Karim and Minister for Immigration and Multicultural and Indigenous Affairs
[2006] AATA 56
•25 January 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 56
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/58
GENERAL ADMINISTRATIVE DIVISION ) Re Abdul Karim Applicant
And
Minister for Immigration and Multicultural and Indigenous Affairs
Respondent
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/59
GENERAL ADMINISTRATIVE DIVISION ) Re Saadia Karim Applicant
And
Minister for Immigration and Multicultural and Indigenous Affairs
Respondent
DECISION
Tribunal Professor GD Walker, Deputy President Date25 January 2006
PlaceSydney
Decision The decision under review is remitted to the respondent for reconsideration on the basis that the discretion be exercised in favour of not cancelling the business visa of Dr Karim and consequently the secondary visa of Mrs Karim.
..............................................
Professor GD Walker
Deputy President
CATCHWORDS
IMMIGRATION – cancellation of business skills visa – cancellation of secondary family unit member visa – whether principal visa holder has a genuine involvement in a business in Australia, has utilised his skills in that business on a day-to-day senior management level – examination of the principal visa holder’s business activities in Australia – whether there will be hardship to the applicants if their visas are cancelled – found that the applicant does not have a substantial ownership interest in an eligible business in Australia and has not made a genuine effort in this regard but he has made a genuine effort to utilise his skills in actively participating at a senior level in the company OPH – applying the discretion it is reasonable to allow the applicant more time to satisfy his visa requirements – the decision under review is remitted to the respondent for reconsideration on the basis that the discretion be exercised in favour of not cancelling the visa of Dr Karim or the secondary visa of Mrs Karim.
Migration Act 1958 ss 134(1), 134(1)(a)(b), 134(2), 134(10)
Freeman v Secretary, Department of Social Security (1988) 19 FCR 342
Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31
Re Drake and Minister for Immigration (No 2) (1979) 2 ALD 634
Re Griffiths and MigrationAgents RegistrationAuthority [2001] AATA 240
Re Halim and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767
Re Hindrojojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724
Re Kamal and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 982
Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703
Re Liu and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 1397
Re Nagaria and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 579
ReYam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283
Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 at 695
REASONS FOR DECISION
25 January 2006 Professor GD Walker, Deputy President Summary
1. The applicant, Dr Abdul Karim, aged 48, is a citizen of Pakistan. On 9 August 2001, he was granted a subclass 127 business skills visa valid from 20 August 2001 (T p60). A secondary business skills visa was also granted to his spouse, Saadia Karim and their three children, Maria Karim, Muhammad Abdullah and Samra Karim.
2. A delegate of the respondent, the Minister for Immigration and Multicultural and Indigenous Affairs, decided to cancel Dr Karim’s business visa on the grounds that he does not have a substantial ownership interest in an eligible business in Australia, he does not utilise his skills in participating in that business, and does not intend to continue with the business in the future. The delegate also cancelled the secondary visas of his spouse and children. The cancellation of the children’s visas was later revoked, but the determinations in relation to the applicant’s and Mrs Karim’s visas stand. Those are the decisions to be reviewed by the tribunal.
Issue
3. The issue for the tribunal is whether it is satisfied that the applicant has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia, has made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of the business and whether he intends to continue to make a genuine effort and if it is satisfied that the applicant does not meet one or all of the criteria, whether it should exercise its discretion to cancel the business visa granted to Dr Karim and to Mrs Karim as a secondary visa holder.
Background
4. Dr Karim, who was born in Quetta, Pakistan on 24 August 1957 and is aged 48 and Mrs Saadia Karim, who was born in Pakistan on 2 December 1967 and is aged 38, have three children: Maria Karim who is aged 16, Abdullah Muhammad who is aged 14 and Samra Karim who is aged six. Mrs Karim and the three children are listed as secondary visa holders in respect of Dr Karim’s business skills visa.
5. Dr Karim holds a doctor in veterinary medicine and masters in animal nutrition from the College of Veterinary Medicine in Lahore, Pakistan. Between 1987 and 1992, he was a director of a two companies, Gallus Enterprises Pty Limited and Grand Parent Poultry Pty Ltd, which were involved with poultry breeding in Pakistan. In 1992, he became a director of Big Feed Pty Ltd, a company manufacturing chicken feed.
6. On 7 October 1998, Dr Karim applied for a business skills visa (S1 p1). On 9 August 2001, Dr Karim was granted a subclass 127 business skills visa and secondary business visas were granted to his wife and children, on the condition that he enter Australia no later than 11 November 2001 (S10 p54). The visas were valid for a period of three years from the date of entry. On 20 August 2001, Dr Karim entered Australia (T p60).
7. By letter dated 4 August 2003 sent to Dr Karim care of his migration agent, he was asked to complete a “Survey of Business Skills Migrant – 24 Months (form 1010)”, to be completed and returned by 17 September 2003 (T9 p61). On 28 November 2003, a further copy of the Survey was sent to Dr Karim at his residence at 34 Jilliby Road, Alison, NSW, 2259 (T p63). By letter dated 15 January 2004, Dr Karim requested an extension of time until the beginning of March for completing and lodging the survey (T p65). Dr Karim did not respond to the survey.
