Gunawan and Minister for Immigration and Citizenship

[2007] AATA 1110

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1110

ADMINISTRATIVE APPEALS TRIBUNAL      )         No.  V2006/123

)       V2006/124 V2006/125

GENERAL ADMINISTRATIVE DIVISION		)
Re		SUNARSO GUNAWAN DIANA GUNAWAN JESSICA GUNAWAN

Applicants

And MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal: G.D. Friedman, Senior Member

Date:8 March 2007

Place:Melbourne

Decision: The Tribunal affirms the decisions under review.  

(sgd) G.D. Friedman

Senior Member

MIGRATION ‑ business skills visa ‑ cancellation - not eligible business - whether genuine effort to obtain substantial ownership of eligible business or participate in senior management - exercise of residual discretion - whether extreme hardship to secondary visa holders   

Migration Act 1958 s 134(1), (2), (3), (5), (10)

Hope v Bathurst City Council (1980) 144 CLR 1

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

Man Ki Kim v Minister for Immigration and Ethnic Affairs (1995) 37 ALD 481

Puzey v Commissioner of Taxation [2003] FCAFC 197

Re Harijono and Anor and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 882

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

Re Chin Lai and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 152

Re Ah Kow Phoon and Minister for Immigration and Multicultural Affairs [2006] AATA 527

Re Salim and Ors andMinisterfor Immigration and Multicultural and Indigenous Affairs [2002] AATA 899

Re Setiawan and Minister for Immigration and Multicultural Affairs [2002] AATA 260

Re Tang and Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103

Re Wang and Minister for Immigration and Multicultural Affairs [2000] AATA 961

REASONS FOR DECISION

8 March 2007   G.D. Friedman, Senior Member

1.        Sunarso Gunawan is an Indonesian citizen who was granted a subclass 127 business skills visa on 1 October 2002.  His wife and daughters Diana Gunawan (born on 16 November 1983) and Jessica Gunawan (born on 10 June 1986) were granted secondary visas at the same time. 

2.        The family first arrived in Australia on 6 October 2002.  On 18 January 2006 the respondent’s delegate cancelled the visas on the grounds that Mr Gunawan had not complied with the terms of the visa, in that he had not obtained substantial ownership of an eligible business in Australia; had not participated in day-to-day management of the business; and had not made genuine efforts to achieve these objectives.

3.        Mr Gunawan and Diana each hold a 50 per cent share of S & DG Investments Pty Ltd (SDG), which was established in Australia in 2004 for the purposes of exporting cotton, food and beverages.  He maintains that although the business is not an eligible business, he has satisfied the conditions of his visa and that the decision to cancel the visa is wrong.  Diana and Jessica claim that cancellation of their visas would cause them extreme hardship. 

EVIDENCE ABOUT MR GUNAWAN’S BUSINESS ACTIVITIES IN AUSTRALIA

4.        In an undated written statement (Exhibit A1) Mr Gunawan said that after working as an assistant credit manager of a bank he joined his father's family textile company in Indonesia in 1989, and since then has taken control of the company due to the illness of his father, who suffered strokes in 2000 and 2001 and is incapacitated.  He said that he is responsible for the major decision-making processes and manages its daily operation.  Mr Gunawan said that he wants to live in Australia with his family and utilise his skills.  He said that in 2004 he established SDG and in August/September 2004 he and his daughters carried out research about business conditions in Australia with the belief that he could export Australian cotton and raw material to the Indonesian textile market.  However, he said that this proposition had not been feasible, and he was required to spend most of his time in Indonesia because of his father's illness and the need to ensure that the family business continued to operate effectively.

5.         In oral evidence Mr Gunawan explained that he has explored other business opportunities in Australia such as the export of fruit juice, macadamia nuts and pet food to Indonesia.  However, he said that these opportunities did not proceed because of pricing, distribution and currency difficulties.  He said that he gave Diana a 50 per cent share in SDG to encourage her interest in the business.  He said he has invested over $100,000 in the business, and that this amount is ready for immediate use.  Mr Gunawan stated that he is trying to engage suitable persons in Indonesia to operate the family business, and a former employee has been approached to assume full-time management.  He stated that he hopes the nurse engaged to look after his father will take over the major care, so that he will be able to re-locate to Australia and pursue his business interests.  He said that Jessica has completed her degree, and Diana is completing her studies at the end of 2007 and both intend to assist him in his Australian business.

