Madjudin and Minister for Immigration and Citizenship
[2008] AATA 49
•17 January 2008
Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL
No: 2007/1689
General Administrative Division
Re: YOHNNY MADJUDIN
Applicant
And: MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DIRECTION
TRIBUNAL: Ms Robin Hunt, Senior Member
DATE: 13 March 2008
PLACE: Sydney
Pursuant to section 43AA of the Administrative Appeals Tribunal Act 1975, the tribunal directs the Registrar to alter the text of the decision in this application as follows:
The paragraph following 20. under “Legislative Framework” should be numbered 21. and follow in numerical sequence thereafter, concluding with paragraph number 51.
.....................[Sgd].......................
Ms Robin Hunt
Senior Member
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 49
ADMINISTRATIVE APPEALS TRIBUNAL ) No 2007/1689
)
GENERAL ADMINISTRATIVE DIVISION ) Re YOHNNY MADJUDIN
Applicant
And
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal: R. Hunt, Senior Member Date:17 January 2008
Place:Sydney
Decision: The decision under review is affirmed. .................[Sgd]........................
Ms R Hunt
Senior Member
CATCHWORDS
MIGRATION ‑ business skills visa ‑ cancellation – no substantial interest in business - no eligible business – no day-to-day management at senior level – consideration of genuine efforts to obtain substantial ownership of eligible business or to participate day-to-day in senior management – no exercise of residual discretion – decision affirmed.
Migration Act 1958 s 134(1), (2), (3), (5), (10), 499
Procedures Advice Manual (PAM3)
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Hope v Bathurst City Council (1980) 144 CLR 1
Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31
Man Ki Kim v Minister for Immigration and Ethnic Affairs (1995) 37 ALD 481
Puzey v Commissioner of Taxation [2003] FCAFC 197
Rokobatini v Minister for Immigration Multicultural Affairs (1999) 57 ALD 257
REASONS FOR DECISION
17 January 2008 R. Hunt, Senior Member
SUMMARY
1. Mr Yohnny Madjudin is an Indonesian citizen who was granted a subclass 127 business skills visa on 3 December 2003. Subsequently, on 12 April 2007, a delegate of the Minister cancelled his visa and Mr Madjudin sought review by this tribunal of the cancellation decision. I have decided that Mr Madjudin’s visa should be cancelled as he has not complied with the criteria that apply to the holder of a subclass 127 business skills visa. This means the review has not resulted in a favourable outcome for Mr Madjudin. My reasons are set out below.
BACKGROUND
2. After the grant of his 127 business skills visa, on 3 December 2003, Mr Madjudin arrived in Australia four days later, on 7 December 2003. He stayed for 8 days and departed on 3 January 2004. Mr Madjudin paid subsequent visits to Australia. The Department’s records show that he spent a total of 87 days in Australia from the first visit in December 2003 to the time of cancellation of his visa on 12 April 2007. His wife and four daughters were granted secondary subclass 127 business skills visas as members of Mr Madjudin’s family. Cancellation of these visas ensued as well. Mr Madjudin’s two older daughters were studying at an Australian university when their visas were cancelled. Mr Madjudin attended the tribunal’s hearing of his review application in person.
ISSUE
3. The issue arising for the tribunal is whether Mr Madjudin has satisfied the conditions of his visa so that it should not be cancelled.
EVIDENCE ABOUT BUSINESS ACTIVITIES IN AUSTRALIA
4. Mr Madjudin recounted a history of his business activities in Australia, starting from 1987, before the grant of his subclass 127 visa. Mr Madjudin gave evidence he had a background in marketing and was employed as a marketing manager until he established his own business in Indonesia.
5. When he first came to Australia in 1987 it was with the object of selling bicycles from Indonesia. Mr Madjudin said that he became interested in migrating during that visit. As the holder of a subclass 457 visa, he bought a 7-Eleven store at Mosman. He employed two full time and six part time staff at the store. Mr Madjudin gave further evidence that he established a company for his enterprises in Australia, Citra Pacific Pty Ltd. He said he invested $300,000, which equated to 90% of the shareholding in that company. The other two directors of the company were former employees in his 7-Eleven store and they each owned 1 share out of 202 shares and lived in Sydney. When he was the holder of a subclass 457 visa, Mr Madjudin told the tribunal he was able to maintain a “strategic day-to-day” role in running the 7-Eleven store. He said he communicated effectively with staff and the other directors when he was not in Australia.
