Carol Awesa, Brian Awesa, Yvonne Awesa v Minister for Immigration and Citizenship

[2007] AATA 53

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 53

ADMINISTRATIVE APPEALS TRIBUNAL      )

)

GENERAL ADMINISTRATIVE DIVISION		)  Nos Q2005/739, 766; 767; 768; 769
Re		FRANCIS AWESA MARTHA AWESA CAROL AWESA BRIAN AWESA YVONNE AWESA

Applicant

And MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal M J Carstairs, Senior Member

Date8 February 2007

PlaceBrisbane

Decision The Tribunal affirms the decisions under review.  

.........…[Sgd]….................

M J Carstairs
  Senior Member

CATCHWORDS

MIGRATION ‑ business skills visa ‑ cancellation – applicant concedes no substantial ownership in an eligible business – no business found – no exercise of residual discretion – no hardship found – decision affirmed

Migration Act 1958 s134

Tio v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 197 ALR 117

Koosasi V Minister for Immigration and Multicultural Affairs [2006] FCA 1260

Hope v Bathurst City Council (1980) 144 CLR 1

Freeman v Secretary, Department of Social Security (1988) ALR 506

Kim v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 31

Re Tang and Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103

Re Huang and Minister for Immigration and Multicultural Affairs [2002] AATA 656

Man Ki Kim v Minister for Immigration and Ethnic Affairs (1995) 37 ALD 481

Re Wang and Minister for Immigration and Multicultural Affairs [2000] AATA 961

REASONS FOR DECISION

8 February 2007   Ms M J Carstairs, Senior Member   

1.      Mr Francis Awesa was granted a business owner subclass 127 visa in 2002.  His wife and five children obtained secondary visas at the same time. 

2.      The respondent subsequently cancelled Mr Awesa’s visa as well as the secondary visas.  The respondent considered that Mr Awesa had not obtained a substantial ownership interest in an eligible business in Australia; nor had he actively participated in day-to-day management of such a business or made genuine efforts to these ends, as he was required to do to fulfil the visa criteria.

3.      Mr Awesa does not dispute certain aspects of the cancellation decision.  He agrees that there was a proper basis for the cancellation on the stated grounds: he acknowledged that he had not obtained a substantial ownership interest in an eligible business in Australia.  However he says he can explain why he was unable to meet his obligations under the visa and his explanations should be given compassionate consideration and warrant continuing his visa.

4.      Mr Awesa says, in addition, that cancelling the secondary visas would result in extreme hardship for their holders (his wife and children).  The Minister has conceded that two of the secondary visas should not be cancelled:

§   before the hearing it was conceded that one of the daughters’ visas – that of Hazel Awesa – should not be cancelled;

§  after the hearing, with further evidence showing that Howard Awesa, Mr Awesa’s elder son, has a partner who is an Australian citizen and they have a child born of that relationship (also an Australian citizen); and that Howard is serving with the Australian Army in Afghanistan, the respondent conceded that Howard Awesa’s visa should continue.

BACKGROUND

5.      Mr Awesa is a citizen of Papua New Guinea.  He is Managing Director and 50% owner of Global Constructions Limited, a company incorporated in New Guinea, which is involved in road construction and sealing projects.  The company has about 25 employees and has carried out a number of government construction projects.  Mr Awesa is also foundation Chairman of the Board of Hornibrook NGI Steel Pty Ltd, a steel fabrication company established in 1945 and purchased some three years ago by Mr Awesa and a partner. 

6.      Mr Awesa registered an Australian company, Kelso Agencies Pty Ltd on 3 April 2002.  His intention was that Kelso Agencies was to source purchases of heavy equipment for the use of mining and construction companies in PNG, including Mr Awesa’s company Global Constructions.  

