Kriel and Minister for Immigration and Citizenship
[2008] AATA 433
•23 May 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 433
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/3404 & ) 2007/5361
GENERAL ADMINISTRATIVE DIVISION ) Re DIRK & EVELINE KRIEL Applicant
And
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date23 May 2008
PlacePerth
Decision The Tribunal sets aside the decisions under review and, in substitution therefor, decides that the visas of the applicants, Dirk Kriel and Eveline Kriel not be cancelled under s134(1) of the Migration Act 1958 (Cth). .............[Sgd Mr A Sweidan]...........
Senior Member
CATCHWORDS
Immigration – whether business skills visa of the primary applicant should be cancelled – whether genuine efforts made for purposes of s.134
LEGISLATION
Migration Act 1958 (Cth) s134
CASES
Bakri and Minister for Immigration and Multicultural Affairs [2007] AATA 14
Bathurst City Council (1980) 144 CLR 1 at 8-9
Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307
Hope v Bathurst City Council (1980) 144 CLR 1
Harsono and Minister for Immigration and Multicultural Affairs [2007] AATA 64
Hindrodjojo, and Ors and Minister for Immigration, Multicultural and Indigenous Affairs [2004] AATA 274
Karim Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77
Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579
Lala and Minister for Immigration, Multicultural and Indigenous Affairs [2003] AATA 209
Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2003] FCAFC 168
Puzey v Commissioner of Taxation [2003] FCA 19
Re Lok Yung (Michael) Wong and Minister for Immigration and Multicultural Affairs [2006] AATA 277
Re Lau and Minister for Immigration and Multicultural and Ethnic Affairs [2002] AATA 703
Re Juliana Leo and Minster for Immigration and Multicultural and Indigenous Affairs [2006] AATA
Re Saleh Leo and Minster for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309
Shaikh and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 1119
Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997
Yam and Minister for Immigration, Multicultural and Indigenous Affairs [2004] AATA 283
REASONS FOR DECISION
23 May 2008 Mr A Sweidan, Senior Member Background
1.This is an application to the Tribunal for review of decisions made by a delegate of the Minister for Immigration and Citizenship (the respondent) on 22 June 2007 cancelling the business skills visas of Dirk Kriel (the primary applicant) and his wife Eveline Mary Kriel (the secondary applicant).
2.The primary and secondary applicants were granted sub-class 127 business skills visas on 12 January 2004 and they first entered Australia on 27 February 2004.
Facts
The relevant facts based on the oral and documentary evidence before the Tribunal are as follows:
3.The primary applicant, Dirk Kriel, (the applicant) applied to migrate to Australia on 28 February 2003.
4.The applicant’s wife, Eveline Mary Kriel, is the sole secondary visa holder and second applicant, on “extreme hardship” grounds, in this application. The applicant and his wife have one adult son who has been granted permanent residency for Australia.
5.The applicant and his wife decided in 2002 to apply to migrate to Australia as a result of the Zimbabwe Government expropriating both his and his son’s farms.
6.Soon after the applicant’s visa was granted in January 2004, the applicant flew to Perth with his family to investigate the possibility of establishing a family flour milling business in Perth. The applicant, his wife and his son are presently operating a similar business in Zimbabwe. The applicant instructed Expro Marketing to do a feasibility study on the flour milling industry in Western Australia. The study was titled "The Kriel Family Project".
7.The applicant and his family met local farmers and visited commercial silos in Perth to discuss wheat blending and possible credit lines. The applicant met with Barry Court, President of the Pastoralists and Grazier Association of WA, and Paul Frapple, Project Manager for Agri Industry Opportunities Trade and Development.
8.The applicant also attended a Milling conference in Brisbane and discussed the possibility of importing flour mills from Sweden and Germany but soon realised their costs were way above his budget.
9.The applicant subsequently decided to approach Snell Africa in South Africa, who manufactured his “Roff” Mill in Zimbabwe to see if they could change the design on their mills to meet the higher quality specifications for flour needed in Australia. The applicant was advised that this was not possible and the project was then abandoned.
10.On 16 October 2005, the applicant flew to Perth to meet with a company advising business migrants called Key Migrant Investments Pty Ltd (KMI). KMI subsequently introduced the applicant to Mark Goldenberg and they agreed to a joint venture to build five residential houses in Surrey Road, Wilson. The applicant agreed to become a 25% share holder to the value of $250,000.00 in a property development company called Silver Property Development Pty Ltd (Silver Property).
11.Silver Property employed a site manager for the Wilson development, with who the applicant was in regular telephonic and electronic contact. Silver Property appointed a building contractor, Impression Homes, to construct the 5 home units on the Wilson site.
