Permana and Ors and Minister for Immigration and Multicultural and Indigenous Affairs
[2004] AATA 802
•30 July 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 802
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2002/483, 485 and 486
GENERAL ADMINISTRATIVE DIVISION ) Re DICKY PERMANA
MARIO SURIYA
CARINA KEJORAApplicants
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr M J Allen, Member Date30 July 2004
PlacePerth
Decision The decisions made on 20th November 2002 to cancel the visas held by the applicants are set aside. The visas remain valid and effective. .............(sgd M Allen)......................
Member
CATCHWORDS
IMMIGRATION-Cancellation of business skills visas - applicant has a substantial ownership interest in several Australian companies - one of those companies carries on an eligible business – applicant has not actively participated at a senior level in the day to day management of the eligible business – applicant has made a genuine effort to obtain a substantial ownership interest in several eligible businesses by developing the activities of the various corporations into eligible businesses – applicant has made genuine efforts to participate in the senior level management of the businesses – applicant intends to continue to make such genuine efforts – decision to cancel applicant’s business visa set aside – visas of applicant and his family members not cancelled.
Migration Act 1958 ss 134, 135, 501
Migration Series Instructions 133
Freeman v Secretary, Department of Social Security (1988) 19 FCR 324
Hope v Bathurst City Council (1980) 144 CLR 1
Hospital Benefit Fund of WA v Minister for Health Housing and Community Services (1992) 39 FCR 225
Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 70)
Nong v Minister for Immigration and Multicultural Affairs (2000) 106 FCR 257
Puzey v Commissioner of Taxation [2003] FCAFC 197Re Bhyat and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 1051
Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77
Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283
Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690
REASONS FOR DECISION
30 July 2004 Mr M J Allen, Member 1. On 20 November 2002 a delegate of the respondent made decisions to cancel the subclass 127 business skills visas held by Mr Permana, his wife Mariana, and their two children, Mario and Carina. Applications for review of those decisions were made to the Tribunal by all four visa holders but I was informed at the hearing of the matter that the application made by Mariana (proceedings W2002/484) had been or was to be withdrawn. Accordingly, these Reasons for Decision deal only with the applications made by the other three applicants.
2. At the hearing of the matter the applicants were represented by their solicitor, Mr Christie, and the respondent was represented by Mr Gerrard, a solicitor with the Australian Government Solicitor. The Tribunal received into evidence the following documents:
(a)In proceedings W2002/483 (concerning Mr Permana) T1 – T22;
(b)In proceedings W2002/485 (concerning Mario) T1 – T6;
(c)In proceedings W2002/486 (concerning Carina) T1 – T7;
(d)In relation to all applicants, S1 – S9; and
(e)Exhibits A1 – A11 tendered on behalf of the applicants.
3. Oral evidence was given on behalf of the applicants by Mr Permana (with the assistance of an interpreter in the Indonesian language), Mr Brian Pilkington, Mr Willy Adenan, Mario, Carina and another daughter of Mr Permana, Anastasia.
Background
4. Mr Permana and his family (but not including Anastasia) applied for visas in November 1997 and they were granted in August 1999. Mr Permana first entered Australia under his visa on 22 August 1999.
5. In June 2001 Mr Permana was sent a 24 month survey form by the respondent’s department seeking information about his involvement in business in Australia up to that time. That survey form was returned by Mr Permana in September 2001 with relevant information. In November 2001 the department sought further information from Mr Permana and he responded in December 2001. In March 2002 the department again sought further information and in June 2002 Mr Pilkington, in his capacity as a migration agent, provided the department with certain information.
6. Notices of intention to cancel the visas dated 29 July 2002 were subsequently despatched by the department and the applicants were invited to make submissions concerning the proposed cancellation by 4 September 2002. Representations were made on their behalf during August 2002, but on 20 November 2002 a delegate made the cancellation decisions referred to in paragraph 1 above.
Legislative Framework
7. Sub-section 134(1) of the Migration Act 1958 (“the Act”) relevantly provides that a discretionary power to cancel a visa of the kind held by Mr Permana would arise if he failed to satisfy, in the opinion of the respondent or the Tribunal, any one of the requirements specified in that sub-section, namely that he:
“(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.”
8. If the power to cancel a visa arises under s134(1) then s134(2) relevantly provides that the visa must not be cancelled if the respondent or the Tribunal is satisfied that its holder has done all the following:
“(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.”
9. For the purpose of determining whether a person has made such genuine efforts, s134(3) relevantly provides that any or all of the following matters may be taken into account:
(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 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).”
10. Section 134(4) of the Act relevantly provides that where a visa of a person has been cancelled under s134(1), a visa held by a member of that person’s family unit must also be cancelled. However, section 134(5) provides that the other person’s visa must not be cancelled under s134(4) “…if the cancellation of that visa would result in extreme hardship to the person.”
11. Subsection 134(8) of the Act relevantly provides that a cancellation of a visa under s134(1) or 134(4) has effect, if the visa holder applies to this Tribunal for review of the decision, “…the 28th day after the day on which the …Tribunal gives its decision on that review…”.
