Cheng and Minister for Immigration and Multicultural and Indigeno Us Affairs

[2003] AATA 136

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 136

ADMINISTRATIVE APPEALS TRIBUNAL        NºV2001/1368

GENERAL ADMINISTRATIVE  DIVISION

Re:       CHAO‑PAO CHENG

(also known as TIN‑NAN CHENG)

Applicant

And:       MINISTER FOR IMMIGRATION AND

MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal:       M.J. Carstairs, Member

Date:             13 February 2003

Place:            Melbourne

Decision:The Tribunal affirms the decision under review. 

(sgd) M.J. Carstairs

Member

MIGRATION ‑ business skills visa ‑ cancellation ‑ whether substantial ownership in an eligible business ‑ whether utilising skills in actively participating at a senior level in the day‑to‑day management of business ‑ whether intention to continue to hold a substantial ownership and to utilise skills

Migration Act 1958 s134

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

REASONS FOR DECISION

13 February 2003  M.J. Carstairs, Member

1.      This is an application by Chao-Pao Cheng (the applicant) for review of decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (the respondent) dated 5 September 2001, to cancel the Business Skills (Migrant) (Class AD) subclass 127 visa (the visa) granted to the applicant.

2.      At the hearing on 23 January 2003 Mr W. Miller, solicitor, represented the applicant and Ms V. Priskich, solicitor with Blake Dawson Waldron, represented the respondent.

3. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T18), together with eleven exhibits (Exhibits A1 to A11) tendered by the applicant, and two exhibits (Exhibits R1 and R2) tendered by the respondent.  The applicant filed a supplementary Statement of Facts and Contentions on 24 January 2003, after the hearing.  On 3 February 2003 Mr Miller advised that the applicant’s children were not lodging appeals against the cancellation of their visas as family members of the primary Business Skills visa holder.

BACKGROUND

4.      The applicant was born on 16 May 1955 and is a citizen of Taiwan.  He is married, with three children.   On 24 May 1998 each member of the family was granted a visa and arrived in Australia on 31 May 1998.  In September 1998 the applicant formed a company known as Chung Cheng Pty Ltd (Chung) with a 33 per cent shareholding interest and an investment of $A30,000.  The purpose of the company was to export zinc alloy metals to his company in Taiwan.  

5.      On 21 December 2000 the applicant entered into an agreement with Company X, a graphic reproduction business, to develop offshore printing facilities.  The applicant acquired a 10 per cent shareholding interest and an investment of $A100,000.  Following a request by the then Department of Immigration and Multicultural Affairs (the Department), on 9 June 2000 the applicant completed a 24‑month survey concerning his business activities, which the Department received on 20 June 2000.  On 26 June 2000 the Department wrote to the applicant seeking additional information on the nature of the businesses and his involvement in them.  On 13 July 2000 the applicant provided further information.  On 23 May 2001 the Department sent a written notice of intention to cancel the visa held by the applicant and the visas held by other family members, and sought a response.   

6.      On 5 September 2001 the respondent cancelled the visas held by the applicant and his family on the basis that no response had been received.  On 24 October 2001 the applicant lodged an application with the Tribunal seeking review of the decision to cancel the visa held by him. 

EVIDENCE

7.      The applicant gave oral evidence and said that Australian Corporate Alliances Pty Ltd (ACA), a business development company, had prepared a comprehensive submission dated 3 July 2001 on his behalf in response to the notice of intention to cancel the visa held by him and each member of his family.  He said that the submission was lodged with the Department on or about 5 July 2001, and that on 6 July 2001 ACA had confirmed to him that the submission had been sent to the Department.  The applicant stated that after the decision to cancel his visa, he arranged for a replacement copy of the submission to be forwarded to the respondent’s solicitor on 1 March 2002. 

