Park and Minister for Immigration and Multicultural and Indigenou S Affairs
[2003] AATA 1021
•10 October 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1021
ADMINISTRATIVE APPEALS TRIBUNAL ) N2002/629; N2002/653
)N2002/652;
GENERAL ADMINISTRATIVE DIVISION ) Re
YONG SU PARK; JOO LIM CHO; SANG HYUN PARK AND JOON HYEONG PARK
Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal MS N BELL, MEMBER Date10 October 2003
PlaceSydney
Decision The Tribunal sets aside the decisions under review and in substitution therefor decides that the First Applicant’s business visa should not have been cancelled and the secondary visas of the Third and Fourth Applicants should not have been cancelled.
[Sgd] Ms. N Bell, Member
CATCHWORDS
IMMIGRATION – subclass 127 business visa and secondary visas – Respondent cancelled business visas on the basis that the First Applicant was not utilising his skills in actively participating at a senior level in the day to day management of the business – decision set aside
LEGISLATION
Migration Act 1958, sections 134(1), (2), (3), (4), (5) and (10), 137
CASE LAW
Tang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 997
Huang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656
Harlim v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767
Widjojo v Minister for Immigration and Multicultural and Indigenous Affairs [2001] AATA 774
Lau v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 703
REASONS FOR DECISION
10 October 2003 MS N BELL, MEMBER 1. This is an application by Mr Yong Su Park (“the First Applicant”), Mr Sang Hyun Park (“the Third Applicant”), and Mr Joon Hyeong Park (“the Fourth Applicant”) for review of a decision, dated 19 April 2002, of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (“the Respondent”) to cancel Business Skills visas issued to the Applicants pursuant to section 134 of the Migration Act 1958 (“the Act”). (T2) Mrs Joo Lim Cho was originally the Second Applicant in these applications. At the hearing of the applications, the Respondent conceded that Mrs Cho had informed the Department of a change of address and therefore had not been properly served in accordance with the Act. On that basis Mrs Cho’s application was conceded by the Department.
2. At the hearing before the Tribunal the Applicants were represented by Mr B Johnston of Addisons, solicitors and the Respondent was represented by Mr C Mantziaris of Blake Dawson Waldron, solicitors.
3. The Tribunal had before it the following documentary evidence:
Exhibit
Document
Date
TD1
Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 T1-15 pp1-93
A1
Applicant’s Statement of Facts & Contentions (with no regard to Paragraph 2.1)
4 November 2002
A2
Statement of Joo Lim Cho (with attachments)
22 October 2002
A3
Statement of Yong Su Park
22 October 2002
A4
Statement of John Crisp
13 June 2003
A5
Statement of Yong Su Park
23 June 2003
A6
Statement of Stephen Victor Thomas
26 June 2003
A7
Brochure relating to the Applicant’s Korean businesses.
A8
Spreadsheet showing agreed dates
A9
Facsimile transmission from ‘Squid’s Ink’ to the Immigration Department informing them of a change of address
13 August 2003
A10
Document titled ‘Request for Access to Documents’.
22 August 2001
A11
Bundle of Telstra call records
4. The First Applicant and Mrs Cho gave oral evidence to the Tribunal as did Mr Stephen Thomas and Mr Greg Crisp.
BACKGROUND
5. The First Applicant was granted a subclass 127 business visa on 20 September 1999 (T6, p74). The First Applicant’s wife, Mrs Cho and their children Sang Hyun Park and Joon Hyeong Park were granted secondary visas (T6, p74). The Applicants first entered Australia under the visas on 21 September 1999 (T6, p74). On 17 December 2001 the Respondent sent the Applicants notices of intention to cancel their visas. (T10, p82). The Applicants did not submit representations opposing the cancellations of their visas. On 19 April 2002, a delegate of the Respondent decided to cancel the Applicants’ visas (T2).
LEGISLATION
6. Section 134 of the Act empowers the Respondent to cancel a business visa in certain circumstances. The relevant provisions of the Act in this case are sections 134(1), (2), (3), (4), (5), and (10) which provide 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).
…
(4) Subject to subsection (5) and to section 135, if:
(a)the Minister cancels a person's business visa under subsection (1) or (3A); an
(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…
…
(10) In this section:
business visa means:
(a) a visa included in a class of visas, being a class that:
(i) has the words "Business Skills" in its title; and
(ii) is prescribed for the purposes of this paragraph; or
(b) a visa:
(i) to which a prescribed provision of the Migration Reform (Transitional Provisions) Regulations applies; and
(ii) that is of a kind prescribed for the purposes of this paragraph; or
(c) a return visa that is granted to a person who is or was the holder of a business permit or business visa;
that is or was granted on or after 17 February 1992.
designated investment has the meaning given by the regulations.
