Harsono and Minister for Immigration and Multicultural Affairs
[2007] AATA 64
•23 February 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 64
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2005/143
GENERAL ADMINISTRATIVE DIVISION ) Re TANTO HARSONO Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date23 February 2007
PlacePerth
Decision The Tribunal affirms the decision under review. ........(Sgd. Mr A Sweidan).........................
Senior Member
CATCHWORDS
Immigration - Business Skills Visa - eligible business - genuine efforts - exercise of discretion.
LEGISLATION
Migration Act 1958 (Cth) section 134 (10 (2) (3) (10)
Migration Series Instruction 133 (paragraphs 4.5.1 and 4.5.2)
CASES
Abbu v Minister for immigration and Multicultural Affairs [2006] AATA 898
Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178
Commissioner for Superannuation v Scott 71 ALR 408 at 412
Gomaidy v Minister for Immigration and Multicultural Affairs [2006] AATA 75 47:
Kok v Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579 21
Wong v Minister for Immigration, Multicultural and Indigenous Affairs [2002] AATA 54.
Lau v Minister of Immigration and Multicultural Affairs [2002] AATA 703 29
Juliana Leo v Minister for Immigration [2006] AATA 308
Saleh Leo v Minister for Immigration [2006] AATA 308
Agus Gunawan v Minister for Immigration and Multicultural Affairs [2006] AATA 852
REASONS FOR DECISION
23 February 2007 Mr A Sweidan, Senior Member BACKGROUND
1. This is an application to the Administrative Appeals Tribunal (the Tribunal) for review of a decision made by a delegate of the respondent on 11 April 2005 cancelling the business skills visa of Tanto Harsono (the applicant).
2. On 17 October 2001 the applicant was granted a sub-class 127 business skills visa (the visa). The applicant first entered Australia on 20 December 2001.
3. On 16 December 2004 a notice of intention to cancel the visa was sent to the applicant.
4. The applicant responded by letter on 14 January 2005. In his response the applicant claimed that he had obtained a substantial ownership interest in Gilete Bunbury Insulation Services Pty Ltd (Gilete) and had been appointed as a senior manager of this business.
5. On 11 April 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.
Delegate’s Decision
6. The delegate found that while there was evidence that the applicant had acquired 150,000 “A Class” shares in Gilete there was no evidence provided to clarify the nature of the “A Class” shares “specifically in terms of the rights and privileges that ownership of the shares conveys, the level of risk and proprietary ownership that ownership of the shares conveys or the existence of any options attached to “A Class” share ownership”. The delegate found that given the existence of different classes of shares she was unable to be satisfied that the visa holder had acquired a substantial ownership “with all the implications of personal financial involvement and exposure to risk that that implies” rather than passive investment.
7. The delegate also found that whilst there was evidence that the applicant was the “Strategic Financial Manager” of Gilete, the ASIC extract stated that there is only one Director of the company and that position was not held by the applicant. The delegate found that this suggested “that the visa holder is not at the highest level of the business and one to whom others are responsible, or that he has executive control and authority of business activities”. The delegate also noted the limited amount of time spent by the applicant in Australia (39 days) between 20 December 2001 until 11 April 2005.
8. Overall 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 level, nor had he made genuine efforts to do so.
Legislation and Policy
9. Section 134 of the Migration Act 1958 (the Act) provides that the Minister has a discretion to cancel the visa if 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 she is satisfied that the visa holder has made genuine efforts and intends to continue to make such genuine efforts.
10. Eligible business and ownership interests are defined in section 134(1) of the Act and discussed at paragraph 4.3 of the MSI-133.
11. 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.
12. 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.
13. 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.
14. 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
15. The Tribunal heard evidence from the applicant and the “T” documents and other documents were tendered to the Tribunal.
16. Under cross-examination the applicant stated that he lives in Indonesia and works on a full-time basis in Indonesian businesses and companies in which he has interests and that this is the main source of his income.
17. He said that after looking at a few small businesses on a 4-day visit to Australia he subsequently invested $150,000 in Gilete and was issued with 150,000 “A” Class shares and entered into a Put and Call Option Agreement in respect of those shares.
18. The relevant documents relating to the applicant’s shareholding together with a Deed of Indemnity were filed as Exhibits. It is clear from those documents that the applicant’s rights as a shareholder did not include any right to participate in any dividends paid by the company and that the shares were also subject to other unusual conditions.
19. The applicant was not a director of Gilete. Contrary to what was said in his witness statement in cross-examination he acknowledged that his role with Gilete mainly involved looking at the accounts of the company and making recommendations. He further said that Gilete is now liquidation and his investment in that company has effectively been lost.