8.      The applicant referred to his statutory declaration dated 12 November 2002 (Exhibit A2) and said that it had always been his intention to develop business in Australia and participate actively in its management.  He explained that he was the Managing Director and major shareholder of Chung, and was responsible for its day‑to-day management and operations.  He said that the company traded in 1998 and 1999 and exported 24,997 kilograms of 10-kilogram zinc slabs to Taiwan in 1999. However, after two years the business was no longer viable due to circumstances beyond his control, so he closed Chung in 2000 and sought other business opportunities.  He stated that, with the assistance of ACA, he negotiated with Company X and proceeded with his investment in the company.  He described his role as that of Asian Business Manager, whose duties involved responsibility for investigating, negotiating and establishing a cost-effective printing facility to enable Company X to expand its business.  He said that he received no wages for the work undertaken, although in the future he may receive commission, depending on profits.  The applicant said that his hardware business in Taiwan, which employs seventeen staff, is the main source of his income.

9.      With respect to the amount of time spent in Australia, the applicant told the Tribunal that he has been based in Taiwan and has been required to spend a substantial amount of time outside Australia.  As Asian Business Manager of Company X, he has been able to research and make contact with printing companies in Taiwan and become familiar with the industry in Taiwan.  He said that he has been responsible for the day-to-day management of developing the company’s printing business, and therefore has been involved in the management and direction of the company itself.  He said that the work he has done entailed negotiating with customers, after Company X settled matters such as product price. The applicant emphasised that he has followed the Heads of Agreement with Company X and is prepared to continue his association with the company, having made repeated requests to become more heavily involved.  It was part of the agreement he reached with Company X that he would not be in Australia for more than a month at a time.  He provided copies of documents showing correspondence with the company.

10.     In a statutory declaration dated 12 November 2002, the General Manager of Company X stated that several years ago the company identified the need to diversify its services and rationalise its production techniques, including the out‑sourcing of high‑volume printing to reliable offshore companies.  She said that for these reasons, in December 2000, the company signed a Heads of Agreement with the applicant, in which the applicant would invest in the business and act as the company's Asian Business Manager.  The General Manager stated that the applicant had sought to become more heavily involved in the company’s operations, but in the early stages of the business relationship the company has preferred the applicant to be based in Taiwan.  She told the Tribunal that prior to the cancellation of his visa the applicant had provided the company with substantial material and contacts with Taiwanese printing companies.

11.     In a statutory declaration dated 11 November 2002 (Exhibit A4) Mr D. Wall, Business Development Manager, stated that he has been employed with a business development company specialising in Australian business investment, and that the applicant has been a client since July 2000.  Mr Wall said that he assisted the applicant in the negotiations with Company X, and that he believed the applicant to be an ideal and enthusiastic partner for the company.  He stated that, in his opinion, the applicant had a genuine intention to become involved in the company’s plans to develop offshore printing facilities, and to continue to be involved in the company’s Australian operations.

12.     The Share Certificate for Company X (Exhibit A5) showed that the applicant was registered as the holder of ten ordinary shares on 18 June 2001.

CONSIDERATION OF THE ISSUES

13.     The Migration Act 1958 Act (the Act) provides as follows:

134(1)     Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment‑linked visa or a family member’s visa), by written notice given to its holder, if the Minister is satisfied that its 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; or

(c)       does not intend to continue to:

(i)hold a substantial ownership interest in; and

(ii)utilise his or her skills in actively participating at a senior level in the day-to-day management of;

an eligible business in Australia.

(2)          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.

(3)          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 venturers 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 a 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).

…

(10)        In this section:

…

eligible business means 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;

…

ownership interest, in relation to a business, means 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.

