Chen and Minister for Immigration and Multicultural and Indigenous Affairs
[2005] AATA 369
•27 April 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 369
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/788
GENERAL ADMINISTRATIVE DIVISION ) Re I -CHIN CHEN Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Ms Robin Hunt, Senior Member Date27 April 2005
PlaceSydney
Decision The Tribunal affirms the decision of the Minister for Immigration and Multicultural and Indigenous Affairs, dated 21 May 2004, to refuse to grant Mr Chen Australian Citizenship. ...............................................
Ms R Hunt
Senior Member
catchwords
IMMIGRATION – Citizenship application – Requirement to be in Australia for certain periods – Aggregate for 2 and 5 years before application – Doing business overseas – No benefit to Australia - Discretion available - Application of departmental policy
legislation
Australian Citizenship Act 1973, s 13 (1) and (4)
Australian Citizenship Instructions, Chapter 4, Criteria for the grant
caselaw
Minister for Immigration, Local Government & Ethnic Affairs v Roberts (1993) 29 ALD 656
Fraser v Minister for Immigration and Mulitcultural and Indigenous Affairs [2002] FCA 1575 (19 December 2002)
Re McCarthy and Minister for Immigration, Local Government and Ethnic Affairs (1993) 30 ALD 447
Re Tinamisan and Minister for Immigration and Multicultural Affairs (1996) 43 ALD 349
Re Pai and Minister for Immigration and Ethnic Affairs (1994) 35 ALD 762
Re Chung and Minister for Immigration and Multicultural Affairs [2001] AATA 274
Re Ho and Minister for Immigration and Ethnic Affairs (1994) 34 ALD 664
Re Tsui and Minister for Immigration, Local Government and Ethnic Affairs (1991) 24 ALD 236
Re Ahi Min Wang and Department of Immigration and Multicultural Affairs (AAT 12747, 6 March 1998)
REASONS FOR DECISION
27 April 2005 Ms Robin Hunt, Senior Member summary
1. The Applicant, I-Chin Chen, applied for a grant of Australian citizenship on 19 April 2004. Mr Chen did not meet the residency requirements of section 13(1)(d) and (e) of the Australian Citizenship Act 1945 (the Act) as he had not spent the required number of days in Australia leading up to his application. Mr Chen asked the Tribunal to exercise the statutory discretion available in cases where the Applicant’s activities overseas benefit Australia. The Tribunal has decided not to exercise its discretion under section 13(4) of the Act in Mr Chen’s favour as it was found that his overseas activities were not sufficiently beneficial to the interests of Australia.
background
2. Mr Chen became a ‘permanent resident’ of Australia on 14 November 1999 as the holder of a Class AD Subclass 127 Business Owners Migrant Visa. Mr Chen’s wife and two sons also entered Australia and later became Australian citizens. Mr Chen was refused the grant of citizenship on 21 May 2004 because in the 2 years prior to his application, Mr Chen had been in Australia for only 120 days and, in the 5 years prior to his application, he had been in Australia for only 333 days.
3. Mr Chen claimed the reason for his frequent absences was the need to conduct the Australian business for which he was granted his business visa. He further claimed that these activities qualified him for the grant as they were beneficial to the interests of Australia. He asked the Tribunal to exercise in his favour the statutory discretion available in these circumstances.
