Prayitno and Minister for Immigration and Multicultural and Indigenous Affairs
[2005] AATA 980
•6 October 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 980
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/479
GENERAL ADMINISTRATIVE DIVISION ) Re EDWIN PRAYITNO Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Senior Member Robin Hunt Date6 October 2005
PlaceSydney
Decision The Tribunal sets aside the decision made by a delegate of the Respondent to cancel Mr Prayitno’s business skills visa and directs that Mr Prayitno’s visa is not to be cancelled. ..............................................
Ms R Hunt
Senior Member
CATCHWORDS
MIGRATION – Business Skills Visa – Cancellation by Minister pursuant to section 134 of the Migration Act – Substantial ownership of an eligible business – Day to day management of an eligible business – Intention to continue – Decision under review set aside.
LEGISLATION
Migration Act 1958 s 134, 137
Migration Series Instructions No 133 (MSI 133)
Second Reading Speech introducing the Bill amending section 134(1)(b) of the Migration Act 1958 (Migration Amendment Bill (No 2) 1992)
CASES
Hope v Bathurst City Council (1980) 144 CLR 1
Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703
ReTang and Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103
Re Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54
Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178
Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299
Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656
Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307
Thomas v Federal Commissioner of Taxation [1972-1973] ALR 368
REASONS FOR DECISION
6 October 2005 Senior Member Robin Hunt SUMMARY
1. Mr Edwin Prayitno is Indonesian and was granted a subclass 127 Business Skills Visa on 3 July 2000. He entered Australia on 25 February 2001. His visa was cancelled on 11 June 2004 by a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs on the grounds that he had not obtained a substantial ownership interest in an eligible business in Australia and that he was not actively participating at a senior level in the day to day management of an eligible business. Mr Prayitno applied to the Tribunal for the review of this decision. The Tribunal has decided that Mr Prayitno has a substantial ownership interest in an eligible business in Australia and that he is actively involved in the day to day management of this business at a senior level. This means that his application has been successful and that his visa will not be cancelled.
ISSUES AND LEGISLATIVE PROVISIONS GOVERNING
2. Section 134 of the Act empowers the Respondent to cancel a business visa in certain circumstances and provides:
(1) Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment-linked visa or a family member's visa), by written notice given to its holder, if the Minister is satisfied that its holder:
(a) has not obtained a substantial ownership interest in an eligible business in Australia; or
(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or
(c) does not intend to continue to:
(i) hold a substantial ownership interest in; and
(ii) utilise his or her skills in actively participating at a senior level in the day-to-day management of; an eligible business in Australia.
(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. In particular, sections 134(1) and (2) give rise to the main issues before the Tribunal. They are, firstly:
· Whether Mr Prayitno has acquired a substantial ownership interest in an eligible business in Australia; and
· Whether Mr Prayitno has utilised his skills in actively participating at a senior level in the day to day management of an eligible business.
4. If I am satisfied that Mr Prayitno fails to meet one of these criteria, I must then determine whether he has made genuine efforts to do these things. If I am satisfied that Mr Prayitno has made suitable efforts for the purposes of the above issues, I must not cancel his visa by virtue of section 134(2) of the Act.
5. Subsection 134(10) sets out that, in this section, business visa means a visa included in a class of visas, being a class that has the words "Business Skills" in its title. As well, the subsection provides that “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.
ANALYSIS
Does Mr Prayitno hold a substantial ownership interest in an eligible business?
6. The Minister has conceded that Mr Prayitno has a substantial ownership interest in Evin Pty Ltd (Evin), an Australian company. The first question at issue for the Tribunal is whether Mr Prayitno, at the date of the cancellation, had an eligible business for the purposes of section 134(1) of the Act. The meaning of an “eligible business” is set out in section 134(1), paragraphs (a) to (f), of the Act. For Mr Prayitno’s business to qualify, it must meet at least one of the criteria. Cases such as Hope v Bathurst City Council (1980) 144 CLR 1 provide guidance about the term ‘business”. The case of Hope is authority that carrying on a business is an activity undertaken on a continuous and repetitive basis for the purpose of profit. The business concerned does not have to reach a threshold of size or turnover to qualify as an eligible business although size and turnover may indicate that a business is performing well. Also, see the Tribunal decision in Tang v Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103 as to the need for activities for profit on a continuous and repetitive basis.