6. In Indonesia in 1989, Mr Madjudin told the tribunal he set up a computer embroidery factory, which embroiders garments and makes sport shoes for some well known brands. Mr Madjudin established another factory in Indonesia in 1993, which manufactures woven labels. His evidence was that he is the owner and president director of both companies and has associated responsibilities. He had delegated some responsibilities for the second company to his sister.
7. Further as to his Australian business interests since 1987, Mr Madjudin told the tribunal he made further preparations before applying for a subclass 127 visa. Preparations included gathering information through internet web sites and from State governments about business name registration, licensing and the like. He also requested information from the Department of Employment and Workplace Relations and Small Business about employers’ obligations and other requirements. He looked into freight logistics through enquiries with transport suppliers and consultants. He further said he met with a certified practising accountant, Mr Louis Galanopoulos, to discuss 7-Eleven store operations back in 1998. When Mr Madjudin set up Citra Pacific Pty Ltd, he explained that Mr Galanopoulos was the accountant who prepared the company’s financial documents and tax returns. Mr Madjudin said he discussed the viability of opening another 7-Eleven store with a fellow Indonesian entrepreneur and also talked to another person who was operating such a store but he did not go ahead with this plan. He decided these stores were not the kind of investment he wanted and sold the Mosman store.
8. After the grant of the subclass 127 visa in 2003, Mr Madjudin said he did more information gathering, especially about export business possibilities. He was particularly interested in construction industry products as he has contacts in that industry in Indonesia. He said he had to cut short his Australian visit during December 2003 to January 2004 because his wife was sick. Mr Madjudin came to Australia again in July 2004 and explored waterproofing products for buildings. Passport entries and the Department’s records show Mr Madjudin paid further short visits in September 2004, November 2004, in late June 2005 to mid-July 2005 and another 5 days in late July 2005, as well as a further 13 days during October/November 2005.
9. The Sydney apartment, where his two older daughters live, Mr Madjudin told the tribunal currently was his business address as well as the residential address of family members when in Australia. The family had been renting the apartment for about three years. While his older daughters have been living in Sydney, Mr Madjudin and his wife and two younger daughters have continued to live in Jakarta, with visits to Australia from time to time. Mr Madjudin said his oldest daughter has completed a bachelor of business degree at the University of Technology, Sydney. The other daughter resident in Australia, had been studying towards a degree also and hoped to complete her course in July 2008.
10. As his business vehicle for subclass 127 visa purposes, Mr Madjudin gave evidence he established Citra Pacific International Pty Ltd (‘Citra’ or the second Citra company). This company was registered as an Australian company on 1 November 2005 as is shown on the ASIC certificate of registration included in the tribunal documents. Other records included in the tribunal documents show that Citra Pacific Pty Ltd, was the owner of the 7-Eleven store at Mosman and not the second Citra company.
11. The Department sent Mr Madjudin a 24 month survey Form 1010, on 28 October 2005, shortly before the registration of the second Citra company took place. This second company is the only enterprise which carried out business activities in Australia since the grant to Mr Madjudin of his subclass 127 visa. There is no evidence that Citra Pacific Pty Ltd carried on any business activity during the currency of the subclass 127 visa.
12. During 2004 and 2005, and after researching business opportunities for the purposes of the subclass 127 visa requirements, Mr Madjudin said he looked for buyers in Indonesia of Australian building products. He tried to establish personal connections with potential buyers because this is how it is best to do business in Indonesia. However, building such contacts takes time. Mr Madjudin said he decided to try Bondall building products. He learnt that Gold Koes Pty Ltd (Gold Koes) was the sole agent for Bondall products sold in Indonesia and contacted Mrs Helen Koes. A purchase transaction ensued and a subsequent sale of the goods in Indonesia. Citra entered into the purchase and export transaction a few weeks after it was registered as a company. On 1 December 2005, Citra purchased some Bondall building supplies from Gold Koes for $84,648 and then exported the supplies to CV Bondall Indonesia for $94,599.19, on 5 December 2005. A different type of transaction occurred in March 2006, when Citra purchased some gold bullion from another Australian company then exported and sold it to a Singapore company. Trading figures for Citra on 30 April 2006, as a result, show turnover of $124,223 and profit of $15,662.
