Legana v Minister for Immigration and Multicultural and Indigenous Affairs

[2005] AATA 1166

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1166

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   W2004/132

GENERAL ADMINISTRATIVE DIVISION		)
Re		NORMAN LEGANA

Applicant

And MINISTER FOR IMMIGRATION, MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms L Savage Davis, Member
Ms L Tovey, Member

Date24 November 2005  

PlacePerth

Decision The Tribunal affirms the decision under review.

(sgd) Linda Savage Davis.

Member

CATCHWORDS

MIGRATION - business skills visa subclass 127 - cancellation of visa - applicant's failure to obtain a substantial ownership interest in an eligible business in Australia - active participation in day to day management at a senior level of business - whether genuine effort made - discretion not to cancel visa

Migration Act 1958 s134 and s137

Migration Series Instructions 133

Wong v Minister for Immigration and Multicultural Affairs [2002] AATA 54

Lau v Minister for Immigration and Multicultural Affairs [2002] AATA 703

Hope v Bathurst City Council (1980) 144 CLR 1

Jo v Minister for Immigration and Indigenous Affairs [2004] AATA 77

Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299

REASONS FOR DECISION

Ms L SAVAGE DAVIS
Ms L TOVEY         

1. This is an application by Mr Norman Legana (the applicant) for a review of a decision dated 24 March 2004 by the Minister for Immigration, Multicultural and Indigenous Affairs, (the respondent), to cancel the business visa issued to the applicant pursuant to section 134 of the Migration Act 1958 (the Act).

2. At the hearing Mr Legana was represented by Mr M Rothstein of M Rothstein and Co., Lawyers and Migration Agents. The respondent was represented by Mr Arran Gerrard of the Australian Government Solicitor. The Tribunal was assisted by Ms Jeane Kongras an interpreter of the Indonesian language. The Tribunal had before it the T- documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (T1 – T 36 / 1 – 568).  In addition the Tribunal had before it the following documents which were marked as follows;

Exhibit A1 – The Applicant’s Statement of Facts and Contentions filed 23 August 2004.

Exhibit A2 – Witness Statement of Norman Legana dated 20 August 2004 and Supplementary Witness Statement of Norman Legana dated 20 September 2005 with Attachments A to H.

Exhibit A3 – Applicant’s Submissions dated 20 September 2005.

Exhibit R1 – The Respondent’s Statement of Facts and Contentions filed 7 October 2004

Oral evidence was given by the applicant Mr Norman Legana, Mr Peter Nichols and Mr Clark Johnson.

3.      By way of background the Tribunal notes that on the 15^th of October 2000 the applicant was granted a sub-class 127 business skills visa and first entered Australia on 26 November 2000. On 20 September 2002 the applicant was sent the standard “Survey of Business Skills Migrant – 24 month” survey form. The applicant provided a response dated 16 December 2002 advising him of his interest in Gumano Proprietary Limited (Gumano) which was involved in exporting Australian hide products. The respondent in a letter dated 21 July 2003 (T17/179-180) sought further information. Further information was provided on the applicant’s behalf by Prima Migration Services in correspondence dated 4 September 2003 and 14 October 2003. (T18 & T19). In a letter dated 20 November 2003 the applicant was notified of the respondent’s intention to cancel his visa (T21/316 – 321). Further information was provided to the respondent by Prima Migration Services in correspondence dated 22 December 2003, 12 February 2004 and 16 March 2004 (T23, 24 & 25). In a letter dated 24 March 2004 the applicant was notified that his visa had been cancelled under s134 of The Migration Act 1958. ( T3/13-15)

Legislation

4. Section 134 of the Act empowers the respondent to cancel a business visa in certain circumstances. Relevant to consideration of this matter are subsections 134 (1) (2) (3) and (10) of the Act that provide 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).

…

(10)     In this section:

business visa means:

(a)       a visa included in a class of visas, being a class that:

(i)        has the words “Business Skills” in its title; and

(ii)       is prescribed for the purposes of this paragraph; or

(b)       a visa:

(i) to which a prescribed provision of the Migration Reform (Transitional Provisions) Regulations applies; and

(ii)       that is of a kind prescribed for the purposes of this paragraph; or

(c)       a return visa that is granted to a person who is or was the holder of a business permit or business visa;

that is or was granted on or after 17 February 1992.

designated investment has the meaning given by the regulations.

