Jian Ping Li and Ors and Minister for Immigration and Citizenship
[2009] AATA 244
•15 April 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 244
ADMINISTRATIVE APPEALS TRIBUNAL )
)No.2007/5398;2007/5399; 2007/5400; 2007/5401
GENERAL ADMINISTRATIVE DIVISION ) Re JIAN PING LI and OTHERS Applicant
And
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal Senior Member M D Allen Date 15 April 2009
PlaceSydney
Decision The Decisions under review are AFFIRMED. .....................[sgd].........................
M D Allen
Senior Member
CATCHWORDS
Immigration and Citizenship: Cancellation of Business Skills Visa - satisfied visa holder did not obtain an interest in an eligible business nor did she actively participate in the management of an eligible business - no reason to exercise residual discretion not to cancel visa - no reason not to cancel visas issued to family members.
LEGISLATION
Migration Act 1958: Section 134
CASE LAW
Shi v Migration Agents Registration Authority (2008) 82 ALJR 1147
Burg and Minister for Immigration and Citizenship [2007] AATA 1630
Philip and Minister for Immigration and Citizenship [2007] AATA 2092
Kim v Minister for Immigration and Indigenous Affairs (2004) 38 AAR 304
Re Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54
Luo and Minister for Immigration and Citizenship [2008] AATA 976Hope v Bathurst City Council (1980) 144 CLR 1
REASONS FOR DECISION
Senior Member M D Allen 1. On 19 October 2007, a delegate of the Respondent cancelled the Applicant’s Business Skills Visa, which visa had been granted on 2 August 2004. As a result of the cancellation of the Applicant’s visa, the visas issued to her husband and two dependant children were also cancelled.
2. The Applicant’s business skills visa was cancelled as the delegate found that she was not utilising her skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia, contrary to Subsection 134(1) of the Migration Act 1958 (“the MA”).
3. The grounds for cancellation of a business skills visa are set out in S134 MA, which reads inter alia:
“(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.
(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 ventures 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 hold the interest or participates in the management (as the case requires)
(10) In this section:
business visa means:
(a) a visa included in a class of visas, being a class that:
(i) has the words “Business Skills” in the title; and
(ii) is prescribed for the purposes of this paragraph; or
(b) a visa:
(i) to which a prescribed provision of the Migration Reform (Transitional Provisions) Regulations applies; and
(ii) that is of a kind prescribed for the purposes of this paragraph; or
(c) a return visa that is granted to a person who is or was the holder of a business permit or business visa;
that is or was granted on or after 17 February 1992.
designated investment has the meaning given by the regulations
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 of 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 in 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.
established business in Australia visa means a business visa a criterion for whose grant:
(a) relates to the applicant having an established business in Australia; or
(b) is that the applicant is a member of the family unit of the holder of a visa a criterion for whose grant is as mentioned in paragraph (a).
family member’s visa means a business visa held by a person:
(a) who is or was a member of the family unit of another person who held a business visa; and
(b) who would not have held the business visa if he or she had never been a member of the family unit of the other person.
investment-linked visa means a business visa a criterion for whose grant:
(a) relates to the holding of a designated investment; or
(b) is that the applicant is a member of the family unit of the holder of a visa a criterion for whose grant is as mentioned in paragraph (a).
member of the family unit has the meaning given by the regulations.
ownership interest, in relation to a business, means an interest in the business as:
(a) a shareholder in a company that carries on the business; or
(b) a partner in a partnership that carries on the business; or
(c) the sole proprietor of the business;
including such an interest held indirectly through one or more interposed companies, partnerships or trusts.
relevant designated investment, in relation to an investment-linked visa (other than a family member’s visa), means the designated investment that was, in deciding to grant the visa, regarded as satisfying the criterion referred to in paragraph (a) of the definition of investment-linked visa.
return visa has the same meaning as in the regulations.”
4. Previously, the Administrative Appeals Tribunal has held that the Tribunal must consider whether the decision to cancel a business skills visa was the correct or preferable decision as at the time of cancellation. See Re Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54. To my mind that fundamental position has not been altered by the High Court judgment in Shi v Migration Agents Registration Authority (2008) 82 ALJR 1147. In this regard, I adopt the reasoning of Senior Member Friedman in Luo and Minister for Immigration and Citizenship [2008] AATA 976.
