Chong and Minister for Immigration and Multicultural and Indigenous Affairs

[2006] AATA 45

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 45

ADMINISTRATIVE APPEALS TRIBUNAL      )

)No A2005/159, A2005/160,

A2005/161

GENERAL ADMINISTRATIVE DIVISION		)
Re		MEOW YAU CHONG SAM SAM CHONG SAM SON CHONG

Applicants

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr J.W. Constance, Senior Member

Date23 January 2006

PlaceCanberra

Decision

1.      In application A2005/159 the decision of the Minister for Immigration and Multicultural and Indigenous Affairs made 9 November 2004 to cancel the Business Skills visa issued to Mr Meow Yau Chong is affirmed.

2.      In application A2005/160 the decision of the Minister for Immigration and Multicultural and Indigenous Affairs made 9 November 2004 to cancel the Business Skills visa issued to Mr Sam Son Chong is affirmed.

3.      In application A2005/161 the decision of the Minister for Immigration and Multicultural and Indigenous Affairs made 9 November 2004 to cancel the Business Skills visa issued to Mr Sam Sam Chong is affirmed.

..............................................

Mr J.W. Constance, Senior Member

CATCHWORDS

IMMIGRATION AND CITIZENSHIP – Cancellation of Business Skills Visa –– whether applicant failed to satisfy requirements of s 134 of the Migration Act 1958 – whether applicant had obtained, or made a genuine effort to obtain, a substantial ownership interest in an “eligible business” – whether applicant actively involved in day-to-day management of that business – whether applicant’s company engaged in any activities on a ‘continuing and repetitive basis’ - whether the Minister should exercise residual discretion not to cancel visa – no basis for discretion – secondary visa holders – would holder suffer “extreme hardship” for purposes of s 135(5) of the Migration Act 1958 if visa cancelled – decision under review affirmed

Migration Act 1958 (Cth) ss 134, 135.

Hope v City Council of Bathurst (1980) 144 CLR 1

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

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

Re Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299

Re Tany and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 58

REASONS FOR DECISION

23 January 2006   Mr J.W. Constance, Senior Member     

INTRODUCTION

1.     Mr Meow Yau Chong is seeking a review of the decision of the Minister to cancel a Business Skills visa issued to him in 2001. His sons, Mr Sam Son Chong and Mr Sam Sam Chong, are seeking a review of the decisions to cancel the visas issued to them as members of the family. For the reasons set out I have decided that the decision of the Minister in each case should be affirmed.

FACTS

2.     Unless otherwise stated the following findings of fact are based on the evidence of Mr Chong (Snr), most of which was unchallenged. I am satisfied of these facts on the balance of probabilities.

3.     On 11 October 2001 Mr Chong was granted a Business Skills (Migrant) (Class AD) (Subclass 127 - Business owner) visa. Mr Chong’s spouse and sons were also granted visas as members of Mr Chong’s family unit.

4.     When Mr Chong applied for the visa he was a substantial shareholder in a Malaysian company which operated a “clean room” business in Malaysia. The business established and maintained sterile environments for the production of electronic components. Mr Chong planned to use funds from the proposed public listing of this company to develop a business in Australia but for various reasons the public float did not proceed. Nevertheless, Mr Chong proceeded with his plans for a business in Australia. He had other funds available.

5.     Prior to the grant of the visa Mr Chong began to investigate business opportunities in Australia, particularly the prospects of setting up a “clean room” business such as he was operating in Malaysia.  Within a few months of the grant of the visa he decided that such a business was not viable in this country. In giving evidence Mr Chong said that there were only two businesses in Australia which could make use of the “clean room” services and that this was clearly an inadequate market for those services. Mr Chong did not explain why, in these circumstances, he ever believed that setting up the “clean room“ business in Australia was viable.

6.     In early 2002 Mr Chong decided to set up a business to manufacture timber moulding using Australian timber. At this time he spent about 4 weeks in Australia investigating the options for such a business. In May 2002 he returned to Australia and made enquiries in the Australian Capital Territory and Sydney as to the possibility of setting up a factory in Australia but he decided that it was not feasible. He took into account the time it would take him to acquire land, the approval process required and the labour costs of operating a factory in Australia. He decided to set up a factory in Malaysia and to establish a trading company in Australia to buy timber and export it to Malaysia for processing. He intended that the Australian company would also sell the Malaysian product in Australia and other countries.

7.     In 2002  Mr Chong personally purchased a factory for the production of mouldings in Malaysia at a cost of approximately $1.5 million and machinery costing approximately $1.2 million. He employed a manager and about 50 staff in the business. The factory started production in 2002 using timber obtained in Malaysia. During 2005 (up until the time of the hearing in December) sales of timber products were approximately $1 million.

