Jananto and Minister for Immigration and Multicultural Affairs

[2006] AATA 737

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 737

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2005/428

GENERAL ADMINISTRATIVE  DIVISION

Re:        JANTO JANANTO

Applicant

And:       MINISTER FOR IMMIGRATION AND

MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal:       G.D. Friedman, Senior Member

Date:             29 August 2006

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) G.D. Friedman

Senior Member

MIGRATION ‑ business skills visa ‑ cancellation - whether eligible business ‑ whether making genuine effort to obtain substantial ownership of eligible business - exercise of discretion

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

Hope v Bathurst City Council (1980) 144 CLR 1

Puzey v Commissioner of Taxation [2003] FCAFC 197

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

REASONS FOR DECISION

29 August 2006   G.D. Friedman, Senior Member

1.        Janto Jananto is an Indonesian citizen who arrived in Australia on 2 October 2001 with his family as the holder of a subclass 127 business skills visa.  On 18 January 2005 the Minister’s delegate cancelled the visa on the grounds that Mr Jananto had not complied with the terms of the visa.  His company, Golden Kew Co Pty Ltd (Golden Kew) was involved in the export of wine, sheepskin wool buffer pads, pneumatic cylinders and other Australian products to Indonesia.  Mr Jananto maintains that he has satisfied all the conditions of his visa and that the decision to cancel the visa was incorrect.

2.        The issues before the Tribunal are whether Golden Kew is an eligible business; whether Mr Jananto has actively participated at a senior level in the day-to-day management of the business; and whether he has made a genuine effort to obtain an interest in an eligible business and participate in day-to-day management.

LEGISLATION

3.        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.

4.        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:

(10)     …

(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.

5.        Section 134(2) 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).

EVIDENCE

6.        Mr Jananto told the Tribunal that he has established business links with the international market by negotiating with suppliers of various Australian products, which has resulted in the export of the products to Indonesia and an increase in commercial activity and competitiveness within the sectors of the Australian economy.  He produced documents including bills of lading and invoices which he said were proof that Golden Kew had made at least six export shipments of pneumatic cylinders and buffing pads to Indonesia in the period from late 2001 to the date of cancellation of his visa.  Financial documents lodged with the Tribunal show that in the years 2002 to 2005 the trading profit of Golden Kew was between $3,518.50 and $6,592.06, and the net profit was between $1,056.86 and $10,066.05. 

7.        Under cross-examination Mr Jananto conceded that one export shipment was made after the date of cancellation of his visa, but he stated that the order was placed before the date of cancellation.  He said that for several shipments the relevant documents are no longer available because they are held by a former manager who is no longer associated with Golden Kew.   

8.        In respect of the management of Golden Kew, Mr Jananto gave evidence that the business was formerly known as Columbida Proprietary Company Limited and the name change was registered on 1 September 1998.  He said that he commenced his involvement on 28 June 1999 when he was appointed as a director.  The other director is his daughter Yolanda Jananto (Yolanda), who was appointed on 3 February 2003.  Mr Jananto said that there were a number of previous directors, including two of his brothers, and that the business has four shares, of which he holds one (25% of the business), the brothers hold one each, and the fourth is held by Mr A. Partowidjojo.  He told the Tribunal that he spends two or three months in Australia each year, and the remainder of the time is spent in Jakarta, where he manages PT Riyadi Putera Makmur (Riyadi), his Indonesian business. 

9.        In respect of the management of Golden Kew, Mr Jananto explained that he has contributed $150,000 to the business and is responsible for marketing and developing new business by negotiating with suppliers of products that might be exported to Indonesia.  He said that in addition to the established products he has written to the manufacturers of Australian products such as lawnmowers, nicotine patches, oxygen spray, white flour, garden sprayers, paving stones, floor cleaning products, beauty products and wine to investigate the export potential of the products, but because of unavailability, currency fluctuations and other factors, no exports have occurred.  Mr Jananto stated that on a day-to-day level he has overall management responsibility, he liaises with existing and potential suppliers, and authorises the correspondence, which is prepared by his daughter.  He said that he spends about 25 hours per week on Golden Kew business.  Under cross-examination he said that he has a business plan, but it is not written, which he said is normal practice in Indonesia.

10.      In respect of efforts that he has made to engage in business in Australia, Mr Jananto said that he has been utilizing his marketing skills and has spent considerable time and effort to establish his business activity in Australia.  He stated that he is committed to developing further business opportunities and has demonstrated that his efforts have been genuine.  He said that although he has not spent long periods in Australia, he intends to make a long-term commitment to Australia by sending his children to study here, purchasing a home and living in this country permanently. 