8. By letter dated 18 June 2004, an officer of the business skills section of the Department of Immigration and Multicultural and Indigenous Affairs (“DIMIA”) informed Dr Karim that the department intended to cancel his business skills visa under s 134 of the Migration Act 1958 (“the Act”) because there was no evidence that he had a substantial ownership interest in an eligible business in Australia, he utilised his skills in the day-to-day management at a senior level of that business, or that he intended to continue holding a substantial interest in the eligible business and utilising his skills in the management of that business. The delegate also informed him that the secondary visas of his wife and children would also be automatically cancelled if his visa were cancelled. He was invited to respond and provide documentary evidence including, inter alia, evidence of funds in Australia, financial statements, taxation records, business plans, by 27 July 2004 (T14 p66). By letter of the same date, the department also notified Mrs Karim of its intention to cancel her secondary visa and those of her children (T15 p70).
9. On 15 July 2004, the solicitor/migration agent for the applicant, Mr Kerry Murphy of Craddock Murray Neumann, Lawyers, forwarded to the department the completed form 1010, together with supporting documents (T16 p72). He submitted that his client owns a 25 per cent interest in an eligible business in Australia, Oriental Pacific Holdings Pty Limited, having invested $645,000, which owns four service stations and a holiday lodge in New South Wales, all operating for profit, and therefore his visa should not be cancelled.
10. On 15 December 2004, a delegate of the respondent decided to cancel Dr Karim’s business skills visa on the grounds that he had not obtained a substantial interest in an eligible business in Australia, he is not utilising his skills in participating at a senior level in the day-to-day management of the business, and he did not intend to continue to hold a substantial interest in the business (T2 p11). The delegate found that there was no evidence that Dr Karim is involved in the day-to-day management of the business at a senior level nor did he provide sufficient evidence to indicate that he had a senior role in the business. The delegate also noted that departmental records indicated that Dr Karim had only been present in Australia for 67 days since his initial arrival in Australia, and he had provided no evidence that he was managing the business from a base overseas or was instructing others in Australia to work on his behalf, nor had he provided evidence of the A$645,000 that he claimed to have invested in Oriental Pacific Holdings (OPH). On this basis, the delegate was not satisfied that he had a substantial ownership interest. Having considered all the evidence, the delegate exercised her discretionary powers and cancelled his visa. On the same day, the secondary visas of Mrs Karim and her children were also cancelled (T3 p16). On 14 January 2005, Dr and Mrs Karim both lodged applications for a review of the decision made against them.
11. On 10 January 2005, the parties filed with the tribunal a s 42C Order to the effect that (a) the three children, Muhammad Abdullah, Maria Karim and Samra Karim be joined as parties to the proceedings of Mrs Karim and (b) the decision made by the respondent to cancel the secondary skills business visas of the three children be set aside. Such an order was made by the tribunal on 11 January 2005. The hearing therefore proceeded on the basis of reviewing the decisions relating to the cancellation of the visas of Dr Karim and Mrs Karim only.
12. At the hearing, the applicants were represented by Kerry Murphy, solicitor, Craddock Murray Neumann, Lawyers, and the respondent was represented by Kate McNamara, solicitor, Phillips Fox lawyers. The evidence before the tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the T Documents”) together with the evidence tendered by the parties at the hearing. Oral evidence in person was given by Dr Karim and Mr Muhammad Ramay.
Applicable Legislation
13. Section 134 of the Act empowers the Minister to cancel a business visa in certain circumstances. Departmental policy with regard to the cancellation of business visa is contained in s 134 of the Migration Series Instructions No 133 – Visa cancellation under subdivision G – cancellation of business visas.
14. Section 134 of the Act empowers the Minister to cancel a business visa in certain circumstances. The relevant provisions in Dr Karim’s case are as follows:
134. Cancellation of business visas
(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 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).
15. Section 134(10) of the Act includes the following definitions:
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.
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)
…
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.
16. In the case of Mrs Karim, ss 134(4), (5) and (6) are relevant:
(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 if he or she had never been a 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.
(6) The Minister is taken not to have cancelled a person's business visa under subsection (4) if the Administrative Appeals Tribunal has set aside the decision of the Minister to cancel the business visa of the relevant person to whom paragraph (4)(a) applied.
17. Paragraph 4.3.2 of the Migration Series Instructions (MSI) notes that eligibility relates to the achievement of the stated objectives through the activities of the business, not directly to the size or scale of the business.
