Re Dhanjal and Minister for Immigration and Multicultural and Indigenous Affairs

[2003] AATA 1120

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1120

ADMINISTRATIVE APPEALS TRIBUNAL      )      N2003/24; 26; 27; 28; 29  

)       

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Baldwinder Singh DHANJAL Sukhdev Kaur DHANJAL Jasdip Singh DHANJAL Rajpal Singh DHANJAL Rajsprit Kaur DHANJAL

Applicant

And Minister for Immigration and Multicultural and Indigenous Affairs

Respondent

DECISION

Tribunal Ms N Isenber, Member

Date10 November 2003

PlaceSydney

Decision The decision under review in respect of each Applicant is set aside.

[Sgd] N Isenberg  Member

CATCHWORDS

CANCELLATION OF BUSINESS VISA - whether Applicant has substantial ownership interest in an eligible business - whether Applicant actively participated at a senior level in the day-to-day management of a business - decision under review set aside

LEGISLATION

Migration Act 1958 (Cth)

Migration Regulations 1994 (Cth)

CASE LAW

Commissioner for Superannuation v Scott (1987) 13 FCR 404 Freeman v The Secretary, Department of Social Security (1988) 19 FCR 341

Hope v Bathurst City Council (1980) 144 CLR 1

Re Griffiths and Migration Authority [2001] AATA 240

Re Ong v MIMIA [2003] AATA 178

Re Huang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656 (2August 2002)

Re Salim & Ors v MIMIA (2002) 36 AAR 42

Re Tang v Minister for Immigration and Multicultural and Indigenous Affairs (2000) 32 AAR 103

Re Wang v MIMIA [2000] AATA 961 (3 November 2000)

Re Wong and MIMIA [2002] AATA 54

Re Widjaja and MIMIA [2003] AATA 380

REASONS FOR DECISION

10 November 2003   Ms N Isenberg, Member

DECISION UNDER REVIEW

1.      The decision under review before the Administrative Appeals Tribunals (“the Tribunal") was the decision of the Respondent, the Minister for Immigration, Multicultural and Indigenous Affairs (“The Minister”) dated 5 December 2002 (T2) to cancel the visa of each of the Applicants.

BACKGROUND

2.      Mr Balwinder Singh Dhanjal ("Mr Dhanjal") is the primary visa holder.  Ms Sukhdev Kaur Dhanjal is his wife, and is a secondary visa holder.  Jasdip Singh Dhanjal, Rajpal Singh Dhanjal and Rajsprit Kaur Dhanjal are the couple's children and are the other secondary visa holders.

3.      On 17 December 1999 the Dhanjal family entered Australia after being granted subclass 127 visa.On 6 May 2002 a “survey of Business Skills Migrant – 24 Months” form 1010 was sent to Mr Dhanjal by the Department of Immigration, Multicultural and Indigenous Affairs (“the Department”) (T5). On 26 June 2002 Mr Dhanjal sought an extension of time from the Department in which to reply to the 24-Month survey (T6).  On 19 August 2002 ‘Notices of Intention’ to cancel the visas were sent to each member of the family by the Department (T7 - T11).  On 21 August 2002 Mr Dhanjal responded to the 24-Month survey (T12) and on 26 September 2002 responses to the Notices of Intention from all family members were received (T14).  On 5 December 2002 the Department cancelled each of the visas (T17 – T21).

ISSUE BEFORE THE TRIBUNAL

4. Section 134 of the Migration Act 1958 provides that the Minister has a discretion to cancel a business visa if certain criteria are not met.

5.      The issues to be determined by the Tribunal are as follows:

·     Had Mr Dhanjal obtained a substantial ownership interest in an eligible business in Australia?

·     Was Mr Dhanjal utilising his skills in actively participating at a senior level in the day-to-day management of the business as at the date of cancellation?

·     Does Mr Dhanjal intend to continue to hold a substantial ownership interest in, and utilise his skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia?