Preliminary issue – relevance of events after the cancellation decision
12. Between the time of his arrival in Australia in August 1999 and the date of the hearing of the matter Mr Permana has been involved, to varying degrees, in the ownership of and management of a number of business activities. Some of these occurred prior to the date of cancellation of his visa and some occurred after that date, and details of these activities will be referred to later in these reasons. However, Mr Christie for the applicants raised as a preliminary issue the question of the relevance of those business activities that occurred after the date of cancellation. He contended that the Tribunal could have regard to evidence of events that occurred after the date of the cancellation decision, because, by virtue of s134(8) the cancellation has not yet taken effect and the visas remain in force, and also because it is well established that the Tribunal, when reviewing a decision, must do so on the material before the Tribunal and is not restricted to the material that was before the original decision-maker. Mr Christie referred to that principle as it has been applied in relation to the review of deportation decisions and the cancellation of visas under s 501 of the Act.
13. For the respondent it was contended that the Tribunal should follow a long list of decided authorities to the effect that the Tribunal must, in the case of a cancellation decision, address the question of whether that decision was correctly made at the time that it was made and that the Tribunal must address the same question as was before the primary decision-maker: see Hospital Benefit Fund of WA v Minister for Health Housing and Community Services (1992) 39 FCR 225, Freeman v Secretary, Department of Social Security (1988) 19 FCR 324, Nong v Minister for Immigration and Multicultural Affairs (2000) 106 FCR 257. The respondent contended that the Tribunal should limit its consideration to “actions and events which occurred prior to the date of the primary cancellation decision or intentions held before or on that date” (paragraph 53 of the respondent’s statement of facts and contentions). However, at paragraph 40 of the respondent’s Statement of Facts and Contentions the respondent acknowledges that the Tribunal “can consider activities after cancellation in situations where there is evidence of prior intentions (Lau v Minister for Immigration and Multicultural Affairs [2002] AATA 70)”.
14. In Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 at [8]-[14], Senior Member Dwyer and Member McLean reviewed a number of decisions of the Tribunal and the Federal Court in relation to this issue, noting differences of opinion that had been expressed in various Tribunal decisions. SM Dwyer and Member McLean concluded that they should follow the approach adopted by the Federal Court and the Tribunal to “confine our consideration to material that relates to relevant ‘events actions or intentions’ prior to or at the time of the cancellation decision”.
15. I had arrived at a similar conclusion in Re Bhyat and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 1051 at [31]-[37].However, at [37] I noted that s134 of the Act in its terms refers to prospective matters. For example, an eligible business is defined in s134(10) in terms of whether a business “will” result in certain type of outcomes. Similarly, the section refers to “intentions” and whether extreme hardship “will” be suffered by a secondary visa holder if the visas are cancelled. Accordingly, I considered that the tribunal is entitled to receive evidence of prospective developments as they appear at the date of the original decision or of events that occurred after that date but which can be related back to actions taken or events that occurred prior to that date. I would also add, to “intentions held” prior or at that date.
16. Mr Christie contended that, at least in relation to the exercise of the residual discretion to not cancel a visa under s134(1), the Tribunal should take into account actions taken and events that occurred after the date of cancellation.
17. My research does not reveal that in the various cases referred to above any distinction has been drawn between, on the one hand, the Tribunal’s consideration of whether or not the grounds to cancel a visa arise under s134(1) or whether the power must not be exercised because of the matters in s134(2) and, on the other hand, the exercise of the residual discretion once it has been established that the power to cancel arises under s134(1) and the exercise of that power is not prohibited by s134(2). Because of the conclusions that I have reached in the present case concerning the actions taken, events that had occurred, and intentions held at the date of the original cancellation decision it is not necessary for me to express any concluded opinion about whether such a distinction ought to be drawn in cases such as the present.
Does the power to cancel arise under s134(1)?
18. The first requirement of s134(1) is that the applicant must have obtained a substantial ownership interest in an eligible business in Australia. At this stage it is appropriate to set out in some detail the evidence concerning the business activities of Mr Permana in Australia, but before doing so I note that he is the owner of and the principal manager of a substantial business in Indonesia involving a palm oil plantation, the manufacture and sale of edible oils, and the manufacture and sale of various building products including ceiling tiles and plaster board. In a statement of evidence (Exhibit A1) filed in the proceedings the applicant said that he had always intended to become involved in property development in Australia but because he was unfamiliar with local laws he thought it best to become involved with others until he became more knowledgeable about the local building industry and economy. In another witness statement (Exhibit A2) Mr Permana said that he had also hoped to become involved in the export of timber and other building products from Australia. He had not expected to have any real difficulty in finding and establishing suitable and profitable businesses, but in the event he found it a much slower and more difficult process than he had anticipated. I should also add that I found Mr Permana to be a very credible witness and I accept his evidence in all respects.
