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[2000] FCA 1696
Federal Court of Australia
2000-11-24
Heerey J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The applicants seek review of a decision of the Migration Review Tribunal which affirmed a decision to refuse the grant of a Temporary Business Entry (Class UC) visa, subclass 457 (Business (Long Stay)). For the purposes of this review the relevant criteria in sch 2 of the Migration Regulations 1994 (Cth) are as follows: "Independent executives (7) The applicant meets the requirements of this subclause if the Minister is satisfied that: (a) the applicant proposes to develop in Australia a business activity that will be: (i) conducted by the applicant as a principal; and (ii) of benefit to Australia; and (b) the applicant has a genuine and realistic commitment: (i) to maintain or obtain an ownership interest in a business in Australia; and (ii) to maintain a direct and continuous involvement in the management of the business; and (iii) to make decisions that affect the overall direction and performance of the business from day to day;"
The applicants' case before the Tribunal 2 At the time of the Tribunal's decision on 17 July 2000 the first applicant was aged 41. The other applicants are her spouse and children. Their applications are dependant on hers. It will be convenient to refer to the first applicant simply as the applicant. 3 The applicant was born in Taiwan and came to Australia with her family in 1995. She made the visa application on 22 September 1997. The business in question is that conducted by a company called Market Investments Pty Ltd which is a manufacturer and importer of plastics and packaging products. The Tribunal had before it a letter dated 20 May 2000 from Mr Chen Chun-Ching the Managing Director of the company. It is apparent from the Tribunal's reasons that it accepted the information conveyed by that letter as truthful and accurate. 4 The shareholders in the company are Mr Chen and his three children Jenny, David and Amy. Each child held twenty per cent until Amy transferred fifteen per cent to the applicant. Amy is still studying in Australia but Jenny and David are studying or travelling overseas. According to Mr Chen, they are not interested in continuing in his footsteps in the business. Mr Chen's health is not good and he has been advised to reduce his workload. 5 The applicant and her husband invested $150,000 in the business in March 1999. Mr Chen says: "We are intending for Ms Huang to take up the role of an Executive Director as soon as the decision to grant her temporary resident status comes through. In the meantime, she has been actively engaged in the role of executive assistant to me. Her roles and duties consist of keeping an eye on the production line and quality control; organising production schedule and roster, assisting in export and import procedures and marketing to Asian clients locally." 6 Mr Chen says that thus far the applicant has shown "initiative and understanding of the business operation." He says: "Whilst I still make all the decisions, Ms Huang has proven her business acumen by involving in negotiation and discussion on business matters which leads to decision-making. This has given me confidence in her ability to take on a more definite role when her visa is approved. It will relieve me of much of my responsibilities and will enable me to take some well earned break from the business. Whilst currently a 15% shareholder in Market Investments, we have agreed to consider a transfer of the further 10 to 15% shares in future. In the long term, we are seeking to place Ms Huang in the important position to oversee the financial management of the company most notably our expansion plans. … She will be in the position of making business decisions in her capacity of an Executive Director. We shall continue to discuss and consult each other as in the past. When I am away, she will be the sole person to make decisions. Our future plans involve the further development of the company that will benefit Australia through increased employment and potential export opportunities." 7 There was also evidence that the applicant was attending Box Hill College of TAFE English classes.