·     Had Mr Dhanjal made a genuine effort to obtain a substantial ownership interest in an eligible business and to utilise his skills in actively participating at a senior level in the day-to-day management of that business?

·     Will the cancellation of Mr Dhanjal's visa result in extreme hardship to any of the Secondary visa holders?

APPEARANCES

6.      A hearing was held before the Tribunal on 17 and 18 September 2003 at which the Dhanjal family was represented by Mr R Turner, solicitor, and the Minister was represented by Ms S Goodman, solicitor.

LEGISLATION

7.      The relevant legislation in this matter is the Migration Act 1958 (“the Act”), in particular section 134. That section, so far as is relevant, provides as follows:

134  Cancellation of business visas

(1)Subject to subsection (2) and to section 135, the Minister may cancel a business 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).

(3A)…

(4)Subject to subsection (5) and to section 135, if:

(a)the Minister cancels a person’s business visa under subsection (1) or (3A); and

(b)a business visa is held by another person who is or was a member of the family unit of the holder of the cancelled visa; and

(c)the other person would not have held that business visa if he or she had never been a member of the family unit of the holder of the cancelled visa;

the Minister must cancel the other person’s business permit or business visa by giving written notice to that person.

(5)The Minister must not cancel the other person’s business visa under subsection (4) if the cancellation of that visa would result in extreme hardship to the person.

(6)The Minister is taken not to have cancelled a person’s business visa under subsection (4) if the Administrative Appeals Tribunal has set aside the decision of the Minister to cancel the business visa of the relevant person to whom paragraph (4)(a) applied.

(7)…

(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.

…

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.

EVIDENCE: Documents

8.      The Tribunal had before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which the Tribunal took into evidence.

9.      The progress of the hearing and the review of the documentary evidence by the Tribunal were somewhat impeded by the late service of voluminous material by Mr Turner.  For that reason identification of the documents referred to in this decision are imprecisely recorded.

The following documents were tendered:

T1 – T 29	The documents prepared for the Tribunal pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975
A1	The Applicants’ statement (undated)
A2	Invoices, deposit records and correspondence from Noltec Engineering Pty Ltd and DMW Worldwide Pty Ltd.
A3	Large bundle of documents submitted by Applicant
A4	Consignment Notices, Invoices, Bank Account Details and Tax information from Noltec Engineering Pty Ltd and DMW Worldwide Pty Ltd.
A5	Customs reports from Kenya
R1	Movement Records of the Applicants

ORAL EVIDENCE

10.      Each member of the Dhanjal family gave evidence and was cross-examined.

Balwinder Singh DHANJAL (‘Mr Dhanjal’)

11.     Mr Dhanjal referred to his statement (Exhibit A1) where he said that it his intention to move to Australia permanently.  He said he has spent the last two years developing a market in East Africa for the products he exports from Australia.

12.      Due to his experience and contacts in the automotive industry in East Africa whilst he was in Australia in August 2001 he researched the Australian market for finished automotive parts which would be marketable in Africa. In the past, a number of Australian products were sold in Africa but demand significantly reduced when cheaper products  from Taiwan and elsewhere.  However, in the past few years, there had been a resurgence of public demand for better quality products, and he therefore identified an opportunity to re-introduce Australian produced goods into East Africa.

13.     In August 2001, he registered in Australia DMW Worldwide Pty Ltd (ACN 097781845) (T22 p216) ("DMW").  DMW, which was to operate from Sydney would be the ‘flagship’ company and all business done in Australia would be through that company.  The company has 3 directors: Mr Dhanjal, his wife and his eldest son, Jasdip.  They are also shareholders, together with Rajsprit ("Rajsprit") and Rajpal ("Rajpal") Dhanjal, his 2 younger children.

14.      His intention was to build up a market in Kenya and then develop it elsewhere in East Africa.  

15.      As the products that he intended to market were specialised, he needed to be “on the ground” in East Africa so that he could use his contacts to ensure maximum market awareness.