7. Whether particular activities constitute a business is a matter of fact and degree, see Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA. Bowen CJ and Franki J in Fergusonv Federal Commissioner of Taxation (1979) 26 ALR 307 at 311 said that:
“There are many elements to be considered. The nature of the activities, particularly whether they have the purpose of profit-making, may be important. However, an immediate purpose of profit-making in a particular income year does not appear to be essential. Certainly it may be held a person is carrying on a business notwithstanding his profit is small or even where he is making a loss. Repetition and regularity of the activities is also important. However, every business has to begin, and even isolated activities may in the circumstances be held to be the commencement of carrying on business. Again, organization of activities in a business-like manner, the keeping of books, records and the use of system may all serve to indicate that a business is being carried on…..The volume of operations and the amount of capital employed may be significant.”
8. In Thomas and Federal Commissioner of Taxation [1972-1973] ALR 368, the taxpayer was able to demonstrate he was in business although he made a loss in his first year and the business was not conducted with maximum efficiency. Walsh J of the High Court found the taxpayer was nevertheless conducting a business of primary production in having planted a number of trees for the production of timber, fruit or other produce. He had made no income due to natural occurrences such as bushfire.
9. Mr Prayitno gave evidence that on 14 October 2002, Evin was incorporated and that he and his wife are the only shareholders. Evin was formed to export goods from Australia to Indonesia. Western Australia was recommended by a friend of Mr Prayitno’s for a construction business and he originally planned to set up this kind of business. This business did not succeed and although Mr Prayitno was involved in construction in Indonesia, he found it difficult to carry on in Australia. He told the Tribunal that he moved to Sydney as there is a larger Indonesian community and more business opportunities. He said that he has a business concept in his head but no formal business plan as his business is still small.
10. Mr Prayitno has gone into export of Australian goods. He told the Tribunal that one of the Australian products he exported was wheat as it is of good quality when compared with wheat from other countries. Mr Prayitno said he marketed Australian goods that had a market in Indonesia. He said if there is no market, then there is no point in exporting goods. On 20 February 2003, Evin exported an order of wheat flour worth $57,355 to Jakarta. His supplier was Manildra Flour Mills and he sold it to Pt. Krida Adiwena Karya in Jakarta. On 26 June 2003, Evin exported $51,823.20 worth of frozen boneless beef supplied by Samex to Golden Penta in Jakarta. He exported a second load on 11 July 2003 worth $52,108.27 to Alfa Nusantara Pratama in Jakarta. He had a second order from Golden Penta but this was cancelled on 7 October 2003, as a result of the outbreak of mad cow disease in the United States (Ex A1, pg 71A). For the financial year ending 30 June 2004, Evin had export sales of $103,925. In the period of February to October 2003, Evin had 4 substantial export sales however one was cancelled as noted above. Mr Prayitno told the Tribunal that as each order is of a large value, it takes time and effort to secure each order. He received a repeat order for wheat flour in September 2004 for $71,400. He says it took so long to get a repeat order for wheat due to the political uncertainty surrounding Indonesia at the time and the “wait and see” attitude of a lot of business people there. In relation to the last order for $71,000 for wheat flour, which was received after the notice of intention to cancel his visa, as it was a repeat order from an existing customer of the business, I have taken this into account.
11. For the financial year ending 30 June 2003, Evin made a gross profit of $1082, after payment of accounting fees, amortisation and tax. For the year ending 30 June 2004, Evin made a gross profit of $4740 after payment of accounting expenses, amortisation, filing fees and tax. Mr Prayitno admits that Evin has not made a big profit and as a result, he has not yet paid himself a wage. He told the Tribunal that he originally asked for more money for each transaction and hoped for later shipments at a higher price. He told the Tribunal that Evin had no labour, rent or insurance costs and that he had first operated from a friend’s address in WA and he would pick up his mail from there when he was in Australia. There was no business sign for Evin and he had a desk there to work on. He now uses another friend’s address in Sydney but plans to buy a property and move his address.
12. There is correspondence before the Tribunal between Mr Prayitno and potential buyers. There is continuing correspondence between Mr Prayitno and established suppliers and clients. There is a letter before the Tribunal from Golden Penta, dated 25 July 2005 (Ex. A7), stating that due to the increase in the Australian dollar, they have stopped importing beef offal and have replaced it with much cheaper local beef raised from Australian stock. There is also evidence Mr Prayitno was and still is trying to find other suitable products to export. Mr Prayitno produced a letter from Evin to a company in Indonesia, dated 25 July 2005, offering health foods and vitamins but received a negative reply on 18 August 2005 due to the high Australian dollar (Ex. A7). He told the Tribunal he had investigated other options such as a Donut King franchise. Mr Prayitno also gave evidence that he had been in contact with Austrade and attended meetings and business exhibitions organised by Austrade. He provided the Tribunal with copies of three Austrade business cards at the hearing (Ex. A2). In addition, he provided a bank statement which showed he deposited $100,000 in a bank account on 13 February 2004 in anticipation of future business orders (Ex. A5).