18. Paragraph 4.5.1 of the MSI also provides guidance as to whether a genuine effort has been made for statutory purposes. While the guidelines are not binding on the tribunal and should not be applied so as to impose requirements which go beyond the statute (see Re Drake and Minister for Immigration (No 2) (1979) 2 ALD 634), the guidelines militate against inconsistency in decision making (see Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 at 695). The guidelines state:
4.5 What is a “genuine effort”?
4.5.1 If, after 24 months, a migrant is not in business, he/she must establish that a “genuine effort” has been made to engage in business since arrival. The Minister must assess “genuine effort”. S 134(3) of the Act lists any or all of the factors which the Minister may take into account:
…
[Notes referring to factors listed above. Decision makers may take account of these notes to guide them in the interpretation of 4.5.1
a. business proposal which is considered genuine, realistic and achievable;
b. formal contract with partners or joint venturers;
c. written evidence of detailed consultations with at least three business advisers (accountant, lawyer, bank/financial institution, State/Territory government business development office, Austrade, business/trade association);
d. physical presence in Australia for more than six months since first arrival as a Business Skills class migrant;
e. transferred to, and retained in, Australia at least 50% of the funds indicated as available for transfer within two years (under Factor 4 of the Business Skills Points test);
f. minimum A$100,000 or 10% ownership previously held by the person. If the person is no longer in business, the reasons for loss of ownership are also relevant.
g. minimum A$100,000 business activity as indicated by turnover. This may include other business activity not considered “eligible business” but cannot include passive investment, eg, purchase of shares.
h. failure to comply with a notice for information under s 137, mandatory monitoring of Australian address and return of survey forms.]
4.5.2While failure to meet one or more of these indicators may normally lead to a visa being cancelled, it will not necessarily mean that a visa will be cancelled. The decision maker must give weight to all relevant factors in a case (of which those set out in subsection 134(3) above may only be some) and reach a decision on that basis. For example, while the factors listed in 4.5.1 above may be indicative of “genuine effort”, lack of them will not necessarily be decisive. The decision maker must decide, on the ordinary meaning of the words, whether the visa holder has made “genuine effort”. A decision maker may still decide not to exercise the discretionary power to cancel the business visa even if it is assessed that no genuine effort has been made.
Evidence
19. Dr Karim gave evidence orally and by a written statement (Exhibit A10) that he adopted at the hearing. Dr Karim was born in 1957 and arrived in Australia in August 2001. After completing high school, he undertook studies towards the degree of doctor of veterinary medicine at the College of Veterinary Medicine in Lahore, which is affiliated with the University of Agriculture Faisal Abad. He graduated with a university medal and also taught at the college, and completed a master’s degree there. One of his classmates at college was Dr Kamal, one of the three other director-shareholders of OPH. Each director holds a 25 per cent shareholding. Mr Basit, another director, is a cousin of Dr Kamal. The other director-shareholder is Mr Ramay, who gave evidence at the hearing also.
20. Dr Karim, Dr Kamal and Mr Basit founded a business called Big Bird Poultry Feeders Pvt Ltd (Big Bird), in which each of them was and is a one-third shareholder. In 1987 they set up Gallus Enterprises Pvt Ltd which was involved in poultry breeding in Northern Pakistan. The company was merged into Big Bird in 1997. The group expanded with the foundation of two further companies in the poultry field and the total net worth of all their enterprises in Pakistan is now some $A90,000,000 to $A100,000,000. The group holds some 60 per cent of the poultry parent stock market in Pakistan.
21. Problems of crime, corruption, business uncertainty and the risk of war caused the partners to consider leaving Pakistan. They appraised several possible destinations and settled on Australia, where they had contact with Mr Muhammad Ramay who had migrated here in March 1998. They planned to diversify in Australia and gradually transfer their assets to this country. Their initial plan was to enter the poultry industry, but after investigating the possibilities they concluded that Australian quarantine laws would make it difficult for them to carry out their plan of importing poultry stock, breeding it and re-exporting.
22. They considered the possibility of investing in marinas and Dr Karim was involved in discussions and negotiations with several of those enterprises in the Hawkesbury area. The directors discussed the prospects but concluded that marinas would not offer the expansion potential that they sought. They also considered the possibility of investing in motels, as Mr Ramay was at that time involved in one as a partner and manager in Sydney. Dr Kamal proposed that the group consider becoming involved in service stations, as he had a relative in that field and Dr Karim knew of expatriate Pakistanis who had conducted service station businesses very successfully. His family also had some retail experience. Another attraction was that it would be an asset-based business, and the directors believed in assets as being a more secure form of investment and one that can be developed.
23. OPH was established in 2001. Mr Ramay was in Australia at that time and was asked to arrange for the company to be registered. Dr Karim’s 25 per cent shareholding was valued at $50,000. Whenever money was transferred to Australia, Mr Ramay would ensure that the sum was equally credited to each of the directors making the transfer, when more than one director was involved.
24. Dr Karim was personally involved in inspecting the first service station site at Bexley in 2001. After discussions, the shareholder-directors decided to purchase the property and funds were transferred from Pakistan for that purpose. Contracts were exchanged on 3 October 2001 and the settlement took place on 18 February 2002. The directors are currently considering redeveloping that site as residential apartments, seeing it as possibly being a more effective investment than continuing to maintain the service station. No firm decision has yet been made.