6.        Under cross-examination Mr Gunawan agreed that he has spent 35 days in Australia as at the date of cancellation of his visa.  He said that he had held discussions with friends and business colleagues in Indonesia about the prospect of importing Australian products, but that conditions in Indonesia were not conducive to the import of the products that he had researched.  He agreed that since 2004 no research or business activity has been carried out by him or his daughters on behalf of the business.  He agreed that no formal directors’ meeting had been held, but he said that he exercised management responsibilities by speaking regularly with Diana and Jessica and giving instructions on the activities of the business.

7.        In a written statement (Exhibit A7) Diana said that she has lived in Australia for four years and has completed the fourth year of Bachelor of Chemical Engineering and Bachelor of Commerce degrees at the University of Melbourne.  She told the Tribunal that she has assisted with the day-to-day administration of SDG on her father’s behalf by contacting suppliers of products that might be exported to Indonesia, and discussing the results of her research with her father.

8.        In a written statement (Exhibit A8) Jessica said that in 2004 she helped Diana undertake research into products that might be exported to Indonesia.  She completed a Bachelor of Multimedia degree at RMIT University in 2006 and stated that she intends to undertake a cookery course in 2007 with a view to operating a restaurant in Australia, as well as being involved in any business that her family establishes in Australia.

9.        In a written statement dated 31 August 2006 (Exhibit A9) Ms R. Gunawan, a resident of Indonesia and sister of Mr Gunawan,  stated that she has tried to assist Mr Gunawan with the daily care of their father in Indonesia but she and her siblings have other commitments.  She stated that Mr Gunawan, being the oldest son, is required to be the major caregiver.

10.      In a written statement dated 14 December 2006 (Exhibit A5) Mr Ty Sam, accountant, said that Mr Gunawan was referred to him in about June 2004 to provide advice in relation to doing business in Australia.  He said that consequently SDG was incorporated on 2 August 2004, and Diana carried out intensive research in an effort to source potential products for export to Indonesia.  He said that in 2004 and 2005 he met Mr Gunawan on several occasions and prepared the financial reports of the business.  Mr Ty explained that Mr Gunawan accepted his advice to deposit $100,000 into SDG’s bank account for investment purposes.

11.      Mr Ty told the tribunal that in his opinion Mr Gunawan had a genuine intention to do business in Australia but because of personal difficulties with his father's illness and continuing efforts to find a person to take over the family business in Indonesia, the process of setting up business in Australia became difficult, especially taking into account currency fluctuations.   

LEGISLATIVE FRAMEWORK

12.      The relevant legislation is the Migration Act 1958 (the Act). Section 134(1) of the Act provides:

(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.

IS SDG AN ELIGIBLE BUSINESS?  

13.      Section 134(10) of the Act defines eligible business as one that the Minister reasonably believes is resulting in 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.

14.      In Hope v Bathurst City Council (1980) 144 CLR 1 the High Court held that carrying on a business denotes pursuing activities for the purpose of profit, undertaken on a continuous and repetitive basis. In Puzey v Commissioner of Taxation [2003] FCAFC 197 the Full Federal Court stated that a business requires some repetition of acts and something of a permanent character. The Tribunal notes that in about August/September 2004 Mr Gunawan and his daughters carried out some research into potential exports of Australian products to Indonesia, but no activity has occurred since then and no transactions have taken place.

15.      In the absence of any real effort to make a profit, and a lack of repetitive and continuous activity, SDG has not demonstrated that it has satisfied any of the criteria in s 134(10) of the Act.  For these reasons the Tribunal finds that SDG is not an eligible business for the purposes of the Act, and is satisfied that Mr Gunawan has not obtained a substantial ownership interest in an eligible business in Australia (s 134(1)(a) of the Act), and the grounds exist for the cancellation of the visa.

HAS MR GUNAWAN MADE A GENUINE EFFORT TO OBTAIN SUBSTANTIAL OWNERSHIP OF AN ELIGIBLE BUSINESS AND TO USE HIS SKILLS IN SENIOR MANAGEMENT?