5. Different considerations apply, however, when considering whether to exercise the residual discretion not to cancel the Applicant’s visa. See Kim v Minister for Immigration and Indigenous Affairs (2004) 38 AAR 304. I understand Shi supra to be sufficient authority to state that in exercising the residual discretion, events up to the date of the Tribunal’s decision can be taken into account.
6. At the outset, I will state that I had some difficulty in this matter as the Applicant’s evidence was given through an interpreter. Numerous times during her evidence, and particularly in cross examination, the Applicant’s answers were not responsive to the questions asked and although the interpreter was a fully qualified court interpreter, I consider I must allow for difficulties in interpreting. This said, the Applicant was discursive in her evidence rather than responding directly to the questions asked.
7. Exhibit A4 is a translated copy of the Applicants work diary. As I accept that document to be a contemporaneous account of events, I put more weight on its contents than upon the Applicant’s oral evidence.
8. As stated above, the Applicant’s business skills visa was granted on 2 August 2004. She then entered Australia on 12 August 2004, departing on 26 August 2004. Since the grant of her visa, until the date of its cancellation, the Applicant has spent a total of 56 days in Australia.
9. In her application for a business skills visa, the Applicant’s agent wrote:
“ I wish to set up a chain of fashion outlet [sic] in Australia as well as a trading company to source Australian marine products, such as lobster and abalone etc. I shall start first of all to set up my first fashion outlet in Sydney. I intend to employ about 4 to 5 staff at the first sales outlet. My plan is increase the sales outlet number to 2 – 3 in the next 2 years, with the employment of staff increase to 15 – 18. As for the trading business, I shall start export these marine products through my extensive network in China. I believe this would have a huge potential in China.”
I have made quite a lot of research into the business environment in Australia. I visited Australia in August 2002 ? A business trip. I have carefully studied the market and demand of the fashion industry in Australia. I have employed a company in Australia to make a series of advertising promotion for me. In the meantime, I find that there is a good potential for the high quality man’s wear market in Australia. Besides, the export market of high quality marine products is having a great potential in China.”
As the evidence before me revealed, those statements were inaccurate. Additionally, no evidence was adduced regarding prior research or the employment of any company to advertise the Applicant’s goods prior to the grant of the visa.
10. As at the date of the visa cancellation, any intentions of exporting seafood to China had been abandoned. As the Applicant said in evidence, she found there was not a lot of profit in that business so she concentrated on the tyre and clothing businesses.
11. The reference to the tyre business is to an activity the Applicant’s Australian company, San-Kelloff Pty Ltd, has engaged in in conjunction with a business entity in Sydney, Logic Group Tyres.
12. I am unsure as to how the Applicant came to involve herself and her Australian company in tyre importing activities. In her work diary, the Applicant records at 30 July 2005 and 1 August 2005 that the idea of importing tyres arose after a dinner with a friend in Chinatown, Sydney. In her statement to the Business Skills Section of the Department of Immigration and Citizenship dated 22 August 2007, the Applicant stated:
“ 31 And before we can implement the man’s wear product line, I have the chance to speak to one of my business associates, Mr Zheng Bun Fu, who was operating a tyres business in Qingdao China.
32 He knew that I was going to setting up a business in Australia. He proposed that I can export his tyres to Australia.
…
38 I started the tyres import business around April / May 2006. I have very good term from Mr Zheng of the Guang Ming Tyres Group Company Limited.
39 I also found a customer, Logic Group Tyres in Australia
…
41 As I am very much in control of the major operation in both ends, i.e. the supplier and the customer, I trust that I am well in control of the business.”
13. Interestingly in that statement, the Applicant also said:
“2 I started my business from scratch in China and now I am a well-established business entrepreneur in the trading/manufacturing of men’s fashionwear.
3 I operate the business together with my spouse, Mr Xiaqun Li.
…
33 As a matter of fact I am also involved in some other businesses in China, while I am operating the men’s fashion business.
34 I also run together with other partners a glass product manufacturing business in China.
…
43 This is very much the same when I operate my other business in China, where we control the business from Guang Zhou. We have many sales outlets and franchisees in different provinces which could be thousands of miles away.”