19. The first business that Mr Permana became involved in in Australia was that of a company Access Australia International Pty Ltd (“Access”). Prior to his arrival in Australia in August 1999 Mr Permana had discussed the possibilities of real estate investment with an old friend of his, Mr Adenan, who was a real estate agent in Perth. On his arrival in Australia Mr Permana was advised of a possible involvement in Access. In July 1998 Access had purchased three adjacent pieces of land in Victoria Park at a total cost of approximately $985,000 with the intention of developing 12 to 18 home units thereon. Part of the funds for the purchase had been borrowed from a bank. At that time the company had 4 or 5 shareholders.
20. In approximately October 1999 Mr Permana agreed to pay approximately $115,000 to 2 existing shareholders to acquire some of their shares and to be responsible for making certain loan repayments to the bank. In this way Mr Permana eventually invested a total of $167,000 to gain a 25% shareholding in Access.
21. Prior to Mr Permana’s involvement in Access, the company had applied to the local authority for development approval for a project that would have involved construction costs of approximately $1.0 million for 12 townhouses. In January 1999 that application had been refused. Thereafter, during 1999 and continuing after Mr Permana’s involvement, there were extensive negotiations between Access and the local authority with a view to the local authority acquiring the land in question for its own purposes. In December 1999 a conditional agreement was reached between Access and the local authority for the sale of the land at a price of $1.22 million but in February 2000 the local authority advised Access it would not proceed with the purchase. Thereafter, Access considered a number of alternative ways to proceed, but in September 2002 one of the 3 blocks of land was sold for $600,000 and the other two blocks were subsequently sold for a price of $1.1 million. I was told at the hearing that the settlement on the latter transaction had been delayed several times but was expected to occur in March 2004. Because of the delay in settlement it had not been possible for Access to acquire any other land and to undertake any other property development activities - but Mr Permana and Mr Adenan gave evidence that there was an intention to do so. Mr Adenan said that he had shown Mr Permana a number of different parcels of land that had potential for development and the company’s present thinking was that it would concentrate on the subdivision of vacant land rather than on building – so as to avoid the need for dealing with builders who, Mr Adenan said, ended up with a large proportion of the profits on any development.
22. Mr Permana said that as a result of the delays experienced in developing Access’ properties he had decided to pursue one of his original aims of being involved in the export of goods from Australia to Indonesia. He had decided to join forces with a Mr Hartanto and together they decided to buy an existing company named Portsway Pty Ltd (“Portsway”). Portsway had been established some years earlier but at the time that Mr Permana and Mr Hartanto became involved in mid-2000 the company had no assets or liabilities. Mr Permana and Mr Hartanto each invested USD $55,000 in the share capital of Portsway, holding a 50% interest each. At the time that investment by Mr Permana represented approximately AUD $100,000.
23. Mr Hartanto was involved in the management of a plastics manufacturing business in Indonesia and he was principally interested in finding plastic granule materials in Australia. Mr Permana was mainly interested in finding supplies of Australian timber products for export to South East Asia, particularly Singapore.
24. Despite their efforts, further reference to which will be made below, by early to mid 2002 Mr Permana and Mr Hartanto decided that they had not made sufficient progress towards setting up a viable export business in either plastic materials or timber products and they decided to go their separate ways. Mr Permana paid Mr Hartento USD $55,000 and Mr Permana thereby acquired full ownership of Portsway. Mr Permana continued to look for export markets for Portsway and in August 2002 he arranged for the shipment to Indonesia of 21,420 kgs of casting plaster. Mr Permana said that he had intended to sell this product in the Indonesian market but, although the quality was very good, the price was too high to enable sale in Indonesia and in the end he had absorbed the plaster into his own business in Indonesia. As a result of the pricing problem he decided that plaster was not a product that would provide the basis for an ongoing export business. He had explored other products, such as potatoes, but for various reasons considered none of them viable.
25. In early 2002 Mr Permana was introduced to a Mr Wijono who was involved in the ownership and development of a storage business in Perth via a company Ezy Storage Pty Ltd (“Ezy Storage”). Ezy Storage was a greenfields development that had been established and constructed during 2000 and 2001 by Mr Wijono, Mr Pilkington and a number of other investors, many of whom were the holders of various visas enabling them to reside in Australia. At the time the development consisted of approximately 193 storage units that had opened for business in January 2002. Mr Permana conducted a due diligence examination of the venture between February and May 2002 and in May 2002 he agreed to invest $110,000 into the business, representing an approximate 10% shareholding, and he became a director of Ezy Storage on 10 May 2002.
26. Mr Permana said that one of the reasons Ezy Storage was attractive to him was that it offered him the opportunity to be involved in the management of it and, in particular, he thought that it was a business that his children might eventually become involved in the management of once he had been able to establish another business that he could personally manage.
