JIN DON KIM V CHIEF EXECUTIVE OF THE DEPARTMENT OF LABOUR HC WN CIV-2006-485-754

JIN DON KIM V CHIEF EXECUTIVE OF THE DEPARTMENT OF LABOUR HC WN CIV-2006-485-754 31 May 2007IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2006-485-754UNDER the Immigration Act 1987 IN THE MATTER OF an appeal pursuant to section 115 of the Immigration Act 1987 from the decision of the Residence Review Board New Zealand given on 25 November 2005 BETWEEN JIN DON KIM Appellant AND CHIEF EXECUTIVE OF THE DEPARTMENT OF LABOUR Respondent Hearing: 24 May 2007 Appearances: R J Connell for Appellant K H Howard and G Stanish for Respondent Judgment: 31 May 2007 at 2.15pmIn accordance with r 540(4), I direct the Registrar to endorse this judgment with a delivery time of 2.15 pm on the 31 st day of May 2007.RESERVED JUDGMENT OF CLIFFORD J Introduction[1] This is an appeal against a decision of the Residence Review Board ("the Board") dated 25 November 2005, upholding a decision of the New Zealand Immigration Service ("the Service") to decline the appellant's application for residency.[2] The appeal is pursuant to s 115 of the Immigration Act 1987 ("the Act"), which allows an appeal against a decision of the Board on a point of law only. The Court may confirm the decision, remit the matter to the Board or make any other order in relation to the matter as it sees fit.Background[3] The appellant is a Korean citizen who, on 22 April 2002, applied for New Zealand residency under the Business (Investor) category. The application also included his wife and their two children. [4] In his application the appellant claimed one point for his investment funds. In order to claim one point, an applicant must have NZD 1,000,000 to invest in New Zealand investments. In support of his application, the appellant provided evidence showing funds held in his name of: a) 380,056,948 Korean Won (KRW) in Hana Bank account [number provided]; and b) KRW 221,728,404 in Hanvit Bank account [number provided]; (together "the Nominated Funds"). [5] The Nominated Funds equated, at the time, to NZD 1,023,967. [6] Mr Kim's application was approved in principle on 18 December 2002. He was notified by letter, which set out the requirements of policy in respect of investment funds as follows:Investment funds Applicants are required to demonstrate that they own the investment funds, and that they have been acquired lawfully. We have confirmed that the above funds/assets you nominated in your application meet these requirements. You will need to show evidence that the funds transferred to New Zealand are linked to these funds/assets as listed above, i.e. bank balances with Hanvit and Hana Bank for KRW 601,785,352. If the nominated funds/assets are not transferred as your investment funds then you are required to demonstrate:1. that the transferred funds or assets used meet the same criteria and, 2. how you have converted the legally earned, nominated investment funds listed in your application for residence, to the funds you have transferred to New Zealand.[7] Those requirements had to be satisfied by 18 December 2003. [8] On 13 November 2003, the Service received a letter from the appellant's daughter requesting an extension of time for transferring the Nominated Funds to New Zealand to allow the exchange rate to stabilise. On 14 November 2003, the Service replied that an extension was not possible. [9] On 17 November 2003, the ASB bank informed the Service by fax of the following payments, totalling NZD 1,014,970.00 ("the Transferred Funds"), which had been credited from the Hana Bank into an ASB account in the name of the appellant and his wife:• 12/12/2003 $152,990.00;• 12/12/2003 $152,990.00; and• 16/12/2003 $708,990.00. [10] In an assessment dated 23 December 2003, the Service noted that the Transferred Funds had originated from a Hana Bank account that was different from the bank accounts originally specified as containing the Nominated Funds. No evidence had been produced to link the Nominated Funds to the Transferred Funds. The appellant's application for residence was therefore declined pursuant to para BB5.1.10 of the Investor policy. [11] Para BB5.1.10 provides as follows:Applications for residence must be declined if principal applicants do not present acceptable evidence of having transferred and invested the nominated funds within 12 months from the date of approval in principle.[12] An appeal to the Board was filed on 30 January 2004. [13] On 4 February 2004, then Associate Minister of Immigration Damien O'Conner, in reply to a letter from the appellant's daughter dated 17 November2003, granted an extension of two months to 4 April 2004 to enable the appellant time to meet the requirements of the Investor category. [14] The appellant subsequently endeavoured to demonstrate to the Service the origin of the funds actually transferred on 17 November 2003 so as to meet the requirements notified to the appellant in the Service's letter of 18 December 2002. He did this first by arranging for the submissions and material prepared for the appeal to the Board, which, it would appear, had been overtaken by the Minister's letter of 4 February 2004, to be referred to the Service. This was done by way of letter of 9 February 2004. [15] On 25 February 2004 the Service advised that that material did not satisfactorily link the Transferred Funds to the