FEDERAL COURT OF AUSTRALIA Shead v Minister for Immigration and Multicultural Affairs [2001] FCA 933 MIGRATION - review of decision of Migration Review Tribunal - error of law - whether employer a "standard business sponsor" - whether visa-holder's employment needs to be the direct and only cause of the creation or maintenance of employment - whether there must be a causal connexion between the business and the visa-holder's employment. WORDS & PHRASES - "standard business sponsor" - "creation or maintenance of employment" Statutes Migration Act 1958 (Cth) S 476(1)(c) Migration Regulations (1994) (Cth), Part 1, Div 1.4A; reg 1.20D; Sched 2 cl 457.223(1), cl 457.223(4), cl 457.223(5) Cases Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469 Distinguished Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1 Cited ANTHONY GERALD SHEAD AND AJAY VERMA v MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS Q103 OF 2000 KIEFEL J 20 JULY 2001 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q103 OF 2000 A REVIEW OF A DECISION OF THE PRESIDING MEMBER OF THE MIGRATION REVIEW TRIBUNAL BETWEEN: ANTHONY GERALD SHEAD FIRST APPLICANT AJAY VERMA SECOND APPLICANT AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS RESPONDENT JUDGE: KIEFEL J DATE OF ORDER: 20 JULY 2001 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The decision of the Migration Review Tribunal dated 30 August 2000 be set aside. 2. The matter be remitted to the Tribunal, differently constituted, for determination according to law. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q103 OF 2000 A REVIEW OF A DECISION OF THE PRESIDING MEMBER OF THE MIGRATION REVIEW TRIBUNAL BETWEEN: ANTHONY GERALD SHEAD FIRST APPLICANT AJAY VERMA SECOND APPLICANT AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS RESPONDENT JUDGE: KIEFEL J DATE: 20 JULY 2001 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Mr Verma is an Indian national. On 4 May 1999 he applied for a Temporary Business Entry Visa (Class UC, sub-class 457). On 29 April 1999 a business sponsorship application and a nomination by a business sponsor was lodged by Mr Verma's employer, Mr Shead, who trades as "Club DP", which is the name of the nightclub at which Mr Verma is employed. 2 Of the criteria to be satisfied with respect to Mr Verma's application, the Migration Regulations (1994) (Cth)Schedule 2, clause 457.223(1) provides that the applicant must meet the requirements of one of the sub-clauses. There is no dispute that two are relevant, sub-clauses (4) and (5). They provide in relevant parts: "Sponsorship by Australian businesses: key activities (4) The applicant meets the requirements of this subclause if: (a) the activity in which the applicant proposes to be employed in Australia by a person (in this subclause called the employer) is a key activity; and (b) that activity is the subject of an approved business nomination by the employer; and (c) the employer is: (i) a pre-qualified business sponsor; or (ii) a standard business sponsor; and (d) the applicant is nominated in relation to the activity by the employer; and (e) the applicant demonstrates (if so required by the Minister) that he or she has the skills necessary to perform the activity; and (f) the applicant has personal attributes and an employment background that are relevant to, and consistent with, the nature of the activity to be performed. Sponsorship by Australian businesses: non-key activities (5) The applicant meets the requirements of this subclause if: (a) the activity in which the applicant proposes to be employed in Australia by a person (in this subclause called the employer) is not a key activity; and (b) that activity is the subject of an approved business nomination by the employer; and (c) the employer is: (i) a pre-qualified business sponsor; or (ii) a standard business sponsor; and (d) the applicant is nominated in relation to the activity by the employer; and (e) where the application is made for a stay in Australia for more than 12 months, the applicant demonstrates that he or she has the skills necessary to perform the activity; and (ea) where the application is made for a stay in Australia for 12 months or less, the applicant demonstrates (if so required by the Minister) that he or she has the skills necessary to perform the activity; and (eb) the applicant has personal attributes and an employment background that are relevant to, and consistent with, the nature of the activity to be performed; and (f) where the employer is a standard business sponsor, the Minister is satisfied that the position to be filled by the applicant has not been created only for the purposes of securing the entry of the applicant to Australia." 3 Common to both subclauses is the requirement that Mr Shead be a "standard business sponsor". As a result of the Migration Review Tribunal's findings in that connexion, the balance of the questions arising under the sub-clauses, such as whether there was or was not involved a key activity, were not determined and they are not the subject of this application. In the result, Mr Verma's application for a business (long-stay) visa was refused. 