27. According to its financial statements (Exhibit A5), in the year to 30 June 2002, which represented less than a full year’s trading, Ezy Storage had income of $35,589 and expenses of $192,296. In the year to 30 June 2003 the company had income of $219,823 and expenses of $260,763. At 30 June 2003 the company had total assets at book value of approximately $872,000 and net assets after liabilities of $830,085. Mr Pilkington gave evidence that at the time of the hearing of these proceedings the company was trading on a break-even basis per month and that the company planned to increase the number of storage units, which he thought would make the company a profitable venture. He said that plans had been prepared for the new units, which would cost approximately $400,000 to construct. The funds for this purpose would come from existing or new investors and if Mr Permana chose not to contribute his share then his percentage holding in Ezy Storage would be diluted to an extent.
28. Mr Permana said that he had been significantly involved in the affairs of Ezy Storage throughout 2002 and for part of 2003. He had been somewhat disappointed in the progress of the development of the business and after about the middle of 2003 he had begun to devote less time to it because his attentions had moved to a business that he was to establish with his daughter.
29. Mr Permana’s eldest daughter, Anastasia, gave evidence that she had been living in Singapore prior to July 2002. At that time she and her husband (who is a permanent resident of Australia) had decided to move to Perth to live. Anastasia is a qualified accountant, having previously completed a postgraduate accounting and commerce degree in Australia. Mr Permana said that he and Anastasia had previously considered establishing a business together in Indonesia in 1997 and for that purpose conducted extensive investigations into acquiring the Indonesian franchise for a particular food product. However, mainly because of the very troubled economic and political situation in Indonesia at that time they had decided not to proceed. However, when his daughter decided to come to Perth to live in the middle of 2002 he and she had again started to formulate plans as to how they could establish a business together in Australia - with Anastasia principally involved in the management of it but with access to capital provided by Mr Permana. Anastasia said in her evidence that she had started to look for a possible business opportunity as soon as she arrived in Australia in July 2002 and identified a franchise known as Deli France. She went to an information seminar about it in late October or early November 2002. She had kept her father fully informed of the prospect and over the next few months she, with the assistance of her father, obtained a great deal of information about the franchise opportunity and negotiated the terms of possible purchase. In early May 2003 Mr Permana and Anastasia decided to buy an existing Deli France shop as a going concern for $365,000. It was agreed that the purchase would be made through Portsway and Anastasia became the owner of the 50% interest that had previously been owned by Mr Hartanto. However, in approximately June 2003 Mr Permana and Anastasia renegotiated the arrangements with Deli France and agreed that, instead of buying the existing business they would buy the franchise for 2 new shops that were being developed at a different shopping centre at a total purchase price of $627,000. That business opened for operation in August 2003.
30. According to Exhibit A9, in the period of operation up until the end of December 2003 the Deli France business had generated income of $143,000 for a gross profit from trading of $81,434 but an operating loss after all expenses of approximately $84,000. Anastasia gave evidence that the business had not developed as well as they had hoped although in the several months prior to the hearing the turnover had increased significantly to between $1700 and $2000 per day and if that level could be maintained the business would be breaking even. Anastasia said that, apart from herself, the business employs a supervisor and assistant supervisor and 15 other casual staff.
31. Against that information I now consider whether Mr Permana has satisfied the requirements of s 134(1). I am satisfied that Mr Permana’s shareholding in Access, Portsway, and Ezy Storage represents an ownership interest in any business that those companies may conduct. Whether or not that ownership interest is a “substantial” one is a matter of fact and degree, having regard to the percentage shareholding involved, the degree to which that interest gives Mr Permana control or influence over the affairs of the company concerned, and the value of the ownership interest. Mr Permana has invested well in excess of $100,000 in both Access and Portsway and he has percentage ownerships of 25% and 50% respectively in those two companies. In the case of Ezy Storage the amount invested is in excess of $100,000 but the percentage is presently about 10% with the potential to be diluted if the company raises further capital. On balance I consider that the 3 shareholdings are all substantial ownership interests in the relevant companies.
32. The next issue to consider is whether or not any or all of the three companies had, prior to the date of cancellation decision, carried on an “eligible business” for the purposes of s134. Section 134(10) defines an eligible business to mean “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”.
33. To be an eligible business that is or will result in any of the outcomes referred to in s134(10) there must be a business that is carried on. The decision of the High Court in Hope v Bathurst City Council (1980) 144 CLR 1 is authority for the propositions that carrying on a business denotes activities for the purpose of profit undertaken on a continuous and repetitive basis, and that a business may be carried on even though it is done in a small way. A Full Court of the Federal court has recently summarised the position (in the context of income tax legislation) as follows in Puzey v Commissioner of Taxation [2003] FCAFC 197 (per Hill and Carr JJ, with French J agreeing):
“46. The question whether a person is carrying on a business is a conclusion to be drawn from all relevant facts and circumstances. There are some relevant propositions which can, however, be stated. First, as was said by Barwick CJ, in Fairway Estates Pty Ltd v Federal Commissioner of Taxation 70 ATC 4061 at 4069 and it is self-evident, every business must have a first transaction. And there may be a business, even if that business is small in scope: cf Thomas v Federal Commissioner of Taxation (1972-3) 46 ALJR 397 at 401 with Hope v Bathurst City Council (1980) 144 CLR 1 at 10. A person may carry on a business, notwithstanding that the person had some other activity, such as full time employment. It is not necessary in concluding that a business is carried on that the acts to be undertaken are acts of the person seeking to establish he or she is carrying on a business. So a person may appoint another to take the steps which constitute the business activity: Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307 at 319 and, at least if the facts in Commissioner of Taxation v Lau at 218 involved a business, that case is another example.
