Saleh Leo v Minister for Immigration

[2006] AATA 308

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 308

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W2005/17

GENERAL ADMINISTRATIVE DIVISION		)
Re		JULIANA LEO

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Associate Professor G A Barton, Member

Date4 April 2006

PlacePerth

Decision The Tribunal sets aside the decision of the respondent’s delegate of 3 December 2004 to cancel the business visa pursuant to s.134 of the Act.

.............(sgd G Barton).................

Member

CATCHWORDS

Migration to Australia - business skills visa - subclass 127 (business owner) - business -  eligible business -  ownership interest in relation to an eligible business - substantial ownership interest in relation to an eligible business - shareholder - put and call options -  indemnity - no right to dividends - ordinary meaning of ‘substantial’ - nature of a share - matters to be considered in determining whether a business visa holder’s underlying ownership interest in an eligible business is substantial

Migration Act 1958

S.134 (1) (2) (3) (9) (10)
s. 135

Migration Regulations 1994

reg. 127.216

Evans v FC of T 89 ATC 4540

Re Rose, Rose v Inland Revenue Commissioners [1952] Ch 499

Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143

REASONS FOR DECISION

4 April 2006 Associate Professor G A Barton, Member         

1. The applicant, Juliana Leo, applied for review of the decision of the respondent’s delegate of 3 December 2004 to cancel her Class AD subclass 127 (Business Owner) Business Skills Visa (“the business visa”). The respondent has a conditional discretionary power, under s. 134(1) of the Migration Act 1958 (‘the Act’), to cancel the business visa.

2.      The Tribunal had before it the “T documents” (T1 - T23) and supplementary T documents (S1 - S7) lodged by the respondent pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 and a statement of facts and contentions from both parties.

3.      The applicant was represented by Mr A Goldfinch of Solicitors Goldfinch & Co who lodged written submissions on 29 December 2005 and 2 February 2006.

4.      Mr D Blades of the Australian Government Solicitor appeared for the respondent. He lodged written submissions on 25 January 2006.

5.      The applicant was granted the business visa on 9 May 2001 on condition that she enter Australia on or before 20 September 2001(S7).

6.      The criteria the applicant had to satisfy to be granted the business visa, at the time of her application and at the time it was decided, are set out in Schedule 2 of the Migration Regulations 1994 at 127.21 and 127.22 respectively. Relevantly, at time of application, the respondent was satisfied that the applicant genuinely had a realistic commitment after entry to Australia as the holder of a subclass 127 visa, to establish an eligible business in Australia or participate in an existing one; to maintain a substantial ownership interest in that business and to maintain direct and continuous involvement in the day - to - day management of that business and in making decisions that affect the overall direction and performance of the business in a manner that benefits the Australian economy - reg.127.216.

7.      In support of her application for the business visa, the applicant signed a declaration which included an undertaking to make genuine efforts to actively participate, as an owner or part - owner, in the day - to - day management at a senior level of a new or existing business in Australia which will do one or more of the following: develop business links with international markets; create or maintain employment; export Australian goods or services; produce goods or services that would otherwise be imported; introduce new or improved technology; add to commercial activity and competitiveness within sectors of the Australian economy (S4). The applicant agreed, in the same document, to complete the survey forms in relation to the surveys of business skills migrants conducted by the respondent at 24 months (form 1010) and 36 months (form 1042) after first entry into Australia and she acknowledged that the respondent may cancel the business visa within 3 years of her first arrival in Australia if she did not fulfil the business undertaking. The applicant first entered Australia after she was granted the business visa on 21 August 2001 and on 4 August 2003, when her Australian address notified to the respondent was Unit 504 Clear Water Reflection, 32 Refinery Drive, Pyrmont - New South Wales, the respondent sent her form 1010 (Survey of Business Skills Migrant - 24 months) to be completed and returned to the respondent by 18 September 2003 (T11). The respondent explained in the covering letter that the information provided in form 1010 would be used to assess whether the applicant had obtained a substantial ownership interest in an eligible business in Australia in which she actively participated at a senior level in the day - to - day management of the business or, if she had not yet engaged in such a business, whether she had made genuine efforts to do so.

8.      The applicant was present in Australia for approximately 69 days in the period from 30 October 2003 to 2 September 2004(T23).  The relevant records for the period 21 August 2001 to 29 October 2003 were not lodged with the Tribunal.  This omission is immaterial in light of the Tribunal’s finding in para. 63 below.

