CHENGYU LIU and MINISTER FOR IMMIGRATION AND CITIZENSHIP
[2009] AATA 101
•16 February 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 101
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/4705
GENERAL ADMINISTRATIVE DIVISION ) Re CHENGYU LIU Applicant
And
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal Mr S E Frost, Member Date16 February 2009
PlaceSydney
Decision The decision under review is set aside. The Tribunal decides instead that Mr Liu’s visa is not cancelled. As a consequence the secondary visas of his family members are also not cancelled. ......................[sgd]....................
Mr S E Frost
Member
CATCHWORDS
MIGRATION – business skills visa – substantial ownership interest in an eligible business in Australia – relevance of the fact that a company in Australia is a subsidiary of a company overseas – actively participating at a senior level in the day-to-day management of a business – whether the Tribunal should take into account the position as at the date of the original decision or as at the date of the Tribunal’s decision – decision set aside
Migration Act 1958 – s 134
A New Tax System (Australian Business Number) Act 1999 – s 8(2), 41
A New Tax System (Goods and Services Tax) Act 1999 – s 9(20)(1)(a), 195-1, Div 23, 25
Shi v Migration Agents Registration Authority [2008] HCA 31
Jebb v Repatriation Commission (1988) 80 ALR 329
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Re Kushner and Minister for Immigration and Citizenship [2008] AATA 1170
Re Nagasaputra and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 39
Re Susanto and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 470
Re Mulyadi and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 1019
Hope v Bathurst City Council (1980) 144 CLR 1
Re Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299
REASONS FOR DECISION
16 February 2009 Mr S E Frost, Member Introduction
1. In 2007, a delegate of the Minister decided to cancel Mr Liu’s subclass 127 business skills visa. As a consequence of that decision, the secondary visas of Mr Liu’s wife and his two children were also cancelled. Mr Liu has applied to the Tribunal for review of the cancellation decision.
2. The power to cancel a visa of the kind held by Mr Liu is contained in s 134(1) of the Migration Act 1958 (Cth) (“the Act”). That power is triggered if the Minister is satisfied that 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; 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.
3. However, s 134(2) of the Act provides that the visa must not be cancelled if the Minister is satisfied that the visa holder has made a genuine effort to obtain a substantial ownership interest in, and to utilise his or her skills in actively participating at a senior level in the day-to-day management of, an eligible business in Australia, and intends to continue to make such genuine efforts.
Preliminary issue – time at which criteria should be examined
4. Apart from the issues arising under s 134 of the Act, there is a threshold question relating to the point in time at which I should consider whether the relevant statutory criteria have been met. It was argued for the Minister that as a result of the decision of the High Court in Shi v Migration Agents Registration Authority (2008) 103 ALD 467; 82 ALJR 1147; [2008] HCA 31, I should consider the state of affairs as at the date of cancellation by the Minister’s delegate, namely 5 September 2007, rather than as at the date of my decision.
5. In Shi it was decided that, on the review of a particular decision made by the Migration Agents Registration Authority (“MARA”) under s 303 of the Act to cancel the registration of a migration agent, the Tribunal was not limited to a consideration of the facts and circumstances as they existed at the time of the original decision, but should take into account the position as at the time of the Tribunal’s decision.
6. Shi has established that the answer to the question – whether, in reviewing a decision, the Tribunal should consider facts and circumstances as they were at the time of the original decision, or as they are at the time of the Tribunal’s decision – depends on the legislation under consideration and the nature of the decision being reviewed.
7. Kirby J spoke at [25] of the need to understand “all of the relevant features of the two inter-related statutes” that provide the basis of the Tribunal’s jurisdiction in any given case. One of those two statutes will be the Administrative Appeals Tribunal Act 1975 (“AAT Act”); the other will be the enactment that provides for the review of decisions by the Tribunal – see s 25 of the AAT Act. After discussing the nature and function of the Tribunal, and referring to the comments of Davies J in Jebb v Repatriation Commission (1988) 80 ALR 329 to the effect that the Tribunal’s function is as a part of the continuum of the administrative decision making process, his Honour said at [46]:
There is thus a general approach deriving in particular from the statutory function of substituting one administrative decision for another. Nevertheless, the particular nature of the “decision” in question may sometimes, exceptionally, confine the Tribunal’s attention to the state of the evidence as at a particular time. (emphasis in the original)
8. His Honour also referred at [43] to the need to “identify the precise nature and incidents of the decision that is the subject of the review”.