legislation
4. Section 13 of the Australian Citizenship Act 1984, as amended, regulates when the Minister may grant a certificate of Australian citizenship to a person. The section reads, in part:
“13 (1) Subject to this section, the Minister may, in the Minister's discretion, upon application in accordance with the approved form, grant a certificate of Australian citizenship to a person who satisfies the Minister that:
(a) the person is a permanent resident;
…
(d) the person has been present in Australia as a permanent resident for a period of, or for periods amounting in the aggregate to, not less than one year during the period of 2 years immediately preceding the date of the furnishing of the application;
(e) the person has been present in Australia as a permanent resident for a period of, or for periods amounting in the aggregate to, not less than 2 years during the period of 5 years immediately preceding the date of the furnishing of the application;
…
(4) For the purposes of the application of subsection (1) in relation to an applicant for the grant of a certificate of Australian citizenship:
.…
(b) subject to paragraph (a), the Minister may, in the Minister's discretion:
(i) treat a period during which the applicant:
(A )was a permanent resident;
(B) was not present in Australia; and
(C) was engaged in activities that the Minister considers beneficial to the interests of Australia;
as a period during which the applicant was present in Australia as a permanent resident;
(ii) treat a period ending before the period of 5 years referred to in paragraph (1)(e), being a period during which the applicant was present in Australia as a permanent resident, as a period within that period of 5 years;
evidence
5. Before the Tribunal was a copy of Mr Chen’s application for Australian citizenship and supporting documents submitted to the Respondent. The supporting documents included financial statements of an Australian company, Carion Industries Pty Ltd (“Carion”). Mr Chen also handed up a current ASIC record for Carion, which shows that he owns shares in the company as well as being one of the directors.
6. Carion’s statement of financial performance for 2003 showed “Net Profit from Ordinary Activities after Income Tax Expense Attributable to Members of the Company” was $313,744 in 2003 and $14,814 in 2002. Carion’s statement of financial performance for 2002 showed “Net Profit from Ordinary Activities after Income Tax Expense Attributable to Members of the Company” was $14,814 in 2002 and $11,177 in 2001. A copy of the completed company tax return for 2003 showed the company suffered a taxable income loss of $253,958 and PAYG instalments totalled $7068. BAS activity statements for periods in 2002 furnished dealt with GST liabilities of Carion. Various commercial documents attached to the application, including cargo receipts and banking certificates, bank drafts and documentary credits and the like, related to certain commercial activities of the company, mainly being export of Australian copper.
7. Mr Chen gave oral evidence to the Tribunal at a hearing on 21 March 2005. He told the Tribunal that, as the holder of a Subclass 127 Visa, he had to maintain his Australian business. Having an Australian business was a condition of his visa. He had established an Australian company, Carion, for this purpose.
8. The company extract Mr Chen produced to the Tribunal showed that Carion was a registered company, starting from 30 March 1990, and carrying on business with an Australian company number and Australian business number. Mr Chen was listed as one of the directors of Carion along with Mr Liu, who was also the company secretary. As well, Mr Chen’s wife, Ku Mei Lin Chen, was listed as a director. Mr Chen and his wife were shown as jointly holding 100,000 ordinary shares. Two of the Hong Kong based shareholders were shown as holding 40,000 and 160,000 ordinary shares respectively. The extract further shows that HSBC Bank Australia Limited has a fixed and floating charge over the assets of the company. This charge has been registered since 19 January 1995 and was created on 16 February 1994.
9. Mr Chen said he was working overseas most of the time because the business of Carion was the export of copper and brass. Carion sold products in Hong Kong and mainland China so Mr Chen had to be in those places constantly to promote and sell the products. He also referred to business connections in Taiwan.
10. Mr Chen said that he had to explain Carion’s products to purchasers and sometimes demonstrate them. If he did not meet with customers personally in their location, he would not be able to sell any of Carion’s products. He stated that it was not possible to make sales over the phone from Australia. If he did not meet with Carion’s customers and deal with local officials personally, he would not be able to develop business opportunities and his sales would be about 5% of what they were otherwise. By being on the spot, he had secured big orders from companies such as Apple, Dow and ASA. Carion’s new product, fine copper wire, would be used by these customers to build computers in Japan. He was developing the market in China for this new product made from Australian copper. Previously, Carion had been selling a thicker copper wire. Mr Chen stated that the potential for fine copper wire was much greater and that he was setting up a factory in China for fine copper wire manufacture from Australian copper. Although Carion’s profits had been small to date, Mr Chen claimed that the potential to sell Australian fine copper wire was enormous.
