Li and Minister for Immigration and Citizenship
[2009] AATA 501
•3 July 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 501
ADMINISTRATIVE APPEALS TRIBUNAL ) No 2007/5460
) No 2007/5480
GENERAL ADMINISTRATIVE DIVISION ) No 2007/5481 Re: Chunming Li
Guiping Li
Wei LiApplicants
And:
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal Ms N Isenberg, Senior Member Date3 July 2009
PlaceSydney
Decision The Tribunal sets aside the decision under review and directs that Mr Chunming Li’s business skills visa not be cancelled. The secondary visas of Guiping Li and Wei Li are also not to be cancelled.
................…[Sgd]..........................
Ms N Isenberg
Senior Member
CATCHWORDS
IMMIGRATION – Cancellation of business visa - whether Applicant has substantial ownership interest in an eligible business – whether Applicant utilised his skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia – aggregate of several business activities – “genuine effort” – residual discretion – the decision under review is set aside.
LEGISLATION
Migration Act 1958 (Cth) – s 134, 135, 494C
CASE LAW
Hope v Bathurst City Council (1980) 144 CLR 1
Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304
Re Awesa and Minister for Immigration and Citizenship [2007] AATA 53
ReBadenhorst v Minister for Immigration and Multicultural Affairs [2006] AATA 742
Re Chawla and Minister for Immigration and Citizenship (2008) 104 ALD 79
Re Chen and Minister for Immigration and Citizenship [2008] AATA 977
Re Deswandy and Minister for Immigration and Citizenship [2007] AATA 1405
Re Goh and Minister for Immigration and Citizenship [2008] AATA 698
Re Gunawan and Minister for Immigration and Multicultural Affairs (2006) 92 ALD 233Re Harlim and Minister for Immigration and Multicultural Affairs [2002] AATA 767
Re Huang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656
Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 394
Re Kushner and Minister for Immigration and Citizenship [2008] AATA 1170
Re Lau and Minister for Immigration and Multicultural Affairs (2002) 35 AAR 395
Re Leo and Minister for Immigration and Multicultural and Indigenous Affairs [2006} AATA 309
Re Liu and Minister for Immigration and Citizenship (2009) 106 ALD 691
Re Nagaria and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 579
Re Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299
Re Padilla and Minister for Immigration and Multicultural Affairs [2006] AATA 922
Re Rasyid and Minister for Immigration and Citizenship [2009] AATA 341
Re Tan and Minister for Immigration and Citizenship [2008] AATA 720
Re Widjaja and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 380
Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
REASONS FOR DECISION
3 July 2009 Ms N Isenberg, Senior Member
1. Chunming Li, reputedly ‘a Chinese billionaire’, was granted a business skills visa on 20 August 2004 and he and his family first arrived in Australia on 26 August 2004 on that visa. On 22 October 2007 the Respondent’s delegate cancelled the visa on the grounds that Mr Li had not complied with the terms of the visa.
2. A business skills visa may be cancelled under s 134(1) of the Migration Act 1958 (Cth) (“the Act”) if the Minister is satisfied that the visa 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.
However, the visa must not be cancelled if the Minister is satisfied that the visa holder has made a genuine effort to obtain a substantial ownership interest in, and to utilise his or her skills in actively participating at a senior level in the day-to-day management of, an eligible business in Australia, and intends to continue to make such genuine efforts: S134(2) of the Act.
PRELIMINARY ISSUE: as at what date are the criteria to be considered?
3. There was evidence of some activity by Mr Li in relation to his Australian business interests before his visa was cancelled. There was, though, a significant amount of activity after that date and up until the matter was listed for hearing. Further, there continued to be substantial activity between the dates the matter was first listed for hearing and when the hearing was ultimately concluded, 3 months later.
4. On behalf of the Applicant it was contended that as a result of the decision in Shi v Migration Agents Registration Authority (2008) 235 CLR 286 (Shi), all evidence, up to date, including evidence about developments in the Applicant’s business activities since the hearing had commenced, should be taken into account in reaching the correct and preferable decision.
5. On behalf of the Minister it was contended that s 134(1) of the Act (unlike the legislation under consideration in Shi) is fettered by a “temporal element” such that “the critical statutory question is whether a criterion was met or not met at a particular date”: Shi at [101], per Hayne and Heydon JJ. It was submitted that I should consider fresh evidence only if it were relevant to the facts during the relevant period, namely up to the date of cancellation by the Minister’s delegate - 22 October 2007. There was no contention that I should only consider the evidence available at the time of cancellation.