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).
family member's visa means a business visa held by a person:
(a) who is or was a member of the family unit of another person who held a business visa; and
(b) who would not have held the business visa if he or she had never been a member of the family unit of the other person.
investment-linked visa means a business visa a criterion for whose grant:
(a) relates to the holding of a designated investment; 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).
member of the family unit has the meaning given by the regulations.
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.
relevant designated investment, in relation to an investment-linked visa (other than a family member's visa), means the designated investment that was, in deciding to grant the visa, regarded as satisfying the criterion referred to in paragraph (a) of the definition of investment-linked visa.
Return visa has the same meaning as in the regulations.”
ISSUES
7. It is not in dispute between the parties that the First Applicant is the owner of 50 per cent of the issued shares of Park Cho Pty Limited, a company incorporated in New South Wales. It is also not in dispute that, by a contract dated 4 April 2001, Park Cho Pty Limited purchased a motel and licensed restaurant business known as ’Squid’s Ink’ carried on at 690 Pacific Highway Belmont, NSW. The company carries on business as the proprietor of the licensed restaurant and motel.
8. On this basis the Respondent concedes that the First Applicant has a substantial ownership interest in an eligible business in Australia (see section 134(1)(a)).
9. The Respondent contends, however, that the First Applicant was not utilising his skills in actively participating at a senior level, in the day to day management of the business.
10. The First Applicant contends firstly that he has utilised his skills in actively participating at a senior level in the day to day management of the business and, secondly, if that is not accepted, that he has made a genuine effort to do so.
FIRST APPLICANT’S EVIDENCE
11. The First Applicant’s statement, dated 23 June 2003 (Exhibit A5), detailed his businesses in Korea, his intention to sell those businesses and move to Australia and the effect of that plan on the cancellation of his visa. In particular, the First Applicant explained the specialised nature of the industry of excavation and distribution of sea sand and rock building materials for the construction industry and the confidential basis on which he must approach industry contacts in order to identify a buyer for his businesses.
12. The First Applicant explained that his business method is to have staff provide him with regular reports, allowing him to remain uninvolved in routine business matters. He explained that, similarly, he operates the ‘Squid’s Ink’ business through his wife who reports on a daily basis. He said that this keeps him informed of all the crucial aspects of the business and that even if he was in Australia full time he would not be any more involved, being “the directing brain of the business not its arms and legs" (Exhibit A5, p.2). He said that if he was in Australia 365 days a year he would develop other business opportunities, probably larger in scale and utilising his business contacts in Korea. The First Applicant conceded that in his telephone calls to his wife he also discusses personal or family matters but said that on almost every call his wife would report to him on aspects of the business operations. He explained that although his wife is doing very well with the business, his experience and daily input is necessary to maintain the business. The First Applicant said that he has made seven trips to Australia in the nine month period between acquisition of the business to the date of the cancellation of his visa and has made many friends and business acquaintances in the Belmont area where the business is located.
13. The First Applicant said that he also communicated with his wife via fax so that his meetings in Korea would not be interrupted.
14. The First Applicant said that he wishes to settle in Australia and have his children continue to live in Australia, noting that they have spent the majority of their adolescent years in Australia and would not cope with having to live in Korea now. Attached to this statement is a statement by Mr Stephen Thomas, a builder involved in the renovation of the business, and copies and translations of faxes received by the First Applicant from his wife from July 2001 to April 2002.
15. In oral evidence to the Tribunal the First Applicant explained that he owns two businesses in Korea, one which is a construction foundation business which buys stones, makes concrete and constructs and the other a business which collects sand from the sea, washes it and sells it to the construction business. In relation to each company, he is the president or chairman and is in charge of employment, management and supervision. The two companies are separate legal entities.
16. The First Applicant said that when he applied for his visa he intended to sell his Korean businesses and can only do so by discreet personal contacts.
17. The First Applicant confirmed that he bought the ‘Squid’s Ink’ business in July 2001 and has completed extensive renovations since then. He referred to the ‘Squid’s Ink’ profit and loss statement (Exhibit A2, Attachment C), which shows repairs and maintenance as at 30 June 2002 as $224,885.33. He said that he has spent a further $80,000 to $90,000 on renovations since then and has lodged a development application with the Council, which has been approved, to build a further storey on an existing two-storey building at the business and to repair the swimming pool.
18. The First Applicant said that extensive renovations of the ‘Squid’s Ink’ business property took place from July 2001 to April 2002. He said that his role was to direct the renovations including repairs to floors, the deck and hand railing. He said that most of the jobs were done by Mr Stephen Thomas, builder. He said that although he was not in Australia all the time, he came approximately once per month and had frequent telephone conversations with his wife. He said that he would occasionally ask for some work to wait until he could observe it.
19. The First Applicant referred to a record of his telephone account in Korea, which refers to his home phone number in Korea, his wife’s mobile number and landlines relevant to his family or business at Belmont (Exhibit A2, Attachment O). He pointed out that earlier statements of his telephone calls are not available because in Korea one can only obtain itemised accounts for the previous six months.
