Russo and Minister for Immigration and Citizenship
[2007] AATA 2054
•11 December 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 2054
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W200700014
GENERAL ADMINISTRATIVE DIVISION ) Re FRANCESCO RUSSO Applicant
And
MINISTER FOR IMMIGRATION AND CITIZENSHIP
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date11 December 2007
PlacePerth
Decision The Tribunal sets aside the decision under review and directs that the business skills visa of the applicant not be cancelled.
...........[Sgd Mr A Sweidan]...........
Senior Member
CATCHWORDS
IMMIGRATION AND CITIZENSHIP – Business Skills Visa – applicant obtained substantial ownership interest in eligible business in Australia – whether applicant utilised his skills in actively participating at senior level in day to day management of that business or made a genuine effort to do so – factors to be taken into account including steps taken before visa granted – decision under review set aside
LEGISLATION
Migration Act 1958 (Cth) s134
Migration Regulations 1994
CASES
Abbu v Minister for Immigration and Multicultural Affairs [2006] AATA 898.
Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307,
Freeman v The Secretary, Department of Social Security (1988) 19 FCR 342
GIGA Investments Pty Ltd (1995) 13 ACLC 1047
Griffiths and Migration Agents Registration Authority [2001] AATA 240
Gunawan v Minister for Immigration and Multicultural and Indigenous Affairs [2006]
Harsono and Minister for Immigration and Multicultural Affairs [2007] AATA 64
Hidayat v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 916.
Hindrodjojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724Hope v Bathurst City Council (1980) 144 CLR 1
Humayun v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 90 ALD 482.
Karim Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77
Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579Koosasi v Minister for Immigration and Multicultural Affairs [2006] FCA 1260
Lala and Minister for Immigration, Multicultural and Indigenous Affairs [2003] AATA 209
Lau v Minister for immigration and Multicultural Affairs [2002] AATA 70
Leo v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309Lioe v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 189;
Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2003] FCAFC 168
Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2006] FCA 1562
Lok Yung (Michael) Wong v Minister for Immigration & Multicultural Affairs [2006] AATA 277
Minister for Immigration and Multicultural and Indigenous Affairs v Ahmed (2005) 143 FCR 314Ng v Minister for Immigration & Multicultural & Indigenous Affairs [2003] AATA 299
Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178
Puzey v Commissioner of Taxation [2003] FCA 197
Shaikh and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 1119
Shi v Migration Agents Registration Authority [2007] FCAFC 59
Sweeney v MIMA [2007] AATA 991
Tio v MIMA [2007] AATA 1118.Tan and Anor and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808
Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997
Tio and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 1268
Tran v Minister for Immigration and Multicultural Affairs [2006] FCA 1229.
Wong v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 54.
Yam v Minister for immigration and Multicultural and Indigenous Affairs [2004] AATA 283.
Zubair v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 139 FCR 344REASONS FOR DECISION
11 December 2007 Mr A Sweidan, Senior Member BACKGROUND
1. On 8 September 2003 the applicant who was then resident in Swaziland was granted a sub-class 127 business skills visa. He first entered Australia under the visa on 21 September 2003.
2. On 22 December 2006 a delegate of the respondent decided to cancel the applicant’s business skills visa on the grounds that the applicant had not obtained a substantial ownership interest in an eligible business, was not utilising his skills in senior management of such a business on a day-to-day basis, nor had he made genuine efforts to do so.
3. The applicant seeks a review of that decision.
APPLICANT’S EVIDENCE
4. The applicant testified that he has extensive experience in a number of successful businesses involved in building supplies/materials and paints for both retail and wholesale, merchandising, construction, manufacturing and importing/exporting in Swaziland.
5. Around October 2002, upon his then migration agent’s advice that he would be granted his Australian business visa soon, the applicant began looking for premises in Perth to open an import tile and bathroom business, similar to the business he was running in Swaziland at the time.
6. The applicant found a suitable site at Melville Square Shopping Centre. The applicant subsequently commenced lease negotiations with CB Richard Ellis for a shop in the centre for selling imported tiles and bathroom goods. The business was to trade under the name “Tile Plus” which was owned by the applicant’s Australian holding company Cyclone Holdings Pty Ltd (“Cyclone Holdings”).
7. The applicant commenced negotiations with tile suppliers from Asia and Latin America and obtaining shipping quotes. He entered into a lease of the premises for the business and engaged the services of Woodhead International to fit out a showroom.
8. The applicant managed Tile Plus. His management duties included:
§ Sourcing out and entering into the lease agreement;
§ Participating in all the business negotiations;
§Dealing with all potential suppliers including making trips overseas to meet suppliers;
§ Receiving all correspondence pertaining to the business; and
§ Making all decisions relating to the affairs of the business.
9. Despite the delay in being granted the visa, the applicant went ahead and placed orders for stock to arrive in time for opening. However, as no approval of his visa was granted the applicant pulled out of the lease agreement in August 2003. The applicant also pulled out of his international supply agreements around the same time.
10. The applicant lost over $30,000 in Tile Plus. These costs were incurred in rentals, deposit on lease agreement, legal advice, accountant’s fees, designs by Woodhead International and two trips to Asia for stock selection.
11. His visa was granted in September 2003 and in the beginning of 2004 the applicant investigated running a Nando’s Franchise outlet in Willetton. The applicant met with the owner as well as members of Nando’s head office based in Melbourne. He was given access to financials and franchise agreements. After obtaining the financials and closely examining the financial situation of the business the applicant was not satisfied with the current standing of the business.
12. The applicant also investigated a Midas outlet in Rockingham. He met the area manager of Midas. He also discussed the business with the General dealership Manager based in Melbourne. The applicant did not however invest in this business as he did not have sufficient expertise in mechanics.
13. The applicant then looked at investing in a restaurant in South Perth and discussed purchasing the restaurant. He subsequently pulled out of the proposed investment on the basis that the restaurant was a Thai restaurant and that it would have been too difficult to find a Thai chef. The financial statements also showed insufficient profitability.
14. Around the start of 2006 the applicant also looked into a car wash and a coffee shop in Forest Lake’s shopping centre but these were not attractive. There were also other businesses that the applicant informally looked into and researched.
15. The applicant then appointed Allan Hodder of Australian Visa and Migration Services to represent his family. The applicant was introduced to Bob Baker a business associate of Allan Hodder and a business agent.
16. Through them the applicant was then introduced to Doug Millar who was involved in a 46 hectare property development in Wundowie (“the Property”). The applicant subsequently met Mr Millar a number of times to discuss the Property project.
17. The applicant was advised that by obtaining a 10% share in the Wundowie Unit Trust (“Wundowie”) he could comply with his visa requirements.
18. After investigation of the company and the site and his meetings with Mr Millar to discuss the development, the applicant accepted the offer and bought a 10% interest in Wundowie through his Australian holding company Cyclone Holdings for $280,000.00.
19. The applicant also paid a $20,000.00 deposit, in the name of Cyclone Holdings, for one of the proposed lots (Lot 10) in the Wundowie subdivision which he intended to develop.
20. On 28 March 2006 the applicant attended the first Wundowie management meeting and was formally introduced as a 10% shareholder. At the meeting the applicant suggested that a brick walled entrance to the estate (to be called Werribee Estate) be constructed so that the Property could be well presented whilst obtaining planning approval.
21. On 3 April 2006, the applicant attended a second management meeting held on site at the proposed development and met a number of Shire of Northam officials including the CEO and town planners. A further meeting was held a couple of days later on 5 April 2006 at the Shire of Northam office. Planning approval was needed for the Property to be rezoned from ‘Agricultural Local’ to ‘Rural Smallholding’ so that it could be subdivided into 21 lots of an average of 2.14 hectares. A further meeting was held on 2 May 2006.
22. Whilst overseas the applicant received regular emails from Doug Millar and his assistant John Udall with respect to the development. However, not much infrastructure work has been carried out on the Property as the project has been held up in the planning approvals stage. The development is still awaiting planning approval. Upon granting of planning approval the applicant is expected to utilise his building industry experience and be closely involved in liaising with contractors for the infrastructure work on site.