Nominated Funds. It invited further evidence by 4 April 2004. [16] Further explanatory material was provided on behalf of the appellant, by way of a letter dated 24 March 2004. By that time, a further sum of NZD 1,000,000 (the Second Transfer) had been received by ASB, and the Service had been notified of its receipt. The letter of 24 March also provided evidence as to the source in Korea (another Hana Bank foreign currency account, in the appellant's name) of the Second Transfer. [17] The Service replied on 5 April 2004, again advising that the Transferred Funds could not be linked to the Nominated Funds. The Service also advised that the material did not provide any satisfactory explanation of the source of the Second Transfer. On that basis, the appellant's application was declined. [18] The appellant then pursued his appeal to the Board.The Board's decision[19] For the purposes of the appeal to the Board, it would appear that the Board was provided only with the submissions originally filed in January 2004, prior to the Minister's grant of an extension of time. Those submissions focussed on a numberof matters, in particular the timing of the Service's decisions, which would appear to have been addressed by the Minister's letter and the extension of time thereby provided. As relevant, they also contained extensive submissions on the question of the relationship between the Nominated Funds and the Transferred Funds, by reference to what was described as the need for "linkage". The Board also had access to the Service's files, which it considered as relevant for the purposes of the appeal.Grounds of appeal[20] The Board described the issue it was required to consider as being whether the funds "that were transferred using a third party retained the necessary link with the nominated investment funds and therefore satisfied the requirements of the Government Residence Policy". [21] The Board set out the factual background, noting that the Transferred Funds had originated from cash deposits given to Hana Bank by the appellant's brother-in- law. The Board also recorded and reviewed the various information which had been provided to the Service, including the further explanatory material provided by way of the letter of 24 March 2004, endeavouring to link, in the necessary manner, the Transferred Funds to the Nominated Funds. It set out the decisions of the Service of 23 December 2003 and 5 April 2004, and referred to the documentary material provided in support of the appeal as originally filed on 30 January 2004. [22] The Board then summarised, at paragraphs [34] to [37] of its decision, the factual circumstances as to the difficulties it saw in linking the Transferred Funds to the Nominated Funds. It noted that: a) The Transferred Funds originated in cash deposits made by the appellant's brother-in-law to the Hana Bank for transfer directly to New Zealand. b) The appellant had been unable to satisfactorily link those cash funds to the Nominated Funds. Rather, it was clear that there had been aconsiderable mingling of funds that may originally have belonged to the appellant, with those of his brother-in-law. Furthermore, it was not possible to trace the Nominated Funds to the Transferred Funds by reason, amongst other things, of the interposition of cash transactions for which there was no satisfactory explanation. Similarly, evidence provided showed that the Transferred Funds originated from other accounts and a share portfolio, which again were not linked as required to the Nominated Funds. [23] The Board concluded:[38] The intermingling of the appellant's money with that of his brother- in-law has not assisted the appellant to comply with the policy requirements. The appellant's failure to provide satisfactory evidence of the linkage between the investment funds that were nominated, and those funds that were transferred, is correctly summarised in the NZIS assessment that accompanied the letter of decline dated 5 April 2004. [39] The inescapable difficulty for the appellant is that cash transactions are unacceptable because they do not meet the requirements of policy. There is no link with the nominated investment funds and it cannot be ascertained that these funds were earned lawfully and owned by the appellant. [40] The relevant sections of policy set out the requirements in relation to investment funds: "BB4.1 General rules for investment funds BB4.1.10 Definition of funds earned or acquired legallya. Funds earned or acquired legally are funds earned or acquired in accordance with the laws of the country in which they were earned or acquired. b. Business immigration specialists have discretion to decline an application if they are satisfied that, had the funds been earned or acquired in the same manner in New Zealand, they would have been earned or acquired contrary to the criminal law of New Zealand.Effective 1/11/1999" [41] The appellant's application failed because he could not satisfy the requirements of policy to transfer the nominated investment funds to an account in New Zealand. While the appellant has provided documentation to show transactions that involve his brother-in-law, the use of cash transactions and a third party means that inevitably he has lost control of his funds. No compelling reasons have been submitted to explain why theappellant entrusted money to his brother-in-law and the gaps in the evidentiary chain have been fatal to his application. [42] The Board finds that the "Approval in Principle" letter expressly stated the criteria that must be met prior to residence being granted. The appellant has failed to meet the criteria. [43] The Board finds that the NZIS was correct in declining the appellant's application.