Lioe and Minister for Immigration and Multicultural Affairs

[2006] AATA 189

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 189

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     No  N2005/822

GENERAL ADMINISTRATIVE DIVISION )

Re koeang hoat lioe

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal Ms G. Ettinger, Senior Member

Date24 February 2006

PlaceSydney

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   N2005/822

GENERAL ADMINISTRATIVE DIVISION		)
Re		KOEANG HOAT LIOE

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal Ms G. Ettinger, Senior Member

Date24 February 2006 

PlaceSydney

Decision For the reasons given orally, the decision under review is affirmed.

[SGD] Ms G. Ettinger
  Senior Member

CATCHWORDS

IMMIGRATION – cancellation of business visa – Applicant has substantial ownership interest – no eligible business – no participation in day-to-day management of business in Australia – no genuine efforts – residual discretion not exercised in Applicant’s favour – decision affirmed       

Migration Act 1958 – sections 134, 134

Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31
Re Drake (No 2) v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 634
Freeman v Department of Social Security (1988) 19 FCR 342
Nong v Minister for Immigration and Multicultural Affairs (2000) 106 FCR 257
Purnama v Minister for Immigration and Multicultural Affairs  [2002] AATA 237
Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997
Re Lau v Minister for Immigration and Multicultural Affairs [2002] AATA 703
Re Chen v Ors v Minister for Immigration, Multicultural and Indigenous Affairs, [2002] AATA 628
Re Griffiths v Migration Agents Registration Authority  [2001] AATA 240
Hope v Bathurst City Council (1980) 144 CLR 1
Re Huang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656
Re Suryaty and Ors v Ministerfor Immigration and Multicultural and Indigenous Affairs, [2003] AATA 581
Re Widjaja v Minister for Immigration and Multicultural and Indigenous Affairs [2003], AATA 380

REASONS FOR DECISION

Ms G. Ettinger, Senior Member

1. At the conclusion of the hearing of the above matter the terms of the decision and the reasons for that decision were stated orally. Following the delivery of the decision, the Respondent, pursuant to subsection 43(2A) of the Administrative Appeals Tribunal Act 1975, requested the Tribunal to furnish to the Respondent a statement in writing of the reasons of the Tribunal for its decision.

2.      The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service. Although the oral reasons given may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.

3.        The said transcript is annexed hereunto and furnished to the Applicant and to the Respondent as the reasons for the Tribunal's decision.

I certify that the preceding pages are a true copy of the decision and reasons for decision herein of Ms G. Ettinger, Senior Member.

Signed:         A. Garcia
          ..................................................................................………………………

Associate

Date of Hearing  20 and 21 February 2006

Date of Decision  24 February 2006

Counsel for the Applicant  Mr L. Karp

Representative of the Respondent           Ms T. Quinn

O/N 23438

JUDGMENT  [4.05pm]

ADMINISTRATIVE APPEALS TRIBUNAL
Matter No N2005/882

By MS G. ETTINGER, Senior Member
KOEANG HOAT LIOE and MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

SYDNEY, FRIDAY 24 FEBRUARY 2006

MS ETTINGER:   This is an oral decision in the matter of  Koeang Hoat Lioe and the Minister for Immigration and Multicultural and Indigenous Affairs.  I have to say it is quite long and parts of are repetitive because I have actually been through all the indicia, and I think that is very important.

BACKGROUND

As far as background goes, Mr Hoat Lioe is a businessman in Indonesia.  He told me that his business consists of supplying clothing to the police force.

According to his application form dated October 1998, made in connection with his application for a business skills visa, subclass 127, Mr Lioe described the nature of his business in Indonesia as expedition.  I asked what exactly was meant by that and was told that he supplied goods to Government authorities, the police in particular.

Mr Lioe said that he visited Australia before his business visa was granted, and said that he found that it was a good country with good weather and good living conditions, and considered that his children would find the right to freedom of expression here. He was granted a business visa on 2 March 2002 which was cancelled on 1 June 2005, pursuant to section 134(1) of the Migration Act 1958.

Mr Lioe's wife, Mrs Lili Suriati Tanzil and his two children, Mr Leonard Caesar aged 22, and Ms Laurencia aged 18, (they are their present ages), received visas consequential upon the grant of a visa to Mr Lioe. Equally, on cancellation of Mr Lioe's visa, the family members have had theirs cancelled. Each family member appealed separately to the Tribunal, but after the first day of hearing, Mr Karp, counsel representing the family, told me that Mrs Lili, Mr Leonard Caesar and Ms Laurencia were not proceeding with their appeals on grounds of extreme hardship pursuant to section 134(5) of the Act.

Both Mr Lioe and Mrs Lili gave evidence before the Tribunal.  There were no issues of credit, and I accepted that they gave their evidence quite openly and truthfully.  Mr Thiam Hok Lee interpreted for both witnesses and assisted the Tribunal very proficiently in that regard. 

I am mindful Mr Lioe was aware of his obligations in relation to the business visa.  He detailed difficulties he had commencing business in Australia due to language problems and lack of local knowledge. He also commented on difficulties in Indonesia due to established agencies,  for example, for certain food supplements, difficulties relating to the attitude of importers there, middle men and difficulties relating to currency issues. 

