Gunawan and Minister for Immigration and Multicultural and Indigenous Affairs
[2004] AATA 1340
•15 December 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1340
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2003/326
GENERAL ADMINISTRATIVE DIVISION ) Re CHANDRA GUNAWAN Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr M J Allen, Member Date15 December 2004
PlacePerth
Decision The decision made on 21 May 2003 by a delegate of the respondent to cancel the subclass 127 Business Skills Visa held by the applicant is affirmed. .............(sgd M J Allen)..........................
Member
CATCHWORDS
IMMIGRATION - cancellation of business visa – applicant did obtain a substantial ownership interest in an Australian business name and an Australian corporation – no business in Australia was carried on – the applicant was not involved in the day to day management at a senior level in an Australian business – the applicant has not made genuine efforts to obtain the required ownership interest in an eligible business in Australia or to be involved in the day to day management of such a business – no factors sufficient to justify the exercise of the residual discretion to not cancel the applicant’s visa – cancellation decision affirmed.
Migration Act 1958 ss 134, 135
Migration Series Instruction 133
Hope v Bathurst City Council (1980) 144 CLR 1
Puzey v Commissioner of Taxation [2003] FCA FC 197Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77
Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283
Skoljarev v Australian Fisheries Management Authority [1995] 133 ALR 690Stone v Commissioner of Taxation [2003] FCA FC 145
REASONS FOR DECISION
15 December 2004 Mr M J Allen, Member 1. On 21 May 2003 a delegate of the respondent made decisions to cancel the subclass 127 business skills visas held by Mr Chandra Gunawan (“the applicant”) and those held by his family members, namely his wife, two daughters and one son. Applications were made to the Tribunal by the applicant, one daughter, and his son for a review of the decisions affecting them, but I was advised at the hearing that the applications made by the daughter and the son had been or would be withdrawn. Accordingly, this decision and the reasons for it relate only to the decision made in respect of the applicant’s visa.
2. At the hearing of the matter the applicant was represented by his solicitor, Mr Christie, and the respondent was represented by Ms McPherson, a solicitor with the Australian Government Solicitor. The Tribunal received into evidence the documents filed pursuant to s 37 of the Administrative Appeals Tribunal Act (T1-T16 and S1-S3) and Exhibit A1, being an affidavit sworn by the applicant on 26 May 2004 with attachments. The applicant gave oral evidence with the assistance of an interpreter in the Indonesian language.
Background
3. The applicant and his family members applied for visas in late 1998 and they were granted in early 2000. The applicant first arrived in Australia under his visa on 5 March 2000. Between the date of that first arrival and the date of cancellation of his visa the applicant spent a total of 26 days in Australia.
4. In March 2002 the respondent’s department sent a 24-month survey form to the applicant at the address that had previously been notified by him as his contact address. That form was never returned to the department.
5. By letters dated 15 January 2003 notices of intention to cancel the visas held by the applicant and his family members were given to the visa holders and representations regarding the proposed cancellation were invited. The notices were subsequently returned by the Post Office with the notation that they had been “unclaimed”. No representations were received from the applicant or any of the other visa holders.
6. Notices advising of the cancellation of the visas were also dispatched by the department but were also returned by the post office as unclaimed.
7. At the hearing of the matter Mr Christie advised me that the applicant would not raise any issues regarding compliance by the respondent with the provisions of the Migration Act 1958 (“the Act”) regarding the giving of notice regarding intention to cancel visas. On the documentary evidence before me I am satisfied that is an appropriate course. I must therefore consider the merits of the decision to cancel the applicant’s visa.
Did the Power to Cancel the Visa Arise?
8. A discretionary power to cancel the applicant’s visa under s 134(1) would arise if the decision-maker is satisfied that by the time of the decision the applicant had failed to satisfy any one of the matters set out in that sub-section, namely that the visa 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.”
9. The applicant asserted that he had complied with the requirements of s 134(1) by virtue of his involvement in a business that was, at first, conducted under the registered business name of Double Fortune Trading (“Double Fortune”) and subsequently via a company named Double Phoenix Proprietary Limited (“Double Phoenix”).