9. Hayne and Heydon JJ similarly noted, at [93], the need to consider “the intersecting operation of ss 25 and 43 of the AAT Act, and ss 303 and 306 of the Migration Act”. At [96] their Honours said:
In reviewing MARA’s decision to cancel the appellant’s registration, the Tribunal was empowered (by s 43(1) of the AAT Act) to exercise all the powers and discretions conferred by the Migration Act on MARA. The questions for the Tribunal in reviewing the cancellation decision were first, whether the Tribunal was satisfied that either of the s 303(1) grounds said to be engaged in this case was made out, and secondly, whether the Tribunal should exercise the powers given by s 303(1) to cancel or suspend the appellant’s registration or to caution him. That is, the first questions for the Tribunal were whether it was satisfied that the appellant “is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance” and whether it was satisfied that the appellant had not complied with the Code of Conduct. (emphasis in the original)
10. After referring to the well-known statement of Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68; 24 ALR 577 at 589 that the question for the determination of the Tribunal is whether the decision was the correct or preferable one on the material before the Tribunal, their Honours added at [99]:
Once it is accepted that the Tribunal is not confined to the record before the primary decision-maker, it follows that, unless there is some statutory basis for confining that further material to such as would bear upon circumstances as they existed at the time of the initial decision, the material before the Tribunal will include information about conduct and events that occurred after the decision under review. If there is any such statutory limitation, it would be found in the legislation which empowered the primary decision-maker to act; there is nothing in the AAT Act which would provide such a limitation.
11. The crux of the Minister’s argument in the current matter is that s 134(1) of the Act, unlike s 303 which was considered in Shi, is fettered by a “temporal element” such that “the critical statutory question is whether a criterion was met or not met at a particular date”: Shi at [101], per Hayne and Heydon JJ. This “temporal element” is said to arise from the provisions of Subdivision G of the Act as a whole (of which s 134 forms a part), under which the Minister, if he or she wishes to cancel a visa of this class, must do so within three years after it was granted. In the Minister’s written submissions it was said at [10]-[11]:
[10] It is submitted that the statutory regime regulates the Minister’s power to cancel business visas under s 134(1). Accordingly, the Respondent contends that the power to cancel a visa under section 134 prohibits any decision maker (either the primary decision maker or the Tribunal on review) from consideration of the circumstances arising after the three year period. In normal circumstances, section 135(4) has the effect that the original decision maker may not cancel a visa after a period of 90 days from the date for reply provided in the notice pursuant to section 135(1). Further, the initial decision maker could not normally take into consideration any information falling outside the three year period as the notice could not be sent to the applicant in respect of events outside the three year period.
[11] This statutory scheme, so described, supports what was Parliament’s clear intent in introducing the scheme into the Act in 1992, as indicated by the then Minister’s second reading speech for the Migration Amendment Bill (No 2) 1992:
“The second is the creation of a power for the Minister to cancel permanent entry permits and entry visas of business skills migrants after their arrival in Australia if they do not enter into business activities which meet the objectives of the category or make a genuine effort to do so. These provisions will apply to such migrants within their first three years after arrival in Australia. The Minister cannot cancel entry permits or visas unless action is initiated within the three-year period … The Bill includes provisions which mean that the power cannot be used against a business migrant unless the Minister has notified him or her of the intention to do so within three years of the migrant’s arrival in Australia. This provision allows business migrants time to make sensible business decisions. It also allows sufficient time for an assessment to be made that the business is likely to be of ongoing benefit. It also recognizes that, as permanent residents, business migrants should not be under the threat of cancellation indefinitely. …” (emphasis as it appears in the Minister’s written submissions)
12. I do not find that argument convincing. There is nothing in Subdivision G of the Act that requires the Minister to turn his or her mind to s 134 “at a particular time”. While it is clear from the legislative provisions (see ss 134(9) and 135(4) of the Act) that action to cancel a visa must be initiated within the three-year time limit, the actual cancellation decision could be made at any time within that period. There is no requirement that it be made on the particular date that is the third anniversary of the granting of the visa.