16.      Section 134 of the Act provides:

(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).

17.      Paragraph 4.5 of the Ministerial Guidelines of Migration Series Instruction 133 entitled What is “genuine effort”? contains the following factors to assist decision‑makers in determining whether a genuine effort has been made under s 134(3) of the Act:

…

(a)       business proposal which is considered genuine, realistic and achievable;

(b)formal contract with partners or joint venturers;

(c)written evidence of detailed consultations with at least three business advisers (accountant, lawyer, bank/financial institution, State/Territory government business development office, Austrade, business/trade association);

(d)physical presence in Australia for more than six months since first arrival as a Business Skills class migrant;

(e)transferred to, and retained in, Australia at least 50% of the funds indicated as available for transfer within two years (under Factor 4 of the Business Skills Points test);

(f)minimum A$100,000 or 10% ownership previously held by the person.  If the person is no longer in business, the reasons for loss of ownership are also relevant;

(g)minimum A$100,000 business activity as indicated by turnover.  This may include other business activity not considered “eligible business” but cannot include passive investment, eg, purchase of shares;

(h)failure to comply with a notice for information under s 137, ie mandatory monitoring of Australian address and return of survey forms.

18.      In assessing Mr Gunawan’s claims against these factors and the Guidelines, the Tribunal takes into account that there is no detailed business plan setting out the broad objectives of the business.  There is no evidence of business partners or joint venturers.  Apart from the inquiries made in late 2004 there is no evidence of genuine research into the conduct of an eligible business in Australia.  Mr Gunawan has spent 35 days in Australia from the grant of the visa until its cancellation, which is less than the minimum of six months suggested in the Guidelines, although the Tribunal takes into account Mr Gunawan’s evidence about his commitments in Indonesia to the care of his father and his obligations to the family business.  

19.      Mr Gunawan has deposited $100,000 in SDG’s bank account but this sum has not been utilised by the business and he has no ownership interest in eligible businesses in Australia.  Apart from the brief market research undertaken by Diana and Jessica at Mr Gunawan’s direction in 2004, there has been little business or no activity undertaken by him.  Mr Gunawan has replied to requests by the Department for additional material. 

20.      After considering all the relevant factors in s 134(3) of the Act, the Tribunal finds that Mr Gunawan has not made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia (s 134(2)(a) of the Act) or to utilise his skills in actively participating at a senior level in the day-to-day management of the business (s 134(2)(b) of the Act).  Therefore he does not satisfy s 134(2) of the Act.

SHOULD THE RESIDUAL DICRETION NOT TO CANCEL THE VISA BE EXERCISED?

21.      In Kim v Ministerfor Immigration and Multicultural and Indigenous Affairs [2004] FCA 31 at [21] Kiefel J referred to a residual discretion which arises notwithstanding the applicant failing the tests in s 134(1) and s 134(2) of the Act:

The Minister might be satisfied of the matters referred to in subs (1) and not be satisfied as to the efforts made as referred to in subs (2) but nevertheless consider in a particular case that further time should be given to the visa holder to undertake what was required of them.

In Re Chin Lai andMinisterfor Immigration and Multicultural and Indigenous Affairs [2006] AATA 152 the Tribunal stated at [44]:

The exercise of the discretion requires that the applicant offer an explanation for his or her inaction that is satisfactory, as a precondition to the grant of further time or other exercise of the discretion in the applicant’s favour.

22.      In Re Tang and Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103 and Re Huang and Minister for Immigration, Multicultural and Indigenous Affairs [2002] AATA 656, the Tribunal held that the aim of the Act is to benefit business owners who settle in Australia and actively manage their business. In Re Ah Kow Phoon and Minister for Immigration and Multicultural Affairs [2006] AATA 527 the Tribunal referred to the need to demonstrate a sufficient level of sustained commitment over a 24-month period.