It was not disputed, and I accepted that the applicant was present in Australia for only approximately 113 days from the date of entry into Australia to the date of cancellation of his visa on 1 June 2005.

From the evidence before me, I formed the view that Mrs Lili, who is an experienced banker, and managed a branch of a bank in Indonesia, has been running whatever business has been conducted on behalf of Mr Lioe in Australia.  He deferred to her local knowledge even to the extent that he did not know in what area the restaurant was which they had investigated, but added that ultimately he made the final decisions as regards business.

He said that he spent approximately two hours a week on his Australian affairs, and 20 on his business in Indonesia, although he said he had to be available and contactable by phone at other times.  Mr Lioe's attempts at business in Australia have included inquiries regarding taking over a Gloria Jean Coffee Shop, which he was ultimately advised not to proceed with, he said, and a restaurant.  Mr Lioe exported approximately 10 to 12 shipments of fruit and vegetables to Indonesia.  He said problems had arisen because the marketplace in Indonesia, which was controlled by four big men, of whom he could only deal with one.  He also said he had no cold storage facilities and agreed, when I asked him, that if he had been serious about the business he would have installed suitable cold storage equipment in Indonesia. 

Mr Lioe’s other attempts at business were approximately seven exports of what he called food supplements, which were Blackmores products, Caltrase, a calcium supplement, and fish oil purchased from a pharmacy in Perth.  He carried them with him to Indonesia and on-sold them through a number of his friends or contacts. 

Mr Lioe also said that he thought real estate development was probably what he would concentrate on if his visa was restored.  He has bought a house a few doors down from his residence in Perth, which he knows can be redeveloped into four to six dwellings.  His wife has commissioned certain drawings, but no permission has yet been sought or obtained from the local authorities.  The development has been in abeyance, he said, due to the uncertainty regarding the visa.  I moved then to consider the issues before me.

ISSUES BEFORE THE TRIBUNAL

The issue to be decided was whether I should, based on all the evidence before me, affirm, vary or set aside the decision of the respondent to cancel Mr Lioe's business skills visa. 

In deciding this issue I had to consider whether I was satisfied that Mr Lioe:

·     had, at the relevant time of the cancellation of the visa on 1 June 2005, not obtained a “substantial ownership interest” in an “eligible business” in Australia or;

·     was not utilising his skills in actively participating at a senior level in the day to day management of that business; or

·     did not intend 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.

In doing so I noted that the Minister, and the Tribunal standing in her shoes, must not cancel Mr Lioe's business skills visa under section 134(1) of the Migration Act 1958 if satisfied that he:

·     has made a genuine effort to obtain a “substantial ownership interest” in an “eligible business” in Australia; and

·     has made a genuine effort to utilise his skills in actively participating at a senior level in the day to day management of that business; and

·     intends to continue to make such genuine efforts.

I am also mindful of the residual discretion which I must, as appropriate, consider pursuant to the decision of Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31.

I have noted above that Mr Lioe's family members, who hold secondary visas pursuant to his business skills visa, withdrew their applications for review on the second day of hearing.  These were, of course, cancelled as a consequence of the cancellation of Mr Lioe's visa.

Now, to proceed to the legislation.

RELEVANT LEGISLATION

Pursuant to section 134(1) of the Migration Act 1958, the respondent has the discretion to cancel a business visa in certain circumstances. I will not read out the whole section of the Act. Section 134(2) of the Act states that the Minister must not cancel a business visa under certain circumstances. That section is also available, and I will not read it out. Section 134(10) sets out the meaning of “eligible business”, and is considered in detail further on in these reasons for decision.

The power to cancel a visa is subject to section 135 which provides for notice to be given to the visa holder, and section 137 of the Act which authorises the respondent to request the holder of a business skills visa to provide certain information. The Tribunal's jurisdiction to review the respondent’s decisions under section 134(1) or 134(4) derives from section 136.

I have also noted that there are guidelines promulgated to assist decision-makers in considering the tests in the legislation and that they are available in relation to considerations under section 134 of this Act. Whilst they do not have a force of law, they are of assistance, and may be used as a guide unless there is some contrary intention expressed in the legislation, and that is pursuant to Re Drake (No 2) v  Minister for Immigration and Ethnic Affairs (1979) 2 ALD 634. I have not found any such contrary intention in the present legislation, and have found the guidelines of assistance in my assessment of Mr Lioe's application.

Now, there is relevant case law in consideration of the application of section 134 of the Act.

RELEVANT CASE LAW

I was mindful that cases which are relevant to the decision making process follow, there is Freeman v Department of Social Security (1988) 19 FCR 342,   Nong v Minister for Immigration and Multicultural Affairs (2000) 106 FCR 257, and a line of Tribunal cases which have followed the above authorities supporting the proposition that the Tribunal is limited to events at the date of the primary decision in cases of review of decisions cancelling business skills, visas pursuant to section 134 of the Act. There is also Purnama v Minister for Immigration and Multicultural Affairs [2002] AATA 237. I have noted also that in Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997, the Tribunal stated:

“…The ordinary principles of administrative review apply.  It is the function of this Tribunal to deal with the question, having regard to the evidence put before it at the time and having regard to all the facts and circumstances that have occurred up until the date of hearing”.