25. Dr Karim also personally inspected the service station property at Charmhaven and reported back to the other directors about it. One of a number of properties that he and the other directors inspected, the Charmhaven site had the advantage that the area seemed to be expanding and the site was on a busy road.
26. Dr Karim acknowledged that there were few if any documents evidencing his personal role in making management decision in relation to Bexley or Charmhaven, but attributed that to the informal pattern of decision-making that had developed between the three Lahore-based directors in their 20 years of conducting business together. There were few formal meetings, other than those required by, for example, the terms of loan agreements with banks. He said the senior day-to-day management of OPH is handled by Dr Kamal, Mr Basit and himself. No senior level management decision would be made without discussions between Mr Ramay and the three Lahore directors, one of whom was usually in Australia at any given time and, when present, worked full-time in the business here. The main decisions are usually made by Dr Kamal, Mr Basit and the applicant, Mr Ramay having the responsibility to ensure that they are carried out and reporting back to the directors on the progress. Dr Kamal and Dr Karim have the financial control of the business.
27. Mr Ramay sends monthly financial statements, which can also be accessed by the directors through the internet. Dr Karim would normally view the accounts weekly. While Mr Ramay will normally appoint part-time staff, decisions on employing full-time staff are made after consultation among the directors. As with other discussions, they could be in person, by telephone, through the internet or sometimes by fax. Where, as has happened in several instances, the full-time employee is sponsored from Pakistan, the Lahore-based directors will interview him there. At present there are three full-time staff and four part-time. Previously there were more, when the company was also conducting service stations on leased premises at Wauchope and Port Macquarie. The Wauchope service station was sold in May 2005 in light of growing competition in petroleum retailing from Coles and Woolworths. The Port Macquarie site was closed in January 2005 when a new lessor decided not to continue the lease to OPH. When it was leased in 2003, Dr Karim had been informed about the negotiations but had not been part of them.
28. The company has also invested in a property at Alison, New South Wales, a 55-acre site which it purchased for $9,000,000. Part has been developed as a resort hotel known as Killara Lodge (Exhibit A5) and the remainder is used for the breeding of livestock, currently 30 head of cattle and 40 goats. The lodge has begun to receive guests. Dr Karim says that the company is “feeling its way” in relation to the Alison property as a possible diversification away from service stations. They still plan to conduct service stations, but only on highways, away from the competition presented in towns by Woolworths and Coles.
29. Another possible project being explored is the export of a poultry vaccine to Pakistan, and in due course possible production of the vaccine in that country. Dr Karim was introduced by a contact, Dr Balkar S Bains, to Dr David Tinworth, chief executive officer of Bioproperties, in connection with possible supply (Exhibit A2). Bioproperties is the proprietor of the particular vaccine, which was developed in Australia. There have been some email exchanges with Dr Tinworth and one meeting between him and Mr Ramay in 2005. To date discussions have not proceeded far because of the need to resolve the question of export rights in the Pakistan market. The vaccine is currently being supplied in Pakistan by Mariel, which is the livestock arm of the French conglomerate Rhone-Poulenc, but the price of the Australian product is more favourable. Bioproperties transferred the seed virus and some marketing rights to Mariel, but Dr Tinworth apparently thinks that Mariel will raise no objection if Bioproperties exports to Pakistan direct. The question has not, however, been settled. Dr Karim is the director mainly responsible for steering this project. The venture does seem, however, to be much more related to Big Bird’s business than that of OPH.
30. Dr Karim conceded that at the time his visa was cancelled he had spent a total of only 64 days in Australia, but maintained that he had spent the amount of time here that business conditions required. At present the group’s Australian investments accounted for only about four per cent of its business, but if it were possible to transfer more assets here, he would prefer to live in Australia. OPH had grown steadily and had acquired a net worth of $3,900,000 in three years. Its turnover for the year ended 30 June 2004 was $3,836,732 (Exhibit A8).
31. The strategy was to make a gradual shift so as not to risk losing large amounts of capital through unsuccessful ventures. Their experience with particular business developments would determine the speed of the shift from Pakistan to Australia. OPH was still growing, but since late 2003 its development had stalled because of uncertainty about immigration matters. A business migrant was in a different position from a refugee or a normal immigrant, because business requires certainty if it is to invest. Visa uncertainty creates greater adversity for the business, and Dr Karim said that he would be out of business in Australia if he could not retain a visa. It was too late for him to start again in another country.
32. Mr Muhammad Ramay adopted, and elaborated upon, his statutory declaration (Exhibit A11). Born in 1951 in Pakistan, he arrived in Australia in 1998 and is now a citizen. He is a shareholder, director and the secretary of OPH.
33. After Dr Kamal, Dr Karim and Mr Basit came to Australia and founded OPH in 2001 they approached Mr Ramay and invited him to join their company, having known him in Pakistan. Mr Ramay had in fact worked with Mr Basit in a joint business there in the 1980s.