16.     Once the markets had been developed, he intended to move to Sydney and run the business from here. 

17.      Due to the poor state of the roads in Africa, there is a constant demand for better suspension products Mr Dhanjal visited a number of garages across Sydney and learned that high quality suspension bushes were  manufactured  by Noltec Engineering Pty Ltd ("Noltec").  That company was using cutting-edge technology to produce a product that provided durability and strength in the suspension bushes, something that was ideal for the African conditions.

18.     Mr Dhanjal met the managing director of Noltec and reached an agreement with him to market the company’s suspension bushes in East Africa under the name of ‘DMW Softride’.  He returned to Nairobi with samples, which were immediately accepted by his colleagues in the automobile industry, who provided references.  He was taken in cross-examination to these references, such as those from Subaru Kenya, PAC and KYB Centre and Jascar, all of which have been produced only quite recently (Exhibit A3, Tab 2), KYB and PAC both refer to having used the products only since mid 2002.

19.     In December 2001, on his return to Kenya, Mr Dhanjal registered Formula 1 Motors Ltd ("Formula 1").  The company has two directors: Mr Dhanjal and Sandeep Jandu ("Sandeep").  Formula 1 was set up primarily to market Australian automotive products in Kenya.  In cross-examination he said that while marketing was done in the name of Formula 1 it was he who was doing that marketing of Australian products.  He described himself as ”the main financier” of the company.  He said the company had a business plan but it was not one that was written down.

20.      As an “automotive engineer” Mr Dhanjal markets the product, whereas Sandeep “runs the office”.  Sandeep has ”no clue” about the technical side of the business.  Mr Dhanjal tells Sandeep what the customers require and Sandeep conveys the order to Jasdip at DMW in Sydney.  Jasdip forwards the order to Noltec.  In cross-examination he said that Jasdip handled all the documentation in Australia.

21.      In cross-examination he was also shown the telephone bills tendered on his behalf (Exhibit A3, Tab 2).  As DMW operates from the family home in Rosebery it was difficult to tell which calls were of a personal nature and which related to the business of DMW.  He said there was not much in the way of personal calls.  The business calls included asking Jasdip to be on the lookout for export opportunities.  He said about 70 per cent of the calls were personal and 30 per cent related to business.

22.      DMW placed its first order with Noltec on or about 8 November 2001, with subsequent orders on 21 March 2002, 30 April 2002, 18 July 2002 and 17 September 2002 (x2).  Invoices totalled about $20,000.  Two shipments were made by DMW to Formula 1 in March and October 2002 (Exhibit A4). 

23.     The products were displayed at the Nairobi Annual Motor Show in October 2002.  (Exhibit A3, Tab 2).  From about mid-November 2002 Formula 1 placed advertisements in car and sports magazines in Nairobi.  (Exhibit A3, Tab 2)

24.     Eleven further orders have since been placed (Exhibit A2), with invoices totalling about $75,000. 

25.     In August 2002 Noltec wrote to DMW stating that it had been dealing with DMW for 12 months and that it was willing to appoint it as its sole agent in East and Southern Africa. (Exhibit A2).   On 11 September 2003 Noltec wrote to DMW confirming that it had been appointed as its authorised distributor in East Africa (Exhibit A3, Tab 1).  Mr Dhanjal said he did not know when the appointment had been made but re-iterated that in August 2002 Noltec had expressed a willingness to do so.  In cross-examination however Mr Dhanjal conceded that he had not personally seen the letter of appointment. 

26.     Formula 1 not only marketed the bushes in Kenya, but also provided a free fitting service at its premises in Nairobi.  It also appointed a number of sub-agents who fit the Softride bushes.  A list of agents was tendered as well as photographs from some of these agents’ fitting centres.  (Exhibit A3, Tab 2).  Letters from a number of sub-agents were also tendered (Exhibit A3, Tab 2).