11. Mr Chen explained that as the cost of labour is cheaper in China, he was building the factory there to manufacture Carion’s copper into fine wire, rather than in Australia. In establishing the factory, Mr Chen stated that he was creating an export market and opportunity for Australian copper, resulting in a benefit to Australia. The factory was built in an industrial area outside Shanghai and was close to transportation. Building work started around May 2003. The factory was built in blocks so that some operations were able to start while other blocks were being completed. The factory had commenced production around July 2004 and was largely operational.
12. Mr Chen produced photographs of himself showing local dignitaries and government officials around the premises. The photos were taken around September 2004 before all the factory buildings were complete. He stated that it would take two or three years to stabilise the manufacturing and factory operations. Mr Chen would live in a factory dormitory or residence attached to the factory when he was in China. His factory residence was not yet complete and he was renting a residence nearby at the time of his application to the Tribunal.
13. Mr Chen gave further evidence that he spent much of his time overseas on other business that benefited Australia as well as Carion’s business. Some of his time in China was spent promoting the products of an Australian company that supplied to Carion, called Kembla Wire & Rod (“Kembla”). Mr Chen produced three bundles of invoices from Kembla addressed to Carion, detailing sales transactions between the parties from 2002 to 2004. Each invoice also bore a certification that the goods were wholly of Australian origin.
14. Mr Blackburn, the Sales and Marketing Manager of Kembla, supported Mr Chen and his application for citizenship. Mr Blackburn provided an affidavit and attended the Tribunal to give oral evidence. He stated that he supervised the export of copper products manufactured and produced by Kembla in Australia. He had dealt with Mr Chen and Carion over the last 6 years. He had sold Kembla copper products to Carion for export to Hong Kong and the Peoples Republic of China.
15. A table set out in Mr Blackburn’s affidavit showed that there were no sales to Carion between 1998 and 2001, followed by sales to Carion to the value of over US$3 million in 2002, US$1,339,262.49 in 2003 and US$1,651,913.48 in 2004. The value of exports placed through Carion is currently around 1.25% of Kembla’s annual sales turnover. Mr Blackburn said that, while the percentage was not a significant figure, there were direct benefits to Kembla, an Australian company. He was of the opinion that Mr Chen’s overseas business activities did benefit Australia. Some of the benefits that Mr Blackburn set out were that sales of Australian copper generated tax in Australia, export orders placed by Carion to export Kembla product assisted payment of Kembla employees’ wages which then enabled them to contribute to the Australian economy and to provide for their families, and Carion’s exports supported the Australian copper industry and employment in that industry.
16. Mr Blackburn gave oral evidence about the assistance he and Kembla had received from Mr Chen. Mr Blackburn told the Tribunal that he had first met Mr Chen in China a few years ago and had last seen him in China around the 8th or 9th of February 2005. He frequently met with him in China and sometimes in Sydney in connection with the business of Kembla. Mr Blackburn told the Tribunal that Mr Chen had introduced him to various contacts in China with whom Kembla now did business. Although the direct business with Carion was a small percentage of Kembla’s total business, it was still important and had the potential to grow. As well, Mr Chen’s introductions had created further business opportunities for Kembla, an Australian business.
17. Mr Blackburn gave further evidence that he sometimes spoke by phone to Simon Chen, one of Mr Chen’s sons in Australia, about Carion business matters. The son referred to his father as the person who made decisions for Carion and let Mr Blackburn know where his father was when he needed to speak to him.
18. Mr Chen conceded that he had probably spent only 16% of his time in Australia during the last two years. Similarly, he agreed that he had probably only spent about 18% of his time in Australia in the last 5 years. He did not agree, however, that he had been residing in Hong Kong and mainland China rather than in Australia during these years. Mr Chen said that he lived in Australia and that there existed good Australian products that he needed to promote to the world.
