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MISLEADING CASES IN PROPERTY DEVELOPMENT

Appeal to AAT, Blog & Articles, Immigration Law, Migration Law, Permanent Visa, Tang Law, Visa Appeal

In the recent years, we noticed a significant increase in number of cases involving misleading or deceptive conduct and breach of contract in property development projects.

Case Study

In one of our recent cases, our client is a successful business migrant from PRC and does not speak any English. Through a friend who lives in Australia, also from China, our client was introduced to a local property development company. The company introduced land subdivision project to our client stating that:

  1. Our client needs to only invest $920k into the project company.
  2. The return on investment is 20% per year
  3. The project will be completed in 2 years.

The friend was present at all meetings and was translating for our client.  Our client relied heavily on and trusted the friend.  The friend helped the company convince our client that the project is very profitable.  Our client ultimately invested $920m and flew back to China.  After almost 6 years, our client did not receive any money back from the company.

Australia Consumer Law

Under the Australia Consumer Law (“ACL”), previously known as the Trade Practices Act, a person is prohibited from engaging in conduct that is likely to mislead another person. Intention to mislead is not required!   What is “misleading conduct”?

  • Any promise or representation made, even though it may be true at that time, but became incorrect or untrue at a later stage is false and misleading for ACL purposes.
  • Any promises or representation about a future matter made without reasonable basis is also false and misleading for ACL purposes.

Back to our client’s case, all of the representations made by the company were false. Our client never received the 20% return on investment or any money from the investment.

Upon investigation, we found that the company has used the project company’s funds to invest into other projects without our client’s consent.  We also found that that the project company and the director of the project company own properties valued between $3.5 to $4m.

We commenced action in the Supreme Court of Western Australia against the project company, the Company, and the director personally, for “misleading or deceptive conduct” and for breach of contract, claiming in excess of $4m in loss or damages.

At the same time, we made a strategic move in applying to the Court and successfully freeze all the assets of the company and the director.

The case went to trial and the Court found in our client’s favour.  Our client received compensation of approximately $3.5m.

High Court Case

“Misleading conduct” is one of the most commonly used legal ground to commence legal action.

In a High Court Case, Henville and Another v Walker and another (2001) 182 ALR 37, the appellants purchased a block of land to subdivide into smaller blocks. The representations made by the Respondent as to the anticipated selling prices of the subdivided blocks were substantially overestimated. The project was undertaken and the appellants suffered loss.

The High Court decided that the respondent’s misrepresentations contravened the Act and has caused loss sustained by the appellants.

Concluding Remark

If you suspect that you may lose your investment, you should act as soon as possible, before the company you invested in goes into financial trouble.  If the company is already in financial troubles, then we need to immediately search whether its directors and all persons involved in the misleading conduct to determine whether they have any assets.

The ACL has a very wide operation.  It catches every person who is involved in the misleading conduct and such person could become personally liable to compensate you for your loss sustained.

Also, there is a limitation period at law.  You will be barred from commencing legal action if you missed the limitation period.  Please do not wait if you suspect that your investment may be loss.

ABOUT THE WRITER

Kelvin Tang has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing migration advice to clients, advising on “Eligible Businesses” within the definition of the Migration Regulations, assisting migrants (investor of the business) with satisfying migration requirements, making visa applications and appealing cancelled or refused visas in the Federal Court of Australia, Administrative Appeals Tribunal and Migration Review Tribunal. Kelvin also has extensive experience in civil litigation, commercial and corporate law matters.

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HOW TO IMPROVE YOUR SUCCESS RATE IN MIGRATION APPEAL

Appeal to AAT, Blog & Articles, Immigration Law, Migration Law, Permanent Visa, Tang Law, Visa Appeal

Appeal Statistics

In 2016-2017, migration appeal to the Administrative Appeal Tribunal (AAT) has increased substantially by 7,675 cases (up 41%) to a total of 26,604.

This is the highest number of applications since the establishment of the Migration Appeal Division. This suggests a significant increase in visa refusals and cancellations by the Department of Immigration.

Of the 26,604 total number of AAT appeal cases in 2017, it comprised of:

  • Partner visa – 4,001
  • Student Refusal – 4,418
  • Student Cancellation – 1,137
  • Nomination/Sponsor Approval – 2,067
  • Permanent Business – 1,007

Approximately 38% (i.e. less than half) of the cases finalised in 2017 was successful.  Where the case relates to refugee visa, only 11% was successful.

How To Increase Your Success Rate?

From our years of experience in successfully representing applicants in migration appeals, we have a proven method of substantially improving your chance of succeeding.