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

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

family member's visa means a business visa held by a person:

(a)       who is or was a member of the family unit of another person who held a business visa; and
(b)       who would not have held the business visa if he or she had never been a member of the family unit of the other person.

investment-linked visa means a business visa a criterion for whose grant:

(a)       relates to the holding of a designated investment; or
(b)       is that the applicant is a member of the family unit of the holder of a visa a criterion for whose grant is as mentioned in paragraph (a).

member of the family unit has the meaning given by the regulations.

ownership interest, in relation to a business, means an interest in the business as:

(a)       a shareholder in a company that carries on the business; or
(b)       a partner in a partnership that carries on the business; or
(c)       the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

relevant designated investment, in relation to an investment-linked visa (other than a family member's visa), means the designated investment that was, in deciding to grant the visa, regarded as satisfying the criterion referred to in paragraph (a) of the definition of investment-linked visa.

return visa has the same meaning as in the regulations.”

5. Section 134(3) of the Act sets out the matters the respondent, without limiting itself only to those matters, may take into account in determining whether a person has made the “genuine effort” referred to in section 134(2) of the Act. In addition the Migration Series Instructions No 133 (MSI) at paragraph 4.5 lists factors, that although not binding on the Tribunal are relevant in considering whether a genuine effort has been made. They are as follows;

“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, ie mandatory monitoring of Australian address and return of survey forms.”

The Evidence of Norman  Legana

6.      Mr Legana confirmed that he was familiar with the contents of his witness statement dated 20 August 2004 and amended witness statement dated 20 September 2005 (Exhibit A2).  Mr Legana said he had been involved in the shoe industry since 1984.  Since 2002 the company he and two others established Gumano Pty Ltd (Gumano) had sourced leather skins from AI Topper & Co Pty Ltd (AI Topper) and Mason Grogan, both Australian Companies, although the poron may come from the US.  He explained that “poron” which is used in the heel and toe of safety boots his company Osaga Pty Ltd (Osaga) in Indonesia produces is a crucial component.  It is very important that he is able to source very good quality material. The poron he has sourced through AI Topper and Mason Grogan may, he said, come originally from America.

7.      Mr Legana told the Tribunal that Gumano purchases the raw leather which is then sold to a tannery  in Indonesia (the tannery) in which he has no interest. They also purchased cattle head. Osaga then purchases up to 60% of that material and the tannery sells the remainder elsewhere.  The product could account for up to 60% of leather Osaga purchases.  Osaga used other tanneries at times.  Gumano has not purchased any raw hide since January 2005 because the tannery in Indonesia had failed to pay GST which prevented Osaga claiming the rebate when the processed leather was exported back to Australia.  Prior to establishing Gumano supplies of raw hide had been sourced in Indonesia and Korea. Osaga continued to obtain some product in this way whilst Gumano was exporting from Australia and since it ceased to in January 2005.  Mr Legana said once the problems with the tannery were rectified Gumano would source raw leather again.

8.      Mr Legana said one of his partners in Gumano was involved in accounting and tax and the other was a silent partner.  He said he was responsible for the day to day running of Gumano.  His two partners in Gumano were also directors of Osaga, a company he had been managing director of since 1984 and had an 80% interest in.  Osaga employed 300 people in Jakarta.  RT Rukun Tripilar which he had been a director of since 1986 and in which he had a 50% interest, employed 1000 workers at its plant at Tangerang, 20 kilometres from Jakarta.

9.      Mr Legana was referred to annexure E (Exhibit A2) the financial statements for Gumano for the year ended 30 June 2005.  He agreed the profit of $5,598 on a total trading income was small but said he intended to make larger profits in the future.  He explained that it was important to foster good relationships and because his Indonesian businesses were profitable he did not need to make large profits although he intended to grow Gumano over the years to come.  He described Gumano as a trading company.  Mr Legana said Gumano bought cattle heads as a gesture of good will because they were difficult to dispose of in Australia.  Mr Legana said transactions were done usually in American dollars because the Australian dollar was too strong.