47. It will be relevant in deciding whether a business is carried on that there is some repetition of acts and that the activities in question have “something of a permanent character”; Hope per Mason J at 8. What is required is that activities be engaged upon “on a continuous and repetitive basis”; Hope ibid at 9. However, perhaps not too much attention should be given to the concept of repetition where the activity is one, such a plantation operation, where the activity will continue over a relatively long period of time but where there will be significant periods of what may be referred to as inactivity. Business does not mean being busy.
48. In deciding whether or not a business is carried on courts have pointed to what have been called in the United Kingdom the “badges of trade,” indicia which, while no one of them will be determinative of whether a business is carried on, collectively will demonstrate a business. These include the profit motive (although a non profit company may still carry on a business), acting in a business like way, (although many businesses may be found which operate in a non-business like way), the keeping of books of account and records, (although the fact that there are none will not necessitate the conclusion that a business is not carried on) and repetition (although a fixed term project may still be a business).”
34. In relation to Access, the development of the land the company intended to undertake would not have involved continuity or repetition of transactions but the company otherwise had the indicia of a business that was in the process of being established. However, by the time of the cancellation decision the company had abandoned the plan to develop the property and had sold or was in the process of selling the land. It could not be characterised, in my opinion, as an eligible business in the sense that it had or would result in any of the outcomes referred to.
35. In relation to Ezy Storage, in my opinion, there was a business that was engaged in continuous and repetitive transactions, it had all the indicia of a business in the sense that it maintained proper accounts and advertised (see T documents p272 and 273). Ezy Storage did carry on a business and the evidence, which I accept, is that it generated employment and could reasonably be expected to have resulted in an increase in commercial activity and competitiveness within the self-storage sector of the Western Australian economy. In the circumstances I am satisfied that Ezy Storage carried on an eligible business.
36. In relation to Portsway I accept the evidence of Mr Permana that in the period prior to the cancellation decision he had pursued various business opportunities that had not come to fruition. By the time of the cancellation decision the company had exported one consignment of plaster in the hope that Mr Permana would be able to sell it in Indonesia. In the event that proved not to be successful and the transaction was never repeated. That transaction had a value of less than AUD $5,000. Portsway’s subsequent acquisition of the Deli France business during 2003 occurred after the date of the cancellation decision and hence cannot be taken into account for the purpose of determining whether Mr Permana satisfied the requirements of s134(1). In the circumstances I find that Portsway did not carry on a business at all in the period prior to the cancellation date and certainly not an eligible business.
37. In summary, in relation to whether or not Mr Permana failed to satisfy the requirement of s134(1)(a), I find that by the date of cancellation of his visa Mr Permana had acquired a substantial ownership interest in Ezy Storage and that company carried on an eligible business in Australia. I turn then to consider whether Mr Permana also satisfied the requirements of s134(1)(b) concerning his involvement in the day to day management at a senior level of Ezy Storage’s business. Mr Permana’s involvement in the business activities of Access and Portsway prior to the cancellation decision will be considered below in relation to whether or not he satisfied the requirement of s134(2).
38. In relation to what constitutes active involvement at a senior level in the day-to-day management of a business, two observations can be made. The first is that day-to-day management of a business does not require daily management. What is required is continuity and regular activity that is sufficient for the management needs of the specific business: see Re Yam at [93] and [95], and Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77 at [35]. Secondly, the Act does not require that the senior level day to day management of an eligible business must take place in Australia: see Re Yam at [101] and Re Jo at [25] to [36].
39. As noted above, Mr Permana’s evidence was that he invested in Ezy Storage with the intention of being involved in its management and with a view to involving his children in the management of that business in due course. At the time Ezy Storage was developing a business relationship with another business, a removal business known as Ezy Move, and was considering whether to acquire Ezy Move. Mr Permana said that he was also aware that there was an intention at that time to expand the business by constructing more storage units. At the time he became involved the company was managed by Mr Pilkington and Mr Wijono and they continued to be the principal managers of the business throughout his involvement. However, after he became a director of Ezy Storage in May 2002 Mr Permana attended meetings with the company’s officers in August and November 2002 and January 2003. He also had a number of discussions about financial affairs and on-going management of the business and the plans for the future. He had held a number of discussions with Mr Wijono, with whom he could converse in the Indonesian language, concerning the disappointing progress in the development of the business.
40. Mr Pilkington’s oral evidence was that he had met with Mr Permana on several occasions although these had not been formal directors’ meetings. The negotiations regarding Ezy Move had not been successful and a decision had been taken not to buy that business, although Ezy Storage did gradually take over the administration of Ezy Move’s operations. A number of staff had been employed for that purpose.