27.     In February 2003, Formula 1 was approached by a number of engineers in Uganda  to market the bushes there.  Mr Dhanjal and Sandeep visited Kampala in April 2003 and were immediately impressed by the potential in the shock absorber market.  A company was registered in Uganda, DMW Auto Parts and Accessories Limited, in April 2003 (Exhibit A3, Tab 2) to market DMW’s products.  The directors of this company are Mr Dhanjal and his wife.

28.      In December 2002, DMW and Formula 1 contacted Fulcrum Suspensions Pty Ltd in Queensland ("Fulcrum") regarding its range of shock absorbers and suspension bushes.  After correspondence with the managing director and the export manager, an order for the company’s range of products was placed.  In an undated letter, received by Mr Dhanjal in March 2003, Fulcrum appointed DMW (which it described as the ‘parent company’ of Formula 1)  distributorship rights for Uganda (Exhibit A3, Tab 2).  The letter observed that Formula 1 would also be trading in Rwanda and the Congo.

29.     So far, only one consignment from Fulcrum, has been shipped by DMW to Formula 1, which was in March 2003 (Exhibit A4).

30.      Mr Dhanjal also provided evidence that Pedders Suspensions ("Pedders")  transferred franchise rights were transferred to Formula 1 on 6 August 2003. (Exhibit A1).

31.     Mr Dhanjal said that he had also been in touch with the communications manager of Disc Brakes Australia Pty Ltd ("Disc Brakes") and  during his current visit to Sydney, he is meeting with that company to see if he could arrange distributorship rights for  its products in East Africa.

32.      Earlier this year, Mr Dhanjal was approached by one of his relatives who is in the bus-building business in Nairobi.  He wanted him to find out if bus coach seats could be sourced from Australia.  In March 2003, Jasdip, on behalf of DMW contacted the marketing officer of McConnell Seats (‘McConnell’) in Melbourne for a quotation.  The brochures and costing information received were tendered, as was an email quoting the cost of a container load of seats to Kenya (Exhibit A3, Tab 1)  The company was unable to match prices available from companies in Malaysia, so negotiations ceased.

33.     Mr Dhanjal said he has spent a large portion of his time in Kenya developing the market for these products and will need to be “on the ground” to push this further.  He said he has a passion for everything he does and has been running his own business, Dhanjal Motors, since 1974.  He said he was confident that he can successfully build a large market for Australian products in East Africa.

34.      Mr Dhanjal also said that he intends to diversify DMW into other fields once he is in Australia. 

35.      Since his first trip to Sydney he has been very keen to purchase a newsagency in Sydney.  During his visit in August 2001, he spent a lot of time with Jasdip researching the newsagency market and they visited a number of newsagencies around Sydney.  They met with a representative of the Australian Newsagencies Federation, NSW Association ("the Federation") at the offices in Burwood, Sydney. He obtained information about the newsagency industry including territorial boundaries.

36.     Mr Dhanjal and Jasdip investigated one particular business in Miranda but it was deemed too expensive, especially as the lease was about to expire, the property needed renovation and the stock was poor.

37.     Mr Dhanjal also enrolled for a Newsagency Information Seminar that the Federation was organising on 5 September 2001.  However, due to some urgent business commitments in Nairobi, he could not attend and his wife and Jasdip attended instead.  Later, information was sent to him. (Exhibit A3, Tab 2)

38.     Jasdip sends him updates from the Federation on what businesses are for sale in Sydney  He said he visited the Federation’s website regularly but in cross-examination conceded that he had seen few of the information bulletins about the newsagency businesses for sale.

39.      He said that he had not bought property in Australia because the family’s status was unresolved. 

40.      He said that once DMW is fully established in Australia his partner, Sandeep, will “take over” the business in Kenya.

41.     He described the crime situation in Kenya.  A newspaper report was tendered referring to 46 violent deaths occurring in a two-month period.  He said he does not go out after 9 pm as it is too dangerous.  His home has a security guard.  If he is out at night, for example at a restaurant, he will phone up the security guard to escort him home.  There have been home invasions and threatened rapes.  He is concerned for his wife and daughter.  He considered it even to be risky for his sons. 