I am mindful also, that future intentions can be taken into account when considering the business skills visa, and that this was canvassed in Re Lau v Minister for Immigration and Multicultural Affairs [2002] AATA 703 where the Tribunal stated that it is entitled to look at activities and transactions after the date of cancellation of the visa, if it would assist the determination of whether or not the decision to cancel is the correct or preferable one. That is, of course, the case here. There is also Re Chen v Ors v Minister for Immigration, Multicultural and Indigenous Affairs, [2002] AATA 628 and Re Griffiths v Migration Agents Registration Authority [2001] AATA 240. It was said in Re Griffiths at paragraph 41:

“Whether concerned with an entitlement decision or a cancellation decision and in the absence of any legislative direction to the contrary, the evidence upon which the relevant facts rest is that before the Tribunal.  Insofar as it is pertinent to the facts to be found, the evidence is not limited to that either known to the decision maker or in existence at the time that the decision on the review was made.”

There is also Kim (supra), as mentioned above, in which her Honour, Kiefel J, discussed the residual discretion available to the Minister, and therefore the Tribunal standing in her shoes, stating relevantly:

“It remains to consider whether the Tribunal took account of the fact that there remained a choice as to cancellation even if the Minister was satisfied about the matters listed in subsection (2).  It seems to me tolerably clear from paragraphs [13] and [15] of the reasons that the Tribunal considered that if the Minister was so satisfied, cancellation followed. In my view, it fell into error in construing the section in that way.  The subsection operates only as a prohibition upon cancellation in the circumstances there mentioned.  The Tribunal followed the same course as the Minister's delegate had done.  The decision to cancel was seen to take only upon a consideration of the matter referred to in subsection (2).  No consideration was given by the delegate to the question whether there was nevertheless a discretion not to cancel the visa.”

Pursuant to section 134(1) of the Act then, the Tribunal has a discretion to cancel the applicant's visa if the applicant has not obtained a “substantial ownership interest” in an “eligible business” in Australia or does not intend to continue to hold a substantial ownership interest, but must not cancel the visa if the person has made a genuine effort to obtain a substantial ownership interest of such kind. 

The Tribunal also has a discretion to cancel the visa if the person has not been utilising his or her skills in actively participating at a “senior level in the day to day management” of the eligible business, or does not intend to continue doing so.  However, the Tribunal must not cancel the visa if the person has made a genuine effort, or intends to make a genuine effort to utilise his or her skills in actively participating at a senior level in management of that business.  (sections 134(2)(b) and (c) of the Act).

Clearly the legislation contemplates in section 134 that consideration be given to a person's intention. This suggests that while it is true that the exercise of the discretion at the time of cancellation of the visa is the focus, in order to properly address the matters raised in section 134, it may be relevant to address matters that go to occurrences after the date of cancellation. To confirm or deny the correctness of views relevantly to be formed under those sections, and further to consider the residual discretion as discussed in Kim (supra).

In this matter I move then to consider the applications of section 134(1) and 134(10) of the Act in relation to Mr Lioe.

CONSIDERATIONS RELATING TO SECTIONS 134(1) and 134(10) OF THE ACT

Section 134(1) of the Act requires that a visa holder have a substantial ownership interest, and be engaged at a senior level on a day to day basis in the management of an eligible business. Cases such as Hope v Bathurst City Council (1980) 144 CLR 1, which deal with the meaning to be given to the term "business" apply to the interpretation of this term in the Act.  The application of this case to Mr Lioe's situation was raised by Mr Karp. 

Hope’s case is authority for the point that carrying on a business denotes activities for the purpose of profit, undertaken on a continuous and repetitive basis which may be revealed by inspecting financial records, examining who the clients are, and a consideration of whether the activities are genuine and real.  Hope's case is also authority for the proposition that a business may be “carried on” though it is done in a small way as Mr Karp agreed occurred in relation to Mr Lioe.

The Department's policy manual sets out that the question of whether business is an eligible business relates to the achievement of stated objectives in the legislation set out at section 134(10) through business activities. It does not directly relate to the size or scale of the business. It says there:

“The business may be small.  It is sufficient for the business to demonstrate that its activities have achieved one of the stated objectives.”

That is from the Migration Series Instructions 133:  Visa Cancellation under sub-division G - Cancellation of Business Visas, paragraph 4.3.3. 

The threshold question then is whether Mr Lioe had a “substantial ownership interest” in an “eligible business” at the relevant time.  The term "eligible business" is defined in section 134(10) of the Act, and there are five subsections (a) to (f) which I will discuss a little later.

