Patel v Minister for Immigration and Citizenship

JUDGE: BROMBERG J DATE: 13 FEBRUARY 2013 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 On 9 March 2011 the first appellant ("Patel") lodged an application for a Student (Temporary) (Class TU) Visa. The second appellant was included in Patel's application as a dependent family member. Patel's visa application was rejected by a delegate of the first respondent and that decision was affirmed by the Migration Review Tribunal ("the Tribunal"). Patel then sought judicial review of the Tribunal's decision before the Federal Magistrates Court. The subject of this appeal is the learned Federal Magistrate's decision to dismiss Patel's application for judicial review (Patel & Anor v Minister for Immigration and Citizenship & Anor [2012] FMCA 870). 2 The task of the Federal Magistrates Court in dealing with the judicial review proceeding brought by Patel was to determine whether the Tribunal's decision was affected by jurisdictional error: s 474 of the Migration Act 1958 (Cth) ("the Migration Act"); Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476. 3 The task of this Court on the appeal brought by Patel is to determine whether the judgment of the Federal Magistrate is affected by appealable error: SLMB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 129 at [11] (Branson, Finn and Finkelstein JJ). The appeal raises for determination whether the Tribunal's finding that Patel failed to meet the requisite financial capacity requirements provided for by the Migration Regulations 1994 (Cth) ("the Regulations"), involved jurisdictional error in the manner I will later identify. 4 Although neither the Notice of Appeal before the Federal Magistrate or in this Court properly raised that issue, the review conducted in the Federal Magistrates Court addressed it as has the Minister on this appeal. No objection was taken at today's hearing to Mr Patel relying on and agitating that issue. 5 Mr Patel appeared unrepresented. Beyond the issue to which I have already referred, Mr Patel did not seek to agitate any other ground of appeal. 6 As at the date of the Tribunal's decision, sub-cl 572.223(1) of Schedule 2 of the Regulations required Patel to meet the requirements of sub-cl 572.223(2). That subclause provided as follows: (2) An applicant meets the requirements of this subclause if: (a) for an applicant who is not a person designated under regulation 2.07AO: (i) the applicant gives the Minister evidence in accordance with the requirements mentioned in Schedule 5A for the highest assessment level for the applicant; and (ii) the Minister is satisfied that the applicant is a genuine applicant for entry and stay as a student, having regard to: (A) the stated intention of the applicant to comply with any conditions subject to which the visa is granted; and (B) any other relevant matter; and (iii) the Minister is satisfied that, while the applicant holds the visa, the applicant will have access to the funds demonstrated or declared in accordance with the requirements in Schedule 5A relating to the applicant's financial capacity; or (b) for an applicant who is a person designated under regulation 2.07AO - the Minister is satisfied that: (i) the applicant has the financial capacity to undertake the course, without contravening any condition of the visa relating to work, because the applicant has access to sufficient funds of the person's own or provided by a relative; and (ii) the applicant's proficiency in English is appropriate to the proposed course of study; and (iii) the applicant is a genuine applicant for entry and stay as a student, having regard to: (A) the stated intention of the applicant to comply with any conditions subject to which the visa is granted; and (B) any other relevant matter. 7 Schedule 5A of the Regulations further provided that sub-cl 572 visa applicants who were subject to assessment level 4 requirements, must at the time of the decision, satisfy the requirements of cl 5A405 of Division 2 of Part 4 of Schedule 5A ("cl 5A405"). That clause was in the following terms: 5A405 Financial capacity (1) The applicant must give, in accordance with this clause: (a) evidence that the applicant has funds from an acceptable source that are sufficient to meet the following expenses for the first 36 months: (i) course fees; (ii) living costs; (iii) school costs; and (aa) a declaration by the applicant stating that he or she has access to funds from an acceptable source that are sufficient to meet course fees, living costs and school costs for the remainder of the applicant's proposed stay in Australia after the first 36 months; and (b) evidence that the applicant has funds from an acceptable source that are sufficient to meet travel costs; and (c) evidence that the regular income of any individual (including the applicant) providing funds to the applicant was sufficient to accumulate the level of funding being provided by that individual. 