Lukman and Minister for Immigration and Multicultural and Indigenous Affairs

[2007] AATA 1363

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1363

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/1322

GENERAL ADMINISTRATIVE  DIVISION		)
Re		DARMAYANTI LUKMAN

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member, Mrs Josephine Kelly

Date25 May 2007

PlaceSydney

Decision The decision under review is affirmed  

.......................[sgd].......................

Senior Member, Mrs Josephine Kelly

CATCHWORDS

BUSINESS VISA – whether applicant had substantial ownership interest in an eligible business – whether applicant made genuine effort to obtain substantial ownership interest in an eligible business – held no eligible business – no genuine effort to obtain substantial ownership interest in eligible business – decision to cancel business visa affirmed.  

CASES

Halim v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767

Hui Sing Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703 Hope v Bathurst City Council (1980) 29 ALR 577

Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31

Ming Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997

Neat Domestic Trading Pty Limited v AWB Limited and Another (2003) 198 ALR 179

Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87

Re Drake v Minister for Immigration (No 2) (1979) 2 ALD 634,

LEGISLATION  

Sections 134,135 & 137 Migration Act 1958

REASONS FOR DECISION

Senior Member, Mrs Josephine Kelly     

Summary

1.On 25 September 2006 a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (“the Minister”) cancelled the subclass 127 visa (“the business visa”) which had been granted to Ms Darmayanti Lukman, a citizen of Indonesia, on 25 March 2003.  Ms Lukman seeks the review of that decision.   The secondary visas held by her partner and two of her four children were also cancelled, but the only matter before me is the cancellation of Ms Lukman’s visa.

2.The cancellation was made pursuant to s 134(1) of the Migration Act 1958 (“the Act”) which provides, relevantly:

Subject to subsection (2) and to section 135, the Minister may cancel a business visa … 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.

3.Section 134(2) provides that:

… 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.

4.For the reasons that follow, the reviewable decision to cancel Ms Lukman’s business visa is affirmed. 

Issues

1.      The issues are:

In relation to s 134(1) of the Act

i.Is MRC Australia Pty Limited (“the Company”) an “eligible business” within the meaning of s 134(10) of the Act?

ii.If so, has Ms Lukman obtained a substantial “ownership interest” in that business as defined in s 134(10) of the Act?

iii.Is Ms Lukman utilising her skills in actively participating at a senior level in the day-to-day management of that business?

iv.Does she intend to continue to hold a substantial ownership interest and utilise her skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia.

If Ms Lukman does not satisfy s 134(1), in relation to s 134(2) of the Act:

v.Has Ms Lukman made a genuine effort to obtain a substantial interest in an eligible business and to utilise her 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?

Background

5.Ms Lukman and her husband established a specialist toy store in Bandung in 1978, and in 1980 established a larger scale business, PT Budi Rahardja Cahaya (Cahaya), which she described as a very popular recreational and entertainment parlour business offering the latest electronic games and toys.  By 2000 the annual turnover was almost $AUD2 million, and the business employed 200 staff in twenty-seven stores in various cities in Indonesia. 

6.In her statement tendered in the proceedings, Ms Lukman explained that she became interested in establishing a business in Australia because she was “attracted to its security, lifestyle and business conditions”.  She and her husband visited Australia in September/October 1998 on a tour organised by Mr Au, who later became their migration agent.

7.Ms Lukman’s daughter moved to Australia in 1999 to undertake a bridging course at university in Melbourne.  Ms Lukman visited her in July/August to help her daughter enrol and returned in January 2000 to bring back her daughter’s belongings after she finished the course.  