To stand a chance of succeeding, you must at least do the following.

Firstly, carefully review Immigration’s decision and formulate your grounds of appeal.

Applying to AAT for review is not just about filling in some forms, collating some documents or just writing a letter to the AAT.     You must know what grounds are there and which one of these grounds are applicable to your case and acceptable by AAT.  These grounds could be merits in nature or error of law.  You may need a lawyer who is experienced in migration law to help you with formulating these grounds.  In brief, you must know what the Tribunal is looking for.

Secondly, substantiate your ground with evidence.  You need to carefully consider what type of evidence would be convincing. You have to carefully reviewed every piece of evidence and tactfully put them together.  Your materials must not be inconsistent.   In short, you must provide the Tribunal with what they are looking for.

Thirdly, strengthen your appeal with past case law.  AAT is a quasi-judicial body.  The Tribunal member is bound by past decisions of the AAT or a higher court (e.g. the Federal Court).  The key here is to find past cases relevant specifically to your situation and use it to support your grounds.  In all, you must know the process and the framework in which the Tribunal must follow

ABOUT THE WRITER

Kelvin Tang has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing migration advice to clients, advising on “Eligible Businesses” within the definition of the Migration Regulations, assisting migrants (investor of the business) with satisfying migration requirements, making visa applications and appealing cancelled or refused visas in the Federal Court of Australia, Administrative Appeals Tribunal and Migration Review Tribunal. Kelvin also has extensive experience in civil litigation, commercial and corporate law matters.

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8 TIPS FOR NON-RESIDENT INVESTORS IN AUSTRALIA

Blog & Articles, Immigration Law, Investment Visa, Migrants, Migration Law, Permanent Visa, Perth Immigration Lawyer, Tang Law, Visa 132

1.      Australia Business Culture

Australians believe in a fair chance for all and are open to tell you what they want.   Australians tend to open conversation straight away about the business on the table.   In contract, most business people from Asia likes to first build the relationship (e.g. have a dinner or casual chat) and fell comfortable before entering into business talks.

Australia encourages work-life balance.  You will find that Australians may not be prepared to meet for work matters outside of their working hours.

TIP:  Be prepared to talk business in the first meeting, be specific with what you want, it is expected – be frank and transparent.

 

2.     Contractual Spirit

Do expect slow decision making as Australians like to consult advisors and stakeholders before deciding.

When a decision is reached and contract is entered into, it is taken very seriously.  In contrast to some parts of the world, especially the developing countries, contracts are often disregarded.  In Australia, contracts are comprehensive, transparent and enforceable by the parties.  Contracts are analysed carefully before agreements are reached and signed.

If a contract is breached, the non-defaulting party can bring an action in Court.

TIP: Be patient with the process.  THINK CAREFULLY and get advice before you sign any contract, especially in Australia.  Once signed, you cannot deviate from it.

3.     Foreign Investment Review Board

General rule of thumb for a “foreign person” buying Australia real estate is that you must apply for approval from Foreign Investment Review Board (FIRB).  A “foreign person” is generally:

  • an individual that is not ordinarily resident in Australia;
  • a corporation, trustee of a trust or general partner of a limited partnership where a non-resident individual or foreign company holds a substantial interest of at least 20%; or
  • a corporation, trustee of a trust or general partner of a limited partnership in which two or more foreign persons hold an aggregate substantial interest of at least 40%.

Failure to obtain FIRB approval is a breach of the Commonwealth law.  Consequences include:

  • The maximum civil penalty for individual is up to $52,500
  • If criminal penalty is imposed, the maximum is $157,500 or 3 years imprisonment.

Commercial land, agricultural land, and Australian corporation (general businesses) have different thresholds where FIRB approval is required.

TIP: Please be mindful to check whether you need to obtain FIRB approval before signing any contract.

 

4.      Taxation

Tax system in Australia is complicated.   At the Federal level, there is:

  • Withholding tax for non-resident (which can range from 10% to 47%);
  • Capital gains tax (Company is not entitled to certain CGT concessions);
  • Company tax (currently at 28.5%);
  • Goods and services tax (which is 10%).

At the State level, there is transfer duty, land tax, and other State’s taxes depending on which business you are investing in.   Transfer duty for purchase of land is around 5% of the purchase price, but it can be tricky. For example, if you decide to change the purchaser’s name on a contract, you may have to pay double transfer duty.  Another example, purchase of shares in “land rich” company may trigger transfer duty.

At the Local Government level, there are council rates and taxes.

TIP: Seek advice from qualified accountant before committing to any investment.

 

5.     Using Correct Structure

Using the correct legal structure to conduct your investment can help you with assets protection, limit your liability, effectively minimise tax, or privacy protection for the “true owner”.

