Padilla and Minister for Immigration and Multicultural Affairs

[2006] AATA 922

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 922

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/571

GENERAL ADMINISRATIVE DIVISION		)
Re		JEROME PADILLA

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal Senior Member B J McCabe

Date30 August 2006

PlaceBrisbane

Decision The decision under review is affirmed. The secondary visas will also be cancelled.

...........[Sgd]...........

BJ McCabe

SENIOR MEMBER

CATCHWORDS

IMMIGRATION & CITIZENSHIP – Immigration — business skills visa - substantial ownership interest in an eligible business – ownership interest – cancellation of applicant’s visa – decision affirmed – secondary visas cancelled.

Administrative Appeals Tribunal Act 1975

Migration Act 1958

Hope v Bathurst City Council (1980) 144 CLR 1

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

Puzey v Commissioner of Taxation [2003] FCAFC 197

Re Haman and Minister for Immigration and Multicultural Indigenous Affairs [2002] AATA 1113

REASONS FOR DECISION

30 October 2006   Senior Member B J McCabe

1. A delegate of the Minister wrote to Mr Jerome Padilla on 9 August 2005 to advise a decision had been made to cancel Mr Padilla’s business skills visa pursuant to s 134(1) of the Migration Act 1958 (the Act). Mr Padilla has asked the Tribunal to reconsider that decision. The Minister says the decision should be affirmed because the applicant:

·     has not obtained a substantial ownership interest in an eligible business in Australia, and has not made a genuine effort to acquire such an interest;

·     is not actively participating in the management of an eligible business in Australia, and has not made a genuine effort to do so.

the material before the tribunal

2. The Tribunal was provided with the material required pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. Statements taken from the applicant and his business partner, Mr Anthony Sheads, were tendered into evidence. The applicant also tendered a letter written by a Mr Pedro Celso. Mr Padilla and his wife both gave evidence at the hearing.

3.      The applicant was represented by Ms Julian-Armitage of counsel. Ms McNeil represented the respondent.

the factual background

4.      The applicant previously resided in the Philippines. He made several trips to Australia in 1999 and 2000 before applying for a subclass 127 (business owner) visa. The visa was granted on 26 June 2002. He first entered Australia using the visa on 8 July 2002. He was joined by his wife and his three children, who all hold secondary visas. Two of the children attend university on the Gold Coast.

5.      Mr Padilla formerly ran Interserve Management and Manpower, a firm of recruiters that supplied labour to businesses all over the Philippines. I understand the business was very successful. Mr Padilla retains an interest in the firm. It is now run by managers. He returns to the Philippines every few months to deal with aspects of the business. Those trips typically last a week, but can last as long as a month. He told the hearing he spends about half of his time in Australia.

6.      The applicant began purchasing residential properties in Australia in 2002. He lives in one of them: an apartment in Biggera Waters on the Gold Coast. He derives rental income from the others. He spoke of his intentions to redevelop some of the properties but concedes he has not taken any steps to that end. He says he was acting on the advice of his former migration agent who told him the investments in rental properties would satisfy the respondent’s requirements.

7.      Mr Padilla’s relationship with the migration agent was discussed at some length in the evidence. The agent in question was also a solicitor. He acted for Mr Padilla in relation to the purchase of the properties. They apparently had a professional relationship before the applicant decided to make the move to Australia. Indeed, it appeared the agent was instrumental in making the decision to migrate. Mr Padilla spoke of the agent visiting him at his home in the Philippines. The applicant says he was not properly advised about his obligations to undertake appropriate business activities. He said he only became aware of his obligations in around 2004 when he had direct contact with officials from the respondent. He had ended the relationship with his migration agent by that time.

8.      The applicant said he considered establishing a human resources/recruitment business in Australia not long after he arrived but decided against it after he realised he was not sufficiently familiar with Australia’s industrial relations laws. He claims he was subsequently encouraged by Mr Sheads to reconsider. A decision was made in 2005 to develop a business in this area called Joblink – after the applicant received the notice of intention to cancel his visa. Joblink Providers Pty Ltd was incorporated on 14 December 2005. Mr Padilla and Mr Sheads are directors, and they each hold two shares in the company through trusts. Mr Padilla gave evidence about discussions with Queensland Health with a view to recruiting nurses from the Philippines to work in Queensland’s hospitals. That business is still in its infancy. At the time of the hearing, there had been attempts to recruit two nurses, but there were problems and the process was aborted. Mr Padilla said there were several other candidates being considered. Mr Sheads, who has an interest in the company, said he was also dealing with hospitals in other states. The prospects for this business are unclear.

9.      During the period following his arrival in Australia, the applicant focused on his real estate investments. Some of the investments were made in the joint names of the applicant and his wife. He has also made a number of purchases through a corporate vehicle, Interserve Investments Pty Ltd. The company was registered as a business on 5 September 2002. Mr Padilla owns 1 share in the company; his wife and his son each hold a share. There are no other shareholders. The company’s principal activity appears to be property investment. It acts as a trustee for the applicant’s family trust in this regard.

10.     Mr Padilla began casting around for other business opportunities when he realised those investments might not satisfy the respondent, I was referred to the T documents which include some business plans that were prepared by the applicant’s accountant. They are obviously based on a template document. Mr Padilla did not appear to be familiar with the contents of the plans. I note the financial data included in two of the plans (at pages 271 and 379 of exhibit one) appear to be identical. The applicant seemed surprised by this and blamed his accountant for the error. I am not convinced these plans related to real opportunities. I think they were prepared for the sake of having plans to show the respondent.