9.      The applicant completed form 1010 on the basis that she was in business in Australia and her migration agent returned it and supporting documents to the respondent on 25 September 2003 and gave an undertaking that further documents would be provided at a later date including a business activity statement (T12).

10.     The applicant stated in form 1010 that she had become the owner of a new business of exporting wheat flour that was established on 27 August 2001 and conducted through two registered companies, Galaxy International Proprietary Ltd (‘Galaxy’) and Global Success Pty Ltd (‘Global’). The applicant is a director and shareholder of Galaxy and Global and has a 25% interest in each. The other shareholders and directors in Galaxy and Global are the applicant’s brother Mr Saleh Leo and Messrs Salim Kortono and Leo Zaher. Galaxy and Global were registered in New South Wales on 27 August 2001 and 30 July 2001 respectively. Galaxy was registered in the Australian Business Register as of 24 September 2001 and it was registered for goods and services tax as of 1 October 2001(T12). The applicant and her brother Mr Saleh Leo founded Galaxy and they each transferred US$55 000 to Galaxy in September 2003. Messrs Salim Kartono and Leo Zaher established Global. The current ownership of Galaxy and Global arose from a business agreement including a transfer of shares at no consideration so that they ‘would operate to complement each other rather than to compete with each other (A1). 

11.     The applicant lodged an undated personal financial statement, a handwritten schedule for the period 13 July 2003 to 17 July 2003 and a typed activity report for the period 18 August 2003 to 28 August 2003 (T12).

12.     The applicant’s migration agent, who is a chartered accountant, also provided accounting and financial advice in Australia to the applicant and to the other directors and shareholders of Galaxy and Global. He wrote them on 15 July 2003 concerning a proposal to acquire, for approximately $180 000,Plateena Pty Ltd. (‘Plateena’), which conducts a franchise business trading as New Zealand Natural Ice Cream at premises in Pagewood New South Wales, advising that the acquisition be made by Galaxy or Global and that the buyer and vendor be registered for the goods and services tax (‘GST’) in order to access the relevant exemption in relation to the supply of a going concern. On 22 August 2003 he advised the applicant and Mr Salim Kartono, after a meeting with them that afternoon to discuss the financial statements of Plateena, that they negotiate  a purchase price up to $170 000. This correspondence together with Plateena’s financial statements from 2000 to 2002, weekly sales reports for 6 July 1999 to 12 August 2003, inventories list as of 17 July 2003 and quarterly business activity statements for July 2002 to December 2002 and April to June 2003, were lodged with form 1010(T12).

13.     It was not disputed, and the Tribunal finds, that neither Global nor Galaxy acquired Plateena. The applicant and Mr Saleh Leo also had a meeting with Unibic Australia Pty. Ltd. (‘Unibic’) at this time to explore becoming the sole distributor of Unibic products in Indonesia. This proposal did not go ahead because Unibic was unwilling to give them the sole distributorship (A1; A8).

14.     On 19 August 2003 the applicant’s  migration agent wrote two letters to her and Mr Salim Kartono, following an earlier meeting and a meeting that day, concerning a proposed business joint venture with Charis International Pty. Ltd.(‘Charis’) trading as ‘Il Gianfornaio’(T12). The proposal involved a corporate joint venture, between Global and Charis, to conduct the master franchise for a retail food business in Indonesia with a wholly owned company set up in Australia to export ‘Il Gianfornaio’ products from Australia to Indonesia . On the advice of the applicant’s migration agent Global employed Australian Franchise Marketing Pty. Ltd. to prepare a ‘due diligence’ report on Charis. Charis, in a letter of 29 August 2003 to the applicant and her co - directors in Galaxy and Global, withdrew from the negotiations. According to the applicant’s brother the investment did not go ahead because he had called for an audited financial report on Charis which it would not provide(A8). The applicant testified to the further difficulty that Charis insisted that its lawyer prepare the documentation in order to settle the transaction expeditiously. She was not comfortable with this approach. The applicant lodged all the correspondence and accompanying documentation in relation to the ‘Il Gianfornaio’ proposal with form 1010(T12).

15.     On 6 November 2003 the respondent’s delegate wrote the applicant through her migration agent informing her that although she had indicated in form 1010 that she was currently engaged in business in Australia, the respondent was unable, on the information provided, to assess whether she was meeting her visa requirements and requested that she provide further information and supporting documents by 30 December 2003 to verify the nature of her business and her involvement in it (T13).