10. Double Fortune was registered as a business name in March 2001 and the applicant said that he and his brother each held a 50% interest in it. The applicant’s evidence was that Double Fortune only ever undertook one business transaction, namely the purchase of oranges from a supplier in South Australia in December 2001 and the export of those oranges to Indonesia. The purchase price of the oranges was $25,707 (A1, p8). No document exists that records the sale of the oranges by Double Fortune to the Indonesian purchaser, but the applicant said in his oral evidence that it was an oral transaction and, although he could not remember the exact sale price, it was at a profit of approximately 10% of the purchase price.
11. In November 2002 Double Phoenix was incorporated, with the applicant owning 300 of the 1000 $1 issued shares. One of his daughters owned 200 shares and his brother and his brother’s son between them owned the other 500 issued shares. Prior to the decision to cancel the applicant’s visa in May 2003 Double Phoenix entered into 2 export transactions. The first transaction was in December 2002 when Double Phoenix agreed to purchase grapes from an Australian supplier at a price of $22,176 for export to Indonesia (A1, p15). Once again there is no document recording the sale of the grapes to the Indonesian purchaser by Double Phoenix and again the applicant said that it was an oral transaction. The second transaction that Double Phoenix entered into was in January 2003 when the company agreed to purchase wheat flour from an Australian supplier at a price of USD $32,349 (A1, p19). Again, no documents record the subsequent sale by Double Phoenix to an Indonesian purchaser.
12. The applicant said that since the cancellation decision Double Phoenix had entered into one other transaction. In May 2004 Double Phoenix entered into what is described as a “sales contract” to sell Australian apples to an Indonesian purchaser at a price of $47,200 (A1, p26). According to the sales contract the apples were to be delivered in August 2004 but the applicant said in his oral evidence that delivery was to be made in September 2004. The applicant was unable to produce any documents relating to the purchase or agreement to purchase the apples in Australia for export to Indonesia and said that the purchase arrangements had been made on his behalf in Australia by friends. He said that some documents relating to the transaction were in Indonesia but he had not brought them to the hearing because they were all in the Indonesian language and he did not think they would be required at the hearing.
13. The only business address shown on documents for Double Fortune was the address in Australia of a man who had assisted the applicant in making his application for a visa in Indonesia. The business address shown for Double Phoenix was the address in Australia of the applicant’s cousin. The applicant said in his oral evidence that Double Phoenix did maintain an office at the home of his cousin but later conceded that the only person who would have used that office was his daughter who, he said, called in occasionally to deal with company matters.
14. The applicant said that he had established Double Phoenix on the advice of an accountant in Australia. Neither Double Fortune nor Double Phoenix ever opened an Australian bank account, neither obtained an Australian business number or registered for GST, and no financial statements were ever prepared for either entity. Neither the applicant nor Double Phoenix has ever filed Australian taxation returns, although the applicant said he intended to make contact with the accountant to have these things attended to.
15. Section 134(10) of the Act relevantly defines an “ownership interest” in relation to a business as an interest in the business as a shareholder in a company that carries on the business, a partner in a partnership that carries on the business, or the sole proprietor of the business. Accordingly, the applicant’s interest in Double Fortune as an owner of the business name with his brother and his shareholding in Double Phoenix would constitute ownership interests in any business that Double Fortune or Double Phoenix carried on. As to whether that interest is a substantial one is a matter of fact and degree. In its statement of facts and contentions the respondent does not dispute that the applicant has a substantial ownership interest in Double Fortune and Double Phoenix and in the light of that concession I am satisfied that, on the facts, the applicant’s ownership interest in those two entities would constitute a substantial ownership interest in any business that may have been carried on by them.
16. However, I am not satisfied that either Double Fortune or Double Phoenix individually, or the two of them taken together, carried on any business at all in Australia.
17. Whether or not a person carries on a business is a conclusion to be drawn from all relevant facts and circumstances. The business can be small but the relevant activity must be carried on in a business-like way and in accordance with commercial principles. There should be some system, repetition and continuity of the activity. There should be something of a permanent character and the existence of some of the indicia of a business – such as acting in a business-like way, and the keeping of books of accounts and other records will be relevant; see Hope v Bathurst City Council (1980) 144 CLR 1 at [8] and [10], Stone v Commissioner of Taxation [2003] FCA FC 145 at [74], Puzey v Commissioner of Taxation [2003] FCA FC 197 at [46]-[48].