13. Before these transactions occurred, on 19 October 2005, the Department had sent a 24 month survey Form 1010 to Mr Madjudin. After obtaining an extension of time to respond to the survey, Mr Madjudin wrote to the Department on 13 June 2006. Mr Madjudin supplied supporting documentation with his survey answers and referred to his efforts to engage in business in Australia including:
1.1He set up the business called Citra Pacific International Pty Ltd (Citra). It was registered with the Australian Securities and Investment Commission on 1 November 2005;
1.2He owned 100% of the shares in Citra;
1.3He usually spent 38 hours a week in his Australian business interest;
1.4His business executed one export of Bondall products to Indonesia in December 2005. The products exported were purchased from an Australian company called Gold Koes Pty Ltd;
1.5The company executed another export of a 1kg gold bar to Singapore in March 2006.
14. Attached to the completed survey form was Citra's certificate of registration, some invoices, bank statements and a business plan. On 26 September 2006, the Department received further information from him by way of commercial invoices, a marine insurance certificate, a packing list and bill of lading for the company's export of Bondall products to Indonesia in June 2006.
15. Mr Madjudin gave some more details of his business efforts and successes at the tribunal hearing. He said he has been negotiating with suppliers and customers, making decisions on purchasing and selling, ensuring compliance with Indonesian and Australian requirements and exploring new opportunities for Australian building products. He emphasised that his dealings with clients in Indonesia have been personal and, where possible, face-to-face, as is the usual way of doing business in Indonesia. Mr Madjudin named three potential Indonesian customers with whom he had exchanged correspondence in early 2006. Copies of expressions of interest from potential customers are on record. Mr Madjudin also developed a relationship with CV Bondall Indonesia and Gold Koes. Citra buys from Gold Koes, which is the exclusive agent for Bondall sales to Indonesian customers and then on-sells to CV Bondall Indonesia, which sells to Mr Madjudin’s customers in Indonesia. He explained that these particular sales would not occur without his Indonesian business network.
16. Mr Budianto Tjahja Kumala of CV Bondall Indonesia gave evidence by telephone from Indonesia. He confirmed that he had been in a business relationship with Mr Madjudin since 2005 and had sold products to Mr Madjudin’s customers through Gold Koes and CV Bondall Indonesia under the arrangement that Mr Madjudin described to the tribunal. Ms Koe Tjai Fung of Gold Koes also gave oral evidence. She told the tribunal that she was also known as Helen Koes and that she had been in a business relationship with Mr Madjudin since 2005.
17. Mr Budianto gave further evidence that he had four Indonesian companies. His business interests included companies that imported and sold various building supplies and soil stabilisation products. He sold building products to builders and contractors. Mr Budianto said that CV Bondall Indonesia had its own customers as well as those of Mr Madjudin. He and Mr Madjudin had sat down together to draw up a memorandum of understanding for their business arrangement and Mr Madjudin could only sell Bondall products in Indonesia through CV Bondall Indonesia. Mr Budianto estimated that the percentage of sales to Mr Madjudin’s customers out of CV Bondall Indonesia’s overall sales was about 2 ½%.
18. As to his day to day conduct of Citra’s operations, Mr Madjudin gave oral evidence that he has been managing the Citra business at a senior level from Indonesia. A typical day involved his checking his emails, faxes and messages. He then telephoned and followed up customers and prospects. He often lunched or dined with people from construction companies who were in charge of buying and he provided samples if required. He was optimistic about his increasing sales in Indonesia. Mr Madjudin tendered some of the Bondall brochures he supplies to potential customers in Indonesia. These were printed in English and in Indonesian.
