Wen v Minister for Immigration & Multicultural Affairs

(a) the applicant proposes to develop in Australia a business activity that will be:

(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 …."

GROUNDS OF REVIEW 3 The applicant contends that the delegate made errors of law in the construction of clause 457.223(7), in particular a wrong construction of the concept of a "principal" in par (a). She claims that the delegate

· confused the criterion in par (a)(i) of clause 457.223(7) with the criteria in par (b)(ii) and (iii);

· wrongly imposed a "higher level of authority and control than the regulation demands"; and

· wrongly required the applicant to demonstrate that she was actually involved in the "day to day" decisions relating to the business.

Other grounds of review were raised in the Application for an Order of Review, but were not pursued in the written submissions or during the hearing.

Was there an error in the delegate's construction of clause 457.223(7)(a)? 4 In the decision record, the delegate states:

"In relation to 457.223(7)(a) [Procedures Advice Manual] states that the intention of the applicant to participate as an owner, the form of ownership and the equity, or the applicant's share of the business and the role of the applicant in the business should be taken into account. The applicant must also demonstrate that they have sufficient interest in the business to satisfy subregulation 457.223(7)(b)(ii) and (iii), where the applicant must show they will be in a position of control and authority which allows them to make decisions that affect the overall direction and performance of the business."

From the information you provided at interview I am not satisfied that you intend to maintain a direct and continuous involvement in the management of the proposed business or be in a position of control that allows you to make decisions that affect the overall direction and performance of the business.

I am therefore not satisfied that you propose to develop in Australia a business activity that will be conducted by you as a principal. You therefore fail to meet the requirement at clause 457.223(7)(a).

[Note: Because the application does not meet 457.223(7)(a), all of the criteria for the grant of the visa are not satisfied. I have, therefore, not assessed any claims against any of the other criteria listed in Regulation 457.223(7)]

5 The applicant submits that the delegate has confused the criterion in clause 457.223(7)(a)(i) with the criteria in par (b)(ii) and (iii). The respondent claims that it is not inappropriate for a delegate to take into account the matters set out in par (b) when considering whether an applicant is a principal, and relies on Guo v Minister for Immigration and Multicultural Affairs [2000] FCA 146 at par 16 where O'Loughlin J said that the role of the applicant in the business is a relevant consideration in determining whether he or she is a principal. However the delegate did more than take the par (b)(ii) and (iii) matters into account. He treated non‑satisfaction of them as determinative of non‑satisfaction of par (a)(i). Clause 457.223(7)(a) and (b) contain cumulative requirements. It cannot be said that because par (b)(ii) and (iii) are not satisfied, par (a)(i) is not. Situations can be envisaged in which a person may be a principal of a business within par (a) yet fail to fulfil the requirements of par (b)(ii) and/or (iii). For example, a partner who has put in a great deal of capital and has a right to veto certain decisions made by the other partners, but otherwise plays no part in the business, is probably a principal by virtue of his financial power and his potential impact on the company, notwithstanding that he does not maintain a direct and continuous involvement in the business, and does not make decisions affecting the overall direction and performance of the business from day to day. The delegate's statement "I am therefore not satisfied that you propose to develop in Australia a business activity that will be conducted by you as principal" refers back to the statement that the delegate is not satisfied of the matters in par (b)(ii) and (iii). In the earlier passage the delegate quotes verbatim from par (b)(ii) and substantially verbatim from par (b)(iii), though in relation to the latter he adds the words "or be in a position of control that allows you", which is derived from the Procedures Advice Manual ("PAM"). Accordingly, the delegate's conclusion that failure to satisfy par (b)(ii) and (iii) involves a failure to satisfy par (a)(i) is an error of law. 6 The applicant's submission that the delegate imposed a test requiring a higher level of authority and control from a principal than is required by the regulations was developed by reference to the decision of Heerey J in Huang v Minister for Immigration and Multicultural Affairs (2000) 105 FCR 34 at [11] that "principal" in par (a)(i)

"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 holding ultimate power."

His Honour pointed out that par (b)(i) and (iii) support this interpretation. Paragraph (b)(i) requires a commitment to maintain or obtain "an ownership interest in a business", not "ownership of the business". Paragraph (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. It was submitted that the delegate in the present case had committed the same error as the delegate in Huang, namely requiring the putative principal to be in control of the business. The delegate in Huang had applied meanings of "principal" derived from the Macquarie Dictionary:

"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 …."

Those composite meanings were described by Heerey J as "'control' over the business … in the sense of unilaterally holding ultimate power". In my view the delegate in the present case has not fallen into the Huang error. Whilst he refers to the PAM, which contains some of the Macquarie meanings, he does not set them out or refer to them. Although he twice uses the word "control", he does so in order to signify a measure of control sufficient to satisfy the requirements of par (b)(iii), not so as to indicate ultimate power or absolute control. Thus, when he says "the applicant must show they will be in a position of control and authority which allows them to make decisions that affect the overall direction and performance of the business", it is clear that the "control and authority" is simply that which is sufficient for the purpose. The same may be said of the later statement that the delegate was not satisfied that the applicant intends to be in "a position of control that allows you to make decisions that affect the overall direction and performance of the business". 7 The applicant also referred to the delegate's conclusion in his handwritten notes of the meeting of 30 May 2000 where he states:

"I am not satisfied that the [applicant] will be acting as a principal in the proposed business based on her stated roles & the roles of the other shareholders."