18. In the present case, apart from the registration of a business name and the incorporation of a company, the business activity carried on in Australia by the applicant via Double Fortune and Double Phoenix has none of the indicia of a business – as evidenced by the lack of a bank account, the absence of an Australian business number and GST registration, and the absence of financial records and taxation returns. The company did not maintain anything other than a token business office and, as will be referred to below, the majority of the relevant activities were undertaken in Indonesia. Those things, plus the isolated nature of the individual transactions and the absence of documentary evidence to support what were said to be sales transactions in Indonesia, lead me to the conclusion that there was no business carried on in Australia by Double Fortune or Double Phoenix. If it could be said that a business was carried on, then in my opinion it was a business that was carried on in Indonesia rather than in Australia and, accordingly, it was not possible for the business activities to satisfy the requirements of s 134(1)(a) – which requires that there to be a substantial ownership interest in an eligible business in Australia. For these reasons it is not necessary for me to consider whether the business (if it existed at all) was an eligible business.
19. Accordingly, I find that the applicant did not satisfy the requirements of s 134(1)(a) and the power to cancel his visa would arise under that subsection. It is not, therefore, necessary for me to consider whether the applicant also failed to satisfy s 134(1)(b) but, on the evidence and material before me, I am satisfied that he did fail to satisfy that requirement.
20. The applicant’s oral evidence, which was at odds in material respects with Exhibit A1, was that all the negotiations with Australian suppliers was undertaken by either family members who lived in Australia or a Mr Lim – who lived in Indonesia but who assisted the applicant in dealing with English-speaking suppliers. The applicant also said that although he had occasional contact with the buyers of the goods exported to Indonesia all the negotiations and dealings with those parties were done by his brother, who was also based in Indonesia.
21. In relation to what constitutes active involvement at a senior level in the day-to-day management of a business, two observations can be made. The first is that day-to-day management of a business does not require daily management. What is required is continuity and regular activity that is sufficient for the management needs of the specific business: see Re Yam and Minister for Immigration, Multicultural and Indigenous Affairs (2004) AATA 283 at [93] and [95], and Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77 at [35]. Secondly, the Act does not require that the senior level day-to-day management of an eligible business must take place in Australia: see Re Yam at [101] and Re Jo at [25] to [36].
22. In the present case the applicant’s evidence was that, because Australian fruit was seasonal in supply at competitive prices, there were long periods when there was no activity required of him by or on behalf of Double Fortune or Double Phoenix and that it was only rarely that he spoke to any of the potential customers in Indonesia - although he asserted that he would have spent on average 5 or 6 hours per week in the management of the Australian business activities. I do not accept his evidence in that regard because I consider that he exaggerated the extent of his involvement and understated the degree of his involvement in another Indonesian business that he was a principal of, further reference to which will be made below. In my opinion the applicant had little involvement in whatever activity was undertaken in respect of the fruit transactions, preferring to leave the conduct of the business to his brother and Mr Lim in Indonesia, and other family members or friends in Australia as required. I consider that there was no continuity or regular activity on his part and, in any event, whatever activity he did undertake in the management of the business was management of an Indonesian business rather than management of an Australian business. Accordingly, I find that the applicant did not satisfy the requirements of s 134(1)(b) and the power to cancel his visa would also arise under that provision.
Does S 134(2) Prevent the Exercise of the Power to Cancel?
23. Section 134(2) relevantly provides that the power to cancel a visa under s 134(1) must not be exercised if the Minister is satisfied that the visa 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”.
24. For the purpose of determining whether the person has made such genuine efforts, s 134(3) provides that any or all of the following matters may be taken into account:
“(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 in the day-to-day management of the 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)”.