19. In additional evidence about the Australian end of his business, Mr Madjudin stated that he had put the address of Philip Au & Associates as the principal place of business of Citra as Mr Au was not only a migration agent but a certified practising accountant and an ex-partner in the Mosman store as well as a friend. Mr Madjudin said he also had some assistance in 2005 from Mr Cassey Poon who handled the book-keeping and prepared financial statements as well as giving him some capital financing and taxation advice. Mr Madjudin said he personally prepared the Citra business plan document furnished to the Department. Some of the records before me suggest that the first Citra company previously used Mr Au’s address but that the address of the second Citra company, which is the vehicle through which Mr Madjudin has operated since he became a subclass 127 visa holder and which was registered in November 2005, is that of the apartment where Mr Madjudin’s daughters live.
20. With regard to the future and to continuing Australian business development, Mr Madjudin stated that he could not spend much time in Australia yet but thought he could break through the Indonesian market. Now that one daughter had obtained her business degree and another daughter was pursuing her degree, they could help him run the business in Australia.
LEGISLATIVE FRAMEWORK
15. Section 134(1) of the Act Migration Act 1958 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.
consideration and findings
21. Section 134 of the Migration Act 1958 provides that the Minister may cancel a business visa if certain things have not occurred. Firstly, sub-section 134(1)(a) refers to the acquisition of a substantial interest in an eligible business.
Does Mr Madjudin have a substantial interest in a business?
22. Mr Madjudin gave oral evidence that he had invested over $300,000 in Australia. An investment by Citra Pacific Pty Ltd occurred before the grant of the subclass 127 visa with the purchase of the 7-Eleven store. However, Mr Madjudin gave further evidence that he sold the store. The evidence before me does not suggest that Mr Madjudin has an investment of $300,000 in any business during the time he held a subclass 127 visa. For the survey response sent to the Department in June 2006, Mr Madjudin declared that he had invested $101,945.00 in business capital equipment and $200,000 in personal effects. He confirmed in oral evidence that he had spent about $200,000 on furniture and the like for the apartment and assistance to his daughters. Citra’s HSBC bank statements for its account in Australia shows a balance of $112,472 at 1 June 2006 and a closing balance on 30 June 2006 of $30,256. HSBC sets out the net position at 1 February 2007 as $12,916.35.
23. On 15 March 2007, a new Procedures Advice Manual 3 (PAM3) set out advice for the making of decisions under s 134 of the Act. PAM3 replaced Migration Series Instruction 133 (MSI-133) and was issued pursuant to section 499 of the Act which authorises the Minister to give written directions to decision-makers. I accept that PAM3 is part of the decision-making process (Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577) and is the policy I should apply in order to reach a decision (Rokobatini v Minister for Immigration Multicultural Affairs (1999) 57 ALD 257). PAM3 guidelines suggest a 'substantial ownership interest' is a matter of fact and degree or proportion, but that officers should consider an ownership interest of at least 10 per cent or a value of at least $100,000 as indicative of substantial ownership. See paragraph 7.2.
24. In my view, Mr Madjudin has not held a substantial interest in a relevant Australian business since he was the holder of a subclass 127 visa. The copies of ASIC records before me show that Mr Madjudin owns all the shares in Citra as at 21 April 2006. This means his ownership stake in Citra is substantial to the extent that he is sole owner. The applicant’s earlier investment in a 7-Eleven store was not part of his investment for the purposes of the subclass 127 visa criteria.
25. Mr Madjudin has not claimed that he held an interest in any other business after the sale of the 7-Eleven store which occurred before he applied for a subclass 127 visa. On 10 February 2003, Mr Madjudin’s agent, Philip Au, set out that Mr Madjudin had previously owned such a store. I note in this regard that no bank statements or financial records have been tendered in relation to the earlier Citra company, which had owned the store. The applicant’s earlier investment in a 7-Eleven store was not part of his investment for the purposes of the subclass 127 visa criteria.
26. Mr Madjudin’s interest in his only relevant Australian business, that of Citra, is not substantial in a financial sense according to bank records and financial reports. The value of Citra’s assets, according to bank statements, was $112,472.45 at its peak in May to June 2006. The company did not exist during most of the period Mr Madjudin was a subclass 127 visa holder, becoming registered only in November 2005. Its financial position diminished to $30,256 by the end of June 2006.