12.The total land and development cost for the five Wilson units was around $1,750,000.00.
13.Sales of the five developed units were over $2,000,000.00 (See Contracts for Sale for each of the home units at Exhibit 42).
14.Around March 2006, the applicant procured a friend of his from Zimbabwe, Henry Sommer, to take up a 25% share holding in Silver Property. Henry Sommer subsequently also took up Mark Goldenberg’s 50% share holding in Silver Property which gave him a share holding of 75%, with the applicant having the remaining 25%. Mark Goldenberg continued to act as Managing Director of the company’s projects and received a fee from Silver Property.
15.As part of the above arrangement, it was agreed that two of the Wilson units would be sold to the applicant and his son, Francois, at a discounted price of $380,000.00 each. Both houses currently have tenants paying $350.00 per week.
16.In October 2006, the applicant travelled to Perth to meet his business partners and advisors with respect to completion of both the Wilson project and for the instigation of new development projects. During the trip, the applicant inspected two proposed duplex sites in Aubin Grove.
17.The development of the Aubin Grove site was first discussed to be Silver Property’s next project around August 2006 along with other potential developments. A project feasibility report on the duplex lots was prepared. The report projected a total development cost for the two duplex lots in Aubin Grove at around $2,080,000 with projected sales at $2,180,000.00.
18.Subsequently, in February 2007, Silver Property purchased the Aubin Grove lots for subdivision into duplex lots for a total of $910,000.00.
19.Conditional approval for the Aubin Grove development was granted by the WA Planning Commission on 7 February 2008.
20.The applicant has since becoming involved in Silver Property had monthly telephonic conferences with his business partner Mark Goldenberg. The applicant has also communicated with Mr Goldenberg by emails telephone calls and faxes.
Issues for Tribunal
21.The issues in this matter are:
21.1.Did the applicant acquire a substantial ownership interest in an eligible business – and does he intend to continue to hold such interest; and
21.2.Was the applicant utilising his skills and actively participating at a senior level in the day to day management of an eligible business – and does he intend to continue to?
If the answers to either or both of these questions are in the negative then the Tribunal must determine whether:
21.3.the applicant has made a genuine effort to obtain a substantial ownership interest in an eligible business and intends to continue to make such genuine efforts; and
21.4.the applicant has made a genuine effort to participate at a senior level in the day to day management of such a business and intends to continue to make such genuine efforts?
If the answers to these questions are in the negative then:
21.5.Are there any issues that could lead the Tribunal to exercise it’s residual discretion in the applicant’s favour?
21.6.Will the cancellation of the applicant’s visa cause “extreme hardship” to the applicant’s wife, Eveline Mary Kriel?
Tribunal’s Findings
Relevance of evidence after 22 June 2007 – date of cancellation of visa
22.The Tribunal is required to consider “material that relates to events or matters occurring up to, but not after, the date of cancellation of the visa”: Re Lok Yung (Michael) Wong and Minister for Immigration and Multicultural Affairs [2006] AATA 277 at paragraph 23.
23.However, it is generally accepted that the Tribunal can consider evidence of “subsequent events to the extent that those later events assist in evaluating the relevant intentions and actions of the visa holder as at the date of the cancellation of the visa”: Shaikh and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 1119, at paragraph 32. Or to consider “prospective issues” such as, for example, whether extreme hardship “would” result to another person who is a member of the family unit of the holder of the cancelled business visa: Re Lok Yung at paragraph 24.
Relevant Legislation
24.S 134(1) of the Migration Act 1958 (Cth) (“the Act”) provides as follows:
“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;”
25.The term ‘substantial ownership interest’ is not defined under the Act or other relevant legislation however both the terms “ownership interest” and “eligible business” are defined in section 134(10) of the Act:
“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”.
An “eligible interest” means:
“…that 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.”
Substantial ownership
26.The question of what is a “substantial interest” of an eligible business is one of “fact and degree”: Harsono and Minister for Immigration and Multicultural Affairs [2007] AATA 64 at paragraph 22. The respondent’s policy openly states that a 10% shareholding in a company and or an investment of $100,000 can be used as a guide for a “substantial ownership interest”. (See T48 – Migration Series Instruction 133 (“MSI 133”)).
27.In November 2005 the applicant agreed to apply for shares in Silver Property and invest a total of $250,000.00 in the company. Subsequently, on 20 December 2005 the applicant was issued with 25 ordinary fully paid shares and 249,975 “D” class ordinary fully paid shares in Silver giving the applicant a 25% stake in the company.
28.The “D” class shares, as seen from Silver Property’s company constitution, enjoy the same rights as ordinary shares such as full voting rights however there is no right to dividends. The applicant’s shareholding both exceeded the respondent’s guide of 10% shareholding and met the investment benchmark of AUD$100,000.00.