34. The senior level day-to-day management of OPH, Mr Ramay said, is conducted mainly by Dr Kamal, Dr Karim and Mr Basit. No significant management decisions are made by him without prior consultation with them, usually by telephone and sometimes by fax. The usual pattern is for the other three directors to take the decisions and transfer to Mr Ramay the responsibility for ensuring that they are carried out and to report back to them on progress. He can also make decisions independently on financial matters such as salaries, the payment of accounts, bank account management and the appointment of lower-level employees.
35. Mr Ramay said that Dr Kamal and Dr Karim have financial control over the business. Mr Ramay sends regular monthly statements for each service station to each director and the statements and other details on financial progress are also available to the directors through the internet. Dr Karim has access to all the accounts and the day-to-day correspondence with suppliers. When Ms McNamara, for the respondent, pointed out to him that there were no written records of decisions made by the directors, he replied that while formal meetings with minutes were conducted as required for bank loan purposes, in Pakistan formal meetings were rare and company affairs were conducted on a basis of consensus and trust. Decisions tended to be oral. The other directors were based in Lahore, but they travelled frequently and one of them was always present attending to the business in Australia.
36. Mr Ramay affirmed that Dr Karim had been actively involved in investigating the possible purchase of the Bexley service station. Dr Karim was the one who had seen the advertisement for the Bexley property, personally visited the site and was involved in negotiations with the vendor. The purchase money came from the company account, having been sent to Australia by bank transfer from Pakistan. Mr Ramay’s share had been deposited locally.
37. Together with the other directors, Dr Karim determined that in order to expand the business further, it was necessary for OPH to work with an oil company to obtain its branding for the site. That was done for Wauchope and Charmhaven, and Mobil agreed to brand Charmhaven as a Mobil service station.
38. Mr Ramay confirmed the reasons given by Dr Karim for selling the Wauchope site and the closure of the Port Macquarie operation, as well as the corporation’s future plans.
39. When it was suggested to him that Dr Karim had been conducting the business largely from overseas and did not need an Australian visa, Mr Ramay said that the applicant needed a base here and wanted to shift his assets and move to Australia. He could not sell his assets all at once and the company’s strategy was for a continuous flow of funds. But if he were unable to retain his visa, he might have to quit the business in Australia, a prospect that disturbs Mr Ramay because he would not be able to buy out the other directors and fears for his position if they were to leave. They also have good technology which would not be developed in Australia unless at least one other director besides Mr Basit could live here.
40. In his written statement, Mr Ramay declared that:
If Dr Karim were unable to keep his visa, this would be devastating for our businesses. I would not be able to set up a new business at my age and I do not have the capital needed to keep the business of OPH an ongoing concern without Dr Kamal.
Without Dr Karim, the directors would seriously need to reconsider the viability of all our current businesses and the future growth plans. The cancellation of Dr Karim’s visa would have very serious consequences for the ongoing and future success of OPH. (Exhibit A11)
41. When it was pointed out to him that in 2005 the tribunal had affirmed the cancellation of Dr Kamal’s visa, Mr Ramay replied that Dr Kamal and the other directors were re-evaluating their strategies pending the outcome of these proceedings. If two of the directors could remain, they might develop a new strategy, but if the decision under review were affirmed, there were be no new projects. He conceded that it was difficult to draw a clear distinction between the roles occupied by Dr Kamal and Dr Karim respectively and that he had given evidence to that effect at the Kamal hearing.
42. As regards discretionary matters, the applicant and his wife Mrs Saadia Karim have three children, Maria, Muhammad and Samra. Maria, aged 16 years is studying for her “A” level examinations (under the British system). She would like to study law and would prefer to do so at the University of Sydney. Muhammed, aged 14 years, is currently doing the first year of his “O” levels and would like to study veterinary science. His preference is to undertake those studies in Australia, where there are very good veterinary faculties. Samra, six years, is in primary school. All three of the children are attending Lahore Grammar School.
43. Pursuant to a settlement agreement with the respondent, the children’s visas are to continue and they have permanent residence.
44. Dr Karim would prefer to keep the children with him and his wife for as long as possible, up to university education level and perhaps including their undergraduate degree studies. He views the world as a potentially dangerous place for children, and especially those who are raised in Pakistan who have a less independent life.
45. They would be able to move to Australia in due course, but if their parents did not have permanent residence it would be more difficult for him to visit them. With permanent residence, he would be able to continue his businesses in Australia and Pakistan without the need to reapply regularly for new visas permitting him to work and own property in Australia. He understands that such visas are difficult to obtain for people aged over 45, as he is.
Consideration of the Law and Findings of Fact
46. I note by way of preliminary observation that the tribunal should have regard to all relevant evidence to enable the making of findings of fact in relation to the cancellation of Dr Karim’s and Mrs Karim’s visas as at the date of the decision, that is 15 December 2004: Freeman v Secretary, Department of Social Security (1988) 19 FCR 342; Re Griffiths and MigrationAgents RegistrationAuthority [2001] AATA 240. The tribunal has held that it is entitled to look at activities after the date of visa cancellation and up to the date of the hearing (see Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703; Re Halim and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767).
