Eu and Minister for Immigration and Multicultural and Indigenous Affairs
[2006] AATA 87
•3 February 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 87
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/162
GENERAL ADMINISTRATIVE DIVISION ) Re SEM DJOENG EU Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Ms N Bell, Senior Member Date3 February 2006
PlaceSydney
Decision The decision under review is set aside and instead the Tribunal decides that Mr Eu’s visa should not be cancelled.
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Ms N Bell,
Senior Member
CITIZENSHIP AND MIGRATION – Business Visa – Cancellation – Not an Eligible Business – Question of Genuine Effort – Applicant Found to Have Made Genuine Effort – Decision Under Review Set Aside
Migration Act 1958, s134
Re Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997
Re Griffiths and Migration Agents’ Registration Authority [2001] AATA 240
Re Vhyat and Minister for Immigration [2003] AATA 1051
REASONS FOR DECISION
3 February 2006 Ms N Bell, Senior Member 1.Mr Eu is a citizen of Indonesia who was granted a subclass 127 business owner visa on 31 August 2001. Mr Eu’s wife and two children were also granted visas as secondary visa holders. Mr Eu entered Australia on 16 September 2001. On 31 August 2004, the Respondent sent Mr Eu a notice of intention to cancel his visa. He responded to that notice and on 5 January 2005, Mr Eu’s visa was cancelled.
2.Mr Eu has a business in Indonesia supplying spare parts for motor vehicles. The business has approximately 50 employees and is run by an employed manager. Mr Eu also has a joint venture with a business partner in China supplying motor vehicle spare parts. In addition, he owns the building from which his company, PD Fajar, operates and a warehouse which he rents. He also owns his principal residence in Jakarta.
legislation and issues
3.The Respondent cancelled Mr Eu’s visa pursuant to the provisions of s134 of the Migration Act 1958 (the Act). That section provides:
Cancellation of business visas
(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.
4.The following issues arise in the circumstances of Mr Eu’s application:
(a)Whether Mr Eu had obtained a substantial ownership interest in an eligible business in Australia;
(b)If so, whether Mr Eu had utilised his skills in actively participating at a senior level in the day-to-day management of the business, and intended to continue to do so.
5.If (a) and (b) above, or one of them, are answered in the negative, then;
(c)Whether Mr Eu made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia.
interest in an eligible business in australia
6.Mr Eu’s evidence was that the company Star Century Australia Pty Limited (Star Century) was registered in Australia in April 2003. He has a 90 per cent ownership share and his wife owns the remaining 10 per cent. The business conducted by Star Century is the export of gold bullion. The bullion was exported personally by Mr Eu. His evidence was that, in all, he exported some 11 kilograms of Australian gold up until the time his visa was cancelled. Star Century, in the financial year ending 30 June 2003, had a turnover of $22,000 and a profit of $4,152.50. In the financial year ending 30 June 2004, Star Century’s turnover was $104,922.56 with a profit of $6,494.11. In the year ending 30 June 2005, Star Century’s turnover was $89,926.83 with a profit of $5,513.98.
7.I am satisfied that Star Century meets the requirements in s134(10) for a business to be an eligible business by virtue of its export of Australian goods in the form of Australian gold bullion (s134(10)(b)). However, Star Century’s activity over a three-year period raises doubt as to whether it was carrying on a business, that is, a commercial enterprise in the nature of a going concern with activities engaged in for the purpose of profit on a continuous and repetitive basis (see ReTang and Minister for Immigration and Multicultural Affairs [2000] AATA 997).
8.The Respondent contended that Star Century was not an eligible business in Australia because it was not, it says, an Australian business but rather an Indonesian business, run from Indonesia and involved in the importation of Australian gold bullion to Mr Eu’s Indonesian business. This submission gained some support from Mr Eu’s evidence that the nominal purchaser of the gold bullion was his Indonesian company PD Fajar and that administrative work, such as the preparation of invoices, was undertaken by an employee of PD Fajar. On the other hand, Mr Eu contended that Star Century was a company registered in Australia and paying Australian tax.