8 The phrase "funds from an acceptable source" was defined in sub-cl 5A405(2) as follows: funds from an acceptable source means one or more of the following: (a) if the applicant: (i) has successfully completed at least 75% of the requirements for his or her principal course; and (ii) has applied for the visa in order to complete the course; and (iii) does not propose to undertake any further course; a money deposit held by an acceptable individual; (aa) if paragraph (a) does not apply - a money deposit that an acceptable individual has held for at least the 6 months immediately before the date of the application; (b) financial support from: (i) the applicant's proposed education provider; or (ii) the Commonwealth Government, or the government of a State or Territory; or (iii) the government of a foreign country; or (iv) a corporation that: (A) conducts commercial activities outside the country in which it is based; and (B) employs the applicant in a role in relation to which the applicant's principal course is of direct relevance; or (v) a multilateral agency; or (vi) a provincial or state government in a foreign country, provided with the written support of the government of that country; or (vii) an organisation specified by the Minister in an instrument in writing for this subparagraph; or (viii) an acceptable non‑profit organisation; (c) a loan from a financial institution that is made to, and held in the name of, an acceptable individual; (d) a loan from the government of the applicant's home country. 9 The phrase "an acceptable individual" was also defined in sub-cl 5A405(2) as follows: acceptable individual means one or more of the following: (a) the applicant; (b) the applicant's spouse or de facto partner; (c) the applicant's parents; (d) the applicant's grandparents; (e) the applicant's brothers and sisters; (f) an uncle or aunt of the applicant who is: (i) an Australian citizen, an Australian permanent resident or an eligible New Zealand citizen; and (ii) usually resident in Australia. 10 For the purposes of sub-cl 5A405(2), the term "financial institution" was defined in cl 5A101 of Part 1 of Schedule 5A as follows: financial institution means a body corporate that, as part of its normal activities: (a) takes money on deposit and makes advances of money; and (b) does so under a regulatory regime, governed by the central bank (or its equivalent) of the country in which it operates, that the Minister is satisfied provides effective prudential assurance. 11 The Tribunal's determination that Patel failed to meet the requirements of sub-cl 572.223(2)(a)(i) and (iii) of Schedule 2 of the Regulations were each based on the Tribunal's finding that Patel failed to satisfy the financial capacity requirements of sub-cl 5A405(1) in relation to course fees, living costs and travel costs. 12 Having calculated that $31,800 was required to cover such costs over the requisite period, the question for the Tribunal by reference to sub-cl 5A405(1) was whether Patel had demonstrated that he had "funds from an acceptable source" sufficient to cover the $31,800 of anticipated expenses. As set out already, sub-cl 5A405(2) defined funds from an acceptable source to include, by paragraph (c), a loan from a financial institution that is made to and held in the name of an "acceptable individual". 13 Patel produced to the Tribunal a letter from the Allahabad Bank in India which relevantly certified that the bank had sanctioned a loan of 20 lakh rupees, to Mr Rakeshkumar Patel for "prosecuting higher studies expenses to Mr Sunil N Patel". The reference to Rakeshkumar Patel is a reference to Patel's brother. There is no issue that 20 lakh rupees is more than A$31,800. The accompanying "Sanction Letter" provided by the Allahabad Bank referred to the nature of the facility provided to Patel's brother as a "term loan", identified the limit of the facility as 20 lakh rupees, identified the interest rate to be charged and identified that the terms of repayment were "on demand". 14 The Tribunal characterised the transaction between Patel's brother and the Allahabad Bank as being an overdraft or line of credit, a description that Patel apparently agreed with when it was put to him at the hearing by the Tribunal. 15 The Tribunal determined that the facility extended by the Allahabad Bank to Patel's brother was not a "loan" within the meaning of paragraph (c) of the definition of "funds from an acceptable source". For that reason the Tribunal determined that Patel failed to provide evidence of his financial capacity as required by sub-cl 5A405(1). 16 In construing the phrase "a loan from a financial institution", the tribunal said at paragraph 27 of its reasons for decision as follows: There is, moreover, no evidence that the full amount that the applicant is required to demonstrate under cl.5A405 has been borrowed, and is in the possession of the borrower. The Tribunal is mindful of a recent decision of Burchardt FM (Sidhu v Minister for Immigration and Anor [2011] FMCA 890), in which His Honour opined that overdrafts were not loans in ordinary parlance or within the meaning of the Regulations, an obiter with which the Tribunal agrees. An overdraft is, at best, a facility for borrowing money to a predetermined limit. It need never be used by the 'borrower', and can be withdrawn in an instant by the 'lender', a common occurrence during a credit squeeze or liquidity crisis in the banking system, events falling outside the control of individual customers, which may imperil their solvency even where they have fully honoured their obligations under the credit arrangement. Withdrawal of credit is also the obvious weapon of choice where a financial institution forms the view that an