29.The Tribunal finds that, at the date of cancellation of his visa, the applicant held a substantial ownership interest in Silver Property.
Eligible Business
30.The activities of Silver Property are established and have a permanent character, as the company was incorporated in October 2005 and has been operating since that time. Silver Property has been actively engaged in activities relating to property development. Silver Property identified and purchased five vacant blocks at Surrey Road, Wilson (“the Wilson development”) and engaged appropriate professionals and others to undertake the development. The total land and development costs for the Wilson development were around $1,750,000.00 whilst total sales have been $2,095,000.00. It appears that for reasons unknown title to the land was not held in the name of the company. However, the company was clearly the beneficial owner thereof.
31.Construction on the Wilson development site was completed around October 2006. Prior to completion of the Wilson development, Silver Property began researching a second development. Two duplex lots were chosen at Lots 154 and 157 Princeton Circuit, Aubin Grove (“the Aubin Grove development”). Both lots were subsequently purchased in February 2007 for $910,000.00 with the intention of developing four home units. The projected cost of the Aubin Grove development is expected to be around $2,080,000.00 with expected sales to be around $2,180,000.00. WA State Planning approval for the development has been granted, subject to conditions.
32.The Full Federal Court in Puzey v Commissioner of Taxation [2003] FCA 197, at paragraph 47, referred to projects that may be for a “fixed term” or that may “continue over a relatively long period of time but where there will be significant periods of what may be referred to as inactivity. Business does not mean being busy.” The above passage was referred to and approved by Member Allen in Hindrodjojo, and Ors and Minister for Immigration, Multicultural and Indigenous Affairs [2004] AATA 274, at paragraph 24, in the context of a property investment business.
33.Silver Property has a tax file number, is registered for GST, maintains accounts and produces financial statements.
34.Notwithstanding that financial statements indicated that Silver Property operated at a loss as at 16 March 2006, it still was a company which actively engaged in business for the purpose of making profit which it subsequently did after the completion of the Wilson development.
35.In Karim Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77, at paragraph 17, the Tribunal determined that one of the applicant’s businesses was an “eligible business” for the purposes of the Act, despite the fact that it had in one year made a loss. It is clear that all other relevant information needs to be considered to find the intention or purpose of making profit, not merely the physical production of profit.
36.In the Full Federal Court decision of Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307, at paragraph 312, it was held that in defining a business:
“The nature of the activities, particularly whether they have the purpose of profit-making, may be important. However, an immediate purpose of profit-making in a particular income year does not appear to be essential. Certainly it may be held a person is carrying on a business notwithstanding his profit is small or even where he is making a loss.”
37.In the Tribunal’s opinion the losses incurred by Silver Property cannot be seen as a test of the applicant’s managerial skills or whether that the company is an “eligible business”. Obviously many outside circumstances can determine the profitability of a company. The fact that Silver Property continued to pursue profit by conducting the business is evidence of a company operating for the purposes of making profit.
38.The pursuit of profit can also be seen in each development through the engagement of solicitors, real estate agents and engineers and the management meetings demonstrating activities of pursuing each project. Each project employs skilled tradespersons, engineers, town planners etc. to develop the property which leads to the creation and maintenance of employment as per section 134(10) of the Act (paragraph b). Silver Property’s development activities inevitably increases commercial activity in Western Australia through its financing and sourcing of viable property developments, pursuant to paragraph f of section 134(10) of the Act, thus contributing to the property sectors of the Western Australian economy.
39.In the Tribunal’s view Silver Property is an active property development company for the purposes of meeting the “eligible business” requirement. To be a business within the meaning of section 134 of the Act the activities undertaken must be “activities undertaken as a commercial enterprise in the nature of a going concern, that it, activities engaged in for the purpose of profit on a continuous and repetitive basis”: see Hope v Bathurst City Council (1980) 144 CLR 1 at 8-9 per Mason J: and Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997 at paragraph 20.
40.It is also clear that a “fixed term project” such as a property development can be a business.
41.In Hindrodjojo, at paragraph 27, the Tribunal stated that property development can be classified as an eligible business as it:
“…would reasonably be expected to result, directly or indirectly, in the creation or maintenance of employment in Australia and an increase in commercial activity in the building, construction and related sectors of the Australian economy”
42.Similarly, in Lala and Minister for Immigration, Multicultural and Indigenous Affairs [2003] AATA 209, at paragraphs 52 to 60, the Tribunal found that not only did property development contribute to “the creation or maintenance of employment in Australia” but also helped to “increase commercial activity and competitiveness within sectors of the Australian economy”. The Tribunal notes that the scale of the property development in question in Lala was smaller than the developments financed by Silver Property.