4 In the Regulations, "standard business sponsor" is said to have the same meaning as it has in Division 1.4A. There it is defined to mean a person approved as a standard business sponsor in accordance with regulation 1.20D. Regulation 1.20D(2)(a)(i) provides: "(2) The Minister must approve an application for approval as a pre-qualified business sponsor, or as a standard business sponsor, made in accordance with regulation 1.20C if: (a) the Minister is satisfied that the applicant for approval is lawfully operating in Australia a business in which the employment of the holder of a Subclass 457 (Business (Long Stay)) visa would contribute to: (i) the creation or maintenance of employment for Australian citizens or Australian permanent residents …" 5 This application for review focuses primarily upon what the contribution to the "creation or maintenance of employment" requires. Before turning to the Tribunal's reasoning in this regard I shall refer to some facts appearing in the affidavit of Mr Shead and upon which reliance was placed by the applicant, although there is, at this point, some doubt about the extent to which resort may be had to them. 6 Mr Shead explained that he owned and operated three nightclubs which involved "adult entertainment" and one standard nightclub together with a building services firm and that he held some commercial property investments. Another nightclub was purchased after the decision refusing the application was made. He employed twenty persons on a permanent basis; sixty-five on contract and employed six shift managers. There is a high turnover of employees in this type of business. 7 Mr Verma has worked for Mr Shead since 1996, and since April 1999 has been a manager. He is restricted to working twenty hours per week pursuant to the terms of his Bridging Visa and this does not permit him to run the three adult entertainment clubs. It is apparent that he has Mr Shead's trust and confidence. Mr Shead explained that he wished to "step back" from the nightclubs and allow Mr Verma to run them. This would allow Mr Shead to "look for and take up other business opportunities". He went on: "By doing so, I expect to employ numerous other persons in the future, whether in nightclubs or in the building industry or property developments and restaurants". 8 At the time Mr Shead's affidavit was sworn he had "in mind" some business projects he presently did not have the time to undertake. He said: "If Mr Verma can work full-time then I propose to establish a nightclub in Toowoomba (and then look at expanding elsewhere). I will also build more "spec" homes through Shead's Building Services. This would immediately create a number of jobs within a matter of months of Mr Verma starting to work full-time for me." (The reference to the nightclub in Toowoomba was that later purchased after the decision refusing Mr Verma's visa.) In the process of explaining Mr Verma's qualities as a manager, Mr Shead also pointed out that as a result of his strategy, two people were employed to recruit staff. They would not otherwise have been engaged. 9 The Tribunal found: "The migration agent representing Mr Shead the sponsor submitted, that Mr Verma has implemented an innovative strategy to recruit new staff for 'CLUB DP' which, he claims, has proven successful, with the appointment of six (6) new staff, which he states, "proves clearly that the employment of Mr Verma by the sponsor has contributed to the creation or maintenance of employment for Australian citizens". The migration agent submits further that, as Manager of 'CLUB DP', "Mr Verma is contributing toward the creation or maintenance of employment whether one focuses directly on the business itself, or adopts a broader view, having regard to the sheer number of people employed through the business". As well the Tribunal notes that it was indicated that Mr Verma introduced new employment methods and that 2 recruitment employees worked to him. It was further indicated that Mr Shead was planning to open another club in Toowoomba and that this will lead to the employment of more people. However the Tribunal notes that Mr Shead stated that the Club business had a high turnover of staff given the nature of the business. As well the business has expanded and more people have been employed as Mr Shead now has an interest in 4 clubs. Any further expansion and employment will no doubt result from an expansion of the business similar to that which has already occurred, rather than as a direct result of the employment of Mr Verma. In other words it is not the employment of Mr Verma per se that contributed or will contribute to the creation or maintenance of employment of Australian citizens or permanent residents. Consequently the Tribunal finds on balance that the employment of Mr Verma would not contribute to the creation or maintenance of employment for Australian citizens or permanent residents as referred to in paragraph 1.20D(2)(a)(i) of the Regulations. It appears that the industry as such has on the evidence of a high turnover of staff and the increase of staff has resulted in large part from the expansion that Mr Shead referred to. His businesses have a number of managers and staff on a permanent and non-permanent basis." 10 The Tribunal went on to find that the requirements which relate to the expansion of Australian trade in goods or services or the introduction, utilisation or creation of new or improved technology or business skills were not made out; but these findings are not challenged. 