25. The Migration Series Instruction 133 (“MSI 133”) issued by the respondent’s department, at paragraph 4.5.1, contains notes to guide decision-makers in the interpretation of the factors set out in s 134(3). Although such indications of policy are not binding on the Tribunal, there is good reason why they should be applied in the interest of consistency of decision-making; see Skoljarev v Australian Fisheries Management Authority [1995] 133 ALR 690 at 695 and 696 per Davies J. No weight should be given to the notes set out in paragraph 4.5.1 where the note is clearly more restrictive than the terms of the Act itself; see Re Yam at [48] to [51]. An “effort” will be “genuine” in the context of s 134 if there is a level of effort beyond that which is purely superficial or token and an effort will not be considered not genuine merely because it falls short of the examples given in s 134(3): see Re Yam at [53]. It is convenient to consider first the efforts made by the applicant in terms of the factors identified in s 134(3) and the guidelines regarding them in para 4.5.1 of MSI 133.
(a) Business Proposals Developed
26. MSI 133 refers to business proposals that are considered “genuine, realistic and achievable”. The applicant produced no documentary evidence of the development of business proposals or plans regarding the establishment of a business in Australia. The concept of exporting Australian fruit appears to have arisen from suggestions made by the applicant’s friends about what might be exported to Indonesia from Australia and the export of flour appears to have arisen from the efforts of the applicant’s brother. Although the applicant said that the exported products were sold at a profit, there is nothing to document that that was so. In the circumstances I do not consider that the applicant has developed proposals that could be regarded as genuine, realistic or achievable.
(b) Partners or joint venturers
27. The MSI 133 refers to formal contracts with partners or joint venturers. The applicant was involved in the relevant activities with his brother but there is nothing by way of documentary evidence to evidence any of the arrangements between them. The applicant said in his oral evidence that he and his brother contributed money equally to the purchase of the exported products on an individual transaction basis, rather than setting up an Australian bank account with working capital. In the absence of any better evidence regarding the arrangements between the applicant and his brother I consider that those arrangements were informal in the extreme.
(c) Research undertaken
28. MSI 133 refers to the need for evidence of detailed consultations with at least 3 business advisors such as accountants, lawyers, financial institutions, state or territory government agencies, Austrade or business trade associations. There is no evidence that the applicant consulted any advisors other than an accountant who recommended the incorporation of Double Phoenix but who, apparently, did not give advice about the other formalities required in the establishment of a business in Australia. If such advice was given then the applicant must have chosen to ignore it.
29. The applicant said that he had originally intended to establish some kind of plastics manufacturing operation in Australia because that is the industry that he is involved in in Indonesia and knows most about. He said that he investigated this idea when he first came to Australia under the visa in March 2000 but decided that it was not a feasible proposition within about 3 months. The applicant’s first visit to Australia was for 5 days only and he did not return to Australia for approximately 18 months thereafter (S3). The applicant said that he had gathered some information during his first visit but after that he had relied on his nephew to gain some further information about business possibilities. I am not satisfied that the applicant made a genuine effort to investigate the idea of a plastics business in Australia at that time because of the limited time he spent here and because of the absence of any documentary evidence to support the claimed investigations.
(d) Physical presence in Australia
30. MSI 133 refers to a visa holder being physically in Australia for more than 6 months since the first arrival. As noted above, the applicant spent 26 days in this country between his first arrival and the cancellation of his visa. In that time he visited Australia only 4 times for periods of between 5 and 10 days (S3). Although the applicant may have spent some of that time considering business matters, at least part of the purpose of the visit was to visit his children who were living here. In the circumstances I am not satisfied that the applicant made genuine efforts to spend a sufficient amount of time in this country to be in a position to properly evaluate business opportunities and to become involved to anything like the requisite degree in business activities here.
(e) and (f) Value of assets transferred and value of ownership interest
31. MSI 133 refers to the transfer to and retention in Australia of at least 50% of the funds indicated as available for transfer within 2 years when the person applied for a business visa and the acquisition of an ownership interest of a minimum $100,000. In his application for a visa the applicant stated that he would transfer $200,000 to Australia. In the period prior to cancellation it appears that the only funds transferred to Australia by the applicant were his 50% contribution to the cost of purchasing the goods that were subsequently exported. When payments for the goods were received in Indonesia none of the proceeds were transferred to Australia. As no financial statements have ever been prepared for Double Fortune or Double Phoenix it is impossible to estimate the value of any ownership interest that the applicant may have in those entities but, in my opinion, it could not be said that the interest was anything other than nominal.