Legal structures in Australia include sole proprietorship, partnership, company, and trust.

TIP:  Know which structure best suits your purpose and set it up before entering into any contract to invest.

 

6.     Common Law and the “Nemo Dat” Doctrine

Australia is a common law country.  Our legal system comprises of common law and legislations.    There is an old common law rule called the “nemo dat” doctrine which basically means that a person who is not an owner of goods or who does not sell those goods under the authority or consent of the owner cannot pass a better title than she/he had.

TIP:  Check the proof of ownership AND check the seller.  If unsure, you can always include a “due diligence” clause in the contract allowing you time to conduct checks and searches before you make the investment.

 

7.     Australia Consumer Law

The Australia Consumer Law (“ACL”) is a national law for fair trading and consumer protection.  If you believe that you have been treated unfairly in a transaction or mislead into investing, you may be entitled to the protection and remedies under the ACL.

TIP:  Don’t wait till it is too late.  There is limitation period to your rights under the ACL.

 

8.     Business Migrants – “Eligible Business”

Business migrants are required to make investment into “eligible business”.  Our Common Law and migration legislation are very specific about what constitutes a “business” and an “eligible business”.  Investment into a wrong business can cost you the visa.

TIP: First, fully understand the conditions on your visa and its legal implications, and second, make sure your contract contains terms that will help you with complying with the visa conditions.

ABOUT THE WRITER

Kelvin Tang has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing migration advice to clients, advising on “Eligible Businesses” within the definition of the Migration Regulations, assisting migrants (investor of the business) with satisfying migration requirements, making visa applications and appealing cancelled or refused visas in the Federal Court of Australia, Administrative Appeals Tribunal and Migration Review Tribunal. Kelvin also has extensive experience in civil litigation, commercial and corporate law matters.

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HOW TO DEMONSTRATE “BUSINESS SKILLS” FOR AUSTRALIAN BUSINESS MIGRATION PURPOSE

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Basic Requirements

To qualify for business migration, generally speaking, you must be able to demonstrate that you have the requisite business skills.
Under the migration policies, the Immigration Department will assess you on:
  1. Your overall successful business career; and
  2. Your direct and continuous management involvement

Overall Successful Business Career

The migration policy intention is to measure the business performance of your entire business career, including any business activities that pre-date the assessment period.  Be aware that the Department may assess ALL businesses that you have had a management role.

Factors considered by the Department in conducting the assessment include:

  1. Financial position of your business – whether it has been making trading profits or losses.
  2. General trend of your business revenue – is it upward or downward trend.
  3. Whether the business likely to be successful in the longer term, looking at the potential to increase profitability, market share, business growth and/or competitive advantage.
  4. If your business recorded losses, you must provide details of relevant factors leading to the loss, such as:
  5. External economic trends
  6. Fall in property values
  7. Drop in world commodity prices
  8. Changes in taxation regime
  9. Recent acquisition of assets

You will NOT pass this criterion if your business has suffered recent trading losses and the business is consideredunlikely to be successful in the longer term due to your role and decision-making in the business.

Direct and Continuous Management Involvement

You are required to demonstrate that they have had 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.

Direct involvement in management

Direct involvement requires an applicant to be in charge of managing the whole or part of a business according to the size of the business.

If the main business is a small business with no or few employees it is expected that the applicant has a dominant role and responsibility for managing the business.

In the case of a larger business, you may not hold responsibility for a principal or dominant role, but it is necessary that you have been directly involved in managing at least one facet of a main business.  If there is more than one person who might have responsibility for managing the business it is necessary to define the management role of the applicant.

“Management” involves planning, organising, directing and controlling the resources of the business.

  • “Planning” includes setting the goals of the business, developing strategies for achieving the goals and determining the standards or quality.
  • “Organising” refers to the way the business allocates resources, assigns tasks, and goes about meeting its goals. In the process of organising, managers arrange a framework that links all workers, tasks and resources together so the business goals can be achieved.
  • “Directing” is supervising or leading workers to accomplish the goals of the business.
  • “Controlling” is the process of determining if the goals and objectives of the business are being met, setting performance standards for workers and monitoring their performance against standards.

Continuous involvement from day to day

You are expected to consistently spend a significant portion of your time managing the business on an ongoing basis from day to day. For a business to be considered a ‘main business’ it is intended that you would be involved in actively exercising your management role:

  • without any significant or frequent breaks in their management involvement
  • without any significant or frequent gaps in the activities of the business and
  • on any ordinary business day.

