Malcov and Minister for Immigration and Multicultural and Indigenous Affairs
[2005] AATA 1290
•22 December 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 1290
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/1455
GENERAL ADMINISTRATIVE DIVISION ) Re
Simion Malcov
Applicant
And
Minister for Immigration and Multicultural and Indigenous Affairs
Respondent
DECISION
Tribunal Professor GD Walker, Deputy President Date22 December 2005
PlaceSydney
Decision The tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration on the basis that the applicant has satisfied the requirements of s 134(2) of the Migration Act 1958.
..............................................
Professor GD Walker
Deputy President
CATCHWORDS
IMMIGRATION – business skills visa – cancellation of business skills visa and secondary visa – whether primary visa holder has a substantial ownership interest in an eligible business, whether he has “utilised his skills” in that business, and whether he continues to have a substantial interest in that business – examination of the primary visa holder’s business activities in Australia including time spent in Australia – examination of whether there will be hardship if the visa is cancelled – found that the applicant’s involvement in the Russian Coachman does satisfy the requirements of s 134(2) - the decision under review is set aside and the matter remitted to the respondent for reconsideration on the basis that the applicant has satisfied the requirements of s 134(2) of the Migration Act 1958.
Migration Act 1958 ss 134(1), 134(2), 134(3), 134(9), 134(10), 135
Migration Series Instructions No 133: Visa cancellation under subdivision G – cancellation of business visas
Freeman v Secretary, Department of Social Security (1988) 19 FCR 342
Re Griffiths and MigrationAgents RegistrationAuthority [2001] AATA 240
Re Halim and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767
Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703
ReYam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283
REASONS FOR DECISION
22 December 2005 Professor GD Walker, Deputy President Summary
1. The applicant, Simion Malcov, aged 45, a citizen of the Republic of Moldova, came to Australia in 1999 with his wife, Mariana Malcova, and daughters, Ana Malcova and Alena Malcova. On 6 April 1999, he lodged an application for a subclass 127 business skills visa. On 7 February 2000, a business skills visa was granted to Mr Malcov with secondary visas to his family.
2. On 29 July 2003, the respondent cancelled Mr Malcov’s business visa on the grounds that he does not have a substantial ownership interest in an eligible business in Australia, he does not utilise his skills in participating in that business, and he does not intend to continue that business in the future. (The delegate also cancelled the secondary visas held by Mr Malcov’s family.) That is the decision to be reviewed by the tribunal.
Issue
3. The issue for the tribunal is whether it is satisfied that the applicant has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia, has made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of the business and whether he intends to continue to make a genuine effort and if it is satisfied that the applicant does not meet one or all of the criteria, whether it should exercise its discretion to cancel the business visa granted to Mr Malcov and to Mrs Malcova as a secondary visa holder.
Background
4. Mr Malcov, who was born in Orhei, Republic of Moldova, on 25 October 1960 and is aged 45, and his wife, Mariana Malcova, who was born in Taraklia, Republic of Moldova, on 14 October 1960 and is aged 45, have two daughters: Ana Malcova who was born on 17 December 1984 and is aged 21, and Alena Malcova who was born on 23 April 1991 and is aged 14. Mrs Malcova and her daughters are listed as family members in respect of Mr Malcov’s business skills visa.
5. On 6 April 1999, Mr Malcov applied, through his migration agent, Michael Ryvchin, of Rykono Translating Interpreting and Migration Services, of Sydney, for a subclass 127 business skills visa as the director-general of Zikos Production, a biscuit manufacturing company of which he owned 40 per cent of the shares as at August 1996 (T5 p49 and T8 p211). His responsibilities as director-general were stated to be: (a) to co-ordinate and develop the factory’s financial turnover, (b) make directions for a production trading system, (c) increase profits from manufacturing production, (d) develop production including growth and new directions, (e) arrange shareholders’ meetings, and (f) represent the company in dealings with the republic and foreign organisations and firms (T p212).
6. On 7 February 2000, he was granted a business skills visa and a secondary business visa was granted to his wife covering their two daughters (who were both under 18 years at that time) (T9 p213). The visas were valid for three years from the date of entry into Australia. Mr Malcov entered Australia on 12 June 2000, departing again on 6 August 2000.
7. By email sent from the Department of Immigration, Multicultural and Indigenous Affairs (“DIMIA”), Moscow office, on 7 February 2000, the applicant’s migration agent was informed that he must ensure that his client, upon his arrival in Australia, lodged a form 922 (notification of change of address) with DIMIA in Canberra (Sup T2 p2). By email of 11 February 2000, his migration agent “guaranteed” that his client would comply (Sup T3 p3). That form was never received by the department.
