Arto Hardy and Minister, Immigration Multicultural and Indigenous Affairs

[2005] AATA 662

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 662

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/1217

GENERAL  ADMINISTRATIVE DIVISION		)
Re		Sinatra Arto Hardy

Applicant

And Minister, Immigration Multicultural and Indigenous Affairs

Respondent

DECISION

Tribunal Ms N Bell, Senior Member

Date8 July 2005

PlaceSydney

Decision The decision under review is affirmed

...........................................

Ms N Bell
  Senior Member

BUSINESS VISA – Cancelled Pursuant to section 134 of the Migration Act –Applicant has not Made Genuine Effort to Participate in the Day-to-Day Management of the Business – Decision of Minister’s Delegate to Cancel Business Skills (Migrant) Visa Correct – Decision Under Review Affirmed

Migration Act 1958, s134

Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997

Dhanjal and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA

Second Reading Speech (introducing the Bill amending section 134(1)(b) of the Act; Migration Amendment Bill (No 2) 1992

Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54

REASONS FOR DECISION

8 July 2005 Ms N Bell, Senior Member

1.      Mr Sinatra Arto Hardy is a 37 year old businessman and a citizen of Indonesia.  He entered Australia on 26 May 2001 on a Business Skills (Migrant) Visa and in April 2002 the business “Jaffa Equestrian Pty Ltd” (“Jaffa”) was registered. Mr Arto Hardy described this business is an export business of performance horse related products to Indonesia. On 31 August 2004, the Minister’s delegate decided to cancel Mr Arto Hardy’s visa pursuant to section 134(1) of the Migration Act 1958 (“the Act”), on the ground that Jaffa was not an eligible business in which Mr Arto Hardy had day-to-day involvement in at a senior level.  It is this decision that Mr Arto Hardy wishes the Tribunal to review. 

2. The issues that I have to decide upon are dictated by sections 134(1) and 134(2) of the Act and are as follows:

·Whether Mr Arto Hardy has a substantial ownership interest in an eligible business in Australia;

·Whether Mr Arto Hardy is utilising his skills in actively participating at a senior level in the day-to-day management of an eligible business;

In the event that I am satisfied that Mr Arto Hardy fails to meet one of these criteria, I am then to determine:

·Whether Mr Arto Hardy has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia, and;

·Whether Mr Arto Hardy has made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of that business, and

·Whether Mr Arto Hardy intends to continue to make such genuine efforts.

If at this stage I am of the opinion that Mr Arto Hardy has made such efforts as described above, I will then determine whether I should exercise my discretion to change his visa status.

3.      I had the benefit of hearing oral evidence from Mr Sinatra Arto Hardy, his sister and fellow Director of Jaffa, Ms Lina Hardy and Mr Sugiharto Ali, an employee of Jaffa.  The descriptions given of Jaffa’s company structure, position and role in the market and the basic operation by Mr Arto Hardy, Ms Arto Hardy and Mr Ali were generally consistent. 

4.      All three witnesses gave evidence to the effect that Jaffa is a company placed in the equestrian industry whose dominant role is to sell horse food, medicine and equipment, to “PT Asawatama Equestrian” (“Asawatama”) which is an Indonesian based family company.

5.      Mr Arto Hardy is a Director of Jaffa and holds 25% of the shares. Hisinvolvement is restricted to finance matters.  Ms Arto Hardy is the family and company member who has the most expertise in relation to the equestrian industry and is a Director with 25% of the shares.  Mr Sugiharto Ali is Jaffa’s only full-time employee (of about four years) and works from the company’s Mascot premises, an address at which Mr Ali also resides.  Mr Ali, as described by Mr Arto Hardy, represents the “bridge between Indonesia and Australia”.

6.      In relation to the future direction of the company, no joint venture or similar business agreements had been signed as yet, but Jaffa is claimed to be in negotiation with a couple of Australian companies.  Currently, the Directors are in the process of determining whether the product that is the subject of negotiation, is suitable to the Indonesian market.  There was no evidence of the details of these negotiations.

evidence of mr sinatra Arto Hardy

7.      Mr Arto Hardy is involved in a range of family businesses.  His first job was in 1986 in a family owned textile company where he learned all aspects of the business by working his way up to the position of Managing Director.  In 1992, Mr Arto Hardy, with the guidance of his father, established a textile company that produces polyester yarn from raw material for export to a primarily European market.  Mr Arto Hardy continues to be involved in this business and holds the position of President.

