Chen and Minister for Immigration and Multicultural and Indigenous Affairs

[2006] AATA 222

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 222

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/527

GENERAL ADMINISTRATIVE DIVISION		)
Re		CHUAN CHUAN CHEN CHENG

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member B J McCabe

Date10 March 2006

PlaceBrisbane

Decision The applicant is able to satisfy the criteria in s 134 of the Migration Act 1958. The decision to cancel her Business Skills visa is set aside.

...........[Sgd]...........

BJ McCabe

SENIOR MEMBER

CATCHWORDS

MIGRATION – business skills visa – fashion export business – applicant has substantial ownership interest – business is properly characterised as eligible business – applicant made genuine efforts to meet migration criteria – applicant actively participates at a senior level in management of the business

Migration Act 1958, s 134

Re Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178

Re Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 229

Re Foo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AAT 597

Re Dhanjal and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 1120

REASONS FOR DECISION

10 March 2006

introduction

Senior Member B J McCabe

1. Chuan Chuan Chen Cheng (Mrs Chen) holds a Business Skills visa. She first entered Australia on that visa on 24 October 2002. Her son, Kuan Yeh Chen, is a dependant or secondary visa holder. The Minister decided to cancel both visas on 8 July 2005 pursuant to s 134 of the Migration Act 1958. Mrs Chen and her son asked the Tribunal to reconsider the decisions.

2.      The Minister reached an agreement with Mr Chen prior to the hearing. Terms of settlement were entered into between the parties. The Minister remains of the view that Mrs Chen’s visa should be cancelled. These reasons relate to Mrs Chen’s application.

3.      I am satisfied the cancellation decision should be set aside. Mrs Chen should be allowed to retain her visa. My reasons are set out below.

the material before the tribunal

4. The Tribunal was provided with the material required under s 37 of the Administrative Appeals Tribunal Act 1975. The following additional documents were also tendered at the hearing:

·Statement of Mrs Chen received by the Tribunal on 5 January 2006 (exhibit 2);

·Supplementary statement of Mrs Chen received by the Tribunal on 16 February 2006 (exhibit 3);

·Statement of Kuan Yeh Chen received by the Tribunal on 5 January 2006 (exhibit 4);

·Bundle of bank statements of the applicant ranging from February 2005 to September 2005 (exhibit 5).

5.      Mrs Chen gave evidence at the hearing. She spoke through an interpreter. Her son, Mr Chen, also gave evidence.

6.      The applicant was represented by Mr Steele of counsel. The respondent was represented by Mr Eteuati, a solicitor in the employ of Messrs Clayton Utz.

the facts

7.      Mrs Chen works in the fashion industry. She has a prosperous business in Taiwan that imports women’s fashion from all over the world for consumption in Taiwan. She explained in her evidence before the Tribunal that she is one of several owners of Yuan Yi Costume Co Ltd (the name of the business), but she is in charge. She continues to live in Taiwan but she travels all around the world in search of new products and to acquaint herself with the latest trends in the fashion industry. Much of her time is spent at the major fashion shows. The shows are held in a number of cities but she says the Spring and Autumn shows in Paris are particularly important.

8.      Mrs Chen says she does a great deal of business at the Paris fashion shows. Designers and fashion houses display their latest collections to fashion buyers from all over the world. Mrs Chen explained she typically reviews the collections and arranges to meet representatives of the various fashion houses in and around the fashion shows. She places orders on behalf of her Taiwanese company. The orders are filled and shipped to Taiwan in due course. She also visits leading department stores and fashion boutiques to spot new labels and trends.

9.      The applicant says she has become aware of Australian exhibitors at the Paris fashion shows in recent years. She said Australian labels were not well known in Taiwan. Her first discovery was the Collette Dinnigan label. Mrs Chen said in her statement that she first came across the Collette Dinnigan label at Harrods in London in 2002. Collette Dinnigan exhibited a collection at the Paris fashion show later that year. Mrs Chen said she thought Collette Dinnigan would be popular amongst Taiwanese women. The applicant placed an order for garments in the 2002-2003 Spring/Summer collection.

10.     Mrs Chen says she has been placing orders for Collette Dinnigan apparel ever since. She has also become aware of other Australian labels. She says the Easton Pearson brand came to her notice in 2003. She says she approached Easton Pearson about importing their clothes into Taiwan but was informed the company already had an agent in that country. Mrs Chen says she understands that agency relationship has since ended, and she was invited to attend Easton Pearson’s fashion show in Paris in September 2005. She has now placed orders with that company in respect of garments for export to Taiwan. She says she anticipates doing business with other fashion houses in Australia.