42.      The financial situation in Kenya is unpredictable.  A couple of years ago 3-4 banks closed. Although the government has now changed there is no way of knowing if things will improve.  There is no market for property as no one has any money.

43.     Mr Dhanjal said that he supports his family from his income in Kenya.  The family home is in Kenya.

Jasdip Singh DHANJAL

44.     Jasdip told the Tribunal that he is employed at Citibank as a business development manager.  He adopted his statement that appears at T14 p157.  There he recorded that he had worked at Citibank (in several capacities) since he came to Australia  on 27 December 1999.  He described his job as being demanding and said he works eight to ten hour days.  He has completed his Securities Institute Certification and is currently enrolled in the Diploma in Financial Planning.

45.      In evidence he said that DMW was registered on his family’s behalf by chartered accountants, with a view to starting a business in Australia.  As to the company’s operations he said in evidence that he looks after day-to-day issues, ”the pens and paper” but his father decides the “‘business issues”.  He personally spends only about three to four hours on the company business per week, because he is otherwise employed fulltime at the bank.  He places orders for products and arranges payment and ”general office stuff”..  He does all of the work done by the company in Australia.  This has been the case since January 2002.

46.      From time to time, his father might phone and say he thinks he can sell a particular product in Kenya and will then ask Jasdip to identify potential suppliers, which he does largely through the Yellow Pages.

47.      Jasdip said that about half of the time he speaks with his father by phone there are some business issues to discuss.  Of his father’s calls to the family about one or two in five are to him. He also says that his father is computer illiterate.

48.     He said that when his father was here in 2001 he took a few days off and, with his father, sought advice from accountants about business opportunities in Australia. 

49.      They investigated the possibility of a newsagency business.  He recalled that they had visited about twenty five or thirty newsagencies.  When none proved of interest at that time, he kept looking even after his father had returned to Kenya, and would sometimes go to look at one on the weekend.

50.      He confirmed his father’s evidence that the contact with Pedders was very recent.  In relation to Fulcrum he said that Sandeep had contacted him and he, in turn, had made contact with Fulcrum.

51.      He told the Tribunal what a return to Kenya would mean to him.  He said the future there was “not bright”.  He saw no future for the financial planning industry he is in.  While there is a banking industry in Kenya there was nothing comparable to his present job.  Although Citibank is an international firm his line of business is only present in sixteen of its offices.  His employers have indicated that they may consider sponsoring him if this application for review is unsuccessful.

52.      If obliged to return to Nairobi, he would be unable to conclude his studies, which are half completed, as there were no comparable courses available.  He was unlikely to be eligible for a student visa in Australia, as his studies require only one hour of lecture time, with the attendant three to four hours of study.

53.      He had recently visited Nairobi but has not lived there since 1994, as he went to the UK to do his studies.  He has family in Kenya, his father’s brothers and sisters who are married with children, aged from about four to eighteen.  He corresponds with the remaining family through email and text messages.  His mother’s whole family is in the UK.  The majority of his friends have gone to Australia, the UK or Canada.

54.      He said that security was an issue.  He had lost close friends.  There were robberies, murders and carjackings.  If he were to travel home after 8pm he would not stop at red traffic lights.  Their home has security grills on the windows.

55.     If his visa is cancelled he will try to find some way to be able to return to Australia.  If that fails he will try to go the UK.

Sukhdev Kaur DHANJAL, Rajsprit Kaur DHANJAL and Rajpal Singh DHANJAL

56.     All adopted their written statements and gave evidence elaborating upon those statements.  In view of my findings in relation to Mr Dhanjal it has been unnecessary to reproduce their evidence.