8.In about mid 2000 Ms Luckman “decided to establish a recreation/entertainment centre together with an expansive toy store in Australia”.  The centre would have the latest games and technology at competitive prices, and toys for visitors to purchase.   She stated that she sought advice about the venture from “business and industry experts in Australia, as well as lawyers and an accountant”.  In that context she stated that she attended a presentation from Australian Industry in Kent Street Sydney and Caringbah on 7 November 2000, where she met a “most successful” Indonesian businessman, a financial consultant from HSBC bank, a representative of Australian Industry Group and a speaker from Penta Properties, Sydney.  She provided business cards from a lawyer and an accountant. 

9.Ms Lukman applied for a business visa on 31 May 2001.  She was interviewed in Jakarta about her application on 11 October 2002, and subsequently that application was approved on 25 March 2003. 

10.Ms Lukman, her husband, daughter and youngest son visited Australia from 31 May until 19 June 2003.  During that time she applied to enrol her son in a school, organised the establishment of the Company through an accountant, opened a savings account for personal use, a business cheque account, and paid a $1,000 deposit on a house in Melbourne.

11.Their next visit was from 11 August to 25 September 2003. During that trip they settled the purchase of their home with a payment of $129,543.69 from funds transferred from Indonesia.  They also purchased a motor vehicle, items for their home, and a computer, computer table, telephone and fax machine for the business.

Consideration

1. Is MRC Australia an “eligible business” within the meaning of s 134(10) of the Act?

12.The Company was incorporated on 12 June 2003.  Ms Lukman is the Secretary and a director.  Her husband is also a director.  Each holds one $1 share, which represents all of the shares issued.

13.“Eligible business” is defined in s 134(10) of the Act:

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

.

14.Both parties accepted that the Company undertook the following exports which are relied upon by Ms Lukman to establish that the Company is an “eligible business” because it “is resulting” in the export of Australian goods (s 134(10)(c) of the Act).

No.	Date of sale	Item	Purchaser	Sale price
1	25 August 2003	Gelato scoop ice cream machine and 36 litres of Frosty Boy ice flavours	PT Garasi Icy Jakarta	$ 12,247.13
2	5 October 2003	Coldelite soft serve ice cream machine	PT Garasi Icy Jakarta	$16,500.00
3	16 March 2005	Six photo printing and vending machines and accessories	MG Electronics/PT Jasa Wahana Karta	$127,402.50
4	21 December 2005	160 boxes of Royal Gelato Base and Flavour	PT Garasi Icy	$19,500.00
5	9 August 2006	Fruit	PT Visi Daya Makmur Sejati	$43,564.00
6	16 August 2006	Fruit	PT Visi Daya Makmur Sejati	$39,317.00
7	13 December 2006	Pet products	PT Harapan Maju Indah	$28,888.30
TOTAL	$287,436.90

15.In considering this issue, it is relevant to take into account the following.  Ms Lukman’s business visa was issued on 25 March 2003.   On 5 May 2005 she was sent a 24 month survey.   The completed survey was received by the Department on 19 August 2005.A notice of intention to consider cancellation of visa was issued on 18 May 2006, and cancellation occurred on 25 September 2006.    Four of the seven export transactions occurred after the 24 month survey was completed, three of which occurred after the notice of intention to consider cancellation of visa was issued, and one of which occurred after the cancellation decision was made.

16.Before considering whether it is an eligible business, I need to address two preliminary matters.  The Minister’s representative argued that the Tribunal is obliged to make the correct or preferable decision as at the date of cancellation, 25 September 2006.  I did not understand Mr Poynder to disagree with that proposition. 

17.The other matter is to what extent the Tribunal may take into account transactions after the date of cancellation and up until the hearing date.  The Minister’s representative referred to what he described as the line of authority which permitted taking into account such material (Hui Sing Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703 and Halim v Minister or immigration and Multicultural and Indigenous Affairs [2002] AATA 767), but argued that such transactions are only of assistance to establish future intention if they represent the outcome of preparatory activities commenced prior to cancellation.

18.Counsel for Ms Lukman relied in Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87, where Hill J dealt with an application for judicial review, not merits review. His Honour held that subsequent events may be relevant as showing that the probability of the subsequent event happening is one that could be taken into account.

