Greyling and Minister for Immigration and Multicultural Affairs

[2007] AATA 1704

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1704

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W 200600013

GENERAL ADMINISTRATIVE DIVISION		)
Re		RUDOLPH THEUNIS GREYLING

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal Mr A Sweidan, Senior Member

Date24 August 2007

PlacePerth

Decision The Tribunal affirms the decision under review.

............[Sgd Mr A Sweidan].............

Senior Member

CATCHWORDS

Immigration – Business Skills Visa – applicant failed to obtain substantial ownership interest in an eligible business in Australia or to utilise his skills in actively participating at senior level in day to day management of such a business or make a genuine effort to do so – decision under review affirmed.

legislation

Migration Act 1958 (Cth) s 134

cases

Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178

Commissioner for Superannuation v Scott 71 ALR 408 at 412

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

Jo v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77

Legana v Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 1166

Lau v Minister for immigration and Multicultural Affairs [2002] AATA 70

Yam v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283

Wong v Minister for Immigration and Multicultural Affairs [2002] AATA 54

Leo v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309

REASONS FOR DECISION

Mr A Sweidan, Senior Member    

background

1.      On 19 June2002 the applicant was granted a sub-class 127 business skills visa.  He first entered Australia on 11 July 2002.  The applicant was in Australia for a total of 23 days during the period from that date to 5 December 2005, when his visa was cancelled.

2.      On 17 August 2004 the applicant was sent a standard 24 month survey but did not return it.

3.      On 7 June 2005 a notice of intention to cancel the visa was sent to the applicant.

4.      The applicant’s authorised representative responded on 5 September 2005.  The response included a completed 36 month survey which claimed, inter alia:

(a)the applicant had obtained a 50% ownership interest in an eligible Australian business, Thordrillstar Pty Ltd (Thordrillstar), in which he had invested $200,000; and

(b)the applicant was involved in the day-to-day management of Thordrillstar and had the role of technical product development advisor.

5.      On 5 December 2005 a delegate of the respondent decided to cancel the applicant’s business skills visa and the visas held by the applicant’s family unit.  The applicant now seeks a review of that decision.

6.      The delegate found that the applicant had not obtained a substantial ownership interest in an eligible business, was not utilising his skills in senior management on a day-to-day basis, nor had he made genuine efforts to do so, as required by the relevant legislation and Ministerial policy outlined in Migration Series Instruction MSI-133.

Legislation and Policy

7. Section 134 of the Migration Act 1958 (Cth) (the Act) provides that the Minister has a discretion to cancel the visa if he or she is satisfied that the visa holder has not obtained a substantial ownership interest in an eligible business in Australia, is not utilising his skills in actively participating at a senior level in the day-to-day management of the business, or does not intend to do these things.  The Minister must not cancel the visa if he or she is satisfied that the visa holder has made genuine efforts to do these things and intends to continue to make such genuine efforts.

8. Eligible business and ownership interests are defined in section 134(1) of the Act and discussed at paragraph 4.3 of the MSI-133.

9. Section 134(10) provides that 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 and 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; and

(f)an increase in commercial activity and competitiveness within sectors of the Australian economy.

10.     Paragraph 4.3.2 of the MSI-133 notes that eligibility relates to achievement of stated objectives through the activities of the business, not directly to the size or scale of the business.

11. Section 134(3) provides a list of matters that the Minister may take into account when determining whether a person has made genuine efforts to obtain a substantial ownership interest in an eligible business in Australia and to utilise his skills in actively participating at a senior level in the day-to-day management of that business.

12.     Notes to guide the interpretation of these matters are provided at paragraph 4.5 of the MSI-133.  The matters that may be taken into account, and the notes to their interpretation provide as follows:

(a)business proposals that the person has developed.  The MSI refers to whether there is a business proposal which is considered genuine, realistic and achievable;

(b)the existence of partners or joint ventures.  The MSI refers to whether there is a formal contract with partners or joint venturers;

(c)research that the person has undertaken into the conduct of an eligible business in Australia.  The MSI refers to whether there is written evidence of detailed consultations with at least 3 business advisers;

(d)the period or periods during which the person has been present in Australia.  The MSI refers to whether there has been physical presence for more than 6 months since the first arrival as a business skills migrant;

(e)the value of assets transferred for use in obtaining an interest in an eligible business.  The MSI refers to whether there has been transfer to and retained in Australia at least 50% of the funds indicated as available for transfer within the 2 years;

(f)the value of ownership interest in the eligible business in Australia which is or has been held by the person.  The MSI refers to whether there is or has been a minimum Australian $100,000.00 or 10% ownership held by the person and provides that if the person is no longer in the business the reasons for loss of ownership are relevant;

