Hendra and Minister for Immigration and Citizenship

[2008] AATA 150

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 150

ADMINISTRATIVE APPEALS TRIBUNAL      )

)    No 2007/3020

GENERAL ADMINISTRATIVE DIVISION        )

ReENGE KUSUMA HENDRA

Applicant

AndMINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

TribunalSenior Member M D Allen

Date26 February 2008

PlaceSydney

DecisionThe decision under review is affirmed.

.................[sgd].......................

M D Allen
  Senior Member

CATCHWORDS

BUSINESS SKILLS VISA – review of decision cancelling applicant’s business skills visa – whether applicant has a substantial ownership interest in; and utilises her skills in actively participating at a senior level in the day-to-day management of; an eligible business in australia – review of decision can only take into account events up to date of cancellation – residual discretion not to cancel business skills visa – decision under review affirmed

RELEVANT ACT/S:

Migration Act 1958 sections 134, 134(1), 134(2), 134(4) and 134(10)

Administrative Appeals Tribunal Act 1975 section 37

CITATIONS

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

Shi v Migration Agent’s Registration Authority [2007] FCAFC 59

Re Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997

REASONS FOR DECISION

26 February 2008	Senior Member M D Allen
Summary

1.      By application made 9 July 2007, the Applicant sought review of a decision to cancel her Business Skills Visa, which decision was dated 20 June 2007.

2.      The grounds for the cancellation of the visa as set out in the delegate’s reasons for decision were that the Applicant:

(a)had not obtained a substantial ownership interest in an eligible business in Australia; or

(b)was not utilising her skills in actively participating at a senior level in the day-to-day management of that business; or

(c)did not intend to continue to:

(i)hold a substantial ownership interest in; and

(ii)utilise her skills in actively participating at a senior level in the day-to-day management of;

an eligible business in Australia.

3. Section 134 of the Migration Act 1958 states inter alia:

…

Cancellation of business visas

(1)Subject to subsection (2) and to section 135, the Minister may cancel a business 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.

(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 an 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).

…

(10)In this section:

…

“eligible business” means a business that the Minister reasonably believes is resulting or will result in one or more of the following:

(a)the development of business links with the international market;

(b)the creation or maintenance of employment in Australia;

(c)the export of Australian goods or services;

(d)the production of goods or the provision of services that would otherwise be imported into Australia;

(e)the introduction of new or improved technology to Australia;

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

…

4.      In this matter the Applicant based her application for review upon the ground that she had made a genuine effort in terms of subsection 134(2) of the MA.

5.Notwithstanding the provisions of s 134 of the MA as pointed out by Kiefel J in Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31, there remains a residual discretion not to cancel a Business Skills Visa even though the criteria set out in ss 134(1) of the MA are not satisfied.

6.      As the decision of the Full Court of the Federal Court in Shi v Migration Agent’s Registration Authority [2007] FCAFC 59 makes clear, the review of any cancellation decision can only take into account events up to the date of cancellation. That is not to say however that the Tribunal cannot have regard to subsequent events to ascertain what light they may throw upon circumstances at the time of cancellation.

7.      The Applicant first applied for a Business Skills Visa in February 2003.  In a letter dated 27 August 2003 to the Perth Business Skills Processing Centre, the Applicant stated:

…

“As to my business plan, I will open a floral shop in Sydney, and will also export plastic flowers, flower vases, and its components from Australia to Indonesia.  This will be consistent with my business in Indonesia.”

…

8. An interview was conducted with the Applicant at the Australian High Commission in Singapore on 7 October 2003. The record of that interview is at T6, pp142-145 of the documents prepared for the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. What is apparent from the Applicant’s evidence to the Tribunal compared to the record of the interview is that the interview was cursory and no effort was made to test the accuracy of the details provided by the Applicant.

9.      The record of interview states that the Applicant will be exporting native and artificial flowers from Australia.  The record of interview also states that the Applicant would open a florist shop in Sydney and later start a flower market in Sydney.

10.     Questioned as to these intentions, it was clear from the Applicant’s evidence that she had no firm arrangements in place to commence these activities but that they were speculative activities.  For example, the Applicant stated that she had visited Flemington flower markets in Sydney but had not, at that time, made any enquiries as to purchasing flowers.  Later, when she did make enquiries after the grant of her visa, she found the growers were not interested in selling flowers to her for export.

11.     Cross-examined, the Applicant conceded that her original business plan was not realistic.  She stated that she thought it was “okay” but after seeing things in Australia there were many shortcomings (in her plan) and she had a lack of knowledge regarding fresh flowers, as opposed to her Indonesian business which was in artificial flowers.

12.     The Applicant was also cross-examined regarding her plan to export plastic flowers from Australia.  She stated she had never actually exported any plastic flowers as the price of Australian artificial flowers is too high as opposed to Chinese.  She conceded she had not researched this prior to the formulation of her original business plan.

13.     By the end of the calendar year 2004, the Applicant had determined that her original business plan was not viable.  She therefore formulated a plan to import and retail homeware and kitchenware products.  To this end, she became a director together with her sister of a company “Homeworld Plus Pty Ltd”.  The Applicant stated it was her sister who had experience in the retailing of homeware and kitchen goods.