47. The decision to cancel Dr Karim’s business skills visa was made pursuant to s 134(1) of the Act on the grounds that the delegate concluded that (T p14):
(a)he 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)do not intend to continue to:
(i)hold a substantial 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.
The terms “ownership interest” and “eligible business” are defined in s 134(10), set out above.
48. Section 134(2) provides that the Minister must not cancel a business visa under s 134(1) if the Minister is satisfied that the person:
(a)has made a genuine effort to obtain a substantial ownership 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.
When considering whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account the matters set out in subsection (3), set out above. It is on s 134(2) that the applicant primarily relies.
49. The representative for the applicant submitted in his statement of facts and contentions (Exhibit A1) that, as a preliminary issue, the date of the cancellation of the applicant’s visa is not the date of the decision, but a date 28 days after an adverse decision of the Administrative Appeals Tribunal. If the applicant’s appeal is successful, then the applicant is not required to do anything as his visa simply continues. The applicant submits that MSI 133 provides that cancellation is not recorded until after the expiration of the 28 day period has expired:
10.1 When the cancellation takes effect
10.1.1 S 134(8) states that the decision to cancel the visa does not come into legal effect until on and from 28 days after the Notice of Intention to Cancel is received, assuming no application for review is lodged with the AAT.
10.1.2 If the visa holder lodges an application for review with the AAT, the 28 day time “clock” stops at that time. The AAT will then make a decision on the application for review and advise the visa holder accordingly. If the AAT decides that the decision to cancel the visa should be maintained, the visa will be deemed to be cancelled 28 days after the AAT makes its decision (S 134(8)(a)).
10.2 Record decision on the Visa Cancellation system
10.2.1 Do not record the decision to cancel on the Visa Cancellation system until either:
. the initial 28 day period expires and no application for review is made; or
. until 28 days after the AAT maintains the primary cancellation decision.
The Visa Cancellation system must be manually updated to record whether the visa holder has applied for review.
In view of the decision I have reached below it is not necessary to decide that point.
50. Turning then to s 134(2)(a), the first issue is whether the tribunal is satisfied that Dr Karim has made a genuine effort to obtain a substantial ownership in an eligible business in Australia. What constitutes an “eligible business” is defined in s 134(10), set out above. The tribunal notes the case of ReYam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 as a useful guide to the meaning of the relevant provisions. With regard to the words “genuine effort”, Senior Member Dwyer notes at paragraph 88 that:
The Act does not specifically include any requirement that the “genuine effort” must be likely to succeed, or must meet any threshold level, beyond being genuine.
51. The applicant submitted in his statement of facts and contentions (Exhibit A1), that Oriental Pacific Holdings is an eligible business with an estimated worth of $3,500,000 and that the applicant’s 25 per cent shareholding in such a business is “substantial”. He also submitted that the company “employs Australian citizens and permanent residents and is involved in the highly competitive industry of selling petrol”. The respondent does not dispute that OPH is an eligible business, but in her statement of facts and contentions (Exhibit R2), the respondent submits that the applicant’s 25 per cent share in Oriental Pacific equates to owning 50,000 shares at $1.00 each, a total ownership investment of $50,000, which is well below the figure specified in MSI 133 and is therefore not a substantial ownership interest. At the hearing Ms McNamara also pointed out, correctly in my view, that the applicant’s loans to OPH cannot be treated as an ownership interest for the reasons given by Senior Member McCabe in Re Liu and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 1397 at paragraphs 21 and 27. The definition of “ownership interest” in s 134(10) is clearly exhaustive.
52. With regard to s 134(2)(b), whether the tribunal is satisfied that the applicant has actively participated at a senior level in the day-to-day management of the eligible business, the respondent contended in her statement of facts and contentions (Exhibit R2) that the applicant has only spent 67 days in Australia since he first arrived, and therefore could not be involved in the day-to-day management of the business in Australia. Further, the copies of correspondence provided by the applicant post-date the notice of intention to cancel. The letter regarding the production of a petrol pump is the only evidence that the applicant has had any contact with suppliers/manufacturers since 2001, and the emails relating to the export of vaccines to Pakistan from Bioproperties Australia suggest the deal is likely to be with the applicant’s company in Pakistan, Big Bird, rather than Oriental Pacific. Further, Oriental Pacific is a domestic business which operates two service stations and the Alison project and does not depend on anyone to attract overseas customers. In his statement of facts and contentions (Exhibit A1), the applicant’s solicitor submitted that Dr Karim is not merely a “passive investor” or “silent partner” but maintains telephone communications with the three other directors in Australia and that decisions on a senior management level are made in consultation with the other directors, including “issues such as employment of staff, new business ventures, and dealing with competition from major players such as Coles and Woolworths”. At the hearing Mr Murphy argued that the test is whether there has been, as Senior Member Allen has put it, “sufficient management for the needs of that specific business” (Re Hindrojojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724 at paragraphs 36-37, 39). The Act’s focus is on senior level management, which is what Dr Karim has done, which is to plan new developments and appraise their prospects. The three senior directors are old friends and business partners who consult and decide in an informal way.
