Goldman and Minister for Immigration and Citizenship
[2008] AATA 9
•7 January 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 9
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2006/1227
GENERAL ADMINISTRATIVE DIVISION ) Re MICHAEL GOLDMAN Applicant
And
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal Senior Member, Mrs Josephine Kelly Date7 January 2008
PlaceSydney
Decision The reviewable decision is affirmed
.....................[sgd].........................
Senior Member, Mrs Josephine Kelly
CATCHWORDS
MIGRATION – business skills visa – whether applicant had substantial ownership interest in eligible business – whether applicant utilised skills in actively participating at senior level in day to day management of business – whether applicant made genuine effort to obtain substantial ownership business in Australia – whether applicant made genuine effort to actively participate at senior level in day-to-day management of the business - statutory criteria for cancellation satisfied – residual discretion not exercised - reviewable decision affirmed
Foreign Acquisitions and Takeovers Act 1975
Migration Act 1958 s 134
Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304; [2004] FCA 31
REASONS FOR DECISION
7 January 2008 Senior Member, Mrs Josephine Kelly 1. Mr Michael Goldman seeks the review of the decision made on 13 July 2006 by the delegate of the Minister for Immigration and Citizenship to cancel his Business Skills (Migrant) Sub-Class 127 Business Owner visa.
THE ISSUES
2. The issues in these proceedings are:
a) Whether, pursuant to subsection 134 (1) of the Migration Act 1958 (“the Act”), I am satisfied of one or more of the following, in which case I have discretion to cancel the visa:
That at the time of the visa cancellation Mr Goldman -
i) had not obtained a substantial interest in an eligible business in Australia, or
ii) had not utilised his skills in actively participating at a senior level in the day-to-day management of that business; or
iii) did not intend to continue to hold that substantial interest and utilise his skills in actively participating at a senior level in the day to day management of an eligible business in Australia; and
b) If I am so satisfied, I must not cancel Mr Goldman's business visa if I am satisfied of all of the following, as required by s 134 (2) of the Act:
That Mr Goldman -
i) has made a genuine effort to obtain a substantial ownership interest in an eligible business, and
ii) 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
iii) intends to continue to make such genuine efforts; and
c) If I am not satisfied in relation to those matters, whether I ought to exercise my residual discretion under s 134 (1) in Mr Goldman's favour (see Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304 at 310 (Kiefel J)).
LEGISLATION
3. In addition to sections 134 (1) and (2), which have been summarised above, ss 134 (3) and (10) of the Act are relevant.
4. Section 134 (3) of the Act provides:
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).
5. Section 134 (10) of the Act relevantly provides:
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
BACKGROUND
6. The following information was disclosed in the application form for the business visa signed by Mr Goldman in March 2001.
7. Mr Goldman held a United Kingdom passport and resided there. He was a citizen of the UK and South Africa. He was the Managing Director of a UK company located in London. He intended to live in New South Wales and proposed to bring AUD$3 million to Australia within two years, and planned to invest AUD$500,000 in the business. In another document apparently signed by Mr Goldman, the question Which industry do you intend your Australian business to be involved in? was answered: "Financial Management". That was the same kind of business as he was carrying on in the UK.
8. Mr Goldman's business visa was issued on 23 July 2002. His wife and two children also received family member visas. The Act required that initial entry to Australia had to be before 9 May 2003, otherwise the visas would have become invalid. Mr Goldman's initial entry was on 14 April 2003. He left the next day. As I understand the Movement Details, he arrived at and departed from Perth. He also visited Australia between 21 June and 7 July the same year. He did not visit Australia again until his attendance in person at the hearing of this application on 28 September 2007.
9. On 13 April 2005 a 24 month survey form was sent to Mr Goldman. He did not respond. On 15 March 2006 a notice of intention to cancel his visa was sent to him and again he did not respond.
THE CASE FOR MR GOLDMAN
10. The case put for Mr Goldman can be summarised as follows. Mr Goldman is a highly skilled and successful businessman. From 1999 onwards, he visited Haggerstone Island a number of times and befriended a co-owner of the lease of the island, Mr Turner. Mr Turner operates a tourist resort on the island which is located in the Coral Sea off the east coast of far north Queensland about 130 kilometres south of the tip of Cape York Peninsula, and two hours' flying time north of Cairns. Mr Turner, his wife and two children live there, and have six to eight guests at any one time. There are currently four styles of accommodation for guests, and a main house where meals are prepared and eaten.
11. Following the grant of the visa, an opportunity arose for Mr Goldman to acquire a half share in the island lease from the other co-owner. Mr Goldman sought legal advice about a range of matters relating to that acquisition. The solicitors, Arnold Bloch Leibler, advised that certain prohibitions under the Foreign Acquisitions and Takeovers Act 1975 applied to prevent Mr Goldman's acquiring the interest personally without approval of the Foreign Investments Review Board. One argument on behalf of Mr Goldman was that he would have acquired the share in the lease in his own name or through a company directly owned and controlled by him but for that advice.