23. Despite the delay, all of the 21 lots have been pre sold awaiting titles through real estate agents. Pre sales have totalled $5.8 million.
24. The applicant said that he intends to spend more time in Australia in order to coordinate and manage the infrastructure work. He said that he would have spent more time previously in Australia had his wife not been suffering chronic back problems. In 2003 the applicant’s wife had 5 spinal fusion operations in neighbouring South Africa and she has suffered complications and been taking heavy medication for pain ever since. The applicant and his wife intended to spend more time with their children in Perth, however the applicant’s wife needed to be close to her South African specialist. The applicant’s wife had a further spinal fusion operation in South Africa in 2006.
25. After investing in Wundowie, the applicant purchased with his daughter Lynette, 3 vacant lots in Rivergum, Baldivis, under a new trust, the Four Corners Trust, with the intention to develop the lots for profit. Lynette obtained a loan as trustee of the trust from the Home Building Society to purchase the lots. The applicant was the guarantor of the loan for the lots.
26. After obtaining separate finance approval, the applicant contracted with Ross North Builders to build three houses, one on each lot. Deposit fees of around AUD $1000.00 for each were paid, plans were drawn up and pre-start meetings were in place.
27. The applicant (Cyclone Holdings) also bought another vacant lot in 9 Marginata Pwy, Canning Vale in early 2006 again with the intention to develop.
28. The applicant also built his own house in Canning Vale.
29. The applicant also bought a display home near his home in January 2005 and leased it back to the building company for a minimum one year term. The house was then sold a year later for a profit of $96,000.00.
30. The applicant investigated a dry cleaning business in Claremont which he turned down as profit margins were not encouraging. He investigated another dry cleaning business in Maddington however the owners only had financials available up to 2005 and the licences were expiring in March 2007. Applicant looked further at another dry cleaning business in Marmion where the vendors were both the owners of both the premises and the business. However, the rent was to be doubled after the sale of the business making the venture not as profitable.
31. The applicant looked into a removalist business (Allied Pickfords). However, as the trucks included in the sale price were significantly depreciated the applicant lost interest in the business.
32. The applicant also considered manufacturing cement building blocks. The applicant has extensive experience manufacturing and marketing cement (cinder) building blocks in Swaziland.
33. The applicant discussed the idea with Bob Baker who introduced him to a business called WA Brick and Paving Pty Ltd who were looking for a partner in the $500,000.00 range and with the applicant’s expertise in manufacturing and marketing cement blocks. The applicant did not proceed with this investment as he subsequently received notification from the respondent of the intention to consider cancellation of his visa. In addition, the applicant did not have the available cash, at the time, to invest $500,000.00 in the venture.
34. The applicant received the notice of intention to consider cancellation of his visa on 18 September 2006. The applicant then had to put all his business projects, including the Rivergum development on hold.
35. The applicant has bought significant private assets in Perth, including his own home in Canning Vale which is unencumbered. In late 2003 the applicant also bought a property in Canning Vale for his daughter Lynette again unencumbered. In 2001 the applicant also purchased a property, also unencumbered, for his son Roberto in Victoria Park.
36. The applicant also retains his 10 percent share in the Wundowie Trust, his lot in Wundowie, three lots in Rivergum, Baldivis and another in 9 Marginata Pwy, Canning Vale all held with the intention to develop.
37. The applicant had invested a total of $2,020,166.00 in Australia at the date of his witness statement in both real property and liquid assets – not including his investment in Wundowie. A significant proportion of this has been invested through his trust entities, commercially for the purpose of making profit.
38. The applicant now believes that he was not given good advice with respect to immigration and business matters.
39. The applicant has divested his assets in Swaziland by selling both of his businesses in 2004.
40. In October 2004 the applicant sold his Swaziland company, Swazi Industrial Agencies Pty Ltd, (a hardware store) however he remained as a director on a transitional arrangement as the purchase price of the company will be paid over a period of 15 years. The applicant maintains this security as the sale was procured by way of vendor loan and he has no security/collateral other than retaining some form of control of the business.
41. The applicant also sold his second Swaziland business, Star Paint Pty Ltd (paint manufacturing), to a different purchaser in 2004. The applicant has leased, with an option to purchase to the purchaser, his factory and laboratory equipment, fittings, fixtures, office equipment and motor vehicles. The applicant provided the purchaser with a vendor loan as he did not have the funds to purchase the business outright.
42. Both of the applicant’s children reside and are employed in Perth.
ISSUES FOR THE TRIBUNAL
43. The relevant issues in this matter are:
(a)Relevance of evidence relating to matters which occurred after 22 December 2006 – the date of cancellation of the applicant’s visa and of matters occurring before the visa was granted;
(b)Does the applicant have a substantial ownership interest in an eligible business – and does he intend to continue to hold such an interest?
(c)Was the applicant utilising his skills and actively participating at a senior level in day to day management of the eligible business – and does he intend to continue to?
(d)If the answers to (b) and (c) are in the negative has the applicant made a genuine effort to obtain a substantial ownership interest in an eligible business and does he intend to continue to make such genuine efforts?
(e)Has the applicant made a genuine effort to participate at a senior level in the day to day management of an eligible business and does he intend to continue to make such genuine efforts?
(f)If the answers to (d) and (e) are in the negative are there any factors that could lead the Tribunal to exercise its residual discretion in the applicant’s favour?
RESPONDENT’S CONTENTIONS
44. In conducting its review of the cancellation decision the Tribunal should have regard to all relevant evidence to determine whether the applicant satisfies the requirements of s 134(1) or is making genuine efforts to do so within the meaning of s 134(2) as at the date of cancellation: Re Griffiths and Migration Agents Registration Authority [2001] AATA 240; Freeman v The Secretary, Department of Social Security (1988) 19 FCR 342 and Wong v Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 54.
45. In the Full Federal Court decision of Shi v Migration Agents Registration Authority [2007] FCAFC 59 His Honour Nicholson J at [10] with Tracey J at [58] agreeing held the following in relation to this issue:
The Tribunal is not confined to material which was before the decision-maker or the events which had occurred up till the time of its decision…However, the Tribunal is obliged to address the same question as the primary decision-maker…Where the question to be decided arises under a statute, the relevance of later evidence will depend upon the proper construction of the statute and the particular factual context…If the primary decision had to be made by reference to a particular point of time, the Tribunal will be limited to deciding the question by reference to that point of time…If the decision could only have been made following a certain procedure, it may be that the evidence called on the review cannot be such as would undermine that procedure. This may preclude calling of evidence of improvements implemented after the date of the decision and in response to the procedure…This does not mean the Tribunal cannot receive as evidence facts that occurred after the date of the decision under review provided that evidence bears on the merits of the decision as at the time that it was required to be made.
Substantial ownership interest in an eligible business in Australia
Tile plus and Baldivis Development
46. The applicant at paragraph 103 of his statement of facts and contentions raises ‘three main business activities, namely Tile Plus, Wundowie and Rivergum, Baldivis.’
47. The respondent points out that only Wundowie is mentioned within the context of s 134(1), while the other business activities are only raised within the framework of genuine efforts under s 134(2). The respondent therefore only addresses Wundowie within the context of substantial ownership of an eligible business and active participation in day-to-day management at a senior level.
Substantial ownership
48. The respondent concedes that the applicant has a substantial ownership interest in Wundowie through Cyclone Holdings as trustee of the Russo Family Trust.
Is Wundowie a business?
49. Before the Tribunal considers whether Wundowie is an eligible Australian business, the Tribunal must consider the preliminary question whether it is even a business at all within the meaning of the Act: see Koosasi v Minister for Immigration and Multicultural Affairs [2006] FCA 1260.