10.     In cross-examination Mr Legana confirmed that the other 2 directors who owned a combined interest of 20% of Osaga were also his partners in Gumano.  He estimated Osaga’s turnover in 2004 was 7 million dollars Australian and that the company made a significant profit.  Mr Legana said he was also a director of PT Rukun Tripilar and PT Sarana Niagon Segjatitera.  He had no intention of selling his interests in any of his Indonesian companies from which he derived the bulk of his income.

11.     Mr Legana said he had been involved with Footwear Industries Pty Ltd (FI) and Clark Johnson & Associates (CJ) since about 1994.  Mr Legana was referred to paragraph 2, page 3 of his witness statement dated 20 August 2004 which read;

“My activities include supervision of manufacture, taking orders for products in Australia, searching for the raw materials and the supplies to ensure there is a constant supply of quality product obtained at the best possible price for the factory.  This is where Gumano Pty Ltd plays an important role”

12.     Mr Legana said the factory referred to in this statement was Osaga.  Mr Legana said he applied for a business skills visa firstly for his children and secondly to expand his business.  He agreed that Gumano fed his Indonesian business and that before 2002 he had not used Australian product.

13.     Mr Legana confirmed that he first had dealings with FI in 1998 and began supplying them at the end of that year.  He was asked what “feeding the cycle” meant as outlined in the diagram (Exhibit A2, Annexure C).  In response, he said he goes in his capacity as Gumano director to CJ every time he visits Australia and talks about new developments and they discuss with him the quality they need to receive from Osaga.  He agreed Osaga had been trading profitably with FI and CJ before Gumano was set up and at that time got raw leather from countries like Taiwan and Korea.

14.     Mr Legana agreed that profits made by Gumano had decreased since 2002/2003 (T18/187).  He said it was difficult to make a profit with the strong Australian dollar.  He said if Osaga folded Gumano would have to find different markets. Mr Legana agreed most of his time was taken up running Osaga.  He said he spent less than 10 hours per week on Gumano, 30 hours per week on Osaga and 10 hours per week on Rukun Tripilar.  Later Mr Legana said he spent 8 – 10 hours on Gumano.

15.     He had no immediate plans to move to Australia, saying perhaps he would move to Australia in a few years.  He has no property in Australia and uses accountant Vincent Tjeuw’s office as Gumano’s principal business address.  Gumano has no employees and he receives no income from it. He uses Mr Tjeuw’s office for correspondence.

16.     In response to questions from the Tribunal Mr Legana said on behalf of Gumano he sends about 8 to 10 emails per week. He then said this was a variable number depending on how busy things were. Some went to AI Hopper and some were trying to find different suppliers. He also spent time checking the quality of hides in Jakarta, speaking to Mr Tjeuw once or twice per month and visits when in Australia. Mr Legana agreed that he essentially ran Gumano from Jakarta. He said that Herbert, to whom an email dated 12 July 2004 from Mason Grogan was addressed to as well as himself (Exhibit A2, Annexure H), was employed in Jakarta by Osaga and dealt with exports / imports.

17.     Mr Legana was asked why Mr Clark Johnson suggested he set up a company in Australia (Exhibit A2 Amended Statement, paragraph 3.6). Mr Legana said it was because it would help FI.

The Evidence of Peter Nichols

18.     Mr Nichols told the Tribunal that he is a director and shareholder of Footwear Industries (FI). He said that FI and Mr Legana have had a business relationship for approximately 7 years.  FI would probably generate about 30 million dollars this year. It employs 85 staff. Mr Legana’s business represented about 65% of FI turnover. He and Mr Legana were in constant communication and FI had a close relationship with his factory in Jakarta. Currently 2 of his staff were working in the Osaga office.  Mr Nichols said quality control was vital to his industry and the leather and poron must be up to specific standards for safety boots.  Mr Nichols told the Tribunal that he deals with Osaga and does not have any dealings with Gumano although he understands the applicant uses Gumano to source products.  FI has no interest in Gumano.

Evidence of Clark Gregory Johnson

19.     Mr Johnson told the Tribunal he has been involved in Footwear Industries (FI) since the company started in the mid 1990’s.  He is a co-director of FI and also a director of Clark Johnson and Associates.  He first met Mr Legana in 1999 or 2000.  He was familiar with Gumano and understood it was an Australian registered company of which the applicant was a director and shareholder and that its registered offices were in WA.  He believed that it was an export business related to footwear.