7.      On 24 June 2004, the Department sent Mr Awesa the 24-month survey form, which is used to provide the Department with business activity information, to assess if the visa holder is complying with their responsibilities.[1]  The form enquires about matters relevant to business activity, such as what funds the person has transferred to Australia for business purposes; any business plans or joint ventures; evidence of business ownership; and the like.  The Department required a response by mid-August.  None came until 28 September 2004, after the due date, when Mr Awesa’s accountant wrote that extreme economic downturn in PNG over the previous 3-4 years had led to a lack of business opportunities, problems with the exchange rate and reduced government funding which adversely affected Kelso Agencies’ plans of acquiring second hand equipment to on-lease to PNG clients.[2] 

[1]         Document T6.

[2]        Document T7.

8.      That letter also explained that because Mr Awesa had outstanding unpaid government contracts in PNG he was unable to transfer the funds he had expected to Australia.  The letter continued:

Mr Awesa is aware of the economic challenges facing PNG and has subsequently commenced research and the sourcing of other business opportunities, including tourism and timber trades, as an alternative opportunity if his core business objectives cannot be realised.[3]

[3]        Document T7, folio 52.

The accountants also forwarded the financial statements for Kelso Agencies; the company tax return for the year ended 30 June 2004; and Mr Awesa’s personal income tax return for the same period, in which he declared rental income of some  $5000, from a residential property in Cairns.

9.      On 22 June 2005, the respondent gave notice of intention to cancel the visa, directed to Mrs Awesa who was the person authorised to receive communications at the home address.[4] The correspondence, both to Mr Awesa and to the secondary visa holder, came back to the respondent marked “Return to Sender.” No further materials were provided by Mr Awesa beyond the information conveyed in the accountant’s letter of September 2004. On 27 October 2005 the Minister’s delegate cancelled the visas, that is, 90 days after Mr Awesa had been served with the notice of intention to cancel, and thus within the timeframe set out for the making of such a decision: s135(4) of the Migration Act.[5]  On 17 November 2005 Mr Awesa sought review. 

[4]        Document T5.

[5]        Tio v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 197 ALR 117.

EVIDENCE ABOUT MR AWESA’S BUSINESS ACTIVITIES IN AUSTRALIA

10.     Mr Awesa first entered Australia on his subclass 127 (business owner) visa on 10 July 2002.  He had visited Australia before then and some of his children had been studying here on student visas prior to then.  Mr Awesa said that the educational opportunities for his children were far better here in Australia than in PNG.  He has two daughters now attending university. 

11.     Mr Awesa said that his plans to develop business in Australia had been hampered by slow payment on government contracts in PNG, involving delays of over two years on some payments.  Mr Awesa said he lost a lot of money because the value of the Kina fell, while the payments due to him remained unpaid.  Meanwhile, he was required to pay substantial income tax and penalty taxes, and had incurred bank penalties for money borrowed to complete the work.  Mr Awesa said that, overall, his financial difficulties in PNG meant that he could not carry out his intentions for his Australian business venture, Kelso Agencies.  

12.     Mr Awesa provided me with photocopies of cheques exceeding K9 million paid to the PNG Internal Revenue Commission.  Mr Awesa’s tax payments even attracted the attention of the local press, being reported in the PNG newspaper Nation on 9 November 2004.  Mr Awesa also provided evidence of his disputes concerning unpaid contracts in PNG.[6]  This material reflected his problems starting in about 2002, involving litigation in early 2003, and some matters were not settled for some years.  I accept that Mr Awesa experienced difficulty enforcing payments on government contracts. 

[6]        Exhibit A2.

13.     However there was other evidence that indicated that Global Constructions was, nevertheless, a very successful operation, not so beset with financial problems as Mr Awesa suggested.  This evidence included a letter dated 10 October 2005,[7] from Mr Ron Drake, Business and Finance Manager of Global Constructions, who stated that over the previous six years Global Constructions had achieved an average annual turnover of K47.1 million exclusive of GST, had purchased plant and equipment to the value of K19 million, and had repaid its bankers K19.4 million without the loans ever being in arrears.  Mr Drake said that apart from three trucks under finance, Global owned all of its assets, and had such a favourable relationship with its financiers that it was being offered loan facilities for plant purchase that is did not require, with an approval to K10 million from one. 

