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Accident Compensation Cases

Tong v Chief Executive of the Department of Labour (HC, 04/11/11)

Judgment Text

JUDGMENT OF WOODHOUSE J 
Woodhouse J
[1]
This is an application pursuant to s 245 of the Immigration Act 2009 for leave to appeal on a point of law against a decision of the Immigration and Protection Tribunal. The Tribunal's decision was on an appeal against a decision of Immigration New Zealand declining an application by Mr Tong, as the principal applicant, for residence in New Zealand under the Entrepreneur category of the Government residence policy (the residence policy) applicable at the time. 
[2]
The residence policy required, in terms applying to Mr Tong's application, that Mr Tong had been self-employed in New Zealand in his business for at least 2 years. Mr Tong contended that there was an error of law by the Tribunal in the test it applied in determining whether Mr Tong had been self-employed in New Zealand in his business for at least 2 years. 
Factual background 
[3]
There was no material issue in relation to the factual background. It is conveniently taken from the decision of the Tribunal dated 13 May 2011. There is reference in the Tribunal's decision to “the appellant”, in the singular. This is a reference to the first applicant on this application, Mr Tong. The second applicant on this application is Mr Tong's wife, Ms Ho. She had not appealed to the Tribunal from the original decision of Immigration New Zealand. For this reason Ms Ho would appear to have no standing to be a party to this application, but nothing turns on this point. The Tribunal's summary of the factual background leading up to the application is as follows: 
“[4]
The appellant, his wife and children arrived in New Zealand, for the first time, in July 2003. His wife and children have lived in this country, with short periods abroad, since January 2005. The appellant, however, has made multiple trips between New Zealand and Hong Kong, spending only brief periods in this country. 
[5]
In October 2006, Mr Tong made an application for a Long Term Business Visa (LTBV), a previous application having failed. 
[6]
On 14 or 15 March 2007, the appellant was issued a LTBV. 
[7]
The appellant's first arrival in New Zealand, subsequent to the issue of the LTBV, was on 8 April 2007. He was granted his first work permit on this date. 
[8]
The couple's company, Tetley (NZ) Ltd (‘Tetley (NZ)’), was incorporated in this country in April 2007. The directors and shareholders are the appellant and his wife. 
[9]
On 11 December 2009, the appellant made an application for residence under the Business (Entrepreneur) category of residence policy, including his wife and two dependent children in the application. In submissions (10 December 2009), the appellant's then representative records that the appellant and his wife worked closely together to establish Tetley (NZ), which had four full-time employees, including the couple. 
[10]
The appellant's LTBV expired on 15 March 2010. Earlier, on 25 February 2010, he applied to renew this visa. It was declined on 1 October 2010, as he did not have an acceptable standard of health. Since the expiry of the LTBV, the appellant has been granted visitor permits on arrival here. ”
[4]
Two issues of present relevance were considered by Immigration New Zealand on Mr Tong's residence application. One was a medical issue. As noted in the background summary, at [10] Mr Tong's application to renew his LTB visa was declined because he did not have an acceptable standard of health. On the residence application a medical assessor expressed a similar conclusion, but there appears to have been no definitive conclusion by Immigration New Zealand on this point. It was therefore put to one side by the Tribunal. 
[5]
The second issue of relevance considered by Immigration New Zealand is the one arising on this application. Immigration New Zealand declined the residence application because of its conclusion that Mr Tong did not meet the policy requirements concerning the duration of self-employment in New Zealand. 
The Tribunal's decision 
[6]
The Tribunal addressed two broad issues. One was whether Mr Tong met the criteria in the Entrepreneur category of the Policy relating to self-employment in New Zealand. The Tribunal held that Mr Tong did not meet the criteria, affirming the decision of Immigration New Zealand in that regard. The application for leave to appeal applies to this decision. The other matter dealt with by the Tribunal related to a direct application to the Tribunal to refer the application to the Minister of Immigration to consider an exception to the policy on the basis that there were special circumstances. The Tribunal found there were no special circumstances justifying this course. There is no application for leave to appeal in that regard. 