[24] In his Notice of Appeal, the appellant identified three errors of law asserted by him to have been made by the Board: a) The Service's policy does not simpliciter preclude cash from being used as part of the investment funds. b) Cash is legal tender in Korea and New Zealand and cannot be excluded as a source of investment funds simpliciter. c) The appellant by giving a power of attorney to his brother-in-law does not involve a "third party", nor that the appellant had inevitably lost control of his funds. [25] Before me, and in his written submissions, Mr Connell expressed the appellant's points in a slightly different manner. He acknowledged that the appellant needed to be able to show an appropriate linkage between the Transferred Funds and the Nominated Funds. He said, however, that the Board had erred because it had found, this being an error in law, that cash transactions interposed between the Nominated Funds and the Transferred Funds inevitably meant that an appropriate linkage could not be established. As a result of this, he said, the Board had approached the appeal in a blinkered fashion and had not properly considered the evidence of linkage provided by the appellant. [26] He argued similarly that the Board had also erred as regards the involvement of the brother-in-law as an attorney. Again, he said that the Board had erroneously concluded in law that the involvement of the brother-in-law under a power of attorney in and of itself meant that the necessary linkage could not be established. This, he said, as a finding that provided for no exceptions, resulted in a situationwhere documentation supporting a contrary view was unlikely to be considered critically, and the Board had therefore failed to properly consider the appeal. [27] In the context of his submissions regarding the Board's errors as regards the significance of the cash transaction and the brother-in-law acting as an attorney, Mr Connell focused on the following passages of the Board's decision:Para 13: ABC Ltd claimed that some of the appellant's money had been given to his brother-in-law pursuant to a Power of Attorney. Evidence of this Power of Attorney effective from April 2002 was provided. Para 39: The inescapable difficulty for the appellant is that cash transactions are unacceptable because they do not meet the requirements of policy. There is no link with the nominated investment funds and it cannot be ascertained that these funds were earned lawfully and owned by the appellant. Para 41: The appellant's application failed because he could not satisfy the requirements of policy to transfer the nominated investment funds to an account in New Zealand. While the appellant has provided documentation to show transactions that involve his brother-in-law, the use of cash transactions and a third party means that inevitably he has lost control of his funds. No compelling reasons have been submitted to explain why the appellant entrusted money to his brother-in-law and the gaps in the evidentiary chain have been fatal to his application.[28] Finally, Mr Connell sought to add a third ground of appeal, namely that the Board also erred where at one point it had said there had been no request for a consideration of other funds in place of approved funds. He said there was no such requirement for a request, and that in any event one had in effect been made. [29] In this context, Mr Connell focused on the following passage from the Board's decision (at para 16): However, these funds could not be taken into consideration as they were not linked with the original nominated funds as the appellant had not requested that they be substituted for nominated funds to enable the NZIS to verify that they had been lawfully acquired.[30] On that basis, Mr Connell asserted that the errors of law made by the Board were:a) The New Zealand Immigration Service policy does not simpliciter preclude cash from being used as part of the investment funds; b) A person acting under a power of attorney is not a third party; and c) There was no requirement to formally request consideration of other funds in place of approved funds. [31] For the Crown, Ms Howard submitted that the statements identified by Mr Connell were to be seen in the context of the tribunal's decision as a whole. [32] The Crown did not contend that "cash transactions" or the "use of a power of attorney", during the course of a series of transactions whereby previously approved funds were transferred to New Zealand, would always preclude the funds transferred having an appropriate linkage to the funds approved. [33] Certainly, the presence of cash transactions, without any explanation, would likely have that result. However, circumstances could be envisaged whereby a properly documented "cash" transaction, and a properly explained use of a power of attorney, would not preclude an applicant satisfying the Service that funds received in New Zealand, although not directly originating from approved funds in a stipulated bank account, could