53. Finally, with regard to whether the tribunal is satisfied that the applicant meets the criteria in s 134(2)(c), the respondent in her statement of facts and contentions submitted that the applicant has not made a genuine effort to obtain a substantial ownership in an eligible business or utilise his skills in the day-to-day management, at a senior level, of that business as there is no evidence of any ownership in the company, only limited funds have been transferred to Australia and that any business research has been sporadic and preliminary in nature. The respondent submits there has been no genuine effort by the applicant and that his involvement is only in an investment capacity and certainly there is no evidence of significant business research, plans or proposals for future business ventures.
54. I find that while OPH is an eligible business in Australia, the applicant has not obtained a substantial ownership in it within the meaning of s 134(1)(a). His loans of approximately $590,000 to the company must be excluded from consideration and his shareholding valued at $50,000 falls well short of the $100,000 minimum established by way of a guide in MSI 133. It is also less than substantial in comparison with the applicant’s one-third interest in the Pakistan-based companies, which are currently valued at $A90,000,000 to $A100,000,000.
55. That finding triggers the operation of s 134(2) and involves consideration of the factors listed in s 134(3). As regards s 134(2)(a), the applicant has not made a genuine effort to obtain a substantial ownership interest in OPH or any other eligible business in Australia. Although he has transferred substantial valuable assets to Australia in the form of the loans totalling $590,000, those transactions were not made for the purpose of gaining an ownership interest as defined in s 134(10) but for other purposes, such as enabling OPH to purchase one or more service stations.
56. On the other hand, I find that the applicant has made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of OPH. In several respects he meets the criteria listed in s 134(3). He participated in the initial research into the possibility of entering the poultry breeding industry, in Australia. When it became apparent that quarantine regulations made that impracticable, he took part, along with his partner shareholder-directors, in evaluating business prospects in marinas and motels. He took the leading role in assessing the potential of the Bexley and Charmhaven service stations, relying in part on his family’s retailing experience, and has had the main responsibility for evaluating and making recommendations on the Alison venture, which is now in operation, both as a holiday resort (Killara Lodge) and in connection with livestock production. While he also has the main responsibility for the negotiations over the Bioproperties proposal, that project is plainly more related to the development of the Pakistan-based companies than that of OPH, which takes only a small part in the livestock production industry, through the Alison property.
57. While Dr Karim is in Australia, he works full-time in OPH. When working from Lahore, he estimates that he spends about four hours of his working week on OPH business. That could not be regarded as a substantial amount of time, but as was pointed out in Re Hindrojojo (supra) the Act does not necessarily require the day-to-day management of the business actually to occur in Australia, as modern communications permit a business to be managed strategically from almost anywhere in the world and the emphasis of s 134(1)(b) is on senior management rather than day-to-day administrative tasks under the direction of a senior manager. Further, in Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703, Senior Member Carstairs pointed out that management input at a senior level by an experienced business person will often be intangible and may involve ideas and planning, such as researching products, securing orders and suppliers and transacting shipping. Thus a business may be run successfully without necessarily requiring daily management by senior officers. What is required is that there be sufficient management for the needs of that specific business (at paragraphs 36-37). In this case the management seems to be sufficient as the business is successful and has grown strongly.
58. The respondent points out that the applicant has spent only 67 days in Australia, well short of the six-month minimum contemplated by MSI 133. Further, as OPH operates purely in domestic markets and has no significant involvement in international commerce, the applicant’s long absences from Australia could not be regarded as being in the service of the Australian business. But for the reasons already given, it is probably adequate for the present purposes of the business, especially as uncertainty over migration issues has led to the deferral of further plans for new investment. The applicant’s stated long-term strategy is based on the gradual transfer of business assets from the Pakistan business to Australia, with the speed of transfer being determined by the success of the local operations. That is a cautious and rational strategy that has so far proved successful for OPH and the group, and the nature and extent of Dr Karim’s involvement in management is consistent with that strategy.
59. The factors that led Dr Karim and his business partners to plan a move to Australia still apply today and he would still prefer to live in Australia. Indeed, he now has an added reason to do so, as his children all have permanent residence here and he wishes to keep them with him in the family circle for as long as possible and at least until they are in tertiary education.
60. Nevertheless, while the applicant has satisfied paragraphs (b) and (c) of s 134(2), he has not succeeded in bringing himself within paragraph (a). Consequently, it is necessary to consider discretionary factors.