50. The Tribunal has previously found that the reference in subs 134(1)(b) to the “day-to-day management of the business” indicates that a business must have some element of continuity and repetition. Applying Mason J’s formulation of “carrying on a business” from Hope v Bathurst City Council (1980) 144 CLR 1, Deputy President McMahon found in Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997 at [20] that the construction of “participating in the day-to-day management of the business” for subs 134(1)(b) required a commercial enterprise in the nature of a going concern with activities engaged in for the purpose of profit on a continuous and repetitive basis.
51. Member Barton at [55] in the matter of Leo v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309 citing Evans v FC of T 89 ATC 4540 also stated:
“Whether a particular activity or course of activities constitutes a business is a question of fact and degree that is to be determined by considering matters such as the scale of activity and whether it is conducted continuously and on a commercial basis to derive profit.”
52. The importance of a clear profit motive was also discussed by Member Allen at [34] in Hidayat v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 916. Member Allen in the same paragraph also drew attention to the keeping of proper books, accounts and other records as a clear indication of this.
53. The applicant cites the cases of Lala and Minister for Immigration, Multicultural and Indigenous Affairs [2003] AATA 209 and Hindrodjojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724. These authorities are referred to for the proposition that property development companies can be eligible businesses in the nature of a going concern.
54. While the respondent concedes that property development companies can be eligible businesses, they are not always: see Lioe v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 189; Tan and Anor and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808 at [15]; Ng v Minister for Immigration & Multicultural & Indigenous Affairs [2003] AATA 299 [25] - [27] and Tio and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 1268 at [20] and [21].
55. Respondent contends that at the time of cancellation, Wundowie appears to have been merely a ‘potential business’ with ‘potential property development transactions’ rather than an ‘actual business’ with ‘continuous and repetitive transactions’. While the applicant states that all the lots had been sold, Respondent points out that settlement had not occurred and that these contracts were conditional upon statutory approval.
56. Respondent also says that the applicant’s own evidence seems to indicate that planning approval was not guaranteed and that the contracts could possibly have all come to nought. The applicant admits that the project is still waiting planning approval. Respondent therefore contends that Wundowie has not completed a single transaction for profit, let alone made continuous and repetitive transactions as is required.
57. Therefore while respondent acknowledges the various authorities which have held that ‘business does not mean busy’ and there may be ‘significant periods of inactivity’, ‘every business must have a small transaction’ and ‘there may be a business, even if that business runs on a small scale’, respondent says these maxims should not be artificially collated to justify the virtual negation of Mason J’s test. Business should not be construed as ‘virtually nothing or merely potentially something in the prospective future.’ The above authorities outline where the benchmark for property development might be, and the respondent contends that Wundowie falls far below it. For the reasons which follow the Tribunal rejects this contention.
Is Wundowie an eligible business?
58. Even if Wundowie were to be characterised as a business, it must still satisfy the legislative requirement of being an eligible business. The definition of an eligible business is set out in s 134(1) of the Act. A business must meet at least one of the criteria set out in paragraphs (a) to (f) of the definition in order to be classified as an eligible business.
59. The applicant claims in his statement of facts and contentions that:
“Wundowie’s activities, like other property development companies, in addition to its project financing activities, fulfil ‘eligible business’ elements of (b) and (f) under sections 134(10) of the Act.”
60. The respondent points out that there appears to be a conflict in the Tribunal whether property development companies as an industry class can satisfy any of the requirements under s 134(10), and if so on what scale: see Hindrodjojo at [27] and at Lala at [52] to [60]; cf. Lioe; Tan at [15]; Ng at [25] - [27] and Tio at [20] and [21].
61. Even if property development companies can be eligible businesses, they still must demonstrate that they have conducted a business which fulfils one of the relevant criteria under s 134(10). Companies in the above decisions that were characterised as eligible businesses, had at least, actually constructed properties and sold them. It is clear that architects, builders and other skilled tradespersons were employed on a significant enough scale and that commercial activity had occurred. Respondent says that Wundowie had at cancellation, developed nothing and with there being no guarantee of it developing anything.
62. Respondent contends that Wundowie has not satisfied the definition of eligible business. The Tribunal rejects this contention for the reasons which follow.
Active participation at a senior level in the day-to-day management of an eligible business
63. The Tribunal should not exercise its discretion to set aside the visa cancellation decision unless it is satisfied that the applicant is utilising his skills in actively participating at a senior level in the day-to-day management of the business (or has made and intends to continue to make genuine efforts to utilise his skills in actively participating at a senior level in the day to day management of the business).
64. The respondent contends that the applicant has failed to demonstrate that he has utilised his skills in actively participating at a senior level in the day-to-day management of an eligible business, pointing out the following:
(a)There is minimal evidence of the applicant’s actual involvement in management.
(b)The applicant does not seem to have the required personal knowledge of the business.
(c)The applicant seems to admit that he has not been actively participating in the day-to-day management of the business at a senior level.
(d)The applicant’s future intentions to become involved in the management of the business, if real, are not relevant considerations.
(e)There is no evidence that the applicant has made any decisions at the requisite level.
The evidence of the applicant’s actual involvement in management is minimal.
65. The respondent contends that the evidence of the applicant’s actual involvement in management is minimal and less than the requisite conditions set out in s 134(1)(b). In contrast to what the respondent calls “the applicant’s virtual non-existent involvement”, Wundowie’s major shareholder and Manager, Doug Millar of MMG, effectively runs the entire business without any real contribution from the applicant. The total evidence of the applicant’s managerial involvement consists of:
(a)attending a total of 4 management meetings between 28 March 2006 and 2 May 2006. The total documented contribution of the applicant is one solitary suggestion to build a brick walled entrance on the estate. In contrast, there are numerous references to Doug Millar, initialled as DM, advising, making suggestions and carrying out a variety of tasks.
(b)a total of 10 emails to the applicant and 3 emails from the applicant regarding Wundowie during the period 26 June 2006 to 10 May 2007. The total sum of the applicant’s contributions via email consist of:
(i)a 2 sentence email on 26 June 2006 to Sarah Stratton informing her that he has not been in touch because of his wife’s operation, but that he has been getting information from Bob Baker;
(ii)a 4 sentence email on 26 June 2006 to John Udall making general comments that he is pleased that the ‘everything is working as planned’, that he questions why there is no mention of block 10 which he personally purchased, and suggesting a big sized sign be set up to advertise the estate; and
(iii)a two paragraph email (undated) where the applicant asked the status of the issue of units to his family trust and questioning why lots are being sold at less than the price list.
66. The respondent contends that the fact that ‘modern means of travel and communication’ allow a business to be ‘managed anywhere in the world’, as the applicant claims effectively means there should have been far more communication, not less. The respondent contends that one suggestion about a brick wall and sign (which may or may not have been carried out) and a single question why blocks are being sold at a certain price does not amount to active participation in the day-to-day management of the business at a senior level.
67. The Tribunal does not accept the above contentions of the respondent for the reasons which follow.
Does the applicant have knowledge of Wundowie consistent with someone actively participating in the day-to-day management at a senior level?
68. In the matter of Lioe, Senior Member Ettinger in her oral reasons indicated that a mere perfunctory personal knowledge of a business is a good indicator that a holder is not utilising their required management skills and therefore not satisfying their visa obligations. His Honour Justice Madgwick at [55] in the Federal Court case of Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2006] FCA 1562 also emphasised how important it was to be:
“fully cognisant of the overall direction and performance of the business”.
69. The respondent points out that in some correspondence the applicant seems to be outside the managerial information loop: see exhibit 9. As mentioned above, in one undated email in particular, the applicant asks why lots are being sold at less than the price list. Respondent says that there is no real documentary evidence to show that the applicant had the requisite knowledge of the overall direction and performance of the business.
70. The respondent contends that the applicant’s lack of knowledge of the business’ operations are more reflective of a substantial but ultimately passive investor concerned about his investment, rather than a senior level manager actively participating in the day-to-day management of the business.
The applicant seems to admit that he has not been actively participating in the day-to-day senior level management of the business
71. The respondent asserts that the applicant at paragraph 20 of his witness statement seems to admit that he has not been actively participating in the day-to-day management of the business at a senior level, although he claims he will at some potential time in future:
“To date the development is still awaiting planning approval. Upon granting of planning approval I expect to utilise my building industry experience and be closely involved in liaising with contractors for the infrastructure work on site (emphasis added).”