CONSIDERATION OF THE EVIDENCE

57.     In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.

58. In conducting a review of the cancellation decision, I am to determine if section 134(1) of the Act applied to Mr Dhanjal at the date of cancellation of his visa (Freeman v The Secretary, Department of Social Security (1988) 19 FCR 341; Re Griffiths and Migration Authority [2001] AATA 240; Re Wong and MIMIA [2002] AATA 54 at par 37 ("Re Wong")).

Had Mr Dhanjal obtained a substantial ownership interest in an eligible
business in Australia?

59.     In determining this issue, given the submissions of the parties, three questions arise:

Is there a business?

60.     Mr Dhanjal arranged the incorporation of DMW while in Australia in August 2001.  All the relevant evidence was on the basis that DMW was the business upon which Mr Dhanjal relied.

61.      Ms Goodman referred to Hope v Bathurst City Council (1980) 144 CLR 1 at paragraph 14 for the definition of business. In order for the activities of DMW to be found to constitute ’business’ Mr Dhanjal would need to show that during the period his visa was current (17 December 1999 to 5 December 2002) DMW engaged in activities "for the purpose of profit on a continuous and repetitive basis".

62.      In Huang and Minister for Immigration, Multicultural and Indigenous Affairs [2002] AATA 656 the Tribunal described the requirements in the following terms:

"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."

63.      Ms Goodman also submitted that DMW had not, during the relevant period, carried on business on a continuous and repetitive basis, because there was only evidence of the export of two consignments to the total value of $13,000 (T22 pp 276 & 279).  I do not accept this submission. Exhibit A2 is a copy of invoices from Noltec to DMW.  Between the date of incorporation and 5 December 2002 there are 6 invoices totalling nearly $46,000 for automotive products purchased by DMW from Noltec.  Of these, four, totalling over $20,000, precede the Minister’s survey of 6 May 2002. 

64.     Both parties invited me to draw some conclusions from the financial statements for both the 2001/2002 and 2002/2003 years.  The 2001/2002 statement reveals the company received only $13,000 in trading income that financial year, whereas, the latter statement shows in excess of $220,000 in income.  It is difficult to assess what portion of that income was received prior to 5 December 2002.

65.      Exhibit A4 contains copies of invoices from DMW to Formula 1, totalling, during the relevant period, over $68,000.  I consider these invoices to provide an insight to the financial activities of DMW during the relevant period.

66.      I find that during the relevant period DMW engaged in activities for the purpose of profit on a continuous and repetitive basis and is therefore a ‘business’.

Is DMW an eligible business?

67.      Having decided that DMW did carry on business, the question arises as to whether that business was an eligible business.  Mr Dhanjal claimed that DMW had exported Australian goods or services (paragraph (c) of definition).  There were two shipments in which DMW exported Australian goods.  I accept that DMW has exported Australian goods and therefore I find DMW to be an eligible business as defined.

68.      Having come to this view it was not necessary for me to consider if DMW satisfied other available criteria to meet the definition of eligible business.

Did Mr Dhanjal have a substantial ownership interest in DMW?

69.      Mr Dhanjal owns 20 per cent of DMW.  The company has an issued share capital of five $1 shares, each held by a member of the family.

70. Mr Turner submitted that as visa sub class 127 (212)(2)(a) permits an applicant and his or her spouse to combine their assets in order to meet the test, the same test should apply here. Even if only Mrs Dhanjal’s share was considered, together Mr and Mrs Dhanjal would have 40 per cent ownership of the company. While there may be some logic to this approach, section 134(1)(a) is quite specific – it is the visa holder who must have the substantial ownership interest in an eligible business.

71. The definition in section 134(10) permits consideration of interests held other than directly. In particular it mentions interests held in trust. However in this case there was no evidence of any trust or other arrangement which might lead me to a view that the other four shares were held by each shareholder other than beneficially.

72.      The question as to whether Mr Dhanjal has a substantial ownership interest in DMW is "a question of fact and degree having regard to the business entity involved, and not simply mathematics" (Re Ongv MIMIA [2003] AATA 178 at 26).