The latter statements quoted above are in direct contrast to the Applicant’s evidence to the effect that although she remains a shareholder in the Chinese businesses, they are run by her husband and she has no executive role.
14. Likewise, entries in the Applicant’s work diary evidence that she is still involved in the activities of her Chinese companies.
15. The export of tyres to Australia has been spasmodic. No ongoing contract has been obtained and the Logic Group apparently orders tyres on demand. The Applicant conceded that there had been problems in obtaining payment from Logic Group and she had had to pay suppliers from her own funds. Up until the date of visa cancellation, there had been six only importations of tyres into Australia. At the date of hearing, there had been in total 15. The Applicant’s evidence was that she was not looking at expanding the tyre section of her business. Certainly no evidence was adduced that she or her Australian manager have in any way sought to obtain as customers other tyre fitting businesses in Australia apart from the Logic Group.
16. There has been no importation of clothing into Australia by San-Kelloff Pty Ltd so that any profit in the books of that company is attributed solely to the sale of tyres imported from China. The company returns give the following net profit figures for San-Kelloff Pty Ltd, namely:
2006
$688.49
2007
$2435.26
2008
$1319.43
17. So far as what might be termed the “fashion business” is concerned, I note that the Applicant did engage an agency, B-Trade Australia, to engage in market development. On the evidence before me, that came to nothing as B-Trade regarded the Applicant’s clothing to be too high priced for the Australian market, see diary entry for 8 December 2007.
18. The Applicant has now made an arrangement with a Ms Ko to advance her clothing lines in Australia. Ms Ko gave evidence and conceded that she has not had expertise in this field, but rather is assisting the Applicant in the hope of learning about “fashion” herself. I regard the efforts of Ms Ko to be no more than pious hopes as opposed to real marketing developments.
19. That the importation into Australia of the SK range of clothing has been subordinated to the tyre importation business is confirmed by the Applicant’s diary entry of 31 February 2008.
20. I do not regard the purchase by the Applicant in the hairdressing salon owned by Ruby H Styling Pty Ltd as material in these proceedings. The purchase of shares in that company was on 24 July 2008 and the shares purchased from the Applicant’s nephew, Li An Lai.
21. Mr Lai is also the resident office manager of San-Kelloff Pty Ltd. I find it difficult to accept that Mr Lai is engaged in full time employment with San Kelloff Pty Ltd. As he states in his statutory declaration, since he joined the company on 29 August 2007, there has been five sales of tyres to the Logic Group. This apparently has been the company’s only trading activity.
22. The appointment of Mr Lai to manage San-Kelloff Pty Ltd casts doubt upon the veracity of the Applicant’s working diary. The entry for 27 August 2007 and 29 August 2007 read:
“ 27 August 2007 I called some of my friends in Australia to ask about recruitment for SK Australia.
29 August 2007 I telephone interviewed some candidates that were recommended by friends, finally I decided to hire a Chinese named LAI as this would be convenient for us to communicate with people in Australia.”
23. Nowhere in her diary entries does the Applicant remark that the Lai she hired for San-Kelloff Pty Ltd is the son of her sister. Instead, the diary entries give the impression that the whole appointment process was a genuine recruitment exercise conducted by her at arms length.
24. Similar comments apply to the purchase of the hair salon now trading under the company name of Ruby H Styling Pty Ltd. The correspondence tendered in this matter would give the indication that the purchase by the Applicant of shares in that company was entirely at arms length whereas, in fact, the shares were purchased directly from her nephew, Mr Lai.
Application of section 134 criteria
25. Dealing with the criterion imposed pursuant to S134 MA , I find as follows.
26. That the Applicant has a substantial interest in an Australian registered company, but at no time has that company engaged in an eligible business.
27. The importation of tyres into Australia by San-Kelloff Pty Ltd can not be said to be of such a continuous basis so as to constitute a business.
28. The test as to whether an activity is being carried on such as to constitute a business was stated by the High Court in Hope v Bathurst City Council (1980) 144 CLR 1 at 8, namely:
“ activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis.”