72. The applicant’s statement of facts and contentions at paragraph 85 makes a similar statement:
“Given the applicant’s extensive experience in the building industry he will play an active management role in this aspect of the development. However, at this stage given the development is still awaiting planning approval there is not much more the applicant could have been doing at the date of cancellation of his visa (emphasis added).”
73. The respondent contends that the criteria under s134(1)(b) restricts the Tribunal to only consider what a visa holder has actually done, in contrast to what a visa holder expects, intends or might do in the future.
74. Further, the respondent disputes the claim that the applicant should be excused for his virtual inactivity because there was ‘not much more the applicant could have been doing’. Respondent points out that Doug Millar’s own activities as recorded in the few minutes of meetings and emails provided act as a good basis for comparison and demonstrate the types of managerial tasks that the applicant could and should have carried out.
75. The Tribunal is of the view that while there is some force in these contentions of the respondent, they should not prevail for the reasons which follow.
Is the applicant’s future intention to be involved in the senior level day-to-day management of the business enough under s134(c)
76. The respondent contends that the applicant had not actively participated at a senior level in the day-to-day management of the business as at the time of cancellation. The respondent contends that there is no evidence that the applicant seriously intended to do “so other than in some intangible and vague way in the unknowable future”. The respondent points out for example that at the time of cancellation the applicant did not know whether planning approval would be granted. There was therefore according to the respondent, the reasonable possibility that he would never become involved in the day-to-day senior level management of the business.
77. Further, even if the applicant’s future intention was genuine and real, the respondent says that the legislation does not make this a relevant consideration or excuse. In addition to s 134(1)(b), the Act inserts for the word ‘or’ the criteria of s 134(1)(c):
“… the Minister may cancel a business visa…if the Minister is satisfied the holder:
(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.
78. The Tribunal notes that s 134(1)(c) provides an additional reason why the Minister may cancel a visa. If the applicant does not intend to continue utilising his or her skills in actively participating at a senior level in the day-to-day management, the Minister may cancel the holder’s visa. However it is clear that the Minister is not prevented from cancelling the holder’s visa if the holder has not actively participated in the day-to-day senior level management, but does intend to utilise those skills in the future.
79. The applicant asserts that there is no minimal decision making threshold, that ‘some businesses, by their nature, will require more, and some less, “decision making” than others’. The applicant also asserts, citing Lau v Minister for Immigration and Multicultural Affairs [2002] AATA 70, that managerial input might be ‘intangible in nature’.
80. The applicant further claims that the delegate of the respondent considered irrelevant criteria regarding decision making, citing the authorities of Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2003] FCAFC 168 and Tran v Minister for Immigration and Multicultural Affairs [2006] FCA 1229.
81. In response to this the respondent contends that even if the delegate of the respondent made an error, this is largely irrelevant or ‘cured’ by the Tribunal making a de novo decision: see Zubair v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 139 FCR 344 at [28]; Minister for Immigration and Multicultural and Indigenous Affairs v Ahmed (2005) 143 FCR 314 and Humayun v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 90 ALD 482. This approach has been followed by the Tribunal in Sweeney v MIMA [2007] AATA 991 at [26] and Tio v MIMA [2007] AATA 1118.
82. Secondly, the respondent says that the cases of Lobo and Tran were not authorities that decision making per se was an irrelevant consideration, rather only that the narrow Departmental policy criteria of decision making was irrelevant. As the applicant in fact states the criteria which the applicant is referring to actually contain three parts with regard to management:
(a)Exercise responsibility within the main business(es) in terms of decision-making authority, responsibility for employees and/or responsibility for expenditure;
(b)Such responsibility has been exercised on a continuous (as opposed to an occasional) basis; and
(c)Their skills have been fundamental to, or have exerted direct influence on, the operation of the main business(es).
83. The applicant states that all three criteria were held as going beyond the strict terms of the legislation. However, it seems from a reading of the cases that the Federal Court may have only rejected the first part as a jurisdictional error. It was obviously unreasonable to expect management to be confined to decision-making authority (i.e. dominant or executive level decisions only), responsibility for employees and/or responsibility for expenditure. Nowhere however were the other two parts said to be specifically incorrect considerations: see Lobo at [63].
84. The respondent points out that the Departmental policy which the Federal Court considered in these cases was the granting of a Subclass 845 visa for an established business in Australia under clause 845.216 of the Second Schedule to the Migration Regulations 1994. The matter before the Tribunal in this matter however is a cancellation of a Subclass 127 business skills visa under s 134 of The Migration Act1958 (Cth). While both criteria are similar, they are not exactly the same. Clause 845.216 for example does not require the management to be at a ‘senior level’ as s 134(1)(b) does. Therefore the factors considered by the delegate of the respondent in this matter are still yet to be judicially determined.
85. The Tribunal notes that the applicant fails to mention that although the original decision in Lobo considered factors too narrow, the Tribunal on remittance still held that the visa holder had nonetheless not satisfied the criteria for management. This was upheld in a further appeal to the Federal Court in Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2006] FCA 1562 in which Madwick J at [54] cited the Tribunal’s decision with approval.
86. While decision making can be characterised in a variety of ways, the respondent says that the authorities should not be artificially construed to absolve a visa holder from having to make decisions of the ‘requisite character’. The respondent contends that decision making is relevant and that there is insufficient evidence to demonstrate that the applicant made any decisions at all, let alone decisions of the requisite character. The Tribunal has, for the reasons which follow, come to a contrary view notwithstanding that there is clearly some force in the respondent’s assertions.
Genuine effort to obtain a substantial ownership interest in an eligible business in Australia and to utilise skills in actively participating at a senior level in the day-to-day management of the eligible business
87. Although there is no statutory definition of genuine effort, numerous authorities have discussed the term and established that it must:
(a)be more than a superficial or token effort. There must be a real and honest effort and not one which is false, fictitious or a pretence, and mere expressions of interest or inquiries fall short of genuine efforts: Yam v Minister for immigration and Multicultural and Indigenous Affairs [2004] AATA 283.
(b)involve some exertion or endeavour. The requirement is that an effort is made and the respondent contends that this requires some activity on behalf of an applicant. In Leo v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 309, and followed in Gunawan v Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 852 at [46], [48], the Tribunal found that a genuine effort must be ‘vigorous and determined’.
(c)be a ‘real and sincere endeavour or strenuous attempt’: Abbu v Minister for Immigration and Multicultural Affairs [2006] AATA 898.
88. The applicant asserts that the delegate’s requirement of ‘sustained and continued efforts is far more specific than the Act and lacks jurisdiction’. The respondent points out that Deputy President Professor Walker at [53] in the matter of Koosasi and Minister for Immigration and Multicultural Affairs [2006] AATA 179 said the following:
While it would be wrong to say that the applicant has made no efforts at all to meet the requirements of his visa, the sporadic and desultory activity displayed by the evidence lacks the sustained and continuous quality and the prospects of future activity implicit in the requirements of s134(2). In my view the applicant’s case fails to meet the requirements of that subsection (emphasis added).
Wundowie
89. The respondent asserts that the applicant’s efforts have been sporadic and desultory and lack the sustained and continuous quality and the prospects of future activity implicit in the requirements of s 134(2). The Tribunal, for reasons which follow, does not agree.
Tile Plus
90. The respondent notes that the applicant’s visa was only granted on 8 September 2003. The respondent contends that the Tribunal does not have the jurisdiction to consider the applicant’s efforts in Tile Plus, as these events occurred before the visa was granted. The Tribunal rejects this contention noting that the relevant events occurred while the applicant’s visa application was under consideration.
Baldivis Development
91. The respondent asserts that this activity, even if it was to proceed, has the hallmarks of “a passive personal use” rather than genuine efforts to obtain a substantial ownership interest in an eligible business, citing the following:
92. There is no evidence that the applicant is a beneficiary of the Four Corners Trust and therefore that he would obtain a substantial ownership interest.