9.I consider that, on balance, the low level of activity of Star Century during the relevant period from 2003 to the beginning of 2005 takes it out of the realm of being a commercial enterprise in the nature of a going concern with activities engaged in for the purpose of profit on a continuous and repetitive basis. I appreciate that businesses require time to develop and become established however in three years Star Century’s turnover and profit have not increased to the extent of making the business a going concern. The small number of transactions undertaken in the relevant period and to date suggests otherwise.
10.I note Mr Eu’s evidence that from 2003, 30 per cent of his time was spent on Star Century business. I find this puzzling, given the small amount of activity engaged in and the few transactions completed. However, I am mindful that Mr Eu gave evidence of having investigated other business opportunities that might be available to him in Australia and I will examine these together with his activities in relation to Star Century below.
11.I do not find Star Century to be an eligible business within the meaning of s134 of the Act, taking into account and adopting, the analysis in Tang (supra).
genuine effort
12.Given my conclusion in relation to Star Century, I turn now to the question of whether Mr Eu made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia.
13.Mr Eu’s evidence was that his original intention was to undertake spare parts and car accessories trading and to find business partners in Australia to join him in that business. However, he found, by 2003, that Australia has high-quality, high-price spare parts and that it would be very difficult for him to export those parts from Australia to Indonesia. Mr Eu described the export of Australian gold bullion to Indonesia as one of the first alternatives he considered, on advice he received from Mr Marzukie, a migration agent and accountant, and from Mr Ade Sawitto and his brother Harry Sawitto who are Indonesian entrepreneurs. Mr Harry Sawitto introduced Mr Eu to the gold bullion market. Mr Sawitto prepared a business plan for Mr Eu.
14.Another opportunity Mr Eu examined was exporting seafood and wine from Australia to China. However, his efforts to find purchasers in China failed. Mr Eu said that in October 2004, encouraged by his business efforts, he purchased a property in Cabarita in Sydney.
15.Mr Eu gave evidence about the establishment of ASVP Trading Corp Pty Limited (ASVP) which was registered on 10 January 2005. Mr Eu said that he first began to think of setting up a new trading company in early 2004. He said he originally thought of setting it up with Harry Sawitto. However, as his brother Ade Sawitto was a resident of Australia he decided that it would be better to set up the company with him. Mr Eu said his idea was to set up a company that could trade in materials relevant to the building industry. He said Mr Sawitto is a building contractor and developer and has his own company. Through Mr Sawitto he also came to know the brothers Vince and Anthony Papallo who are architects. Vince is the proprietor of Complete Building & Carpentry Pty Limited and Anthony is the proprietor of Papallo Building Services Pty Limited. Mr Sawitto and the Papallo brothers helped Mr Eu establish his new business.
16.Mr Eu said that at the time of the registration of ASVP he was not aware that his visa had been cancelled. He said he first found out when immigration officials stopped him at Sydney airport on 11 March 2005 and he was taken to Villawood Detention Centre for one night. He then returned to Indonesia.
17.Mr Eu said that one of his initial ideas was to seek business as a supplier of promotional clothing to companies in the building industry. He considered he could supply these and protective work clothing such as work boots and safety hats for construction workers. He also considered extending the supply to spare parts for construction machinery.
18.Mr Eu said that during the course of 2004 he was planning for the new company, ASVP, as well as operating Star Century and in October 2004, he went to China to look at various possible suppliers for ASVP. He provided a number of business cards obtained from possible suppliers that he contacted in China. He said he also investigated possible suppliers from Indonesia and maintained his communication with Mr Sawitto to obtain information about the demand for promotional products in Australia and market research undertaken by the Papallo brothers. He said that by the time ASVP was established in early January 2005, the most promising line of business appeared to be the supply of promotional clothing to the construction industry.
19.Mr Eu said that the company office is located at Mr Sawitto’s premises in Surry Hills. Mr Sawitto runs the office and provides administrative support, and the Papallo brothers, who operate their own companies, have a sales role, looking for prospective purchasers, while Mr Eu is responsible for suppliers in Australia and overseas. He provided a copy of his business card. He said that shortly after the company was registered he went to China with Mr Sawitto in order to meet manufacturers and suppliers of clothing to be used for promotional purposes.
20.Mr Eu described the development of the business in 2005 with some 6,000 to 10,000 items of promotional clothing now having been sold. He provided a list of suppliers that have been used to date and some details of manufacturers for embroidery products and screen printing. He said his intention is to make ASVP his major business interest in Australia.