[7]         Exhibit A2.

14.     Mr Awesa submitted that despite his not satisfying the business activity requirements of his visa, some consideration should be given to his ownership of real estate in Australia, now totalling over $1M, comprising two rental properties in Cairns and his small acreage property in Townsville where the family live.  This was money that he had brought into Australia and invested here, and was equivalent to amounts suggested as suitable for business purposes relating to the visa.  He said that he has now entered into an option to purchase a real estate franchise in Port Douglas, on a contract (entered into on 21 October 2006) expressed as conditional on Mr Awesa retaining his business visa.[8] 

[8]        Exhibit A3.

15.     Mr Awesa said that he has never been a burden on the Australian taxpayer and has always paid his way while here, including all outlays for his children’s private school fees and university education. 

16.     Mr Stuart Lovell, who is Managing Director of Pacific Battlefield Tours Pty Ltd, had prepared a written document setting out details of his association with Mr Awesa in relation to projects in the Mendi region of the Southern Highlands, where Mr Awesa comes from.[9]  More recently he and Mr Awesa have been involved in the formation of the company Pacific Battlefield Tours, formed in August 2005 by re-naming an existing shelf company.  Mr Awesa was made a director in November 2005.  Mr Lovell said in oral evidence that business operations will not commence until 2007 and there had been no call for start up capital.  Pacific Battlefield Tours will take guided tours to World War II battle sites.  To date Mr Awesa has been involved by facilitating meetings with relevant tourism interests in PNG. 

[9]        Exhibit A2, Letter dated 23 January 2006.

17.     Mr Lovell, who told me also that he is a Justice of the Peace and a director of the Cairns Regional Development Corporation, said that he has known Mr Awesa for about 9 years and during this time Mr Awesa has facilitated Mr Lovells’s business interests in PNG.  

18.     Mr Lovell assured me that Mr Awesa is well-known and respected in New Guinea in the construction industry, but also as a chief of a number of villages and clans.  He said he is an able mediator who has brokered a number of settlements of disputes in the Southern Highlands.  I have no reason to doubt the truth of this and Mr Awesa provided me with numerous materials indicating the esteem in which he is held, including an award from the National Honours and Awards Council of Papua New Guinea in 2006.

THE LEGISLATION

19.     The Migration Act 1958 relevantly provides that the Minister may cancel a business visa if satisfied, amongst other things, that the visa holder has not obtained a substantial ownership interest in an eligible business in Australia.  There are a number of requirements for an eligible business set out in sub-section 134(10).  But before the question of the criteria for an eligible business arises it is necessary to show that business is carried on.  As the Federal Court pointed out in Koosasi V Minister for Immigration and Multicultural Affairs [2006] FCA 1260 at [23], if the Tribunal finds that there is no business at the date of cancellation decision (in the sense of activities engaged in for the purpose of profit on a continuous and repetitive basis)[10] there is no need to give further consideration to the definition of eligible business.[11]

[10]        Hope v Bathurst City Council (1980) 144 CLR 1.

[11]        At para 23 of Reasons.

20.     There was no real dispute here that there was no relevant business carried on.  The correctness of that concession is confirmed by the financial records.  The tax returns for Kelso Agencies show NIL income in the tax year 2003/2004.  The total assets for Kelso Agencies were recorded as $4,600, mostly comprised by office equipment, of which the value of the computer, at $3500, represented the greatest proportion.  The company’s $4367 loss for the 2002/2003 financial year was transformed into a loss of $14,780 for the 2003/2004 financial year.  No company bank accounts were produced.  There was no documentary evidence or financial reports that indicated that the business was trading at all. 

21.     Section 134(2) of the Act provides that the power to cancel a visa must not be exercised if the Minister is satisfied that the visa holder has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia; 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 intends to continue to make such genuine efforts.