93. The loans obtained were ‘Home mortgages’:
94. There is no evidence that a business name or company has been registered or any other representation consistent with a business or intended business. In contrast, the purchases were made and paid for by the applicant’s daughter as the trustee of what is essentially a family trust.
95. There is no evidence that the property will be used for anything other than personal use.
96. Even if these developments went ahead they would be at a scale and degree of something less than an eligible business.
97. The respondent contends the applicant’s conduct is similar to the facts in Ng or Lioe, where purchase of residential lots of land and their partial development and was held did not to constitute genuine efforts.
98. The respondent’s contentions are not accepted by the Tribunal for the reasons which appear below.
Section 134(3), MSI factors and the applicant’s efforts in totality
99. The Tribunal notes that paragraph 4.5.1 of MSI 133 also provides a list of factors which ‘correctly summarises the relevance of s 134(3) to the decision making process’: Re Lok Young (Michael) Wong v Minister for Immigration & Multicultural Affairs [2006] AATA 277. As paragraph 4.5.2 of the MSI points out, failure to meet any one criterion may not necessarily lead to a visa being cancelled. All factors should be weighed as a whole.
(a) business proposals that the person has developed
100. The respondent points out that the applicant has not provided any documentary evidence of ‘business proposals’ which he has prepared for either Baldivis or any other proposed business activity.
(b) the existence of formal contracts with partners or joint ventures
101. The applicant says that he ‘has enlisted the support of his daughter, an Australian citizen, in a property development partnership for three lots in Rivergum, Baldivis.’ However, the respondent contends that co-ownership via a family trust, where the applicant and his daughters are both trustees, does not amount to a partnership or joint venture.
(c) research that the person has undertaken into the conduct of an eligible business in Australia
102. The applicant says that he has investigated a number of enterprises. The respondent however contends that the research conducted appears to be of a preliminary nature only.
103. The respondent contends that the applicant’s research bears many similarities to the visa holder in Ng. For the reasons which follow, the Tribunal rejects these contentions.
(d)the period or periods during which the person has been present in Australia
104. The Tribunal notes that the applicant has been in Australia longer than the Departmental policy of 6 months.
(e) value of assets transferred for use in obtaining an interest in an eligible business
105. Departmental policy indicates that a visa holder is required to transfer and retain at least 50% of funds indicated as available for transfer within two years. At question 14 of the applicant’s application for a business skills visa, the amount of $3,639,374 was indicated as available for transfer: 50% of this amount is $1,819,687. The respondent contends that the applicant has not satisfied this requirement because although the applicant has transferred in excess of $2 million to Australia, a large part of this was, according to the respondent, not for use in an eligible business.
106. The Tribunal is of the view that the evidence shows that at least $400,000 of the transferred funds has been invested in eligible businesses and that this is sufficient to show the applicant’s genuine efforts.
(f) value of ownership in a relevant business in Australia that is, or has been, held by the person
107. The Tribunal notes that the respondent concedes that the applicant’s ownership of 10% shares valued at $280,000 in Wundowie satisfies the Departmental policy of 10% or $100,000.
(g) business activity that is, or has been, undertaken by the person
108. The respondent contends that the business activity undertaken by the applicant is well below the minimum turnover of $100,000. The Tribunal’s findings in this regard appear below.
TRIBUNAL’S FINDINGS
Relevance of evidence after 22 December 2006 – date of cancellation of visa
109. The Tribunal is required to consider “material that relates to events or matters occurring up to, but not after, the date of cancellation of the visa”: Re Lok Yung (Michael) Wong and Minister for Immigration and Multicultural Affairs [2006] AATA 277 at paragraph 23.
110. However, it is generally accepted that the Tribunal can consider evidence of “subsequent events to the extent that those later events assist in evaluating the relevant intentions and actions of the visa holder as at the date of the cancellation of the visa”: Shaikh and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 1119, at paragraph 32. Or to consider “prospective issues” such as, for example, whether extreme hardship “would” result to another person who is a member of the family unit of the holder of the cancelled business visa: Re Lok Yung at paragraph 24.
Substantial ownership interest in an “eligible business”
111. Section 134(1) of The Migration Act 1958 (Cth) (“the Act”) provides as follows:
“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;”
112. The term ‘substantial ownership interest’ is not defined under the Act or other relevant legislation however both the terms “ownership interest” and “eligible business” are defined in s 134(10) of the Act:
“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”.
113. An “eligible interest” means:
“…that 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.”
Substantial ownership
114. The Tribunal finds that the applicant established a “substantial ownership interest” in Wundowie pursuant to s 134(10) of the Act and MSI 133.
Eligible Business
115. The activities of Wundowie were established in March 2006 and have been operating since this time.
116. Wundowie and its trustee company, Glensun, were incorporated by the MMG which specialises in property development. Wundowie came into existence after MMG researched and conducted feasibility studies on the acquisition of property located at 204 Hawke Avenue, Wundowie (“the Property”). The Property is a 46.8 hectare lot zoned ‘Agricultural Local’. The development involves rezoning to ‘Rural Smallholding’ and subdividing the land into 21 lots of an average 2.14 hectares.
117. Construction on site has not yet commenced as the development has been awaiting planning approval since June 2006. A lot of the time has been consumed in feasibility studies, due diligence, zoning and planning approval. The company needed to ensure the viability of the property development property prior to investing in further assets and sourcing further liabilities. Wundowie has however has engaged the services of contractors and sub contractors in carrying out the above activities.
118. The Full Federal Court in Puzey v Commissioner of Taxation [2003] FCA 197, at paragraph 47, referred to projects that may be for a “fixed term” or that may “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.” The above passage was referred to and approved by Member Allen in Hindrodjojo, and Ors and Minister for Immigration, Multicultural and Indigenous Affairs [2004] AATA 274, at paragraph 24, in the context of a property investment business.
119. In Karim Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77, at paragraph 17, the Administrative Appeals Tribunal determined that one of the applicant’s businesses was an “eligible business” for the purposes of the Act, despite the fact that it had in one year made a loss. All other relevant information needs to be considered to find the intention or purpose of making profit, not merely the physical production of profit.
120. In the Full Federal Court decision of Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307, at paragraph 312, it was held that in defining a business:
“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.”
121. The pursuit of profit can also be seen in the development through the engagement of solicitors, real estate agents and engineers and the management meetings demonstrating activities of pursuing each project. When the project receives planning approval it will engage skilled tradespersons, engineers, town planners etc. to develop the property which leads to the creation and maintenance of employment as per s 134(10) of the Act (paragraph b). Wundowie’s development activities will in the Tribunal’s opinion inevitably increase commercial activity in Western Australia through its financing and sourcing of a viable property development, pursuant to paragraph (f) of s 134(10) of the Act, thus contributing to the booming property sectors of the Western Australian economy.
122. The Tribunal is of the view that Wundowie is an active property development business for the purposes of meeting the “eligible business” requirement. To be a business within the meaning of s 134 of the Act the activities undertaken must be “activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis”: see Hope v Bathurst City Council (1980) 144 CLR 1 at 8-9 per Mason J: and Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997 at paragraph 20.
123. In Puzey, at paragraphs 46 to 48, the Full Court held that:
“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 FCT (1970) 123 CLR 153 at 166-7; 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 FCT (1972) 46 ALJR 397 at 401 with Hope (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 FCT (1979) 26 ALR 307 at 319 and, at least if the facts in Federal commissioner of Taxation v Lau at FCR 218; ALR 123 involved a business, that case is another example.
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 CLR 9: ALR 582. However, perhaps not too much attention should be given to the concept of repetition where the activity is one, such as 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.
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 profit motive (although many businesses may be found which operate in a non-businesslike 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).”
