Li and Minister for Immigration and Citizenship

[2008] AATA 729

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 729

ADMINISTRATIVE APPEALS TRIBUNAL      )         No.  2007/4965

)

GENERAL ADMINISTRATIVE DIVISION		)
Re		DECAI LI

Applicant

And MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal: G.D. Friedman, Senior Member

Date:20 August 2008

Place:Melbourne

Decision: The Tribunal sets aside the decision under review and the visa of the applicant is not cancelled.

(sgd) G.D. Friedman

Senior Member

MIGRATION ‑ business skills visa ‑ cancellation - eligible business - whether participation in senior management on day-to-day basis

Migration Act 1958 s 134(1), (2), (3), (10)

Hope v Bathurst City Council (1980) 144 CLR 1

Puzey v Commissioner of Taxation [2003] FCAFC 197

Re Hindrodjojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724

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

Re Russo and Minister for Immigration and Citizenship [2007] AATA 2054

REASONS FOR DECISION

20 August 2008           G.D. Friedman, Senior Member

1.        Decai Li is a citizen of the People’s Republic of China who was granted a subclass 127 Business Skills visa on 31 March 2004.  He and his family first arrived in Australia on 7 May 2004.  On 19 September 2007 the respondent’s delegate cancelled the visa on the grounds that Mr Li had not complied with the terms of the visa.

ISSUES

2.        The issues before the Tribunal are:

·Has Mr Li obtained a substantial ownership interest in an eligible business in Australia?

·Is Mr Li utilising his skills in actively participating at a senior level in the day-to-day management of the business?

·Does 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?

If the answer to any of these questions is no:

·Did Mr Li make a genuine effort to do so?

If the answer is no:

·Should the general discretion not to cancel the visa be exercised?

LEGISLATIVE FRAMEWORK

3. Section 134 of the Act Migration Act 1958 relevantly provides:

(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:

…

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.

…

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.

HAS MR LI OBTAINED A SUBSTANTIAL OWNERSHIP INTEREST IN AN ELIGIBLE BUSINESS IN AUSTRALIA?

4.        Mr Li told the Tribunal that he lives in Guangzhou, China and works full-time as the chairman of a cosmetics company.  He said that he applied for a business skills visa with the intention of relocating his family to Australia and setting up an import/export business.  Mr Li stated that he registered Shine Global Australia Pty Ltd on 5 September 2006 and is the sole director.  He owns 100 per cent of the ten shares.  He explained that he asked his daughter Lili Li, who is a full-time student in Melbourne, to investigate possible products to import or export.  As a result of that research he negotiated a distribution agreement in September 2006 for Shine Global to import toys from China.  However the manufacturer preferred to sell the toys through its own retailer, so Mr Li decided to pursue other opportunities.

5.        The second business opportunity involved exporting Australian grapes to Hong Kong.  He secured a contract worth $A31,824, but the products deteriorated during shipment and were unfit for consumption on arrival.

6.        Mr Li stated that his third business opportunity arose after he met a representative of Taste Master Pty Ltd, an Australian flavour and fragrance company, in China.  He subsequently negotiated a contract, signed on 11 September 2006, for Shine Global to export a range of fragrances to China for $A100,000 over 12 months.  On 22 September 2006 he negotiated a contract with a company in Hong Kong to export fragrances for $US100,000 over 12 months.

7.        In Hope v Bathurst City Council (1980) 144 CLR 1 the High Court held that carrying on a business denotes pursuing activities for the purpose of profit, undertaken on a continuous and repetitive basis. In Puzey v Commissioner of Taxation [2003] FCAFC 197 the Full Federal Court stated that a business requires some repetition of acts and something of a permanent character.

8. The respondent conceded that Shine Global is an eligible business. In view of Mr Li’s shareholding in the company the Tribunal finds that he has obtained a substantial ownership interest in an eligible business in Australia, so the visa may not be cancelled under s 134(1)(a) of the Act.

IS MR LI UTILISING HIS SKILLS IN ACTIVELY PARTICIPATING AT A SENIOR LEVEL IN THE DAY-TO-DAY MANGEMENT OF THE BUSINESS?

9.        Mr Li told the Tribunal that as the sole director and shareholder he is the only person who manages the business and makes decisions.  He said that he negotiates with buyers and suppliers and that contracts are sent to him in China for approval and signature.  Mr Li emphasised that although he has spent only 42 days in Australia up to the date of cancellation of his visa, he has day-to-day management of the business and controls the finances, budgeting, cash flow and expenditure.  He liaises with his accountant in Melbourne and gives instructions about the preparation of Business Activity Statements, financial reports, company tax returns and annual returns.  He has responsibility for compliance with taxation legislation.

10.      Mr Li stated that he is able to manage the business from China, and when he is not in Australia he communicates regularly with his daughter by webcam which enables him to see and speak to his daughter using internet technology.  He said that he does not keep written records of his conversations or business dealings, as business in China is carried out traditionally in person or by telephone.  He stated that he does not speak English and does not use electronic mail, and that he instructs his daughter, because of her knowledge of English, to pay accounts, deliver documents to his accountant and assist where necessary.  He said that she has no business skills and is a full-time student.

11.      Ms Li told the Tribunal that she has been living in Australia since September 2006 after completing her secondary schooling in China, and is in the second year of a business administration course at Swinburne TAFE.  She confirmed that she communicates with her father regularly about the business and follows his instructions such as researching customs requirements using the internet, delivering documents and arranging funds transfers.  Ms Li said that she has no business experience and has no decision-making role in the business.