[7]
The relevant criteria for the Entrepreneur category are: 
“BH1
Objective 
The objective of the Entrepreneur category is to attract migrants who can demonstrate they have been actively participating in business and contributing to New Zealand's economic development. 
BH2.1
Successful establishment of a business that is benefiting New Zealand 
Principal applicants in the Entrepreneur category are required to demonstrate that: 
a.
they have established a business in New Zealand; and 
b.
the business is benefiting New Zealand in some way. 
BH3.1
Businesses established while the principal applicant was holding a permit granted under the Long Term Business Visa/Permit category 
An application under the Entrepreneur category will be declined if: 
a.
the business on the basis of which the application is made was established while the principal applicant was holding a work permit granted under the Long Term Business Visa/Permit category; and 
b.
the principal applicant was not self employed in that business for two years prior to the date the application under Entrepreneur category is made. 
c.
Applications under the Entrepreneur category will also be declined if the principal applicant and any partner or dependent child applied for and was granted welfare assistance under the Social Security Act 1964 while in New Zealand during the currency of their temporary permits. 
BH4.1
Criteria for successfully establishing a business in New Zealand 
A principal applicant will be considered to have successfully established a business in New Zealand if: 
a.
they have established or purchased, or made a substantial investment in a business operating in New Zealand; and 
b.
the principal applicant has been self-employed in New Zealand in that business for at least 2 years. 
BH4.5
Definitions 
BH4.5.1
Substantial investment 
Substantial investment means the purchase of 25% or more of the shareholding of a business. 
BH4.5.5
Self-employment 
a.
Self-employment is lawful active involvement in the management and operating of a business in New Zealand which the principal applicant has established or purchased, or in which the principal applicant has made a substantial investment. 
b.
For the avoidance of doubt, self-employment does not include involvement of a passive or speculative nature. ”
[8]
The Tribunal's decision on the matter in issue was as follows: 
“[28]
It is accepted by Immigration NZ and the Tribunal that the appellant has established a business in New Zealand which benefits the country and that he is self-employed in the business. The only issue is whether the duration of the appellant's self-employment meets the minimum stipulated period of two years (in New Zealand). 
[29]
Prior to assessing whether the appellant meets this criterion, the Tribunal will consider a contention made on appeal that Immigration NZ wrongly assessed the appellant's application as his business model is that of a limited liability company (said to be applicable to the entrepreneur category of residence policy), not that of a sole trader (said to be inapplicable to the entrepreneur category). It is submitted that the time spent by him in New Zealand is ‘insignificant’ (irrelevant) to the business model he adopted (limited liability company), whereas it would be relevant if he was a sole trader. 
[30]
The Tribunal rejects this contention. The entrepreneur category of policy embraces all business models, so the requirement to spend a specified minimum period of time in this country is equally applicable to the (limited liability company) model adopted by him. It is an illogical argument, as it would mean that the specified time criterion could never be applicable to the only business model said to be relevant to this category of policy, rendering the criterion otiose. 
[31]
The Residence Review Board has previous interpreted this provision of policy and set out the relevant principles; Residence Appeal No 13564 (28 April 2003), Residence Appeal No 15834 (10 December 2008) and Residence Appeal No 16594 (5 November 2010)
[32]
An applicant must show that he or she has been self-employed in New Zealand in the business for at least two years prior to the date of the residence application. The policy does not require that an applicant spend his or her entire time in this country, but the criterion has been interpreted as requiring ‘the centre of the applicant's domestic and business life must be in New Zealand, over a period of at least two years’; 15834 [50]. 