11.       Mrs Chen’s interest in Australian fashion emerged at the time she was seeking a business skills visa. She entered this country on her business skills visa (together with her son) for the first time on 24 October 2002. Shortly after, on 17 December 2002, she incorporated Auchys International Pty Ltd (Auchys). Mrs Chen and her son are the only directors and shareholders in the company.

12.     Sales of Collette Dinnigan and – more recently – Easton Pearson – apparel are processed through Auchys. By that I mean the orders are placed directly with the fashion houses by Mrs Chen, who increasingly deals through web-based email which she can access throughout the world. (Mrs Chen agreed she previously placed orders by facsimile transmission from her Taiwanese office.) The orders are apparently placed in the name of Auchys. They are filled and despatched to the Taiwanese importer by the fashion house. Auchys never takes possession of the goods. Auchys receives money into its bank account from the Taiwanese importer and arranges for a telegraphic transfer of funds to the Australian fashion house. Mr Chen explained in his evidence that he attended the company’s bank when a telegraphic transfer had to be completed and arranged for the transfer after receiving instructions from his mother. He said Mrs Chen would attend the bank in person if she was in Australia.

13.     The respondent says this arrangement is artificial. Mr Eteuati argued the applicant has not established a local company to process orders in any of the other countries from which she imports fashion on behalf of her business in Taiwan. In each of those cases, Mrs Chen agreed, the Taiwanese importer placed orders directly with the fashion house and paid using a Letter of Credit.

14.     Mrs Chen explained that having a local company to process the orders had some advantages. She said it was easier to make credit arrangements with Australian suppliers when dealing through a local company. She said Auchys was not required to issue a Letter of Credit, which eliminated transaction costs.

15.     The applicant also pointed out Auchys was no longer dealing exclusively with the Yuan Yi Costume Co Ltd. It has now started to export Australian products to other Taiwanese companies, including a business known as New Legion. The sales in each case are organised by Mrs Chen. Mrs Chen says there is no conflict of interest between her role as a manager of Yuan Yi Costume Co and arranging sales to other traders in Taiwan because those companies do not compete with each other. It appears those sales have commenced since the date of the visa cancellation.

16.     Mrs Chen says she expects Auchys’s sales to Yuan Yi and others to increase over time, and to include a wider range of apparel. She says she is actively looking for other Australian fashion houses to supply her with product. She has also started the small scale export of Australian cosmetics and health care products like vitamins. It appears sales of those products are limited at this stage. It is unclear whether those sales will ever be conducted on a genuinely commercial basis.

17.     Auchys is still small. Mrs Chen asserted in her statement that Auchys had a turnover of in excess of $100,000 in the year ending 30 June 2005. The company showed a gross profit of $14,782.65 (although that figure does not take into account some of the expenses associated with running the business). The business is still marginal. It does not have any employees apart from Mrs Chen and her son. Mr Chen gave evidence that he did very little towards running the business. He is a full-time student. He said he might occasionally forward mail to his mother, and he sometimes visited the bank at her request.

18.     For her part, Mrs Chen estimated she spent up to a third of her time managing the Australian aspect of her larger business interests. That is difficult to accept, given she says Australian imports account for a small percentage of her business’s sales in Taiwan. She says she works around 70 hours a week and travels extensively, although she agreed she remained based in Taiwan. She conceded she had no plans to live in Australia in the foreseeable future. She said she might move here one day.

19.     Mrs Chen spent a total of 112 days in Australia while she held the visa. She says it is not necessary for her to be present in Australia constantly in order to run the business. Indeed, she says much of her work is necessarily carried on overseas. She says representatives of the various fashion houses tended to meet at fashion shows in Paris and elsewhere. She agreed she visited some of the labels in Australia but insisted it was ordinarily unnecessary to maintain close personal contact once the relationship was established. Communications by email or fax or phone sufficed. It was therefore possible to carry on the business from abroad.

the legislation

20. The Minister’s decision was made under s 134 of the Migration Act 1958. Section 134(1) says the Minister may cancel a business skills visa if the Minister is satisfied the visa holder:

(a) has not obtained a substantial ownership interest in an eligible business in Australia; or

(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business…

21. The Minister’s power to cancel under s 134(1) extends to situations where the Minister is satisfied the visa holder does not intend to continue to have a substantial ownership interest or does not plan to continue participating in management.