22.     At s134(3) the Act sets out a number of matters that may be taken into account in determining the genuineness of efforts as referred to in subsection 134(2).  Those matters are elaborated upon in the Migration Series Instruction No 133 relating to cancellation of business visas.

23.     Referring to those matters and the Instructions there was no evidence of business proposals or consultations with relevant professionals in the period after Mr Awesa was granted the business visa and until its cancellation.  Mr Awesa referred generally to his intentions for the activities of Kelso, but there was no documentary evidence of activity. 

24.     Mr Awesa has said that Kelso Agencies sourced equipment including dump trucks and a large crusher purchased in Maryborough in 2002 at a cost of over $800,000 for Global Constructions.[12]  However those purchases are not reflected in the financial materials presented to me.  I do not accept that this was activity directly undertaken by Kelso after Mr Awesa was granted his business visa.  I was satisfied that if Kelso had purchased heavy equipment to the value of $800,000 Mr Awesa would have produced evidence of that. 

[12]        Exhibit A1.

25.     Mr Awesa acknowledged in his oral evidence that Global Constructions had used Repage Pacific Pty Ltd to source equipment for works in PNG, that is, another company unrelated to Mr Awesa was playing the role that had been intended for Kelso.  A letter dated 7 March 2006 from the Managing Director of Repage Pacific, Mr R L Watkins, stated that his company had worked closely with Mr Awesa to supply parts and material that Mr Awesa was originally intending to purchase out of Townsville.  Global Constructions paid Repage Pacific $60,000 per month in 2003; $50,000 per month in 2004, and $20,000 per month in 2005.  Mr Watkins stated:

We have jointly looked at and brought over $1M of crushing and screening plants but once again these were financed direct with the supplier to avoid complications to title and tax problems with the GST implications if the units were purchased by an Australian company.

Francis has spent considerable time and effort on these purchases however these transactions were recorded through this companies books.[13]

[13]        Exhibit A1, Document R.

26.     Mr Awesa’s evidence was vague and unsatisfactory when he was questioned about these substantial payments - in excess of $1 million - made to Repage in this period, at the same time as money problems allegedly prevented him carrying out his responsibilities under his business visa.  He suggested that this was a failure of local branches of Global Constructions outside Port Moresby to carry out his instructions that Kelso would be the company sourcing equipment, instead of Repage Pacific.  In the end, there was no real explanation.

27.     As to the proposed future business venture with Pacific Battlefields Tours this is not a matter that might be taken into account under s134(2) and s134(3) because it comes well after the visa cancellation.  As a general proposition, I must have regard to the evidence as it stands at the time of cancellation in October 2005.  This is the effect of authorities such as Freeman v Secretary, Department of Social Security (1988) ALR 506.  The Pacific Battlefield proposal comes much too late – even if Mr Awesa could demonstrate a substantial ownership interest in that business, a matter about which there is some doubt.  It is, even now, only a proposal, not anticipated to get off the ground until 2007.  I regard the proposed purchase of the real estate agency in Port Douglas as arising too late. 

28.     On some matters considered in the Instruction, Mr Awesa did comply. For instance he was in Australia regularly, but I do not think this assists him in the absence of relevant business activity.  It seems he failed to comply with mandatory monitoring to the extent that the reply compiled by his accountant was late and did not provide the requested information.[14]  There is no firm evidence to satisfy the matters under 4.5.1, factors (e) and (f) of the Instruction relating to the transfer of funds and the value of the ownership interest which the Migration Series Instructions suggests should be in the order of a minimum of A$100,000. 

[14]        Paragraph 4.5.1, factor (h) of the Instructions.

29.     I do not accept that the purchasing of real estate satisfies transferring funds for business.  This seems to me to be personal expenditure not business expenditure.  Mr Awesa was not engaged in any business of real estate or property management.  The rental income was declared in his personal taxation returns, not in his business taxation returns.  In any event the activity of investing in real estate would not meet any of the criteria set out in s134(10) of the Act as being eligible business activity.