nevertheless be appropriately linked. This was, after all, Ms Howard submitted, what the policy, as originally advised by the Service to the appellant on 18 December 2002, clearly envisaged. [34] What the Crown did submit, however, was that where a cash transaction, or a payment made by an attorney under an alleged power of attorney, is interposed between funds in a bank account that have been approved by the Service, and funds as actually transferred to New Zealand, then without appropriate explanation an applicant will not have satisfied the Service's policy that requires funds received in New Zealand to have originated from approved funds, or to otherwise comply with the relevant criteria for approval of investment funds.Discussion[35] With no disrespect to Mr Connell, who argued his client's case succinctly and well, I think the issue in this appeal is relatively straightforward. [36] I accept that, if the Service and the Board had simply noted the presence of the cash transactions and the use by the brother-in-law of the power of attorney, and without more concluded that the Transferred Funds could not be linked to the Nominated Funds, and therefore declined the appellant's application, then the proper legal test may not have been considered. As acknowledged by Ms Howard for the Crown, there may be circumstances where, notwithstanding the interposition of cash transactions and the use by persons other than an applicant of a power of attorney to make payments on behalf of an applicant, the necessary linkage can be established. [37] In my view, however, when the Board's decision is considered in its totality, it can be seen that the Board has considered the correct legal test and has undertaken an appropriate analysis to see whether, on the basis of the facts available to it, the Service was right in concluding that the appellant had not established the necessary linkage between the Transferred Funds and the Nominated Funds. [38] I think that the passages I have set out above at para [23], in particular, warrant this conclusion. [39] In my view, the Board undertook the substantive exercise of reviewing the Service's decision to establish whether or not the appellant had been able to show linkage between the Transferred Funds and the Nominated Funds. The Board was not "blinkered" by the view it took of the significance of the cash transactions or the power of attorney. Rather, in my view, it was considering the significance of the particular cash transactions in this instance, and the involvement of the brother-in- law as an attorney in this instance, to determine whether the appellant had made out the necessary linkage. [40] I refer in this regard to paras [38] and [39] of the Board's decision. In my view, where the Board refers to cash transactions in para [39], it is referring to thecash transactions that occurred. It can be acknowledged that the opening sentence of para [39], taken in isolation overstates the position as regards cash transactions. Notwithstanding that, in my view, the Board actually applied the correct legal test. [41] I think this is sufficient to dispose of the first two points of Mr Connell's rephrased grounds of appeal. As regards the third, I tend to the view that the Crown was correct in arguing that an appropriate basis for leave to introduce that ground of appeal had not been established. Even if I had been of a mind to allow Mr Connell to advance that ground of appeal, in my view, it would not avail the appellant. Where the Board refers to the appellant not requesting that other funds "be substituted for Nominated Funds to enable NZIS to verify that they had been lawfully acquired", in my view the Board is referring to the fact that, although considerable documentary material was provided in support of the appellant's submissions that the Transferred Funds could be appropriately linked to the Nominated Funds, the Service had not been satisfied as required that that linkage had, in fact, been established as regards the various sources of funds that apparently were used to create the cash deposits that were in turn transferred to New Zealand. The appellant had, by his various submissions, obviously made such a request and it was that request and the Service's response to it, that the Board considered. [42] I reach that decision having, as I think is appropriate, not taken an intricate, word by word dissection approach to the Board's decision, but rather having looked at that decision in its entirety. I acknowledge that it is very unfortunate for the appellant that, having had funds available and approved, he has dealt with those funds in such a way that the Service was unable to approve his application. The importance of the policy of approval, and the need for the Service to be satisfied as to the source of funds to be used for these purposes, is clear, however, and in my view the Board did not err in law in the decision it reached. [43] I therefore dismiss this appeal. [44] The Board is entitled to costs on a 2B basis. In the event that counsel are unable to resolve the question of costs between them, they may make writtensubmissions to me, such submissions to be received no later than Friday, 27 June 2007. __________________Clifford JSolicitors: Connell & Connell, PO Box 5275, Auckland, for Appellant Crown Law Office, PO Box 2858, Wellington, for Respondent