19. Mr Chen argued that as his wife and children have become Australian citizens, this was further evidence of his intention to make Australia home. Documents before the Tribunal show that Mr Chen’s older son became a citizen in 2002 and that his wife and younger son became citizens in 2003. Although Mr Chen and his family had been living in rented premises in Australia and he did not own real estate in Australia at the time of his citizenship application, his wife was buying a place for the family at the time of the Tribunal hearing. Mr Chen produced to the Tribunal a copy of the front page of an unstamped contract, dated 12 November 2004, for the purchase of an apartment in Sydney. The contract was in his wife’s name as purchaser. Mr Chen also said further evidence of his intention to make Australia his home was that his children were studying in Australia. He stated that he and his family had made a commitment to stay in Australia.
20. Mr Chen conceded that Carion did not generate a large profit from its operations. When asked how he and his family survived financially, in view of Carion’s financial position, Mr Chen said that he had other assets and income. He agreed that Carion’s last financial year earnings were insufficient for his family’s living expenses. He said he and his family had other business interests and investments in Hong Kong and Taiwan. Carion copper products generated only a portion of his income. Mr Chen declined to reveal what his other business or assets were but pointed out that he had furnished evidence of these to the Department of Immigration and Indigenous and Multicultural Affairs when he applied for his current business visa.
21. Mr Chen was unable to say exactly what percentage of his time he spent on the business of Carion and what percentage he spent on other matters. He said it was impossible to say as promotion and developing customers could take years before producing results. Carion did not research how much time he was engaged in promotion. He estimated that, during the last 5 years, he had spent approximately 70% of his time on Carion’s business. He declined to explain how he spent the remainder of his time overseas. Mr Chen’s counsel submitted that Mr Chen misunderstood the question and was not being evasive but simply non-responsive.
analysis
22. Mr Chen has not disputed that he spent less than the period of residence in Australia expected under subsection 13(1) (d) and (e) for the grant of Australian citizenship. Instead, he has argued that his activities and frequent absences overseas benefited Australia. In addition, he suggested that his Australian business would have failed if he did not travel overseas to promote it, develop his customer base and make sales in person. His travel was necessary for him to be able to maintain his Australian business. If he had not kept up his Australian business, he would not have met his visa requirements. Therefore, Mr Chen thought it was appropriate for the Tribunal to exercise the discretion under subsection 13(4)(C) in his favour.
23. Under ministerial policy guidelines, the discretion to take into account a lesser period spent in Australia is expected to be exercised only if the applicant is required to work overseas by an employer or is self-employed and frequent travel is essential to the successful operation of the business. As well, under the guidelines, the activities involved must be clearly beneficial to Australia (paragraph 4.3.21, Australian Citizenship Instructions or “ACI”). Activities beneficial to the interests of Australia are discussed at paragraph 4.3.26. The concept involves something which connotes an advantage to Australia commercial or otherwise. This means more than the private interests of the applicant and requires some objective benefit to Australia. Einfeld J of the Federal Court explained in Minister for Immigration, Local Government & Ethnic Affairs v Roberts (1993) 29 ALD 656 that an applicant’s close ties to Australia and family connections were not a benefit to Australia as such. It follows that although Mr Chen’s family are Australian citizens, this does not result in his activities amounting to activities beneficial to Australia by virtue of the family connection.
24. Mr Chen has demonstrated the requirement under the guidelines that he is self-employed and that he needs to be overseas frequently in order to run his business. The Tribunal accepts Mr Chen’s evidence that he needs to spend a large amount of his time overseas to develop the export market for Australian copper. This is the only business of Carion brought to the Tribunal’s attention apart from the setting up of the factory in China. It is self-evident that sales of an Australian resource would normally provide some financial return and employment in Australia. Mr Blackburn gave evidence in support of this claim. However, Mr Chen did not furnish to the Tribunal any evidence of immediate benefit to Carion or to Australia of the factory set up and operations. He spoke of the future potential of the factory and the plans to manufacture fine copper wire from Australian copper. However, the factory employs Chinese nationals, not Australians. Mr Chan and Mr Blackburn both spoke of the huge new market opening up for fine copper wire and its use in computers. They also spoke about the demand from major Japanese computer manufacturers. However, there is no documentary evidence before the Tribunal of any such arrangements for sales of Australian copper to computer companies. Any new market for Carion’s copper products is not reflected in the trading information before the Tribunal. It may well be that this potential exists but I do not find evidence that any present benefit to Australia exists in this regard.
