Yuan v Minister for Immigration and Citizenship [2025] FedCFamC2G 2145

(a) reasoned that while the bank statements showed cash transfers to the Company, the statements did not show that the cash came from the Applicant or the Second Applicant;[43]

(b) referred to the revised financial statements, and found that the net assets of the Company as at 30 September 2015 were only $172. The Applicant submits that the Tribunal erred by failing to realise that the balance sheet in the statements showed a Director's loan of $92,500;[44]

(c) referred to the loan contact, which on its face was for a loan of up to $92,500.[45] The Applicant submits that the Tribunal does not explain how this evidence was apparently inadequate;

(d) discounted the amended company tax return on the basis that the Applicant had not provided evidence that it had actually been lodged;[46] and

(e) referred to "a handwritten note" of transactions occurring in 2014 and 2015, totalling $92,500.[47] The Applicant submits that the Tribunal does not explain how this evidence was apparently inadequate.

1. The Applicant contends that the Tribunal misunderstood the nature of the evidence before it. The Applicant submits that if the Tribunal considered the evidence submitted "in its totality",[48] it could not have reasonably or rationally concluded that cl 891.212(c) had not been met.

Misunderstanding of the evidence / unreasonable or irrational reasoning

1. The Tribunal accepted that the Applicant was one of two directors of the Company, with the other director being the Second Applicant.[49]
2. The Applicant acknowledges that the bank statements provided to the Tribunal did not indicate the source of cash payments into the Company's account.[50] However, the Applicant submits that the evidence must be considered with other evidence "in its totality". The "other evidence" plainly shows that the amount of $92,500, recognised on the balance sheet, came from the Applicant.
3. The revised financial statements showed that there were "loans" from "directors" totalling $92,500 as at financial year ending 30 September 2015.[51] The only two directors were the Applicant and the Second Applicant. In submissions to the Tribunal, the accountants explained that bank statements were relied upon in preparing the revised financial statements.[52] On the evidence, reasonably assessed, the Applicant submits that he and the Second Applicant were owed and had personal assets worth $92,500.
4. The Tribunal's Decision suggests that it "did not understand" what the revised financial statements meant. The Tribunal notes that the statements showed net assets of $172.00.[53] The Applicant contends that there is no awareness in the Tribunal's Decision that the balance sheet showed the existence of a Director's loan. The Applicant submits that the balance sheet should have been considered in the Tribunal's assessment of the Company's net value.
5. The signed loan contact was further evidence of a facility from the Applicant to the Company for $92,500. As to the definition of "repayment", the contract provided that: "the Borrower [Charment] must repay to the Lender [Mr Yuan, Applicant]".[54] On first instance, the only way to understand the contract was as evidence of a liability of the business in favour of the Applicant. The Applicant notes that the "only element" missing from the face of the contract was that the Applicant had advanced the full $92,500 by 24 November 2015. However, the Applicant contends that "other evidence" provided to the Tribunal went to this fact.
6. The "other evidence" included the amended tax return which recorded "non-current liabilities - loans from directors" as $92,500.[55] The amended tax return, signed by the Applicant, further showed that the Applicant had advanced $92,500 to the Company.[56] The Applicant submits that there is no other reasonable or logical interpretation of the amended tax return. The Tribunal discounted the amended tax return on the technicality that there was "no evidence" that the document had been lodged.
7. The Applicant submits that the overwhelming inference was that the amended tax return had been lodged, given the tax agent's declaration[57] and instructions from the agent.[58] The financial state of affairs of the Company did not turn on whether or not the amended tax return had been lodged. Even if it had not been lodged, the document was further evidence of the Director's loan.
8. The Tribunal requested that the Applicant provide a ledger showing transfers of funds totalling the $92,000 loan.[59] The Applicant submits that he provided this, albeit in a form not fully translated into English.[60] The Applicant submits that the lack of translation was not significant, given that the Arabic numerals on the ledger required no translation. The Applicant submits that these numbers were "obvious as to what they represented" when read with the accompanying submissions which explained that the ledger contained "relevant transaction records".[61]
9. The Applicant submits that he provided evidence demonstrating that the net value of his assets in the Company exceeded $75,000 as at 24 November 2015 and for the following 12 months. The Applicant submits that the Tribunal misunderstood the evidence before it in finding that cl 892.212(c) of the Regulations was not met,[62] or engaged in unreasonable or irrational/illogical reasoning. The Applicant contends that these simultaneous characterisations[63] describe the Tribunal's jurisdictional error.

1. Pursuant to reg 2.08 of the Regulations, the fourth applicant is taken to have also applied for the Visa.[64] The Tribunal seems to be aware that a decision was made by a Delegate of the Minister in respect of the fourth applicant on 31 October 2018.[65] The Applicant contends that the fourth applicant's application should not have been treated separately by the Tribunal.

1. The Applicant submits that the criterion in cl 892.212(c)(ii) correlates solely with the "net value" of "the assets".[66] The enquiry does not involve an examination of the "source" of funds used to acquire the assets.
2. The Applicant submits that the Tribunal erred in its interpretation of the phrase "the balance of any loans advanced to the business by the applicant" within the Procedures Advice Manual (PAM). At [14][67] of the Tribunal's Decision, the Tribunal expressly noted that it had considered Departmental policy in its reasons. The Tribunal was then inclined to accept that a Director's loan had been made but was not "satisfied of the source of funds injected into the company".[68]
3. The Applicant contends that the Tribunal's "misguided" enquiry into "source of funds" derives from PAM's reference to "loans advanced to the business by the applicant".[69] The Applicant contends that the correct approach involved consideration of the "net value" of the Applicant's "assets" in the Company. This would have included loans "owned" by the Applicant; not limited to loans "advanced" by him.[70] The Applicant suggests that there was sufficient evidence before the Tribunal to suggest the existence of a loan.[71] The Applicant contends that the PAM is invalid to "the extent that the words call for an examination of the source of funds in assessing cl 892.212(c)(ii)".[72] The Applicant submits that the Tribunal superimposed an additional requirement not found in the clause.