overdraft or other credit facility may become non-performing. The Tribunal is of the view that until and unless funds are actually disbursed to a borrower, that is, transferred to his or her custody, underwritten by a loan contract setting out the relevant terms and conditions, including a repayment schedule, the arrangement cannot reasonably be characterised as a loan. Quite apart from questions of migration law, commercial practice and nomenclature, the central policy objective underlying the requirement is to ensure that student visa holders will actually have funds to support themselves and meet their other commitments while holding the visa. The achievement of that objective is jeopardised where applicants seek to rely instead on such tenuous, contingent and often ephemeral arrangements as lines of credit and overdrafts, which amount, at best, to an offer by a financial institution to a client, revocable at will by either party, to make funds available to the latter should they be required. 17 In my view, the Tribunal misconstrued what the definition of "funds from an acceptable source" meant by the phrase "a loan from a financial institution". Both an overdraft facility and a line of credit may properly be described in ordinary parlance as a loan. Both are a form of lending from a financial institution. 18 As to what the Regulations mean by the word "loan", the Tribunal confined the meaning of that word to a transaction in which funds have already been disbursed to the borrower and where the transaction was underwritten by a loan contract setting out the loan's terms and conditions, including a repayment schedule. The Tribunal determined that unless those characteristics were present, the transaction could not be characterised as a "loan". 19 I agree that the term "loan", read in the context of it being "from a financial institution" and "made to and held in the name of" a borrower connotes the existence of a contract with terms and conditions. However, I see no reason why such a transaction is not to be regarded as a loan unless and until funds are transferred to the borrower, and unless and until the terms of the contract include a repayment schedule. In my view, the definition encompasses a legally enforceable agreement by which a financial institution promises to advance funds to a borrower on condition that the funds advanced be repaid. The existence of a "loan" for the purposes of the definition is not dependent upon any or all of the funds agreed to be lent coming into the possession of the borrower, and nor is it contingent upon there being a repayment schedule. 20 I have reached this view, taking account of the fact that the word "loan" appears in a definition which provides for a number of alternative means of satisfying the requirement that the applicant has funds, including by paragraph (b) that the applicant has "financial support" from one of a range of specified providers. Nothing in paragraph (b) suggests that the requisite funds must be in the hands of the visa applicant or any other "acceptable individual". 21 Furthermore, the alternatives provided for by the definition of "funds from an acceptable source" already encompass moneys held by an acceptable person which, if the Tribunal were right to conclude that the money borrowed under a loan had to be in the hands of an "acceptable individual", would give the alternative means provided for by paragraph (c) little or no practical utility. 22 The purpose of cl 5A405 is to provide some assurance that an applicant has access to funds or financial support sufficient to cover the basic expenses likely to be incurred during the applicant's stay in Australia. Sub-cl 572.223(2)(a)(iii) (with which cl 5A405 should be read) speaks of the Minister's satisfaction about the applicant's "access" to funds. In my view, a legally-enforceable agreement from a financial institution whereby an "acceptable individual" has been given access to funds to be drawn down as and when required, satisfies both the overarching purpose of the provisions in question, and falls within the meaning of "loan" as used in the definition of "funds from an acceptable source". The need for some certainty about the applicant's access to funds is sought to be accommodated in paragraphs (c) and (d) of the definition of "funds from an acceptable source", primarily by the restrictions placed on the nature of the lender (ie "financial institution" or "government") and not by reference to the nature of the lending. That view is fortified by the restricted meaning of the term "financial institution". If there had been a concern to restrict the nature of the lending, a more explicit approach may have been expected to have been taken by the draftsperson in relation to that subject matter. 23 By misconstruing the meaning of "loan" in the Regulations, the Tribunal asked itself the wrong question and fell into jurisdictional error: see Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [82] - [84] (McHugh, Gummow and Hayne JJ). 24 The Federal Magistrate erred by failing to identify that error, and on that basis I am satisfied that Patel has established appealable error. 25 I will allow the appeal and make orders which will require the Tribunal to reconsider the appellants' application for a visa. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.