6. After the hearing I was referred to the Tribunal’s very recent decision in ReRasyid and Minister for Immigration and Citizenship [2009] AATA 341. The Tribunal found there to be some temporal limit on the Minister's power to cancel a visa, including that there are a number of factors affecting the latest time for making such a decision. The Tribunal decided that the Minister is not required to consider the position other than at the time of his or her decision (whenever that is), and that there is no reason why the Tribunal should not consider the position as at the date of its decision. I agree with the Tribunal’s view that there is certainly no reason for the Tribunal to limit its consideration of the evidence to the date of the Minister's decision, but I was not asked to do so.
7. In Shi the High Court held that there is nothing in the Tribunal‘s enabling legislation that confines it to the facts and circumstances before the primary-decision maker, and that any restriction on the Tribunal to consider only conduct and events up to a certain point in time would have to arise from the intention of the legislation under consideration and the nature of the decision under review.
8. In the second reading speech for the Migration Amendment Bill (No 2) 1992 Parliament’s clear intent was outlined:
“The second is the creation of a power for the Minister to cancel permanent entry permits and entry visas of business skills migrants after their arrival in Australia if they do not enter into business activities which meet the objectives of the category or make a genuine effort to do so. These provisions will apply to such migrants within their first three years after arrival in Australia. The Minister cannot cancel entry permits or visas unless action is initiated within the three-year period ... The Bill includes provisions which mean that the power cannot be used against a business migrant unless the Minister has notified him or her of the intention to do so within three years of the migrant’s arrival in Australia. This provision allows business migrants time to make sensible business decisions. It also allows sufficient time for an assessment to be made that the business is likely to be of ongoing benefit. It also recognises that, as permanent residents, business migrants should not be under the threat of cancellation indefinitely. ...”
9. During the hearing I was referred by the Applicant’s representative to a number of cases which have been decided by the Tribunal since Shi. The majority of those decisions, it was submitted, did not limit the material the Tribunal could consider eg Re Liu and Minister for Immigration and Citizenship (2009) 106 ALD 691, Re Kushner and Minister for Immigration and Citizenship [2008] AATA 1170, Re Chen and Minister for Immigration and Citizenship [2008] AATA 977, Re Tan and Minister for Immigration and Citizenship [2008] AATA 720 and Goh and Minister for Immigration and Citizenship [2008] AATA 698.
10. In particular I was referred to Re Chawla and Minister for Immigration and Citizenship (2008) 104 ALD 79. I agree that ‘there is nothing obvious in the language or subject matter of section 134 of the Act which would confine the attention of the Tribunal to facts and circumstances existing at the time of the decision under review’, but, as I have said, this was not the Respondent’s contention.
11. I was also especially referred to Senior Member Kelly’s decision in Re Kushner and The Minister for Immigration and Citizenship (2008) AATA 1170. I agree with her view that the provisions of the Act are intended to provide certainty to business visa holders by limiting the time within which the visa can be cancelled. However I do not agree that the Act does not impose any temporal restriction. The Minister’s power to cancel a visa is clearly limited by time constraints, as discussed below.
12. I note too, the recent decision of Member Frost in Re Liu and Minister for Immigration and Citizenship (2009) 106 ALD 691. I agree that there is nothing in the Act which requires the Minister to turn his or her mind to s 134 “at a particular time”, and that it is clear that action to cancel a visa must be initiated within the three-year time limit, and that the actual cancellation decision could be made at any time within that period. However, while there is no requirement that a decision be made on the particular date, that is, the third anniversary of the granting of the visa, there is an end date on or before which any decision to cancel the visa must be made. Section 135(1) sets out a pre-condition to the cancellation of a visa: the Minister must give the visa holder a written notice - a NOIC. The NOIC must be given within 3 years of the date the visa was granted, or the person first enters Australia on the visa: s 134(9). Representations by way of reply may be made, within the time specified in the notice: s 135(2). Notices sent by post are taken to have been received after 7 working days after the date of the document if the document was dispatched from a place in Australia to an address in Australia or in any other case, 21 days after the date of the document: s494C. The original decision-maker may not cancel a visa after a period of 90 days from the date for reply provided in the NOIC: s 135(4).
13. By my calculations, as discussed with the representatives at the hearing, and bearing in mind that Mr Li arrived in Australia on the visa on 26 August 2004, the last possible date, applying the time limits specified in the Act, that the visa could have been cancelled by the Minister, was I believe, on 1 December 2007. The actual date of cancellation was somewhat earlier, namely 22 October 2007.
14. In matters of the present kind, the statutory intention arises from s 134 and 135 of the Act, which confines the cancellation power. Accordingly the primary decision-maker did not have the power to consider conduct and events after 1 December 2007, so the Tribunal’s powers are limited in a similar manner.