20.     Mr Johnson said that FI aim is to be at the premium end of the safety footwear market and one marketing strategy had been to promote the use of Australian product.  Mr Johnson said that he recalled talking to Mr Legana at a breakfast some time in late 1999 or early 2000.  He said he discussed with Mr Legana the possibility of entering into a joint venture with him to export leather and suggested some possible ideas.  He also offered to introduce him to people including people working at Coogee in the leather business.  He said it did not progress beyond this.

21.     Mr Johnson said he had no interest in or dealings with Gumano and had always dealt with Mr Legana in his capacity as the director of Osaga.

Final Submissions

22.     Submissions on behalf of the applicant were provided in writing (Exhibit A3), and orally and can be briefly summarised as follows;

·Gumano it was submitted was an eligible business because its prime activity was the exporting of hides and poron to Indonesia, and therefore satisfied s134(10)(c) of the Act. Gumano filed tax returns in Australia and whilst its profits were small this did not disqualify it from being an eligible business. In addition it was submitted that it satisfied s134(10)(a) because it had developed international business links;

·That whilst the profit margin was not substantial this was not uncommon when developing a long term business and it was submitted emphasis needed to be given to building relationships.  In addition it was submitted that the applicant was not reliant on Gumano in the short term for profits;

·It was submitted that Gumano was a link in the cycle which was crucial to Australian businesses such as Footwear Industries that employed 85 people; and contributed to the employment of people at Mason Grogan and AI Topper;

·Whilst the applicant did not spend a substantial amount of time on Gumano this was because his vast experience in the industry meant that he did not need to spend the time someone who was still on a learning curve and developing relationships would need to;

·It was submitted that the applicant in his capacity as a director of Gumano was a legitimate exporter and not just a facilitator of Gumano for the benefit of his Jakarta company Osaga;

·That the amount of time spent in Australia by the applicant should not be used as an indicator of the use of his  skills and active participation at a senior level in the day to day management of Gumano; it was not necessary it was submitted for the holder of a subclass 127 visa to be tied to a physical location in order to undertake his responsibilities;

·It was submitted that the evidence of the shipping transactions and business meetings by the applicant was evidence of a genuine effort to utilise his skills day to day at a senior level of management of Gumano;

·Whilst Osaga was related to Gumano it was submitted that there was nothing to prevent the two legal entities with similar shareholders from doing business and Gumano could not be described as not simply an extension of Osaga as it was able to stand alone.

23.     On behalf of the respondent the Tribunal was referred to the written submissions and the following oral submissions were made which can be summarised as follows;

·     Whilst it was conceded that Mr Legana had a substantial interest in Gumano and that Gumano was a business, it was not it was submitted an “eligible business”.  This was as evidenced by the fact minimal tax was paid by Gumano, and that the focus was not on making profits which had in fact decreased despite increased export returns, but on assisting Osaga to make profits.

·     It was submitted that the relationships and international business link with FI and Clark Johnson pre-dated the establishment of Gumano and had been established by Osaga.

·     It was submitted that Gumano does not create or maintain employment in Australia; Gumano itself employs no-one and other employment such as that at FI and Clark Johnson existed prior to the establishment of Gumano.

·     It was submitted that there was no evidence as to why the applicant needed Gumano when the existence of Gumano was tangential and insignificant; the raw material in Australia could be acquired without the existence of Gumano and the exports by Gumano were of limited benefit to Australia and the expansion of  Australia’s exports.  Gumano it was submitted was in effect a facilitator between Osaga and Australian companies that it had an existing relationship with.

·     It was submitted that the applicant had failed to demonstrate that he had utilised his skills in actively participating at a senior level in the day to day management of the business because he had spent only 48 days in Australia prior to be date of cancellation; had been vague in his evidence about what he did in the 10 hours per week he said he worked for Gumano and because the evidence from Mr Nichols and Mr Johnson showed that his interactions with FI and Clark Johnson were in his capacity as director of Osaga.

·     It was submitted that there was no evidence of genuine effort because no business proposals were developed for Gumano, there was no evidence of research and profits were marginal.