23.      Mr Gunawan said that until August 2006 he had been unable to convince his father that primary care should be provided by a nurse rather than himself, although as the oldest son in a Chinese family he accepted responsibility for his father’s well-being and treatment.  Mr Gunawan emphasised that this situation, together with the difficulty in finding a suitable replacement for him in the operation of the Indonesian business, has prevented him from moving to Australia and establishing an eligible business.  He said that both matters have now been resolved and he is anxious to settle in Australia and develop his business interests.  He said that he has made every effort to conduct the business from Indonesia with the assistance of Diana and Jessica.

24.      Although Mr Gunawan has stated that he plans to settle in Australia and develop the business, his father has been incapacitated since 2000, before the grant of the visa, and Mr Gunawan, on his own admission, is required to accept ongoing responsibility for his father’s welfare.  Despite Mr Gunawan’s evidence that his father now accepts the role of a nurse in everyday care, there seems little likelihood that Mr Gunawan is in a position to leave his seriously ill father and move to Australia.  Similarly, Mr Gunawan has been managing the family business in Indonesia and the person he says has been recruited to operate the business has yet to commit to that role on a permanent basis.

25.      For these reasons, and taking into account the limited time and effort spent by Mr Gunawan on SDG activities and in Australia during the past two years, the Tribunal concludes that he has not demonstrated a sustained commitment to the business or a satisfactory explanation for inaction that would warrant the exercise of the residual discretion in his favour.

WOULD DIANA AND JESSICA SUFFER EXTREME HARDSHIP IF THEIR VISAS WERE CANCELLED?

26.      Section 134(5) of the Act provides in relation to a visa held by a person who is a member of the family unit of a person whose business visa has been cancelled:

The Minister must not cancel the other person’s business visa under subsection (4) if the cancellation of that visa would result in extreme hardship to the person.

27.      In Re Setiawan and Minister for Immigration and Multicultural Affairs [2002] AATA 260 the Tribunal noted that the meaning of the words extreme hardship was considered by the Federal Court in Man Ki Kim v Minister for Immigration and Ethnic Affairs (1995) 37 ALD 481 at page 487:

...It is, in my opinion, important to approach the phrase "extreme hardship" in a broad way.  Clearly, it imports a high degree, perhaps a very high degree of hardship, but it must be applied in the context of the facts of the particular case.

28.      In Re Wang and Minister for Immigration and Multicultural Affairs [2000] AATA 961 the Tribunal stated at [29]:

…Clearly, whatever view is taken, hardship involves more than inconvenience or detriment.  Affectation must be to a considerable degree before it can properly be called hardship.

At [30] the Tribunal stated:

…There are many meanings of the word "extreme" offered in the Macquarie Dictionary.  Some of the more helpful suggestions are "of a character or kind farthest removed from the ordinary or average", "utmost or exceedingly great in degree", "farthest, utmost or very far in any direction", "going to the utmost lengths, or exceeding the bounds of moderation", "the utmost or highest degree, or a very high degree".  The use of the word "extreme" can be contrasted with the use of the word "undue" found in Ministerial Guidelines relating to hardship associated with deportation.  In order to enliven the prohibition against a Minister cancelling another person's business visa under subsection (4), there must be shown to be not only hardship and not only undue hardship, but extreme hardship…

29.      In Re Salim and Ors and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 899 the Tribunal held at [46] and [47]:

46.  However, it would be strange or unusual and unexpected if three relatively young, intelligent and capable persons had not in the years developed such relationships.  It will be hard to leave these people.  It will be hard to readjust to a life outside Australia and the university environment.  But this hardship is one within the contemplation of the legislature when it chose to insert the word "extreme" as to qualify the hardship.  And it must be "extreme" to the particular individual.

47. The Tribunal does not consider that the hardship that will undoubtedly be experienced by each one of the Applicants is exceptional, unexpected or of such a nature as to qualify for the description of exceedingly great in degree.  Unfortunate yes, emotional yes, financial yes to a degree.  But not extreme.

30.      Diana stated that since arriving in Australia she has assimilated into the Australian way of life and has adapted culturally and socially, and stated that most of her friends live in Australia.  She said she returns to Indonesia each year and spends about two months visiting friends and relatives, and intends to reside in Australia and pursue a career in this country when her studies are completed in 2007.  She told the Tribunal that her studies would be disrupted as she would be forced to leave Australia to apply for a student visa.