19.In my view, in this Tribunal, it is a question of weight to be given to the evidence in all of the circumstances.  For example, I would give greater weight to a transaction after cancellation if it were the result of preparatory activities undertaken before cancellation, than I would give to an export that was an isolated transaction bearing no relationship to any other that had occurred before the cancellation date.

Conclusion re eligible business

20.Mr Poynder, counsel for Ms Lukman, argued that the various exports were “transactions ... entered into on a continuous and repetitive basis for the purpose of making a profit”, and therefore a “business” as discussed by Mason J in Hope v Bathurst City Council (1980) 29 ALR 577 at 9. I accept that that meaning applies in the statutory context of s 134, as held by Deputy President McMahon in Ming Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997 at 20.

21.Mr Lukman’s migration agent provided the following information in her visa application in May 2001.  Funds totalling $1,500,000 were “available for transfer to Australia within the next 2 years”.  Ms Lukman “intends to establish a recreation/entertainment centre together with an expansive toy store in Sydney, Australia”.  She intended to distinguish her business from existing centres by offering the latest games and technology at competitive prices, as well as offering toys for sale. 

22.In the Business skills profile in the business owner part of the application (Form 1136), the response to the question How much do you plan to invest in your business in Australia? was $500,000.

23.The business activity that has occurred is not that disclosed in the application, but something quite unrelated. I find that the export transactions have been ad hoc, rather than “continuous and repetitive”. There are no ongoing contracts for any of the exports, just invoices and some bills of lading. I infer that that the last three were prompted by a fear of cancellation of the business visa rather than representing the ongoing transactions of a business. It follows that I do not reasonably believe that the “business” is resulting in or “will” result in exports of Australian goods or services, which is the second aspect of s 134(10)(c).

24.In coming to that conclusion, I accept that the purchase and payment for the goods were in Australia and that the total sale price was substantial, in the order of $300,000.  However, when compared to their purchase price, the resulting profit was relatively small.

25.Mr Poynder did not address any other aspect of s 134(10), and on the evidence I would not find any other provision of s 134(10) has been satisfied. I emphasise that he also did not rely on the activities said to be related to establishing a recreation/entertainment centre in relation to s 134(1).

26.Mr Poynder addressed each of 134(1)(b) and (c) as well.  Given my finding, it is unnecessary for me to consider them, or whether Ms Luckman has a substantial ownership in the Company.

Has Ms Lukman made genuine efforts as required by s 134(2) of the Act?

27.The next question is to consider is has Ms Lukman made a “genuine effort” to obtain a substantial interest in an eligible business and to utilise her 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 as required by s 134(2) of the Act?

28.Section 134(3) relevantly provides:

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).

29.The Migration Series Instruction 133, “Visa cancellation under subdivision G – cancellation of business visas dated 30 May 1996 (MSI 133) provides policy guidance but is not binding on the Tribunal (Re Drake v Minister for Immigration (No 2) (1979) 2 ALD 634; Neat Domestic Trading Pty Limited v AWB Limited and Another (2004) 216 CLR 277, Gleeson CJ at 17 and 24, Kirby J at 138 and 150).

30.The Company is the only business about which there is any evidence. There was evidence of a 2005 business proposal for “Melbourne Recreation Centre” by the Company. The proposal was essentially to establish a business in Australia on the model of the very successful business in Indonesia, Gamemaster, which Ms Lukman and her partner established in 1978 and which runs in several cities, from Jakarta to Bali, and in more that 30 centres. Ms Lukman gave evidence of trying to find an appropriate site in Melbourne, but without success. There was a business proposal referred to in s 134(3) of the Act.

31.There were no partners of joint venturers as specified in s 134(3)(b).