Discretionary factors
61. The tribunal has a discretion not to exercise the power to cancel a business visa even if the criteria set out in s 134(1)(a) to (c) are not satisfied (Re Nagaria and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 579). A common ground on which that discretion can be exercised in favour of an applicant is that further time should be given to the visa holder to undertake what was required of him or her (Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31, paragraph 21). In her statement of facts and contentions, the respondent referred the tribunal to clause 127.216 of Schedule 2 of the Migration Regulations 1994 which provided at the time of the application:
The applicant genuinely had a realistic commitment, after entry to Australia as the holder of a Subclass 127 visa:
(a) to either:
(i) establish an eligible business in Australia; or
(ii) participate in an existing eligible business in Australia; and
(b) to maintain a substantial ownership interest in that business; and
(c) to maintain direct and continuous involvement in management of that business from day to day and in making decisions that affect the overall direction and performance of the business in a manner that benefits the Australian economy.
62. The respondent contends that the visa conditions contained in the Regulations evidence an intention that business skills visas be available to persons who intend to immigrate to Australia for the purposes of establishing, or participating in, an eligible business, and to allow such persons to maintain direct and continuous involvement in the day-to-day management of that business within Australia. It would run counter to the legislative scheme to grant such a visa to a person who does not intend actively to manage the business and conduct business activities in Australia.
63. There are two partners in Australia, Mr Ramay and Mr Basit, who may be faced by a serious business decision if Dr Karim withdraws his financial involvement due to not having a visa, a possibility he has foreshadowed. Mr Ramay says the consequences could be “devastating” for him, as he does not have the capital needed to keep OPH as a going concern and could not establish a new business at his age.
64. The applicant’s other visa options are very limited. The subclass temporary business “short stay” 456 allows for limited work, but not for living permanently in Australia. Tourist visas do not allow the holder to work while in Australia.
65. The subclass 127 visa no longer exists since 1 March 2003. He therefore cannot apply again for the same visa. At the same time, new visa subclasses in the business stream were created. These include the subclass 160, but an applicant must be under 45 at the time of application. This he cannot meet. The alternative is to be under 55 years for the State/Territory sponsored subclass 163 visa.
66. Onshore, Dr Karim cannot apply for the subclass 845 as he needs to be holding a substantive visa and needs to be in Australia for nine months before lodging the application. If his visa is cancelled, he will not be able to reside in Australia for the nine-month requirement.
67. He may meet the requirement for the subclass 132 “business talent” visa, but an application for that visa does not give him a visa to remain in Australia.
68. The long stay business subclass 457 is for employees, not business owners, and the visa applicant needs a skill on the gazetted list. The visa is for a maximum of four years, and the holder must work for the company which sponsors him or her. There is a serious question about maintaining employment with overseas businesses. Secondly, Dr Karim is a business owner, not an employee, so this visa is not at all suitable.
69. The Employment Nomination Scheme requires a visa applicant must be under the age of 45 years unless there are “exceptional circumstances”. Again, employment is required, when Dr Karim is a business owner, not an employee.
70. Mr Murphy argued that there is a benefit to Australia in more competition in the service station industry, providing employment of Australians, allowing Dr Karim gradually to transfer more assets to Australia and maintaining his links with businesses in Pakistan.
71. The fact that the applicant’s three children now have permanent residence in Australia also has a bearing on the matter. Mr Murphy submitted that the intentions of the two older children to pursue higher education studies in Australia would be more difficult to carry out if they were required to live alone in Australia, especially given the more dependent style of upbringing they have had in Pakistan. Their parents would also be disadvantaged because they would need to seek visas each time they wished to visit their children in Australia. Alternatively, they would be disadvantaged if they had to defer or abandon their plans for Australian university education.
72. While those points may well be correct, I think the main relevance of the children’s visa status is that it gives the applicant an added and strong incentive to continue to implement the gradual transfer of his substantial business assets from Pakistan to Australia and in due course to migrate to Australia permanently.
73. As Ms McNamara pointed out, in 2005 the tribunal affirmed a decision cancelling the business visa of Dr Kamal, the applicant’s business partner (Re Kamal and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 982). While that decision was not binding in this case, it should be treated as having persuasive value. I agree that it should be treated as persuasive, but I think there are material factual distinctions between the basis of that decision and the present case. The business of OPH has developed further since Dr Kamal’s case was decided, and Dr Karim has been actively involved in the new Alison development. The permanent residence visas granted to the applicant’s children are a substantial new factor and should serve to reinforce the applicant’s motivation to implement his plans and ultimately to settle in Australia. Further, Dr Kamal had spent only 47 days in Australia since receiving his 127 visa, his main involvement had been in relation to the Charmhaven service station and to a lesser extent in the now liquidated Port Macquarie venture. There were also certain inconsistencies between his evidence and the documentary evidence.
74. In my view it is reasonable to allow the applicant more time to satisfy the requirements of the visa and the discretion should be exercised accordingly.
75. The decision under review is remitted to the respondent for reconsideration on the basis that the discretion be exercised in favour of not cancelling the applicant’s business visa and, consequently, Mrs Saadia Karim’s visa.
I certify that the 75 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President
Signed: .....................................................................................
AssociateDate/s of Hearing 12 and 13 January 2006
Date of Decision 25 January 2006
Solicitor for the Applicant Mr K Murphy, Craddock Murray Neumann
Solicitor for the Respondent Ms K McNamara, Phillips Fox lawyers
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