11.     Mr and Mrs Padilla both spoke of other business opportunities they have investigated. Mr Padilla said he had exported small quantities of wine to the Philippines. He said he sent about 20 cases of wine to friends about twice a year. He also spoke about his investigation of a potential business venture with RD Tuna Canners in Papua New Guinea in 2003. A letter from Mr Celso of RD Tuna Canneries suggests the plans were dropped when it became apparent the business would not be profitable. It is unclear whether those plans advanced very far before they were abandoned. I was also supplied with a sheaf of business cards recording contacts that the applicant and his wife say they have made with various suppliers of goods and services. The applicant included an explanation for the various business cards in a statement. Most of the cards relate to goods and services acquired in the course of making the property investments. There are a small number of cards reflecting contacts made in relation to other business opportunities. The applicant also referred to his investigation of the possibility of acquiring a Nando’s chicken franchise.

12.     The applicant’s investigations into business opportunities came late in the day. The applicant says that is because he was operating under a misapprehension as to his obligations – a misapprehension engendered by his former migration agent. The applicant does appear to have made an effort to establish a recruiting agency, but that occurred after his visa was cancelled. I am not convinced the other investigations and discussions were carried out diligently or with the expectation they might lead to a viable business. He appears to have focused on his property investments.

the legislation

13. The Minister is entitled (although not obliged) to cancel a business visa pursuant to s 134(1) of the Act if she is satisfied the applicant:

(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.

14. Section 134(2) goes on to say the Minister must not cancel the visa if the applicant has been making genuine (albeit unsuccessful) efforts to comply with s 134(1).

15.     The respondent says the applicant was not involved with an eligible business within the meaning of the legislation. The respondent argues Interserve Investments Pty Ltd is not even operating a business, let alone an eligible business. Ms McNeill, for the Minister, referred to the High Court’s decision in Hope v Bathurst City Council (1980) 144 CLR 1 at 2. In that case, the Court said the concept of carrying on a business denoted “pursuing activities for the purpose of profit, undertaken on a continuous and repetitive basis…”. In Puzey v Commissioner of Taxation [2003] FCAFC 197, the Court said one must look for indicia of trade that suggest a business is being carried on.

16.     The evidence leaves room for doubt about whether Interserve is a business. The company has entered into a number of property transactions, and it presumably collects rent on the various properties it owns. There was little evidence as to the state of its finances.

17.     Even if I were to accept Interserve was a business, I have to be satisfied it is an eligible business. Section 134(10) offers some guidance on this point. It says the decision-maker must be satisfied the business results 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.

18.     I am not satisfied that a passive property investment business like that carried on by Interserve will achieve any of the desirable results identified in s 134(10). I am not satisfied Interserve will achieve any of those results having regard to the half-hearted way in which the applicant has pursued other business opportunities. I am therefore not satisfied Interserve is an eligible business for the purposes of the Act.

19.     The applicant’s only other involvement in what may turn out to be a substantive business is his interest (through Interserve) in Joblink Providers Pty Ltd. The respondent says I should not have regard to that business in the course of my deliberations because it only came into being after the date of the cancellation of the visa. The Minister relies on the decision of Deputy President Hotop in Re Haman and Minister for Immigration and Multicultural Indigenous Affairs [2002] AATA 1113 at paras. 52-53; see also Re Yam andMinister for Immigration and Multicultural Indigenous Affairs [2004] AATA 283 at paras. 8-14 per Senior Member Dwyer and Mr McLean (member). I note the Tribunal took a more inclusive approach in Lau and Minister for Immigration and Multicultural Indigenous Affairs [2002] AATA 703. In that case, the Tribunal was prepared to consider evidence relating to the period after the cancellation decision.

20. I think I should confine myself to considering the evidence of what transpired before the cancellation decision – although it is possible that evidence of what occurred afterwards might still be relevant to the exercise of the residual discretion under s 134(1).

21.     I think the evidence establishes the applicant did not hold a substantial ownership interest in an eligible business in Australia. There is no evidence he has been involved in the management of such a business either.

22. I am not satisfied the applicant made genuine efforts to acquire an eligible business or participate in its management during the period under review. It follows the Minister’s discretion to cancel under s 134(1) has been enlivened.

should the minister cancel the visa under s 134(1)?

23.     There are two matters in particular that must be considered when deciding whether or not to exercise the residual discretion: the applicant’s misunderstanding of his obligations as a result – he says – of his reliance on a professional adviser; and the prospects for success of Joblink Providers Pty Ltd.

24.     The applicant and his wife spoke about their relationship with the migration agent. It appears they were not well-served by his advice. It is possible the applicant might have arranged his business affairs differently if he had received better service. Evidence that the applicant had investigated a number of other business ventures in the period between 2002-2004 does not sit comfortably with his claims that he was ignorant of his obligations under the law.

25.     It is difficult to know whether the applicant’s confidence in the future of Joblink Providers Pty Ltd is justified. The evidence presented at the hearing does not suggest the business has been an immediate success.

26. After considering these matters, I am satisfied it is appropriate to cancel the applicant’s visa pursuant to s 134(1).

conclusion

27.     The decision under review is affirmed. It follows the secondary visas will also be cancelled. I understand there was no application made with respect to these visas.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe.

Signed:         .....................................................................................
  Associate      Adam Ryan

Date of Hearing  21 August 2006
Date of Decision  30 October 2006
The applicant was represented by Ms Julian-Armitage, of Counsel.
The respondent was represented by Ms McNeil.