73.      In that case the Tribunal referred to Commissioner for Superannuation v Scott (1987) 13 FCR 404 at 412, in relation to the meaning of "substantial" and decided that a 12.25 per cent holding in a private company having a share capital of 10,000 $1 shares was not a substantial ownership of that business.

74.      In Re Wong and MIMA [2002] AATA 54 a 25 per cent ownership interest was held to be substantial by the Tribunal.

75.     I note that in both Ong and Wong the applicants purchased a minority shareholding in an existing company, and did so well after the Minister’s request for details of their business activities in which they had engaged since arriving in Australia.  In Tang (2000) 32 AAR 103 the company was incorporated only after the Minister’s enquiry. In all three cases there had previously been relatively minor activity of a business nature by the Applicant.

76.      In this case however there was no sudden flurry of activity following the Minister’s enquiry. Mr Dhanjal had arranged for incorporation of the company and had nominated his family members as the other shareholders.  The evidence was that he immediately set about investigating enterprises for the company.  His first purchase of automotive parts from Noltec was in about November 2001, well before the Minister’s enquiry.

77.      While there was no evidence that the family members held their shares in trust for Mr Dhanjal, I think the company is correctly characterised as a family company.  As is frequently the case in family companies the directors are husband and wife.  In this case, the Dhanjal’s eldest son, was also a director.  The other children were students and there was no evidence that they took part in the company’s business whatsoever. 

78.      I therefore find that Mr Dhanjal had a substantial ownership interest in DMW.

Was Mr Dhanjal utilising his skills in actively participating at a senior level in the day-to-day management of the business as at the date of cancellation?

79.      Firstly, I do not accept that the research Mr Dhanjal carried out in August 2001, during which he visited newsagencies and explored other options is relevant in considering Mr Dhanjal’s role in the day-to-day management’ of DMW.  At that time, the company was only recently incorporated and the ‘research’ could not be characterised more generously than that.  However from the time that he obtained samples from Noltec the business was underway.  Indeed the business activities relied on were associated with the export business of DMW.

80.      Mr Turner submitted that it was clear that Mr Dhanjal was running DMW because he made all the important decisions for the business.  Mr Dhanjal’s evidence, and that of Jasdip’s, was that the business was run, and continues to run, with Mr Dhanjal’s direction, guidance and instruction.  Significantly, if Mr Dhanjal gives no instructions for goods to be exported then none are exported. 

81.     Mr Dhanjal spends a minimum of 50 per cent of every day in work connected with the exports.  Jasdip however spends a maximum of 3-4 hours per week in such work, having a responsible full time job and also undertaking part time studies.  Ms Goodman sought to differentiate between the entities on whose behalf Mr Dhanjal was acting, eg that it was on behalf of Formula 1 that he undertook marketing activities in Kenya and Uganda, rather than DMW.  It was said that the activity of Mr Dhanjal marketing Australian goods in Africa should not be categorised as participation in the day-to-day management of DMW.  I do not accept this submission.  If these activities were not undertaken there would be no demand for DMW to export goods.  I do not think the roles are capable of differentiation.

82.      During the relevant period Mr Dhanjal only spent 3½ months in Australia and he spent the rest of time in Kenya. 

83.      I accept that the very nature of an export business requires a significant part of the business, especially marketing, to take place overseas.  The requirement to be overseas is inherent in the nature of such a business.  There is no bar in the legislation to a visa holder being overseas as long as they are managing the business in Australia. 

84. Mr Turner submitted that it was not necessary for Mr Dhanjal to participate in the business while physically present in Australia. While there is nothing in the Act precluding an applicant from travelling overseas, it was held in Re Tang v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 997 at paragraph 21:

"The Act is intended to benefit business owners who settle here (in Australia) and actively manage that business. "

85.      Mr Turner’s submission however does receive some support in Re Tang where, at paragraph 25, the Tribunal considered whether there had been active participation in the business from overseas.