20. The First Applicant said that his telephone conversations with his wife on every occasion included some discussion about the business. He said that a typical phone call would include a discussion about how the other was feeling, how many guests were staying at the motel, whether the employees were providing a good service to customers and whether the facilities were working well.
21. The First Applicant said that from July 2001 to April 2002 there were no particular problems of a family nature or in relation to his children. He noted that his wife would often communicate with him by fax as well.
22. The First Applicant referred to Korean newspaper and magazine advertisements for the ‘Squid’s Ink’ Restaurant, which were placed in July 2002 in order to attract golfers from Korea to the ‘Squid’s Ink’ business. He said that he had not advertised in Korea in 2001 because the renovations had not yet been completed.
23. The First Applicant said that from the proceeds of the sale of his Korean businesses he plans to open a new business in Australia.
24. In cross-examination the First Applicant said that his business in Korea is worth approximately A$35 million. He described a typical working day as beginning with a walk around his factory at 7am and then a 20 minute meeting with his executives at 8 o’clock. He said that until lunchtime he would meet with associates and attend a business club, ultimately finishing work at approximately 8 to 9pm. He said that he would have approximately five appointments outside the business premises throughout the week.
25. The First Applicant said that in total he has approximately 100 employees, including two personal secretaries, one for each of his businesses, who answer his phones, arrange appointments and organise his schedule.
26. The First Applicant said that he employs managers for both companies. He said that his personnel people are responsible for recruiting and he gives the final go ahead at the end of the recruitment process. He said that throughout the course of managing his businesses he only meets with senior executives. He said that he works an average of ten hours per day when busy but that on some days he only works two hours per day and plays golf for the rest of the day with his business associates.
27. The First Applicant conceded that he has no prior experience in the restaurant and motel business.
28. When asked to name some employees of the ‘Squid’s Ink’ business the First Applicant named five and explained that those five are permanent and at management level. He did not recall any other names stating that other employees are casual employees and that he has some difficulty remembering Australian names.
29. The First Applicant said that he expected that the remainder of the renovations to the restaurant would require approximately $150,000.
30. The first Applicant told the Tribunal that the tariff for the motel is $85 for a small room and $240 for a penthouse suite. He agreed that a lot of minor decisions are undertaken by his wife and that he deals with the larger decisions concerning the business. He said that he regards ‘Squid’s Ink’ as part of his general business empire and agreed that the value of his Korean businesses is much larger than his Australian business. He stated that the proceeds of sale of the Korean businesses will exceed the amount needed to finish the renovations for ‘Squid’s Ink’.. He explained that he will be investing his Korean funds into building development and possibly a white sand for glass manufacturing business. He has in mind exporting to Korea but has not made any inquiries in relation to such a business yet.
31. The First Applicant referred to the contact he had with his wife and said that if his wife faxed him in the morning he would usually respond straight away, there being only a one hour time difference between Australia and Korea. He said if the message was important he would respond straight away. He said that in telephone conversations with his wife, about 20 per cent of the conversation would relate to personal matters and 80 per cent would relate to business. He said that he and his wife have been married almost 20 years and this is their first overseas business. He said that his wife is not very experienced in business matters. He conceded that he is not the person who undertakes contacts with tradesmen, tourist organisers, and purchasing suppliers. He agreed that he has a very valuable business in Korea and that by comparison ‘Squid’s Ink’ is very small. He also agreed that he can only look at very broad issues in relation to ‘Squid’s Ink’.
32. In re-examination, the First Applicant clarified his understanding of the exchange rate between Korean won and Australian dollars. He also noted that ‘Squid’s Ink’ employs a large number of casual staff and that the average turnover of staff is three to four months, in relation to junior staff.
OTHER EVIDENCE
33. In her statement dated 22 October 2002, Mrs Joo Lim Cho stated that she is a 50 per cent shareholder/owner of Park Cho Pty Limited (Exhibit A2).
34. Mrs Cho said that the ‘Squid’s Ink’ business includes a seafood restaurant, accommodation, conference seminar and function rooms, a gazebo and jetty, a boat, catamaran and cruiser hire and tennis, golfing, fishing and education packages.
35. Mrs Cho said that her husband, when not in Australia, telephones her about the business almost every day and referred to a list of telephone calls made by the First Applicant to her, during the period 2 February 2002 to 29 July 2002, from his mobile phone (Exhibit A2, Attachment O). She said that they also communicate by fax and email.
36. She stated that although she and her husband are assisted by advice from their employees, in particular their manager Mr Greg Crisp, all important managerial decisions are referred to them by Mr Crisp and taken by them jointly. Mrs Cho stated that in their daily telephone conversations she and her husband would discuss cash flow, profitability and funding of the business, advertising, publicity, the web site, promotion of the business in Korea and devising tour packages for overseas group tours.