13. A cancellation decision could, for example, be made after two years, rather than three. If the matter were then brought to the Tribunal, then on the Minister’s argument, the Tribunal could take into account evidence relating to events or activities after the date of the decision and up to the third anniversary, but not after that date. I cannot discern from Subdivision G of the Act that that is the outcome that was intended.
14. It should be noted that a visa cancellation decision of this kind will find its way to the Tribunal only if the Minister has already formed an unfavourable view of the visa holder’s business activities. In other words, if the Minister does not form an unfavourable view by the third anniversary then the visa holder has nothing to fear after that date. But if the Minister has formed an unfavourable view by the third anniversary, should the visa holder not be entitled to point to activities undertaken after that date in an attempt to have the Tribunal decide the issue in his or her favour? To exclude those activities from the Tribunal’s consideration, particularly in circumstances where those activities are likely to be favourable, rather than unfavourable, to the applicant would seriously hamper the Tribunal in its task of making the correct or preferable decision.
15. Given that the question for determination by the Tribunal is whether the correct or preferable decision is to cancel, or not to cancel, Mr Liu’s visa, I do not accept the Minister’s submission that the Tribunal is limited to examining activities that occurred during that first three year period.
16. The decision to cancel a person’s visa has serious consequences for the visa holder: if the person is in Australia when the cancellation decision takes effect, and remains here, he or she will be an unlawful non-citizen, and is liable to be detained and removed from Australia. Alternatively, if he or she is outside Australia and tries to return here, immigration clearance will be refused unless an alternative visa has been obtained.
17. Taking into account the relevant legislation and the nature and incidents of the decision under review, I have concluded that I am required to take into account the state of affairs as at the date of my decision. I note that this conclusion is consistent with that reached by the Tribunal in Re Kushner and Minister for Immigration and Citizenship [2008] AATA 1170 where at [17], like me, Senior Member Kelly rejected the Minister’s submissions, which appear to have been along the same lines as they were here: see [11] above.
Issue 1 – a substantial ownership interest in an eligible business in Australia?
18. The power to cancel Mr Liu’s visa is enlivened if the Minister (or, on review, the Tribunal) is satisfied that Mr Liu has not obtained a substantial ownership interest in an eligible business in Australia. It is important to note that the cancellation power is not triggered if it is simply the case that I am not satisfied that Mr Liu has obtained such an ownership interest. The question is whether I am positively satisfied that he has not obtained such an interest.
19. It is not disputed that Mr Liu owns 60% of the shares in a company known as KStar Australia Pty Ltd (“KStar Australia”). It is also not disputed that Mr Liu’s 60% share ownership amounts to a “substantial ownership interest” in KStar Australia.
20. However, the Minister does not consider that KStar Australia is an “eligible business in Australia”. The reason for this reservation is that, according to the Minister, KStar Australia is merely a subsidiary or a branch of Mr Liu’s very large business undertaking in China, Shenzhen KSTAR Science and Technology Development Co. Ltd (“KStar China”), which is a manufacturer of uninterruptible power systems (“UPS”). The Minister did not seek to put forward a precise definition of “subsidiary” or “branch”, but suggested a level of control from China that leads to a lack of autonomy in relation to the Australian activities. The Minister’s contention, as I understand it, is that, although the outward appearance is that activities in Australia are conducted by KStar Australia, the reality is that the activities are those of KStar China; KStar China is not an Australian business; and so it cannot be an “eligible business in Australia”.
21. The expression “eligible business in Australia” is not defined in the Act, although s 134(10) contains the following definition of “eligible business”:
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.