29. To the date of cancellation, only six orders for the purchase of tyres had been processed by the Applicant’s company. The Applicant conceded that tyres were only imported when the Logic Group placed an order with San-Kelloff Pty Ltd and in cross examination, she stated that she was not looking at expanding the tyre section of her business. She said:
“Tyres are just a business opportunity for me, fashion is my business.”
30. I find that the importation of tyres by San-Kelloff Pty Ltd is no more than a spasmodic activity undertaken on an opportunistic basis to give the impression of business activity and that it does not have the continuous and repetitive basis to constitute a business.
31. In any event, the activities of San-Kelloff Pty Ltd do not constitute an eligible business as that term is defined in Ss 134(10) MA.
32. Of the criteria set out in Ss 134(10) MA, the following findings can be made:
(a)The activities of San-Kelloff Pty Ltd did not lead to the development of business links with the international market. The activities undertaken by San-Kelloff Pty Ltd were the arranging of tyre importation into Australia. The source of the tyres was business links the Applicant had with the principal of the tyre manufacturing company in China.
(b)San-Kelloff Pty Ltd has not created or maintained employment in Australia. Currently, there is one employee of the company in Australia and he is a relative of the Applicant. No manufacturing activities are intended to take place in Australia but rather San-Kelloff Pty Ltd is an importer of Chinese made goods (tyres) and any fashion items imported will be manufactured in China.
(c)No Australian goods have been exported by San-Kelloff Pty Ltd nor is it intended to export any.
(d)All the goods are imported into Australia or intended to be imported into Australia. No intention exists to produce goods in Australia.
(e)No technology has been introduced into Australia nor is it intended to do so.
(f)There is no evidence that the tyres imported have increased competitiveness in the market for tyres in Australia nor, given the small number imported and restricted distribution, namely one retailer only, is there evidence of increased commercial activity. The extent of commercial activity can be gauged by the fact the retailer had difficulty in paying its bills to San-Kelloff Pty Ltd.
33. The Applicant is not exercising her skills in actively participating at a senior level in the day-to-day management of her Australian business. I find, contrary to her evidence, that she is intimately concerned with the day to day management of her Chinese businesses and very little needs to be done regarding her Australian business whose overall activities were restricted to six importations of tyres during the assessment period.
34. I am satisfied that the Applicant has not made genuine efforts to obtain an ownership interest in an eligible business in Australia. She has a substantial interest in the Australia company, namely a 50 percent share with her husband, but for the reasons stated above I am satisfied the activities of San-Kelloff Pty Ltd can not be categorised as being an eligible business.
35. In particular I find:
(a)No real business proposals have been developed by the Applicant. As stated previously, I regard the activities of Ms Ko to be ephemeral at best. Ms Ko has no expertise or qualifications in product placement. So far as tyre importation is concerned, this activity is spasmodic and on demand from the Australian retailer. No proposals exist to expand this activity and the Applicant specifically denied any intention to do so.
(b)No partners or joint ventures exist for any business proposals. I do not regard the tyre retailer to be a joint venturer as no capital has been provided by that company. Neither was it suggested that the relationship between the Applicant and her Australian company and the tyre retailer amounted to a partnership.
(c)The research the Applicant has done regarding the conduct of an eligible business has been negligible. During the assessment period, no business plan was devised. The tyre importation activity was undertaken purely as an adjunct to the proposed fashion importation activity. As the Applicant said, the tyre importation was just a business opportunity for her. In her diary, it appears the idea for that activity came from suggestions over dinner on 30 July 2005.
So far as the fashion business is concerned, arrangements with the B-Trade group appear to have faltered and current arrangements with Ms Ko are to, my mind, not conducive to real activity.
(d)The Applicant has, during the assessment period, visited Australia in total 56 days. She has continued to reside in China with her family and conduct her Chinese business activities.
(e)The Applicant has transferred monies to the Australian company, San-Kelloff Pty Ltd, but no evidence was adduced to demonstrate that these funds have been used in obtaining any interest in an eligible business in Australia. It appears the funds were transferred from China to the Australian company by the Applicant as the Australian company had a cash flow problem, caused by the tyre retailer failing to make timely payments.