8. Mr Malcov returned to Australia on 30 December 2001.
9. By letter from DIMIA dated 24 May 2002, Mr Malcov was asked to complete a “Survey of Business Skills Migrant – 24 Months (form 1010)”, returnable to the department by 12 July 2002 (T11 p225). The applicant did not respond to that letter. On 24 August 2002, Mr Malcov departed Australia, returning again on 31 December 2002. He departed again on 27 January 2003, returning on 1 May 2003.
10. On 2 April 2003, DIMIA notified the applicant of its intention to cancel his business visa under s 134 of the Migration Act 1958 (“the Act”) for failure to meet the requirements of his business skills visa, including that he did not respond to the 24-month survey concerning his business activities which he had previously acknowledged was a requirement of his visa; he had not obtained a substantial ownership interest in an eligible business in Australia; had not utilised his skills in actively participating in that business at a senior level on a day-to-day basis; and did not intend to continue holding a substantial interest in an eligible business and using his skills in that business (T12 p226). He was invited to respond to the Department’s intention and provide evidence in support of his claim by 9 May 2003. The letter was addressed to Mr Malcov at 44/7 Elliott Street, Surfers Paradise, QLD 4217 (T p226) and a copy sent CC: 1 Laurel Court, Sorrento, QLD 4217 (T p228). On the same day, DIMIA also notified Mrs Malcova of its intention to cancel her business skills visa and that of her daughter Alena and inviting her to respond by 9 May 2003 (T16 p235). That letter was also addressed to 44/7 Elliott Street, Surfers Paradise, QLD 4217 (T p226) and a copy sent CC: 1 Laurel Court, Sorrento, QLD 4217 (T16 p235). A similar letter was also sent to Ana Malcova (T14 p232).
11. On 29 July 2003, a delegate of the respondent decided to cancel Mr Malcov’s business skills visa on the grounds that he had failed to comply with his visa requirements by completing the 24-month business skills survey and that in the absence of that survey, the delegate was not satisfied that the applicant had obtained a substantial ownership interest in an eligible business in Australia, or that he was utilising his skills in participating at a senior level in the day-to-day running of that business and that he did not intend to continue to have a substantial ownership or participate in the day-to-day running of the business (T2 p12). That letter was forwarded to Mr Malcov at 44/7 Elliott Street, Surfers Paradise, QLD 4217. On the same day, the business skills visas of Mrs Malcova, Ana and Alena were also cancelled.
12. On 9 November 2004, the solicitor for the applicant, Christopher Levingston, of Christopher Levingston & Associates, solicitors, lodged an application for a review of this decision by the tribunal (T p4). Mr Levingston also lodged with the application a letter advising that his client had received only oral notification of the cancellation of his visa on 1 November 2004 and that neither the applicant nor his wife had ever received the written decision record. He stated that he had contacted the director of the business skills unit of DIMIA on 2 November 2004 requesting a copy of the written decision and that it would be filed with the tribunal as soon as it was received. On 9 November 2004, the tribunal informed the applicant’s solicitor that unless the tribunal received the written decision, the application could not be accepted. On 17 January 2005, Mr Levingston lodged an application for an extension of time for the lodging of an application for review which was opposed by the solicitor for the respondent, Stella Koya, of Phillips Fox solicitors. On 22 March 2005, having heard oral arguments from both parties, the tribunal granted an extension of time for the filing of the application with the tribunal.
13. At the hearing of the substantive application, the applicant was represented by Christopher Levingston, solicitor, Christopher Levingston & Associates, and the respondent was represented by Lenny Leerdam, solicitor, Phillips Fox solicitors. The evidence before the tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the T Documents”) together with the evidence tendered by the parties at the hearing. Oral evidence was given in person by Simion Malcov, Mariana Malcova and Ana Malcova.
Applicable Legislation and Policy
14. The principal legislation is contained in sections 134 to 137 of the Act. Departmental policy with regard to the cancellation of business visa is contained in s 134 of the Migration Series Instructions No 133 – Visa cancellation under subdivision G – cancellation of business visas.
15. Section 134 of the Act empowers the Minister to cancel a business visa in certain circumstances. The relevant provisions in Mr Malcov’s case are as follows:
134. Cancellation of business visas
(1) Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment-linked visa or a family member's visa), by written notice given to its holder, if the Minister is satisfied that its holder:
(a) has not obtained a substantial ownership interest in an eligible business in Australia; or
(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or
(c)does not intend to continue to:
(i)hold a substantial ownership interest in; and
(ii)utilise his or her skills in actively participating at a senior level in the day-to-day management of;
an eligible business in Australia.