[33]
The policy does not set out any minimum number of days required to be physically present in this country and is sufficiently flexible to allow an entrepreneur to spend time overseas on business connected to a New Zealand company. The Tribunal agrees with the appellant's submission on appeal that an entrepreneur immigration policy, operating in a global marketplace, cannot have been intended to be restricted to those entrepreneurs staying in New Zealand for the entire minimum period, but it does not accept that a minimal number of days present is sufficient. If there is a considerable time spent overseas, even if on behalf of a New Zealand company, there will come a point where the time present in this country is so little that it cannot be said that the applicant is self-employed (for, at least, two years) ‘in New Zealand’; 15834 [51], 16594 [42]-[44]. For example, the manager of a New Zealand company, seconded overseas to run a branch, who returns to this country for a few days a year for senior management meetings is not employed ‘in New Zealand’
[34]
According to the assessment by Immigration NZ, the appellant had been in New Zealand for 110 days between 15 March 2007 (the day the LTBV was approved) and 11 December 2009 (the date of the residence application). The Tribunal calculates that the appellant actually spent 97 days in New Zealand in that period. However, it does not matter whether it was 110 or 97 days. It is a period of less than four months out of approximately 32 months and is demonstrably short of the time required by policy. This is approximately 12 per cent of his time. Even if the appellant had spent the entire period overseas working on behalf of his New Zealand company (which, the Tribunal observes, has not been established), he has spent so little time in New Zealand that he cannot be said to have been selfemployed for two years in this country. 
Conclusion on policy 
[35]
The Tribunal agrees with Immigration NZ that the appellant has not met the minimum duration of time spent in New Zealand employed in the business and accordingly fails policy. The decision of Immigration NZ is correct in terms of policy. ”
Criteria for leave to appeal — s 245 
[9]
Section 245 of the Immigration Act 2009 provides as follows: 
“245 Appeal to High Court on point of law by leave 
(1)
Where any party to an appeal to, or matter before, the Tribunal (being either the person who appealed or applied to the Tribunal, an affected person, or the Minister, chief executive, or other person) is dissatisfied with any determination of the Tribunal in the proceedings as being erroneous in point of law, that party may, with the leave of the High Court (or, if the High Court refuses leave, with the leave of the Court of Appeal), appeal to the High Court on that question of law. 
(2)
Every appeal under this section must be brought— 
(a)
not later than 28 days after the date on which the decision of the Tribunal to which the appeal relates was notified to the party appealing; or 
(b)
within such further time as the High Court may allow on application made before the expiry of that 28-day period. 
(3)
In determining whether to grant leave to appeal under this section, the court to which the application for leave is made must have regard to whether the question of law involved in the appeal is one that by reason of its general or public importance or for any other reason ought to be submitted to the High Court for its decision. 
(4)
On the appeal, the High Court must determine the question or questions of law arising in the proceedings, and may then— 
(a)
confirm the decision in respect of which the appeal has been brought; or 
(b)
remit the matter to the Tribunal with the opinion of the High Court, together with any directions as to how the matter should be dealt with; or 
(c)
make such other orders in relation to the matter as it thinks fit. 
(5)
Subject to subsection (2), every appeal under this section must be dealt with in accordance with the rules of the court, with any modifications necessary to reflect the provisions of this Act, including any ancillary general practices and procedures developed under section 260. ”
[10]
The principles applying on an application for leave to appeal on a point of law, and where there is a statutory direction such as that in s 245(3), are well settled: see Waller v Hider1
| X |Footnote: 1
Waller v Hider [1998] 1 NZLR 412 (CA)Has Litigation History which is not known to be negative[Blue] 
; Snee v Snee.2
| X |Footnote: 2
Snee v Snee CA198/99, 1 November 1999 at [13]-[22]. 
 