37. In oral evidence to the Tribunal Mrs Cho said that she had advised the Respondent of her change of address and anticipated the two year survey that had to be completed, contacting the Respondent on a number of occasions.
38. She said that when she and her husband took over the ‘Squid’s Ink’ business they had approximately 25 staff including a head chef, sous chef, four apprentices, a resident manager, a function administrator, trainees, a bar manager, waitresses and housemaids. She said that she is responsible for general human resources management and detailed decorating. Mrs Cho said that she has no previous experience in this work.
39. Mrs Cho said that in Korea she ran an early childhood kindergarten and considered that principles of customer service were the same.
40. Mrs Cho said that when they first purchased the business there was a lot of building and renovating work to be done and that the First Applicant made all of the decisions in relation to that. She said that she would only make decisions with her husband and he made most of the decisions and guided her through telephone conversations every day.
41. In relation to Attachment O to her statement, Mrs Cho said that reverse charge phone calls are much cheaper and are not recorded on statements by Telstra. Mrs Cho also referred to the Telstra call record and noted that the highlighted calls were calls she made to the Applicant’s home and office landlines in Korea and to his mobile phones. She said that the remainder of the calls, which are not highlighted, were about private matters.
42. In cross-examination Mrs Cho agreed that the move to Australia was a big change for her, with her children first coming for the purpose of education and then she and her husband joining them. She said that she has one child in year 11 and another who has graduated from high school. She said that she has been in Australia with her children since 1999 and that her husband has mostly been in Korea with frequent visits to Australia. She said that her husband is close to their children and speaks to them by phone frequently. She agreed that in Korea the First Applicant is very busy with his work and enjoyed, when visiting Australia, being able to spend all week with his children. She said that when the First Applicant calls the children he uses the telephone number at their residential address.
43. Mrs Cho said that her husband is experienced in company management and business generally and uses these skills in his management of ‘Squid’s Ink’.. She said that at the Korean Kindergarten she developed skills in dealing with people and uses these skills at ‘Squid’s Ink’.
44. She described an average day as having a staff meeting with Greg Crisp, doing a general inspection and surveying the business finances. She said she has weekly staff meetings.
45. Mrs Cho said that Mr Crisp became involved in management very quickly and went from a waiter to restaurant manager in two weeks, having discussions with the First Applicant and herself about how the restaurant was running. She said that Mr Crisp moved to the office near her as soon as he became restaurant manager. She said he is experienced in the hospitality industry and that his skills were helpful to her in the filing of documents, the required formatting of documents in relation to records of sale, assisting with weddings and conferences, and meeting with her and the head chef on a weekly basis. She said that she and Mr Crisp work well as a team but noted that financial reports are managed by the business accountant and bookkeeper.
46. Mrs Cho said that she and Mr Crisp are able to manage the day to day business of ‘Squid’s Ink’ with frequent input from the First Applicant. She noted that Mr Crisp is not authorised to make any decisions about financial matters or to make any expenditure.
47. In his statement, dated 13 June 2003 (Exhibit A4), Mr Gregory Crisp states that he is employed by Park Cho Pty Limited, trading as ‘Squid’s Ink’ Restaurant and Motel, as restaurant manager and in that capacity he reports directly to the First Applicant and Mrs Cho. He said that he reports daily to them or, when the First Applicant is overseas, to Mrs Cho to review the business generally with particular reference to the operation of the restaurant. During these discussions he reports on known occupancy levels and projections, staff attendance and need for allocation, staff responsibilities and engagement and termination of staff, event co-ordination, menu design and repair and maintenance.
48. He said that sometimes decisions in meetings are postponed in order for Mrs Cho to speak to the First Applicant about matters. He said that when the First Applicant is overseas he is sometimes present when Mrs Cho speaks to her husband on the phone about the business but does not understand because he does not speak Korean. However sometimes Mrs Cho will interrupt her conversation with her husband in order to ask Mr Crisp a question and obtain more information to give to the First Applicant..
49. Mr Crisp said that when the First Applicant is in Australia he attends the business on a daily basis and takes part in the regular daily meetings as well as inspecting the premises and observing it’s operation. Mr Crisp said that when the premises were being renovated the First Applicant took a close interest in the design of the renovations and in the quality of the performance of the various contractors who were carrying out the work on the property. He said that recently the First Applicant has accompanied, from Korea, group tours of golfers who stay at the motel and play golf at nearby golf courses during their stay.
50. He summarised the matters of day to day administration that are dealt with, primarily by the First Applicant and Mrs Cho, as financial planning, cash flow, funding of the business, advertising, publicity, the web-site, promotion of the business in Korea and throughout the Australian Korean community and planning tour packages for overseas groups.