8.     Mr Chong said in evidence that it was necessary that he purchase the factory  as Mypro Pty Ltd (the Australian trading company) had not been incorporated at the time. There has been no attempt to transfer the factory to the company since its incorporation. The actual business of the manufacture of the wood products in Malaysia has always been carried on by Wonway Industries Sdn. Bhd, another company in which Mr Chong has an interest. The s.37 documents[1] show that up to and including October 2003 Wonway Industries was making enquiries on its own behalf as to opportunities to import timber from Australia.[2]

[1] Ex. A2.

[2] Pp. 353-366.

9.     In early 2003 Mr Chong learned of the severe bushfires in the ACT. In March of that year he travelled to Australia to determine the effect of the fires on the availability of timber for his business. He ascertained that there were other sources available.

10.   In November 2003 Mr Chong again travelled to Australia and arranged for the incorporation of Mypro Pty Ltd to operate the planned business in Australia. The company was incorporated on 8 November 2003 and started exporting timber to the Malaysian factory in late 2003. In March and April 2004 Mr Chong came to Australia to arrange for timber supplies for export to Malaysia by Mypro Pty Ltd.

11.   Records of Mr Chong’s movements into and out of Australia[3] establish that during the time Mr Chong’s visa was in force he spent the following times in this country:

[3] Ex. R1.

·14.10.01 to 20.10.01

·11.11.01 to 17.11.01

·14.04.02 to 30.04.02

·30.05.02 to 08.06.02

·24.09.02 to 04.10.02

·15.03.03 to 27.03.03

·17.05.03 to 31.05.03

·08.11.03 to 15.11.03

·31.03.04 to 17.04.04

·23.08.04 to 12.09.04.

This is a total of 127 days in a period of just over 3 years.

12.   On 9 November 2004 the delegate of the Minister cancelled Mr Chong’s visa and those of his family members.

13.    In December 2004 Mypro Pty Ltd sold its first shipment of finished product in Europe and at the time of the hearing was about to send another shipment to Japan.

14.    Mr Chong brought approximately $300,000 into Australia to establish the business. By reason of the delay in setting up the business he purchased a house in Canberra with these funds but proposes to use the property as security to borrow funds for the business when they are needed.

15.   On 2 January 2004 Mypro Pty Ltd opened a cheque account with the Commonwealth Bank of Australia.[4] As at 2 August 2004 (the latest date of the statement) the account was $17,609.70 in credit. Of the transactions shown on the statement only 8 are possibly business transactions.

[4] Ex. A2, p. 434.

16.   Mr Chong did not seek professional advice as to setting up the business initially but relied on his own business experience. Later he did seek advice from accountants and financial institutions in Australia, particularly in relation to financial matters. He also relied on advice from his son who was studying commerce at an Australian university.

17.   In 2001 Mr Chong met Mr Tam through his sons in Australia. Following discussions with Mr Tam, Mr Chong invested between $20,000 and $30,000 in a joint venture with Mr Tam in a business involving the repair and sale of motor vehicles. There was no written proposal in relation to this joint venture. Some time later the parties discussed the setting up of a car wash business. A company owned by Mr Tam has purchased land for this purpose in NSW and an application has been made to the local Council. There is no documentation of any proposed joint venture in relation to the car wash business.

18.   The s.37 documents[5] refer to a proposal involving Mr Chong in a taxi business and Mr Chong mentioned it briefly in his evidence. It seems that this joint venture did not proceed.

[5] Ex. A2, pp. 367-371.

STATUTORY BACKGROUND

19. Section 134 of the Migration Act 1958 in part provides:

“(1)Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australian 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).”

THE ISSUES

20.   The issues which arise for determination are:

A.Apart from the provisions of subsection 134(2) of the Act, are  there grounds to cancel Mr Chong’s visa under subsection 134(1)?

B.If so, has Mr Chong met the requirements of subsection 134(2) of the Act which prevents the cancellation of a business visa in certain circumstances?

REASONING

21.   In considering whether there are grounds for cancellation under subsection 134(1) it is the situation at the time the visa was cancelled that is to be taken into account: Re Tany and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 58. However what has happened after the cancellation may be relevant in determining the intention of Mr Chong at the time his visa was cancelled.

22.   The Minister’s contentions can be summarised as follows;

·Mr Chong has not obtained a substantial interest in an eligible business nor has he made a genuine effort to do so;

·Mr Chong was not utilising his skills in the day-to-day management of an eligible business nor has he made a genuine effort to do so; and

·there is no basis for the exercise of the residual discretion in Mr Chong’s favour.