32.There was evidence of “research undertaken” (s 134(3)(c)).  That evidence included consultations with an accountant, a lawyer and a financial analyst, inquiries about ice cream packaging, pinball machines, chocolate and sweet vending machines, play equipment, party equipment, other games and equipment, and internet research about exporting ice cream overseas, and jumping jack castles,  

33.Ms Lukman stated in her 24 month survey, and repeated during her oral evidence, that she was spending 40 hours per week on matters relating to the Company.  She also stated that two of her children operate the Indonesian business and that she is an adviser.   She has not given up her plan of setting up a gaming/entertainment centre in Australia but it is dependent on finding the right location.  In the meantime, I used other opportunities to make money from other products, no matter what the products were.

34.Some other examples of Ms Lukman’s activities were an alleged contract with Win N Grin in 2006 for a Dinosaurking machine which she said she operated in Brisbane for a few months from June to December 2006 without success and so she terminated the contract.  The only documentary evidence of this activity was a “Letter of Offer” from the Company to Win n Grin apparently sent by facsimile on 23 March 2006 and two pages of illustrations of the Donosaurking advertisements.  There was no contract in evidence. 

35.I am not persuaded by this evidence.  Although there is a quantity of emails, other communications, and internet downloads which might give the impression of activity, the inquiries are preliminary in nature, with no tangible results or resultant negotiations, apart from the ice cream export.  The inquiries did not require substantial thought or planning.   There was also no apparent plan linking the inquiries.   Some may be thought to have a connection with activities that take place in a recreation centre.  However, if no suitable location had been found, what purpose is served by inquiring about equipment or activities that might be used there?   There is no evidence of researching the demand for such a business. 

36.Ms Lukman expressed her intention of “genuinely” wanting to do business in Australia.  “If the near future, I can locate a strategic location for a gaming centre in Melbourne, I would definitely will invest and set up a leisure centre as planned”.    However, as I am not persuaded that she has made genuine efforts to establish such a business in the past, I am also not persuaded that she will in the future.

37.Ms Lukman has been in Australia 264 days and certainly meets the MSI 133 requirement of 6 months (s 134(3)(d)).

38.In relation to the value of assets transferred to Australia for use in obtaining an interest in an eligible business (s 134(3)(e)), MSI 133 refers to the transfer to and retention of at least 50% of the funds indicated as available for transfer within 2 years, when the visa application is made.  Ms Lukman’s application stated that she would have $1,500,000 available for transfer within the next two years.  The application also stated that she planned to invest $500,000 in the business in Australia.

39.The evidence is that Ms Lukman and her partner have transferred approximately $130,000 which was used to purchase a house worth $790,000.  During her oral evidence Ms Lukman said that they had transferred $800,000 to pay for the house, plus $150,000 which was used to purchase there motor vehicles.  They have also sent one child to a private school in Melbourne at a cost of $20,000 per year, or $80,000 over four years from 2003, and another to university. Their son who was formerly at school is also now at university.  They have $100,000 in the bank.  Ms Lukman did not bring the Company’s bank account statements to the hearing. 

40.The evidence does not support a finding that $800,000 was transferred from Indonesia for the purchase of the house. Rather, a deposit was paid on the house and a mortgage entered into with Perpetual Trustees, with monthly repayments of approximately $5,500 direct debited to the mortgagor.Further, the payments Ms Lukman talked about were principally for private use.  She mentioned purchase of a computer, which may be used for the business, but equally it could be used by her children for their studies.

41.On the evidence, the total funds brought to Australia for the business is not clear, but I do not accept that $750,000 or half of what was represented in the application, has been invested in the business.  Mr Poynder relied on the representation of $500,000 in the application as being the relevant one, and therefore the relevant figure is $250,000.  I do not think he has referred to the relevant question in the application in terms of the MSI.  