51. In oral evidence to the Tribunal Mr Crisp said that he was employed as a restaurant manager from November 2001 with duties of supervising staff, functions, weddings, room service, breakfast, lunch and dinner seven days a week. He said that his hours in the early period of the business were very long and that there were lots of renovations carried out on the property.
52. Mr Crisp said that on the first day that he met the First Applicant he (the First Applicant) was working in the garden and told him his vision for ‘Squid’s Ink’.. That vision was to expand the property physically and in terms of quality and he instructed Mr Crisp to treat the business as if it were the First Applicant’s house and to welcome its guests accordingly.
53. Mr Crisp said that he recently travelled to Korea, meeting executives and looking at some properties for the business to emulate as well as a student exchange program project.
54. Mr Crisp described the systems that had been established by the First Applicant at ‘Squid’s Ink’. He said there are weekly meetings with various departments of the business (the restaurant, housekeeping, et cetera), monthly reports made by heads of departments to the First Applicant, Mrs Cho and the accountants, periodic meetings between the First Applicant, Mrs Cho and the accountant and Mr Crisp’s meetings everyday with Mrs Cho. Mr Crisp said that Mrs Cho relies on him for information and that he would go to her almost everyday for a decision, which she usually makes in consultation with her husband. He said that he usually gets an answer very quickly.. He said that Mrs Cho telephones the First Applicant in his presence very often. He said that Mrs Cho almost always makes decisions in consultation with the First Applicant.
55. Mr Crisp said that the First Applicant told him that he wants to sell one of his businesses in Korea, buy a big boat, place it in front of ‘Squid’s Ink’ and retire.
56. In cross-examination Mr Crisp agreed that his international experience with Ansett as a flight attendant has helped him with Korean foreign nationals and guests of the business. He also told the Tribunal that he is a partner in a Subway sandwich store with 12 to 18 casual staff. He said that his wife looks after that business and is the manager. He said his partner in the business is his father-in-law, and that he, Mr Crisp, does the workers’ compensation matters, superannuation and basic accounting. He agreed that the skills he provides to ‘Squid’s Ink’ are of a high calibre.
57. Mr Crisp said that at ‘Squid’s Ink’ he is involved in occupational health and safety, marketing and advertising and is sometimes the front person for ‘Squid’s Ink’ in those dealings. He said that he gathers financial information for a monthly report provided to the First Applicant and Mrs Cho.
58. Mr Crisp said that ‘Squid’s Ink’ has approximately ten to 12 full time staff and up to 30 casual staff and that he knows the names of all permanent staff and the majority of casuals.
59. Mr Crisp said that the First Applicant and his wife have a very different vision of ‘Squid’s Ink’ to the business’s previous owners. He noted that they have reorganised the business into business departments, which is a very Korean way of doing things. He said that although he does not speak Korean, he communicates very well with the First Applicant and his wife.
60. Mr Crisp said that in December 2002 he was appointed Operations Manager of ‘Squid’s Ink’ but has never dealt with the bank or the accountant alone on the business’s behalf.
61. Finally Mr Crisp said that if his job did not exist he considers that the business would survive because of the general structure established by the First Applicant and his wife.
62. Mr Stephen Thomas, in his statement dated 26 June 2003 (Exhibit A6), said that he is a builder and was, from July 2001 to September 2002, involved in carrying out various renovations at the ‘Squid’s Ink’ property. He said that all of his dealings with the renovations were with the First Applicant or Mrs Cho. He said that whenever the First Applicant was at the property his discussions in relation to the works were with him. He said that the First Applicant’s building construction background made him very easy to deal with. He said that whenever a decision had to be made in relation to the job, for minor matters such as approving hardware items to major matters such as accepting a quote, Mrs Cho would either telephone the First Applicant or leave a message for him to make the final decision. He said that on one occasion painting on a job had to be stopped so that the First Applicant could look and choose a finish on his next trip to Newcastle. Mr Thomas said that, having now observed the First Applicant and Mrs Cho in a social setting his observation is that Mrs Cho will not make decisions without first discussing the matter with the First Applicant.
63. In oral evidence to the Tribunal Mr Thomas said that from July 2001 to April 2002 he spent approximately 80 per cent of his time on site at the ‘Squid’s Ink’ property. He said that a typical day would involve a walk around the site to discuss the work and possible changes. He said that every day that the First Applicant was at the site, he stayed with him and prioritised his work. He said that when the First Applicant was not there the work would carry on but Mrs Cho would telephone the First Applicant for direction. He said that Mrs Cho would contribute her ideas but that the First Applicant would always make the final decision. Mr Thomas said that the First Applicant and his wife have talked about expanding the property and possibly buying the adjacent property to create a complex. He said that the First Applicant has also told him that he wants to establish a building business in Australia.