22. There are limits to the power to cancel, however. One of those is set out in s 134(2). That provision says the Minister must not cancel the visa if she is satisfied  the visa 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.

23. The Minister is obliged to take into account a range of matters set out in s 134(3) in the course of considering whether genuine efforts have been made for the purposes of s 134(2).

24.     There does not appear to be any doubt the applicant has an ownership interest in Auchys within the meaning of the Act. She controls at least half of the shares in the company. The real issue is whether Auchys is properly described as an eligible business.

25.     The expression eligible business is defined in s 134(10) to mean:

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.

26.     If one accepts the applicant’s account of Auchys as a growing exporter of Australian fashion to Taiwan, there is little doubt Auchys satisfies the definition. But the respondent says Auchys is not really a business. The respondent says export transactions that would occur in any event are funnelled through Auchys in order to give the appearance of a business so the applicant can satisfy Australian migration laws.

27.     The word business is not defined in the Act. The parties referred me to the decision of the High Court in Hope v Bathurst City Council (1980) 144 CLR 1. That case dealt with the question of whether a person who was running cattle on a property could be said to be carrying on the business of grazing.  Mason J suggested (at 8-9) the expression referred to:

…activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis.

28.     There is no doubt the transactions entered into by Auchys with Collette Dinnigan were real: real money changed hands in return for real goods on a repetitive basis. The company maintained a bank account and filed annual returns. The company was making a gross profit on its trading activities. It has all the hall-marks of a business, albeit a fledgling one.

29.     The respondent made much of the applicant’s motivation in establishing the company. The respondent says Mrs Chen conducted business in Australia through Auchys in order to satisfy the requirements of our immigration laws. I do not think that makes any difference to the question of whether or not Auchys is a business. The fact is it does do business in this country.

30.     For the same reason I do not think it is relevant that Mrs Chen’s Taiwanese company was the principal customer of the applicant. The High Court suggested in Hope that one should look to the activities of the company and consider whether or not they are carried on with a view to profit. If the company is carrying on business in an apparently commercial way, it is beside the point that its customers may be related. I am satisfied Auchys should be regarded as a business on that basis.

31.     It follows I am satisfied the applicant has acquired a substantial ownership interest in an eligible Australian business as required under the Act. I should add that if I had any doubts that Auchys was a business at the time of the decision to cancel the visa, I am satisfied the applicant has demonstrated genuine efforts to meet the criteria. The evidence of transactions that occurred since the date of the visa cancellation – in particular, the evidence that Auchys is dealing with companies other than Mrs Chen’s Taiwanese business, and the evidence of the expanded range of products she sells into that country from Australia – makes it clear that Auchys is not intended to be a mere conduit for Mrs Chen’s businesses overseas.

32. Section 134(1) also requires the applicant to utilise “…her skills in actively participating at a senior level in the day-to-day management of that business.” The respondent says the applicant cannot satisfy this requirement because Mrs Chen spent so little time in Australia attending to the business of Auchys.

33.     There have been a number of authorities in which the Tribunal has doubted whether an individual can effectively be involved in the management of a business in the appropriate sense if they are not physically present in Australia: see, for example, ReOng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178; ReNg and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 229; Re Foo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AAT 597. But special allowance must be made where the business in question requires a good deal of overseas travel, as the Tribunal explained in ReDhanjal and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 1120. In that case, the Tribunal said (at paragraph 82):

I accept that the very nature of an export business requires a significant part of the business, especially marketing, to take place overseas. The requirement to be overseas is inherent in the nature of such a business. There is no bar in the legislation to a visa holder being overseas as long as they are managing the business in Australia.

34.     In this case, a lot of the management work must be done overseas. The suppliers and buyers tend to congregate in Paris, and communications are carried on by fax or email. Mrs Chen did not spend a long time in Australia during the period prior to the cancellation decision, but there was not a great deal for her to do here given the size and scale of the business at this early stage of its development. She was travelling overseas, chasing business.

35.     I am satisfied the applicant used her “skills in actively participating at a senior level in the day-to-day management of that business”. I am also satisfied from her evidence that she intends to continue to retain her interest in the business and continue with her management role.

conclusion

36. The applicant is able to satisfy the criteria in s 134 of the Migration Act 1958. The decision to cancel her Business Skills visa is set aside.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe

Signed:  Associate   Adam Ryan

Date of Hearing  20 February 2006
Date of Decision  10 March 2006
The applicant was represented by Mr Steele of Counsel.

The respondent was represented by Mr Eteuati.