(2)The Minister must not cancel a business visa under subsection (1) if the Minister is satisfied that its holder:
(a) has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia; and
(b) has made a genuine effort to utilise his or her skills in actively participating at a senior level in the day-to-day management of that business;and
(c) intends to continue to make such genuine efforts.
(3) Without limiting the generality of matters that the Minister may take into account in determining whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account any or all of the following matters:
(a) business proposals that the person has developed;
(b) the existence of partners or joint venturers for the business proposals;
(c) research that the person has undertaken into the conduct of an eligible business in Australia;
(d) the period or periods during which the person has been present in Australia;
(e) the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;
(f) the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person;
(g) business activity that is, or has been, undertaken by the person;
(h) whether the person has failed to comply with a notice under section 137;
(i)if the person no longer holds a substantial ownership interest in a particular business or no longer utilises his or her skills in actively participating at a senior level of a day-to-day management of a business:
(i) the length of time that the person held the ownership interest or participated in the management (as the case requires); and
(ii) the reasons why the person no longer holds the interest or participates in the management (as the case requires).
16. Section 134(10) of the Act includes the following definitions:
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.
established business in Australia visa means a business visa a criterion for whose grant:
(a) relates to the applicant having an established business in Australia; or
(b)is that the applicant is a member of the family unit of the holder of a visa a criterion for whose grant is as mentioned in paragraph (a)
…
ownership interest, in relation to a business, means an interest in the business as:
(a) a shareholder in a company that carries on the business; or
(b) a partner in a partnership that carries on the business; or
(c) the sole proprietor of the business;
including such an interest held indirectly through one or more interposed companies, partnerships or trusts.
17. Paragraph 4.3.2 of the Migration Series Instructions (MSI) notes that eligibility relates to the achievement of the stated objectives through the activities of the business, not directly to the size or scale of the business.
18. Paragraph 4.5.1 of the MSI also provides guidance as to whether a genuine effort has been made for statutory purposes. While the guidelines are not binding on the tribunal and should not be applied so as to impose requirements which go beyond the statute (see Re Drake and Minister for Immigration (No 2) (1979) 2 ALD 634), the guidelines militate against inconsistency in decision making (see Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 at 695). The guidelines state:
4.5 What is a “genuine effort”?
4.5.1 If, after 24 months, a migrant is not in business, he/she must establish that a “genuine effort” has been made to engage in business since arrival. The Minister must assess “genuine effort”. S 134(3) of the Act lists any or all of the factors which the Minister may take into account:
…
[Notes referring to factors listed above. Decision makers may take account of these notes to guide them in the interpretation of 4.5.1
a. business proposal which is considered genuine, realistic and achievable;
b. formal contract with partners or joint venturers;
c. written evidence of detailed consultations with at least three business advisers (accountant, lawyer, bank/financial institution, State/Territory government business development office, Austrade, business/trade association);
d. physical presence in Australia for more than six months since first arrival as a Business Skills class migrant;
e. transferred to, and retained in, Australia at least 50% of the funds indicated as available for transfer within two years (under Factor 4 of the Business Skills Points test);
f. minimum A$100,000 or 10% ownership previously held by the person. If the person is no longer in business, the reasons for loss of ownership are also relevant.
g. minimum A$100,000 business activity as indicated by turnover. This may include other business activity not considered “eligible business” but cannot include passive investment, eg, purchase of shares.
h. failure to comply with a notice for information under s 137, mandatory monitoring of Australian address and return of survey forms.]
4.5.2 While failure to meet one or more of these indicators may normally lead to a visa being cancelled, it will not necessarily mean that a visa will be cancelled. The decision maker must give weight to all relevant factors in a case (of which those set out in subsection 134(3) above may only be some) and reach a decision on that basis. For example, while the factors listed in 4.5.1 above may be indicative of “genuine effort”, lack of them will not necessarily be decisive. The decision maker must decide, on the ordinary meaning of the words, whether the visa holder has made “genuine effort”. A decision maker may still decide not to exercise the discretionary power to cancel the business visa even if it is assessed that no genuine effort has been made.
19. In the case of Mrs Malcova and her daughters, ss 134(4), (5) and (6) are relevant:
(4) Subject to subsection (5) and to section 135, if:
(a) the Minister cancels a person's business visa under subsection (1) or (3A);and
(b) a business visa is held by another person who is or was a member of the family unit of the holder of the cancelled visa; and
(c)the other person would not have held that business visa if he or she had never been a member of the family unit of the holder of the cancelled visa;
the Minister must cancel the other person's business permit or business visa by giving written notice to that person.
(5) The Minister must not cancel the other person's business visa under subsection (4) if the cancellation of that visa would result in extreme hardship to the person.