8.      In addition, Mr Arto Hardy is involved in a family shoe business that deals in the “FILA” brand of footwear and markets it within Indonesia.  He is also the General Director of a marble business that quarries, manufactures and sells the marble locally.  Mr Arto Hardy also sits on various boards that meet once or twice a year, concerning a bank, a hotel and some restaurants in Bandung. 

9.      Mr Arto Hardy told the tribunal that 75%-80% of his time is spent dealing with Indonesian businesses and 20%-25% of his time relates to Jaffa.  When asked how many hours he worked per week on business relating to Jaffa, Mr Arto Hardy considered 25-30 hours per week would be accurate.  When asked whether he works a total of 150 hours per week, Mr Arto Hardy said “yes”. 

10.     Mr Arto Hardy stated that about five years ago he thought about establishing himself in a more developed country that was not too far from his country of origin, Indonesia.  He decided to support his sister in establishing a company that was related to the horse industry.  At the time his sister was involved in importing Australian trained performance horses to Indonesia and they decided to expand the business into importing food for the horses and related equipment and that this business grew “day by day”. 

11.     Mr Arto Hardy described his role in the business as the controller of the company’s finances.  Mr Arto Hardy stated that he does not have much contact with Mr Ali during the week and noted that he usually speaks to Asawatama employees who will in turn go to him for approval.  Mr Arto Hardy stated that it is his sister who has the particular expertise and interest in the equestrian business and has a more direct involvement in running Asawatama and Jaffa.  Mr Arto Hardy also confirmed that Jaffa does not export to any company other than Asawatama.

12.     Mr Arto Hardy is currently living in Indonesia, with his wife and two children located in Singapore due to the location of his children’s school.  He said that he is a “heavy traveller”.  Mr Arto Hardy had travelled to Australia for the Tribunal’s proceedings.  He had arrived on the previous Friday and was leaving the following day, being Tuesday.  Mr Arto Hardy’s last visit was in March 2005 with his family for one week over the school holiday period and before that in June 2004 for about the same amount of time. 

13.     Mr Arto Hardy told the Tribunal that the goods Jaffa buys in Australia are sent to Asawatama who passes them on to the customer.  When asked whether Asawatama could just deal directly with Australian suppliers, instead of through Jaffa, Mr Arto Hardy said that it would be difficult as there would be “too many items to follow up” and that there was “a need for a face-to-face technique”, which was why Jaffa was set up at the same time.  Mr Arto Hardy agreed that his role in relation to Asawatama and Jaffa was the same.  He confirmed that he prepares the finances for purchases and is the person who must approve all purchases.  Mr Arto Hardy said that he has an accountant who assists with these transactions. 

14.     Mr Arto Hardy’s children aged 11 and 8 years study at a Government School in Singapore where they learn both English and Chinese.  He said that whilst his status in Australia is “confusing” and that he “needs to be certain in order to move here” it was his long term plan to have his family move to Australia permanently when his children are of High School age. 

15.     Mr Arto Hardy recently purchased an apartment on Macquarie Street for $3,275,000.00 that he is in the process of having refurbished.  He has no immediate plans for residence and said that he did not intend to rent out the property.  When asked whether he would leave this residence vacant for up to two years, he replied that it was a “tough question” but “probably, yes”. 

evidence of ms lina arto hardy

16.     Ms Arto Hardy described her role as looking for new products and new markets in Indonesia and exporting from Australia.  She said that she has been actively involved in equestrian sport for a number of years and over that period used a lot of Australian products. 

17.     Ms Arto Hardy said that Jaffa is a family business with each family member having a 25% shareholding.  She confirmed that it was her brother’s role to approve finance capital for purchasing.  Her father and other brother, William Arto Hardy, are also involved in the business.  Ms Arto Hardy explained that her father assists her with purchasing performance horses and on big projects like the one they are negotiating at the moment, concerning feed mills.  Her brother William Hardy takes care of Jaffa and Asawatama’s marketing in Indonesia, Malaysia and Singapore. 

18.     When asked whether she thought she was the family member with the most involvement in Jaffa, Ms Arto Hardy said that in her opinion, each family member contributes equally, but mentioned that her expertise was in the sport so she is involved more in that respect.  She added that every family member is equally involved in growing the business.

evidence of mr sugiharto ali

19.     Mr Ali described Mr Arto Hardy as Jaffa’s finance director and that he had to report to Mr Arto Hardy when wanting to make a purchase.