124. It is also clear that a “fixed term project” such as a property development can be a business.
125. The case of Hindrodjojo, at paragraph 27, the Tribunal stated that property development can be classified as an eligible business as it:
“…would reasonably be expected to result, directly or indirectly, in the creation or maintenance of employment in Australia and an increase in commercial activity in the building, construction and related sectors of the Australian economy”
126. It is precisely the business activities of a “property development company” to source viable land, employ skilled tradespersons to develop it to make it appeal to a particular property market and then intend to sell it on that market for the purposes of making profit. Such activities are explicitly provided for under s 134(10) of the Act and the authority of Hindrodjojo.
127. Similarly, in Lala and Minister for Immigration, Multicultural and Indigenous Affairs [2003] AATA 209, at paragraphs 52 to 60, the Tribunal found that not only did property development contribute to “the creation or maintenance of employment in Australia” but also helped to “increase commercial activity and competitiveness within sectors of the Australian economy”.
128. The company’s actual development of investment properties, “creates and maintains employment” with the contract of services of skilled tradespersons to engage in the work of the project. In the Tribunal’s view the impact that Wundowie will have in meeting the rising Western Australian property demand provides “an increase in the commercial activity” of that market. It also generates greater competition with other property developers in the property sector of the Australian economy. The Tribunal finds that Wundowie’s activities, like other property development companies, in addition to its project financing activities, fulfil the “eligible business” elements of (b) and (f) under s 134(10) of the Act.
Future Intention
129. The applicant has stated and the Tribunal finds that he intends to continue to hold a substantial ownership interest in Wundowie.
Day-to-day Management at a Senior Level
130. Subsections 134(1) of the Act states that the respondent may cancel a business visa if it is satisfied that the Visa holder:
“…is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business;”
The applicant’s management involvement
131. The applicant spent 355 days in Australia from the granting of his visa to date of cancellation. This does not take into account the considerable period of time the applicant spent in Australia in attempting to set up his previous business (import tile business) prior to the granting of his visa.
132. The Tribunal finds that the applicant remained involved in the “day-to-day management” of Wundowie as evidenced in the monthly management meetings and email correspondence whenever he was not in Perth
133. It also appears to the Tribunal that the applicant utilised all forms of communication such as email, telephone and when possible, “in person” to actively comply with his responsibilities through regular advice on day-to-day matters on the business. Corporations law recognises the advantages of technology in communication that allow senior management to still carry out their duties effectively without having to be “physically” at the registered office, or in the country for that matter, via email or telephone/video conferencing. The use of technology in management is supported in the case Re GIGA Investments Pty Ltd (1995) 13 ACLC 1047. In the case of Hindrodjojo, at paragraph 36, the Tribunal cited with approval its decision in Karim Jo, at paragraph 77, and stated that given the “modern means of travel and communication” a business may be “managed and strategically directed from almost anywhere in the world”.
134. In Hindrodjojo, the Tribunal also agreed with the decision in Karim Jo that s 134(1)(b) emphasises “senior management rather than the day to day administrative tasks under the direction of a senior manager”. Hindrodjojo, at paragraph 36, further agreed with the decision in Re Lau and Minister for Immigration and Multicultural and Ethnic Affairs [2002] AATA 703 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 suppliers and transacting shipping”.
135. As noted earlier, the Full Federal Court decision in Puzey, at paragraph 46, though admittedly within the context of tax legislation, states that “a person may appoint another to take the steps which constitute the business activity”. The evidence shows that the applicant availed himself of the opportunity to rely on the services of others in the day to day administrative tasks of property development.
136. Puzey goes onto state, at paragraph 46, that “a person may carry on a business, notwithstanding that the person had some other activity, such as full time employment”. Indeed, the fact that the applicant had business interests in Swaziland is not unique given the nature of a property development business where there can be significant periods of inactivity due to waiting on development approvals. It is common knowledge that with the current skills shortages in both the building and construction and town planning/surveying (both in private and local government sectors) delays are becoming more common in Western Australia. Puzey, at paragraph 47, contemplates this by stating that “there will be significant periods of what may be referred to as inactivity”.
137. The respondent asserted in its Notice of Cancellation that the applicant’s primary focus is on his business interests in Swaziland. The applicant has stated in his witness statement that he has wound down his business activities in Swaziland from 2004. It appears that the applicant only maintains an overseeing role to secure the smooth transitioning of the transfer of his two businesses as he has no security on the transfers which he has facilitated by way of vendor finance.
138. It is clear that the Act does not require the applicant to cease all business activities overseas nor occupy the most senior management positions in Wundowie.
139. Deputy President Jarvis of the Tribunal held in Re Lok Yung (Michael) Wong, at paragraph 41, that subs 134 (1) and (2) do not require the relevant management of an eligible business to take place in Australia. Whilst a business visa confers an entitlement for a migrant to reside in Australia, the Act does not require the holders of those visas to take up that entitlement.
140. The Tribunal further notes Attachment “A” in the respondent’s Notice of Intention to Consider Cancellation of Visa dated 18 September 2006 forwarded to the applicant.In Yam and Minister for Immigration, Multicultural and Indigenous Affairs [2004] AATA 283, at paragraph 98, the Tribunal referred to the last bullet item in Attachment “A” (erroneously under the heading “substantial ownership interest”) of the Notice of Intention to Consider Cancellation of Visa which states:
“If you have spent the majority of your time outside Australia, evidence of how you have been managing the business from overseas, eg e-mails, facsimiles, itemised phone bills, minutes of meetings held, statements from overseas business associates (including suppliers, buyers and partners), statements from onshore advisors.”
141. The Tribunal in Yam, at paragraph 99, added that there is some “justification” in the argument “that the attachment to the Notice of Intention to Cancel shows that the way the scheme is administered, it is not necessarily the case that a person must spend the majority of their time participating in the day to day management of their business in Australia.”
142. Yam, at paragraph 103, also approved of the following passage by Member Allen in Karim Jo (at paragraph 33) that:
“…However, 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 the country, only taking trips overseas from time to time. A number of factors have influenced that conclusion. In the first place, there is nothing in the documentation provided to me concerning the application made by the applicant for his visa …that indicates that the Australian government had any requirement that overseas businesses be disposed of or the applicant’s involvement in them scaled down. Specifically, the 24 months survey form that is used by the government to obtain information from visa holders asks the question (in section 7): “are you still actively involved in a business outside Australia?” and contains the statement: “note that there is no expectation or requirement that you discontinue any business outside Australia”….Secondly, the MSI at clause 4.5.1, when dealing with the issue of what constitutes “genuine efforts” in relation to the establishment of a business and involvement it its management, refers to whether or not the visa holder has been physically present in Australia for more than 6 months since first arrival. Bearing in mind that a cancellation decision will often be made between 3 and 3 and a half years after the first arrival, an expectation that the visa holder may have spent only 6 months in Australia suggests that, so far as the respondent is concerned, the visa holder is not expected to spend the majority of his or her time in this country – and may indeed as little as 15% of the total time between first arrival and cancellation. Finally, I note that s 134(1)(a) specifically require the active participation in the management of that business to occur in Australia. It would have been very easy for Parliament to have specified in s 134(1)(b) that the management activities must occur in Australia if that had been the intention”.
143. It seems to the Tribunal that the respondent has held out, in its own documentation mentioned above, that there is no requirement for a visa holder to spend most of his time in Australia – though the applicant has spent almost a third of his time in the country. It appears that the applicant has relied on this both directly and indirectly based on advice from his migration agents, and has subsequently organised his affairs around the respondent’s statements.
144. The respondent in its Notice of Cancellation further stated that the applicant “did not have any input into the original direction, function or development opportunities of the Wundowie Unit Trust”. This seems to imply that there is a requirement that the business be a new business. In the Tribunal’s view there is no such requirement. The fact that Wundowie is not a new business does not mean that there is no further senior management to be carried out. Indeed, the development, when the applicant joined, was only at the initial stages and there will be more steps to be taken which require senior management participation. These included the need to manage the infrastructure development and liaise with contractors. Given the applicant’s extensive experience in the building industry it can be expected that he will play an active management role in this aspect of the development. However, at this stage given that the development is still awaiting planning approval there is not much more that the applicant could reasonably be expected to have been doing at the date of cancellation of his visa.