15. In coming to the correct or preferable decision to cancel, or not to cancel, Mr Li’s visa, I accept the Minister’s submission that the Tribunal may consider fresh evidence only if it were relevant to the facts during the relevant period. However, I consider, in view of my observations as to the legislative intent, that period ends at the last possible date for cancellation, which, given the ‘start date’ of 26 August 2004, would be 1 December 2007 “the relevant date”.
16. Were I to accept the Applicant’s submissions, no applicant would want his or her matter to be finally heard in the tribunal, so as to take advantage of the delays and have the opportunity to address any shortfall in meeting obligations as the holder of a business skills visa. That to me, would be to frustrate the intention of the legislation, having regard to the second reading speech, and would invite unacceptable delays in the Tribunal’s consideration (or resolution) of the matters before it.
SUBSTANTIVE ISSUE
17. Had Mr Li obtained a substantial ownership interest in an eligible business in Australia by the relevant date?
·If so, was Mr Li was utilising his skills in actively participating at a senior level in the day-to-day management of the business as at the date of cancellation?
·Did Mr Li intend to continue to hold a substantial ownership interest in, and utilise his skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia?
·Alternatively, did Mr Li make a genuine effort to obtain a substantial ownership interest in an eligible business and to utilise his skills in actively participating at a senior level in the day-to-day management of that business?
·Should the general discretion not to cancel the visa be exercised?
·If Mr Li’s business visa is cancelled, whether, in respect of the Applicants, Guiping Li and Wei Li, “extreme hardship” would result from cancellations their visas?
CONSIDERATION OF THE EVIDENCE
18. I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence.
19. In addition, there was tendered a series of documents and these Exhibits are noted in the attachment to this decision.
20. Mr Li gave evidence through interpreters and I have taken into account that this was a less than ideal manner of receiving his evidence. Nevertheless, on numerous occasions during his evidence, Mr Li’s answers were largely unresponsive to the questions asked and were generally discursive.
21. Mr Li provided evidence in relation to his three Australian enterprises: Great Pacific Real Estate Investment Pty Ltd, Great Pacific International Holding Pty Ltd and Arena International Aviation College Pty Ltd.
22. Having regard to the approach I have adopted in relation to the relevant date, the statement made by Mr Li to the Department dated 5 January 2007 was particularly relevant.
23. Evidence was also given by Mr John Drayton, General Manager of W Drayton & Sons Pty Ltd, Mr Kevin McMurtrie, who was the Chief Pilot and Chief Flying Instructor of CoastJet Pty Ltd, Ms Iris Xie, Director, Summit Equities Pty Ltd and Mr Jimmy Chen, Mr Li’s Accountant in Australia.
Great Pacific Real Estate Investment Pty Ltd ("Great Pacific Real Estate")
Was Great Pacific Real Estate an eligible business?
24. It was not disputed that Mr Li had obtained substantial ownership in Great Pacific Real Estate; on 21 February 1997 Great Pacific Real Estate was registered by the Australian Securities Commission and Mr Li was appointed as director. He has been the sole shareholder, from his evidence, since 2000. The issue is whether the Great Pacific Real Estate was, at the relevant date, an ‘eligible’ business.
25. As to what amounts to a business, the solicitor for the Respondent referred me to Hope v Bathurst City Council (1980) 144 CLR 1, where the Court stated that carrying on a business denotes: “pursing activities for the purpose of profit, undertaken on a continuous and repetitive basis which can be revealed by inspecting financial records, examining who the clients are and consideration of whether the activities are genuine and real.”
“Eligible business” is defined in s 134(10) of the Act as follows:
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.
26. I was referred by the solicitor for the Respondent to Re Tan and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808 where the Tribunal was not prepared to accept that "an isolated property development transaction involving construction costs of approximately $1 million would have the kind of economic consequences that are contemplated by the requirements for an eligible business in s 134" (at [15]). In Re Awesa and Minister for Immigration and Citizenship [2007] AATA 53 the Tribunal stated at [29] that "[in] any event the activity of investing in real estate would not meet any of the criteria set out in s 134(10) of the Act as being eligible business activity". Similarly, in RePadilla and Minister for Immigration and Multicultural Affairs [2006] AATA 922 (Padilla) at [18], the Tribunal was not satisfied that "a passive property investment business will achieve any of the desirable results identified in s 134(10)".
27. In Mr Li's 24 Month Survey to the Department dated 5 January 2007 it was recorded that Great Pacific Real Estate's income was predominantly from rent from its property, Regal Arcade, 363 Sussex St in Sydney. The financial statements demonstrate that Great Pacific Real Estate made substantial profits in the years 2003-2006. The gross rental income, according to the company’s 2007 tax return was $324,256. Expenses were $86,437. In the financial statements for the year ended 30 June 2007 Mr Li’s loan to the company was $2,148,321.