43.Silver Property has been actively involved in the Wilson development and now the Aubin Grove development showing that the company’s activities are continuous, repetitive, long established and have a permanent character. The total value of these developments, based on actual sales on the Wilson development and projected sales on the Aubin Grove development, is over $4,000,000.00 and total land and development costs of over $3,750,000.00 (See Exhibits 4 and 42). The combined value of these developments provides Silver Property’s business activities with sufficient scale to warrant it being classed as an eligible business.
44.The Tribunal finds that the evidence shows that, at the date of cancellation of his visa, the applicant held a substantial ownership interest in Silver Property, and that he continues to do so and intends to continue hold a substantial ownership interest in Silver Property and that Silver Property is an eligible business.
Day-to-day Management at a Senior Level
45.S 134(1) of the Act states that the respondent may cancel a business visa if satisfied that the Visa holder:
“…is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business;”
46.Despite residing in Zimbabwe, the applicant claims that he was involved in the “day-to-day management” of Silver Property on an ongoing basis which he says is evidenced in the records of the monthly management meetings.
47.It is clear that the applicant had substantial involvement in the general direction of the property development as evidenced in his emails.
48.The applicant, while based overseas also sourced an additional shareholder and subsequent business partner, Henry Sommer.
Evidence of the applicant’s management involvement
49.The respondent’s in its Notice of Cancellation stated that “there is no evidence that Mr Kriel is involved in the day to day management of the business at a senior level”.
50.The applicant’s email correspondence does contain content that demonstrates his involvement in decision making and management, this is particularly evident in emails sent after phone discussions with the managing director, Mark Goldenberg. The emails show that the applicant and Mr Goldenberg often discussed issues and made decisions over the phone, and confirmed the decisions by email. Decisions made jointly by the applicant and Mr Goldenberg include, but are not limited to:
(a) Determining that the project manager, Prudence Beal, should report to the applicant;
(b) Requiring that the project manager should visit the Wilson Development Project Site at least once a week to ensure the development was progressing smoothly;
(c) Deciding to sell two of the remaining three houses in the Wilson Development to a purchaser for $455,000.00 each; and
51.The applicant’s decision making involvement is also reflected in his participation by phone in regular management meetings. Through his participation in these meetings, the applicant was involved in company decisions including:
(a) Having the three remaining units at the Wilson development valued to ensure Silver Property obtained a fair price for them;
(b) Discussing future projects for Silver Property, and after this consideration, deciding to give Mr Goldenberg the “green light” to proceed with the Aubin Grove development;
(c) Determining how to structure the respective shareholders’ interests in the Aubin Grove development; and
(d) Obtaining a $100,000.00 loan to speed up the Aubin Grove development.
52.The Tribunal is of the view that the frequency, scope and content of the applicant’s correspondence shows that the applicant was at all relevant times actively involved in decision making relating to the day to day operations of Silver Property.
53.The respondent in its Notice of Cancellation and it’s submissions to the Tribunal commented critically on the applicant’s email correspondence and referred to comments which it was contended showed that the correspondence was only to fulfil visa obligations. The Tribunal notes that given that the respondent informed the applicant that he should keep documents evidencing his involvement in an eligible business in Australia it is understandable that at least some of his correspondence should refer to that. The Tribunal notes that the “Monitoring Information” fact sheet provided by the respondent to the applicant states:
“I would encourage you to start documenting any efforts you make towards entering into business in Australia, for example keep records of any business negotiations you enter into, research you undertake, correspondence, contacts you make or business plans you consider”.
54.In the Tribunal’s opinion the applicant utilised all forms of communication such as email, telephone and when possible, “in person” to actively comply with his responsibilities through regular advice and contact on day-to-day matters in the business. When he could not attend a meeting, the applicant adhered to Corporations Act requirements and provided an apology for his absence. The applicant also submitted written reports for every business meeting he was unable to attend. Corporations law recognises the advantages of technology in communication that allow senior management to still carry out their duties effectively without having to be “physically” at the registered office, or in the country for that matter, via email or telephone/video conferencing. The use of technology in management is supported in the case Re CIGA Investments Pty Ltd (1995) 13 ACLC 1047. In the case of Hindrodjojo, at paragraph 36, the Tribunal cited with approval its decision in Karim Jo, at paragraph 77, and stated that given the “modern means of travel and communication” a business may be “managed and strategically directed from almost anywhere in the world”. The applicant can therefore be “actively involved” in the business and management of the company, including consideration of drafting agreements, pre-feasibility studies, assess construction costs, negotiate with the property vendor and other day-to-day affairs presented at management meetings through telecommunication mediums and not solely by personal attendance.