14.     In August 2005, homewares were purchased from an Indonesian company to the value of $65,995.  The resale of these items took a long time due to competition from cheaper Chinese imports.  Most items were eventually sold over a period of two years.

15.     During 2005, the Applicant, under the name of her Indonesian company, took part in two exhibitions in Sydney where the sale of cooking utensils, ceramics and glassware imported from Indonesia was promoted.  Although the stall in both cases was under the name of the Indonesian company, any business cards handed out were for the Australian company, namely Homeworld.

16.     Another aspect of the business of Homeworld was the export of goods from Australia.  In particular, agencies were obtained to sell Australian manufactured essential oils in Indonesia, in particular Bali.  Confectionary was also exported for sale.

17.     The Applicant was questioned regarding her day-to-day involvement with the management of the Australian company.  I accept her explanation that some agreements have been signed on behalf of the company by her sister but only after consultation with her.  On the other hand, the Applicant has primarily been resident in Indonesia since the grant of her business visa.  For example, she departed Australia on 9 December 2005 and did not return to Australia until February 2007.  Although she may have been consulted regarding some of the business decisions made by her sister in Australia, I can see no evidence that she was involved in the day-to-day management of any business.

18.     At paragraph 17 of her statement dated 1 February 2008 (Exhibit A2), she said:

…

Developments in 2006

17.“During 2006 I did not visit Australia at all as I was busy to attend many exhibitions in Indonesia looking for business.  One of the most popular exhibition, Bali Spa was being held at the end of 2006.”

…

19.     Currently, the Applicant still has business interests in Indonesia.  She has two shops selling artificial flowers and one selling artificial and fresh flowers.  The Applicant also seeks markets for Australian goods.  Her intention was not to sell the Australian goods only from her shops but also to act as an exporter/importer of those goods, so as to gain access to larger markets, for example in Jakarta.

20.     Negotiations were also commenced with an Australian business “The Carton House”, but this does not appear to have progressed to the stage where orders have been placed.

21.     A further activity engaged in by Homeworld was the importation into Indonesia by it of 135 metric tonnes of flour sourced from Manildra Flour Mills Pty Limited.  This importation occasioned a gross profit of $17,114.38.  This shipment of flour occurred after the cancellation of the Applicant's Business Skills Visa, but I am satisfied on the documents before me that negotiations would have been entered into prior to the cancellation.

22.     At paragraph 26 of the Applicant's witness statement (Exhibit A2), the Applicant said:

…

26.“Our best opportunity was to export flour from Manildra Flour Mills.  I had looked into this at the end of 2006, because flour is being used as ingredients for many different food products in Indonesia.  I calculated the price and believed that this type of trading will bring profit for Homeworld to fund some further research for other possibilities for Homeworld.”

…

No explanation was given as to why no further shipments of flour have occurred.

23.     The Applicant’s children have attended trade fairs in Germany and a florist course in the Netherlands but I do not regard these activities as establishing the viability of any Australian business.  As the Applicant says in her statement, she hopes that these activities will help her understand what type of products can be developed for the Asian as well as the Australian market.

24.     No activity by the Applicant has resulted in permanent employment for any Australian employee.  Staff have been contracted from time to time for specific activities, for example an exhibition in Melbourne.

25.     At paragraph 18 of her statement, the Applicant says:

…

18.“In January 2006 Homeworld was in the middle of negotiation with Kwik Holding Pty Ltd to become their marketing arm in Australia.  The cost agreement at T365-366 was a draft but it was never realised.”

…

26.     Having regard to the monetary value of goods sold, Homeworld has hardly traded at all.  Taking figures from the Applicant’s Statement of Facts and Contentions, it can be said that in the financial year 2004/2005, goods to the value of $842.10 were traded and in the financial year 2005/2006, kitchenware to the value of $65,995.16 was imported and purchases for export totalled $1,489.66.  As the Applicant pointed out, the sale of the kitchenware was extremely slow.

27.     When the scale of activities of Homeworld is considered, no viable business has been established.  There have been various “one off” activities, but none can be said to have the repetition necessary to establish a course of business.

28.     I accept that the Applicant had been seeking markets in Indonesia for goods to be exported by Homeworld.  Likewise, I accept she was attempting to source goods that could be imported into Australia by Homeworld.  The real question before me is whether these activities on her part could be said to amount to a genuine effort to obtain a substantial ownership interest in an eligible business in Australia or a genuine effort to utilise her skills in actively participating at a senior level in the day-to-day management of an eligible business.

29.     At the outset I will state that the fact that a delegate of the Respondent apparently concluded that the Applicant's sister, the co-owner with the Applicant, of the business carried out by the corporate entity Homeworld Plus Pty Limited was an eligible business, does not bind my decision in any way.

30. Having regard to the criteria set out in ss 134(3) and 134(10) of the MA, I am satisfied that the business conducted by Homeworld is not an eligible business.