28. Mr Li gave evidence that he had invested $7 million in purchasing and upgrading the arcade. He changed from large to small stores, advertised and changed the air conditioning, electricity, water and sewage. Mr Li said that in 6 or 7 months he had spent about $1 million, although the 2007 and 2008 financial records show very little by way of expenses – in each financial year there was less than $300,000 recorded as expenses, the majority of which related to strata levies, interest and wages.
29. In adopting the Tribunal’s approach in Padilla, I agree with the submission on behalf of the Respondent that the company does not meet any criteria in s 134(10) – save one: the company employed 3 staff, including Mr Li’s 2 daughters. All 3 are Australian citizens. While there was evidence that they provided services to Mr Li’s other companies, Great Pacific Real Estate paid them a salary upon which Australian income tax was paid. The company’s employment of Australian Citizens then distinguishes this matter from Re Deswandy and Minister for Immigration and Citizenship [2007] AATA 1405, to which I was referred by the Respondent. In that case the company in question was found not to be an eligible business for reasons including, inter alia, that the renting of the properties was not shown to have involved any Australian employees.
30. I therefore find that Great Pacific Real Estate was at the relevant time, an eligible business.
Was Mr Li a senior manager on a day-to-day basis?
31. Mr Li is the managing director of the company. There was documentary evidence of several very brief faxes between Mr Li and his daughter and employee, Xie Li in which she addressed him formally as ‘Mr Li’, asking for simple instructions on minutiae: eg rent, renewal, upgrade of the water system.
32. Mr Li told the Department in the statement dated 8 January 2008 that he had a manager, Mr Wu of Mellow Properties and that Mr Wu reported ‘the daily management’ of the arcade on a regular basis. Mr Li was to approve the ‘condition, term and renewal of each leasing contract’. I do not think such renewals would be likely to come up with any frequency.
33. I am unable to accept that Mr Li was actively participating in the management of this business at a senior level on a day-to-day basis. I consider the nature of the business to be such that there was little management essentially required.
Great Pacific International Holding Pty Ltd ("International Holding")
Was International Holding an eligible business?
34. On 11 December 2006 International Holding was registered by the Australian Securities and Investments Commission and Mr Li was appointed director. Mr Li is one of 3 directors, the others being his wife, Guiping Li and his daughter, Li Li. He owns 70% of the shares and his wife, and daughter Li Li own the balance. In the detailed balance sheet in that document by 30 June 2007 the loan provided by Mr Li was $38,691, and increased significantly the following year. I find that Mr Li had at the relevant time, a substantial interest in International Holding.
35. In the 24 Month Survey dated 5 January 2007 Mr Li's migration agent noted Mr Li's intention to acquire a winery and export red wine. Mr Drayton gave evidence that he had first met Mr Li in February 2007 when he visited his family’s winery in the Hunter Valley. On 2 March 2007 International Holding entered an Agreement of Purchase with Drayton’s for wine to the value of $65,196. On 10 March 2007 International Holding entered into a contract with a Beijing company, Ji Hong Yong Tai Trade Co Ltd (which is owned by Mr Li’s wife) for the sale of wine to the value of $75,306.
36. The Drayton’s wine, under a label designed by or for Mr Li, was shipped to Beijing on 14 April 2007 and two further containers were shipped in August 2007. Mr Li said the main end user of the wine is the (Chinese) Army. He gave evidence that he while he sells to a number of suppliers in China, the majority of his wine sales are through his wife’s company, and that that company on-sold the wine. The reason for the on-sell to the Army, which I accept, was that the Army is not allowed to contract with a foreign company.
37. Mr Li had initially negotiated with Mr Trevor Drayton about wine sales, but after his tragic death in an accident at the winery in early 2008 negotiations for further exports resumed with Mr John Drayton. Trevor Drayton had also been president of the local winery association and the discussions extended to investment in the region beyond wine purchase.
38. On 19 June 2007 Mr Li provided to the Department a minute of a meeting held on 25 April 2007 between Mr Li described as President of Youlong (sic) Group and Mr Osbourne, Commercial Counsellor of Australian Embassy in Beijing (amongst others). There Mr Li noted his interest in the wine industry ‘to promote Australian wine in China for the benefit of boosting tourism between China and Australia’. I note too that Mr Li’s company Yulong Eastern Investment Management Co Ltd (‘Yulong’) owns a ‘wine resort’ in Miyun province.
39. In his statement to the Department Mr Li wrote of his investigation of the Tasmanian wine industry between 2000 and 2005.