41. According to the T documents pages 257-258, at June 2002 apart from Mr Pilkington and Mr Wijono Ezy Storage had a further 15 shareholders (including Mr Permana), all of whom were the holders of business skills visas and all of whom were appointed as directors of the company. Mr Pilkington said that all of the investors were appointed as directors to give them a sense of control as well as access to information and some responsibilities. He said also that all or most of the shareholders needed to retain permanent resident status and their involvement in Ezy Storage was to assist them in fulfilling their obligations and maintaining their visas. An Information Memorandum (T documents pages 182-206) that had been prepared concerning Ezy Storage in 2001 described Mr Pilkington and Mr Wijono as being responsible for the management of the project as executive directors supported by a management committee consisting of two other experts who would provide input to “both day to day operational matters as well as strategic direction”. Mr Pilkington said that the board of directors of Ezy Storage did not meet in a formal sense and anything that involved a major decision would have the information circulated and voting would occur by mail or email. He said that since May 2002 there had been no resolutions conducted in that fashion.
42. Mr Pilkington said that Mr Permana’s involvement in the affairs of Ezy Storage was considerably greater than any of the other investors who were in a similar position to him.
43. I accept Mr Permana’s evidence that he intended to be actively involved in the management of Ezy Storage but that, in the event, his involvement was necessarily limited because Mr Pilkington and Mr Wijono were principally involved in the management. Although I accept that Mr Permana discussed the company’s affairs from time to time I consider that there was in reality little for him to usefully do and that, because of the structure of Ezy Storage, he was never likely to be able to be actively involved in meaningful decision-making on anything like a continuous or repetitive basis. In the circumstances, and despite his intentions, I do not consider that Mr Permana was actively involved in the day-to-day management of Ezy Storage. Accordingly, he failed to satisfy the requirements of s134(1)(b) and accordingly the power to cancel his visa arose under that paragraph.
44. Although it is not strictly necessary to do so, I should mention that for the purposes of s134(1)(c), I consider that Mr Permana, in the period prior to the cancellation of his visa, did intend to be involved in the management of Ezy Storage and intended to continue to be so involved. Accordingly, had it been the case that he was involved in the day-to-day management of Ezy Storage at a senior level then I consider that he would have satisfied the requirements of s134(1)(c).
Was the power to cancel the visa unable to be exercised?
45. The power to cancel Mr Permana’s visa having arisen because of his failure to satisfy the requirements of s134(1)(b), the next question to consider is whether Mr Permana satisfied all of the requirements of s134(2). If he did then the effect of that subsection is that the power to cancel the visa must not be exercised.
46. In relation to whether Mr Permana satisfied the requirements of s134(2)(a) I have already concluded that he did acquire a substantial ownership interest in Ezy Storage, a company that carried on an eligible business. In that respect I am satisfied that he made genuine efforts to acquire that interest and thereby satisfied the requirements of that paragraph. However, I have also found above that Mr Permana obtained a substantial ownership interest in Portsway and Access but that those companies did not carry on an eligible business.
47. The respondent’s department has issued policy instructions concerning business visas known as Migration Series Instruction 133 (MSI 133). Paragraph 4.5.1 of MSI 133 contains notes to guide decision makers in the interpretation of the factors set out in s 134(3). Although such indications of policy are not binding on the Tribunal, there is good reason why they should be applied in the interest of consistency of decision making: see Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 at 695 and 696 per Davies J. No weight should be given to the notes set out in paragraph 4.5.1 where the note is clearly more restrictive than the terms of the Act itself: see Re Yam at [48] to [51]. An “effort” will be “genuine” in the context of s 134 if there is a level of effort beyond that which is purely superficial or token and an effort will not be considered not genuine merely because it falls short of the examples given in s 134(3): see Re Yam at [53]. I refer below to the various factors identified by s 134(3).
48. The evidence of Mr Permana and Mr Adenan was that the former was involved in the affairs of Access after he became a director and shareholder in 1999. As noted at [21] above, at the time Mr Permana became involved with Access the company had already purchased the land and had had a development proposal application rejected by the local authority. Mr Adenan corroborated Mr Permana’s evidence that he had been involved in negotiating with the local authority for the sale of the land. Mr Adenan’s evidence was that Mr Permana is an astute businessman and a wise person and Mr Adenan said that he had been in regular contact with Mr Permana to discuss various options and at times they would have spoken on the telephone as often as twice a day when there were important decisions to be made. Mr Adenan also supported Mr Permana’s evidence that the latter would have been involved in the marketing of the home units in Indonesia. Mr Adenan said that Mr Permana had in fact recommended two prospective buyers prior to him becoming involved in Access. Those two buyers had entered into conditional contracts and paid deposits, which were refunded when the project was aborted because of the sale of the land.