64. In cross-examination Mr Thomas said that his conversations with Mrs Cho were about the building and renovation work and that he always heard the First Applicant and his wife talk about other aspects of the business, for example the operation of the kitchen. He said that they are a very close couple with strong family values. He said that when he was present during one telephone conversation they mentioned their son.
65. Exhibit A8 is an agreed statement of facts in the form of a spreadsheet indicating the days from July 2001 until April 2002 that the First Applicant spent in Australia, that Mrs Cho spent outside of Australia, that faxes were sent by Mrs Cho to the First applicant and that telephone calls were made in accordance with Attachment O to Mrs Cho’s statement.
CONSIDERATION
66. The Respondent concedes, and the Tribunal accepts on the evidence before it, that the First Applicant has a substantial ownership interest in an eligible business in Australia (see section 134(1)(a)).
67. The Respondent contends, however, that the First Applicant was not utilising his skills in actively participating at a senior level in the day to day management of the business and that it follows that his visa may be cancelled.
68. Relevant to this issue, the Tribunal made the following findings on the basis of the evidence before it:
§ The First Applicant continues to reside in Korea and continues to manage, as President or Chairman, on a full time basis, his two substantial businesses there;
§ The First Applicant intends to sell his Korean businesses and has attempted to do so by the informal and discreet method required in that industry. He intends to move to Australia when the sale of his businesses is effected and apply the proceeds of the sales (anticipated to be in the realm of A$35 million) in part to further development of the ‘Squids Ink’ business but mainly to the establishment of a building development business in Australia;
§ In the relevant period, the First Applicant spent 86 days at the business in Australia;
§ The First Applicant is an experienced business person and manager but has no prior experience in the hospitality industry;
§ Mrs Cho is experienced in business only to the extent of having run a kindergarten in Korea;
§ Mr Crisp has experience as an international flight attendant and has, since he has worked at the ‘Squid’s Ink’, been promoted from waiter to Restaurant manager and then to Operations Manager. He also has a half share in a ’Subway’ sandwich franchise. He has no authority to make any decisions about financial matters or to make any expenditure. He reports directly to the First Applicant and Mrs Cho;
§ Mrs Cho speaks to the First Applicant on the telephone at least daily in relation to the business and defers to him on most decisions. While telephone contact would include some discussion of family or personal matters, every telephone contact would include some discussion of business matters also;
§ The First Applicant does not deal directly with tradesmen (except for Mr Thomas), suppliers and tour organisers nor, generally, with staff (except for Mr Crisp). However, he was directly involved in the renovation project and makes decisions in relation to cash flow, funding, advertising and promotion and the development of tour packages. The First Applicant also provides guidance to Mrs Cho in the tasks she performs on a daily basis;
§ The First Applicant has established a system in the business for regular reporting of information by heads of departments of the business.
69. The Respondent submitted that the First Applicant’s lack of experience in the hospitality industry, the relatively minor nature of ‘Squid’s Ink’ in the scheme of the First Applicant’s business empire, his non intervention in routine business matters, the important roles played by Mrs Cho and Mr Crisp and his comparatively poor English skills, show that while the First Applicant is the owner of the business, he is not the manager of the business. It follows, in the Respondent’s submission, that the First Applicant did not utilise his skills in actively participating at a senior level in the day to day management of the business.
70. The Tribunal had regard to the decisions of the Tribunal in Tang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 997, Huang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656, Harlim v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 767, Widjojo v Minister for Immigration and Multicultural and Indigenous Affairs [2001] AATA 774 and Lau v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 703.
71. In Tang (supra) Deputy President McMahon said:
“19. Apart from these activities, nothing much more has been done by anyone for Tiproll Pty Limited. What activities have taken place have been carried out by the Applicant's sister-in-law. He himself has spent very little time in this country. He arrived on 18 October 1996 and left 12 days later. He did not return to Australia until 21 December 1997, leaving on 28 December 1997. A further year passed before he returned on 24 December 1998, returning to Hong Kong on 30 December 1998. The visits over Christmas 1997 and Christmas 1998 were to see relatives. He travelled with his wife and family. To choose to come to Australia two years in succession over Christmas indicates that the visits could not have been for the purpose of establishing export connections in the aluminium industry. Mr Tang did not visit Australia again until 9 February 2000, staying for five days and returning on 13 February. It was on this visit that he inspected the premises of Capral Aluminium Limited for the first time. He did not return to Australia until 5 November 2000, the day before the hearing in this Tribunal.