55.Hindrodjojo, at paragraph 36, also agreed with the decision in Karim Jo that section 134(1)(b) emphasises “senior management rather than the day to day administrative tasks under the direction of a senior manager”. Hindrodjojo, at paragraph 36, further agreed with the decision in Re Lau and Minister for Immigration and Multicultural and Ethnic Affairs [2002] AATA 703 that “management input at a senior level by an experienced business person will often be intangible and may involve ideas and planning, as much as researching products, securing orders and suppliers and transacting shipping”.
56.The Tribunal notes that the Full Federal Court decision in Puzey, at paragraph 46, though admittedly within the context of tax legislation, states that “a person may appoint another to take the steps which constitute the business activity”. Here, the applicant availed himself of the opportunity to rely on the services of others in the day to day administrative tasks of property development.
57.Puzey goes onto state, at paragraph 46, that “a person may carry on a business, notwithstanding that the person had some other activity, such as full time employment”. Indeed, the fact that the applicant had both a senior management role in a business in Australia and a business in Zimbabwe is not unique given the nature of a property development business where there can be significant periods of inactivity due to waiting on development approvals. Puzey, at paragraph 47, contemplates this by stating that “there will be significant periods of what may be referred to as inactivity”.
Time Spent in Australia
58.It is clear that the applicant is not required to cease all business activities overseas nor to occupy the most senior management positions in Silver Property.
59.The Act does not provide for any special considerations or “benefits” for business migrants that choose to reside in Australia, nor does it stipulate time periods or number of trips a business migrant can make overseas. There are also no legal requirements under the Act or the Corporations Act for a person to be in Australia when shares in a company are issued to him or her.
60.Deputy President Jarvis of the Tribunal held in Re Lok Yung Wong, at paragraph 41, that subsections 134 (1) and (2) do not require the relevant management of an eligible business to take place in Australia. Whilst a business visa confers an entitlement for a migrant to reside in Australia, the Act does not require the holders of those visas to take up that entitlement.
61.In Hindrodjojo the Tribunal found that the applicant had discharged his obligations relating to the management of an eligible business. The visa holder in Hindrodjojo had spent only 55 days in Australia since his first entry as a permanent resident, and conducted his management of the business primarily from Indonesia. The Tribunal concluded there is no requirement in the Act that prescribes that the participation by the business visa holder in the management of the business should occur from within Australia. If Parliament had intended that this management role be undertaken in Australia, it would have been very straightforward to include this specification in section 134(1)(b). However, this requirement was not included in the Act.
62.The Tribunal has also noted Attachment “A” in the respondent’s Notice of Intention to Consider Cancellation of Your Visa dated 26 February 2007 forwarded to the applicant.In Yam and Minister for Immigration, Multicultural and Indigenous Affairs [2004] AATA 283, at paragraph 98, the Tribunal referred to the last bullet item in Attachment “A” (erroneously under the heading “substantial ownership interest”) of the Notice of Intention to Cancel Visa which states:
“If you have spent the majority of your time outside Australia, evidence of how you have been managing the business from overseas, eg emails, facsimiles, itemised phone bills, minutes of meetings held, statements from overseas business associates (including suppliers, buyers and partners), statements from onshore advisors.”
63.The Tribunal in Yam, at paragraph 99, added that there is some “justification” in the argument “that the attachment to the Notice of Intention to Cancel shows that the way the scheme is administered, it is not necessarily the case that a person must spend the majority of their time participating in the day to day management of their business in Australia.”
64.Yam, at paragraph 103, also approved of the following passage by Member Allen in Karim Jo (at paragraph 33) that:
“…However, I do not believe that it can be said that the Act demonstrates a requirement that the visa holder become ordinarily resident in Australia immediately in the sense that he or she spends the majority of his or her time in the country, only taking trips overseas from time to time. A number of factors have influenced that conclusion. In the first place, there is nothing in the documentation provided to me concerning the application made by the applicant for his visa …that indicates that the Australian government had any requirement that overseas businesses be disposed of or the applicant’s involvement in them scaled down. Specifically, the 24 months survey form that is used by the government to obtain information from visa holders asks the question (in section 7): “are you still actively involved in a business outside Australia?” and contains the statement: “note that there is no expectation or requirement that you discontinue any business outside Australia”… [Please see T247, Part E question 36]…Secondly, the MSI at clause 4.5.1, when dealing with the issue of what constitutes “genuine efforts” in relation to the establishment of a business and involvement it its management, refers to whether or not the visa holder has been physically present in Australia for more than 6 months since first arrival. Bearing in mind that a cancellation decision will often be made between 3 and 3 and a half years after the first arrival, an expectation that the visa holder may have spent only 6 months in Australia suggests that, so far as the respondent is concerned, the visa holder is not expected to spend the majority of his or her time in this country – and may indeed as little as 15% of the total time between first arrival and cancellation. Finally, I note that s 134(1)(a) specifically require the active participation in the management of that business to occur in Australia. It would have been very easy for Parliament to have specified in s 134(1)(b) that the management activities must occur in Australia if that had been the intention”.
