basis. It is equally unacceptable for a solicitor to make accusations of fraud… without adequate grounds for doing so. An assertion unsupported by evidence is not enough. An accusation is not evidence." 28 In Rondel v Worsley (see above), Lord Reid said at p227: "Counsel must not mislead the court, he must not lend himself to casting aspersions on the other party or witnesses for which there is no sufficient basis in the information in his possession…." 29 Minister Administering Crown Lands (Consolidation) Act & Western Lands Act v Tweed Byron Aboriginal Land Council (see above) was applied by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, in which he stated at 170 that: "An allegation of fraud made by a solicitor in a pleading when there is no factual basis for it is sufficient to constitute a serious dereliction of duty or serious misconduct which will enliven the jurisdiction to order costs against the solicitor." 30 In the circumstances of this case, a costs order against the practitioner would not be warranted and because the allegation of fraud was not pursued beyond its inclusion in the original application a reference to the Law Society of South Australia Inc need not be made. The case was fought as if the allegation had not been made and the respondent unsuccessfully defended the matter by pursuing the futility argument. In those circumstances I have concluded that the normal costs order should be made: there will therefore be an order that the respondent pay the applicant's costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Loughlin.

Associate: Dated: 23 February 2000 Counsel for the Applicant: Mr J A Gibbons

Solicitor for the Applicant: No Solicitor on record

Solicitor for the Respondent: Australian Government Solicitor