49. Mr Adenan said that he had shown Mr Permana a number of different sites that were possible development propositions in the future. On the evidence I am satisfied that when Mr Permana became involved in Access there was a genuine and realistic project even though at that stage the local authority had rejected the original development proposal. I am satisfied that thereafter Mr Permana played a role as a director (and astute businessman) with Mr Adenan in the various negotiations that subsequently occurred – involving the possible sale of the land to the local authority and thereafter the sale to third parties. In my opinion the efforts made by Mr Permana in trying to have Access proceed with a venture that may have become an eligible business were more than superficial or token and they were, in my opinion, genuine efforts regarding the development of an eligible business.
50. In relation to the activities of Portsway prior to the cancellation decision, the evidence of Mr Permana was that he had been principally involved in the activities of the company because Mr Hartanto had been occupied with his business interests in Indonesia. Mr Permana said that he had travelled to Sydney to negotiate the supply of plastic granules and that he had made 3 or 4 trips to Singapore to try to negotiate the terms upon which timber could be exported from Western Australia to Singapore. The correspondence at T documents pages 133-137 and 170 from the latter half of 2001 support Mr Permana’s evidence. I accept his evidence that he spent at least 300 hours over some months trying to develop the timber products export prospect. I accept also Mr Permana’s evidence that he wished to develop Portsway as an exporter of Australian products and had he succeeded that would have constituted an eligible business. In my opinion his efforts were not superficial or token and were genuine, albeit unsuccessful.
51. In relation to Portsway’s eventual acquisition of an interest in the Deli France business after the cancellation decision date, I accept the evidence of Mr Permana and Anastasia that they had discussed the idea of becoming involved in a business together in about July 2002 when Anastasia moved to live in Australia. I also accept that they discussed the idea of investing in a Deli France franchise as early as October or November 2002 when Anastasia attended the seminar. However, the idea of becoming involved with Deli France really only took concrete form after November 2002 and, as at the date of the cancellation decision (20th November 2002) I do not consider that Mr Permana had made sufficient efforts to acquire the Deli France business, even though that possibility was in prospect.
52. Having regard to the above, I am satisfied that as at the date of the cancellation decision Mr Permana had made genuine efforts to acquire the requisite ownership interests in Ezy Storage, Access and Portsway. The next question is whether by that time he had made genuine efforts to be involved in the management of the activities that might have developed into eligible businesses had they come to a successful fruition.
53. I have outlined above the role played by Mr Permana in relation to the attempts to establish businesses via Access and Portsway. I accept the evidence of Mr Permana and Mr Adenan that Mr Permana was involved at a strategic level in the decision-making that needed to be made concerning how Access was to proceed. It is apparent that during 2000 and 2001 the likelihood of the townhouse development proceeding became smaller (because the local authority would not approve it and because the economics of the project changed with the introduction of the GST) and the company had to decide whether and on what terms the land should be sold - either to the local authority or subsequently to a third party. Bearing in mind that the management effort that was required was that which was sufficient for the needs of Access, I consider that Mr Permana’s involvement was such as to be a significant contribution to the management needs of Access through that time and that his involvement was not superficial or token. I am satisfied that Mr Permana made genuine efforts to be involved in the management of Access.
54. In relation to Portsway, I accept Mr Permana’s evidence that he was the principal person involved in the management of the company. I accept that he travelled to Sydney and Singapore in an attempt to get the business underway and that, with Mr Hartanto, he was the principal decision-maker of the venture. I am satisfied that he made genuine efforts to be involved in the management of Portsway.
55. In relation to Ezy Storage, which did constitute an eligible business, the position is less clear. I accept Mr Permana’s evidence that he wished to be involved in the management of it at a board and strategic level, and that he had every intention of being so involved. However, from the evidence of Mr Pilkington I was left with the clear impression that Mr Pilkington and Mr Wijono never intended that the people who invested in Ezy Storage as a means of fulfilling their visa obligations were ever going to have a meaningful opportunity to be involved in the senior management of Ezy Storage. To be appointed as a director of the company obviously confers a degree of status within the organisation and a legal ability to gain access to information about the company’s financial position and operations. However, the reality appears to be that the board of directors rarely met and most strategic decisions were made by Mr Pilkington and Mr Wijono – although they may have discussed proposals with the other directors.
56. Nevertheless, I am satisfied from the evidence of Mr Permana and Mr Pilkington that Mr Permana played a greater role in the affairs of Ezy Storage than did the other investors. Mr Permana is obviously a very experienced and astute businessman and he had a desire to inform himself about and be involved in the affairs of Ezy Storage. He obtained information about the company on a regular basis and he had regular discussions with Mr Pilkington and Mr Wijono. He was obviously aware of the consideration that was being given to combining the businesses of Ezy Storage and Ezy Move and he took it upon himself to be involved in discussions about that prospect, even though in the long run I believe that the real decision-making was in the hands of Mr Pilkington and Mr Wijono.