1. The Minister submits that the Tribunal's Decision is not affected by jurisdictional error and that the Applicants' Ground of Review is misconceived.
2. The Minister notes that cl 892.212(c)(ii) required the Applicants to demonstrate that:

the assets owned by the applicant, the applicant's spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia ... had a net value of at least AUD75 000 throughout the period of 12 months ending immediately before the application is made.

1. At the hearing, the following correspondence took place:[73]

MEMBER: Okay. Do you have a loan register?

INTERPRETER: Yes.

MEMBER: Are you able to provide a copy of the loan register?

INTERPRETER: Can it be done afterwards?

MEMBER: Yes.

INTERPRETER: Yes.

MEMBER: I'll set some extra time. I need to be satisfied that that money has gone into the business and that it's properly accounted for in order for me to count it as an asset of the company.

1. The Minister notes that the Applicants failed to provide any evidence of a loan register to the Tribunal. The Tribunal was not satisfied on the evidence that the Applicants had advanced a Director's loan to the Company from their own funds.[74] In particular, there was no evidence that the "unidentified" cash deposits and transfers claimed to comprise the Director's loan flowed from the Applicants to the Company.
2. The Minister notes that the Tribunal expressly put the Applicant on notice that he needed to provide substantiating further evidence, which the Applicant failed to do. The Minister submits that it was open to the Tribunal to find that the evidence was not "sufficiently probative" in the absence of further material. The Minister submits that the deficiencies in the evidence provided were fatal.[75]

1. The Minister submits that there is no inconsistency between the PAM and cl 892.212(c)(ii) and that the Tribunal's approach to Departmental policy was one open to it.
2. The Minister contends that the Applicant has erred in "gloss[ing] over the requirement that the assets in the business be owned by the Applicant.[76] The Minister further contends that the PAM does not mandate the consideration of the "source" of "funds" in any enquiry into assets owned by an applicant in a business.[77]
3. As a "beneficial policy", the Minister contends that the PAM allowed for decision makers to take account of common instances where an applicant's personal assets are used to bolster business assets.[78] This allowed decision makers to "go beyond" a "pure assets vs liabilities accounting analysis" in relation to the net assets of a business.[79] On the evidence before it, the Minister contends that it was open for the Tribunal to find that it was not satisfied that the funds in question "belonged" to the Applicant.[80] The Minister suggests that the issue before the Tribunal was in "identifying the proper owner of the asset" to determine whether the "beneficial approach in the PAM could apply".[81]

1. Section 476 of the Migration Act provides that the Federal Circuit and Family Court of Australia (Division 2) has the same original jurisdiction in relation to migration decisions as the High Court has under s 75(v) of the Constitution.
2. Section 75(v) of the Constitution provides that the High Court has original jurisdiction in all matters in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth. Thus, subject to the statutory exceptions provided for in s 476 of the Migration Act, the Federal Circuit and Family Court of Australia (Division 2) has original jurisdiction in all matters in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth. Further, s 474 of the Migration Act does not preclude judicial review of decisions under the Migration Act where jurisdictional error is alleged.[82]
3. "The task of the Court [in an application for judicial review] is to rule upon the lawfulness or legality of the decision by reference to the complaints made about it". The court neither consider the merits of the decision nor remakes it.[83] The critical question is whether the decision maker has acted in breach of an express or implied condition of the decision-making authority which results conferred by statute such that the purported exercise of that authority lacks the legal force attributed to it by the statute.[84]
4. The Court may grant relief if it is satisfied that the decision of the Tribunal is affected by jurisdictional error.[85] Jurisdictional error by a statutory decision maker may manifest itself in a variety of ways. Recognised categories of jurisdictional error include "misunderstanding the applicable law; asking the wrong question; exceeding the bounds of reasonableness; identifying a wrong issue; ignoring relevant material; relying on irrelevant material; in some cases, making an erroneous finding or reaching a mistaken conclusion; or failing to observe some applicable requirement of procedural fairness".[86] Different kinds of error may overlap.[87] The categories are not closed.[88]
5. In most but not all cases, for an error to be jurisdictional, the error must be material to the decision being challenged. The test is whether there is a "realistic possibility" that the decision that was made "could" have been different, but for the error.[89] This is to be determined as "a matter of reasonable conjecture within the parameters set by the historical facts that have been determined".[90] It has been described as an "undemanding" standard.[91]

**Business Skills (Residence) Visa (Class DF) Visa State/Territory Sponsored Business Owner (Subclass 892) visa

1. The Business Skills (Residence) Visa (Class DF) State/Territory Sponsored Business Owner (Subclass 892) visa was a subclass of visa that allowed business owners and investors to gain permanent residency in Australia. It included Subclass 892 (State/Territory Business Owner).

1. Clause 892.212 of Schedule 2 to the Regulations prescribed (at the time of the Tribunal's Decision) that one of the primary criteria for the grant of the visa was that:

Unless the appropriate regional authority has determined that there are exceptional circumstances, the applicant meets at least 2 of the following requirements:

...

1. the assets owned by the applicant, the applicant's spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:
   1. have a net value of at least AUD 75 000; and
   2. had a net value of at least AUD 75 000 throughout the period of 12 months ending immediately before the application is made; and
   3. have been lawfully acquired by the applicant, the applicant's spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.

1. A "main business" is defined in reg 1.11 of the Regulations as follows:
   1. For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:
      1. the applicant has, or has had, an ownership interest in the business; and
      2. the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and
      3. the value of the applicant's ownership interest, or the total value of the ownership interests of the applicant and the applicant's spouse or de facto partner, in the business is or was:
         1. if the business is operated by a publicly listed company - at least 10% of the total value of the business; or
         2. if:

A. the business is not operated by a publicly listed company; and

1. the annual turnover of the business is at least AUD400 000; at least 30% of the total value of the business; or

   1. if:

A. the business is not operated by a publicly listed company; and

1. the annual turnover of the business is less than AUD400 000; at least 51% of the total value of the business; and
   1. the business is a qualifying business.
2. If an applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the applicant, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.