The residence policy: legal force and interpretation 
[11]
The residence policy was provided for in s 13B of the Immigration Act 1987. It is a form of secondary legislation; it “has legal force”.3
| X |Footnote: 3
Attorney-General v E [2000] 3 NZLR 257 (CA)Has Litigation History which is not known to be negative[Blue]  at [16]. 
The 1987 Act was the Act in force when Mr Tong made his application.4
| X |Footnote: 4
The residence policy, under s 13B of the 1987 Act, in force immediately before the commencement of the 2009 Act is in any event to be treated as “residence instructions” for the purposes of the 2009 Act. Residence instructions are provided for in s 22 of the 2009 Act, which deals with “immigration instructions” generally. 
 
[12]
The approach to interpretation of provisions in the residence policy was discussed by the Court of Appeal in Patel v Chief Executive of the Department of Labour:5
| X |Footnote: 5
Patel v Chief Executive of the Department of Labour [1997] NZAR 264Has Litigation History which is not known to be negative[Blue]  at 271. 
 
“A policy document, such as the one in issue, is not to be construed with the strictness which might be regarded as appropriate to the interpretation of a statute or statutory instrument. It is a working document providing guidance to immigration officials and to persons interested in immigrating to New Zealand or sponsoring the immigration of a person to this country. It must be construed sensibly according to the purpose of the policy and the natural meaning of the language in the context in which it is employed, that is, as part of a comprehensive and coherent scheme governing immigration into this country. See Alexander v Immigration Appeal Tribunal [1982] 2 All ER 766Has Cases Citing which are not known to be negative[Green] , per Lord Roskill at 770; see also R v Immigration Tribunal ex parte Shaikh [1981] 3 All ER 29Has Cases Citing which are not known to be negative[Green] , per Bingham J at 35. ”
The applicant's point of law and discussion 
[13]
The application for leave to appeal identified what was said to be three points of law. In the course of the hearing Mr Tongatule made clear that he was contending that there was one essential error. This relates to the application of residence policy BH4.1b. For convenience I will set this out again: 
“A principal applicant will be considered to have successfully established a business in New Zealand if … the principal applicant has been selfemployed in New Zealand in that business for at least 2 years. ”
[14]
Before me, both counsel accepted that “self-employment” includes employment through a limited liability company, as occurred in this case. This is undoubtedly correct, a point discussed further below. The Tribunal applied a test which does not require an applicant to establish that he or she has been physically present in New Zealand, in self-employment, for a continuous period of 2 years. On this application, neither counsel challenged the general proposition that the residence policy in respect of the 2 year requirement, and generally, needs to be applied with flexibility as indicated by the Tribunal at [33]. 
[15]
The essence of the Tribunal's error, as articulated by Mr Tongatule, was that the Tribunal failed to specify the amount of time that must be spent in New Zealand by an applicant who is self-employed through a limited liability company. He submitted that the test applied by the Tribunal is a test applying to self-employment as a sole trader, but that test, it was submitted, is inapplicable to the limited liability model. The question that would arise from this might be stated as follows: Should there be separate tests under residence policy BH4.1b for self-employment through a limited liability company and self-employment as a sole trader? 
[16]
The Tribunal touched on the applicant's contentions at [29]-[30]. It appears from what the Tribunal said there that the argument before the Tribunal was that the entrepreneur category in the residence policy applied only to self-employment through a limited liability company, and not to self-employment as a sole trader (which appears to have been put forward as the only other form of self-employment), with a further submission that an applicant who was self-employed through a limited liability company did not have to spend any particular period of time in New Zealand. I agree with the Tribunal's conclusion at [30] in respect of an argument to that effect. However, as noted above, the argument presented on this application was different from the argument considered by the Tribunal. 
[17]
I am not persuaded that there was an error of law as now contended. The residence policy for the entrepreneur category applies to all forms of selfemployment. The definition of “self-employment” in BH4.5.5 is broad. It plainly includes self-employment as a sole trader. As already discussed, it includes selfemployment through a limited liability company, by being involved in the management and operation of the business of the company. In this case Immigration New Zealand accepted that Ms Ho, a director and shareholder of the company with her husband, was also in self-employment through the company. Self-employment through sole trading or a limited liability company would also not be the only means of self-employment. In terms of legal form, for example, there could be selfemployment in a partnership. 
[18]
Mr Tongatule referred to provisions in various statutes, or departmental guidelines, dealing with self-employment and related matters. He referred, for example, to the Injury, Prevention, Rehabilitation, and Compensation Act 2001 (definition of ‘self-employed person’ in s 6); “self-employment guidelines” published by the Inland Revenue Department; and relevant definitions in the Employment Relations Act 2000. These do not have any bearing on the application of the residence policy for the entrepreneur category. 
[19]
The test that was applied by the Tribunal was discussed at [31]-[33] of the Tribunal's decision. I am not persuaded that there was any error of law, justifying leave on the present application, in respect of the application of that test in this case. The test applied is a test which, in terms of the Tribunal's decision, is one applied to all forms of self-employment. Having concluded that the residence policy applies to all forms of self-employment, I am satisfied that there was no error by the Tribunal's applying this test in this case to self-employment through a company. 
[20]
Having regard to the narrow focus of the question of law said to arise in this case, it is not strictly necessary to express any opinion on the formulation of the test by the Tribunal. That is to say, the question raised in this case did not involve analysis of the test, but rather whether there should be a different test altogether for self-employment through a limited liability company. It is nevertheless appropriate to make some observations, for the purposes of the present application. An essential feature of the test applied by the Tribunal is flexibility. Because the residence policy for the entrepreneur category applies to all relevant business models, there is need for flexibility. For example, an applicant who is a sole trader might be expected to spend more time in New Zealand, in the 2 year period, than a self-employed applicant operating through a limited liability company with a co-director and coshareholder (or several directors and shareholders). Self-employment through a partnership may come somewhere in between. In addition, the test developed by the Tribunal and its predecessor, and applied in this case, is consistent with the approach outlined by the Court of Appeal in Patel v Chief Executive.6
| X |Footnote: 6
 