57. As noted above, involvement in the day-to-day management of a company does not involve participation in management daily. At the relevant time Ezy Storage was in its early stages of development and it had employees who were able to manage the daily administrative tasks. What was important for Ezy Storage at the time was strategic decision-making regarding the connection with Ezy Move and whether the company should build more storage units. Although I consider that Mr Permana did not play a major part in the decision-making of Ezy Storage, on balance I consider that his involvement in the management of the company in the period up to the end of 2002 was just sufficient to enable a conclusion that he made genuine efforts to be involved in the day-to-day management of that company at a senior level.
58. Up until this point I have not considered specifically the factors identified in s134(3) in relation to the issue of whether Mr Permana made genuine efforts and I will now refer specifically to them.
59. In relation to business proposals developed, the existence of partners or joint venturers, and research undertaken into the conduct of an eligible business in Australia, it is apparent that Mr Permana did not himself develop the proposals regarding the establishment of the Access and Ezy Storage ventures. He invested in those ventures after they had been established but at an early stage in their life. It is apparent that he discussed the Access venture over some months with Mr Adenan and that he conducted his own due diligence investigation of Ezy Storage over several months. In that respect he had the benefit of the detailed Information Memorandum that had been prepared for EZY Storage during 2001. Throughout the period Mr Permana had the benefit of advice from accountants who assisted, for example, in the purchase by him and Mr Hartanto of the share capital of Portsway from the previous shareholders of that company.
60. In relation to the period of time that Mr Permana spent in Australia prior to the cancellation of his visa, it was not in dispute that he spent approximately 243 days in this country during that time, which exceeds substantially the period of six months that MSI 133 nominates as a guide.
61. In relation to the value of assets transferred to Australia for use in obtaining an interest in an eligible business, the evidence shows that prior to the cancellation decision Mr Permana had invested approximately $167,000 in Access, $110,000 in Ezy Storage and approximately $200,000 in Portsway (after taking into account the amount paid to Mr Hartanto to buy his 50% interest). In addition, in June 2000 Mr Permana purchased a home unit at a value of $324,000 and in October 2000 purchased a home at a price of $600,000. I note also that in September 2002 Mr Permana loaned his son Mario the sum of $25,000 to enable Mario to take up a 50% interest in a business that he established with Anastasia’s husband at that time and that Mr Permana also, after the date of cancellation of the visa, invested a substantial additional amount in Portsway as part funding for the Deli France acquisition. The amounts invested in aggregate are substantially more than the $100,000 that MSI 133 refers to in relation to the value of ownership interests in the businesses. The amounts invested for both business and residential purposes exceed 50% of the amount nominated by Mr Permana (AUD $2.5 million) that he nominated as available for transfer to Australia in his original application for the visas.
62. In relation to the business activity that has been undertaken by Mr Permana, the evidence of all his efforts in the various businesses has been set out above. The Ezy Storage business alone involved a turnover of more than $100,000, which is the amount nominated by MSI 133 as a guide.
63. It was not in dispute that Mr Permana had not failed to comply with any of the requirements of the department regarding the provision of information that enabled the department to monitor his business activities in Australia.
64. Having regard to the conclusions that I have set out above regarding the genuiness of Mr Permana’s efforts in relation to the three businesses that he was involved in, and having regard to the specific factors referred to in s134(3), my conclusion is that I am satisfied that Mr Permana did, prior to the cancellation of his visa, make genuine efforts to both acquire an ownership interest in and to be involved in the senior-level management of eligible businesses in Australia. I accept Mr Permana’s evidence that he wished to continue to be involved in all of those businesses, even though the bulk of his time would be devoted to the Deli France business until it became more established. Overall, I am satisfied that at the time of the cancellation of his visa Mr Permana intended to continue to make genuine efforts to obtain the requisite ownership interests and to be involved in the management of eligible businesses in this country. I am satisfied that Mr Permana satisfied the requirements of s134(2) and that, as a consequence, the power to cancel his visa that arose under s134(1) could not be exercised.
65. It is not necessary, therefore, for me to consider whether I should exercise a residual discretion not to cancel Mr Permana’s visa. I observe, however, that had it been necessary for me to do so, I would have exercised my discretion to not cancel the visa because I am satisfied that Mr Permana and his family have made a genuine commitment to live in Australia and he has made very substantial investments in this country and has become involved in the management thereof in an attempt to satisfy the requirements of his visa. He has retained substantial business interests in Indonesia but I accept his evidence that he wishes to sell them when it is possible to obtain a realistic value for them and that he would then be in a position to invest substantially greater sums of money in this country.
66. For the reasons set out above I decide that the decision made to cancel Mr Permana’s visa must be set aside. That being the case, the basis upon which the visas held by Mario and Carina were cancelled under s134(4) falls away and the decisions concerning their visas must also be set aside.
I certify that the 66 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Allen, Member
Signed: ............(sgd V Wong)...................................
AssociateDate/s of Hearing 4-6 February 2004
Date of Decision 30 July 2004
Counsel for the Applicant Mr H Christie
Solicitor for the Applicant Christie & Strbac
Counsel for the Respondent Mr A Gerrard
Solicitor for the Respondent Australian Government Solicitor
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