(6) The Minister is taken not to have cancelled a person's business visa under subsection (4) if the Administrative Appeals Tribunal has set aside the decision of the Minister to cancel the business visa of the relevant person to whom paragraph (4)(a) applied.
20. Section 134(9) of the Act provides:
(9) The Minister must not cancel a business visa under subsection (1),
(3A) or (4) unless a notice under section 135 was given to its holder within the period of 3 years commencing:
(a) if its holder was in Australia when he or she was first granted a business visa—on the day on which that first visa was granted; or
(b) if its holder was not in Australia when he or she was first granted a business visa—on the day on which its holder first entered Australia after that first visa was granted.
21. Section 135 of the Act provides:
Representations concerning cancellation of business
visa(1) Before cancelling a visa under subsection 134(1), (3A) or (4), the Minister must give its holder a written notice:
(a) stating that the Minister proposes to cancel the visa; and
(b) inviting its holder to make representations to the Minister concerning the proposed cancellation within:(i) if the notice is given in Australia—28 days after the notice is given; or
(ii) if the notice is given outside Australia—70 days after the notice is given.
(2) The holder may make such representations to the Minister within the time specified in the notice.
(3) The Minister must give due consideration to any representations.
(4) If:
(a) the time specified in the notice ends after the end of the period referred to in subsection 134(9); and
(b) at the end of the period of 90 days commencing at the time specified in the notice, the Minister has not made a decision on whether to proceed with the cancellation;
the Minister is not to proceed with the cancellation.
(5) If the Minister decides not to proceed with the cancellation, the Minister must give its holder written notice to that effect.
Evidence on the “genuine effort” issue
22. Mr Malcov speaks basic English but a Russian interpreter was sworn to assist him and Mrs Malcova to give evidence. Mr Malcov pointed out that in the statement of his intentions supplied with his application for a business visa in 1999, he related how he had visited Australia and New Zealand and had held brief discussions with several companies such as Goodman Fielder Pty Limited (“Goodman Fielder”) and DDS Food Services Pty Limited (“DDS Foods”), both of which are based in New South Wales. He received offers from Goodman Fielder to exchange products with Zikos Productions (“Zikos”). DDS Foods were interested in expanding their operations and building a food processing factory in New South Wales using Mr Malcov’s experience, knowledge and financial support.
23. The family arrived in Australia on 12 June 2000 at Sydney. Because they had some friends on the Gold Coast in Queensland who knew of two suitable girls’ schools for their two daughters, Mr and Mrs Malcov enrolled their daughters at school in Southport. Mr Malcov remained in Australia until 6 August 2000 when he returned to Moldova to prepare his business, Zikos, for sale in accordance with his expressed intentions. Moldova is a small country of only two million inhabitants and its trade with Russia was hampered by heavy tariff barriers. It does not have a strong economy and was recently adjudged by an international study to be Europe’s poorest country.
24. Mr Malcov realised that it would take a long time to find a buyer for a substantial business with 300 employees in Moldova and even more difficult to obtain a satisfactory price for it. He therefore resolved to move the business from Moldova to Moscow, taking the Italian-built production line, which was the business’s most important asset. In Moldova he owned 82 per cent of the corporation and on moving the operation transferred the building to his Moldova partners.
25. In Moscow he had the opportunity of obtaining strong partners who provided the building and premises. The move gave the corporation access to the Russian market of 160,000,000 people and although Mr Malcov’s share in the company was reduced to 51 per cent, he calculated that he could raise the funds he needed for his Australian operations by selling a smaller share of it than would have been necessary if the business had remained in Moldova.
26. As Mr Malcov saw it, he was acting in accordance with the intentions he had expressed to DIMIA in his application, as he was still in the same business of producing biscuits through the same company and with the same equipment, but had simply moved it to a more promising location where he could develop the business further so as to obtain a more satisfactory return on sale. His intention remained to sell his share of the business and use the funds to establish the proposed operation in Australia.
27. The move to Russia proved more complex and time-consuming than expected, however, and part of the company’s market was lost. When he sold his share of the business he consequently had to take a substantial loss. Nevertheless, he was able to transfer $500,000 to Australia, and as part of the settlement with his Moscow partners obtained the ownership of the land, valued at US$1 million, on which the Moscow factory stands. That landholding is not, however, producing any rental income. Until about four years ago, as a legacy of the communist period, Russian law did not permit private ownership of land. Even now it is legally complicated to establish a leasing arrangement as a proper earning proposition. Mr Malcov regards the Moscow land as a long-term investment and believes he will be able to sell it for a good price in the future.
28. The processing of the visa application took about 12 months and Mr Malcov signed the contract with his Russian partners to transfer the business to Moscow three months before the visa was granted. Consequently, he was contractually committed to the move and could not have extricated himself from it without sustaining severe losses. Nevertheless, his intentions as stated remained the same, to move to Australia with his family, establish a branch of Zikos here and export products to Russia, taking advantage of the opportunities in that country for sales of better grades of biscuits.