24.     In conclusion it was submitted that Gumano could only be seen as an extension of Osaga; the owners and directors were the same; its sole client was Osaga and it was Osaga who had a relationship with Australian companies FI and Clark Johnson.

Consideration and Decision

25.     In reaching its decision the Tribunal took into account the documentary and oral evidence as well as the leading authorities and relevant legislation.

26.     In cases of cancellation of a visa the Tribunal must consider whether the decision to cancel was the correct and preferable decision at the time of the cancellation decision Re Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54. It is however open to the Tribunal to examine events that occurred after the date of cancellation to see whether they throw light on the circumstances at the time of cancellation.

27. It is not in dispute that the applicant has a one third share in Gumano, a company registered in Australia in early 2002. It is conceded by the respondent and accepted by the Tribunal that the applicant has a “substantial ownership interest” as required by s 134(1)(a) of the Act. The respondent submits however that Gumano is not an “eligible business”. The meaning of an “eligible business” is outlined in s134(10) of the Act and to qualify must meet at least one of the criteria. Of particular relevance in this matter are the criteria in s 134(10)(b) and (c) of the Act. Hope v Bathurst City Council (1980) 144 CLR 1 is authority that carrying on a business should be understood as an activity undertaken on a continuous and repetitive basis for the purpose of profit. The Tribunal notes that whilst Gumano has not traded since early 2005, apparently because the one tannery it exports to has failed to pay GST, it has on a number of occasions purchased raw material from Australia despite the profit it has made being only minimal. This it can be assumed would have created some employment in Australia, in particular for A I Hopper, therefore satisfying s 13410(b) and also (c) of the Act. In reaching this conclusion the Tribunal accepts the applicant’s evidence that he has no interest in the tannery in Indonesia and also that prior to establishing Gumano he did not source raw leather in Australia but in countries such as Indonesia and Korea.

28.     The Tribunal being satisfied that the applicant has obtained a “substantial interest” in an “eligible business” now must consider whether the applicant has demonstrated that he utilises his skills “in actively participating at a senior level in the day to day management of the business” (s 134(1)(b) of the Act), in order to avoid the prospect of cancellation of his visa.

29.     On behalf of the applicant the Tribunal had been referred to the decision of Member Allan in Jo v Minister for Immigration and Indigenous Affairs [2004] AATA 77 including at para 36 where he stated:

“I consider that the views expressed in cases such as Huang, Ong and Ng, to the extent that they require only a person’s management activities in Australia to be considered for the purposes of determining whether a person has been actively involved in the senior management of an Australian business, to go too far and beyond that which the Act requires.  In my opinion activities undertaken outside Australia can also be taken into account if they can be directly related to the management of the Australian business.  Putting it another way, once it is established there is an eligible business in Australia, then in my opinion the management activities in relation to that business can take place either in Australia or overseas.”

30. The Tribunal understands the grant of a business skills visa under s 134 of the Act is to enable individuals to settle in Australia and establish and manage an eligible business. With respect the Tribunal disagrees with an understanding that in effect renders the visa holders presence in Australia largely irrelevant for the purpose of s134(1)(b) of the Act. Whilst travel outside Australia and communication by email and telephone during these absences can form part of the process of day to day management of the Australian business, the Tribunal does not accept that the management activities can take place virtually entirely offshore. The Tribunal believes the comments of Deputy President Wright QC in Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299 at para 12 to reflect the meaning of the Act where he states:

“This does not mean that the visa holder is confined to working within the geographical limits of Australia.   Obviously overseas trips may be a vitally important part of fostering and expanding the business.  However, the Act does not contemplate an absentee entrepreneur directing operations from afar.  Direct “hands on” involvement within the Commonwealth of Australia is essential.  A business skills visa carries with it the right of permanent residency in Australia during its existence and by departing from Australia and joining family members as secondary applicants they too can obtain this privilege.  It would be strange indeed if an overseas entrepreneur could secure these advantages by directing business operations from abroad within a day or two of his first arrival and never setting foot in this country again.”