(g) Business activity undertaken
32. MSI 133 refers to business activity of a minimum of $100,000 as indicated by turnover. The transactions undertaken by Double Fortune and Double Phoenix prior to the cancellation decision had a value of just less than that. With the inclusion of the post-cancellation decision that amount was exceeded.
(h) Compliance with notices
33. As noted above, the applicant was sent a 24 month survey form but failed to respond to it. The applicant said in his oral evidence that he had never received the form but provided no evidence as to why that might have been the case. The form was sent to the address provided by the applicant to the department as his contact address in Australia and it was the address at which the applicant’s cousin lived. The applicant said that correspondence was sent to him from that address but he could offer no explanation as to why he did not receive the correspondence from the department. In the circumstances I consider that the applicant has offered no satisfactory explanation as to why he did not respond to the form.
34. Looking at the applicant’s position generally, I am satisfied that the applicant made no genuine efforts to establish an eligible business in Australia or to be involved in its management at a senior level. I consider that whatever efforts he made regarding investigating the establishment of a plastics business were nominal and the efforts that were made to establish an exporting business appear to have been substantially undertaken by the applicant’s brother with the involvement of Mr Lim in Jakarta. The applicant’s efforts to advance the exporting business were, in my opinion, nominal, especially in light of the applicant’s very limited time in Australia.
35. At the time he was granted his visa the applicant had an 83% shareholding in a substantial Indonesian company involved in the manufacture of plastic products and he described himself as “the president/director” of that business in his application for a visa. The applicant said that he remained a director and retained his 83% shareholding until approximately the end of 2003 i.e. well after the cancellation of his visas. The applicant said that he had scaled back his activities in the Indonesian business over the years and that, at the end of 2003, he had reduced his shareholding in the business from 83% to about 30%. The applicant said that he spent a considerable part of each month in Palambang, Jakarta and Batam, which are the 3 locations where the Indonesian company has its factories. In my opinion the applicant has understated his involvement in the Indonesian business and has, throughout the period that he held his Australian visa, continued to be actively involved in its management.
36. Overall, I was left with considerable doubt about the applicant’s evidence. There were significant differences between his oral evidence and Exhibit A1, and during the course of his oral evidence he frequently changed the emphasis or detail of some of the evidence. Even allowing for the difficulties that can be present when evidence is given via an interpreter, I conclude that the applicant’s evidence was in important respects unreliable. Overall, I am satisfied that the applicant did not make genuine efforts to satisfy the requirements of s 134(2) and hence that subsection would not prevent the exercise of the power to cancel his visa under s 134(1).
37. There remains the question of whether the residual discretion that is available should be exercised in favour of the applicant so that his visa is not cancelled. The applicant has identified no particular factors that should be taken into account in the exercise of that discretion. As noted above, no application has ever been made on behalf of the applicant’s wife and one of his daughters, and the applications that were made on behalf of one daughter and the applicant’s son were not proceeded with. No information was provided to the Tribunal regarding the position of the applicant’s wife but I note from T p64 that the applicant’s elder daughter has spent only approximately 12 days in Australia since 1995 and has not been here since April 2001. It appears that the applicant’s other daughter has been granted another form of visa and is thereby entitled to reside in Australia regardless of what happens to the applicant’s business visa. The person who is potentially most affected by the cancellation of the applicant’s visa would be his son, who is presently attending school in Australia. However, in view of the fact that the son’s application for review is not to proceed I conclude that it is not considered that he would suffer any particular hardship by virtue of the cancellation of the applicant’s visa.
38. It is apparent that the applicant is a successful businessman in Indonesia. He has acquired no property in Australia and, for the reasons set out above, has made no genuine efforts to establish himself in this country under the visa that he was granted. In the absence of specific information about factors that might suggest the discretion should be exercised in his favour, I am not prepared to exercise that discretion so as to not cancel the applicant’s visa. Accordingly, I affirm the decision made on 21 May 2003 to cancel the applicant’s visa.
I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Allen, Member
Signed: ....................(sgd V Wong)......................
AssociateDate/s of Hearing 1 September 2004
Date of Decision 15 December 2004
Counsel for the Applicant Mr H Christie
Solicitor for the Applicant Christie and Strbac
Counsel for the Respondent Ms L McPherson
Solicitor for the Respondent Australian Government Solicitor
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