Decisions affecting the overall direction and performance of the business

You need to demonstrate that you were involved in making decisions affecting the overall direction and performance of the business. For example:

  • Establishing the business goals, market position, and competitive edge.
  • Method of sales distributions
  • Determining or creating business products and services
  • Setting up management structure and operational plan for efficient monitoring
  • Solving problems with complaints
  • Contingency planning for unforeseen circumstances

Assessment by the Department

If the Department has any doubt in relation to your management, additional scrutiny will be undertaken to determine the true nature of your management role in the business.

The case officers in charge of handling your application may:

  • refuse the visa
  • request further evidence
  • arrange an interview for you (in person or by phone). An interview may test whether you appear to have a full understanding of how the business operates, the duties you undertakes and the level of responsibility held.
  • A site visit may also be undertaken.

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ABOUT THE WRITER

Kelvin Tang has close to 20 years’ experience practising law in Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing migration advice to clients, advising on “Eligible Businesses” within the definition of the Migration Regulations, assisting migrants (investor of the business) with satisfying migration requirements, making visa applications and appealing cancelled or refused visas in the Federal Court of Australia, Administrative Appeals Tribunal and Migration Review Tribunal. Kelvin also has extensive experience in civil litigation, commercial and corporate law matters.

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ARE YOU ELIGIBLE TO APPLY FOR A BUSINESS TALENT (SUBCLASS 132A) VISA?

163 visa, 188 visa, Blog & Articles, Business Migrants, Immigration Law, Migration Law, Perth Immigration Lawyer, Tang Law, Visa 132

Australia invites you to apply for permanent residence through a Business Talent visa. ​​These visas can provide businessmen that have a Significant Business History with permanent residency to establish a new (or develop an existing) business in Australia that can deliver exceptional economic benefits to the country and generate jobs.

Successful applicants will:

  • Have the opportunity to sponsor eligible relatives for permanent residency to live and work in Australia.
  • Be able to travel freely within and out of Australia while managing their day-to-day business directly or through an authorised representative. [1]

Australia also has many benefits for domestic and international businesses, which includes:

  • A stable political and legal environment, ranked as one of the top ten stable countries in the world based on its defence, economy and system power.[2]
  • A weaker Australian dollar in the past three years, making assets in Australia substantially cheaper for foreign investors to acquire and operate.
  • Favourable time zones due to its geographical location. Specifically, Western Australia is in the same time zone as about 60% of the world’s population making international business with Asia much more convenient.

For all states and territories in Australia, the criteria for applicants to be considered as having a Significant Business History is that they have net business and personal assets of at least AUD1.5 million and an annual business turnover of at least AUD3 million.[3]Each state or territory will then impose additional requirements relevant to their state.

Why Western Australia?

Western Australia has some of the most favourable requirements for prospective applicants.[4]For example:

  • Western Australia only requires AUD1 million of net assets to be in business within the state, unlike Victoria (AUD2 million) and New South Wales (AUD3 million).
  • Western Australia only restricts those businesses that exist only for the provision of rental properties or passive investment unlike other states, such as Victoria, which place additional restrictions on general importing, exporting of commodities and smaller project based property development businesses.

Generally, Western Australia requires the creation of at least one (1) new job for any qualifying business and two (2) new jobs for a property development business. Other states, such as New South Wales, require as many as five (5) jobs created within the city of Sydney or three jobs created in regional New South Wales.

Applications for Business Talent visas are assessed on a case-by-case basis and exemptions for certain requirement may be extended to applicants based on their individual applications and reasoning. To maximise your chances for a successful application and to find out how you can expand your business to Australia, get in touch with us at Tang Law in Northbridge.

 

[1] See Re Sheik Anis Iqbal and Minister For Immigration And Citizenship [2010] AATA 1029; Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656.

[2] http://www.heritage.org/index/ranking [as at 6 January 2017], https://www.gfmag.com/global-data/non-economic-data/most-peaceful-countries?page=2 [as at 6 January 2017].

[3] Migration Regulations 1994 (Cth) sch 2, ‘Subclass 132 — Business Talent’

[4]For a list of Western Australian requirements, please refer to http://www.businessmigration.wa.gov.au/?cat=business-migration&page=visa-132-business-talent

ABOUT THE WRITER

Kelvin Tang has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing migration advice to clients, advising on “Eligible Businesses” within the definition of the Migration Regulations, assisting migrants (investor of the business) with satisfying migration requirements, making visa applications and appealing cancelled or refused visas in the Federal Court of Australia, Administrative Appeals Tribunal and Migration Review Tribunal. Kelvin also has extensive experience in civil litigation, commercial and corporate law matters.

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