20.     When in discussion with suppliers, Mr Ali said that he is normally in contact with the supplier and Ms Arto Hardy.  Due to her particular expertise in the equestrian industry, she assesses the market then Mr Ali sources the product and Mr Arto Hardy decides if the purchase is financially viable and says whether the price requires further negotiating.  Mr Ali said that Mr Arto Hardy will approve purchases via email or they will speak over the phone once every week or fortnight.  Mr Ali also sends purchasing orders to Mr Arto Hardy via facsimile and will do this about once a week.  Mr Ali said that Mr Arto Hardy knows all of the prices and that unless he sees anything out of the ordinary he will just approve the orders.  Mr Arto Hardy is more involved when pricing is being negotiated than once prices are fixed.  Mr Ali confirmed that he has about twice as much contact with Ms Arto Hardy than Mr Arto Hardy and this contact is product focussed. 

other evidence before the tribunal

21.     Taken into evidence was a Contract for the sale of land signed on 27 January 2005 by Mr Sinatra Arto Hardy concerning the property as described above in Macquarie Street, Sydney.  I also have before me a Company Tax return for Jaffa for the year 2004 declaring a taxable or net income of $2,656.  There are a number of early business activity statements spanning July 2002 to September 2003 that declare the following:

(a)For the period 16 April 2002 – 30 June 2002, export sales of $55,916.

(b)For the period 1 July 2002 – 30 September 2002, export sales of $73,352.

(c)For the period 1 October 2002 to 31 December 2002, export sales of $30,066.

(d)For the period 1 January 2003 to 31 March 2003, export sales of $36,594.

(e)For the period 1 April 2003 to 30 June 2003, export sales of $36,867.

(f)For the period 1 July 2003 to 30 September 2003, export sales of $65,862.

22.     In addition, I have a bundle of internal documents signed for approval by Mr Arto Hardy pertaining to the payment of invoices.  There are approximately 30 Memoranda dated from 5 February 2004 to 19 December 2004. 

23.     I also have a Trading Statement and Profit and Loss Statement for Jaffa before me relevant to the periods ending 30 June 2004 and 30 June 2003.  The Trading Statement records a gross profit on trading of $43,657.25 and a net profit of $2,656.02 for 2004.  For 2003 a gross profit on trading of $1,030 and net profit of $1,205 is recorded.  These Trading statements also record the current net assets of Jaffa for 2004 being a total of $4,272.78 and for 2003 a total of $2,413.

is jaffa equestrian an eligible business of which mr arto hardy has a substantial ownership interest?

24. Section 134(10) of the Act defines “eligible business” as:

“…a business that the Minister reasonably believes is resulting or will result in one or more of the following:

(a)       the development of business links with the international market;

(b)       the creation or maintenance of employment in Australia;

(c)       the export of Australian goods or services;

(d)       the production of goods or the provision of services that would otherwise be imported into Australia;

(e)       the introduction of new or improved technology to Australia;

(f)        an increase in commercial activity and competitiveness within sectors of the Australian economy;

25.     Jaffa’s link with the international market is through Asawatama (albeit it’s only client) to which it exports goods.  Together with the full-time employment of Mr Ali in Australia Jaffa satisfies the definition of “eligible business”.

26. Section 134(10) of the Act determines an “ownership interest” in relation to a business to mean:

“…an interest in the business as:

(a)       a shareholder in a company that carries on the business; or

(b)       a partner in a partnership that carries on the business; or

(c)       the sole proprietor of the business;

Including such an interest held indirectly through one or more interposed companies, partnerships or trusts;

27.     Mr Arto Hardy is a Director of Jaffa and owns 25% of the shares in the business.  I find this to be a substantial ownership interest.

does mr arto hardy acively participate in the day-to-day management of jaffa equestrian?

28.     In coming to a view as to whether Mr Arto Hardy actively participates in the day-to-daymanagement of Jaffa I have had particular regard to the cases of Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997 and Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54.

29. In the matter of Tang (supra), the Tribunal commented that the Act is intended to benefit business owners who make the decision to settle in Australia and actively manage that business. Mr Arto Hardy told the Tribunal that he has contemplated moving his family to Australia when his children are of High School age. He did not express this as a firm intention, but a possibility, though I note that he has purchased a property in Sydney.

30.     I also note the decision in Wong (supra) where the tribunal found an applicant who had not visited Australia other than for a holiday to be making a genuine effort of the kind required.  The amount of time Mr Arto Hardy has spent in Australia since his visa was granted is very limited.  This is notable but not determinative.