1. An "ownership interest", for the purposes of reg 1.11(1)(a), is defined in reg 1.03 by reference to the definition in s 134(10) of the Migration Act.
2. Section 134(10) of the Migration Act provides:

ownership interest, in relation to a business, means an interest in the business as:

1. a shareholder in a company that carries on the business; or

2. a partner in a partnership that carries on the business; or

3. the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

1. A "qualifying business", for the purposes of reg 1.11(1)(d), is defined in reg 1.03 to mean:

an enterprise that:

1. is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and
2. is not operated primarily or substantially for the purpose of speculative or passive investment.

1. The "PAM3: GenGuideM - Business ownership and assets" (PAM3 Guidelines) provides the following guide for calculating business assets:

To determine the net value of the assets of an applicant, and/or the applicant's spouse or de facto partner in a business:

• calculate the proportionate share of the assets held by the applicant and/or spouse or de facto partner, then:

add

• the balance of any loans advanced to the business by the applicant (if the directors or major shareholders have made any loans to the company, these should be itemised in the financial statements or in the notes to the accounts); and

deduct

• the balance of any loans the business may have advanced to the applicant and
• the value of any other loans the applicant may have taken out to finance their investment in the business not based on personal assets pledged as collateral...

1. The PAM3 Guidelines also provides the following guidance about how decision makers can consider loans to the business:

Loans to the business

It is common for companies or other incorporated businesses to initially be financed by loans from the owner/s, a business loan from a financial institution and sometimes by the loans from independent investors. These loans are liabilities to the business, and which are later repaid.

...

Loans made to incorporated businesses by independent parties, including financial institutions, are liabilities of the business and cannot be included in the net value of an applicant's assets in the business.

Loans made to businesses from the applicant's personal asset base (for example, from funds transferred from overseas) are fully attributable to the net value of the assets of an applicant in a business.

Encumbered loans based on collateral

An applicant may obtain a personal loan and then loan those funds to a business.

...

Loans based on collateral are an acceptable source of funds provided that they are obtained from an established and registered financial institution. Loans from nonfinancial institutions or individuals are not acceptable for the purposes of this requirement. Refer to business visa legislated and policy terms - financial institution.

Using collateral (or security) to secure a loan is a common business practise in Australia. Doing so may provide tax advantages and is the only course available to obtain a loan or finance in many business situations.

The value of personal loans made to business by the applicant which are based on an applicant's (and/or their spouse or de facto partner's) personal assets as collateral should be added to the net value of an applicant business asset. However, the value of personal loans made to the business by the applicant which are not based on personal assets as collateral or that exceed the value of the secured assets used as collateral should be deducted from the net value of the applicant's business assets. Unsecured loans cannot be counted as a personal asset.

For example:

• If a financial institution lends money to the applicant using the applicant's personal assets such as the applicant's house as security and

• The applicant lends the money to a company or trust (that is, separate legal entity)

Provided the funds do not exceed the value of the secured asset, the loan advanced by the applicant should be included in the computation of the applicant's net value of assets in the business

This is based on the premise that the applicant's asset (money) is directly used by the business and is a personal liability which is exposed to risk.

1. During the Hearing, the Applicant sought leave to amend the Amended Application by adding a ground of opposition. I advised the parties that I would rule on both the application to amend and the substantive ground, if leave were granted, in my judgment. I made provision for the filing of supplementary submissions on both the application to amend, and the amendment, if leave were granted.
2. The Applicant subsequently filed further submissions,[92] seeking to add the following ground:

The Tribunal erred in imposing an additional requirement concerning the source of funds, such requirement derived from the PAM, but inconsistent with clause 892.212(c)(ii) of Sch 2 of the Migration Regulations 1994 (Cth).

1. Rule 8.09 of the _Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 202_5 (GFL Rules) provides that at any stage in a proceeding, the Court or a Registrar may allow or direct a party to amend a document (other than an affidavit) in the way and on the conditions the Court or the Registrar thinks fit.
2. The power to grant an amendment is discretionary. The discretion is to be exercised in a manner that "best promotes the overarching purpose"; namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.[93] The central question is whether it is in the interests of justice for the amendment to be granted. The power to grant leave to amend is broad and has the objective of facilitating the curing of errors and omissions so that the real questions in controversy are properly agitated.[94]
3. In Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (A Firm)[95] (Tamaya), Gleeson J set out in summary form a non exhaustive list of the matters relevant to the discretion whether or not to grant leave to amend which includes:[96]

(a) the nature and importance of the amendment to the party applying for it;

(b) the extent of the delay and the costs associated with the amendment;

(c) the prejudice that might be assumed to follow from the amendment, and that which is shown;

(d) the explanation for any delay in applying for that leave: Aon at [108];

(e) the parties' choices to date in the litigation and the consequences of those choices;

(f) the detriment to other litigants in the Court; and

(g) potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification.

(References omitted)

1. The Proposed Amendment raises the question as to whether the PAM3 Guidelines impose a requirement that is additional to, and inconsistent with, that found in Clause 892.212(c).
2. For reasons that are set out below, in the course of adjudicating on the Original Ground, I am required to determine the content of the requirements in both Clause 892.212(c) and the PAM3 Guidelines, and whether the Tribunal correctly interpreted them. An aspect of the interpretation of the PAM3 Guidelines, concerns the question of whether those guidelines are consistent with Clause 892.212(c).
3. It would be somewhat artificial for me to confine my consideration to those matters, without also considering whether the Tribunal committed jurisdictional error by imposing a requirement derived from the PAM3 Guidelines. Further, there is a public interest in the resolution of the correct approach to the interpretation of Clause 892.212(c).
4. It is apparent from the circumstances in which the Proposed Amendment emerged, that it was the product of the interactions between the parties' at the bench at the Hearing. While by no means a completely satisfaction explanation, it provides some explanation for the late application.
5. I take into account the matters set out above, in Tamaya, which might weigh against a grant of leave to amend, such as delay, and explanation for delay, litigation choices, detriment to other litigants as well as the public interest factors identified in Aon.
6. Having regard to the foregoing matters, I am satisfied that it is in the interests of justice that the application for leave to amend to include the Proposed Amendment be granted. A significant consideration is that the Proposed Amendment can be addressed without substantial prejudice to the Minister. Accordingly, I allow the Applicant's application for leave to amend to include the Proposed Amendment.