29. During the time occupied by processing the visa application and completing the move of the factory to Moscow, however, the plans of his intended Australian business partners had changed. Further, he realised that he had underestimated the capital requirements of the project and that his then very limited knowledge of English would be a serious handicap. After a year had elapsed from his original arrival in Australia, he realised that he would need to invest in some other kind of business even before completing the sale of the Moscow factory, and began investigating possibilities here. His migration agent, Michael Ryvchin, was aware of his position and suggested acquiring the Coachman, a well-known restaurant located in the Surry Hills area of Sydney that had been established for over 40 years and had an annual turnover of some $400,000. Mr Ryvchin knew something about the business and was in a position to help operate it because of his knowledge of English, of Sydney conditions and of the basic legal and taxation requirements. Mr Malcov visited the restaurant a number of times, compared it with other Russian restaurants in Sydney and discussed the idea with friends. He checked the details of the lease and the premises and noted that it was an interesting building. He concluded that it was possible to operate the business profitably on “a higher level” and thinks that he achieved that objective.
30. Contracts for the sale of business were exchanged in August 2002. Mr Malcov took an 80 per cent share of the business, while his partner Mr Ryvchin was to hold 20 per cent. Mr Malcov did not remain in Sydney for the trial period or the training period, leaving it to Mr Ryvchin and Mrs Malcova to take part in those programs. From his viewpoint he had more important concerns in Moscow at that time relating to the sale of the biscuit factory. The purchase of the restaurant, now renamed “The Russian Coachman”, was completed in September 2002 for a total purchase price of $200,000 including trading stock.
31. During his absences in Moldova and Moscow, Mr Malcov remained in continual contact with Mr Ryvchin and Mrs Malcova, speaking to his wife by telephone two or three times a day. He gave detailed instructions on the restaurant’s development and management, which she endeavoured to carry out precisely. The chef was responsible for ordering provisions and there was an accountant to take care of the bookkeeping, but Mrs Malcova was on the premises every day it was open, both during the day and in the evening, supervising staff, welcoming guests and when necessary supervising kitchen operations. Their daughters Ana and Alena also worked in the business, on a voluntary basis. Ana in particular acted as an interpreter for her mother when dealing with tradesmen, the council and other authorities.
32. The business operated quite successfully but there were certain ongoing problems. The establishment is located in a residential area and there were complaints from neighbours about the volume of the music from the live band. Ana assisted in the negotiations with the council over an acoustic evaluation, and it seems as if the matter could be resolved, but a number of other problems appeared not to have a ready solution, Mr Malcov said. One was that the lease was for a short period and there were regular market rent reviews. Further, the shortage of parking in the immediate area seemed insoluble.
33. During the time he owned The Russian Coachman, from September 2002 to March 2004, Mr Malcov held the position of general manager. He had the chef reporting to him and assumed overall responsibility and day-to-day management of the chef, the two kitchen hands and four waiters and waitresses. The restaurant had a capacity for between 200 and 250 customers at any one time. Its main source of income was functions and parties, and the business was very busy. While Mr Malcov was there he also took over the responsibility for meeting the customers and taking bookings. He paid for restaurant supplies, utilities and services as requested by the chef, and assumed overall responsibility for its operations on a five-day a week basis.
34. He eventually decided to sell the business, after first consulting his equity partner, Michael Ryvchin. The restaurant was placed in the hands of a business broker and after some time was sold at a modest profit of $20,000. After that Mr Malcov undertook some English language training at Roseville Community College for about six months, while at the same time looking for a new business. Between about April 2004 and September 2004 he approached a number of business brokers and inspected a number of business opportunities, mainly restaurants in the central business district. In two instances he proceeded as far as paying a deposit, including on the Double Bay Steak House opposite the Cosmopolitan Hotel, until he discovered that the building owner was planning to construct a third floor on the building, which would have disrupted restaurant operations.
35. In due course he settled on the purchase of the Giardinetto Restaurant, at 62 Stanley Street, Darlinghurst, for a purchase price of $70,000. This was a smaller business that Mr Malcov thought he could develop himself and improve its overall profitability for the benefit of himself and his family. It had a longer lease and no market rent reviews. Since purchasing the restaurant he has invested in it through building a cool room, gaining various licenses through the council, refurbishing the bar and redesigning the dining area, besides purchasing some new equipment.
36. This restaurant seats about 70 people and is a smaller scale operation than The Russian Coachman. Mr Malcov is the general manager and assumes responsibility for its day-to-day running. He employs one chef, one kitchen hand and one waiter. He greets arriving customers, takes telephone bookings and makes the payments associated with the business, and accounts for the cash receipts. He also pays all accounts.