31.     In particular, I find that Homeworld:

(a)has not developed business links with the international market, but has made a series of one off imports and exports without establishing any business links or course of business as opposed to opportunistic sales;

(b)has not created or maintained employment in Australia.  The engaging of temporary staff for specific activities does not, in my view, answer the criteria of creating or maintaining employment.  The director’s report provided by the Applicant to the Respondent shows that the company had no expenditure on wages or payments to employees in the year ended 30 June 2006 and expenditure of only $900 in the following nine months to 31 March 2007;

(c)Australian goods have been exported, but no business in the sense of ongoing activity has been shown;

(d)No goods or services have been created that otherwise would have had to be imported into Australia;

(e)No new or improved technology has been introduced into Australia; and

(f)No commercial activity or corporate services have been increased within Australia.

32.     I am further satisfied that the Applicant has not made a genuine effort.  Once the original plan had been shown to be unrealistic, the only other formulated plan was an undated document forwarded to the Respondent by the Applicant under cover of a letter dated 28 April 2007.

33.     More particularly, the director’s report for Homeworld for the year ended 30 June 2006 states that the company made a loss of $45,989.67.  The principal activities of the company were stated as “kitchenware distributor” and it was recorded that “no significant changes in the company’s state of affairs occurred during the financial year”.

34.     Although in her initial application for a Business Skills Visa, the Applicant had said:

… 

“My roles in business in Australia, I will be a Director in charge of supervising the procurement and finance.  I and my husband have distributed out jobs, that we will stay in Australia together with our children.  The existing business in Indonesia will be handled by our assignee and if any problem is encountered, my husband will solve it, he will come to Indonesia whilst at the same time making efforts to market Australian products in Indonesia.  Whilst, I will be managing company in Australia and also caring for our children…”

The contrary has been the case and the Applicant has spent the majority of her time outside Australia.

35.     The purpose of a Business Skills Visa is that the visa holder will exercise their skill in establishing and maintaining a business in Australia.  As was pointed out by Deputy President McMahon in Re Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997:

…

“From its language and from the visa condition, it is apparent that the Act is intended to benefit owners who settle here and actually manage the business”

…

In this matter the Applicant has placed her major efforts into maintaining her Indonesian businesses.  I find that her involvement in Homeworld is no more than that of a shareholder who will use the company as a vehicle for transactions when required but who is otherwise unconnected with its day-to-day administration.

36.     Any evidence of activity by the Applicant to further the business interests of Homeworld is minimal.

37.     The activities of Homeworld are best described in its accounts.  The trading account for the financial year ending 30 June 2006 shows a total trading income of $6,893.12. This can hardly be regarded as the activities of a genuine effort to establish an eligible business.

38.     All in all I am satisfied that the Applicant has been content to reside in Indonesia and concentrate on the activities of her Indonesian business interests.  Her interest in the Australian company has been desultory at best and in my opinion cannot be said to be the making of a genuine effort to either:

(a)obtain a substantial ownership in an eligible business; or

(b)to utilise her skills in actively participating at a senior level in the day-to-day management of the business.

39.     There is, to my mind, a distinct difference between actively participating in the day-to-day management of a business and having oversight of one’s business entity in Australia.

40.     Notwithstanding my findings as to the Applicant's genuine efforts regarding the establishment of an eligible business in Australia, there still exists a general discretion not to cancel the Applicant's visa (see Kim (supra)).

41.     In this matter, two events require consideration in relation to the exercise of any discretion.  The fact is that the department’s officer who interviewed the Applicant in Singapore prior to the issue of any visa, merely accepted the Applicant's business plan at face value, made no enquiries of the Applicant as to the background of that plan and whether there were any supporting investigations, which might have led to the formulation of the said plan.  Had that officer made further enquiries of the Applicant, it would have been apparent that the Applicant’s business plans were totally devoid of any substance.  In other words, the Applicant was allowed to proceed towards the grant of a Business Skills Visa following inadequate investigation.

42. So far as the original grant of a Business Skills Visa is concerned, the Applicant did realise that her original proposals could not be achieved, but as I have found she then did not make any genuine effort to comply with the requirements of s 134 of the MA.

43.     The second matter to be considered is that the Applicant’s sister and co-partner in the business conducted under the corporate entity Homeworld Plus Pty Limited retained her Business Skills Visa upon review.

44.     Unfortunately, the delegate who decided that the Applicant's sister Lydia Kusuma Hendra should retain her visa, did not set out the grounds upon which she determined that the sister was meeting the requirements of her Business Skills Visa.  Suffice it to say that on the material before me, which was also before the delegate, I would not have come to that conclusion.

45.     Therefore, despite the two matters referred to above I am not satisfied that there exists any grounds upon which to exercise a discretion not to cancel the Applicant’s Business Skills Visa.

46.     The decision under review is therefore affirmed.

I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed:   ......[sgd]........
               Mwela Kapapa, Associate

Date/s of Hearing:  1 February 2008
Date of Decision:  26 February 2008
Counsel for the Applicant:                 Mr N Poynder
Solicitor for the Respondent:             DLA Phillips Fox