(g)the business activity that is or has been undertaken by the person.  The MSI refers to whether there is a minimum of Australian $100,000.00 business activity as indicated by turnover and provides that this may include other business activity not considered as an eligible business but cannot include passive investment, for example the purchase of shares;

(h)whether the person has failed to comply with a notice under section 137.  The MSI refers to whether there has been a failure to comply with a notice for information under section 137, i.e. mandatory monitoring of Australian address and return of survey forms; and

(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 on the day-to-day management of the business:

(i)the length of time the person held the ownership interest or participated in the management as the case requires; and

(ii)the reason why the person no longer holds the interest or participates in the management as the case requires.

evidence

13.     The Tribunal heard evidence from the applicant and Mr Henk Corporaal and was provided with a number of documents.  The salient features of their evidence may be summarised as follows:

(a)they had collaborated over a period of time in relation to the development of a drill rig (“the Thor Jumper”) with a view to setting up a joint venture for the manufacture and sale thereof in Australia;

(b)all of the development work on the drill rig was carried out by the applicant in South Africa, who continued to reside there and conduct his own business there at all relevant times;

(c)the applicant claimed that he carried out the development work on behalf of Thordrillstar Pty Ltd, an Australian company which was however only registered on 5 September 2005 and in which he and Mr Corporaal each hold a 50% interest;

(d)no documentary evidence to support this claim was provided.  To the contrary the applicant said that he had in fact applied for a patent in respect of the drill rig in his own name;

(e)no joint venture or partnership agreement was entered into;

(f)evidence was provided of dealings relating to the supply of goods and the payment of monies relating thereto between the applicant’s South African business and Mr Corporaal’s Australian business.  However, this did not support the existence of any joint venture;

(g)there was no evidence of any business activity conducted by Thordrillstar Pty Ltd in Australia, nor was there any explanation as to why this company was only registered after the applicant was given notice of the intention to cancel his visa.

Substantial Ownership Interest in an Eligible Business in Australia

Substantial ownership

14. Sections 134(1) and (2) of the Act require the visa holder to obtain a substantial ownership interest in an eligible business in Australia.

15. Section 134 defines “ownership interest” in relation to a business to mean an interest held by the visa applicant in a business as:

(a)a shareholder in a company that carries on the business; or

(b)a partner in a partnership that carries on that business; or

(c)the sole proprietor of a business;

(d)including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

16.     The word “substantial” was considered in Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 where Commissioner for Superannuation v Scott 71 ALR 408 at 412 was cited with approval.  In Commissioner for Superannuation v Scott the Court considered a number of authorities dealing with the question of what constitutes “substantial” and held, (albeit in the context of s 45D of the Trade Practices Act 1974 (Cth)) that the word “substantial” means:

“Real or of substance and not insubstantial or nominal.”

17.     What is a substantial ownership of an eligible business is also a question of fact and degree (Ong supra at [25]).

18.     The applicant holds a 50% ownership interest in Thordrillstar and the respondent conceded that this constitutes a substantial ownership interest.  However, the next question is whether Thordrillstar is an eligible business in Australia.

Eligible business in Australia

19. The definition of an eligible business is set out in section 134(1) of the Act. A business must meet at least one of the criteria set out in paragraphs (a) to (f) of the definition set out above in order to be classified as an eligible business.

20.     Furthermore, the Tribunal has previously found that the reference in subsection 134(1)(b) to the “day-to-day management of the business” indicates that an eligible business must have some element of continuity and repetition.  Applying Mason J’s formulation of “carrying on a business” from Hope v Bathurst City Council (1980) 144 CLR 1, Deputy President McMahon found in Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997 at [20] that the construction of “participating in the day-to-day management of the business” for subsection 134(1)(b) required 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.

21.     As noted earlier there is no evidence of the applicant’s Australian company Thordrillstar engaging in any business activity in Australia.  At best for the applicant, if there was any such activity, it was research and development all of which was carried on in South Africa.

22.     The applicant contends that Thordrillstar satisfies the definition of an eligible business because it has introduced new or improved technology in the form of the Thor Jumper into Australia.  However, there is no evidence of this and the Tribunal notes that:

(a)the Thor Jumper is still in its development stage and has not as yet been introduced into Australia.

(b)on the applicant’s own evidence the prototype was developed by him in South Africa; and

(c)all testing of the prototype was undertaken in South Africa.

23.     The Tribunal accordingly finds that Thordrillstar is not an eligible business.

Active participation at a senior level in the day-to-day management of an eligible business in Australia

24.     In the Tribunal’s view the applicant has also failed to demonstrate that he has utilised his skills in actively participating at a senior level in the day-to-day management of an eligible business, in Australia

25.     It is clear that the Tribunal should not exercise its discretion to set aside the visa cancellation decision unless it is satisfied that the applicant is utilising his skills in actively participating at a senior level in the day-to-day management of an eligible  business (or has made and intends to continue to make genuine efforts to utilise his skills in actively participating at a senior level in the day to day management of the business).