12. Consequently, Mr Goldman arranged for the half share to be acquired by AU Island Holdings Pty Limited, (“the Company”) an Australian company incorporated on 16 June 2003 (ACN 105 102 663). In December 2003 Mr Goldman’s trust company, Bermuda Trust (Jersey) Limited, loaned the Company $2,250,000.00 for the purpose of acquiring a half interest in Haggerstone Island.
13. In addition to the purchase of the lease, Mr Goldman invested AUD$375,000 to AUD$500,000 into the resort business through his trust structure or directly. Those funds are being utilised to further develop the facilities on the island, including the acquisition of a new boat and the construction of a jetty. Mr Goldman is also having a luxury residence constructed on the Island which is designed for the top-end family sector of the tourist market. He has wholly funded the construction and may reside there from time to time.
14. Mr Goldman maintains direct and regular contact with Mr Turner, and is involved with marketing the island. He is directly involved in the strategic and tactical planning of the development, and has been directly instrumental in raising the global profile of the resort by his involvement in upgrading the website. This resulted in the resort being featured in the Qantas in-flight magazine and a Conde Nast Magazine. Mr Goldman's staff in London take care of the financial records of the business.
CONSIDERATION
15. At the beginning of the hearing, the Respondent conceded that the operation of the resort on Haggerstone Island was an eligible business and I accept that is so.
Has Mr Goldman obtained a substantial ownership interest in the eligible business?
16. The first matter to determine is whether Mr Goldman obtained a substantial interest in that business. It is clear on the evidence that the Company owns half the lease of the island. It purchased the interest of the previous owner directly, and indirectly by the purchase of the former co-owners shares in Hagggerstone Island Holdings Pty Ltd (HIH). The directors and shareholders of the Company are Mr Goldman's brother and sister-in-law who live in Melbourne. I accept that Mr Goldman provided the funds for an unsecured loan to the Company for the purchase of the half share of the lease. The Company holds its interest in Haggerstone Island as trustee of the Goldman Family Trust from which Mr Goldman is excluded as a beneficiary because he is a foreign person within the meaning of s 5 of the Foreign Acquisitions and Takeovers Act 1975.
17. In a letter of advice dated 26 August 2003, Arnold Block Leibler wrote to Mr Goldman:
As we have discussed with you on a number of occasions previously, your selection of the trust structure to acquire the interest in Haggerstone is made on the basis that Philip and Ingrid Goldman are acting entirely in their own right and that they exercise all the control over the decisions to be made in relation to the interest in Haggerstone Island.
18. The letter also stated that it assumed that the Company was not acquiring an interest in the business conducted by Mr Turner, and that the Company's rights to receive a percentage of the profits of the business over a threshold “is merely a right to receive any amount of money”.
19. An undated document entitled "Haggerstone Ownership Agreement," executed by the Company but not by Mr Turner, was in evidence. I infer from later evidence that this document was also executed by Mr Turner. It provides that the Company's obligations were to make capital contributions agreed to by Mr Turner, and to pay half of the lease rental. All decisions in relation to HIH, the lease and the “island generally” have to be by agreement between Mr Turner and the Company. Mr Turner was entitled to retain the income of "the business", which defined as the “low key tourism business including accommodation conducted on the island,” subject to paying the Company a proportion where an income threshold was exceeded.
20. Mr Turner was obliged to design and construct a dwelling on the island in accordance with requirements and directions of the Company. The Company was to pay the costs and expenses of the construction. The dwelling was to be available to a nominee of the Company at no cost although Mr Turner could use the dwelling for the purpose of the business with the Company's prior consent, and the Company was entitled to half the income received. From other correspondence it is clear that this house was for Mr Goldman's use.
21. Mr Turner was appointed the operator of the business, which was to be continued in substantially the same manner as it had been. Mr Turner's duties were set out. He had to obtain the Company's consent to any material change in operation, the cessation, or sale of the business.
22. A further loan of $168,000 was made indirectly from Mr Goldman to the Company in July 2004.
23. An ownership interest, in relation to the eligible business as defined in s 134(10) of the Act, 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.
24. I am not satisfied on the evidence that the Company has such an interest in the business. Further, in my view, Mr Goldman has no ownership interest in the Company, including through the Goldman Family Trust. That Mr Goldman had no ownership interest seemed to be conceded by his legal representative at the hearing, although the existence of such an interest was asserted in the written Statement of Facts and Contentions. The legal advice Mr Goldman received in 2005 after the 24 month survey form had been received and which will be referred to later in these reasons for decision, reflected that he did not consider at that time that he had the necessary ownership interest.
25. In coming to this conclusion, I accept that Mr Goldman, directly and through a trust, has paid monies to Mr Turner. However, a significant proportion was for the construction of the dwelling to be used by Mr Goldman. In October 2004 Mr Turner estimated the costs of Mr Goldman's house at $166,500 (p 171). In February 2007 Mr Turner was estimating an additional $122,100 to finish the house. On the evidence, it had not been finished at the time of the hearing.