40. I do not accept the Respondent’s submission that the manner of the wine exports and the quantity of the exports does not indicate a clear intention to engage in a profit-making exercise on an ongoing basis. I accept that, by the relevant date, International Holding was an eligible business, on the basis of its exports of Australian wine: s 134(10)(c). Further, the company, through its sales in China, also had developed business links with international markets: s 134(10)(a).
41. Later, after the relevant period, two containers were shipped to China in June 2008 and in October 2008. With the earlier shipments, these totalled $345,840. In February 2009 five more contracts (totalling $292,320) were signed. In March 2008 Xue Li, on Mr Li’s behalf, made enquiries of Pulpit Rock Estate in WA about wines for export.
Was Mr Li a senior manager on a day-to-day basis?
42. Mr Drayton said that Mr Li had visited his winery a number of times since February 2007 and that he would email or telephone Mr Li ‘through’ Xue Li or Li Li. As early as August 2007 Mr Drayton wrote that Mr Li had visited the winery on several occasions and had assisted in label design and he conducted the negotiations for the ongoing purchase of wine. Subsequently Mr Li signed all of the (later) agreements for wine exports. Mr Drayton was in no doubt that Mr Li, and no one else, makes decisions for International Holding and I accept that Mr Li is ‘the boss’ of International Holding. I also accept, as Mr Drayton observed, because Mr Li speaks very little English, he needed assistance from English-speaking staff.
43. However, that Mr Li alone was making decisions for the company does not indicate the active participation on a day-to-day basis that the legislation requires. The business of wine exporting did not, during the relevant period, entail ongoing day-to-day activity by Mr Li. Once the wine source was selected, agreements entered and the export arranged, the sales and distribution then occurred at the ‘China end’. On the available evidence, none of this would, in my view, have required day to day input by Mr Li. He did not, during the relevant period, on his evidence, continue looking for other suppliers as well as Drayton’s. Nor was there evidence of ongoing high level of communications with his daughter; it was not a business venture that required day to day input by him.
Aviation business: Arena International Aviation College Pty Ltd ("Arena")
Was Arena an eligible business?
44. The evidence was that on 13 October 2006 Mr Li's Chinese company, Yulong entered into an agreement with a Brisbane based company, Arena Aviation Pty Ltd (‘Arena Aviation’), to ‘facilitate Chinese airline cadets’ traineeship in Brisbane’. On 23 November 2006 Yulong and Arena Aviation agreed to create a joint venture company to be known as Arena International Aviation Group P/l, and on 30 November 2006 that company was registered. On 16 March 2007 Arena Aviation was granted a certificate from the Chinese government to verify its approval as an overseas pilot training institution. The company, however, was in financial difficulties.
45. On 16 March 2007 Arena was registered by the Australian Securities and Investments Commission. Mr Li’s owns 100 per cent of the company and he is the sole director.
46. The minute of the meeting held on 25 April 2007 between Mr Li and Mr Osbourne of the Australian Embassy in Beijing noted that Mr Li had been ’asked by the Civil Aviation Administration of China’ to investigate ‘the mechanism of general aviation management and development in Australia‘. Mr Li was reported as having ‘established the business relationship’ with Arena Aviation College in Queensland and had commenced negotiations with ‘another aviation school’. This was substantiated by material provided by Mr Li.
47. In July 2007, well before the delegate’s decision, Mr Li, on behalf of Arena commenced detailed discussions and negotiations with another potential joint venture partner: CoastJet Pty Ltd (“CoastJet”) of Port Macquarie. There he met with Dr Guy Hingston, the owner of CoastJet, Mr Jamie Johnston, the operations manager (and owner before Dr Hingston) and Mr Kevin McMurtrie. Mr McMurtrie gave evidence that he first met Mr Li in July 2007 when Mr Li came to inspect the premises and facilities and to discuss a joint airline pilot training business venture between CoastJet and Arena. CoastJet could provide the training facilities; it had aircraft and a maintenance regime; it had training manuals; it had an established reputation as a trainer; it had all the necessary government licences and approvals. Arena was supplying the (Chinese) trainees.
48. At about the same time, the documents provided by Mr Li demonstrate he also had discussions with other aviation companies around NSW and elsewhere: Tasair, Tristar, Interair, Altara, and Basair.
49. By mid July 2007 there was a draft agreement between Arena and CoastJet. By 31 July 2007 there was a ‘letter of intent’ between Binzhou University and Arena whereby they would each be providing ‘joint training for flight students’.
50. Following July 2007 was a period of extensive communications between Mr Li and Dr Hingston and Mr McMurtrie on behalf of CoastJet. In August 2007 Dr Hingston wrote of the need for Mr Li to attend once every 1-2 months over the following 2 years ‘while we set up this new joint venture’.