145. The respondent made further adverse inferences in its Notice of Cancellation stating that the applicant must have an “active, ongoing and senior management role in the business” and that there is no “indication that Mr Russo is undertaking a senior role in the day to day management of the Wundowie Unit Trust”. The nature of a property development business involves the making of decisions at various stages of the project. As these decisions are implemented senior management monitors the progress of the development, intervening where necessary. As a result the management role may not be as onerous and requires less active management than a grocery store would for example. The Tribunal finds that since obtaining a substantial ownership interest the applicant has participated as much it is reasonable to expect in the business to ensure the success of the project pending the notification of planning approval.
146. In Re Lau, at paragraphs 32 and 33, the Tribunal noted that there is no hard or fast requirement in the legislation that a visa holder establish a certain level of activity that he undertakes in the business in order to show that he is involved in its day to day management. The Tribunal in Hindrodjojo, at paragraph 37, also agreed with the comments of Senior Member Dwyer in Yam, at paragraph 95, where he stated that a “business may be successfully run without necessarily requiring daily management. What is required is that there be sufficient management for the needs of that specific business”.
147. What must be established is whether the applicant is exercising “sufficient” management for the needs of the business. This can be determined by other management members who know what management is required for the overall direction of the business. The testimony from Doug Millar of Wundowie demonstrates that the applicant exercised, in his view, sufficient managerial input for the needs of the business.
Decision Making
148. The respondent states in its Notice of Cancellation that :
“As evidence shows this 42 hectare rural property will be subdivided into smaller rural holdings, thereby requiring minimal development, this indicates to me that there will be minimal decision making likely to occur with this development.”
149. In the Tribunal’s view it is clear that the Act does not require that a business must have a “minimum level of decision making” in order to qualify as a business or to show that the visa holder has passed some decision making threshold. No two businesses are alike and it is natural that some businesses, by their very nature, will require more, and some less, “decision making” than others.
150. The respondent further stated in its Notice of Cancellation that that it did not consider that a 10% shareholder would carry the power of an 80% shareholder. While this is clearly so, as stated earlier a 10% ownership interest satisfies the respondent’s requirements for substantial ownership.
151. “There is insufficient documentary evidence that Mr Russo is using his management skills in the above mentioned directions.”
152. The Tribunal notes that the above passage is substantially identical to that contained in paragraph 8.1 of the Procedures Advice Manual Pam 3 (“Para 3”).
153. The Full Court of the Federal Court in Lobo v Minister for Immigration, Multicultural and Indigenous Affairs [2003] FCAFC 168 (“Lobo”) held that the requirements of PAM3 did not correspond to the requirements of the Migration Regulations. The Full Court said, at paragraph 63, that :
“…the departmental policy… was narrower than the criterion for a subclass 845 visa set out in cl 845.216… The criterion requires satisfaction on the part of the Minister that the applicant for the visa as owner of and interested in a main business “maintain direct and continuous involvement in the management of that business or in those businesses from day to day and in making decisions that affected the overall performance or direction of that business or those businesses’ This did not import a requirement that could only be satisfied by demonstrating the exercise of responsibility within the business in terms of decision-making authority, responsibility for employees, and/or responsibility for expenditure. There is a variety of ways in which a person might direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance. ”
154. The Tribunal again in Re Lau, at paragraph 33, established that day-to-day management input at a senior level by an experienced business person will often be “intangible”, and may involve ideas, planning, research, assessing and analysing decisions. Such input may not be evident in the end product, for example, the personal signing of a contract, but can be found in business communications relating to the contract.
155. Here, it is evident that the terms best used to describe the applicant’s management input are that of an “intangible” nature. It appears to the Tribunal that the applicant is successfully exercising types of involvement that are suited to the purpose of the type of business he is in, namely, property development. This form of input can be evidenced in his monitoring of decision making in the business activities via sending his advice, agreement, review, analysis or queries in e-mails. In Re Lau, at paragraph 33, it was decided that this type of management involvement was sufficient “intangible input” in the company’s day-to-day management.
Future Intention
156. The applicant has stated that, upon confirmation of his visa status in Australia, the applicant fully intends to continue to utilise his skills in actively participating at a senior level in the day to day management of Wundowie.
Genuine Efforts
157. The Tribunal is accordingly satisfied that the applicant has discharged his obligations under s 134(1) of the Act. However, in the alternative the Tribunal is of the view that the applicant’s visa should not be cancelled as he has made genuine efforts to fulfil his obligations.
158. Section 134(2) and (3) of the Act states:
“(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 business 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 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).”
159. In the view of the Tribunal the evidence as a whole shows that he has made genuine efforts to meet his obligations and because of that his business visa should not be cancelled.
160. Before considering the requirements under s 134(2) the Tribunal refers to the respondent’s reasons for finding the applicant has not made genuine efforts to meet his visa obligations. The respondent stated in its Notice of Cancellation:
“There is an expectation that a visa holder will make sustained and continued efforts to meet visa requirements.”
When assessing genuine efforts the Act requires that a visa holder “intends to continue to make such genuine efforts”. The respondent’s interpretation that a visa holder is expected to make “sustained and continued efforts” appears to be more specific than the Act. Furthermore, there is also no mention of “sustained and continued efforts” in MSI 133 which was applicable at the date of cancellation of the applicant’s visa. The focus of s 134(2) of the Act is on “intention” and it appears to the Tribunal that the extent of the efforts made by the applicant clearly evidences his intention to meet his visa obligations.
161. As outlined in his evidence prior to the granting of his visa the applicant spent a considerable amount of effort in attempting to establish a tile and bathroom business in Australia. After persisting with the business for almost a year, the applicant had not yet obtained confirmation of the grant of his visa and thus was forced to wind down Tile Plus. However, the applicant continued to look for alternative businesses. Although the respondent suggests that these efforts were not sustained and continuous the Tribunal finds that they were. From October 2002 through to October 2003 the applicant ran his tile business. Then from February 2004 through to the end of 2005 the applicant spent a considerable amount of time and effort sourcing other potential businesses. He attended meetings and analysed the financial statements of various businesses to make an informed decision. Eventually in March 2006 he found a suitable business, namely Wundowie in which he has been active ever since. In addition to Wundowie, the applicant, with his daughter, bought 3 lots in Rivergum, Baldivis at the end of 2005 to develop for the purpose of making of profit.
Requirements under section 134(2) of the Act
162. As the applicant has involved himself in three main business activities, namely Tile Plus, Wundowie and Rivergum, Baldivis, the Tribunal addresses each separately.
Tile Plus
163. The applicant held a substantial ownership interest in Tile Plus through his 100% (together with his wife) shareholding in Cyclone Holdings which traded as Tile Plus. The respondent has not disputed that the applicant had a substantial ownership interest in Tile Plus. Given that the applicant actually had a substantial ownership interest in Tile Plus it follows that he made genuine efforts to obtain a substantial ownership interest.
164. Whilst Tile Plus was not an eligible business it is clear that the applicant made genuine efforts to develop Tile Plus into an eligible business in Australia. As outlined in his evidence, the applicant commenced negotiations with tile suppliers from around the world as well as sourcing workable shipping quotes. The applicant then went on to lease premises for the business and engaged the services of Woodhead International to construct a tile showroom in Myaree. These latter acts are more than just preliminary in nature as they were part of physically establishing the business to enable it to commence trading. Furthermore they demonstrate that the applicant’s negotiations with suppliers were more than just inquiries and that the applicant was making genuine efforts to get his tile business off the ground. Had the applicant been granted his visa sooner there is in the Tribunal’s view little doubt that Tile Plus would have developed into an eligible business and achieved several of the stated objectives under s 134(10) of the Act.
165. As the applicant solely managed Tile Plus he would have had no choice but to participate in its day-to-day management. In fact up until the applicant’s decision not to continue with the business he was primarily responsible (a greater involvement than that required by the Act) for all aspects of the business. The following factors demonstrate the applicant’s participation at a senior level in the day-to-day management of Tile Plus.