42.The total value of the exports is about $300,000.  Although an Australian product was purchased for export, it is not clear to what extent the Company contributed its own funds to the export transactions. It may be that they were funded from the proceeds of sale in Indonesia such that Ms Lukman or the Company relevantly made no contribution to the total funds needed.  Even if the Company financed the purchase, it was only a short term investment until the proceeds of sale were received.  On the evidence, I simply do not know the funding details of all the exports.  Even if Mr Poynder is correct in relation to the effect of the MSI, I am not persuaded as indicated that such an amount has been transferred and relevantly invested in the business. 

43.An example where documentation for an export is available is item 3 in the table at paragraph 16, being the sale of six photo printing and vending machines and accessories.  The invoice for these items from the vendor is dated 18 March 2005 (page 203 of the T-documents) with payment terms: $30,000 within 30 days of invoice date, 30% within 60 days of invoice and remaining after delivery of goods.  The Company’s cash receipts book shows receipts from the purchaser, MG Electronic-Indonesia, of $25,000 on 25 February 2005, $5,207.50 on 20 March 2005, $30,215.00 on 30 March 2005 and more receipts following.  The Company’s cash payments book shows payments to the purchaser, Mooi Pty Ltd of $20,207.50 on 21 March 2007, $5,400 on 22 March and more payments in the following months.  This seems to indicate that the payments to the vendor were made from funds received from the purchaser, thereby removing the need for the Company to provide its own funds. 

44.Looking at the invoices from the Australian vendors without records of payment does not assist that exercise, and in some cases raises other questions.  For example, there is a “Proforma Only” invoice from Frosty Boy dated 15 July 2003 (T-documents p 161).  The typewritten “ship to” address is MRC at an Australian address.  It has been crossed-out and a handwritten Bandung address included.  There is a handwritten notation “paid”, and details of a cheque.  Such a document has little evidentiary value in my opinion.

45.It follows that I do not know how much has been transferred to Australia for the purpose of the business.  I also do not know the amount of funds the Company has in Australia at the present time.  I do know that Ms Lukman owns a $1 share in the Company.  What the value of her ownership of the Company is beyond that I do not know (s 134(3)(f)).  

46.The business activity that has and is being undertaken has been set out earlier in relation to the export activity and the research undertaken (s 134(3)(g)).  Mr Poynder refers to the MSI 133 reference to a minimum of $100,000 as indicated by turnover, and referred to the Company’s turnover for the years ending 30 June 2004, 2005 and 2006 of $35,870, $107,177 and $51,475 respectively.  If this is correct it reflects a total of $194,522.

47.Ms Lukman has not failed to comply with notices under s 137 (s 134(3)(h)).

48.For the purpose of s 134(3)(i) I would be prepared to assume that Ms Lukman maintains a substantial ownership in the Company. 

49.Taking into account all of the above matters, I am not persuaded Ms Lukman has made a genuine effort to obtain a substantial ownership in an eligible business in Australia as required by s 134(2). While I accept that Ms Lukman contributed to whatever was done by the Company, those activities were minimal and certainly did not require 40 hours per week as she maintained.

RESIDUAL DISCRETION

50.Finally, I must consider the residual discretion in s 134(1) identified by Kiefel J in Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31. Her Honour said:

Whilst the discretion given in s 134(1) is not as broad as that considered in Samad, in the sense that it does not involve more choices, it cannot be said that a decision not to cancel a visa could serve no purpose. The Minister might be satisfied of the matters referred to in subs (1) and not be satisfied as to the efforts made as referred to in subs (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. [paragraph 21]

51.This aspect of the case was not relied upon.  In any event, there was no evidence before me which would persuade me to exercise the discretion in her favour.

52.For the above reasons, the reviewable decision is affirmed.

I certify that the 52 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member,
Mrs Josephine Kelly.

Signed: Ms P Nimmagadda

Associate

Date of Hearing  27 April 2007             
Date of Decision  25 May 2007
Representative for Applicant   Phillip Au & Associates
Counsel for Applicant  Mr Nicholas Poynder
Solicitors for the Respondent  DLA Phillip Fox