In concluding that cl 892.212(c) was not met, the Tribunal misunderstood the evidence before it, further or alternatively applied unreasonable or illogical/irrational reasoning.

The evidence before the Tribunal, when considered in its totality, could only have been reasonably and rationally understood as showing that cl 892.212(c) was met.

The Tribunal erred in imposing an additional requirement concerning the source of funds, such requirement derived from the PAM, but inconsistent with clause 892.212(c)(ii) of Sch 2 of the Migration Regulations 1994 (Cth).

1. Clause 892.212(c)(i) and (ii), relevantly required that the assets owned by the Applicants in the business (Company) have, and have had for a 12 month period before the application was made, "a net value of at least AUD75,000".
2. The Tribunal's Decision concluded that:[97]

On consideration of the evidence submitted in its totality, the Tribunal cannot be satisfied that either Director advanced a loan to the company. While the amended company financials and loan contract suggest that a Director's loan was made, the Tribunal cannot be satisfied of the source of the funds injected into the company account on the basis of unidentified transfers and cash deposits without further supporting evidence. Accordingly, the Tribunal must find that the assets owned by the applicant, the applicant's spouse, or the applicant and his or her spouse together, in the main business did not have a net value of at least AUD75 000 throughout the period of 12 months ending immediately before the application was made.

(emphasis added)

1. There is some ambiguity in these reasons as to what matter the Tribunal was referring to when it concluded that it was not "satisfied that either Director advanced a loan to the company". There are two possibilities: first, that the Tribunal was not satisfied that the Applicants had themselves provided the money the subject of the Director's loan in the Company's accounts; and second, that the Tribunal was not satisfied that there was in fact a Director's loan (regardless of where the money came from).
2. I begin by a consideration of Clause 892.212(c) and the PAM3 Guidelines.
3. The "main business" in the present case is the Company. A person's interest in a company includes the value of their shareholding. Where the company is 100% owned, the value of the shares might, on an adjusted book value test,[98] be valued by subtracting (adjusted) total liabilities from (adjusted) total assets.
4. The requirement is to determine the "assets owned by the applicant... in the main business" (emphasis added). The assets owed by a director in a company include both the value of the director's shares, and the net value of the director's loans. Accordingly, the PAM3 Guidelines provide that the "net balance of any [director] loans" are to be added to the value of the shareholding.
5. To take a simple example, the company has assets of $200,000 and a liability of $100,000 to the director on account of moneys advanced by the director to the company. The company would have net assets of $100,000 ($200,000 - $100,000). According to the guidelines, applying a book value test, the director's interest in the business would be calculated by adding the value of the shares ($100,000) to the director's loan ($100,000) giving a value of $200,000.
6. The Minister contends that "a normal accounting exercise would count that loan as a liability". But the normal accounting exercise is one to value the company or its shares. Here the exercise is to value the director's interest in the company. While a director's loan is a liability of the company, it is an asset of the director. The PAM3 Guidelines (consistently with Clause 892.212(c)) treat it as part of the director's interest in the company.

1. The PAM3 Guidelines raise a question as to what is meant by the words "loans advanced to the business by the applicant". The guidelines use two formulations: "loans advanced" and "loans made" - the latter in the section in parenthesis concerning accounting requirements.
2. What role does proof that moneys were actually advanced by an applicant have in determining the value of "loans advanced to the business by the applicant"?
3. In assessing the value of a director's loan, there are at least five important questions:

(a) first, is the loan claimed to be the director's loan a true loan as opposed to a sham[99] or an incorrect entry[100] in the accounts?

(b) second, and overlapping with the first question, is the loan claimed to be the director's loan owed to the director and not some other person?

(c) third, does the loan have the value attributed to it by the director?

(d) fourth, was the director's loan lawfully acquired?[101]

(e) fifth, is the _"_director's loan as an asset of the director offset by an unbacked obligation of the director to another party, such as a bank"?

1. Proof that moneys were in fact advanced might bear upon each of these questions:

(a) it may contribute to proof that a director's loan is a true loan. The advance would be evidence of the underlying economic activity that is recorded as a loan;

(b) it may contribute to proof that a director's loan is owed to the director and not some other person. For example, evidence that the moneys were in fact advanced by the director would contribute to proof that the moneys were owed to the director;

(c) it may contribute to proof that the company has resources to repay the loan and that it has the value attributed to it. For example, the funds advanced may be sitting in a bank account and recorded as a current asset that is available to repay the loan;

(d) it may contribute to proof that the director's loan was lawfully acquired; and

(e) it might contribute to an understanding of whether the director's loan is offset by an unpacked obligation.

1. The Minister has noted that the fifth question was not addressed by the Tribunal here.
2. Not all directors' loan accounts reflect a transfer or "advance" of money to the company by the director. The following are examples of circumstances where a director's loan account might be recorded in the books of a company without a corresponding transfer:

(a) the director may make payment to a company's creditor in respect of the company's indebtedness,[102] which are then recorded (by agreement)[103] in the company's accounts as an amount owing by the company to the director (by way of indemnity);

(b) the director may direct a third party who owes money to him or her to pay the company instead, and the amount is recorded (by agreement) in the company's accounts as an amount owing by the company to the director;

(c) the company may owe money to the director pursuant to an employment contract, which is then recorded (by agreement) in the company's accounts as an amount owing by the company to the director; and

(d) the company and director may enter into a deed by which the company promises to pay to the director an amount of money, which is then recorded (by agreement) in the company's accounts as an amount owing by the company to the director.