30.     In assessing Mr Awesa’s claims against the factors listed in s134(3) of the Act, I find that Mr Awesa has not made a genuine effort to obtain a substantial ownership interest in an eligible business or to utilise his skills in actively participating at a senior level in the day-to‑day management of that business as required under s134(2)(a) and (b) of the Act.

31.     Next I looked at the residual discretion referred to in Kim v Ministerfor Immigration & Multicultural & Indigenous Affairs [2004] FCA 31 which arises notwithstanding the applicant failing the tests in ss134(1) and 134(2) of the Act. In Kim, Kiefel J stated (at [21]):

The Minister might be satisfied of the matters referred to in subs (1) and not be satisfied as to the efforts made as referred to in subs (2) but nevertheless consider in a particular case that further time should be given to the visa holder to undertake what was required of them.

32.     Mr Awesa said that he relied on humanitarian grounds and a lack of procedural fairness by the decision maker.  He said that if the respondent had difficulty with the explanation provided in his accountant’s letter in September 2004, this should have been raised then, and he could have taken other steps.  As it was, there was no reply and he did not know there was a problem until the cancellation of his visa.  However I do not accept that Mr Awesa was not accorded procedural fairness.  It seems to me that it would have been prudent for either Mr Awesa or the accountant to follow up whether the explanation in the September letter was sufficient, and accepted by the respondent.  I accept that the Notice of Intention to Cancel did not reach Mr Awesa, however the respondent had sent it to the address that Mr Awesa had given as the place where he could be reached. 

33.     I took into account the cases of Re Tang and Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103 and Re Huangand Minister for Immigration and Multicultural Affairs [2002] AATA 656 in which the Tribunal held that the aim of the Act is to benefit business owners who settle in Australia and actively manage that business. Having regard to the facts in the his case, even taking into account the problems Mr Awesa encountered with late payments to his business in PNG, his efforts in Australia were minimal. I have already referred to the reservations I hold about Mr Awesa’s explanations for his lack of activity. I concluded, taking into account the evidence from the Business and Finance Director of Global Constructions, that Mr Awesa exaggerated the extent of his financial problems in PNG. I was not satisfied that the explanation gave a sufficient reason for the lack of business activity and in those circumstances it is not appropriate to exercise the residual discretion here. I do not consider that the evidence supports a view that Mr Awesa required more time to obtain a substantial ownership interest in an eligible business in Australia.

34.     Mr Awesa also said that if his visa is cancelled he would not be able to facilitate joint ventures in projects that have involved public and private interests in Townsville and PNG, which he said would benefit Australian business.  In this regard Mr Awesa referred to his involvement with a proposed gas pipeline between Townsville and PNG.  However there seems to be no reason that Mr Awesa’s involvement in such projects would cease if he were in PNG. 

35.     I was satisfied that the discretionary power in section 134(1) of the Act to cancel Mr Awesa’s business visa should be exercised, and the decision under review should be affirmed.

THE SECONDARY VISAS

Martha Awesa

36.     Mr Awesa’s wife Martha Awesa holds a secondary visa and Mr Awesa claims that she will suffer extreme hardship if the visa were cancelled.  This ground is available under s134(5) of the Act.  The meaning of "extreme hardship" was considered by the Federal Court in Man Ki Kim v Minister for Immigration and Ethnic Affairs (1995) 37 ALD 481, in which Foster J said (at 487) that it imports a high degree, perhaps a very high degree of hardship, but it must be applied in the context of the facts of the particular case.  In Re Wang and Minister for Immigration and Multicultural Affairs [2000] AATA 961 Deputy President McMahon observed that the deliberate choice by Parliament of the word extreme by Parliament requires that there be shown hardship that is more than undue hardship, and is extreme.