20. On these facts, it seems to me that Tiproll Pty Limited is not carrying on a business and its activities are therefore not an eligible business. The reference in subparagraph 134(1)(b) to the "day-to-day management of that business" indicates that an eligible business must have some element of continuity and repetition. In Hope v Bathurst City Council (1980) 144 CLR 1 Mason J considered that the use of the phrase "carrying on the business", as a qualifier of the noun "business", required that there be a commercial enterprise in the nature of a going concern "that is activities engaged in for the purpose of profit on a continuous and repetitive basis". Similar qualifying words in section 134 would compel a similar result. There is no day-to-day activity of the business of Tiproll Pty Limited. It has had one export transaction to a company associated with Mr Tang. The evidence relating to lanolin and roller shutters does not add to the perception of a business requiring day-to-day management. In my view therefore what activities have been carried on by Tiproll Pty Limited cannot be described as an eligible business.
21. If I am wrong in my understanding of this term, it is certainly clear that Mr Tang has not used his skills in the day-to-day management of that business. Clearly the type of remote association which he has had with Tiproll Pty Limited is not the type of activity contemplated by the statute as appropriate for holders of visas of this type. From its language and from the visa conditions, it is apparent that the Act is intended to benefit business owners who settle here and actively manage that business.”
72. The circumstances in Tang contrast with the circumstances of this application in that in this application there is no dispute that the business in question is an eligible business within the meaning of the Act and, although the First Applicant has not settled in Australia, his family is established here and his visits to Australia have been frequent and regular. In addition, the First Applicant maintains involvement in the business through daily contact with Mrs Cho and when he visits Australia.
73. In Huang (supra) Deputy President Muller (as he now is) said:
“11. From the date when the Business Skills visa was granted to Fa-Chen Huang, 25 August 1997, until the date of cancellation, 23 November 2000, the activities of Lin Sun produced a profit of about $5,000 and returned on average about $10 per week to Fa-Chen Huang. One of the most significant factors to be taken into account in determining whether or not an activity amounts to carrying on a business is whether or not there is an intention to make a profit. If an activity has not and is not likely to result in a reasonable return for energy and money expended, then it is more likely than not that the person so engaging in the activity does so for motives other than the carrying on of a business. The activities carried on in the name of Lin Sun have been virtually revenue neutral. The Tribunal is not satisfied that Lin Sun was a company that was carrying on business. If Lin Sun was carrying on business it was doing so in Taiwan, certainly not in Australia. The act of ordering Australian goods from a base in Taiwan does not constitute the management of a business in Australia.
12. Not only must the eligible business operate in Australia to comply with the Act, the visa holder must participate at a senior level in the day-to-day management of the Australian business in Australia, albeit with trips overseas from time to time. “
74. In the present application the business in question operates in Australia as an eligible business. The First Applicant has made frequent trips to Australia to participate directly in its management and has daily contact with Mrs Cho who defers to him in decision making. His participation in day to day management does not, generally, take place in Australia but given his close and frequent contact on business matters with Mrs Cho, nor does it take place with the degree of remoteness that was evident in Huang.
75. In Widjojo (supra) Deputy President Estcourt said of the question of whether the applicant in that case participated at a senior level in the day to day management of the business:
“10. He clearly does not. He didn’t claim to. His evidence was that his wife kept him informed of how the business was going but that he spent 4 to 5 hours a day working in his businesses in Indonesia.
11. The applicant didn’t know the names of any of his employees, he didn’t know their qualifications, he doesn’t have any contact with his staff, he doesn’t have any involvement in the day to day paperwork of the business, he has no involvement in inventory, he doesn’t know who his suppliers are and he is not involved in marketing.
12. It is plain that for all practical purposes the applicant is a non working partner who leaves any involvement he might have in the running of the business to his wife.
13. The applicant was completely honest with the Tribunal. His real business interests are in Indonesia and he has not been able to move them onshore because of the political and consequent economic changes which he says occurred in his country at about the time he obtained his business visa.
14. The applicant’s purchase of a half share in the business is, as he put it, a ‘side business’.. He is using it to learn how business works in Australia and he still hopes to bring his assets and business involvement to Australia when the economic climate in Indonesia is such that he can sell his interests there.”
76. In the present case it can not be said that the First Applicant leaves “any involvement he might have in the running of the business to his wife” and nor is he a “non working partner” given his decision making role and frequent input. There is no evidence that the First Applicant is aware of who his suppliers are or that he is “involved in the day to day paperwork” of the business or that he is involved in such things as inventory. He is, however, involved in marketing, was able to recognise the names of permanent members of staff and was well acquainted with Mr Crisp. The First Applicant was also closely involved in the renovation of the business property and was responsible for the development of the business system, which now governs the business.
77. In Harlim (supra) the Tribunal said:
“29. Section 134(1)(b) refers to whether the visa holder is utilising his or her skills in actively participating at a senior level in day-to-day management of that business. For business such as Vanwin, the day-to-day management involved in developing an export market for Australian metering systems will involve personal representations in Indonesia, securing orders and facilitating the provision of technical support by Energex. The Tribunal accepts the applicant's evidence and Dr Chan's evidence, that the applicant has substantial experience in Indonesia and has applied his knowledge and contacts consistently and continuously in actively promoting the business plan developed by Energex.