- Sourcing and entering into the lease agreement;
- Participating in all the business negotiations;-Dealing with all potential suppliers including making trips overseas to meet suppliers;
- Receiving all correspondence pertaining to the business; and
- Making all the decisions relating to the affairs of the business.166. As already noted, it is clear that the applicant’s efforts took place prior to the granting of the visa in September 2003. However, the Tribunal notes that after he applied for his visa in April 2002 the applicant was advised by his migration agent that his application would be granted much sooner than it eventually was. It is clear in the Tribunal’s view that the applicant acted in the “spirit” of the Act and had the requisite intention to make genuine efforts in anticipation of being granted his visa. Moreover, the applicant spent over $30,000.00 on the project. The Tribunal finds that the applicant made genuine efforts to establish Tile Plus as a business with the intention of fulfilling the requirements of the Act.
Wundowie
167. The applicant has a substantial ownership interest in Wundowie though his investment of $280,000 giving him a 10% shareholding.
168. As noted earlier Wundowie is an eligible business in Australia and therefore it follows the applicant has made genuine efforts to obtain a substantial ownership interest in an eligible business in Australia. In the alternative the Tribunal finds that the applicant has made genuine efforts to develop Wundowie into an eligible business.
169. The Tribunal also finds that applicant has made genuine efforts to ensure Wundowie creates and maintains employment in Australia as evidenced by his participation in the business. He has suggested that a brick wall be constructed, agreed to the planting of 5000 trees on the estate and that the grape vines on the property be sub-contracted to a third party. The implementation of these decisions has required, and will require, employment in Australia. Furthermore, the sale of the subdivided lots will require the services of marketing agencies, advertisers and other professionals. This further demonstrates that the applicant is making genuine efforts to develop Wundowie into a business that achieves the stated objectives of s 134(10) of the Act. In the Tribunal’s view the evidence shows that the applicant has made genuine efforts to develop Wundowie into a “commercial enterprise in the nature of a going concern”.
170. The Tribunal finds that the applicant has made genuine efforts to participate at a senior level in the day-to-day management of Wundowie. Evidence of these efforts has been outlined above.
171. The Tribunal is also satisfied that the applicant intends to continue to make such genuine efforts to satisfy his visa obligations. Further evidence of his intentions to do so are reflected in his ownership of several properties in Perth for his own private and commercial use.
Baldivis Development
172. As outlined in the applicant’s evidence, in late 2005 the applicant’s daughter, in conjunction with the applicant, purchased three lots of land in Rivergum, Baldivis which they intended to develop in partnership under the Four Corners Trust (“Trust”). The Trust obtained finance from Home Building Society, guaranteed by the applicant personally, and entered into contracts with Ross North Homes to build a house on each of the blocks which the Trust would subsequently sell with an intention of making a profit. The property development project had to be subsequently put on hold when the applicant received his Notice of Intention to Consider Cancellation in September 2006. The applicant’s evidence is that he intends to develop the three blocks if the respondent’s decision to cancel his visa is set aside.
173. Given the applicant’s skills and experience in the building and painting supplies business there is in the Tribunal’s view little doubt that this new venture will meet the definition of an eligible business under the Act as was the case in the decision in Lala. Similarly, the visa holder in Lala was in the building industry in his native country which was an important factor in the Tribunal deciding to set aside the decision to cancel his visa. Furthermore, it demonstrates the Applicant’s genuine efforts to meet his visa obligations. The applicant’s continued and substantial investment in Australia clearly demonstrates his strong desire to create the benefits intended under the Act.
Further Examples of Genuine Efforts
174. As stated in his evidence the applicant has researched numerous possible business ventures in Australian businesses.
In addition to the above, as outlined in his evidence, the applicant also bought a display home whilst building his own home. The applicant leased back the display home to the building company for one year and sold it for a profit of $96,000.00 at the expiry of the lease. This is another example of the applicant’s entrepreneurial sense and eye for business opportunity which in the Tribunal’s opinion would make him a valuable contributor to the Australian economy.
Requirements under section 134(3) of the Act
Part (a): business proposals that the person has developed;
175. As outlined earlier, the applicant has proposed to develop three lots in Rivergum, Baldivis.
Part (b): the existence of partners or joint ventures for the business proposals;
176. The applicant has enlisted the support of his daughter, an Australian citizen, in a property development partnership for the three lots in Rivergum, Baldivis. Land has been purchased but the development is currently on hold pending the respondent’s decision to cancel the applicant’s visa being set aside.
Part (c): research that the person has undertaken into the conduct of an eligible business in Australia;
177. This has been referred to above.
178. The Tribunal notes that the evidence is that the applicant is a highly successful and astute business operator in his previously adopted country and does not need to research any more than required when ascertaining whether a venture may or may not be profitable. Moreover, the Act does not require visa holders to invest in enterprises that, after prudent due diligence, can be seen to have little chance of success. Nor does the Act expect visa holders to invest in businesses that are doomed to fail.
Part (d): the period or periods during which the person has been present in Australia;
179. The applicant spent 355 days in Australia from date of granting to date of cancellation of his visa. The respondent’s policy indicates business skills migrants should be physically present in Australia for more than six months after their first arrival in order to satisfy “genuine efforts” under part (d). The time the applicant is calculated to have spent in Australia by the respondent does not include the considerable time the applicant spent in Australia prior to the granting of his visa in setting up Tile Plus.
Part (e): the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;
180. The applicant has invested over $2 million in Australia both privately and for the purpose of making profit in addition to Wundowie and Tile Plus.
Part (f): the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person;
181. This has already been referred to.
Part (g): business activity that is, or has been, undertaken by the person;
182. As noted above since 2003 the applicant has engaged in a range of business activities in an effort to meet his visa requirements.
183. Clause 4.5.2 of MSI 133 states that:
“While failure to meet one or more of these indicators mat normally lead to a visa being cancelled, it will not necessarily mean that a visa will be cancelled. The decision maker must give weight to all relevant factors in a case (of which those set out in subsection 134(3) above may only be some) and reach a decision on that basis. For example, while the factors listed in 4.5.1 above may be indicative of “genuine effort”, lack of them will not necessarily be decisive. The decision maker must decide, on the ordinary meaning of the words, whether the visa holder has made “genuine effort”. A decision maker may still decide not to exercise the discretionary power to cancel the business visa even if it is assessed that no genuine effort has been made”.
184. In Shaikh, at paragraph 68, Member Tovey held in relation to 4.5.1 of MSI 133, that they “…are a guide only and are not binding on the Tribunal”. Member Tovey in Shaikh went on to agree, at paragraph 69, with the statement in Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579 (at paragraph 22) that:
“…no weight should be given to the guidelines in MSI 133 if they are clearly more restrictive than the words of the section itself, and the factors referred to in s.134(3) cannot be the basis for rejecting relevant efforts which are genuine, simply because they fall short of the examples given in section 134(3)… [nor, we submit the examples given in 4.5.1 of MSI 133]… For an effort to be genuine it must not be false or fictitious and the level of effort must be something that is real and beyond that which is purely superficial or token”.
Conclusion – Genuine Efforts
185. The Tribunal finds that the applicant’s actions have shown that he is committed to Australia has taken his responsibilities seriously and has made genuine efforts to fulfil the relevant requirements.
Residual Discretion
186. Having regard to the Tribunal’s findings as set out above it is not necessary for the Tribunal to consider the exercise of its residuary discretion to set aside the respondent’s decision to cancel the applicant’s visa.
DECISION
187. The Tribunal sets aside the decision under review and directs that the business skills visa of the applicant not be cancelled.
I certify that the 187 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: .....................[Sgd C Skinner]...............................
AssociateDate of Hearing 22 August 2007
Date of Decision 11 December 2007
Counsel for the Applicant Mr M Solomon
Solicitor for the Applicant Fiocco's Lawyers
Counsel for the Respondent Mr S Ferguson
Solicitor for the Respondent Australian Government Solicitor
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