Are there grounds for cancelling Mr Chong’s visa under s. 134(1)?

23.   The first point for determination is whether it has been established that at the time of the cancellation there was in existence an “eligible business”. For an entity to be carrying on a business it needs to be engaged in “activities…for the purpose of profit on a continuous and repetitive basis.” [6]

[6] Hope v The Council of the City of Bathurst (1980) 144 CLR 1, pp. 8-9.

24.   Whilst I am satisfied that Mr Chong is the sole shareholder in Mypro Pty Ltd I am not satisfied that the company was conducting a business as at 9 November 2004. It follows that I am satisfied that Mr Chong had not obtained a substantial ownership interest in an eligible business nor was he exercising his skills in actively participating in the day-to-day management of such a business at 9 November 2004.

25.   Wonway Industries Sdn. Bhd. has always operated the Malaysian manufacturing business in premises owned by Mr Chong personally. Until the month before Mypro Pty Ltd was incorporated Wonway was itself making enquiries as to importing timber from Australia and there does not appear to be any reason why it could not have continued to do so. Whilst Mr Chong gave evidence that Mypro Pty Ltd sold one shipment of finished product directly from Malaysia there was no explanation given as to how this product became the property of Mypro Pty Ltd or why Wonway could not have sold the product to the customer directly. On the evidence before me it appears that even on Mr Chong’s long term plans, Mypro Pty Ltd was simply an Australian company interposed in an existing business structure doing what other business entities in the group could do without its intervention. On this basis alone I am not satisfied that it operated a business.

26.   Furthermore, as at 9 November 2004, 12 months after its incorporation, Mypro Pty Ltd had not exported any timber nor sold any finished product.  There is no evidence that at that time Mypro Pty Ltd was engaged in any activities “on a continuing and repetitive basis.”

27.   On the basis of the reasons set out above there are grounds under subsection 134(1) for Mr Chong’s visa to be cancelled.

Have grounds been established to prevent the cancellation of the visa under subsection 134(2)?

28.   The provisions of this subsection are set out in paragraph 19. In summary Mr Chong’s visa must not be cancelled if I am satisfied that he has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia AND made a genuine effort to utilise his skills in managing the business AND intends to continue to make such genuine efforts. All requirements must be met.

29.   Although I have found that the company through which Mr Chong proposed to operate an eligible business had not commenced to carry on business at all by 9 November 2004, this does not mean that Mr Chong has not made a genuine effort to obtain a substantial interest in an eligible business. However, for reasons set out in the following paragraphs, I am not satisfied that Mr Chong has made a genuine effort to utilise his skills as required by subsection 134(2)(b). Therefore, it is not necessary to decide the issue as to his effort to obtain the necessary ownership interest.

30.   Mr Chong concedes that between 11 October 2001 and 9 November 2004 he had not been utilising his skills in actively participating at a senior level in the day-to-day management of Mypro Pty Ltd in Australia. This was stated in the summary of his case filed in the Tribunal and which was adopted by Mr Vong who appeared on his behalf.

31.   In Re Huang and Minister for Immigration and Multicultural Affairs [2002] AATA 656 the Tribunal summarised the purpose of a Business Skills visa as follows:

“A Business Skills visa is designed to allow the overseas business person to travel to and from Australia and to live in Australia while conducting the business. It envisages that the holder of such a visa will acquire a significant interest in the Australian company and play a significant role in the day-to-day management of the company. It also envisages that the business person will probably wish to have close family members accompany them while they live in Australia. Hence the provision of secondary visas for family members.” [7]

[7] Re Huang and Minister for Immigration and Multicultural Affairs [2002] AATA 656, 6.

32.   The Second Reading Speech of the Minister when the Migration Amendment Bill (No. 2) 1992 was introduced indicated an expectation that migrants under these visas would remain resident in Australia. This was also the view of the Tribunal in ReNg and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299.

33.   Mr Chong has given evidence (again unchallenged) that difficulties he experienced with his businesses in Malaysia prevented his spending as much time as he planned managing the business in Australia. He claimed that he was managing the business on a day-to-day basis from Malaysia. However Mr Chong did not give evidence of what he actually did in fulfilling this role.