37. In Mr Malcov’s view, the overall prospects for the business are good. The restaurant is quite well known, the staff costs are low and the opportunities for higher profits are relatively promising. A 10-year lease was entered into on 2 November 2004. The experience of The Russian Coachman taught him a number of valuable lessons about the day-to-day running of a business in Australia. He recognises that his relative lack of English continues to be an impediment, but he is confident that with his family’s assistance this opportunity will allow his family to lead a good life in Australia and also permit him to continue to create and develop business opportunities in this country.
Other visa obligations – evidence
38. As was noted above, the immediate reason for cancellation of the visas in this case was Mr Malcov’s failure to respond to his 24-month business survey or reply to other correspondence originating from the department. Consequently, the delegate had no reason to believe that Mr Malcov had taken the necessary interest in an eligible business or had made a genuine effort to do so. Quite properly, he proceeded to issue the notice of intention to cancel the visa. The delegate did not have the opportunity to consider the evidence that was made available at the hearing.
39. The main reason for that state of affairs was the failure to lodge the required Form 922s notifying the department of Mr Malcov’s current address. Since his initial entry into Australia, he has lived at four addresses, in Sorrento, Queensland, Surfers Paradise, Queensland, Waterloo, New South Wales and his current address at the house he purchased in November 2003, at Pagewood, New South Wales. The migration agent, Mr Ryvchin, appears to have been remiss in failing to lodge the Form 922s. The family did, however, endeavour to satisfy its obligation to keep the department informed of its address in a more informal way. On two occasions, Ana Malcova accompanied her mother to the DIMIA office at Southport, Queensland, to notify changes of address. She also visited the Sydney office early in 2003 with the intention of giving the Waterloo address, but as the main purpose of that visit in her mind was to enquire about the requirements for her to obtain citizenship, she is not sure that she thought to mention the new address. That seems likely, as the department’s correspondence was in fact sent to the wrong address.
40. As the applicant had not in fact obtained an interest in an eligible business within two years of his arrival, the applicant chose to conduct the case before the tribunal on the basis of having made a “genuine effort” to engage in business within s 134(3) of the Act. In the alternative, the applicant submitted that he had not been properly served with the notice required by s 134(9), arguing that Mr Ryvchin’s functions and responsibilities as the applicant’s migration agent did not cease with the grant of the subclass 127 visa but continued until he had satisfied the conditions on which that visa was granted, including the submission of the necessary periodic business reports. Consequently, the statutory surveys and notices should have been sent to Mr Rhvchin as authorised recipient under s 494D. I will return to that submission below.
Application of the Law and Findings of Fact
41. I note by way of preliminary observation that the tribunal should have regard to all relevant evidence to enable the making of findings of fact in relation to the cancellation of Mr Malcov‘s and Mrs Malcova’s and their two children’s visas as at the date of the decision, that is 29 July 2003: Freeman v Secretary, Department of Social Security (1988) 19 FCR 342; Re Griffiths and MigrationAgents RegistrationAuthority [2001] AATA 240. The tribunal has previously found that it is entitled to look at future intentions (see Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703; Re Halim and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767). The respondent in her statement of facts and contentions (Exhibit R2), submits, however, “that whilst activities and transactions after the date of cancellation may be relevant to establish intention, they are only of assistance to the Tribunal if they represent the outcome of preparatory activities commenced prior to cancellation”.
42. The decision to cancel the applicant’s business skills visa was made pursuant to s 134(1) of the Act on the grounds that the delegate was not satisfied that Mr Malcov (T p15):
(a)have not obtained a substantial ownership interest in an eligible business in Australia; or
(b)are not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or
(c)do not intend to continue to:
(i)hold a substantial interest in; and
(ii)utilise his skills in actively participating at a senior level in the day-to-day management of;
an eligible business in Australia.
The terms “ownership interest” and “eligible business” are defined in s 134(10), set out above.
43. Section 134(2) provides that the Minister must not cancel a business visa under s 134(1) if the Minister is satisfied that the person:
(a)has made a genuine effort to obtain a substantial ownership 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.
When considering whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account the matters set out in subsection (3), set out above.
44. The applicant and respondent agreed that a preliminary issue was whether the applicant had been properly served with a notice of intention pursuant to s 135 of the Act within the three years period commencing on 12 June 2000 (being the date he first entered Australia).