1. In Equuscorp Pty Ltd and Another v Glengallan Investments Pty Ltd and Others,[104] Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ held that payment may be made by means of book entries where the parties agree, either expressly or by inference, to that course.[105] Similarly, a director's loan account may be created by means of book entry provided that the parties (ie. the company and the director) agree to that course, either expressly or by inference.
2. In Tosich Construction Pty Ltd (in liq) v Tosich,[106] Lehane J stated:

Accounting entries, after all, reflect and may provide evidence of the nature of, the underlying transaction. The character of the underlying transaction depends, principally at least, on the intention of those who entered into it.

1. The question for the purposes of Clause 892.212(c) is whether each of the amounts that are recorded against the Director's loan are "assets owned by the applicant [or his wife]... in the main business".
2. The evident purpose of Clause 892.212(c) is to ensure that the threshold value that the Applicants hold is greater than the statutory minimum. Absent the PAM3 Guidelines, there would be no reason to read down Clause 892.212(c) as importing a requirement that "assets owned" be the result of a transfer of property to the business by the Applicants. From the standpoint of proof of value of their interest, the critical question is the company's ability to repay the director's loan, rather than verification of the source of funds that gave rise to it.

1. Clause 892.212(c) requires consideration of the value of the assets owned by the applicant, the applicant's spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia.
2. Assets owned by an applicant in a company include the applicant's shareholding in the company and amounts owed by the company to the applicant. In the latter case, the "interest" is the debt. To borrow the Minister's description, what Clause 892.212(c) seeks to value is the Applicant's "stake" in the business.

1. The PAM3 Guidelines use the phrase "loans advanced to the business by the applicant". What is meant by "loans advanced"?
2. The Macquarie Dictionary[107] definition of "advance" when used as a verb includes:

...

1. to supply beforehand; furnish on credit, or before goods are delivered or work is done;

2. to supply or pay in expectation of reimbursement: to advance money on loan.

...

1. Such an approach is consistent with usage of the word in a legal context.[108]
2. The ordinary and natural meaning of the phrase "loans advanced to the business by the applicant [etc.]" means a loan where the obligation the subject of the loan arises from moneys transferred or "advanced" by the applicant etc. to the business. This can be contrasted with the situations above where a loan is recorded without a corresponding advance.

1. If the PAM3 Guidelines were subordinate legislation like a Ministerial Direction under s 499(1) of the Act, then s 46(1)(c) of the Acts Interpretation Act 1901 (Cth) would have effect that the direction be read and construed, subject to the enabling legislation, and so as not to exceed the power of the Minister.[109] PAM3 is not a binding document. Section 46(1)(c) has no application.
2. In El Ess and Another v Minister for Immigration and Multicultural and Indigenous Affairs,[110] Gray J explain the status of the PAM3 Guidelines:

In any event, PAM3 is not a binding document. PAM3 is intended by its own terms to be nothing more than procedural and policy guidance to officers applying the Migration Act and the Migration Regulations. See Xie v Minister for Immigration and Multicultural Affairs [2000] FCA 230; (2000) 61 ALD 641 at [28]- [29] and Soegianto v Minister for Immigration and Multicultural Affairs [2001] FCA 1612 at [15]- [16]. PAM3 does not have the effect of a direction pursuant to s 499 of the Migration Act, which would bind a person or body having functions or powers under the Migration Act as to the performance of those functions or the exercise of those powers. Because the PAM3 guidelines are not binding on a decision-maker, they cannot be relevant considerations, in the sense of considerations that the decision-maker is bound by legislation to take into account. See Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40 per Mason J, with whom Gibbs CJ and Dawson J agreed. A failure to apply the guidelines may have significance in establishing some error on the part of a decision-maker, but it is not of itself a jurisdictional error.

(emphasis added)

1. In Xie v Minister for Immigration and Multicultural Affairs,[111] Weinberg J explained that the purpose of the PAM3 Guidelines was to act as a companion to the Regulations:

Ms McCann's reference to the Procedures Advice Manual 3 was a reference to what are colloquially described as "the PAM Guidelines", or "PAM 3". Those guidelines are a companion to the Regulations. Their main purpose is to provide guidance to departmental officers on the interpretation of the Regulations. They mirror the order and contents of the Regulations and comment on or annotate those thought to require comment, background or policy interpretation. The PAM 3 Guidelines also cover general principles and procedural issues as well as matters arising directly from the Act.

The status of the Guidelines is described as follows:

"The term "guidelines" is generally used to describe the content of PAM3 documents. However, PAM3 documents are DIMA policy/procedural documents, with status as official instructions within DIMA's centralised instructions system ...

The guidelines in PAM3 on interpreting the law have the status of departmental policy and as such must be given due weight by delegates of the Minister who are making decisions on visa applications. However, policy cannot be regarded as inflexible and decision makers must not give it the same force as law."

(emphasis added)

1. In Soegianto v Minister for Immigration and Multicultural Affairs,[112] Ryan J held that the tribunal was not bound to apply the PAM3 Guidelines:

Generally speaking, the Tribunal is not strictly bound to apply ministerial policy like that embodied in PAM 3 when making its decision. Thus, in Drake v Minister for Immigration and Ethnic Affairs (No 2) [1979] 2 ALD 634, Brennan J, sitting as a Presidential Member of the Administrative Appeals Tribunal, said, at 642-643;

"In point of law, the Tribunal is as free as the Minister to apply or not to apply that policy. The Tribunal's duty is to make the correct or preferable decision in each case on the material before it, and the Tribunal is at liberty to adopt whatever policy it chooses, or no policy at all, in fulfilling its statutory function."

Moreover, this Court has either stated or implied that it is not an error of law for an administrative tribunal to disregard general statements of policy that have been laid down for the guidance of administrative decision-makers but are not mandated by Parliament; Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 420-21; Ali v Minister for Immigration, Local Government and Ethnic Affairs [1992] FCA 453; (1992) 38 FCR 144 at 148-49. Nevertheless, it was indicated by Brennan J in Drake (No 2) (supra) at 645, that the Tribunal should adopt "a practice of applying lawful ministerial policy, unless there are cogent reasons to the contrary". PAM 3 specifically instructs delegates (though not the Tribunal) to give it "due weight" but "decision makers must not give it the same force as law"; Xie v Minister for Immigration and Multicultural Affairs [2000] FCA 230 at [29].