But before considering the specific indicia, I have reviewed the evidence before me, including that of Mr Lioe and Mrs Lili in regard to his claim that he has set up an eligible business in Australia.  Both Mr Lioe and Mrs Lili told me they had investigated business ventures in Australia, in particular looking into a Gloria Jean Coffee Franchise, a restaurant, and Mr Lioe also spoke of exporting second-hand trucks or fork-lifts.  However, he said that all he could find in Perth were small fork-lifts which would not be suitable for his Indonesian purposes, so he abandoned that idea.  It was recommended to them not to go ahead with Gloria Jean, they said, and after investigating the restaurant by going there several times, although he was not actually familiar with the location, saying only that it was a little way out of the city, Mr Lioe said that he thought it would not be a good proposition. 

Now, as to other business, I was mindful that Three Golden Star Pty Ltd was incorporated on 28 April 2003 with Mr Lioe, and Mr Husen Djaya, as directors. Mr Lioe and Mr Husen Djaya each held 50 per cent of the shares.  The company was to export fruit and vegetables.  Later there was another director, Mr Hakim, and Mr Lioe told me that he had had trouble with his fellow directors as they were not agreed upon what size of orders to take and shipments to make.  In addition, Mr Lioe who was based in Indonesia, found that of the “four big men” he described, he could only deal with one. He described market problems and currency exchange problems.

Eventually, Mr Husen and Mr Hakim, whose Australian visas had been cancelled or were in the process of review, resigned their directorships.  There were 10 to 12 shipments of fruit and vegetables from Perth to Indonesia between early 2003 and mid 2004.  It was agreed that this was not a successful venture.  As to detail, I noted that the fruit and vegetables were sourced by Mrs Lili in Australia and shipped according to orders which Mr Lioe obtained in Indonesia.  I did not accept Ms Quinn's submission for the respondent that the main work in the fruit and vegetable export was done by the purchaser.

I then considered substantial ownership, and was satisfied that Mr Lioe had a substantial ownership in Three Golden Star Pty Ltd, but I was not satisfied that the business he conducted in exporting fruit and vegetables could qualify as an eligible business under the Act because while the size or volume is not the determining factor, it lacked the relevant indicia of being carried on on a continuous and repetitive basis for profit. 

Mr Lioe also said that he exported what he called food supplements which consisted of fish oil, Blackmores products and Caltrase, a calcium supplement by taking some amounts home with him approximately seven times when he travelled from Perth to Indonesia. He had purchased them from a pharmacy in Perth and supplied them to a retailer for on-sale.  He said that he understood he would have problems selling large quantities because Blackmores already have an agency in Indonesia.  I find that those transactions would not qualify as an eligible business because they do not meet the relevant indicia. 

Mr Lioe also registered Leonard Lauren Pty Ltd on 21 April 2005.
He and his wife hold the shares in equal amounts in that company.  Their evidence was that the company purchased real property close to the family home as an investment, and for development purposes.  Both Mr Lioe and Mrs Lili said they had been interested in real estate development since 2001, but had been unable to purchase this property due to the unwillingness of the vendor to sell until June 2005. That was of course well after February 2005 when Mr Lioe was notified of the impending cancellation of his visa.  I was satisfied from the evidence that Mrs Lili made the relevant inquiries, inquired of Council whether the property could be subdivided, the reply being in a letter of August 2005 addressed to her, and also that she commissioned a feasibility study and plans.  Mr Lioe did not appear to know much about any of those activities, although his wife said that she discussed them with him.  He said, ultimate decisions were made by him, and other decisions by Mrs Lili. 

I was satisfied from the evidence that matters were discussed and decisions made jointly in some cases, as one would expect in a family business.  Mr Lioe also said he spent approximately 20 hours a week on his business in Indonesia, although he had to be available on the telephone at other times, and spent two hours a week on the telephone in relation to his Australian business.

Mr Lioe said that the plans to subdivide and develop the property which was purchased in 2005 have been put in abeyance, due to the cancellation of the business visa, and suggested he may not go ahead, and may have to sell the property if his visa is cancelled. 

Mr Lioe was able to point to transfers of approximately $1.6 to Australia in the relevant three years.  Income tax returns were tendered, and were before me as Exhibit A6.  I do not give any particular weight to the fact the figures do not exactly match those in the accountant's statements.  The evidence was however, that only certain of those funds were used in the business as they included funds for the purchase of the family home, school fees and other expenses incurred.  Accordingly, whilst I was satisfied that Mr Lioe and Mrs Lili are the directors of both companies they registered in Australia, and Mr Lioe has a substantial interest, I could not be satisfied that that ownership was in an eligible business.

However, to actually make the correct or preferable decision, I first gave detailed consideration to the indicia in section 134(10)(a) to (f) of the Act, in the section which follows.

FURTHER CONSIDERATION OF WHETHER MR LIOE'S BUSINESS ACTIVITIES CAN BE CONSIDERED AN “ELIGIBLE BUSINESS” 

That was really the threshold issue, and in order to be fair, I have had to go through each of the subsections of section 134(10)(a) – (f) of the definition of "eligible business".  I have considered the business ventures Mr Lioe has investigated or entered into in Australia from the time of his grant of the business visa in 2002.