31. Of key importance, in my opinion, in determining whether Mr Arto Hardy is involved at a senior level in the day-to-day management of Jaffa, is the lack of evidence of his relevant management activities. He is a Director with a substantial ownership interest, but the only evidence of his practical role in the company’s management is his signing of forms approving the transfer of funds, in effect from Asawatama to Jaffa or vice versa once or twice a fortnight. This does not amount to the type or depth of involvement envisaged by the Act.

32.     I consider that Mr Arto Hardy overstated the amount of time spent by him attending to matters concerning Jaffa.  Mr Arto Hardy has a wide range of family and other business commitments and I cannot accept, given his limited contact with Mr Ali, that he would spend about 30 hours each week tending to matters concerning Jaffa.  Even if I were to take into account Mr Arto Hardy’s discussions with Ms Arto Hardy, I cannot be satisfied that he participates in the management of the business for the amount of time each week that he claims.  His involvement and the time he may reasonably be spending on business relating to Jaffa is further diluted by the fact that he has the same function with respect to Asawatama, Jaffa’s only export customer to date.

33.     There has been no evidence presented to me of Mr Arto-Hardy’s particular involvement in the discussions said to be taking place relevant to the possible expansion of Jaffa into other areas of the equestrian market, or generally.  I cannot be satisfied that Mr Arto Hardy actively participates in the day-to-daymanagement of this business. 

Whether mr arto hardy has made, and continues to make a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of jaffa.

34. Given that I am not satisfied that Mr Arto Hardy actively participates in the day-to-day management of Jaffa, I must consider whether he has made and continues to make a genuine effort to do so. Section 134(2) of the Act provides the following:

The Minister must not cancel a business visa under subsection (1) if the Minister is satisfied that its holder:

(a)  has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia; and

(b)  has made a genuine effort to utilise his or her skills in actively participating at a senior level in the day-to-day management of that business; and

(c)  intends to continue to make such genuine efforts.

35.     Section 134(3) provides:

Without limiting the generality of matters that the Minister may take into account in determining whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account any or all of the following matters:

(a)  business proposals that the person has developed;

(b)  the existence of partners or joint ventures for the business proposals;

(c)  research that the person has undertaken into the conduct of an eligible business in Australia;

(d)  the period or periods during which the person has been present in Australia;

(e)  the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;

(f)  the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person;

(g)  business activity that is, or has been, undertaken by the person;

(h)  whether the person has failed to comply with a notice under section 137;

(i)  if the person no longer holds a substantial ownership interest in a particular business or no longer utilises his or her skills in actively participating at a senior level of the day-to-day management of a business:

(i)  the length of time that the person held the ownership interest or participated in the management (as the case requires); and

(ii)  the reasons why the person no longer holds the interest or participates in the management (as the case requires).

36.     While evidence was given of some negotiations having taken place in relation to the establishment of a feed mill, no detail of these negotiations was given and no business plan, or other documentation was in evidence.  Nor was I provided with any evidence of the role that Mr Arto Hardy intends to play in relation to this activity. 

37.     I note that since it commenced business in 2002, Jaffa’s turnover has increased somewhat.  However, I also note that it has not expanded its customer base beyond its sister Indonesian company, Asawatama.  It is difficult to escape the conclusion that Jaffa was established for the sole purpose of sourcing Australian products for export solely to Asawatama.  I note that Jaffa is an eligible business in which I am satisfied Mr Arto Hardy has a substantial ownership interest so there is no need to address genuine effort in that context.  Mr Arto Hardy’s level of participation to date, as already discussed, does not indicate any notable effort to increase or vary the role that he plays in the operation of Jaffa.  There was no evidence of unsuccessful attempts to increase his participation or of plans to do so in the future, apart from some evidence about the possibility of establishing a feed mill, negotiations that Mr Arto Hardy may or may not be involved in.  Thus I cannot be satisfied that Mr Arto Hardy has made, continues or even proposes to make a genuine effort to utilise his skills in actively participating in the management of Jaffa on a day-to-day basis at a senior level.

38. Notwithstanding the above conclusions, I am required to consider whether I should exercise the discretion inherent in s134(1) (“the Minister may cancel a business visa”).  There is no evidence before me of any matter which overrides the conclusions I have reached above or which gives me cause to exercise the discretion available. 

decision

39.     The decision under review is affirmed.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member

Signed:         .............[Linda Blue]................................
  Associate

Date of Hearing  23 May 2005
Date of Decision  8 July 2005
Representative for the Applicant    Mr A Maguire, Migration Agent
Solicitor for the Respondent     Clayton Utz Lawyers