65.The Tribunal also notes that, upon obtaining notification of his visa being granted, the applicant also received from the respondent a document titled “Requirements of Business Visa Holders”. The document, which is addressed to visa holders, states that “there is no requirement for you to discontinue any business you have outside Australia.”. At the same time the applicant was further provided a document titled “Monitoring Information”. The respondent stated that (See T214):
“…there is no requirement that you spend a certain amount of time in Australia, however you are required to be involved in the day-to-day management of your business at a senior level, so if you have not been physically present in Australia, you would need to provide documentary evidence of how you have been involved while overseas, for example keep a record of phone calls, conferences and meetings attended, emails, faxes etc.”
66.The Tribunal finds that the respondent has clearly held out, in its own documentation, that there is no requirement for a business visa holder to be resident in Australia. The applicant’s evidence is that he relied on this, both directly, and indirectly based on advice from his migration agents, and organised his affairs around the respondent’s statements.
Hours Worked Per Week
67.The respondent in its Notice of Cancellation of Visa incorrectly stated that the applicant only worked 10 hours a week on the business. The respondent made a number of certain adverse inferences stating that the respondent’s hours were “…significantly less than expected working hours of a senior manager of a business…”. This assumption is unsupported by both legislation and case law.
68.There is no requirement in the Act that the business visa holder works a particular number of hours each week in their management role. It appears that the respondent does not have a written policy on this issue. If such a policy or guidelines did exist, to be valid it would have to be consistent with the relevant legislation.
69.In Re Lau, at paragraphs 32 and 33, the Tribunal noted that there is no requirement in the legislation that a visa holder establish a certain number of days that he or she undertakes the activity of the business in order to show that he or she is involved in its day to day management. This was affirmed in Hindrodjojo where the Tribunal found that the applicant had discharged his obligations relating to the management of an eligible business. The visa holder in Hindrodjojo gave evidence to the Tribunal, at paragraph 35, that he spent about 5 hours per week attending to the management of his Australian businesses and that, at paragraph 33, he spent 8 hours a day, five days a week on his Indonesian business. This is the same amount of time that the applicant says he dedicates to the management of his Australian business. The Tribunal in Hindrodjojo, at paragraph 37, also agreed with the comments of Senior Member Dwyer in Yam, at paragraph 95, where he stated that a “business may be successfully run without necessarily requiring daily management. What is required is that there be sufficient management for the needs of that specific business”. It was further provided in Puzey, at paragraph 47, that “business does not mean being busy”.
70.This case law assists in interpreting the legislation on the matter and can be applied to the applicant’s business involvement. It is not for the respondent to determine the amount of time necessary for the applicant to discharge his obligations in his managerial role at Silver Property. What must be determined is whether the applicant is exercising “sufficient” management for the needs of the company. This can be determined by other management members, and fundamentally, Silver Property’s directors who know what management is required for the overall direction of the company.
71.Mr Goldenberg states that the applicant “is a valued member of the management of the business and I have enjoyed a professional and working relationship with him.”
72.The conclusion reached by the Tribunal in the decisions cited above is that there is no requirement in the relevant legislation for the business visa holder to spend a certain number of hours per week on their management role in the business in order to show they are involved in the day-to-day management.
Decision Making
73.The respondent in Part C of the Notice of Cancellation (Genuine Efforts) stated that:
“It is claimed that the Department has misrepresented section 134(1)(b) of the Act, in stating that a business skills visa holder is required to demonstrate that:
·they have exercised responsibility within the business/es in terms of decision-making authority and setting a strategic direction of the business. This may include, but is not limited to, responsibility for employees and/or responsibility for expenditure;
·such responsibility has been exercised on a continuous and daily basis (as opposed to occasional);
·their skills have been fundamental to, or have exerted direct influence on, the operation of the business/es; and
·they have a specific and identifiable role in the business.
However, departmental guidelines as outlined in the current PAM 3, requires the visa holder to demonstrate that the above dot points should be met in relation to section 134(1)(b) of the Migration Act.
74.The above passage is materially identical to that contained in paragraph 8.1 of the Procedures Advice Manual Pam 3 (“PAM3”).