22. It follows that an “eligible business in Australia” is a business in Australia that the Minister (or, on review, the Tribunal) reasonably believes is resulting or will result in one or more of the matters set out in paragraphs (a) to (f). The link to the substantial ownership criterion in s 134(1)(a) of the Act is made through the definition of “ownership interest” in s 134(10), which so far as relevant provides:
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;
…
23. The identification of the “company that carries on the business” (assuming, for the moment, that there is a business being carried on, and assuming also that it is an “eligible business”) is critical. If it is KStar Australia, then it must follow that Mr Liu’s visa cannot be cancelled in reliance on s 134(1)(a). That is because KStar Australia is undoubtedly a “business in Australia”, and the fact that it may be a subsidiary or a branch of KStar China will not alter that outcome.
24. The Minister likened KStar Australia’s circumstances to those of the businesses involved in Re Nagasaputra and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 39, Re Susanto and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 470 and Re Mulyadi and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 1019. In each of those cases, the Tribunal concluded that the business activities on which the respective visa holders were relying were not the activities of an eligible business in Australia, but were:
· “part of [the applicant’s] long-standing business in [Indonesia] to supply those sorts of products. In that sense, his activities were more related to the carrying on of a business in Indonesia than [one] in Australia”: Nagasaputra at [19];
· “a part of a larger business activity conducted by the applicant in Indonesia involving the import of goods into that country from a number of [other] countries, principally China”: Susanto at [16];
· “in substance transactions undertaken as part of the applicant’s normal business in Indonesia via PDSS and they were booked to the account of Excellent Trading only for the purpose of creating the impression that Excellent Trading was carrying on a business in Australia”: Mulyadi at [31].
25. However, it should be noted that the shortcoming identified in each of those brief excerpts was not the only obstacle faced by the applicant. In Nagasaputra, the Tribunal was also influenced (at [19]) by the “small number of transactions” undertaken; in Susanto, goods were bought and sold for the same price (at [16]); in Mulyadi, there were very few transactions and the profit on at least one sale was taken by the offshore entity rather than by the Australian trader (at [32]).
26. It is well established that a business must be shown to be a commercial enterprise involving activities being pursued for the purpose of profit on a continuous and repetitive basis (Hope v Bathurst City Council (1980) 144 CLR 1). The evidence in the current case, as set out in the following paragraphs, supports the conclusion that there is a business being carried on, and that it is being carried on by KStar Australia. This evidence is to be found in the documents lodged with the Tribunal under s 37 of the AAT Act, the written statement of Mr Liu (Exhibit A1), the written statements of Mr Jackson Gao, the Managing Director of KStar Australia (Exhibits A2, A3 and A4), and the oral evidence Mr Liu and Mr Gao gave during the hearing.
27. KStar Australia was incorporated in June 2006. Mr Liu was asked by the Minister’s representative to explain his statement in Exhibit A1 that KStar Australia was established for the purpose of marketing KStar China’s products. He answered that that was one of the purposes. In addition, his many years of experience in the industry had encouraged him to establish an Australian business with a view to using Australia as a platform to develop into other markets, including Europe. The ultimate goal, he said, was to manufacture products in Australia because goods manufactured in Australia would have a better reputation than those manufactured in China.
28. In August 2006, KStar Australia entered into a commercial lease of premises in the Sydney suburb of Peakhurst where it occupies a combined warehouse/office suite. There are photographs in evidence (Annexure B to Exhibit A1) showing internal and external views of these premises and confirming that KStar Australia has the familiar look of a small enterprise carried on in a suburban business park.
29. In September 2006, KStar Australia became registered for Australian Business Number (“ABN”) and goods and services tax (“GST”) purposes. Any entity registered as a company under the Corporations Act 2001 is entitled to an ABN (ss 8(2) and 41 of the A New Tax System (Australian Business Number) Act 1999(Cth)), but for GST purposes a company like KStar Australia cannot be registered unless, as a minimum, the Commissioner of Taxation is satisfied that it carries on an enterprise, or intends to do so from a particular date (Divisions 23 and 25 of the A New Tax System (Goods and Services Tax) Act 1999 (“GST Act”)). An “enterprise” is relevantly an activity or series of activities done in the form of a business (ss 195-1 and 9-20(1)(a) of the GST Act).
30. Shortly after incorporation, the company was informed by the New South Wales Department of Fair Trading that imported electrical devices had to comply with Australian safety standards. Mr Liu arranged for appropriate compliance certification (Exhibit A1, para 13).