27. The value of Mr Madjudin’s current business entity’s assets met PAM3 guidelines expectations for a few weeks only. The bulk of the company’s funds were used for trade rather than as investment or capital of the business. Only limited funds have been transferred to Australia during the currency of Mr Madjudin’s subclass 127 visa. There is no evidence that additional funds have been transferred to effect further transactions or to boost the holdings of Citra. It follows that, while I am satisfied that Mr Madjudin has substantial ownership of Citra, I have concluded that it is not a substantial business interest. Further, I am not convinced his interest is one in an eligible business for the purposes of sub-section 134(1)(a) of the Act. I have dealt further with the eligible business aspect after the analysis below about the degree of his involvement in the business.
How much does mr madjudin involve himself in the business?
28. Subsection 134(1)(b) states that the Minister may cancel a business visa if the visa holder is not utilising his skills in actively participating at a senior level in the day-to-day management of that business. I have examined whether the applicant is so utilising his skills in respect to Citra. There is nothing before me to suggest that Mr Madjudin presently has any other business enterprise in Australia.
29. I accept Mr Madjudin’s evidence that he is the person responsible for the running of his Australian business through Citra. However, I am concerned about the amount of time he spends on the business. The limited number of transactions and lack of other records indicates less than day-to-day involvement by Mr Madjudin in the business. I note he has letters from 3 potential customers in Indonesia and confirmation of a relationship with Bondall and Gold Koes. However, these successes do not demonstrate day-to-day devotion or involvement by Mr Madjudin in the Australian operations.
30. PAM3 at paragraph 8.1 provides that the visa holder must demonstrate an active, ongoing and senior management role in the business. This involves showing the holder has exercised responsibility in the business on a continuous and daily basis in a specific and identifiable role, and that the holder’s skills have been fundamental to, or have exerted direct influence on, the operation of businesses.
31. The PAM further points out that the purpose behind business skills migration is to attract to Australia highly skilled business people who will use their skills to engage in business in Australia. Paragraph 8.2 details the form which evidence of day-to-day management could take, and includes:
(a)Business correspondence or a statement from the business outlining the visa holder’s duties and involvement in the day to day management of the business;
(b)Business correspondence, emails, attendance at meetings or facsimiles showing participation by the visa holder in day to day management of the research, negotiations or decision making for the business;
(c)If the visa holder has spent most of their time outside Australia, evidence of how the visa holder has been managing, on a day-to-day basis, their Australian business from overseas (i.e. faxes, emails, presence at trade fairs, etc).
32. While the guidelines simply suggest a means of demonstrating daily involvement, Mr Madjudin has not provided the type of evidence suggested beyond a small sample of correspondence and has provided no alternative evidence of significant involvement in the affairs of Citra on a regular basis apart from his claims about making contacts. Certainly Mr Madjudin has established some useful contacts in Australia and in Indonesia but his achievements to date do not suggest a great deal of time spent in endeavours to develop Australian business.
33. Mr Madjudin has spent most of his time out of Australia and has presented little evidence of the type suggested in PAM3. I accept that modern means of communication make it less necessary to be in Australia in order to conduct an Australian business. However, the limited amount of correspondence Mr Madjudin has presented as evidence of his endeavours together with the small number of transactions he has carried out suggests that he has not spent a great deal of time, let alone time on a continuous and daily basis, engaged in the Australian enterprise. On balance, I am not satisfied that Mr Madjudin meets the criteria in sub-section 134(1)(b).
Does Mr Madjudin have an interest in an eligible business?
34. Even if I am wrong and he does exercise responsibility in the business of Citra on a continuous and daily basis, I am concerned that this is not an eligible business. While Mr Madjudin does have ownership of Citra and has a management role in the company, an eligible business is one which must meet special criteria. Section 134(10) of the Act defines eligible business as one that the Minister reasonably believes is resulting in 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.