31.     Mr Legana’s evidence was that essentially he runs Gumano from Jakarta from the offices of Osaga.  He told the Tribunal he spent most of his time running Osaga and spent less than 10 hours per week on Gumano.   In his evidence he stated that he is assisted to some extent by at least one staff member of Osaga, Herbert (Exhibit A2/Anneure H).  Telephone enquiries and correspondence are dealt with by his Accountant, Mr Tjew and staff in Mr Tjew’s Perth Office.  Gumano itself is not listed in the phone book in Australia.  The substantial interaction Mr Legana has with FI as reflected in the evidence of Mr Nichols and Mr Johnson is of no direct relevance to Gumano because it is done in Mr Legana’s capacity as director of Osaga.  A suggestion that Mr Legana enter into a venture, possibly with Mr Johnson to export leather was never more than a conversation at a breakfast an therefore has no bearing in this matter.

32.     The Tribunal has examined the “cycle of supply” (Exhibit A2/Annexure E).  In his witness statement dated 20 August 2004 (Exhibit A2) Mr Legana stated:

“The purpose of the creation of Gumano Pty Ltd was to feed the ‘cycle’ which is created by Gumano Pty Ltd, the tannery that we use, Osaga and Footwear Industries Ltd and Clark Johnson and Associates Pty Ltd and the Australian suppliers of leather products, elastic, poron and toecaps;”

33.     In addition on behalf of the applicant it was submitted that: “In the process there is substantial economic benefit to Footwear Industries which employs 85 people in its WA factory and is entirely dependent on the “cycle” of which Gumano is an important link.” (Exhibit A3)

34.     The Tribunal does not accept this description of Gumano’s role as accurate.  Whilst Gumano has exported what the evidence from Mr Legana is the majority of raw leather required by Osaga in 2002 to 2004; it has exported none since January 2005.  Osaga has since that time and as it did for several years prior to the establishment of Gumano, accessed other sources and fulfilled its role in supplying Footwear Industries.  The benefits experienced by FI and product it requires are supplied by Osaga.  Gumano is, the Tribunal believes better characterised as having been, between 2002 and 2004 part of “cycle” to benefit Osaga.   Mr Legana’s evidence confirms this when he agreed that his Australian business feeds the “cycle” for his Indonesian business.  Mr Legana’s evidence is that it is Osaga and his other Indonesian business interests that occupy the vast majority of his time. In addition the Tribunal notes that the applicant has no intention of resigning or selling these business interests.  Accordingly, the Tribunal has concluded that the applicant has not been actively participating at a senior level in the day to day management of Gumano.

35. Notwithstanding this, the applicant’s visa must not be cancelled if he has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia and intends to continue to make such genuine efforts (s 134(2) of the Act). Matters that may be taken into account are set out in s 134(3) of the Act. Guidance may also be sought from the MSI. Mr Legana has spent only 48 days in Australia up to the date of cancellation of his visa. His evidence of plans to expand Gumano once issues with the tannery which has halted exports since January 2005 are not supported by any documentation or business proposals. The Tribunal does not accept that a conversation over breakfast with Mr Johnson suffices as evidence of genuine effort. Gumano is owned by Mr Legana and two others who are his business partners in Osaga. Gumano has no office, no telephone listing in Australia, no staff in Australia and owns no property in Australia. The Tribunal does not accept that Mr Legana’s efforts satisfy s 134(2) of the Act.

36. The Tribunal has concluded that the applicant has not acquired a substantial interest in an eligible business, nor utilised his skills in actively participating at a senior level in the day to day management of an eligible business and made a genuine attempt to do those things or intends to continue to make such genuine attempts in accordance with s 134 of the Act. This does not, however, result in the automatic cancellation of the applicant’s business skills visa. There remains the discretion under s 134 of the Act as to whether or not to cancel his visa. In the light of the evidence, including Mr Legana’s evidence that the first reason he applied for a business skills visa was for his children, the Tribunal finds no basis not to exercise the discretion to cancel the applicant’s visa.

37. In accordance with s 43 of the Administrative Appeals Tribunal Act 1975 the Tribunal therefore affirms the decision under review.

I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of Ms L Savage-Davis and Ms L Tovey

Signed:         J Rainey
  Associate

Date of Hearing  20 September 2005 
Date of Decision  24 November 2005
Counsel for the Applicant         Mr M Rothstein
Solicitor for the Applicant          M Rothstein & Co
Counsel for the Respondent     Mr Arran Gerrard
Solicitor for the Respondent     Australian Government Solicitor