12.      Mr Dong Li, Director, China Market Development, Taste Master Pty Ltd, told the Tribunal that he is based in China and that Mr Li contacted him in 2005 about the possible purchase of the Australian company’s fragrance products by Shine Global for export to China.  As a consequence a number of export shipments have occurred each year since 2006.  He said that Mr Li handles negotiations on behalf of Shine Global and makes all the decisions about arranging shipments and payments.  Mr Dong Li confirmed that business in China is carried out principally in person and by telephone.

13.      Ms Sue Gui Zhi Shi told the Tribunal that she has been the accountant for Shine Global since 2006, and that Mr Li, as the sole director and shareholder, has been responsible for the day-to-day operation of the business.  She said that she discusses the taxation and financial affairs of the business directly with Mr Li in person or by telephone, and he makes the decisions and gives her relevant instructions on the range of issues affecting the company, including allocation of resources and operating costs.  Ms Shi said that the only role played by Ms Li is to deliver business documents from Mr Li or to arrange telephone contact with Mr Li.

14.      In Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703 the Tribunal stated at [32-33]:

32. Section 134(1)(b) requires that the visa holder be utilising his or her skills actively, participating at a senior level in day‑to‑day management of that business.  In using the term that business the legislation directs the decision‑maker to consider the nature of the actual business undertaken.  The term day–to‑day should be given its ordinary meaning.  It is defined in the Shorter Oxford English Dictionary on Historical Principles as continuous(ly), routine(ly).  The Macquarie Dictionary defines it as ordinary, happening every day.  Consistent with these meanings, it is not a requirement that a visa holder establish a certain number of days that he or she undertakes the activity of business in order to show that he or she is involved in its day‑to‑day management.  The meaning is consistent with the need to show that a business is in existence, namely continuity and regular activity.

33.      …While some of the activities undertaken by the applicant might be viewed as unsophisticated, there is nothing to suggest that they were inappropriate for the nature of the proposed business.  The activities relied on the applicant’s considerable experience directly in this field in the Asian market and on his business acumen.  There may not be extensive notes, or records of activity occurring every day.  As Ms McKenzie submitted, the diary notes showed only entries 30 days.  However, the use of the term day-to-day management does not require that that activity be recorded every day, and the input at a senior level by someone of the experience of the applicant will often be intangible.

15.      In Re Hindrodjojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724 the Tribunal stated at [36-37]:

36.      Because of the limited amount of time that Mr Hindrodjojo spent in Australia prior to the cancellation of his visa, there was considerable discussion at the hearing as to whether or not the Act required the involvement in the day to day management of the business to actually occur in Australia.  In Re Jo and Minister for Immigration and Multicultural Affairs [2004] AATA 77 at [35] I said that modern means of travel and communication permit a business to be managed and strategically directed from almost anywhere in the world and that the emphasis in section 134(1)(b) is on senior management rather than day to day administrative tasks under the direction of a senior manager. I agreed with the comments of Member Carstairs in Re Lau v 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.

37.      I agree also with the comments of Senior Member Dwyer and Member McLean in Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 at [95] 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.

16.      In Re Russo and Minister for Immigration and Citizenship [2007] AATA 2054 the Tribunal stated at [133]:

133. It also appears to the Tribunal that 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 on day-to-day matters on the business. 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…

17.      The Tribunal finds that Shine Global is a small business that does not require a sophisticated structure or complex management on a daily basis.  The Tribunal accepts the evidence from Mr Li and Ms Li that that Mr Li makes all the decisions about the business, and that Ms Li assists by carrying out his instructions and performing administrative tasks such as the delivery of documents, payment of accounts and occasional research.  With internet and telephone technology, and the presence in Australia of Ms Li to implement decisions, the business is operated successfully by Mr Li from his home in China, supplemented by visits to Australia where he consults his supplier and his accountant.  The Tribunal also accepts the evidence from Mr Li and Mr Dong Li that business of this nature in China is conducted traditionally by telephone or in person, so that the absence of written records of conversations with suppliers or customers is not unreasonable or unexpected.

18. Having accepted that Shine Global is an eligible business that is ongoing at the date of cancellation and is managed solely by Mr Li, the Tribunal is satisfied that Mr Li is an experienced and successful businessperson who is utilising his skills in actively participating at a senior level in the day-to-day management of that eligible business. Therefore the visa may not be cancelled under s 134(1)(b) of the Act.

DOES 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?

19.      Mr Li told the Tribunal that he intends to continue to develop the business and is seeking new opportunities.

20. In view of its findings in relation to s 134(1)(a) and (b) of the Act, and Mr Li’s evidence regarding his intentions, the Tribunal is satisfied that he intends 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. Therefore the visa may not be cancelled under s 134(1)(c) of the Act.

CONCLUSION

21. Because of its findings in relation to s 134(1)(a), (b) and (c) of the Act, the Tribunal finds that the discretion to cancel the visa held by Mr Li does not arise, and there is no need to consider whether he has made a genuine effort or whether the general discretion not to cancel the visa should be exercised.

DECISION

22.      The Tribunal sets aside the decision under review and the visa of the applicant is not cancelled.

I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Senior Member

(sgd) Mara Putnis

Associate

Dates of hearing:  14 August 2008
Date of decision:  20 August 2008
Counsel for the applicant:            Mr G. Gilbert
Solicitor for the applicant:           Chua Tan & Associates
Advocate for the respondent:      Ms T. van Duyn

Solicitor for the respondent:        Clayton Utz