31.      Diana said that in the longer term she would be disadvantaged as she would be unable to pursue a career in business in Australia or enjoy the rights of an Australian citizen.  She also said that she was concerned about problems of racism in Indonesia and would be apprehensive about returning to live in that country, particularly as she has not resided there for a number of years, as she had  completed her secondary education in Singapore before coming to Australia.

32.      Jessica told the Tribunal that, like Diana, she has assimilated into the Australian way of life and feels that she has adapted to Australia socially and culturally, with most of her friends now living in Australia.  She said that if her visa was cancelled she would not be able to undertake her proposed cookery course and would be unable to fulfil her goal of opening a restaurant.  She explained that she would be forced to go overseas to apply for a student visa.  She said she would suffer extreme hardship because she would have been able to obtain Australian citizenship but for the cancellation of her father's visa, and would be disadvantaged as she would not be in a position to pursue a career in business or enjoy the rights given to Australian citizens.

33.      Under cross-examination Jessica agreed that she returns to Indonesia each year for a visit, but has not investigated the availability of cookery or other courses in Indonesia.  She said that she is not interested in studying or working in Indonesia.

34.      The Tribunal takes into account Diana has spent about four years in Australia, has formed a wide network of friends, is committed to the Australian way of life and has completed her Commerce degree.  She has one year remaining in her Chemical Engineering degree.  Cancellation of the visa would result in the refusal of her application for Australian citizenship because she would no longer hold a permanent visa, but this in itself does not constitute extreme hardship, and she would be able to make another application in the future when she has complied with the criteria.  Clearly her studies would be disrupted if she is required to return to Indonesia and either seek a similar course of study in that country or apply for a student visa to return to Australia, possibly next year as a full fee-paying student.  Such disruption, while inconvenient, is not extreme hardship (Re Harijono and Anor and Ministerfor Immigration and Multicultural and Indigenous Affairs [2004] AATA 882).

35.      The Tribunal takes into account Diana’s evidence about her fears of racial discrimination as a person of Chinese background in a Muslim country, although there is no material before the Tribunal to suggest that her safety and well-being would be under particular threat if she returned to Indonesia.  Undoubtedly Diana would experience emotional and practical difficulties if forced to leave her network of friends in Australia and re-locate to Indonesia.  However, her parents and extended family live in Indonesia and have the financial and other resources to support and assist her with accommodation and adjustment to the Indonesian way of life.  She has sound employment prospects either in the family business or elsewhere in Indonesia.  In all the circumstances the Tribunal does not consider that any difficulties or disruption constitute hardship that is exceptional, unexpected or exceedingly great in degree, so the Tribunal finds that cancellation of Diana’s visa would not result in extreme hardship to her.

36.      The Tribunal notes that Jessica has been in Australia for nearly three years.  There is no doubt that she enjoys living in Australia and has developed a network of friends.  Cancellation of her visa would cause disruption to her established lifestyle. Jessica has completed her degree in multimedia and there is no material before the Tribunal to suggest that she would be unable to obtain employment in the family business in Indonesia or with another employer.  If she wishes to pursue a cookery course there would probably be opportunities for her to do so in Indonesia, or she could apply for a student visa to return to Australia. 

37.      As with Diana, Jessica has strong family support in Indonesia.  She has lived independently of her parents for several years, and there is no material before the Tribunal to suggest that any long-term plans for Australian citizenship would be affected adversely by the cancellation of her business skills visa.  In all the circumstances the Tribunal does not consider that any difficulties or disruption constitute hardship that is exceptional, unexpected or exceedingly great in degree, so the Tribunal finds that cancellation of Jessica’s visa would not result in extreme hardship to her.

DECISION

38.      The Tribunal affirms the decisions under review.

I certify that the thirty-eight [38] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Senior Member

(sgd)        Lydia Zozula

Associate

Dates of hearing:  14 December 2006, 28 February 2007
Date of decision:  8 March 2007
Counsel for applicant:                  Ms S. Burchell
Solicitor for applicant:                  Lily Ong
Advocate for respondent:           Mr M. Brereton

Solicitor for respondent               Australian Government Solicitor