25. I have again turned to the case of Roberts cited above to determine whether Mr Chen’s sales of Australian copper amount to activities that are beneficial to the interests of Australia. Mr Chen represents the Australian company, Carion, and is making sales on its behalf. On one hand, these sales of an Australian product might seem to be beneficial to Australia. However, there is little discernable benefit to Australia when the transactions are examined. Any profit generated does not find its way to Australia even though millions of dollars worth of copper has been exported through Carion. Carion has made only small returns according to the material before the Tribunal. Mr Chen and his family cannot rely on Carion’s profits to survive. They must rely on other sources of income as Mr Chen has testified.
26. A cursory look at the company’s records show that the majority shareholding is based in Hong Kong. While the company is Australian, limited benefits reach Australians. In any event, the private interests of the Australian shareholders do not equate with the public interests of Australia and are therefore not beneficial to Australia according to Einfeld J’s judgment in Roberts or according to policy. His Honour, at 661, was “unable to see the nexus between [the applicant’s] overseas work and our natural resource and employment policies”. The Tribunal has rejected the argument that there is any nexus leading to a benefit to Australia in similar situations in the cases of Re Tsui and Minister for Immigration, Local Government and Ethnic Affairs (1991) 24 ALD 236, Re Tinamisan and Minister for Immigration and Multicultural Affairs (1996) 43 ALD 349 and in Re McCarthy and Minister for Immigration, Local Government and Ethnic Affairs (1993) 30 ALD 447. Again, in Re Ho and Minister for Immigration and Ethnic Affairs (1994) 34 ALD 664, Deputy President McCarthy noted as to commercial activities, that more of a public character is necessary.
27. In Re Pai and Minister for Immigration and Ethnic Affairs (1994) 35 ALD 762, Deputy President McDonald found that there was a benefit to Australia in that case as the applicant was promoting Australian products overseas. He considered private benefit and public benefit to not be mutually exclusive and I agree with this proposition. However, Deputy President McDonald, at 763, noted that it was beneficial to Australia “to secure markets from overseas competitors which brings in foreign currency revenue”. By contrast, there is little evidence before me of foreign currency revenue coming to Australia as a result of Mr Chen’s activities. Mr Chen has admitted that he and his family have to rely on other sources of income as they do not receive a sufficient income from Carion.
28. While the Tribunal accepts Mr Chen as a truthful witness, he was not prepared to divulge his sources of income and did not establish that Carion provided sufficient income to support his family let alone contribute to Australian public revenue. I accept Mr Chen’s argument that his activities overseas on the business of Carion consume a large portion of his time. However, these activities, while resulting in sales of Australian copper, have not generated much profit in Australia, even though there were sales of several million dollars in 2002 and 2003. Mr Chen has not shown that he personally paid any Australian income tax. Carion returned small gross profits of $24,391 in 2003, $7,643 in 2002 and $3,571 in 2001. Carion’s sales may continue to improve. However, the financial reports were unaudited. They show no payments of wages or salary to any Australian citizens or residents. Three of the six company officers listed for Carion are Hong Kong residents and the principal shareholder is a Hong Kong resident. It is difficult to see much benefit to Australia in these activities. The profits from sales by Carion are not being fed back to Australia.
29. Mr Chen and Mr Blackburn stated that Australia obtained a benefit because sales generated tax revenue for Australia. I agree that such a situation could be of benefit to Australia. Einfeld J in Roberts also expressed the opinion that “(E)ven if the particular person paid Australian tax on the wages earned in such places, Australia might derive some benefit”. However, Mr Chen did not present any evidence that he or Carion had paid any Australian taxes other than modest amounts of GST disclosed in the BAS statements before the Tribunal. The Tribunal was not shown evidence of income tax raised on Australian earnings as a result of Mr Chen’s activities. A copy of an income tax return of Carion for the year ending 30 June 2002, showed no payment of income tax in Australia. The return claimed a loss and indicates no Australian tax liability.