[21]
I apprehend that one concern underlying the application is that someone in Mr Tong's position does not know in advance how long he can spend out of New Zealand before it will be regarded as too long for the purposes of BH4.1b. It seems that this in turn influenced the way in which the question of law was articulated, with the distinction between sole trading and a limited liability company. The at least implicit proposition was that a sole trader would have to be in New Zealand continuously for 2 years, but a person operating through a company would not, and the test should therefore specify a precise period for the limited liability operator. As I observed to Mr Tongatule, he was effectively asking the Court to act as a legislator. If the residence policy gives rise to serious difficulties for potential applicants, then it will be for the Government to determine whether the Government's residence policy requires amendment. It is not for the Court. And in making those observations the Court is not implying that there is necessarily any material problem with the wording of the residence policy. 
[22]
Mr Tongatule's submission that there should be a separate test for applicants who are self-employed through a limited liability company also raised the question as to what the test should be. Mr Tongatule did not seek to articulate a test, either by reference to a precise period of time that the applicant would need to be in New Zealand, within the overall 2 year period, or otherwise. This lends considerable emphasise to the point just made; the Court cannot act as a legislator. 
Result 
[23]
The application for leave to appeal is dismissed. 
[24]
If the respondent seeks costs, a memorandum in that regard should be filed and served within two weeks with any response for the applicant to be filed and served within two weeks after receipt of the respondent's memorandum. 


Waller v Hider [1998] 1 NZLR 412 (CA)Has Litigation History which is not known to be negative[Blue] 
Snee v Snee CA198/99, 1 November 1999 at [13]-[22]. 
Attorney-General v E [2000] 3 NZLR 257 (CA)Has Litigation History which is not known to be negative[Blue]  at [16]. 
The residence policy, under s 13B of the 1987 Act, in force immediately before the commencement of the 2009 Act is in any event to be treated as “residence instructions” for the purposes of the 2009 Act. Residence instructions are provided for in s 22 of the 2009 Act, which deals with “immigration instructions” generally. 

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