What is the effect of a policy that is inconsistent with the statute?

1. In Re Drake and the Minister for Immigration and Ethnic Affairs (No. 2),[113] Brennan J stated:

Of course, a policy must be consistent with the statute. It must allow the Minister to take into account the relevant circumstances, it must not require him to take into account irrelevant circumstances, and it must not serve a purpose foreign to the purpose for which the discretionary power was created. A policy which contravenes these criteria would be inconsistent with the statute.

1. In Green v Daniels,[114] the applicant's claim for unemployment benefits was refused for a period of time by reason of the application of a Department of Social Security policy. She sought review of the decision of the Director General to refuse her application.
2. The statutory qualification for the receipt of an unemployment benefit included a requirement that the person applying "has attained the age of sixteen years". While the applicant had attained the age of 16, the Department applied a policy that school leavers would not be eligible for unemployment benefits until the end of the school vacation or the commencement of the new school year.
3. The policy was in these terms: "[as] a general rule ... people who leave school and register for employment within 28 days prior to the end of the school year, or at any time during the long vacation, will not be in a position, until the end of the school vacation, to satisfy the conditions of eligibility for unemployment benefit which require the claimant to be unemployed and to have taken reasonable steps to obtain work".
4. Stephen J held that if a delegate observed instructions that were inconsistent with the statutory criteria he would act unlawfully:

... if [the Director of the Department] issues instructions as to what will give rise to the requisite state of satisfaction on the part of his delegates and these are inconsistent with a proper observance of the statutory criteria he acts unlawfully; should his delegates then observe those instructions, their conclusions concerning an applicant's compliance with the criteria will be vitiated.

This is what has happened in the present case. The criteria in s 107(c)(i) and (iii), those of being "unemployed" and of having "taken reasonable steps to obtain such work", have had superimposed upon them a requirement which prevents them from being satisfied by any school leaver during the school holidays, a period of about three months, and which, in effect, renders them inoperative during that period.

1. The Minister accepts that if the PAM superimposes requirements that are not authorised by the Regulations, then it would be invalid.[115]

Did the Tribunal treat PAM3 Guidelines as an inflexible policy?

1. Clause 892.212(c) does not impose a requirement that the "assets owned by the applicant [or his wife]... in the main business" (emphasis added) be sourced from the Applicants' own money. Accordingly, the Tribunal would have committed a jurisdictional error if it treated the PAM3 Guidelines as an inflexible policy to the contrary effect.
2. In Wen v Minister for Immigration & Multicultural Affairs,[116] (Wen) the delegate did not accept that the applicant had shown the source of capital funds invested into the business, in the context of a requirement in the Regulations for the applicant to show that his or her net assets in the business was not less than $300,000 in the relevant year. The applicant contended that the delegate had wrongly interpreted the regulations to "require the applicant to specify and prove the source of the funds which gave rise to the net assets of the applicant".
3. Mansfield J stated:[117]

The critical question is whether the delegate took the view that it was necessary for the delegate, by reason of cl 127.212(2), to require the applicant to prove the source of the funds which gave rise to the net assets of the applicant or whether the delegate, in the process of considering the material, took the view that in the particular circumstances it was appropriate to seek that information. In my judgment, it was the latter step which the delegate took. ... [The delegate's reasons] do not demonstrate that the delegate took the view that, as a matter of law to satisfy cl 127.212(2) in every case there is an obligation to undertake such an inquiry.

1. Applying Wen, the question in the present case is whether the Tribunal took the view in the circumstances of the case that it was appropriate to seek information regarding the source of funds giving rise to the Director's loan, or whether the Tribunal regarded proof of source of funds as an essential requirement of Clause 892.212(c).
2. In order to understand the approach taken by the Tribunal to the PAM3 Guidelines, it is necessary to have regard to the way in which the case evolved before it.
3. The case as originally put to the Delegate relied on an earlier set of accounts (Original Accounts).[118] The Delegate refused the application on the basis that the Original Accounts showed that the Applicants' interest in the Company was less than the threshold.
4. After applying for review of the Delegate's Decision, the Applicants' Representative made a written submission that included the following:[119]

We note that an error was occurred by the formal accountant who did the annual accounting works for PA and his main business in Australia. The applicant took action and rehired another accountant, JKO Business & Tax Solutions (JKO), a CPA firm in early 2018 when he found some errors in the financial reports which was submitted with the visa application. JKO went through all information and provided an updated Financial Report for the period claimed on 5th February 2018.

1. The Applicants submitted that:[120]

In the period of 12 months ending immediately before the application is made, Charment Melbourne Ply Ltd had $257,265 (previous accountant erred as AUD 90,591.41) as at 30 September 2016, increased from $128,659 as at 30 September 2015. We have annexed amended financial report prepared by JKO and a letter addressed relevant issues for your consideration and marked as "A" together with relevant transaction records annexed and marked "B".

1. The updated Financial Report included "Loans from Directors" of $92,500 for the period ending 30 September 2016 (Updated Accounts), which was greater than the amount recorded in the Original Accounts.
2. At the hearing before the Tribunal, the following exchange took place:[121]

MEMBER: Okay. Do you have a loan register?

INTERPRETER: Yes.

MEMBER: Are you able to provide a copy of the loan register?

INTERPRETER: Can it be done afterwards?

MEMBER: Yes.

INTERPRETER: Yes.

MEMBER: I'll set some extra time. I need to be satisfied that that money has gone into the business and that it's properly accounted for in order for me to count it as an asset of the company.