THE DEVELOPMENT OF BUSINESS LINKS WITH THE INTERNATIONAL MARKET

Mr Lioe’s very perfunctory investigations into the possibilities of entering into a Gloria Jean franchise, taking over a restaurant and exporting second-hand trucks or fork-lifts did not proceed. 

As to Mr Lioe's other activities, I found from the undisputed evidence before me that the Three Golden Star Pty Ltd sales of fruits and vegetables and food supplements such as vitamins, consist of exports of very small volumes, the latter carried to Indonesia by Mr Lioe on departure from Australia.  Notwithstanding the incorporation of both those companies, neither has proceeded to do business to any extent, or develop business links with the international market.  In saying that I am mindful that the size of transactions and profitability are not deciding factors although, of course, they can be taken into account. 

The only other activity is the property development activity in relation to the Perth property, and that has not commenced, and would, in any case, lead to employment of local labour rather than forging international links. 

Accordingly, I am satisfied that Mr Lioe cannot be held to have developed business links with any market in regard to his proposed area of business. Therefore, his activities in Australia did not satisfy the criteria in section 134(10)(a) of the definition of "eligible business" in the Act, being the development of business links with the international market.

THE CREATION OR MAINTENANCE OF EMPLOYMENT IN AUSTRALIA

I moved then to consider whether Mr Lioe, had a role a claimed, in the creation or maintenance of employment in Australia.  The evidence which I accepted, was that Mr Lioe purchased a residence for the family shortly after his arrival in Australia.  His wife and children, who are students, live there, and his wife, operating from the family home, has done some research, and based on orders from Mr Lioe in Indonesia, arranged approximately 10 to 12 exports of fruit and vegetables.  There have been no employees in the past, and there are none now, although I noted that Mr Lioe has had advice and services rendered by an accountant. He referred to employing architects and builders in the future in connection with the development of the investment property. 

I found from the above evidence that the criterion, the creation, or maintenance of employment in Australia as anticipated in section 134(10)(b) of the definition of "eligible business" in the Act has not been met by Mr Lioe.

EXPORT OF AUSTRALIAN GOODS OR SERVICES

I next considered in the context of "eligible business" whether Mr Lioe was involved in the export of Australian goods or services.

I have already commented upon the fruit and vegetable and the food supplement exports above.  I have already held that Mr Lioe's activities in that regard do not qualify as a business pursuant to the tests in Hope v Bathurst City Council, as the activity was not undertaken on a continuous or repetitive basis. Accordingly, I could not be satisfied that Mr Lioe was exporting Australian goods or services in satisfaction of section 134(10)(c) of the definition of "eligible business" in the Act.

FURTHER SUBSECTIONS

As to the further subsections, I did not consider either subsection 134(10)(d) or subsection (e) of the definition of "eligible business" in the Act relevant in this case, and have not considered them further. 

INCREASING COMMERCIAL ACTIVITY AND COMPETITIVENESS WITHIN SECTORS OF THE AUSTRALIAN ECONOMY,

As to this subsection, I noted that there is a bank account and that income tax returns have been filed. 

Mr Lioe's other activity which he has nominated as his main interest is property development. Leonard Lauren Pty Ltd has purchased an investment property.  I am satisfied from the evidence that the relevant Council will entertain an application for development, but that such application has not been made.  A feasibility study was commissioned by Mrs Lili, and certain drawings done.  These are dated in the second half of 2005, which post-dates the visa cancellation.  However, I accept that the investigation into the possibility of development commenced close to, but prior to the cancellation.  I noted that the purchase of the property is dated June 2005, but I am mindful that the intention is also given weight in relation to assessing business visas.  I am mindful also of the evidence of the applicant that development plans were halted in 2005 due to uncertainty regarding the visa. 

I found however that Mr Lioe's activities in the relevant period and indeed beyond did not increase commercial activity and competitiveness within sectors of the Australian economy in satisfaction of section 134(10)(f) of the definition of "eligible business" in the Act.  Ultimately I could not find that Mr Lioe, although he had substantial ownership of his companies, was in an eligible business.

WHETHER MR LIOE WAS UTILISING HIS SKILLS IN ACTIVELY PARTICIPATING AT A SENIOR LEVEL  IN THE DAY-TO-DAY MANAGEMENT, WHETHER HE HAD MADE A GENUINE EFFORT TO DO SO, OR WHETHER HE HAS THE INTENTION TO MAKE SUCH EFFORTS

I explored whether Mr Lioe was utilising his skills in actively participating at a senior level in the day-to-day management, whether he had made a genuine effort to do so, or whether he has the intention to make such efforts. 

I have noted that Mr Lioe’s various attempts at business in Australia have already been discussed in the paragraphs above.  However, I must first emphasise that I have found in the paragraphs above also that I am not satisfied that Mr Lioe has an “eligible business” in Australia. 