31. Another early activity was to ensure that KStar Australia was included as an exhibitor in the technology exhibition which would take place in Sydney in May 2007. This exhibition is known as “CeBIT”, an abbreviation of the name of the German organisation that translates as “Centre for Office and Information Technology”. The company applied for stand space (T12-127) and ordered a specially designed display stand. Photographs of Mr Liu, and of the stand in situ at the CeBIT exhibition, are at Annexures I and J of Exhibit A2.
32. At the CeBIT exhibition Mr Liu was introduced to representatives of the New South Wales Department of State and Regional Business Development. These representatives were receptive to Mr Liu’s description of the KStar product performance, international compliance, and marketing strategies for Australia. Shortly after the exhibition one of the Department representatives led a delegation to Shenzhen to visit KStar China’s operations (Exhibit A2, paras 22-23).
33. Around this time, Mr Liu and Mr Gao were involved in negotiations with the Queanbeyan-based company Dyesol Limited, said to be one of Australia’s leading companies in the field of photovoltaic and nanotechnology. By July 2007 a memorandum of understanding was finalised with Dyesol under which KStar China, Dyesol “and their respective subsidiaries”:
agreed in principle to collaborate in the development, manufacture and marketing of potentially low-cost DSC [Dye Solar Cell] PV [photovoltaic] products for the remote power market including telecommunication applications.
34. The revenue-earning activities of KStar Australia up to the date of cancellation of Mr Liu’s visa in September 2007 were modest, to the point of being virtually non-existent. The company’s accounts for the year ended 30 June 2007 (T12-96) disclose no income other than $86 by way of interest income. In the same year the company incurred expenses of $4,621.
35. KStar Australia’s Business Activity Statement (“BAS”) for the quarter ended 30 September 2007 (Exhibit A3, Annexure E) reported no sales, but “non-capital purchases” of $74,921. For the next quarter, ended 31 December 2007, there were reported sales of $68,168 and purchases of $17,856 (Exhibit A3, Annexure F). For the quarter ended 31 March 2008 the company reported sales of $91,781 and purchases of $221,034 (Exhibit A3, Annexure G).
36. Those BASs are consistent with the following claim of Mr Liu at Exhibit A1, paragraph 29:
With careful planning and proper marketing, the Australian business has secured new orders from an expanding network of businesses since mid-2007.
37. Mr Liu and Mr Gao have conducted in-depth market research into their competitors in the UPS industry and the prices of their products (Exhibit A1, para 34 and Annexure L).
38. KStar Australia has four “experienced sales representatives” (Exhibit A2, para 29), each of whom is retained, under a written Sales and Agency Agreement (Exhibit A1, Annexure N), to promote and market the company’s products. The company has also entered into a distribution agreement with a New Zealand based company for the distribution of KStar products. If the targeted level of sales in New Zealand is achieved, then KStar Australia will be entitled to a minimum $2.1 million in sales to New Zealand over the five year term of the agreement (Exh A3, para 14).
39. These activities that I have described are undoubtedly carried on by KStar Australia. I am not swayed from this view by the statement of Mr Liu (Exhibit A1, para 42) that it was his desire “to develop KStar Australia as a trading arm of KStar China”, or by Mr Gao’s reference (Exhibit A2, para 9) to an agreement with Mr Liu that “the Australian company would act as a trading arm of KStar China”. Those statements, in my view, amount simply to a proper recognition of the fact that, at least in the early days of the business, KStar China would be a major, and perhaps even the only, supplier of the product which KStar Australia was seeking to market in Australia.
40. KStar Australia’s activities are of a kind and scale that one would expect of “a commercial enterprise involving activities being pursued for the purpose of profit on a continuous and repetitive basis” and therefore, in my view, it is proper to conclude, in reliance on the test in Hope v Bathurst City Council (see [26] above) that KStar Australia is carrying on a business. The marketing efforts, the involvement in trade exhibitions, the making of proposals to potential customers (referred to, for example, at Exhibit A3, para 15), the lease of commercial premises, the securing of a joint venture with an Australian public company for the development of innovative products, the appointment of a New Zealand distributor, all point towards a repetitive, commercially-focused and profit-driven enterprise. It is true that KStar Australia is not yet profitable, but that is not unusual in the formative years of a new enterprise.