75.The Full Federal Court in Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2003] FCAFC 168 (“Lobo”) held that the requirements of PAM3 did not correspond to the requirements of the Migration Regulations. The Full Court said, at paragraph 63, that:
“…the departmental policy… was narrower than the criterion for a subclass 845 visa set out in cl 845.216… The criterion requires satisfaction on the part of the Minister that the applicant for the visa as owner of and interested in a main business “maintain direct and continuous involvement in the management of that business or in those businesses from day to day and in making decisions that affected the overall performance or direction of that business or those businesses’ This did not import a requirement that could only be satisfied by demonstrating the exercise of responsibility within the business in terms of decision-making authority, responsibility for employees, and/or responsibility for expenditure. There is a variety of ways in which a person might direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance. ”
76.The Tribunal in Re Lau, at paragraph 33, that day-to-day management input at a senior level by an experienced business person will often be “intangible”, and may involve ideas, planning, research, assessing and analysing decisions. Such input may not be evident in the end product, for example, the personal signing of a contract, but can be found in business communiqué relating to the contract.
77.The Tribunal finds, on the evidence before it, that the applicant is an experienced businessman and has utilised his skills through managerial involvement in Silver Property. There is nothing in either the Corporations Act or the Act to suggest that in order to fulfil the day-to-day management of a company, the visa holder is required to physically liaise or represent the company in meetings with financial institutions, local government officials, engineers, architects, builders or any other third parties. Nor do visa holders have to “personally sign” contracts or agreements on the company’s behalf in order to play a part in the preparation of the contract or agreement.
78.It is evident that the terms used to describe the applicant’s management input are that of an “intangible” nature. The Tribunal finds that the applicant is successfully exercising types of involvement that are suited to the purpose of the type of business he is in, namely, property development. This form of input can be evidenced in his monitoring of decision making in the business activities via sending his advice, agreement, review, analysis or queries in business communiqué such as e-mails. In the case of Re Lau, at paragraph 33, it was decided that this type of management involvement was sufficient “intangible input” in the company’s day-to-day management.
Future Intention
79.The applicant has said and the Tribunal accepts that he fully intends to continue to utilise his skills in actively participating at a senior level in the day to day management of the business of Silver Property.
Genuine Efforts
80.If the Tribunal is wrong in finding that the applicant has discharged his obligations under s134(1) of the Act, then the Tribunal finds in the alternative that the Tribunal must not cancel the applicant’s visa as he has made genuine efforts to fulfil his obligations.
81.Section 134(2) and (3) of the Act states:
(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 business 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 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;
(ii)the length of time that the person held the ownership interest or participated in the management (as the case requires); and
(iii)the reasons why the person no longer holds the interest or participates in the management (as the case requires).”
82.After considering all the evidence the Tribunal is of the view that the applicant has shown that he has made genuine efforts to meet these obligations and because of that his business visa should not be cancelled.
Requirements under sec 134(3) pursuant to MSI 133’s interpretation guide of clause 4.5.1 (See T6 at pages 34-35)
83.Parts (a), (b) and (c): The evidence establishes that the applicant has personally undertaken research in conducting business for his proposed milling business in Western Australia and then for Silver Property. This demonstrates his genuine efforts to discharge his obligations including securing new investors/business partners and researching into possible new property developments and business opportunities.
84.Part (d): There is no requirement that the applicant must have stayed more than 6 months after first arrival in order to satisfy genuine efforts under paragraph (d). This policy is in the Tribunal’s view to say the least, misleading, as confirmed in Re Lok Yung Wong, at paragraph 41, as subsections 134 (1) and (2) do not require the relevant management of an eligible business to take place in Australia. In the Tribunal’s opinion, in light of the relevant facts no adverse inferences should be based on the amount of time that the applicant has spent in Australia. See also Bakri and Minister for Immigration and Multicultural Affairs [2007] AATA 14, at paragraph 69, where the Tribunal held that the visa holder had made genuine efforts notwithstanding that he had stayed in Australia for less than 3 months and that many other parts of the MSI guidelines had not been satisfied.
85.Part (e):The applicant has transferred $250,000.00 to Australia for use in obtaining an interest in an eligible business, Silver Property. In addition, the applicant has also acquired residential property in Wilson and Mindarie.
86.This reflects positively on the applicant’s genuine efforts to fulfil his visa obligations.
87.Clause 4.5.2 of MSI 133 states that:
“While 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”.