17. PAM3 also provides notes about how to interpret the definition of eligible business in subsection 134(10) at paragraphs 7.4 to 7.10. These are similar to the legislative provisions but have a little more detail. Matters that may be taken into account include:
(a)Development of business links (s134 (10)(a)) – Paragraph 7.5 of the PAM states that visa holder must demonstrate that the business, as opposed to the visa holder, has created or will create business links between Australia and the overseas market;
(b)Creation/maintenance of employment in Australia (s134(10)(b)) – Paragraph 7.6 of the PAM provides that the visa holder should demonstrate that by virtue of their involvement in the business, new employment opportunities have been created in Australia, or existing positions have been maintained;
(c)Increase in commercial activity/competitiveness within the Australian economy (s134(10)(f)) – The PAM provides at paragraph 7.10 that the mere existence of a business does not necessarily mean the business is increasing commercial activity and competitiveness. It is expected that the business can demonstrate it has directly enhanced competitiveness/commercial activity in particular ways.
35. PAM3 does little to enlarge on the legislative requirements which are clear already. In terms of these requirements, I note Mr Madjudin has been working towards the development of business links with the international market and has established links for the sale of Bondall products in Indonesia. He has achieved some exports of Australian goods and the possibility of further sales. His sales are not creating competition in the Australian economy but have played a role in expanding sales of Bondall products in Indonesia. He has not created or maintained employment in Australia or met any of the other factors in subsection 134(10) determining the eligibility of a business. His earlier enterprise involving a store may have met some of these criteria but he had sold the business before applying for the present category of visa.
36. PAM3 provides, at paragraph 7.3, that a business may be regarded as a commercial enterprise and going concern where it is engaged in activities for the purpose of profit on a continuous and repetitive basis. This accords with judicial opinions of what amounts to the carrying on business in cases such as that of the High Court in Hope v Bathurst City Council (1980) 144 CLR 1. As well, 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.
37. At the time of the delegate's decision, the evidence before me shows the exports made by Mr Madjudin’s business were:
(i)A shipment on 5 December 2005 worth AUD$98,213 (Bondall products to Jakarta);
(ii)A shipment on 22 March 2006 worth AUD$24,266 (1kg Gold Bar to Singapore);
(iii)A shipment on 25 June 2006 worth AUD$26,000 (Bondall products to Jakarta);
(iv)A shipment on 18 November 2006 worth AUD$44,646; and
(v)A claimed shipment, referred to as being 'in the process of being sent' in the applicant's letter of 11 January 2007, worth AUD$20 000.
38. These transactions show an element of continuity from December 2005, commencing two years after the grant of the visa, and through to January 2007. In deciding whether Citra is an eligible business, I take into account that Mr Madjudin arranged these four or five export transactions in the period since the grant of his visa in December 2003 until the date of cancellation in April 2007. I also take into account Mr Madjudin’s evidence that he is still negotiating with potential customers in Indonesia. I acknowledge the evidence from Ms Koes and Mr Budianto that they have had a business relationship with Mr Madjudin sine 2005. However, I am not satisfied that Citra or Mr Madjudin’s Australian business has been engaged in continuous and repetitive activity for the purpose of making a profit over the several years during which he was the holder of a subclass 127 business visa. The degree of activity has been insignificant in the context of the overall period and no transaction took place until after service of the Department’s notice of intention to cancel the visa. In addition, the profit margin was very slender and the business does not create the impression that it is carried on for commercial success. This limited achievement and small number of transactions Citra has carried out does not make it an eligible business in my view. Consequently, I am not satisfied that Mr Madjudin has satisfied the criteria in sub-section 134(10) of the Act.
39. For these reasons I find that Mr Madjudin did not have an interest in an eligible business for the purposes of the Act at the date of cancellation, 12 April 2007. As he has not obtained a substantial ownership interest in an eligible business in Australia nor engaged in day-to-day management in accordance with sub-sections 134(1)(a), 134(1)(b) and 134(10) of the Act, there are grounds for the cancellation of his visa.
Consideration of any genuine efforts and the residual discretion
40. The Minister must not cancel a business visa where the holder has made genuine efforts to meet visa conditions. Mr Madjudin’s visa should not be cancelled if he demonstrates that he has made genuine efforts pursuant to sub-sections 134(2) and (3) of the Act. Subsection (3) lists several matters which may be taken into account without limiting a decision maker to those factors. These all concern genuine efforts to obtain a substantial ownership interest in an eligible business in Australia and active participation in day-to day management at a senior level.