41. In terms of the definition of “eligible business” in s 134(10) of the Act, KStar Australia’s activities have already resulted in the development of business links with the international market (both China and New Zealand) – paragraph (a) – and I reasonably believe that they will result in the creation or maintenance of employment in Australia – paragraph (b) – and the introduction of new or improved technology to Australia – paragraph (e).
42. For these reasons, Mr Liu’s visa cannot be cancelled under s 134(1)(a) of the Act.
Issue 2 – utilising his skills in actively participating at a senior level in the day-to-day management of the business?
43. The Minister submitted (Respondent’s Statement of Facts and Contentions, para 20) that Mr Liu:
has had limited involvement with the Australian subsidiary, and has spent at vast majority of his time overseas. … The Applicant has remained in China because of his involvement with KStar China. His involvement with KStar in Australia has been limited to its capacity as a subsidiary for KStar China.
44. The Minister’s representative tendered an up-to-date “Interval Calculator” (Exhibit R2) which showed the following movements by Mr Liu into and out of the country since he was first granted his visa in 2004:
Arrive Depart Days in Australia
26 August 2004 29 August 2004 3
2 May 2005 6 May 2005 4
4 June 2006 12 June 2006 8
28 April 2007 7 May 2007 10
23 September 2007 27 September 2007 4
25 May 2008 27 May 2008 2
45. (Although the document appeared to cover the period up to 4 December 2008, it did not include any reference to a further visit to Australia which, according to Mr Gao, Mr Liu made in September 2008.)
46. The Minister also noted that Mr Liu’s management of KStar China, which has 32 branches in China and almost 2000 employees, would take up so much of his time that it would be virtually impossible for him to be conducting the business of KStar Australia. It was suggested that it is Mr Gao who is responsible for the day-to-day management of KStar Australia, and that Mr Liu’s involvement is in respect of his role as owner of the parent company.
47. The Minister relied on a number of earlier decisions of the Tribunal, including Re Ng andMinister for Immigration and Multicultural and Indigenous Affairs[2003] AATA 299, where Deputy President Wright QC commented at [12]:
This does not mean that the visa holder is confined to working within the geographical limits of Australia. Obviously overseas trips may be a vitally important part of fostering and expanding the business. However the Act does not contemplate an absentee entrepreneur directing operations from afar. Direct “hands on” involvement within the Commonwealth of Australia is essential. A business skills visa carries with it the right of permanent residency in Australia during its existence and by departing from Australia and joining family members as secondary applicants they too can obtain this privilege. It would be strange indeed if an overseas entrepreneur could secure these advantages by directing business operations from abroad within a day or two of his first arrival and never setting foot in this country again.
48. Notwithstanding Mr Liu’s extensive periods of time out of the country – indeed, he had been in Australia for only 31 days in a period of four years since the grant of his visa – he maintained that he was actively participating in the day-to-day management of KStar Australia. He stated, for example (Exhibit A1, para 15):
Whilst I was overseas, I would speak with Mr Gao over the telephone on an almost daily basis to discuss all the daily issues as well as answering clients’ specific enquiries and responding to requests for product samples.