13. I accept that Mr Prayitno was trying to make a profit through Evin and in fact did make a small profit if his time is not billed to Evin. The case law set out above indicates that the amount of profit is not always important and that a person can be carrying on a business, even if he is operating at a loss, see Ferguson (supra). Hope (supra) sets the requirement for repetition and I am satisfied that there is some degree of repetitively in Evin’s activities. This is reflected by the two wheat flour transactions and the two beef offal transactions, although one was cancelled. Although he did not have as many transactions as he would have liked, Mr Prayitno continually tried to secure further transactions for wheat, beef offal and other products such as health foods and timber. There is ample evidence before the Tribunal in the form of correspondence between Mr Prayitno and both existing and prospective customers. The number of transactions need not be significant and I accept that when a new business commences, it takes some time to build up a client base. I accept that due to the rise in the Australian dollar and the political uncertainty in Indonesia, his business activities have been hindered to some extent.
14. I find that Mr Prayitno has created business links with international markets as his customers are genuine and independent overseas customers in Indonesia. He exports only Australian goods and this has resulted in over $230,000 of commercial activity in the Australian export sector. In addition, he has allocated $100,000 in company’s bank account in readiness for any future business orders. It follows that Evin is an eligible business in accordance with s134(10) of the Act.
Has Mr Prayitno participated in the day to day management of Evin at a senior level?
15. Mr Prayitno told the Tribunal that he is involved in the day to day management of Evin as he is the sole decision maker and his role involves seeking potential customers, showing and introducing materials, maintaining customer service and overseeing the purchase and export of products. He needs to meet face to face with clients and has to approach clients in person most of the time. He runs his business from the address of his Indonesian business and in Australia, his friend has allowed him to use a room in his office in Alexandria. He told the Tribunal that he has spent much of his time in Indonesia in order to find buyers. He said that he spends 4 hours per day 6 days per week. He gave evidence that he sold his Indonesian construction business to his brother-in-law for $600,000 and at the Tribunal hearing had only received half of this payment. He told the Tribunal that he still spends some time on that business as he has not been fully paid for it yet and in order to protect his interests, the business needs to be viable. He is also training his brother-in-law in the business. He has transferred only $100,000 as he is waiting to receive the rest of the purchase price but when he does, he will transfer more to Evin. Once he has been paid for his Indonesian business, he plans to move to Australia. Upon questioning, Mr Prayitno stated that he spent 4 hours in total on the first wheat flour transaction but his representative pointed out that this was in response to a question which was restricted to how much time in total spent only on the actual transaction, which doesn’t take into account the research he undertook and the dead ends involved before locating the customer and the supplier.
16. The representative for the Respondent set out the requirement for the visa holder to participate at a senior level in the day to day management of an eligible business in Australia and referred to the second reading speech of Hansard introducing the Migration Amendment Bill (No 2) 1992, which introduced the new s134 of the Act. However, Mr Prayitno’s counsel pointed out at the hearing that there is no such requirement in the legislation or in the second reading speech that a visa holder be involved in the day to day management in Australia and referred to a number of cases.
17. In Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77, Member Allen stated:
“I do not believe that it can be said that the Act demonstrates a requirement that the visa holder become ordinarily resident in Australia immediately in the sense that he or she spends the majority of his or her time in this country, only taking trips overseas from time to time.”
Member Allen stated that a number of factors led him to this conclusion and included the fact that nothing in the documentation in an application for a visa requires that an applicant dispose of overseas businesses or interests in overseas businesses. The 24 month survey form states at section 7 that there is no requirement that an applicant discontinue any business outside Australia. In addition, Member Allen noted s134(1)(b) does not specifically refer to day to day management in Australia and if this is what Parliament intended, it would have been easy to insert this as a requirement. In addition, Member Allen noted the MSI at clause 4,5,1 when dealing with “genuine efforts” states an expectation that a visa holder spend 6 months since their first arrival and visa cancellation frequently occurs 3 to 3 1/2 months after it has been issued, which accords to less than 15% of the visa holders time. Member Allen also noted that a business can be “managed and strategically directed from almost anywhere in the world.” Deputy President Groom recently concurred with Member Allen’s approach in Jo in Thomas and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 637. I note that the 6 month reference in the MSI is not set out in the legislative provision.