51. By September 2007 Mr Li had met with the General Manager of Port Macquarie Hastings Council who then wrote of the council ‘keenly extending a helping hand to investors’. In December 2007 Air China wrote that it had been working with Arena in relation to education and training.
52. Subsequently and after the relevant date, on the evidence of Mr McMurtrie, from January 2008 he was exchanging emails with Mr Andrew Liang, Mr Li’s ‘aviation manager’, on a weekly basis. On 22 February 2008, an agreement was entered into between Arena and CoastJet and a joint venture company was formed: Arena CoastJet International Aviation College Pty Ltd. Mr Li owned 51% of the shares through his company, Arena but was not an office bearer in the company. Later, in August/September 2008 Mr McMurtrie visited Mr Li in China. Then, in January 2009, CoastJet went into voluntary administration. Mr Li has now purchased CoastJet and has developed a business plan for the resumption of the proposed training of Chinese pilots.
53. I do not accept the Respondent’s contention that, as at the relevant date, Mr Li's involvement with the aviation industry was on behalf of his Chinese company, Yulong, and not on account of his own company’s interests. While there was evidence that Mr Li/Yulong had been asked by the Chinese government to investigate aspects of the aviation business in Australia Mr Li had incorporated Arena and had proceeded in negotiation in that capacity. The representative for the Minister contended that Mr Li did not provide sufficient evidence such that I could be satisfied that Arena was an eligible business in Australia, there was no evidence that Arena had entered into negotiations or signed contracts for future business activity, beyond Mr Li’s preliminary enquiries, or had commenced or was close to commencing any business activities in Australia. In fact, there was ample evidence in my view that Mr Li, through Arena was well advanced in his intentions to establish a joint airline pilot training business venture. In July 2007, there were detailed discussions and negotiations, and a draft agreement with CoastJet and there had been discussions with other aviation companies. By the end of July 2007 Arena had reached agreement with Binzhou University which would supply the students. By September 2007 Mr Li’s investment was being welcomed, it seems, by Port Macquarie Hastings Council.
Was Mr Li a senior manager on a day-to-day basis?
54. I have no doubt that in respect of Arena Mr Li made all the major decisions about Arena; it was he who negotiated with Arena Aviation, CoastJet, Port Macquarie Hastings Council, and Binzhou university, all on behalf of his Australian company. Because of his limited English he was aided when in Australia by English-speaking staff, including his daughter, and Mr Liang, his ’aviation manager’.
55. However I am not satisfied that Mr Li was actively participating at a senior level in the day-to-day management of that business. Messrs Johnson, McMurtrie and Liang were the ones managing the operation on a day to day level.
56. Later, after the relevant date, according to Mr McMurtrie both he and Mr Johnson had known for some time that CoastJet was in severe financial difficulty, but this was apparently unknown to Mr Li. I note that I would find it unlikely that a senior manager who is actively participating at a senior level in the day-to-day management of his business would have had no idea that his company’s joint venture partner was in financial difficulties.
Was Mr Li utilising his skills in actively participating at a senior level in the day-to-day management of his Australian businesses?
57. While I have found that Mr Li was not utilising his skills in actively participating at a senior level in the day-to-day management of any one of his Australian businesses, it remains to be considered whether, when taken together, his participation in the businesses could amount to the requisite amount of attention.
58. Obviously, when, taken together, Mr Li’s input into the businesses of Great Pacific Real Estate, International Holding and Arena is greater than any one of the businesses alone. There are, however, some features that militate against a finding that the sum of Mr Li’s attention to those businesses suffices to attract the provisions.
59. I was referred to Re Huang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656 where Senior Member Muller said at [12]:
"Not only must the eligible business operate in Australia to comply with the Act, the visa holder must participate at a senior level in the day-to-day management of the Australian business in Australia, albeit with trips overseas from time to time". (my underlining)
Also, in Re Ng v Minister for Immigration and Multicultural Affairs [2003] AATA 299 Deputy President Wright QC commented at paragraph 12:
"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". (my underlining)
60. Notwithstanding modern technology and the frequent telephone and fax contact it remains that Mr Li spent very little time managing the businesses in Australia.
61. I acknowledge that the Tribunal in some cases e.g. Re Widjaja and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 380 and Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 394 has come to a different view about the need for the business involvement to occur in Australia. In preferring the Re Huang line of cases I have especially considered the reason for Mr Li’s prolonged absences from Australia, namely his extensive business interests in China.