11 The ultimate finding of the Tribunal was one which, according to the words of the subsection, held that Mr Verma's employment would not contribute to the creation or maintenance of employment. The reasons given for that conclusion reflect the Tribunal's view of the construction of the subsection and its requirements. There was some debate at the hearing about what was intended to be conveyed by the Tribunal in the two or three sentences which are critical to its determination. Whilst I am conscious of not reading the reasons in such a way as to unduly emphasise particular words so as to distort the overall meaning conveyed, here the words chosen have particular meaning in context and must, I consider, be given effect to. It seems to me that the Tribunal provided two views. In the first place it appears to view the statutory requirement as one requiring a direct, and not an indirect link between the visa-holder's employment and any increase in employment. In this respect it determined that the expansion of the business was the cause. If this stood as a finding of fact which excluded Mr Verma's employment as having any effect, that would be an end to the matter. The question posed by the statute would have been answered. That does not however reflect the balance of the Tribunal's reasoning, which held that his employment had not or would not "per se" contribute to the creation or maintenance of employment; and that the increase of staff had resulted "in large part" from the expansion of the business or businesses. That is to say, in legal language, the Tribunal considered the visa-holder's employment needed to be the direct and only cause. The question which it has not posed and answered is whether the employment would contribute to the employment of others in a real or meaningful way, even if there are other factors leading to the creation or maintenance of that employment and the effect of the visa-holder's employment is indirect. 12 The enquiry of the subsection is as to whether, judged prospectively, the visa-holder's employment will have an effect. There is nothing to suggest that the creation or maintenance of the employment of others cannot be the result of a number of factors, of which the visa-holder's employment is one. The test is, after all, only whether it would contribute to an increase in or retention of employment, not that it be the sole cause. In my view the Tribunal was in error in applying the latter test and that error is one of law. 13 Additionally, there does not seem to me to be any warrant for limiting the words "the creation or maintenance of employment for Australian citizens or Australian permanent residents" in subpar (i) to only a direct causal effect. To do so in this case would seem to me to limit the enquiry to an effect within the business in which the visa-holder is in fact employed. The other qualifications for a business sponsor in par(a) of subs (2) assume the potential for wide effects, which are quite likely to be indirect and it seems to me that the effect on the employment of others should be viewed in the same way. They include a contribution to the expansion of Australian trade in goods and services; the improvement of Australian business links with international markets; or competitiveness within sectors of the Australian economy. None of these are limited to the influence or effect of the employment within the business in question, although one would expect to see some causal connexion between the business and the employment and the subjects nominated by the subsection. 14 I shall also refer, briefly, to the other grounds for review. 15 The second ground alleged that there was no evidence from which the Tribunal could be satisfied that Mr Verma would not relevantly contribute to employment, which is rather the reverse of the state of the evidence required. It was in reality a complaint that the Tribunal did not apply facts, favourable to the applicant, and in particular those relating to the freeing up of Mr Shead's time to come to a different conclusion. The only other aspect of the evidence referred to in submissions was that Mr Verma's employment had already contributed to the employment of staff of the two staff members in recruitment. If the Tribunal had misunderstood the evidence that would not be a ground for review by this Court. Any failure to take the evidence into account is more likely to have resulted from the Tribunal's approach to the construction of the subsection which, as I have held, provides a ground for review. 16 It was also submitted that the Tribunal failed to set out findings on material questions of fact and in so doing failed to observe the procedures required by the Act. The case relied upon (Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469) has however been held to have been wrong in imposing such an obligation on a decision-maker in circumstances such as these (Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1). In any event, as I have said, the true legal error lay in the Tribunal's understanding of the requirements of the subsection, which then limited its consideration of the facts. That is the exercise which it must now undertake. 17 The ground for review referred to in s 476(1)(c) Migration Act 1958is made out, namely that there has been an error in its interpretation of the law and its application to the facts. The decision of the Tribunal will be set aside. There will be an order that the Tribunal, differently constituted, reconsider the application according to law. It would seem to follow that the respondent should pay the applicant's costs; but I will allow an opportunity for submissions on the matter. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 20 July 2001 Counsel for the First and Second Applicant: Mr D Rangiah Solicitor for the First and Second Applicant: Hynes Hartnett Counsel for the Respondent: Mr D Kelly Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 19 March 2001 Date of Judgment: 20 July 2001