(f)The Applicant has a 50 percent interest in the Australian company San-Kelloff Pty Ltd which company has a paid up capital of $100.00. In the 2007/2008 Balance Sheet, the net assets of the company are shown as $4543.18
(g)The only business activity undertaken by the Applicant and her Australian company during the assessment period was the importation of tyres on six occasions. As stated above, the Applicant continued to reside in China and as I have found, continued to play a major role in the management of her and her husband’s Chinese company’s.
(h)Paragraph 134(3)(h) MA is not relevant to these proceedings.
Residual Discretion
36. Notwithstanding that the Applicant has both failed to obtain a substantial interest in an eligible business in Australia and has not utilised her skills in actively participating at a senior level in the day-to-day management of that business, there exists a residual discretion not to cancel a business visa.
37. In exercising this discretion, I am able to take into account events since the cancellation of the Applicant’s visa. See Shi v Migration Agents Registration Authority [2008] HCA 31.
38. I do not regard the importation of tyres for on sale to the Logic Group that has occurred since the cancellation of the Applicant’s visa to be relevant. Although there may have been an increase in business activity, it does not represent any attempt to expand the business by obtaining other customers.
39. More pertinent, in my opinion, is the Applicants continued residence in China and her involvement with her Chinese business interests. As was pointed out by Deputy President Walker in ReBurg and Minister for Immigration and Citizenship [2007] AATA 1630 at paragraphs 52 – 53, namely :
“At the same time Re Huang and Minster for Immigration, Multicultural and Indigenous Affairs [2002] AATA 656 points out that the legislation is directed towards overseas business people who wish to use their business skills to establish a significant business in Australia. A business skills visa is designed to allow the overseas business person to travel to and from Australia and to live in Australia while conducting the business. It envisages that the holder will acquire a significant interest in the Australian company and play a substantial role in its day-to-day management. It also envisages that the business person will probably wish to have close family members accompany them while they live in Australia. Hence the provision of secondary visas, for family members.
In this case the Applicant has spent only a little over a month in Australia. While overseas he has been principally engaged in the management of his South African manufacturing company. His involvement in the Australian business has totalled only about 9 hours per week, a low figure for a senior manager engaged in the day-to-day conduct of the company…As Deputy President McMahon noted in Re Tang and Minister for Immigration and Multicultural Affairs AATA [2000] 997, “It is apparent that the Act is intended to benefit business owners who settle here and actively managed that business”…”
Further, I adopt what was said in Re Philip and Minister for Immigration and Citizenship [200] AATA 2092 at paragraphs 11 and 12:
“The Tribunal should not exercise its residual discretion where as here the Applicant has only spent a minimal amount of time in Australia and has no serious and realistic intention (beyond a vague intention) to spend more time in Australia in the near future…
It appears to be another well established proposition that the residual discretion should not be exercised unless the Applicant has shown a sustained commitment to trying to fulfil his or her visa obligations.”
40. I am not satisfied that any grounds exists which would justify my exercising my discretion in favour of not cancelling the Applicant’s business visa.
41. Visas were also granted to the Applicant’s husband and her two dependent children. Those visas are dependent upon the Applicant’s visa and Ss 134(4) and (5) state:
“(4) Subject to subsection (5) and to section 135, if:
(a) the Minister cancels a person’s business visa under subsection (1) or(3A);
and
(b) a business visa is held by another person who is or was a member of the family unit of the holder of the cancelled visa; and
(c) the other person would not have held that business visa of he or she had never been a family member of the family unit of the holder of the cancelled visa;
the Minister must cancel the other person’s business permit or business visa by giving written notice to that person.
(5) The Minister must not cancel the other person’s business visa under subsection (4) if the cancellation of that visa would result in extreme hardship to the person.”
42. At all times the Applicant’s husband and her dependant children have been resident in China. No evidence whatsoever was put before me to the effect that cancellation of their visas would result in hardship, much less extreme hardship, to them individually. For that reason, the visas of the Applicant’s husband and two dependant children are also cancelled.
43. The decisions under review are AFFIRMED.
I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen
Signed: M.Corcoran.....................................................................
AssociateDates of Hearing 2, 3 and 24 March 2009
Date of Decision 15 April 2009
Advocate for the Applicant I. Rados, Chancellor and Rados
Solicitor for the Respondent A. Linacre, Clayton Utz
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