37.     Mr Awesa made submissions on the questions of extreme hardship.  I had no evidence on these matters directly from Mrs Awesa, either in writing or at the hearing.  The respondent indicated (in written submissions) that Mrs Awesa had returned to PNG in December 2005, but there was no evidence about this.

38.     Mr Awesa submitted that his wife suffers from an acute case of arthritis, for which medical facilities in PNG are non-existent or are of a lower standard in the hospitals.  The material on which Mr Awesa relied for this submission included reports upon Mrs Awesa from medical practitioners in PNG.  In a report dated 5 May 2006 Dr A Lagayan said that he had treated Mrs Awesa since 1995 for severe swelling and pain in both knees and she has been referred to specialists and is on regular medication with aspiration of the knees as required.[15]  He said that he recommended that she be referred Down South for better medical facilities.  Mr  said that Mrs Awesa has received treatment from Townsville Base Hospital which, if ceased, would pose a grave heath risk to her life[16]. 

[15]        Exhibit A1, Document “S”.

[16]        Document T1.

39.     There was no medical evidence to suggest that Mrs Awesa’s life was at risk from the condition of arthritis, whether treated or untreated, so I do not accept that the situation with Mrs Awesa’s arthritis has the gravity that would justify an exercise of the discretion on the grounds of extreme hardship.  

40.     Mr Awesa made the general point with respect to all the supplementary visas that the family should be allowed to stay together as they are close knit and the situation should not be allowed to occur that some of the family are in Australia and some in PNG.  However the family members who remain in Australia are adults and studying, or, as in Howard Awesa’s case serving overseas with the Australian Army.  While it is important to keep families together while children are minors, I do not accept that it creates conditions of extreme hardship that adult offspring live in different places from their parents.  In Mr Awesa’s case he has been able to come to Australia on a monthly basis over recent years, so travel does not seem to be an issue that would prevent regular contact. 

Yvonne Awesa

41.     Yvonne Awesa completed Grade 12 in 2006 at Ryan Catholic College where she has done well; she was dux in Biological Sciences in Year 11.  She hopes to study Medicine and has been at school in Australia for four or five years of senior school.  She said that she goes home with the family each Christmas holidays at which time they stay at their home in the town of Mendi, and she has observed some incidents of fighting while there.  Mr Awesa asserts that conditions for study would not be as good for Yvonne in PNG.  He said that a state of emergency has recently been declared in their area of the Southern Highlands.  However Mr Awesa also said that he lives in Port Moresby where they also have a house.  Because the family has housing in Port Moresby where Mr Awesa lives I concluded that there is no real threat to the family arising from any state of emergency in Mendi.

42.     Furthermore, should Yvonne wish to study in Australia, there would seem to be no bar to her applying for a student visa.  There are no grounds of extreme hardship in relation Yvonne Awesa.   

Brian Awesa

43.     Brian Awesa is the youngest child.  He is aged 11 and has completed Grade 5 of primary school in Townsville.  He told me that he enjoyed going back to PNG.  There were no grounds of extreme hardship which Mr Awesa identified in relation to him.  Clearly his best interests are to live with his parents. 

Carol Awesa

44.     Carol Awesa is now aged 21 and I understand that she is studying at university in Townsville.  No particular grounds of hardship were specified in relation to her.  It seems to me that, as is the case with Yvonne, should Carol wish to continue her studies in Australia she could apply for a student visa.

45.     For these reasons I concluded that no grounds of extreme hardship are made out and the decisions to cancel the four supplementary visas are affirmed.

DECISION

46.     The Tribunal affirms the decisions under review.

I certify that the preceding 46 paragraphs are a true copy of the reasons for the decision of M J Carstairs Senior Member:

Signed:     …………………………………………………..

Associate

Date of hearing:  2 November 2006, 18 December 2006    

Date of decision:  8 February 2007
For the applicant:  The applicant was unrepresented 
For the respondent:  Mr Eteuati, Clayton Utz