21.Mr Eu said that prior to the registration of ASVP he had many planning meetings, starting in early 2004. He said that he, Mr Sawitto and the Papallo brothers, had about three meetings in Mr Sawitto’s Surry Hills premises and communicated often by telephone. He said there was no written record of these meeting or telephone discussions because they are good friends. He said that in 2004 he approached many different places in order to secure suppliers for ASVP. He drew my attention, in particular, to the business card of a Chinese clothing manufacturer he had visited in China in 2004.
22.When asked in cross examination why ASVP was not mentioned in correspondence with the Respondent concerning the notice of intention to cancel, Mr Eu said that he was in the process of changing from his former migration agent to another new agent, the information about ASVP was not included by his old agent and the new agent had not yet learned all about Mr Eu’s circumstances.
23.The Respondent contended that it is not open to me to have regard to Mr Eu’s activities after the date cancellation of his visa. However, I am mindful that evidence of events that have taken place after the date of cancellation may be considered by me where those events shed some light on activity within the relevant period (Re Griffiths and Migration Agents’ Registration Authority [2001] AATA 240 and Re Vhyat and Minister for Immigration [2003] AATA 1051). In particular, I consider that the events leading up to the establishment of ASVP, within the relevant period, and the activities of ASVP and Mr Eu after the date of cancellation are relevant to the issue of genuine effort on his part.
24.I turn, now, to the matters outlined in s134(3) of the Act. I also note that I am not limited to consideration of those matters only.
25.While there is no evidence of any formal business proposal in relation to ASVP, Mr Eu provided a copy of a business proposal concerning Star Century and the proposed export of gold bullion. The proposal is rather non specific and lacking in detail.
26.Mr Eu has partners in his ASVP enterprise and I note that they reside and have other businesses in Australia. On the question of research undertaken by Mr Eu, he gave evidence of fairly sustained inquiry into business alternatives from 2003. This included inquiries in Australia and in China.
27.Mr Eu has only spent 51 days in Australia since the grant of his visa. He transferred an amount of $100,000.00 to Australia in the purchase of his 40% share of ASVP, after the visa was cancelled. The business activity undertaken by Mr Eu is the gold bullion export transactions completed under the auspices of Star Century, within the relevant period, and the sales of some 6,000 to 10,000 items by ASVP, after the visa was cancelled. There is no evidence of failure to comply with any notice received by him.
28.I am also mindful of the activity engaged in by Mr Eu in 2004, planning the establishment and business of ASVP. I accept his evidence that this included discussions and meetings with his business partners and travelling to China with a business partner and alone to source materials and products. The subsequent establishment of the company in January 2005 and its continued trading, although after the relevant period, is an indication of the genuineness of Mr Eu’s efforts and of their success. In this regard, I also accept his evidence that he was unaware that his visa had been cancelled until he sought to leave Australia in March 2005. He had proceeded with the establishment of ASVP, his contribution of $100,000.00 and with its business activity until that time in the belief that his visa was still current.
29.I am not concerned by Mr Eu’s presence in Australia for only 51 days in the circumstances of an ultimately successful effort to obtain an interest of the kind required by the Act. There is no dispute that ASVP is an eligible business within the meaning of the Act. I accept Mr Eu’s evidence that his intention is to make ASVP his major business interest in Australia.
30.Together with Mr Eu’s investigations into the export of spare parts from Australia, the registration of Star Century for the purposes of export of Australian gold bullion and the research undertaken by him prior to that, the completion of a number of transactions by Star Century and investigation into the export of Australian seafood and wine, Mr Eu’s efforts resulting in the business of ASVP all indicate a genuine effort of the kind provided for in s134(2) of the Act. I am also satisfied, on the basis of his evidence that Mr Eu intends to continue with his participation in the senior management of ASVP.
31.It follows that the visa must not be cancelled.
decision
32.The decision under review is set aside and instead the Tribunal decides that Mr Eu’s visa should not be cancelled.
I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member.
Signed: ............[Linda Blue]......................................
AssociateDate of Hearing 9 December 2005
Date of Decision 3 February 2006
Counsel for the Applicant Mr Nicholas Poynder
Solicitor for the Respondent Phillips Fox
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