30.In addition, the factory operations established outside Shanghai are, according to Mr Chen, likely to stimulate more sales of Australian copper for the manufacture of fine copper wire and the growing use of this product in computers. Mr Chen did not show that any Australian was receiving wages or a salary as a result of these operations. There is no evidence that Carion employs Australians in any of its operations and benefits Australia in this way as compared with Re Chung and Minister for Immigration and Multicultural Affairs [2001] AATA 274.
31. I have come back to the suggestion that sales of copper might, however, generate jobs and sales revenue and tax revenue in Australia. To date, there is no convincing evidence of this. It may be that these types of benefit will become apparent in due course but they are not apparent at the date of Mr Chen’s application or at the date of the Tribunal hearing.
32. Mr Chen spends much time and energy overseas promoting and obtaining orders for the products of an Australian company, Kembla. I have considered Mr Blackburn’s evidence and have noted that he places considerable importance on Mr Chen and his introductions, which have opened up further markets for the copper products produced by the Australian company which he represents. Mr Chen’s activities in this regard are of some benefit to Australia as Mr Blackburn suggested. I am not convinced, nevertheless, that Mr Chen has spent much of his time in assisting Mr Blackburn to further the objects of Kembla. Mr Chen told the Tribunal he spends 70% of his time on developing markets and customers. His efforts have not generated a substantial return to Australia over the years since he arrived in 1999. On balance, therefore, I consider that Mr Chen’s activities are predominantly for private purposes and are not to the benefit of public interests in Australia.
33. Other matters include the Australian citizenship of Mr Chen’s wife and children, his wife’s present intention to purchase a residential property in Australia, his son’s assistance to Mr Blackburn and possibly to other potential customers of Carion in Australia. In addition to these is the importance to Mr Chen of meeting his business visa conditions and the need for him to have ease of travel on an Australian passport to continue his activities to promote and sell Australian copper. I note that Mr Chen’s wife may have entered into a contract to purchase a place to live in Australia. However, an unstamped front page of a contract with no signature is not good evidence of this. In addition, the contract was dated in November 2004, which was after the time of Mr Chen’s application. As I have mentioned above, the family connection in itself does not result in a benefit to Australia from Mr Chen’s activities. On balance, I find no benefit to Australia from these matters.
34. I have noted that policy has not always been applied by the Tribunal, notably in Re Ahi Min Wang and Department of Immigration and Multicultural Affairs (AAT 12747, 6 March 1998). This does not open a door for the Tribunal to go against policy and the judgment of the Federal Court in Roberts in order to find a sympathetic solution for the Applicant. It may be that in Wang, Deputy President Gerber misunderstood the difference between citizenship and permanent residency. The Tribunal is not deciding whether Mr Chen continues to be entitled to permanent residency. This entitlement depends on the type of visa which Mr Chen continues to hold. There are other grounds available to Mr Chen to maintain or pursue his permanent residency status.
35. Taking all these matters into account, without making any criticism of Mr Chen and acknowledging his efforts to maintain his responsibilities to meet his visa conditions, I nevertheless find, on balance, that Mr Chen’s activities are not sufficiently beneficial to Australia for the exercise of the discretion under section 13(4)(C). It follows that the Tribunal must affirm the decision under review.
decision
36. The Tribunal affirms the decision of the Minister for Immigration and Multicultural and Indigenous Affairs, dated 21 May 2004, to refuse to grant Mr Chen Australian Citizenship.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: .....................................................................................
Zoe McDonald
Associate
Date/s of Hearing: 21 March 2005
Date of Decision: 27 April 2005
Solicitor for the Applicant: Mr Rutland Cheung
Solicitor for the Respondent: Mr John Bird
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