His research efforts in regard to the Gloria Jean franchise, the restaurant and the business of second-hand trucks and fork-lifts was quite perfunctory, and none of the three proceeded.  Mr Lioe told me because of his lack of knowledge of business practices in Australia and the difficulties with his former co-directors in relation to the export of fruit and vegetables, he has been hampered in doing business.  His evidence was that he forfeited 50 per cent of business anticipated in the fruit and vegetable business due to that disagreement with his co-directors.  This was not quantified in any way, and I am unable to be satisfied with that estimate.  In that regard I also rejected the submissions made by Ms Quinn that it was the Indonesian purchasers who did the business.  I was satisfied from the evidence that Mr Lioe obtained the orders in Indonesia which he passed to Mrs Lili, who did the research as to suppliers and organised the supply of some 10 to 12 shipments of fruit and vegetables.

I was satisfied that Mrs Lili has undertaken the Australian side of the business, such as it was. 

I accepted Mr Lioe's evidence that he took food supplements such as fish oil, Blackmores products, and Caltrase from Perth to Indonesia for resale approximately seven times. 

As to the development of the property, I have noted the purchase of the investment property and am mindful that the feasibility study, plans and other research were initiated by Mrs Lili, and that the replies to queries were directed to her.

Mr Lioe told me that he makes the final decisions, but I have already said I was satisfied from the totality of the evidence that both he and Mrs Lili made decisions.  However, she did all the local work and wrote the cheques, and made, as one would expect, some of the decisions in the family business.  It was she who was on the spot in Perth, and it is she who has the expertise in matters financial from her long background in banking and management.

Notwithstanding Mr Lioe's evidence that he was in touch two to three times a week, I was satisfied from the evidence that Mr Lioe had little, if any, involvement in the day-to-day management of any Australian business.  Neither did I find that Mr Lioe had formed any future intention of doing so.  In making the above decision that Mr Lioe was not utilising his skills in actively participating at a senior level in the day-to-day management of the Australian business, not making a genuine effort to do so, and did not demonstrate the intention to make such efforts, I took into account some of the Tribunal's decided cases, noting that in Re Huang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656, Senior Member Muller, as he then was, said:

“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.”

I noted further that Deputy President McMahon in Re Tang said:

“There is no evidence that the applicant actively participates at a senior level from overseas.”

I was mindful that Deputy President Wright stated in Re Suryaty and Ors v Ministerfor Immigration and Multicultural and Indigenous Affairs, [2003] AATA 581:

“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 with the Commonwealth of Australia is essential.”

The evidence before me was that there has been a minimal amount of business done by Mr Lioe and his companies in Australia, and what has been done has been through his wife who speaks more English, makes the arrangements and signs cheques.  I am mindful noting what Deputy President Wright said in Re Suryaty, that to qualify, Mr Lioe would not be confined to working within the geographical limits of Australia.  However, the Act does not contemplate an absentee entrepreneur directing operations from afar, and I am satisfied that direct hands-on involvement within Australia would need to be part of the enterprise.

The evidence before me satisfied me that Mr Lioe had only perfunctory personal knowledge of what was going on in Australia.  Unfortunately I could not be satisfied from the evidence that Mr Lioe was, or indeed is, involved in the day-to-day management of any business in Australia, or that he has any intention of so doing.  Even with the latest project which was property development, it was Mrs Lili who did the research and commissioned the feasibility study of which he seemed to have little knowledge.

SUMMARY REGARDING SECTION 134(1) OF THE ACT

Just summarising then regarding section 134(1) of the Act, I find then for the reasons given above that Mr Lioe, although he has a substantial ownership interest in Three Golden Star Pty Ltd and Leonard Lauren Pty Ltd, which are companies registered in Australia, he does not have that substantial ownership in an eligible business in Australia pursuant to section 134(1)(a) of the Act, because the activities of Golden Star Proprietary Limited and Leonard Lauren Proprietary Limited do not qualify as eligible business in Australia.

I also find that Mr Lioe was not utilising his skills in actively participating at a senior level in the day-to-day management of any business in Australia, (134(1)(b) of the Act). There was no suggestion, however, that Mr Lioe did not intend to continue to pursue the business of property development in Australia in satisfaction of section 134(1)(c) of the Act were his visa restored.

So I move then to consider the tests in section 134(2) of the Act which states that the visa must not be cancelled if the Minister and the Tribunal standing in her shoes is satisfied of certain things.

CONSIDERATION OF THE TESTS IN SECTION 134(2) OF THE ACT

Although I was satisfied that there were grounds to exercise the discretion to cancel the applicant's business skills visa, and the tests pursuant to section 134(1) of the Act were made out, I needed to be satisfied regarding the tests set out in section 134(2), and the residual discretion, if necessary (Kim (supra)). I will not read the whole of section 134(2), but I do go through all the subsections in 134(3) of the Act a little further on in these reasons.

I have had to take into consideration whether the applicant has made, and intends to continue to make genuine efforts to obtain a substantial ownership interest in an eligible business in Australia, and whether he has made, and intends to continue to make a genuine effort to utilise his skills in actively participating at a senior level in the day‑to‑day management of that business.