18. On the other hand, in Tang, the Tribunal noted that the Act is intended to benefit business owners who make the decision to settle in Australia and actively manage that business. In Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656, the Tribunal noted that an applicant was expected to manage the Australian business in Australia albeit with trips overseas from time to time. However, in Wong, the Tribunal found an applicant who had not visited Australia other than for a holiday was making a genuine effort of the kind required. In Ng v Minister for Immigration and Multicultural Affairs [2003] AATA 299, the Tribunal commented that the Act does not contemplate an absentee entrepreneur. Each case before the Tribunal turns on its own facts.
19. I acknowledge that the purpose of a business skills visa is to enable permanent settlement in Australia for its holder and that, in most cases, it is desirable for a visa holder to reside in Australia. However, I accept that there is no requirement that in order for a person to satisfy s134(1)(b), they must be in Australia to participate in the day to day management of an eligible business.
20. I find that Mr Prayitno has valid reasons for only spending 47 days in Australia up until the date of his visa cancellation. I accept that he needed to spend a considerable amount of time in Indonesia to source buyers, as he already had an established network of Australian suppliers. In addition to this, he has not been fully paid for the sale of his Indonesian business to his brother-in-law. It is in his best interest to train and work in the business until he has been fully paid in order to protect his interests. I also accept the evidence in his written statement (Ex A1 at pg 12) in relation to his mother-in-law’s poor health and time spent in hospital, as well as his wife’s cancer scare, as further adequate reasons to justify the large amount of time he has spent in Indonesia since his visa was issued.
21. In Re Lau and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 703, Member Carstairs commented that:
“management input at a senior level by an experienced business person will often be intangible, and may involve ideas and planning, as much as researching products, securing orders and transacting shipping.”
In Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724, Senior Member Dwyer and Member McLean stated that a business may be successfully run without necessarily requiring daily management, however there must be sufficient management for the needs of that business. In accordance with these cases, I accept that Mr Prayitno has actively participated at a senior level in an eligible business. He is an experienced and successful businessman and the Tribunal accepts his evidence that he spends in the vicinity of 4 hours per day, 6 days a week on the business of Evin. He attended an Australian expo in Indonesia and met with Australian representatives. He located agents in Indonesia to find Australian suppliers. It is evident that he has undertaken extensive research into many viable products to export and has been involved in correspondence with prospective buyers and has met with them in order to secure orders. I find that although Evin has not returned a large profit to date, there has still been sufficient management by Mr Prayitno to meet the needs of Evin. Correspondence indicates continuing potential.
Intends to continue to hold substantial ownership and participate in the day to day management of an eligible business
22. I find that as there is no evidence before the Tribunal that shows Mr Prayitno has plans to sell Evin or to discontinue business, he satisfies the requirement under s134(1)(c). There is evidence before the Tribunal of continuing correspondence between Evin and both prospective and existing customers. In addition, Mr Prayitno gave evidence that he hopes to make a bigger profit and has been looking for other Australian products to export into Indonesia.
CONCLUSION
23. Even if I am wrong in finding that Mr Prayitno has an eligible business and manages it day to day, I am satisfied as well that Mr Prayitno has made genuine efforts to attain a substantial ownership in an eligible business and to manage it day to day. This is evidenced by the continuing correspondence between Mr Prayitno and existing and prospective customers and his continuing efforts to find suitable products to export to Indonesia. Letters before the Tribunal confirm his endeavours. Mr Prayitno told the Tribunal of his efforts and intentions. I accept that he has undertaken considerable research into viable business opportunities and believe he has a genuine intention to run a profitable Australian business and participate in the day to day management of that business at a senior level. It follows that I must not cancel the visa pursuant to s134(2).
DECISION
24. The Tribunal sets aside the decision made by a delegate of the Respondent to cancel Mr Prayitno’s business skills visa and directs that Mr Prayitno’s visa is not to be cancelled.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Robin Hunt
Signed: .......................................................................Zoe McDonald
AssociateDates of Hearing: 28 and 29 September 2005
Date of Decision: 6 October 2005
Counsel for the Applicant: Mr Poynder
Solicitor for the Applicant: Margaret Tan and Associates
Counsel for the Respondent: Ms Maurer
Solicitor for the Respondent: Australian Government Solicitor
0
12
0