1. The Minister notes that the Applicants failed to provide any evidence of a loan register to the Tribunal. The Tribunal was not satisfied on the evidence that the Applicants had advanced a Director's loan to the Company from their own funds.[122] There was no evidence that the "unidentified" cash deposits and transfers claimed to comprise the Director's loan flowed from the Applicants to the Company.
2. The Tribunal put the Applicants on notice that he needed to provide further evidence, and the Applicants failed to do so. The Minister submits that it was open to the Tribunal to find that the evidence was not "sufficiently probative" in the absence of further substantiating material. The Minister submits that the deficiencies in the evidence provided were fatal.[123]
3. The Tribunal's Decision provided:[124]

At the hearing on 20 August 2019, the applicant explained that the accountant who prepared the original financial statements missed a Director's loan from the profit and loss. Two Commonwealth Bank Statements for a business transaction account held by Charment Melbourne were provided to the Tribunal. The statements cover the period 31 December 2014 to 30 June 2015. The applicant gave evidence that the statements were provided to demonstrate that money was injected by the Directors. Further to the bank records, a handwritten note of transactions occurring in 2014 and 2015, totalling $92,500 was provided.

The Tribunal notes that while the statements show a number of cash deposits and transfers from other accounts into the business account, they do not show any money going to or from accounts in the names of either Xiaolan Wen or Zhiqiang Yuan. Lists of transactions for the same business account were provided for the period 1 August 2014 to 8 January 2015. Similarly, these lists do not show money going to or from accounts in the names of either Xiaolan Wen or Zhiqiang Yuan. No bank records were provided for the Directors to demonstrate that the money came from their personal funds.

The Tribunal provided the applicant with additional time following the hearing to submit further evidence of the alleged Director's loans, such as a loan ledger or additional bank statements.

(emphasis added)

1. The Tribunal's Decision concluded that "the Tribunal cannot be satisfied that either Director advanced a loan to the company" and that while the evidence "suggest[s] that a Director's loan was made, the Tribunal cannot be satisfied of the source of the funds injected into the company account on the basis of unidentified transfers and cash deposits without further supporting evidence".[125] Tellingly, the Tribunal then said it "must find" that the assets owned by the Applicants in the Company were less than the threshold value.
2. These passages make clear that when the Tribunal said that it "cannot be satisfied that either Director advanced a loan to the company", it meant that the Applicants had not established to the Tribunal's satisfaction that the Applicants had advanced moneys to the Company out of their own funds. They also make clear that the Tribunal approached the requirement to demonstrate that the source of moneys advanced by the Applicants was an inflexible one.
3. In MZXSA v Minister for Immigration and Citizenship,[126] the Full Court stated:

Although in Eshetu v Minister for Immigration and Ethnic Affairs [1997] FCA 19; (1997) 142 ALR 474 at 485 Hill J cautioned in emphatic terms that the Tribunal must not approach its task of merits review on the basis that it will not accept an applicant for refugee status unless there is some independent corroboration, it is to be borne in mind that the character of the inquiry it undertakes in conducting its review is inquisitorial: Minister for Immigration and Citizenship v SZIAI [2009] HCA 39; (2009) 259 ALR 429 at [18]. In W_arnakulasuriya v Minister for Immigration and Multicultural Affairs_ [1998] FCA 336 Finkelstein J referred to the function of the Tribunal to make determinations of fact based on the evidence that is before it. His Honour said in this context.

This must admit of the possibility that the Tribunal will not accept the accuracy of certain "facts" unless they are corroborated in some way. The acceptance or rejection of "facts" is a matter for the Tribunal and no error of law will be demonstrated merely because the Tribunal has decided that certain evidence will not be accepted by it unless it is corroborated. Some "facts" may be so implausible that they should not be accepted. An applicant may appear to lack credibility and in that circumstance the Tribunal may not be disposed to accept his or her evidence unless that evidence corroborated by some independent source. If the Tribunal forms the view, for one reason or another, that evidence is unreliable and should be rejected unless corroborated that does not amount to an error of law. On the contrary, it suggests that the Tribunal is taking seriously its obligation to evaluate the evidence that is before it.

1. While it is true that jurisdictional error is not demonstrated by the Tribunal not accepting the accuracy of certain facts, in a particular case, unless corroborated, the error in the present case was in the Tribunal imposing an additional requirement.
2. Adapting the language of the Full Court in Elliott v Minister,[127] the Tribunal took "the mistaken view that PAM3 Guidelines precluded an applicant from demonstrating" that the assets owned by the applicant, the applicant's spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia could not be established without evidence of the source of funds that gave rise to the director's loan account.
3. In Lobo v Minister for Immigration and Multicultural and Indigenous Affairs,[128] French J,[129] Sackville and Hely JJ stated:

Where the Minister misconstrues one of the criteria prescribed in the Act or Regulations and, because of that misconstruction he considers that the criterion has not been satisfied, it is as though he did not consider the criterion at all. For, on the face of it, he has failed to ask the question which the Act and Regulations, upon a proper construction of the criterion, require him to ask. In such a case ... the Minister's decision would be a nullity. The Minister has not done that which the Act requires him to have done. The decision would be a purported decision of no legal effect.

1. I am satisfied that the Tribunal erred by imposing a requirement not found in Clause 892.212(c). That is not to say that verification of the economic activity that is recorded in a director's loan is irrelevant to the Tribunal's task. As indicated above, the inability of a director to put forward material to verify the underlying economic activity recorded in the director's loan account might be a reason why the Tribunal does not accept the accounts as evidence of the loan.[130] It might have particular significance in a case where the applicant claims to have advanced money but is unable to furnish proof of that.
2. The next question is whether the error was material.

1. I do not accept the Minister's contention that an error of the type that I have found was not a material one. I am satisfied that there is a "realistic possibility" that the Tribunal's Decision "could" have been different, but for the error.[131] It was open on the evidence for the Tribunal to be satisfied of the Director's loan on the basis that the loan agreement produced was a true loan agreement in the absence of evidence of an advance of funds. The assets owned by the Applicants in the main business potentially included the Director's loan regardless of the source of funds. That conclusion is derived from the wording of Clause 892.212(c) and does not depend upon the "beneficial construction" given to that clause by the PAM3 Guidelines. It follows that the error I have identified was a jurisdictional error.

1. As jurisdictional error has been established, the Tribunal's Decision ought to be quashed and the matter should be remitted to the Tribunal for reconsideration according to law.
2. In relation to the position of the fourth applicant, I accept as submitted by the Minister that no special order is required. It is unclear whether any valid review application was ever made to the Tribunal in respect of her. The Tribunal will need to determine for itself whether it has jurisdiction in respect of any application by her.