45. Turning then to s 134(2)(a), the first issue is whether the tribunal is satisfied that Mr Malcov has made a genuine effort to obtain a substantial ownership in an eligible business in Australia. What constitutes an “eligible business” is defined in s 134(10), set out above. As to what constitutes “genuine effort”, Senior Member Dwyer in ReYam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 notes at paragraph 88 that:
The Act does not specifically include any requirement that the “genuine effort” must be likely to succeed, or must meet any threshold level, beyond being genuine.
46. In her statement of facts and contentions, the respondent submits that while the applicant went into partnership with Mr Ryvchin in the restaurant business known as “The Russian Coachman” in September 2002 (the business being sold in March 2004), there is no evidence that he had a substantial interest in this business and there is no evidence that it meets the criteria in s 134(10) of the Act (Exhibit R2).
47. The second issue is whether the tribunal is satisfied that the applicant has made a genuine effort to utilise his skills in actively participating in the day to day management of that business (s 134(2)(b)).
48. Taking those two issues together, the respondent began by pointing out that this case involved assessment of matters of degree and of subjective considerations, informed by impressions of the applicant and his circumstances and intentions. Much of the evidence adduced by the applicant, Mr Leerdam said, was recent, and had not been available to the delegate when making his decision because of the problems in the delivery of the department’s documents. The delegate’s decision had therefore been reached without the benefit of that information.
49. This later evidence was admissible only if it shed light on circumstances at the date of the cancellation. During the relevant three-year period, Mr Leerdam argued, the appellant’s focus had been on his business in Moldova and Russia and the transfer of the manufacturing operations to Moscow. At an early stage he altered the plans he had put before the department, and his focus had been overseas until the business in Moscow had been sold in May 2003, or two years and 11 months after his initial arrival in Australia.
50. He realised that he needed to act soon to become involved in a business in Australia but had no real interest in the purchase of the Coachman restaurant. He considered its potential but the legislation requires active involvement in the business operation. He had been actively engaged on a daily business in his overseas business operations and the purchase of the Coachman restaurant in August 2002 had been entered into after he had left Australia. He took no interest in the training or trial periods but proceeded with the acquisition simply because he needed it for visa purposes. He saw its potential but left its running to his wife and daughters. Mrs Malcova was the one actually involved with it from day-to-day. The applicant might have given the orders, but he was not actually involved in carrying them out, that being his wife’s responsibility.
51. The “genuine effort” required by s 134(2) involved a good deal of subjectivity, Mr Leerdam said, but had to be considered at three levels; obtaining a substantial ownership in an eligible business, making a genuine effort to use his skills at a senior level in its day-to-day management, and the intention to continue to make such genuine efforts.
52. His involvement did not satisfy the criteria in s 134(3), Mr Leerdam submitted. His original business proposals and research were never used because his plans changed at an early stage. The restaurant was not his main concern but was purchased only for visa compliance purposes. He had spent over two years in Australia during the relevant period, which is longer than in some other similar cases, but for much of that time while not actually involved in the Coachman business. The Giardinetto business could not be taken into account because negotiations for its purchase did not even begin until, unknown to Mr Malcov, his visa had already been cancelled.
53. While he did own 80 per cent of the Coachman business, that was a small stake compared with his holdings in Russia. Again, while he did transfer $500,000 to Australia in April 2003, that was only three months before the decision to cancel his visa and two months before its expiry. He had failed to comply with a notice under s 137 as the relevant communication had been returned unclaimed. As regards criterion (i), he had acquired the Coachman business only 10 months before cancellation and for eight of those months was overseas. Overall, he had not made a genuine effort as required by s 134(2).
54. On behalf of the applicant Mr Levingston submitted that Mr Malcov’s activities in Moldova and Russia were entirely consistent with the intentions he had expressed in his application (T pp222-223). He had never said it was his intention to sell the Moldova business in situ and its relocation to Moscow offered major advantages that would enable him to maximise the sale price and therefore the amount of funds he would be able to bring to Australia. He brought his family to Australia, enrolled his daughters in school and later purchased a house, making clear his intention to settle permanently in Australia.
55. The delay in moving the Zikos business to Russia and in selling out his share did mean that he had to purchase his Sydney business in some haste, but the Coachman restaurant did qualify as an eligible business. He had indeed returned to Russia before the contract had been signed, not only because he had pressing matters to attend to there but also in order to avoid appearing too eager, so as to improve his negotiating position with the vendors, who he thought had exaggerated ideas about the business’s market value. He left his wife with authority to sign the contract and she carried out his instructions.
56. He maintained regular contact with her, initially by telephone calls two or three times a day, and later by emails. His participation was of a hands-on nature and he did succeed in taking the business to a higher level. This was not a “round robin” of capital payments as so often happens, but a genuine venture in which he had an 80 per cent interest, his partner Mr Ryvchin having the other 20 per cent. Mrs Malcova’s evidence corroborated the close day-to-day involvement Mr Malcov had in running the restaurant, even though he had at the time important ongoing business commitments in Russia.