34.   A consideration of the matters set out in subsection 134(3) does not assist Mr Chong for the following reasons:

a)there have been no detailed business proposals developed for any of the proposed businesses;

b)there is extremely limited  evidence of the arrangements (formal or otherwise) with Mr Tan or his company, Jason Signs Pty Limited;

c)Mr Chong has undertaken very little research into the conduct of any of the proposed businesses;

d)funds originally transferred for business purposes have been expended in purchasing a residential property in which Mr Chong’s sons have resided;

e)up until 2 August 2004 the bank account held by Mypro Pty Ltd had a maximum credit of $17,609.70;[8]

f)there was no export of timber or sale of finished product by Mypro Pty Ltd prior to cancellation of Mr Chong’s visa; and

g)Mr Chong failed to comply with a notice under section 137.

[8] Ex. A2 pp 434-5.

35.   On the basis of the findings in the previous paragraph an application of the guidelines set out in Migration Series Instruction 133 supports the conclusion that Mr Chong has not made a genuine effort to obtain a substantial ownership interest in an eligible business.

36.   I also take into account that neither the Malaysian factory nor the manufacturing business have been transferred to the Australian company claimed to be operating the eligible business. Also the company has exported only one consignment of timber from Australia and one consignment of finished product from Malaysia. Furthermore, I also note that there has been very little activity on the company’s bank account and that such activity as has taken place has not been explained as being related to business activity by the company.

37.   For the reasons stated I am not satisfied of the grounds set out in subsection 134(2) which would prevent the cancellation of Mr Chong’s visa.

Are there grounds to exercise the residual discretion not to cancel the visa under section 134?

38.   The Tribunal is not obliged to cancel the visa simply because it is not satisfied of the matters set out in subsection 134(2): Kim v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 31. In that case the Federal Court of Australia referred to the possibility of the Minister exercising the discretion to allow the visa holder further time to comply with the requirements of the Act or accepting an explanation as to inaction up until the time of assessment.

39.   On the evidence before me I am not satisfied that grounds such as discussed by the Federal Court, or in fact any other grounds, have been established to justify the discretion not to cancel being exercised in Mr Chong’s favour.

40.   The decision of the Minister to cancel the visa of Mr Meow Yau Chong will be affirmed.

Would cancellation of the visas of Mr Sam Son Chong or Mr Sam Sam Chong result in extreme hardship to either visa holder?

41.   In the cases of Mr Sam Son Chong and Mr Sam Sam Chong the only issue raised in each application before the Tribunal was whether cancellation would result in “extreme hardship” within the meaning of subsection 135(5). In either case, if it would, the subsection provides that the visa must not be cancelled.

42.   Again the information provided to the Tribunal in support of the applications based on hardship was very limited. Neither Mr Sam Son Chong nor Mr Sam Sam Chong gave evidence or filed a statement or affidavit in support of his application. The Statement of Issues filed by each applicant stated, in part:

“6. The Applicant is a student at the University of Canberra who, if his visa cancellation is affirmed, would be forced to leave Australia to apply for another visa (see section 48 of the Migration Act 1958).

7. Consequently, the Applicant would be forced to terminate his university studies in 2005 if his visa cancellation is affirmed. Applicant contends that being forced to discontinue a successful course of study before its completion would constitute extreme hardship.“

43.   Although the applications were filed on 7 December 2004 they did not come on for hearing until 12 December 2005. At the hearing Mr Chong (Snr) gave evidence that Mr Sam Son Chong may not wish to complete his study in Australia and that Mr Sam Sam Chong had completed his degree at the end of the 2005 academic year. He did not know what either son may wish to do in future.

44.   On the basis of the evidence before the Tribunal I am not satisfied that either Mr Sam Son Chong or Mr Sam Sam Chong would suffer extreme hardship as a result of the cancellation of his visa and the decision of the Minister to do so  will be affirmed.

DECISION

45.   In application A2005/159 the decision of the Minister for Immigration and Multicultural and Indigenous Affairs made 9 November 2004 to cancel the Business Skills visa issued to Mr Meow Yau Chong is affirmed.

In application A2005/160 the decision of the Minister for Immigration and Multicultural and Indigenous Affairs made 9 November 2004 to cancel the Business Skills visa issued to Mr Sam Son Chong is affirmed.

In application A2005/161 the decision of the Minister for Immigration and Multicultural and Indigenous Affairs made 9 November 2004 to cancel the Business Skills visa issued to Mr Sam Sam Chong is affirmed.

- END OF REASONS FOR DECISION -

I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of J.W. Constance, Senior Member

Signed:         .....................................................................................

Joe Meagher, Associate

Date/s of Hearing  12 December 2005
Date of Decision        January 2006
Representative for the Applicant    Alan Vong
Solicitor for the Respondent          Catherine Petre