I am mindful that the Tribunal is entitled to look at activities and transactions after the date of cancellation of the visa if it would assist in determination of whether or not the decision to cancel is the correct or preferable one.  In that regard I have referred to Re Chen and Re Griffiths, the guidance given in Paragraph 4.5.1 of the Migration Series Instruction: Cancellation of Visa Guidelines and section 134(3) of the Act. So going through those subsections:

Section 134(3)(a) deals with business proposals which the person has developed.  In that regard I have noted there is no business proposal or business plan available which I have seen.  I have noted and accepted that Mr Lioe holds a substantial interest, that is 50 per cent of the shares in both the registered family companies.  However, although Mr Lioe professed that the latest project, the property development, was business-wise of the greatest interest to him, he demonstrated little knowledge with regard to what had taken place in regard to the purchase of the property, and any feasibility study or other research.

I have already said I am satisfied Mrs Lili commissioned the study and that she has had carriage of what has occurred so far. The genuine effort anticipated in section 134(3)(a) is not made out.

Section 134(3)(b) deals with the existence of partners or joint venturers for the business proposals.  There was no evidence of business proposals before me except for a rudimentary intention to develop the investment property which has been purchased by Leonard Lauren Pty Ltd.  There is no partner, although earlier on there had been two other directors in Three Golden Star Pty Ltd.

There are no joint venturers, and no employees and very little involvement by Mr Lioe himself. The genuine effort anticipated in section 134(3)(b) is not made out.

Section 134(3)(c) allows for an examination of the research that the person has undertaken into the conduct of an eligible business in Australia.  In regard to research I have already mentioned superficial research by Mr Lioe in regard to a Gloria Jean franchise, a restaurant, and second-hand trucks or fork-lifts, none of which proceeded.

I did not have evidence before me of research in Australia with regard to the export of fruit and vegetables, although what Mrs Lili has done is to source a supplier or suppliers for the 10 to 12 orders received.  Mr Lioe gave evidence of his knowledge that Indonesians would like Australian fruit and vegetables which is what prompted him to attempt to export them from Australia to Indonesia. He gave details of the difficulties which I have spoken about elsewhere in these reasons.  So if any research was conducted in regard to fruit and vegetables, it was at the Indonesian end.  Mr Lioe also concluded he would not do well with food supplements because Blackmores already has agents in Indonesia, so he did not proceed further with that line of export. 

I have already stated above that I was satisfied that in relation to the final project, which was the development of an investment property, Mrs Lili did the work. I have also said that that project was entered into when cancellation had been signalled and was at an early stage when it was halted due, I was told, to cancellation of the visa. The genuine effort anticipated in section 134(3)(c) is not made out.

Section 134(3)(d) considers the period or periods which Mr Lioe spent in Australia. I have noted from Exhibit R3, the movement record tendered by Ms Quinn, that Mr Lioe spent approximately 113 days in Australia from March 2002 to the date of cancellation in June 2005, and that to the date of the hearing he has spent 148 days in Australia. He was not asked at the hearing whether he planned to spend more time in Australia, but he also gave no assurances that he was planning to do so. The genuine effort anticipated in section 134(3)(d) is not made out.

Section 134(3)(e) concerns the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business.  I note that Mr Lioe bought a house in Perth where his family resides, and out of which the family companies operate.  Mr Lioe's evidence was that he had transferred approximately $1.6 million to various Bank West accounts in Australia between April 1999 and July 2005. Various financial statements were before the Tribunal in the T-documents.

I was satisfied that those moneys were brought to Australia, and were used to finance real estate, children's school fees and other expenses, and were not just used for business purposes.  Mr Lioe emphasised that he had bought out his previous co-shareholders in Three Golden Star Pty Ltd, and that his equity was now $100,000 higher as a result.

I was satisfied that the value of Mr Lioe's shareholding in his companies was not insubstantial, but I was not satisfied that the transfer of funds for Mr Lioe to develop an eligible business can satisfy the genuine effort anticipated in section 134(3)(e), which accordingly is not made out.

Section 134(3)(f) deals with the value of ownership interests in eligible businesses in Australia that are or have been held by the person. As stated above Mr Lioe owns 50 per cent of Three Golden Star Pty Limited and 50 per cent of Leonard Lauren Pty Limited, and Mrs Lili holds the other 50 percent. However, as also noted above, I have been unable to find that Mr Lioe has an eligible business in Australia pursuant to the terms of the legislation. The genuine effort anticipated in section 134(3)(f) is not made out.

Section 134(3)(g) deals with the business activities which have been undertaken by the person.  Mr Lioe's attempts to set up business in Australia have been detailed above.  They consisted of some superficial research and projects such as the Gloria Jean franchise, a restaurant, and the export of second-hand vehicles, none of which proceeded.

The only business which has been conducted in the relevant period has been 10 to 12 small shipments of Australian fruit and vegetables to Indonesia, and Mr Lioe purchasing amounts of fish oil and other food supplements from a pharmacy in Perth to take with him for resale through a friend in Indonesia.  Activity post cancellation or close to cancellation of the visa has been the purchase of the investment property in Perth, the feasibility study regarding its development by Mrs Lili, and some preliminary plans. The latter project has been stopped because of the feeling Mr Lioe has of being in limbo due to the apprehension he might not be able to supervise the project if it proceeded, and if he had his visa cancelled. 

I am satisfied from the evidence that the genuine effort anticipated in section 134(3)(g) is not made out.