41. In paragraph 9.2 of PAM3, guidelines refer to evidence of involvement in the business and list the following factors to assist decision‑makers in determining whether a genuine effort has been made under s 134(3) of the Act:
· business proposals/plans which are genuine, realistic and achievable;
· the existence of partners or joint venturers by formal contract or written agreement;
· continuous and genuine business research such as written evidence of detailed consultations with business advisors (accountant, lawyer, bank/financial institution, business/trade association);
· physical presence in Australia for a significant time;
· transfer or investment of sufficient funds (other than for personal use) to ensure that the business meets the requirements of an eligible business;
· failure to comply with a notice for information under s 137, including notification of address and return of relevant survey forms.
42. In assessing Mr Madjudin’s efforts, I have taken into account the existence of a business plan although I observe that it lacks detail and simply sets out broad objectives. I note Mr Madjudin has business partners in Gold Koes and CV Bondall Indonesia and he has a memorandum of understanding with CV Bondall Indonesia and an acknowledgement of his efforts from the principals of both businesses. He has some interested prospective customers. His proposal does have some prospects of success but Mr Budianto revealed that the business achieved to date is a mere 2 ½% of his turnover in Indonesia.
43. There also is some evidence of genuine research into the conduct of an eligible business in Australia. I note Mr Madjudin once had a 7-Eleven store but sold it because he wanted to operate a different kind of business. In the period of more than three years from the grant of the visa until its cancellation, however, little business has been achieved by Mr Madjudin in Australia. In addition, he has spent little time in Australia while he was a visa holder and he has not transferred much by way of value or assets for use in obtaining an interest in an eligible business. Nor has he acquired a valuable ownership interest during this period. I do not consider his previous investment in 1989 as relevant for inclusion in terms of the subclass 127 visa granted in 2003. The asset acquired in 1989 was sold before 2003.
44. While Mr Madjudin has spent little time in Australia, his evidence is that he has been able to attend to his business commitments in Indonesia as well as devoting time to the development of business for his Australian company. It is understandable in view of the small return generated in Australia that Mr Madjudin spends most of his time in Indonesia. However, the important question is whether Mr Madjudin has made genuine efforts to develop and sustain his Australian business.
45. In forming an opinion about whether Mr Madjudin has made genuine efforts towards the end of satisfying section 134(2) and (3), I take into account the matters I have set out above and note that Mr Madjudin:
· set out in his survey form that he spent 38 hours each week on the Australian business but gave oral evidence that the hours were reduced now that he had established the business.
· prepared his own business plan after he set up Citra.
· entered into a memorandum of understanding with CV Bondall for the purchase and resale of Australian building products in Indonesia.
· researched business opportunities in Australia.
· obtained expressions of interest from potential buyers in Indonesia such as the three persons who wrote to him in February, March and April 2006.
46. I further note Mr Madjudin made enquiries of Australian authorities and experts before he proceeded with his export venture and that he trialled a business in 1998 when he purchased an Australian franchise. While the guidelines suggest the desirability of more detailed and specific enquiries, I accept that Mr Madjudin has researched and investigated options for his intended business in Australia. Nevertheless, Mr Madjudin’s activities are not, in my opinion, sufficiently impressive to warrant the exercise of the residual discretion in his favour.
47. I have borne in mind that in Kim v Ministerfor Immigration and Multicultural and Indigenous Affairs [2004] FCA 31 at [21] Kiefel J suggested that the discretion was available to allow a decision maker to consider in a particular case that further time should be given to the visa holder to undertake what was required of them. However, I do not consider that Mr Madjudin’s case is one where further time will result in satisfaction of the required criteria.
48. After considering all the relevant factors in s 134(3) of the Act, I find that Mr Madjudin has not made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia (s 134(2)(a) of the Act) or to utilise his skills in actively participating at a senior level in the day-to-day management of the business (s 134(2)(b) of the Act). Therefore he does not satisfy s 134(2) of the Act. Overall, his efforts do not warrant the exercise of the residual discretion in his favour.
49. The decision under review is affirmed.
I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Hunt
Signed: [Talaishia Collis]
AssociateDate/s of Hearing 29 November 2007
Date of Decision 17 January 2008
Counsel for the Applicant Mr N PoynderSolicitor for the Respondent Mr S Moloney – DLA Phillips Fox
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