49. Mr Gao stated in Exhibit A2:
[9] It was agreed that … as the Managing Director [of KStar Australia], I would report directly to Mr Liu whenever he is not in Australia. …
…
[11] Mr Liu was kept closely posted as to every major development in the company setting-up. Before making an important and major decision, I would always seek Mr Liu’s instructions and approvals either by telephone or email. For instance, I emailed Mr Liu all details on the 2007 CeBIT Fair including floor plan, stand size/layout and budget. Mr Liu then commented and approved the same before I proceeded to confirm our booking with the organiser. …
…
[15] … On most occasions (unless he was in a meeting or simply caught up with something important), I have always been able to contact him over the telephone. My communication with Mr Liu was predomina[nt]ly by way of international phone calls. On other occasions, we used emails. …
…
[18] Mr Liu had been involved in the negotiations with Dyesol Limited to form a joint venture since the beginning. I recall Mr Liu met with Dyesol’s representative in Japan in October 2006 followed by a further meeting in Shenzhen on 23 October 2006. …
…
[26] There are other instances that Mr Liu exercised his decision-making powers and made important decisions that affected KStar Australia’s overall operation. I recall at the conclusion of the 2007 CeBIT exhibition, Mr Liu, having spoken with various Australian business representatives, decided to amend the introductory product selection for the Australian market. He instructed me to hold on to the safety compliance testing on the Pro 2000, Office 2000 and Yespower series and instead, to get BM3000, HP900C and HP900C RM series ready for testing on an urgent basis. From discussing with Mr Liu over the telephone, he made such a decision based on his understanding that demand for the former product range was somewhat limited. I acted on his instructions and updated the list of products for testing and verification. On other occasions, having reviewed the potential clients list which was compiled and explained by me, Mr Liu would instruct me to approach these companies and offer them with (sic) our product samples for trial. All quotations were approved by Mr Liu before sending.
[27] Mr Liu also made a decision with regards to appointing 4 experienced sales representatives to market our products. …
50. Mr Gao said in cross-examination that because Mr Liu is the key person in KStar Australia, most of the decisions have to be made by Mr Liu. He said that Mr Liu makes the major decisions, but that he, Mr Gao, could handle some of the smaller issues. He gave product pricing as an example: Mr Gao had the authority to communicate to a client the single unit price of a product, but said that the major pricing decisions were made by Mr Liu.
51. Mr Gao was asked whether it would be fair to say that Mr Liu finds out about the things that happen in Australia only because he, Mr Gao, tells him about them. Mr Gao conceded that that was the case with most things. “Because he is the big boss,” he said, “I have to report to him.”
52. In my opinion, it is beyond argument that Mr Liu’s participation in the business is both active, and at a “senior level”. He is referred to as the “key person” and the “big boss”. He is the one who is in charge. Mr Liu does not speak English, and so he has a fluent English speaker, Mr Gao, in Australia to implement the various decisions he, Mr Liu, makes. He is absent from Australia for much of the time, but his absence does not affect the efficiency of the business operations.
53. Mr Liu has been involved in all the major projects. He took an active role in the company’s involvement in the CeBIT exhibition. He was involved in the strategic negotiations with Dyesol; he initiated the process of product safety compliance certification; he undertook with Mr Gao the market research into the company’s competitors; he decided to appoint sales representatives to develop business. He has attended meetings with many of the company’s potential customers, and he took an active role in the discussions and meetings with the State Government representatives.
54. The Act does not talk of “everyday” management; the expression is “day-to-day management”. That suggests an ongoing (rather than ad hoc) involvement in the management of the business, but it does not require an involvement on every single day of the year. Nevertheless, Mr Liu’s involvement in the management of the business – his setting of strategic direction; his approval of pricing on major quotations; his selection of the appropriate means of establishing the company’s workforce – has been extensive, active, ongoing and at a “senior level”. It is clear that Mr Liu is “actively participating at a senior level in the day-to-day management” of the business of KStar Australia. Sometimes – in fact, most of the time – he does this in China; when necessary, he does it in Australia.
55. For these reasons, Mr Liu’s visa cannot be cancelled under s 134(1)(b) of the Act.
Intention to continue?
56. There is no suggestion that Mr Liu does not intend to continue to maintain his ownership interest in KStar Australia, or to continue to participate at a senior level in the day-to-day management of the business.
57. For this reason, Mr Liu’s visa cannot be cancelled under s 134(1)(c) of the Act.
Decision
58. The decision under review is set aside. I decide instead that Mr Liu’s visa is not cancelled. As a consequence the secondary visas of his family members are also not cancelled.
I certify that the 58 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S E Frost, Member
Signed: ...............................[sgd].................................................
Associate
Date/s of Hearing 4 December 2008
Date of Decision 16 February 2009
Counsel for the Applicant S.A. Sirtes
Solicitor for the Applicant Gray & Perkins Lawyers
Solicitor for the Respondent Thérèse Quinn, DLA Phillips Fox
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