30. In Hope v Bathurst City Council (1980)144 CLR 1 the Court held that carrying on a business denotes activities for the purpose of profit undertaken on a continuous and repetitive basis, even if the business is conducted in a small way. Therefore the Tribunal finds that the relatively small turnover reported by Vanwin does not necessarily prevent the applicant from satisfying the indicators in MSI N°133. It is clear that the management of Vanwin is undertaken almost entirely by the applicant on behalf of the company, so the Tribunal finds that he participates at a senior level and 134(1)(b) does not apply. “
78. In Lau (supra) the Tribunal said:
“33. The day-to-day management of a company like Corcom, involved in developing an export market for Australian grocery goods in South East Asia, will involve researching products, securing orders and suppliers, transacting shipping. It will also involve ideas and planning. This is clearly evidenced by the applicant's activities in this case. The applicant had substantial commercial experience in Malaysia on which to develop Corcom as an export vehicle for sale of Australian goods into Asia. He developed Australian contacts through the proposed venture with Unipole and (T22, exhibit A31). While some of the activities undertaken by the applicant might be viewed as unsophisticated, there is nothing to suggest that they were inappropriate for the nature of the proposed business. The activities relied on the applicant's considerable experience directly in this field in the Asian market and on his business acumen. There may not be extensive notes, or records of activity occurring every day. As Ms McKenzie submitted, the diary notes showed only entries 30 days. However, the use of the term day-to-day management does not require that that activity be recorded every day, and the input at a senior level by someone of the experience of the applicant will often be intangible.
34. The Tribunal is satisfied that the applicant has substantial commercial experience in the field and has applied his knowledge, contacts and business acumen consistently and continuously in the development of Corcom's business. The Act requires that the focus be on participating at a senior level in the day-to-day management of that business. This does not require that comparison be made with senior levels of management in another business or in business generally. It is clear that the management of the Corcom is almost entirely undertaken by the applicant on behalf of the company: he is its senior management. The Tribunal is, therefore, not satisfied of the matters set out at s134(1)(b); that is, that he is not utilising his skills in actively participating at a senior level in the day-to-day management of Corcom”
79. The First Applicant, whilst having no previous experience in the hospitality industry, is a businessman of considerable experience and success. The business is an ongoing concern and operates on a continuous and repetitive basis. The Respondent sought to distinguish the decision in Lau (supra) on the basis that in the present case there are others (Mrs Cho and Mr Crisp) involved in the business who play a significant role in its day to day management. The First Applicant’s particular management method and style as adopted by him in his Korean businesses is to delegate routine matters to executives and to establish a structure for information reporting. He has adopted the same method and style in relation to ‘Squid’s Ink’.
80. There is no requirement in section 134(1)(b) of the Act for a person to have no other business interests or responsibilities besides the eligible business in question. The size of the ‘Squid’s Ink’ business relative to the rest of the First Applicant’s business empire is not, in the context of his style of management, an indicator of the utilisation of his skills in active participation in day to day management of ‘Squid’s Ink’.
81. The Tribunal considers that the First Applicant does utilise his skills in actively participating at a senior level in the day to day management of an eligible business in Australia and there is no evidence to suggest that he does not intend to continue to do so. It follows that the First Applicant’s business visa should not have been cancelled and that the secondary visas of the Third and Fourth Applicants should not have been cancelled.
82. If the Tribunal is wrong in this conclusion then it considers that, in accordance with section 134(2) of the Act, the First Applicant 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. The Tribunal considers that the First Applicant has been prevented from actively participating in the management of the business on site by his inability, to date, to sell his Korean businesses. The Tribunal accepts that the First Applicant intends to continue his efforts to sell his Korean businesses and to participate in the senior management of ‘Squid’s Ink’.
83. The factors listed in section 134(3) of the Act are largely irrelevant to the circumstances of the First Applicant, given the development of ‘Squid’s Ink’ as an ongoing business. The First Applicant’s business activity in relation to ‘Squid’s Ink’ has been frequent and regular, if generally not on site. His failure to comply with the notice under section 137 of the Act is explained by him not having received it. On this basis, the First Applicant’s business visa and those of the Third and Fourth Applicants should not have been cancelled.
Decision
84. The Tribunal sets aside the decision under review and in substitution therefor decides that the First Applicant’s business visa should not have been cancelled and the secondary visas of the Third and Fourth Applicants should not have been cancelled.
I certify that the 84 preceding paragraphs are a true copy of the reasons for the decision herein of MS N BELL, MEMBER
Signed: A. Krilis
AssociateDate/s of Hearing 26 and 27 June 2003
Date of Decision 10 October 2003
Solicitor for the Applicant Mr Ben Johnston
Solicitor for the Respondent Mr Christos Mantziaris
1
5
0