I certify that the preceding one hundred and fifty-nine (159) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Fary.

[1] Orders made by Judge Fary on 20 November 2025, Order 1.

[15] Supplementary Court Book (SCB) 260.

[16] Pursuant to reg 2.08 of the Migration Regulations 1994 (Cth) (Regulations)

[35] CB 241-242 [16] and [20]-[21].

[41] Pursuant to Order 2 of the Orders made by Judge Fary on 20 November 2025, amended on 5 December 2025.

[42] Pursuant to Order 4 of the Orders made by Judge Fary on 20 November 2025, amended on 5 December 2025.

[62] Plaintiff M1/2021 v Minister for Home Affairs [2022] HCA 27; (2022) 275 CLR 582 at [27].

[63] Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323 per McHugh, Gummow and Hayne JJ at [82].

[64] Applicant's outline of submissions filed 12 September 2025.

[66] Applicant's further submissions filed 26 November 2025 at [16].

[70] Applicant's further submissions filed 26 November 2025 at [22].

[71] Applicant's further submissions filed 26 November 2025 at [23].

[72] Applicant's further submissions filed 26 November 2025 at [24].

[73] Sean Dong Affidavit affirmed 12 September 2025, Annexure SD01, Transcript p 7 lns 44-46, p 8 lns 1-11.

[75] Broussard v Minister for Immigration & Ethnic Affairs (1989) 21 FCR 472 (Broussard) at 479-480. See also MZXSA v Minister for Immigration and Citizenship [2010] FCAFC 123 at [91].

[76] Minister's further submissions filed 17 November 2025 at [11].

[77] Minister's further submissions filed 17 November 2025 at [12].

[78] Minister's further submissions filed 17 November 2025 at [21].

[79] Minister's further submissions filed 17 November 2025 at [18].

[80] Minister's further submissions filed 17 November 2025 at [28].

[81] Minister's further submissions filed 17 November 2025 at [29].

[82] Plaintiff S157/2002 v Commonwealth [2003] HCA 2; (2003) 211 CLR 476 (Plaintiff S157/2002).

[83] Djokovic v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 289 FCR 21 at [17] (Allsop CJ, Besanko and O'Callaghan JJ).

[84] LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12; (2024) 280 CLR 321 (LPDT) at [2].

[87] Minister for Immigration and Multicultural Affairs v Yusuf (2001) 2006 CLR 323 at [82].

[90] MZAPC v Minister for Immigration and Border Protection (2021) 273 CLR 506 per Kiefel CJ, Gageler, Keane and Gleeson JJ at [38].

[91] Nathanson v Minister for Home Affairs [2022] HCA 26; (2022) 276 CLR 80 per Kiefel CJ, Keane and Gleeson JJ at [33].

[92] Pursuant to Order 2 of the Orders made by Judge Fary on 20 November 2025, amended on 5 December 2025.

[93] Section 190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth). Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [42].

[94] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (Aon) at [14].

[95] [2015] FCA 1098.

[98] Accepting that there are other, often more accurate ways, of valuing a company or its shares, such as the discounted cash flow methodology.

[99] On the question of sham, see Equuscorp Pty Ltd and Another v Glengallan Investments Pty Ltd and Others, [2004] HCA 55; (2004) 218 CLR 471.

[100] E.g. Manzi v Smith [1975] HCA 35; (1975) 132 CLR 671; Fischer v Nemeske Pty Ltd [2016] HCA 11; (2016) 257 CLR 615 (Fischer); Michell v Onroad Offroad Pty Ltd [2018] VSC 648.

[101] See Clause 892.212(c)(iii) of the Regulations.

[102] With the company's authorisation: see Burness, In the matter of Denward Lane Pty Ltd (ACN 065 418 411) (In Liquidation) [2009] FCA 893 at [45].

[103] Compare White v Timbercorp Finance Pty Ltd (in liq); Collins v Timbercorp Finance Pty Ltd (in liq) [2017] VSCA 361; (2017) 123 ACSR 284.

[104] [2004] HCA 55; (2004) 218 CLR 471.

[105] In The Matter of York Street Mezzanine Pty Ltd (in liq) [2007] FCA 922 at [26].

[106] [1997] FCA 252; (1997) 23 ACSR 466 at 472. Affirmed on appeal in Tosich Construction Pty Ltd (in liq) v Tosich [1997] FCA 979; (1997) 78 FCR 363.

[107] Macquarie Dictionary (6th Edition), p 20.

[108] For example, in Fischer, Keifel J in addressing a contention that an acknowledgment of payment gave rise to an estoppel, said that at its highest, this was evidence against the party, "which that party can rebut by showing that the amount had never actually been advanced".

[109] BDQ19 v Minister for Home Affairs [2019] FCA 1630; (2019) 167 ALD 38 at [17].

[110] [2004] FCA 1038; (2004) 142 FCR 43 at [45].

[111] [2000] FCA 230; (2000) 61 ALD 641 at [28]- [29].

[112] [2001] FCA 1612 at [15]- [16].

[113] (1979) 2 ALD 634.

[114] [1977] HCA 18; (1977) 13 ALR 1.

[115] Citing Babar v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 38; (2020) 275 FCR 413 at [24]. The Full Federal Court in G v Minister for Immigration and Border Protection [2018] FCA 1229 at [58]- [60].

[116] [2000] FCA 320.

[121] Sean Dong Affidavit affirmed 12 September 2025, Annexure SD01, Transcript p 7 lns 44-46, p 8 lns 1-11.

[123] Citing Broussard at 479-480. See also MZXSA v Minister for Immigration and Citizenship (2010) 117 ALR 441 at [91].

[127] [2007] FCAFC 22; (2007) 156 FCR 559 at [41].

[128] [2003] FCAFC 168; (2003) 132 FCR 93 at 106 [43]; cited with approval by Steward J in Le v Minister for Immigration and Citizenship [2025] HCASJ 33 at [21].

[130] Section 1305 of the Corporations Act 2001 (Cth).