26.     The Tribunal notes that the Act is intended to benefit business owners who settle in Australia and actively manage an eligible business (Tang supra at [21[).

27.     In Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656 Senior Member Muller said at [12]:

“not only must the eligible business operate in Australia to comply with the Act, the visa holder must participate at a senior level in the day-to-day management of the Australian business in Australia, albeit with trips overseas from time to time”.

28.     Reference can be made to the Second Reading Speech of the Minister for Immigration and Ethnic Affairs introducing the Migration Amendment Bill (No 2) 1992 which introduced the new section 134 into the Act. It is clear from that speech (Hansard, House of Representatives, 7 May 1992 at 2678) that it was understood that migrants who arrived in Australia on a business skills visa would remain resident in Australia (see Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 at [31]).

29.     In Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299 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”.

30.     Conversely, in Jo v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77 Member Allen found at [36] that “activities undertaken outside Australia can also be taken into account if they can be directly related to the management of the Australian business”.

31.     However, in the recent decision of Legana v Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 1166, Members Savage Davis and Tovey held at [30]:

“The Tribunal understands the grant of a business skill visa under s134 of the Act is to enable individuals to settle in Australia and establish and manage an eligible business. With respect the Tribunal disagrees with an understanding that in effect renders the visa holders presence in Australia largely irrelevant for the purpose of s134(1)(b) of the Act. Whilst travel outside Australia and communication by email and telephone during these absences can form part of the process of day to day management of the Australian business, the Tribunal does not accept that the management activities can take place virtually entirely offshore”.

32.     Whatever the position may be in South Africa, the applicant was clearly not involved in the day-to-day running of Thordrillstar at a senior level in Australia.

Genuine effort to obtain a substantial ownership interest in an eligible business in Australia and to utilise skills in actively participating at a senior level in the day-to-day management of the eligible business

33.     In considering whether the applicant has made a genuine effort the Tribunal should only look at events, actions and intentions that existed prior to the cancellation of the visa (Wong v Minister for Immigration and Multicultural Affairs [2002] AATA 54).

34.     However, the Tribunal when reviewing visa cancellation decisions can consider activities after cancellation in situations where there is evidence of prior intentions (Lau v Minister for immigration and Multicultural Affairs [2002] AATA 70).

35.     Paragraph 4.5.1 of the Migrations Series Instructions provides a list of factors that decision-makers may look at when determining whether a genuine effort has been made.

36.     In relation to what constitutes a genuine effort the Tribunal notes the following:

(a)a genuine effort must be more than a superficial or token effort (Yam v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283);

(b)the use of the word “genuine” implies that it must be a real and honest effort and not one which is false, fictitious or a pretence;

(c)the use of the word “effort” implies that some exertion or endeavour must be involved. The requirement is that an effort is made and the Tribunal’s view is that this requires some activity on behalf of an applicant. In Leo v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309 the Tribunal found that a genuine effort must be “vigorous and determined”;

(d)It must be a genuine effort to obtain a substantial ownership interest in an eligible business in Australia or to utilise an applicant’s skills in the day-to-day management of an eligible business at a senior level in Australia. Efforts which cannot realistically satisfy either of these criteria cannot be said to be genuine efforts;

(e)It is clear that mere expressions of interest or inquiries fall short of genuine efforts (Yam);

(f)in determining whether a genuine effort has been made, there is good reason for a decision-maker to have regard to the factors set out in MSI-133.

37.     The respondent contends, and the Tribunal agrees, that on the evidence before the Tribunal the applicant has not shown that he made a genuine effort either to obtain a substantial ownership in an eligible business in Australia or to utilise his skills in actively participating at a senior level in the day-to-day management of such an eligible business.

38.     The Tribunal considers that the very limited time the applicant has spent in Australia, coupled with the lack of any business activity in Australia by the applicant or his company, is a very strong indication that the applicant has not made genuine efforts to satisfy his visa requirements.  A further indication of this is the fact that the Australian company was only registered approximately 3 months after the applicant was given notice of intention to cancel his visa.  This was more than 3 years after the applicant first came to Australia.

Decision

39.     The Tribunal is of the view that the correct or preferable decision in this matter is that the applicant’s visa should be cancelled and the Tribunal accordingly affirms the decision under review.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member

Signed: ........................[Sgd C Skinner].........................
  Associate

Date of Hearing  8 March 2007
Date of Decision  24 August 2007
Counsel for the Applicant         Solomon Gerber
Counsel for the Respondent     Arran Gerrard
Solicitor for the Respondent     Australian Government Solicitor