86.      As to whether a visa holder must participate at a senior level in the day-to-day management of the Australian business in Australia I also considered Re Huang where the Tribunal said:

"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.  (My emphasis)"

87.      In Re Huang however all of the company’s business transactions had been organised from Taiwan.  For most of the transactions, Mr Huang had “attached himself” to other companies which have had exclusive rights to market the products he has dealt with. In this case however Mr Dhanjal had arranged his partner Sandeep to transmit orders to Jasdip in Australia because he, Mr Dhanjal, does not know how to use a computer.  Jasdip then conveyed the orders on behalf of DMW.  Another feature of Huang was that the company operated on a ”revenue neutral” basis and hence was found not to be a business according to Hope v Bathurst City Council..  In this case, DMW operated profitably in the relevant period and this profit was increased in the subsequent financial year.

88.      The Tribunal in Ong also was of the view that the business activities that must be examined are those in Australia.  In that case, however, the Tribunal had already decided that the applicant had not, by the relevant date, obtained a substantial ownership interest in an eligible business.  Having come to that decision, it is difficult to see how the Tribunal could have come to a view other than that the applicant was not utilising his skills in actively participating at a senior level in the day-to-day management of an eligible business.  Furthermore in that case there appeared to be little evidence of business endeavours at all before the visa was cancelled.  This therefore is quite different to Mr Dhanjal’s situation.

89. Further, I do not accept that the Second Reading Speech (introducing the Bill amending section 134(1)(b) of the Act; Migration Amendment Bill (No 2) 1992) was quite as clear as was suggested in re Ong, namely that business activities must be in Australia.

90.      Ms Goodman asked me to disregard telephone records tendered by Mr Turner to show Mr Dhanjal’s involvement in the day-to-day management of DMW.  While these phone records are addressed to Mr Dhanjal in Nairobi he was unable to identify most of the phone numbers in them.  Jasdip’s evidence was that approximately 20-40 per cent of the calls were to him and the rest were to other family members.  Of those which were to Jasdip, his evidence was that approximately 40 per cent of these phone calls were for business purposes although there was little evidence of the business content of the calls.  Mr Dhanjal's evidence seemed to be that he asked Jasdip to look into buying a variety of items unrelated to the export of automotive parts, the main business activity of DMW.  It is consistent with Mr Dhanjal’s evidence of his intention to expand and diversify the company.

91.      Ms Goodman submitted that because Mr Dhanjal retained substantial business interests in Kenya this was a further indication of his business efforts being expended in respect of those businesses, and not DMW.  Mr Dhanjal stated that he has been attempting to sell his assets in Kenya.  Although there is only one letter attesting to this, I accept Mr Dhanjal's evidence as to his attempts.  There was evidence from all family members of the deteriorating economic and social situation in Kenya and I find Mr Dhanjal’s intention to dispose of his assets there before finally leaving (as have many members of his extended family) to be entirely reasonable.  This differs from the applicants in Re Huang and Re Tang who apparently were making no efforts whatsoever to sever financial ties with their country of origin.

92.      I therefore find that Mr Dhanjal was utilising his skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia. 

93.      I also find that Mr Dhanjal intends to continue to hold a substantial ownership interest in, and utilise his skills in actively participating at a senior level in the day-to-day management of an eligible business in Australia.

94. I am therefore satisfied that the Minister's discretion to cancel Mr Dhanjal’s business visa pursuant to s 134(1) should not be exercised.

95.      Having come to that view I also find that the visas of the secondary visa holders should also not be cancelled.

DECISION

96.      The decision under review in respect of each Applicant is therefore set aside.

I certify that the 96 preceding paragraphs are a true copy of the reasons for the decision herein of MS N ISENBERG, MEMBER

Signed:         .......................................................................................
  Associate

Date’s of Hearing  17 & 18 September 2003
Date of Decision  10 November 2003
Solicitor for the Applicant           Mr R Turner
Solicitor for the Respondent    Ms S Goodman