11.      Mr E. Gunawan, accountant, gave evidence that he prepared the 2004 and 2005 tax returns for Golden Kew.  He said that Mr Jananto handles marketing and sales, and Yolanda deals with financial aspects of the business.           

HAS MR JANANTO OBTAINED SUBSTANTIAL OWNERSHIP OF AN ELIGIBLE BUSINESS IN AUSTRALIA?

12.      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. On the available material the Tribunal finds that since its registration Golden Kew has made six export sales, but apart from one that was made after the date of cancellation, all were to Riyadi, owned by Mr Jananto. Consequently the transactions do not constitute business activity, because Golden Kew appears to be a means of transferring goods rather than being engaged in business itself. This conclusion is supported by a lack of adequate financial reports for the business, an absence of any real effort to make a profit, and a lack of repetitive and continuous activity.

13.      Similarly there is no persuasive evidence that Golden Kew is creating or maintaining employment in Australia, producing goods or services that would otherwise be imported to Australia, introducing new or improved technology to Australia or increasing the commercial activity and competitiveness within sectors of the Australian economy.  As most of its dealings have been with Riyadi, Golden Kew has not demonstrated that it has developed business links with the international market.

14.      For these reasons the Tribunal finds that Golden Kew is not an eligible business for the purposes of s 134(10) of the Act, and is satisfied that Mr Jananto has not obtained a substantial ownership interest in an eligible business in Australia (s 134(1)(a) of the Act).  Consequently the Tribunal is required to consider whether to exercise the discretion to cancel the visa under s 134(2) of the Act.     

DID MR JANANTO MAKE A GENUINE EFFORT TO OBTAIN SUBSTANTIAL OWNERSHIP OF AN ELIGIBLE BUSINESS AND TO PARTICIPATE IN DAY-TO-DAY MANAGEMENT?

15.      The Tribunal has considered the factors listed in s 134(3) of the Act and the guidelines in Migration Series Instruction N° 133 Visa Cancellation Under Subdivision G ‑ Cancellation of Business Visas.  In assessing Mr Jananto’s claims against these factors and the Guidelines, the Tribunal takes into account that there is no written business plan, and the proposals described by Mr Jananto appear to be vague (s 134(3)(a)).  There are no partners or joint venturers (s 134(3)(b)).  Although Mr Jananto sent standard-form letters to a number of suppliers of various products, he failed to produce evidence of follow-up action, and there is no evidence of meaningful research into the conduct of an eligible business in Australia (s 134(3)(c)).  Mr Jananto has spent brief periods in Australia from the grant of the visa until its cancellation (s 134(3)(d)), although the Tribunal takes into account that he was ill for an extended period in 2003 and that he has other commercial interests in Indonesia.  

16.      There is no evidence that Mr Jananto has made a significant investment in the business (s 134(3)(e)), as a term deposit of $150,000 in the name of the business may not be considered because it was not directed to Golden Kew’s business activity; and he has no ownership interest in eligible businesses in Australia (s 134(3)(f)).  The turnover of the business did not exceed $63,000, which is considerably less than the required amount of $100,000.  With a small number of confirmed export shipments, there has been little business activity undertaken by Mr Jananto (s 134(3)(g)).  In respect of s 134(3)(h) Mr Jananto has replied to requests to provide additional material requested by the Department. 

17.      In Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 the Tribunal concluded at paragraph 53 that …the word "genuine" and the matters mentioned in s 134(3) show that there is a requirement of a level of effort beyond that which is purely superficial or token.  After considering all the relevant factors in s 134(3) of the Act, the Tribunal finds that Mr Jananto’s efforts could not be characterised beyond purely superficial or token.  Consequently Mr Jananto has not a genuine effort as required under (s 134(2) of the Act), and the Tribunal finds that the exercise of the discretion to cancel the visa is appropriate in this case.

DECISION

18.      The Tribunal affirms the decision under review.

I certify that the eighteen [18] 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:                  18 January 2006, 13 June 2006 and 10 August 2006

Date of decision:                   29 August 2006

Advocate for applicant:         Mr E. Yao, Australian Migration & Education Consultants Pty. Ltd.  

Advocate for respondent:    Ms K. Miller

Solicitor for respondent:      Australian Government Solicitor