13.      Paragraph 4.5 entitled "What is a 'genuine effort'?" in the Migration Series Instruction (MSI) N°133 Visa Cancellation Under Subdivision G ‑ Cancellation of Business Visas (the Instruction), issued on 30 May 1996, contains the following factors to assist decision-makers in determining whether a genuine effort has been made under s134(2) of the Act:

[…

a.business proposal which is considered genuine, realistic and achievable;

b.formal contract with partners or joint venturers;

c.written evidence of detailed consultations with at least three business advisers (accountant, lawyer, bank/financial institution, State/Territory government business development office, Austrade, business/trade association);

d.physical presence in Australia for more than six months since first arrival as a Business Skills class migrant;

e.transferred to, and retained in, Australia at least 50% of the funds indicated as available for transfer within two years (under Factor 4 of the Business Skills Points test);

f.minimum A$100,000 or 10% ownership previously held by the person. If the person is no longer in business, the reasons for loss of ownership are also relevant

g.minimum $A100,000 business activity as indicated by turnover.  This may include other business activity not considered “eligible business” but cannot include passive investment, eg, purchase of shares;

h.failure to comply with a notice for information under s137, ie mandatory monitoring of Australian address and return of survey forms.]

14. Mr Miller submitted that the applicant satisfies s134(2)(a) of the Act as he has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia. With respect to the activities of Chung, Mr Miller referred to the export of 24,997 kilograms of zinc and said that this demonstrated the development of business links with the international market (s134(10)(a) of the Act), and the export of Australian goods and services (s134(10)(c) of the Act).

15.     With respect to the activities of Company X, Mr Miller submitted that the  Heads of Agreement, signed on 21 December 2000, giving the applicant a 10 per cent shareholding in the business, together with the investment of $A100,000, demonstrated that the applicant has obtained a substantial ownership interest in the business.  He stated that as Company X employs more than ten full-time staff and has been operating for twenty-eight years, the company is an eligible business, which has resulted in the creation or maintenance of employment in Australia (s134(10)(a) of the Act).  He said that the company’s business plan involves the establishment of a printing facility outside Australia, so this demonstrated the development of business links with the international market (s134(10)(a) of the Act).   

16. Mr Miller submitted that the applicant satisfies s134(2)(b) of the Act as he has made a genuine effort to utilise his skills in actively participating at a senior level in the day‑to‑day management of the business. With respect to the activities of Chung, Mr Miller referred to the applicant’s position as Managing Director, and stated that he participated at a senior level in the day-to-day management of the company before he was forced to close the business for reasons involving quality and supply, over which he had no control.

17.     With respect to the activities of Company X, Mr Miller referred to the applicant’s position as Asian Business Manager, in which he was required to devote considerable time and effort to investigate, negotiate and establish a cost-effective printing facility to enable the company to expand its activities.  Mr Miller said that this demonstrated that the applicant participated at a senior level in the day-to-day management of the business.

18. Mr Miller submitted that the applicant satisfies s134(2)(c) of the Act as he demonstrated a commitment to hold a substantial ownership in an eligible business and hold a senior management position when he continued to search for business opportunities in Australia after the failure of his initial business venture. Mr Miller said that the applicant’s position as Asian Business Manager of Company X and his desire to become more heavily involved in the business showed that he intended to continue to utilise his skills in actively participating at a senior level in the day-to day management of the company.

19. Ms Priskich noted that, although Chung recorded an operating profit in 1998/99, admissions by the applicant show that the company was de-registered by April 2001, so it has ceased to exist. With respect to the activities of Company X, Ms Priskich submitted that the applicant has not obtained a substantial ownership interest in the business and cannot be participating in the management of the business on a day-to-day basis when he has spent only nineteen days in Australia from the date of first arrival to the date of the decision to cancel his visa. She said that there is no evidence of any consultations with business advisers or partners of any other business opportunities in Australia which would satisfy the requirements of s134(1) of the Act.

20.     Ms Priskich referred to Re Tang and Minister for Immigration and Multicultural Affairs (2000) 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. She submitted that the applicant’s role with Company X has been to develop the company’s printing opportunities from Taiwan, and that he had not demonstrated an actual intention to reside in Australia to manage the business. Ms Priskich said that the evidence of the General Manager of Company X confirmed that the company’s intention was that the applicant remains in Taiwan. Ms Priskich said that he has not satisfied the indicators in the Instruction.

21.     In reaching its decision the Tribunal takes into account the documentary and oral evidence and the submissions made at the hearing.