RELEVANT PRINCIPLES
Substantial ownership
20. The word “substantial” is not defined but has been 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 s45D of the Trade Practices Act 1974 (Cth)) that the word “substantial” means:
“Real or of substance and not insubstantial or nominal”.
21. Whilst the Tribunal is required to consider the position as at the date of the cancellation of the visa, it is entitled to consider subsequent events to the extent that those later events assist in evaluating the relevant intentions and actions of the visa holder as at the date of the cancellation of the visa: Gomaidy and Minister for Immigration and Multicultural Affairs [2006] AATA 75 47: Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579 21.
22. The question of what is a substantial “ownership interest” of an eligible business is one of fact and degree; Wong and Minister for Immigration, Multicultural and Indigenous Affairs [2002] AATA 54.
Active participation at a senior level in the day-to-day management of an eligible business
23. The respondent contended that the applicant has 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.
24. 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 the 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).
25. The Act is intended to benefit business owners who settle in Australia and actively manage an eligible business (Tang supra at [21]).
26. 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.”
27. 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]).
28. 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.”
29. 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”.
30. 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.”
31. The applicant claims to have been appointed as the Strategic Financial Manager of Gilete. However, the documentation does not support the case that the applicant is involved at a senior level. For example, there are company minutes but the applicant was not in attendance at any of the meetings.
32. The applicant has provided evidence that he emails the directors of the company regularly. However, the email correspondence is, as the delegate pointed out, more in the nature of suggestion and recommendation. There is no evidence of the applicant actually making any decisions for the company. The applicant does not, for example, attend any of the company meetings.
33. The nature of Gilete is described in correspondence from the applicant’s former migration agent at T12 (p59):
“[Gilete] supplies, installs and maintains temperature and acoustic insulation products to the residential and industrial market in the South West of WA. The company also fabricates components in support of insulation products for commercial and industrial use.”
34. The applicant has only spent 39 days in Australia in the relevant period and there is no evidence that the time spent outside of Australia is necessary for the business activities of Gilete. Given the nature of Gilete, it is difficult to see how the applicant’s sustained absence could be related to the operation of the business.
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
35. 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).
36. 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).
37. 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.
38. The respondent contends that the applicant has not made a genuine effort either to obtain a substantial ownership interest 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 the eligible business. In support of this contention and with reference to paragraph 4.5.1 of the MSI the respondent says as follows:
(a)whilst a business plan exists in relation to the business, it appears to have been drafted prior to the applicant’s involvement ;
(b)the applicant’s involvement reflect passive investment only;
(c)there is no evidence of research undertaken by the applicant personally
(d)there is no evidence of business activity actually undertaken personally by the applicant;
(e)the applicant failed to comply with a section 137 notice;
(f)the applicant has spent only 39 days in Australia; the respondent contends that this in itself is indicative of a lack of genuine efforts but is particularly so given the nature of the business certainly does not require his presence overseas.
39. The respondent contends that the applicant’s efforts do not amount to genuine efforts but are merely an attempt to avail himself and his family of the benefits that flow from the visas.
40. There is at least a suspicion that his business investment is for visa purposes only. At the bottom of an email from Gilete to the applicant dated 29 July 2004 the applicant is advised to copy all of his correspondence to Gary Hardman of Gilete who is described as being “ultimately responsible for keeping your file for visa purposes”.
41. The respondent asserts and the Tribunal finds that the applicant has failed to demonstrate that he has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia or made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of an eligible business.
42. The respondent therefore asserts that the delegate’s decision should be affirmed because:
(a)The applicant has failed to obtain a substantial ownership interest in an eligible business in Australia;
(b)the applicant has failed to utilise his skills in actively participating at a senior level in the day-to-day management of the business; and
(c)the applicant has failed to make any efforts to obtain a substantial interest 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 an eligible business.
ISSUES
43. The above are therefore the issues which the Tribunal must determine, subject to the following:
(a)if (a) and (b) are resolved in favour of the applicant, (c) does not arise:
(b)if either or both of (a) and (b) are resolved against the applicant, and (c) is resolved in favour of the applicant, s134 (2) of the Act compels the Tribunal not to cancel the visa;
(c)if either or both of (a) and (b) are resolved against the applicant, and (c) is likewise resolved against the applicant, the Tribunal nevertheless retains a discretion as to whether or not the applicant’s business visa ought to be cancelled.