62. Mr Li spent less than 130 days in Australia between September 2004 and the end of 2007. His absences were sometimes of some months duration, and he was absent for a whole year from November 2005. I accept though that during his attendances here he had a whirlwind of meetings and that he enthusiastically inspected and evaluated investment opportunities. His evidence was that while in Australia he works 30 hours per week in his three companies.
63. I consider that Mr Li’s significant periods spent outside of Australia do not fall within the acceptable levels of absence that the Tribunal contemplated in Re Huang where it was envisaged that overseas trips should occur from time to time but that the bulk of activity should occur in Australia.
64. Mr Li did not go overseas from “time to time”. He spent significantly more time in China than he did in Australia and presumably ran his extensive Chinese business there as chairman of Yulong, his Chinese company. Ms Xie, gave evidence that she had visited Mr Li’s company in China and that it was a huge establishment and that though Mr Li may have had management teams underneath him, he was certainly in charge. The Respondent submitted, and I agree, that there must be some doubt as to how Mr Li can maintain the requisite degree of senior management in all his Australian companies as well as his Chinese interests. He has done this, it appears to me, by delegating the senior management day to day role to various employees, or to family members.
65. I therefore find that Mr Li was not utilising his skills in actively participating at a senior level in the day-to-day management of his eligible businesses in Australia.
Has Mr Li made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of, an eligible business in Australia, and intends to continue to make such genuine efforts?
66. Subsection 134(3) sets out a non exhaustive list of matters to be considered in deciding if an Applicant has made a ‘genuine effort’:
(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).
67. The above matters have to be considered in the context of the meaning of the phrase "genuine efforts" as stated by the Tribunal in Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 at par 53:
We are of the view that the word “genuine” and the matters mentioned in s 134(3) show that there is a requirement of a level of effort beyond that which is purely superficial or token. Further, it is necessary that [the Applicant himself or] herself has made some real or “genuine effort”. We do not accept that s134(3) can be the basis for rejecting relevant efforts which are genuine, simply because they fall short of the examples given in s 134(3).
68. Also as stated by the Tribunal in Re Gunawan and Minister for Immigration and Multicultural Affairs (2006) 92 ALD 233 at par 46
"Genuine effort" is not defined so must be given its ordinary meaning within the context of the Act. The Oxford Dictionary of English defines "genuine" to mean "truly what something is said to be; authentic" and "effort" to mean "a vigorous or determined attempt”.
69. A range of Mr Li’s activities, by the relevant date, are significant in this regard:
·Mr Li had developed business proposals with Drayton’s, Arena and CoastJet. In his statement of 8 January 2008 Mr Li wrote that following his discussions with Trevor Drayton, he had decided to build an eco-park in the Hunter Valley. I note that he had the capacity to do so because he already had a huge wine resort in Miyun. His accountant and Mr Drayton also gave evidence as to Mr Li’s intentions, although Mr Drayton thought Mr Li was buying a vineyard from which Drayton’s would produce wine. In his statement of 8 January 2008 Mr Li also wrote of having secured wine sales of 50,000 bottles and, at that time, estimated orders of 100,000 bottles per annum and this was broadly consistent with Mr Drayton’s evidence.
·While it had been his Chinese company that had initially entered negotiations with Arena Aviation Pty Ltd he had incorporated his own company, Arena in March 2007 and it was that company that entered joint venture negotiations with CoastJet.
·Mr Li had undertaken extensive research into the wine industry, real estate development opportunities and the aviation training industry. On his evidence he spent at least two to three years seeking to develop his Chinese pilot training business in Australia. Mr Li wrote in his 8 January 2008 statement that he ‘and [his] team’ had travelled over 7000kms and spent dozens of hours flying between potential sites: pasturelands, farms, commercial properties, villas, residential properties and engaging in extensive market research. He had investigated sites in Sydney, Melbourne, Brisbane, Canberra, Perth, Wingecarribee, Hunter Valley and the Blue Mountains. Ms Xie’s evidence was that Mr Li had first been approached by Summit Equities, a financial advisory firm, in October 2008 and that the firm had ‘collected information’ about Hunter Valley vineyards and Alpine Meadows, a resort project in Jindabyne, as potential investment opportunities. This activity, of course, post-dates the relevant period.
·Mr Li transferred to Great Pacific Real Estate by way of loan account over $2 million as at 30 June 2007, according to his accountant. By the end of the following financial year it was over $4 million.
·Mr Li’s company has owned Regal Arcade since 2004, and he has been a part owner at least since 2000. Great Pacific had a turnover of over $300,000 in 2007 and over $400,000 in 2008. The value of the property originally was about $1 million but after his improvements he estimated that it is now probably worth $5 million.