It was submitted that this statement shows that the delegate's decision was heavily influenced by what he thought were the contrasting roles of the applicant and Mr Whitehead. It was further contended that this dichotomy is not one that is determinative of the matters in pars (a) and (b) and that its use demonstrates error. I do not agree. Comparing and contrasting the applicant's role with the managerial tasks and duties of others in the business may provide a valuable insight into the precise scope of that role.

Was there an error in the delegate's construction of clause 457.223(7)(b)(iii)? 8 The applicant contended that the delegate incorrectly construed clause 457.223(7)(b)(iii) so as to require that an applicant make day to day management decisions. Paragraph (iii) requires an applicant to have a genuine and realistic commitment to make decisions that affect the overall direction and performance of the business from day to day. The applicant submits that this is not synonymous with the making of day to day management decisions. However, the only reference to day to day management made by the delegate was when outlining information provided by the applicant. The delegate stated:

"You outlined the roles of your business partner, Mr Bill Whitehead, as the Managing Director of the company and the person who will be responsible for the day to day management of the business."

There is nothing in the decision report to suggest the delegate required that the applicant make day to day management decisions.

Should the decision be set aside? 9 Whilst the delegate was in error in his approach to clause 457.223(7)(a), the Minister urged me not to set aside the decision. This was put on two bases. The first relied on a passage in the reasons of the majority of the High Court in Minister for Immigration and Multicultural Affairs v Thiyagarajah (2000) 74 ALJR 549 at 552:

"It should be noted that the phrase in s 476(1)(e), 'the decision involved an error of law', in the present case applied to the decision of the Tribunal under s 415(2)(a) to 'affirm' the decision of the delegate to refuse to grant a protection visa. In s 476(1)(e), the term 'the decision' thus identifies 'a determination effectively resolving an actual substantive issue' by 'effectively [disposing] of the matter in hand'. The error of law which will attract review must be more than one found in a step taken at some stage in the decision‑making process. The involvement of which s 476(1)(e) speaks postulates an error which finds a necessary consequence in the ultimate decision to affirm the refusal of the grant of a protection visa."

It was submitted that the errors in relation to par (a)(i) did not affect the delegate's ultimate decision to refuse the visa. They were no more than errors found in a step taken at some stage in the decision‑making process. This was because the delegate really disposed of the matter under par (b)(ii) when he said he was not satisfied that "you intend to maintain a direct and continuous involvement in the management of the proposed businesses". In my view the delegate's decision was based on his conclusion that par (a)(i) was not satisfied because the applicant was not "a principal". Paragraph (a)(i) is the only part of clause 457.223(7) that is set out in the decision record, as a requirement for the grant of the visa, though the general effect of par (b)(ii) and (iii) is described. The delegate's decision is expressed as follows:

"I am therefore not satisfied that you propose to develop in Australia a business activity that will be conducted by you as principal. You therefore fail to meet the requirement at clause 457.223(7)(a)."

Further, the delegate expressly stated that he had not assessed the application against any criteria other than that in (a)(i):

"Because the applicant does not meet 457.223(7)(a), all of the criteria for the grant of the visa are not satisfied. I have, therefore, not assessed any claims against any of the other criteria listed in Regulation 457.223(7)."

In those circumstances it cannot be said that the delegate's error in relation to par (a)(i) did not find a necessary consequence in the ultimate decision to refuse the visa; that it was not an error that affected the ultimate decision. 10 The second ground on which I was urged to refuse relief was that it would be futile to remit the matter to the delegate because he had made findings of fact that meant that par (b)(ii) was not satisfied. The delegate's conclusion was expressed as follows:

"From the information you provided at interview I am not satisfied that you intend to maintain a direct and continuous involvement in the management of the proposed business or be in a position of control that allows you to make decisions that affect the overall direction and performance of the business."

He thus finds facts the result of which is that the criteria in par (b)(ii) and (iii) are not satisfied. The applicant has not convinced me that there is any error of law which would justify me setting aside this finding. As I have said, the word "control" is not used in the sense of unilateral or absolute control, but in the sense of control that is sufficient to make the decisions in question ‑ "allows you to make decisions …". At the second interview the applicant was asked about her position in the partnership business. She said she thought she would take care of the financial books and contact with the Chinese side of the business because she is unable to speak English. She added "So I just can do this". She was then asked who would run the business on a day to day basis, and she said Mr Whitehead would, because he was familiar with the Australian hardware market. At the earlier interview Mr Whitehead was asked, in the applicant's presence, whether he could foresee the applicant taking over the role of General Manager in the future. He said he would remain the General Manager. It was open to the delegate on that material to find as he did. It would thus be futile to remit the matter to the delegate, because on the findings made, the same result will be inevitable even if the delegate correctly construes and applies par (a)(i). See, for example, Rahim v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 223 at 237‑238. CONCLUSION 11 The appropriate course in the circumstances is to dismiss the application but not to give the Minister his costs.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.