I have noted that sections 134(3)(h) and (i) are not relevant to Mr Lioe.

SUMMARY

So in summary, I have found that throughout the relevant period the applicant was in Australia for approximately 113 days.  He did not make any commitment to move to Australia or come here more often than he has should his visa be restored. 

I found that Mr Lioe was not involved to any extent in the day to day management of the fledgling business of either the fruit and vegetable export or property development.

I do not think the carrying of small quantities of fish oil or food supplements for resale to Indonesia on seven occasions qualifies as business, although Mr Lioe's involvement there may have been more than with any of the other attempts at business in Australia. 

Mr Lioe has shown very little commitment to any business in Australia and has not managed any business here, although he gave evidence that he intended to continue with property development if he was able to stay in Australia.  He said that he considered the property market in Perth profitable, and was satisfied that the development of the property his family company had purchased from a single dwelling to four – six  separate dwellings would be profitable. 

I have noted Mr Karp's submissions regarding the case of Lala v MIMIA, which I decided in 2003, and in which I decided that Mr Lala's property developments and his other businesses could be classed as eligible business for the purpose of his business visa.  That case can be distinguished on the basis that Mr Lala was a property developer back in Fiji, unlike Mr Lioe, who is a trader, and that Mr Lala had an ongoing property development business in Australia with the attendant employment of architects and builders necessary for that business.  I found also from the evidence that Mr Lala had employed a real estate agent to manage properties in Australia.  That was quite a different situation from Mr Lioe's, and whilst not binding on me in any case, that case can be distinguished on the facts. 

I found, based on the evidence, that Mr Lioe does not have an eligible business in Australia.

I therefore find from the above that notwithstanding the registration of Three Golden Star Pty Ltd and Leonard Lauren Pty Ltd, the applicant's conduct has been inconsistent with the making of a genuine effort to obtain a substantial ownership interest in an eligible business in Australia, and to actively participate.

I am not satisfied that Mr Lioe has made a genuine effort to utilise his skills in actively participating in a senior level in the day to day management of Three Golden Star Pty Ltd and Leonard Lauren Pty Ltd.  I have noted Mr Lioe's stated intention to develop the real estate in Perth, but noted that the feasibility study and purchase only took place at cancellation of the visa in mid 2005, and that an early plan, addressed to Mrs Lili, was produced in August 2005 after which no further activity has been undertaken. I have also noted the reason Mr Lioe gave for this, being his uncertainty regarding the visa. 

However, taking into account all the indicia, and I have explored them quite extensively, I was satisfied that the conditions in section 134(2) of the Act were not met.

For the above reasons and bearing in mind that the applicant spent only approximately 113 days in Australia from the date his visa was granted in March 2002 until it was cancelled in June 2005, I find that the applicant did not, at the date of cancellation, hold an intention to continue making the genuine efforts required pursuant to section 134(2) of the Act. However, there is a residual discretion which must be explored.

THE RESIDUAL DISCRETION

I have taken into account the residual discretion raised in Kim so that notwithstanding Mr Lioe not having succeeded in relation to the tests in section 134(1) and 134(2) of the Act, further consideration have been given. Her Honour Kiefel J stated at paragraph 21 of Kim:

“The Minister might be satisfied of the matters referred to in subsection (1) and not be satisfied as to the efforts made as referred to in subsection (2), but nevertheless consider in a particular case that further time should be given to the visa holder to undertake what was required of them.”

And that is, of course, Mr Karp's submission on behalf of Mr Lioe.  I considered her Honour's statement in relation to Mr Lioe, and was satisfied that although he registered Three Golden Star Pty Ltd and Leonard Lauren Pty Ltd a short time after his arrival in 2002 - and I note that he holds 50 per cent of the value of the companies, - I have found above that he has no eligible business pursuant to the legislation.

I am satisfied from the evidence that Mr Lioe's personal participation in the companies has been minimal during the relevant period, and afterwards, and notwithstanding his stated intention, I do not accept that Mr Lioe requires more time to develop an eligible business.  I am not confident that the real estate project will necessarily proceed.

I am mindful of Member McLean's findings in Re Widjaja v Minister for Immigration and Multicultural and Indigenous Affairs [2003], AATA 380.  There Mr McLean held that it was the day to day participation in the management of the business activities of the applicant which had to be examined, and not the location of the applicant. In my view that case is not on foot with Mr Lioe's situation as Member McLean accepted that the applicant in Widjaja was in a joint venture, and was required, as part of the conduct of that business, to be located in Asia.  That does not apply to Mr Lioe's situation, and Widjaja can be distinguished, and does not assist with applying the residual discretion.  I was mindful further that the Act requires the day to day management of an eligible business in Australia as one of the criteria.

So after taking into account all of the evidence and submissions, I was satisfied that the discretionary powers of the Act to cancel Mr Lioe's business skills visa should be exercised; that the residual discretion cannot be exercised in his favour, and that the decision under review should be affirmed. 

DECISION

The Tribunal affirms the decision under review, and thanks the parties for their participation.

Ms G Ettinger
Senior Member