Was Mr Goldman utilising his skills in actively participating at a senior level in the day-to-day management of the business?
26. I also find that Mr Goldman was not utilising his skills in actively participating at a senior level in the day to day management of the business.
27. There are numerous facsimiles from Mr Turner to Mr Goldman in the years 2003 to 2005, which set out the costs of maintaining and running the island, but there were no replies. These communications show that Mr Turner was carrying out the day to day management of the island, which was quite complicated given the distance from Cairns. Materials had to be shipped in and labourers flown in. Mr Goldman planned a trip to Haggerstone Island in July 2004, which apparently did not eventuate. In 2004 there were a few emails from Mr Goldman's personal assistant to Mr Turner. However, from the beginning of 2006 there was a significant increase in the correspondence between Mr Turner and his wife and Mr Goldman's personal assistant about bookings on the island. Notably, Mr Goldman's personal assistants refer frequently to Mr Goldman's being away from London.
28. In July 2006 Mr Goldman's personal assistant was arranging for telephone lines and a broadband connection for Mr Goldman's house on Haggerstone Island. In October 2006, a part-time employee of Mr Goldman, Edward Miller, referred to discussions in London with Mr and Mrs Turner about accounting, and asking for government returns, quarterly and annual financial statements and details of monies received "re Michael". The communications between Mr Goldman's personal assistant and Mr Miller and the Turners continued in 2007. It is not surprising that these communications increased, given the notice of intention to cancel Mr Goldman's visa dated March 2006, the cancellation dated 13 July 2006 and the subsequent application to this Tribunal dated 18 September 2006. However, they do not reflect that Mr Goldman was even then involved in the day-to-day management of the business.
Has Mr Goldman made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia?
29. I do not consider that Mr Goldman has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia.
30. First, he made no effort to obtain such an interest in the kind of business he had stated in his visa application. Secondly, Mr Goldman's decision to establish the structure of the Company and the Goldman Family Trust was a response to legal advice that he may need the approval of the Foreign Investment Review Board if he purchased an interest in Haggerstone Island. There was no evidence about his reasons for not seeking permission.
31. The final matter which is relevant is that, during the period May to August 2005, Mr Goldman was apparently getting legal assistance in Australia in response to the receipt of the 24 month survey form. A company, Haggerstone Guesthouse Pty Ltd (ACN 114 269 02), was registered. Cairns solicitors wrote to Mr Goldman:
We have been instructed by Roy to go ahead and prepare a Partnership/License Agreement between Haggerstone Guesthouse Pty Ltd and the owners of the Haggerstone Island. This will assist in your submissions to the Department of Immigration to show you have obtained a substantial ownership interest in an eligible business in Australian and participate at a senior level in the day to day management of this business..
32. In August, the solicitors advised that the Foreign Investment Review Board had advised that, as Mr Goldman was an Australian Permanent Resident, there was no objection to his acquiring a majority interest in the Company. It was proposed to draw up a Marketing Agreement between Haggerstone Guesthouse and the owners. There was reference to Mr Goldman taking the position of Marketing Director and some form of commission would be payable from the owners or Roy Turner to Haggerstone Guest House Pty Ltd for bookings made via the Guesthouse. However, there is no evidence that any of these matters were pursued.
Has Mr Goldman made a genuine effort to utilise his skills in actively participating in a senior level in the day-to-day management of the business?
33. I am not satisfied that Mr Goldman has made a genuine effort to utilise his skills in actively participating in a senior level in the day-to-day management of the business.
34. All the evidence persuades me that Mr Goldman's attention is directed to his business which is based in the United Kingdom and that Mr Turner is very much the hands-on manager of the business on Haggerstone Island. Mr Goldman may have had some input into the island's web page and made some suggestions about improvements on the island, however what he has done does not satisfy the statutory criterion.
CONCLUSION
35. It seems to me that Mr Goldman's interest in Haggerstone Island has been to have a holiday home constructed there by Mr Turner, which he can use from time to time, and which otherwise can be used by Mr Turner as accommodation for tourists visiting the resort, in which case the Company will receive income. The Haggerstone Island Ownership Agreement limits the use of this remote island to a low scale resort, which I infer is attractive to Mr Goldman in terms of the amenity the island will offer him in the event that he visits. Further, Mr Turner will be effectively the caretaker of the house.
36. Given all of the circumstances set out above, I do not consider this to be an appropriate case in which to exercise my residual discretion. Although Mr Goldman is a very successful businessman, I am not persuaded that he has any intention of utilising his undoubted business skills in Australia, or of migrating here.
DECISION
37. For the reasons set out above, the reviewable decision is affirmed.
I certify that the preceding 37 paragraphs are a true copy of the reasons for the decision herein of Senior Member,
Mrs Josephine Kelly.Signed: Steven Mulipola
Associate
Date of hearing: 28 September 2007
Date of decision: 7 January 2008
Solicitor for Applicant: Diamond Conway Lawyers
Solicitor for Respondent: DLA Phillips Fox
0
2
0