DECISION
44. The Tribunal is satisfied that Gilete was an eligible business.
45. The Tribunal is not satisfied that the applicant had acquired a substantial ownership interest in Gilete.
46. The Tribunal notes that in Juliana Leo v Minister for Immigration [2006] AATA 308 and Saleh Leo v Minister for Immigration [2006] AATA 308 similar arrangements involving shareholdings in other companies in the Gilete group were considered by Associate Professor Barton, a Member of the Tribunal. The Tribunal found as follows in relation to those arrangements:
‘‘Substantial ownership interest’ is not defined in the Act. ‘Substantial’ means “1.of considerable importance, size, or worth. 3. real and tangible rather than imaginary;” Oxford Dictionary of English, second edition, 2003.
A share in a registered company has been described as an indivisible bundle of rights and the obligations that attach to it, as burdens or incidents of the shareholding. It is a species of transferable personal property which does not include a legal or equitable interest in the assets of the company; Re Rose, Rose v Inland Revenue Commissioners [1952] Ch 499, 513, 514; Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143, 154, 157. The nature of a share is variable from corporation to corporation, from share to share and from time to time. So where, as in this application, the business visa holder’s ownership interest in an eligible business is an interest in the business as a shareholder in a company that carries on the business, the issue as to whether that interest is substantial, for the purposes of the Act, is to be determined not only by considering the number or percentage of issued shares held and their cost but also by reference to the rights that constitute the shares and the circumstances in which they are held.
The circumstances in which the applicant became a member of Optel, the nature of her shares in Optel, including the manner in which she is excluded from participating in its profits, and the terms of the contractual arrangements by which she acquired and holds her shares, are set out fully above. These matters, when considered as a whole, lead irresistibly to the conclusion that her underlying ownership interest in the business of Optel is severely attenuated, especially in light of the rights that ordinarily accrue to the proprietors of a private company.”
47. The Leo decisions on this point were followed by the Tribunal in Gunawan v Minister for Immigration and Multicultural Affairs [2006] AATA 852.
48. However in the matter of Abbu v Minister of Immigration and Multicultural Affairs [2006] AATA 898 Deputy President Hotop took the opposite view on similar facts.
49. The Tribunal agrees with the conclusions in the Leo and Gunawan cases in relation to this applicant, insofar as Gilete is concerned.
50. In relation to Gilete the Tribunal is also not satisfied that the applicant participated actively at a senior level in the day-to-day management of the business of those companies.
51. The Tribunal finds that the applicant did not have a substantial ownership interest in Gilete Bunbury Insulation, and further that he did not actively participate at a senior level in the day to day management of that company.
52. The Tribunal notes that there are emails from the applicant where he has advised in general terms on the performance of the company. In these emails or in the applicant's replies to these emails, the applicant has made suggestions and offered advice, however, those emails really go no further than informal advice and suggestion. There is no evidence that the applicant made any decisions. There is no evidence that any of his suggestions were acted upon. In one email at page 117 of the T documents there is a comment from Mr Richards of Gilete that:
“It is always rewarding to have an outside opinion.”
53. Under s 134(2) of the Act the applicant’s visa must not be cancelled if the respondent is satisfied that the applicant has made a genuine effort 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 and intends to continue to make such genuine efforts.
54. “Genuine effort” is not defined so must be given its ordinary meaning within the context of the Act. The Oxford Dictionary of English defines “genuine” to mean “truly what something is said to be; authentic” and “effort” to mean “a vigorous or determined attempt.
55. The Tribunal notes that although s 134(2) requires the respondent to be successively satisfied in relation to the matters set out in sub-paragraphs (a), (b), and (c) where, as in this matter, the finding is that the applicant has not obtained a substantial ownership interest in an eligible business in Australia, s 134(2) (b) does not have practical application and therefore the visa must not be cancelled if the Tribunal is satisfied in relation to the matters set out in sub-paragraphs (a) and (c) or, if the Tribunal is not so satisfied, it nevertheless decides to exercise it’s residuary discretion in favour of the applicant.
56. In the Tribunal’s view, the evidence suggests that the applicant’s efforts were not genuine, nor were they “vigorous and determined”. The Tribunal is further of the view that this is not a matter in which it should exercise it’s residuary discretion in favour of the applicant.
57. The Tribunal accordingly affirms the decision under review.
I certify that the fifty seven [57] preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: ........(Sgd. Ms R Riberi) .....................................
AssociateDate/s of Hearing 10 November 2006
Date of Decision 23 February 2007
Counsel for the Applicant Mr T Goldfinch
Solicitor for the Applicant Goldfinch & Co
Counsel for the Respondent Mr Arran Gerrard
Solicitor for the Respondent Australian Government Solicitor
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