57. While the business was of a different scope from that contemplated in his original proposals, it did help to maintain employment in Australia and constituted an eligible business. The downsizing of his original plans was brought about by market changes and by the problems of disposing of assets in a small market, in which the valuation of the business alone was shown to have taken six months.
58. Having concluded that the Russian Coachman business would face continuing problems that would be difficult to solve, he decided it would be easier to dispose of it and seek another business, which he did.
59. In my view the applicant has satisfied the requirements of s 134(2). Almost a year before his visa was due to expire, he obtained an 80 per cent holding in the Coachman restaurant. The respondent did not dispute that it was an eligible business, but pointed out that it was a small operation compared with his manufacturing activities in Russia, or for that matter with his original Australian proposals. Nevertheless, the difficulties of selling the Moldova business in situ, the onerous task of relocating it to Moscow, and the intervening changes in market conditions and in the plans and intentions of his proposed Australian co-venturers adequately explain the need to downsize the proposal.
60. To the extent that it was practicable, given the need to manoeuvre the Russian business into a position where it was a viable prospect for sale, he did use his skills at a day-to-day level as general manager in the operations of the Russian Coachman, giving detailed instructions which his wife carried out during his absence, and fully taking charge when he was back in Australia. His activities in Russia and Moldova in preparing Zikos for sale can be regarded as being in the service of his aim to establish a business in Australia.
61. The purchase and development of the Giardinetto business shows that he intends, and at all relevant times has intended, to continue to make use of his business skills and capital in Australia and has made a real commitment to become a permanent resident. If it were relevant I would find it too to be an eligible business on the basis of employment maintenance, but I also think it is likely to be a stepping-stone to larger-scale activities. Mr Malcov is a knowledgeable, astute and energetic businessman. At 45 he is still relatively young and I think there is every chance that he will seek more extensive business opportunities as his knowledge of Australian business conditions and the English language continue to improve.
62. In relation to the specific criteria mentioned in s 134(3), he has developed realistic business proposals both for the Russian Coachman and the Giardinetto, in the former case in partnership with Mr Ryvchin. He has continued to research the relevant markets in Australia and has transferred a substantial amount of capital to Australia which has enabled him to purchase majority control of the Russian Coachman and subsequently complete ownership of the Giardinetto. His failure to comply with the 137 notice appears to have been due to oversights by his migration agent. Although he is legally responsible for those failures, they are to some extent offset by the undisputed attempts of his family to keep the department advised of address changes by personally informing them at department offices.
63. In view of the above conclusion, it is not necessary to consider the application of the implied discretion. For completeness, however, I should mention that the respondent argued that the fact that Mr Malcov retains substantial property in Russia, compared with which his $70,000 initial investment in the Giardinetto is relatively small, should count against exercise of the discretion in his favour. If he had not retained any property interests in Russia, matters might be different, Mr Leerdam said.
64. It is true that the Giardinetto investment was a relatively small one, but that was the result of a deliberate and rational strategy on Mr Malcov’s part to take over a relatively modest business that could be developed into something more substantial and more profitable. I do not think the landholding in Moscow can be regarded as a major distraction or detraction, because in present conditions there is little Mr Malcov can do with it other than treat it as a long-term investment which he will in due course be able to realise by sale, probably at a substantial profit. If that happens, I think that Mr Malcov is the kind of entrepreneur who by that time will have identified other and larger business opportunities in Australia and is likely to put a substantial part of those funds to good use in taking advantage of them.
65. Migration law is aimed at achieving favourable results for Australia and is geared towards practical realities. For that reason I prefer to rest my decision on my assessment of the facts and merits of the case rather on the question of proper service under s 134(9), a matter of pure statutory construction upon which the opinions of reasonable and competent lawyers might differ. As my conclusion on the facts relevant to s 134(2) makes it unnecessary for me to decide the s 134(9) point, I propose not to do so.
66. While I propose to set aside the decision of the delegate in this case, that is not, as I have said before, because of any defect in the decision that the delegate reached on the basis of the evidence available to him. Through no fault of the department’s, the delegate did not have access to the evidence on which I have based my decision.
67. I therefore set aside the decision under review and remit the application to the respondent for reconsideration on the basis that the applicant has satisfied the requirements of s 134(2).
I certify that the 67 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President
Signed: .....................................................................................
AssociateDate/s of Hearing 15 and 16 December 2005
Date of Decision 22 December 2005
Solicitor for the Applicant Mr C Levingston, Christopher Levingston & Associates
Solicitor for the Respondent Mr L Leerdam, Phillips Fox
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