·Mr Li’s association with airline training companies was well established by October 2006 when he was negotiating with Arena Aviation Pty Ltd.
·Mr Li’s association with Draytons dates back to February 2007.
70. On the other hand, Mr Li had, by the end of December 2007 only been present in Australia for about 130 days.
71. In Re Lau and Minister for Immigration and Multicultural Affairs (2002) 35 AAR 395, Senior Member Carstairs pointed out that management input at a senior level by an experienced business person will often be intangible. A business may be adequately run without necessarily requiring daily management by its senior officers: the input required will vary according to the business.
72. While Mr Li may be looking to expand his business into Australia, it is clear he is not looking to replace his business in China with the ones in Australia. However, I accept that his efforts to expand his business interests in Australia are indeed “vigorous and determined”: Re Leo and Minister for Immigration and Multicultural and Indigenous Affairs [2006} AATA 309. I accept that, when in Australia, Mr Li worked full time on considering ways to expand his Australian businesses, and that no senior management decision was taken in respect of those businesses other than by him. In all the circumstances the steps taken by Mr Li to own and manage an eligible business in the relevant period coupled with the evidence of his intention to continue that business into the future and particularly having regard to his long term vision and goals, meets, in my view, the criteria for "genuine effort".
Residual Discretion
73. 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 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 (Re Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304, paragraph 21).
74. The efforts of an applicant are to be something greater than "superficial or token": ReYam and Minister for Immigration and Multicultural Affairs [2004] AATA 283, and Re Badenhorst and Minister for Immigration and Multicultural Affairs [2006] AATA 742. Mr Li’s efforts are far from superficial or token. The Tribunal may to look to future intentions: Re Lau and Minister for Immigration and Multicultural Affairs (2002) 35 AAR 395; Re Harlim and Minister for Immigration and Multicultural Affairs [2002] AATA 767). Mr Li’s plans in expanding his Australian businesses are well advanced and ongoing.
75. Mr Li is a man of some business acumen. In addition to being a very successful businessman he holds a number of important positions in China eg Vice President of Beijing Water Source Conservation Foundation, the Executive Director of the China Australia Association of Promotion of Glorious Program, the Standing Vice-president of China Association of International Promotion of Medium & Small-sized Enterprises, the Executive Director of Council of Beijing Industrial & Commercial Enterprises Union.
76. As I have already observed he speaks almost no English. It is entirely understandable that he requires assistance in his negotiations. I accept that he may prefer to have trusted advisers or family fulfil this role. Similarly, I accept that his business interests in both China and Australia are many and varied. In those circumstances there is some lack of reality about expecting him to be ‘hands on’ in every aspect of those businesses. By necessity, he would have staff to assist him. One might contemplate whether so called ‘media moguls’ and other successful businessmen have anything other than a strategic overview of their empires.
77. Therefore, even if I had determined that Mr Li had not made the genuine efforts as required by s 134(2), I am of the view that the residuary discretion not to cancel his visa should be exercised so as to allow him more time to satisfy the requirements of the visa and the discretion should be exercised accordingly. I note that the power to cancel a visa is a continuing one (see Kim v Minister for Immigration and Multicultural Affairs [2004] FCA 31).
DECISION
78. The Tribunal sets aside the decision under review and directs that Mr Chunming Li’s business skills visa not be cancelled. The secondary visas of Guiping Li and Wei Li are also not to be cancelled.
I certify that the 78 preceding paragraphs are a true copy of the reasons for the decision herein of MS N ISENBERG, SENIOR MEMBER.
Signed: ...............[sgd].......................................
AssociateDates of Hearing: 2, 3 February 2009
16, 17, 28, 29 April 2009
Date of Decision: 3 July 2009
Representative for the Applicant: Mr I Rados, Chancellor & Rados
Solicitor for the Respondent: Ms A Linacre, Clayton Utz
Attachment
List of Exhibits
A1 Applicant’s Bundle of Documents (in two volumes) filed on 6 August 2008
A2 Three historical extracts
A3 Statement of Company (Mandarin with English Translation)
A4 Applicant’s Supplementary Documents filed on 14 April 2009
A5 Historical Extract for AV8 Brisbane Pty Ltd extracted on 17 April 2009 at 13:27A6Agreements of Purchase between Great Pacific International Holding Pty Ltd and Drayton & Sons Pty Ltd dated 11 February 2009 and numbered A200901 to A200905
A7 Historical Company Extract for Arena Coastjet International Aviation College Pty Ltd
R1 Extract from the ASIC National Names Index in relation to Arena Coastjet College and Arena Coastjet International Aviation College Pty Ltd plus extract from s 436A of the Corporations Act and a newspaper Article entitled “Coastjet Grounded”
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