Decision of the Tribunal 8 After recounting the factual background and setting out the terms of the regulation the Tribunal said: "32. In relation to whether the visa applicant can be considered to propose to develop a business activity that will be conducted by her as a 'principal', PAM [Departmental Procedures Advice Manual 3] advises that it will be acceptable for the visa applicant to intend to become involved in an existing business in Australia, provided the intention is to participate as an owner of a substantial interest of that business in a manner that satisfies 456.223(7)(b) [sic - correctly 457.223(7)(b)]. 33. Ownership interest is defined by regulation 1.03 to have the same meaning as in s 134(10) of the Act. That section defines 'ownership interest' to mean '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; 34. In relation to the requirement to participate as an owner of a substantial interest of that business under subparagraph 456.233(7)(b) [sic] PAM offers the following guidelines: Ownership interest 4. In assessing whether the applicant has or intends to obtain an 'ownership interest' in a new or existing business, officers should first note the regulation 1.03 definition of this term. … It is irrelevant whether the applicant intends to · start a new business in Australia; or · become involved in an existing business in Australia; or · continue an existing involvement in a business in Australia; provided the intention is to participate as an owner of an interest in that business. The applicant should intend to hold sufficient interest to give them a degree of control over the affairs and operations of the business. It is not intended that applicants, employed by a business, but who happen to hold a very minor interest in the business, be regarded as satisfying this criterion. 35. Although the visa applicant holds 15% interest in the business of Market Investments, the Tribunal finds that this is insufficient to give her a degree of control over the affairs of the business. Even if that interest is increase [sic] to 30%, the majority of shares will still be held by the family of the Managing Director and the visa applicant will not be in the position to have control over the affairs and operations of the business. The Tribunal has considered the visa applicant's claims that she will take on further involvement in the running of the business as her English improves and once the visa is granted, however even on the evidence provided by the Managing Director of the company, there is no indication that she will have control over the business. The Managing Director states that the visa applicant will be making decisions about the company while he is away. However it was stated at hearing and does not appear to be subsequently denied that the Managing Director makes the decisions in relation to the business and will continue to do so, and the visa applicant's role subject to his direction. The Tribunal finds that this indicates insufficient control over the business for the visa applicant to be considered a 'principal'. 36. The Macquarie Dictionary (second revision) defines 'principal' as 1. first or highest in rank, importance, value etc; chief, foremost … 3. a chief or head; 4. A governing or presiding officer, as of a school or college; 5. one who takes a leading part a chief actor or doer … The role which is proposed for the visa applicant to carry out does not fit within this definition nor does it fit within the interpretation set out in PAM. In comparison, the duties carried out by the Managing Director appear to satisfy the definition of 'principal'. The Tribunal notes that the Managing Director has suffered from ill health and wishes the visa applicant to take on some of his responsibilities, however at no stage is it suggested that she will be his equal and so be a joint principal of the business. The Tribunal finds that the visa applicant does not propose to develop in Australia a business activity that will be conducted by the visa applicant as a principal and therefore does not satisfy subparagraph 457.223(7)(a)(i)."
Conclusions on the review 9 It will be seen that the Tribunal found criterion 7(a)(i) was not satisfied. In reaching that conclusion the Tribunal seems to have rolled up together 7(a)(i) and 7(b). In the course of doing so the Tribunal has managed to extract from the regulations a criterion of "control over the business", non-compliance with which has proved to be fatal to the application. But the language of the regulations provides for no such criterion. 10 It is noteworthy that 7(a)(i) uses the indefinite article. An applicant must conduct a business activity as a principal, not as the principal. Plainly this visa is not to be restricted to persons who are sole proprietors of businesses. In Guo v Minister for Immigration and Multicultural Affairs [2000] FCA 146, counsel for the Minister had advanced the Macquarie Dictionary meaning that is referred to in par 36 in the present Tribunal's reasons. O'Loughlin J said (par 16): "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." 11 "Principal" in 7(a)(i) is not in my opinion used in any sense of firstness or superiority. Rather it conveys the notion that the applicant is not to be an employee, a meaning corresponding to the distinction between principal and agent. For example, a partner in a large legal or accounting firm would be referred to as a principal notwithstanding that he or she had no "control" over the business of the partnership in the sense of unilaterally holding ultimate power. 12 Further support for this reading of the regulation is found by looking at 7(b). The commitment spoken of in 7(b)(i) is one to maintain or obtain an ownership interest in a business, not ownership of the business. 13 Moreover 7(b)(iii) contemplates that the applicant will be making decisions that "affect the overall direction and performance of the business from day to day." A person can make such decisions without being in control of a business. Again, the work of a partner in a legal or accounting firm provides an example, as does the kind of work that the applicant herself was doing.
Conclusion 14 There will be an order that the decision of the Tribunal be set aside and the matter be remitted to the Tribunal differently constituted for reconsideration according to law. There will be an order that the respondent pay the applicants' costs to be taxed, including reserved costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.
Solicitor for the Applicants: Fernandez Cunda Gerkens
Solicitor for the Respondent: Blake Dawson Waldron
Huang
Minister for Immigration & Multicultural Affairs