22.     On the question of whether either business is an eligible business, the Tribunal accepts that Chung has been de-registered and has ceased to exist.  Consequently, the Tribunal finds that it was not an eligible business at the time of the decision to cancel the applicant’s business skills visa.  With respect to Company X, the Tribunal accepts the submission from Mr Miller and the statutory declarations from Ms Armitage and Mr Wall.  The Tribunal finds, in respect of Company X, that the activities of the business involving the establishment of offshore printing facilities resulted, or will result, in the development of business links with the international market (s134(10)(a) of the Act), so the Tribunal finds that Company X is an eligible business. However, the Tribunal notes that the applicant has invested $100,000 and has a ten per cent shareholding in the business.  The Concise Oxford Dictionary (Seventh Edition) defines substantial as of real importance or value, of considerable amount.  While it is difficult to accept that a ten per cent shareholding meets this definition, the Instruction accepts, in paragraph 4.5.1(f), that a minimum $100,000 or ten per cent ownership is sufficient. Therefore, applying the Instruction, the Tribunal finds that the applicant has  obtained a substantial ownership interest in an eligible business in Australia (s134(1)(a) of the Act) on the basis of his outlay of $100,000 to purchase the ten per cent interest in Company X.

23.     The Tribunal accepts the submission from Ms Priskich that, at the date of cancellation of the applicant’s visa, the applicant was involved in activities relating to the development of a printing facility in Taiwan.  Although the Tribunal accepts that the applicant has maintained regular contact with management of the company, his involvement has been at the level akin to an agent for the company, organising sales contacts.  He receives no remuneration for his time and from his evidence his activities are at a very preliminary stage.  While his title is "Manager", there was little evidence that he was undertaking any role that could be described as management at a senior level in the company’s day‑to‑day operations.   On his evidence and that of the General Manager of Company X, he has not been required to be involved in the management of the company, despite his eagerness to be involved.  The applicant is resident in Taiwan and has spent little time in Australia.  This leads the Tribunal to conclude that, for the purposes of the Act, the applicant …is not utilising his or her skills in actively participating at a senior level in the day‑to-day management of that business  (s134(1)(b) of the Act).

24. The applicant has failed to satisfy s134(1). Therefore, the Tribunal must now consider whether any of the grounds in s134(2) exist. When doing so, the Tribunal may take into account any or all of the matters listed in s134(3). The Tribunal also takes into account the Instruction referred to in paragraph 13 above. In assessing the applicant’s claims against the factors listed in s134(3) of the Act, the Tribunal finds that the applicant has not 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 as required under s134(2)(b) of the Act.

25. In assessing the applicant’s claims against the factors listed in the Instruction, the Tribunal takes into account that the applicant resides in Taiwan, and has little claim under factors (a), (b) and (c) of the Instruction. He has spent nineteen days in Australia since his first arrival under the visa, and this figure is substantially less than the minimum of six months suggested as relevantly applying to consideration of presence in Australia in s134(3)(d). There is no evidence that the applicant has transferred to Australia fifty per cent of funds available for transfer within two years (factor (e)), although there is a minimum $A100,000 business activity represented by the purchase of shares (factor (f)). In the applicant's favour the Tribunal notes that there is no evidence that he has failed to comply with mandatory monitoring (factor (g)). On the available material, the Tribunal is satisfied that the applicant has not made a genuine effort to utilise his skills in senior management of the business.

26.     Therefore, the Tribunal finds that the exercise of the discretion to cancel the visa is appropriate in this case.

DECISION

27.     The Tribunal affirms the decision under review.

I certify that the twenty-six [26] preceding paragraphs are a true copy of the reasons for the decision of:

M.J. Carstairs, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  23 January 2003

Date of decision:  13 February 2003
Advocate for applicant:                Mr W. Miller
Solicitor for applicant:                  William Miller
Advocate for respondent:            Ms V. Priskich
Solicitor for respondent:              Blake Dawson Waldron