88.In Shaikh, at paragraph 68, Member Tovey held in relation to 4.5.1 of MSI 133, that they “…are a guide only and are not binding on the Tribunal”. Member Tovey in Shaikh went on to agree, at paragraph 69, with the statement in Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579 (at paragraph 22) that:
“…no weight should be given to the guidelines in MSI 133 if they are clearly more restrictive than the words of the section itself, and the factors referred to in s.134(3) cannot be the basis for rejecting relevant efforts which are genuine, simply because they fall short of the examples given in section 134(3)… [nor, we submit the examples given in 4.5.1 of MSI 133]… For an effort to be genuine it must not be false or fictitious and the level of effort must be something that is real and beyond that which is purely superficial or token”.
89.In the Tribunal decisions of Hook, at paragraph 54, Re Juliana Leo and Minster for Immigration and Multicultural and Indigenous Affairs [2006] AATA 308, at paragraph 64, and of Re Saleh Leo and Minster for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309, at paragraph 61, all three visa holders were found to have made genuine efforts notwithstanding that neither fulfilled every criterion in 4.5.1 in MSI 133 and had only each spent 69 (Hook), 69 (Juliana Leo) and 90 (Saleh Leo) days respectively in Australia within the 3 year period. All three visa holders were also found to have made genuine efforts notwithstanding that they were in property development businesses.
Whether the efforts which, whilst genuine, cannot realistically satisfy the requirements of section 134(1) of the Act are genuine efforts in the sense identified in section 134(2)
90.The Compact Oxford English Dictionary definition of the word “genuine” is that it means “honest”.
91.The Tribunal finds that the applicant had an honest belief, based on the professional advice that he obtained, that what he was doing satisfied the criteria in section 134(1) and that his conduct amounted to an “effort” so that he satisfied the requirements of section 134(2).
92.The Tribunal is of the view that section 134(3) provides support for the proposition that in using the term “genuine efforts” the legislature intended the word “genuine” to have its natural meaning (i.e., honest) and that such genuiness or honesty falls to be assessed by reference to the objective standard of a reasonable person.
93.Sub-section 134(3)(g) provides that one of the matters the Minister may take into account is “business activity that is, or has been, undertaken by the person”. That example is unqualified and is plainly not circumscribed by reference to the technical requirements of section 134(1). This supports the Tribunal’s view that the word “genuine” is to be understood in the sense of “honest” and by reference to an objective standard.
94.This is also consistent with the intent of the legislature as reflected in the Second Reading Speech.
95.In the Second Reading Speech, the Minister made the following comments in relation to section 134(2):
“The second part of these changes deal with a power to cancel entry permits and visas. The Joint Committee of Public Accounts recommended that the new arrangements for business migration should not use a system of conditional visas. The Government accepted that recommendation. Nevertheless it is appropriate for the Minister to have the power to deal with cases of serious abuse. This concept is incorporated in these provisions.
The bill gives the Minister clear legislative indicators on which a decision is to be based if cancellation is being considered. The overwhelming majority of business migrants are not likely to be affected by the use of this power. Only those whose intentions are inconsistent with the objectives of the category need have any concern about its use. I do not anticipate that the power will be exercised on more than a few occasions.”
The Minister went on to say:
“The bill will also maximise economic outcomes arising from it and provide the Government with a stronger information base on which to make decisions in future. This is achieved without placing unnecessarily onerous conditions on business skills migrants.”
96.The Tribunal accepts that the applicant acted honestly and diligently in accordance with professional advice. This qualifies as a “genuine effort” as a matter of subjective belief. However, if the notion of “genuine effort” is to be assessed by reference to a more objective standard of reasonableness, his conduct plainly still amounts to a “genuine effort” in the Tribunal’s opinion.
Conclusion – Genuine Efforts
97.The Tribunal finds on the evidence before it that the applicant has made genuine efforts to develop his Australian business interests since obtaining an Australian business visa despite falling short of some of the MSI 133 guidelines. It is clear that the applicant has taken his responsibilities seriously in utilising his business skills in a country whose laws and business methods are foreign to him.
Residual Discretion
98.Having regard to the Tribunal’s findings as set out above it is not necessary for the Tribunal to consider the question of it’s residual discretion.
Secondary Applicant
99.It is not necessary for the Tribunal to consider further the “extreme hardship” contentions advanced on behalf of the secondary applicant.
Decision
100.The Tribunal sets aside the decisions under review and in substitution therefor, decides that the visas of the applicants Dirk Kriel and Eveline Kriel not be cancelled.
I certify that the 100 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: .............[Sgd Ms C Skinner]....................
AssociateDate/s of Hearing 17 & 18 March 2008
Date of Decision 23 May 2008
Counsel for the Applicant Mr D Barich
Solicitor for the Applicant Fiocco’s Lawyers
Counsel for the Respondent Mr S Thackrah
Solicitor for the Respondent Australian Government Solicitor
0
19
0