16.     On 8 January 2004 the applicant’s migration agent sent further documents to the respondent ‘to confirm that the applicant has engaged in an eligible business in Australia and has utilised her skills in participating at a senior level in the day - to - day management of the business’(T14). The documents in question are the quarterly business activity statements for Global and Galaxy for the period July to December 2003; the 2003 company tax return and financial statements for Galaxy which show that its total equity at 30 June 2003 was $145 and the documents relating to the purchase of flour in Australia by Galaxy and Global and its sale in Indonesia.

17.     On 11 August  2003 Global exported wheat flour to a consignee in Medan Indonesia at US$280 per metric ton for a total price of US$56 210 which it had purchased from Manildra Flour Mills Pty. Ltd.(‘Manildra’) at US$270 per metric ton CNF Belawan (Medan) Indonesia. The export documents were signed by Salim Kartono on behalf of Global. On 21 August 2003 and 13 December 2003 Global made further exports of Manildra wheat flour to the same consignee on the same terms to the value of US$56 602 and US$56 224 respectively. The export documents for these transactions were signed by Zahar Leo and Salim Kartono respectively (T14). On 24 August 2003 and 14 October 2003 Galaxy made exports of Manildra wheat flour to the same consignee and on terms the same as those of the Global contracts to the value of US$57 022 and US$55 972 respectively. On these occasions the invoices to the consignee were authorised by the applicant and by Saleh Leo respectively (T14).The applicant testified that Galaxy and Global have no employees.

18.     According to the applicant’s covering letter of 8 January 2004 Global exported the commodity ‘Skin Free” on 10 October 2003 to the value of A$3 300(T14).

19.     On 11 March 2004 the applicant’s migration agent wrote the respondent to correct the information provided on 8 January 2004 by reporting a further wheat flour export sale by Global on 15 December 2003 to the value of US$55 734 and by Galaxy on 24 December 2003 to the value of US$55 594(T15).Galaxy incurred a loss of $700 from ordinary activities for the year ended 30 June 2003 and made a gross trading profit of $16 107 for the year ended 30 June 2004 (A10). Global made a gross trading profit of $3 800 and $16 625 for the years ended 30 June 2003 and 30 June 2004 respectively (A11).

20.     On 21 April 2004 the applicant’s migration agent informed the respondent that the applicant and her brother, Mr Saleh Leo, had visited Australia to do research, negotiate and discuss the acquisition of the master franchise for the Forte School of Music in Indonesia (T16). He included an agreement dated 26 March 2003 between Galaxy and Australian Franchise Marketing Pty Ltd for a due diligence report on the Forte School of Music master franchise for Indonesia and a concurrent tax invoice for $11 275, dated 26 March 2004, for the cost of the report. As the applicant’s brother, Mr Saleh Leo, who signed the agreement, was in Australia on 26 March 2004 and not on 26 March 2003, the Tribunal finds that the agreement for the study on the Forte School of Music franchise was concluded on 26 March 2004. The applicant and Mr Saleh Leo did not proceed with the agreement because of the cost and decided instead to observe the business themselves. After a meeting with the Forte franchisor they decided not to go ahead with the investment on account of the price and because they had received certain information from existing franchisees concerning support from the franchisor (A1; A8).

21.     On 29 April 2004 the applicant’s migration agent sent the respondent the business activity statements for Global and Galaxy for the March 2004 quarter, current bank statements for both companies and company extracts for Global and Galaxy from the Australian Securities and Investment Commission database reflecting the applicant’s interests in Global and Galaxy (T17).

22.     On 8 June 2004 the applicant’s migration agent sent the respondent a copy of a letter of 28 April 2004 to Galaxy from Manildra informing the applicant and her brother that Manildra had been unable to fulfil Galaxy’s flour orders owing to a failure in its software system that it was hoped would be corrected by July 2004, and correspondence to the applicant from the Forte School of Music including the agenda for a meeting scheduled for 23 February 2004 between representatives of the school and the applicant and her brother Mr Saleh Leo(T18). On 7 September 2004 Galaxy exported approximately 176 metric tons of Manildra wheat flour to Indonesia to the value of US $48 846(A12). The flour was purchased on 11 February 2004 and the delay in exporting it was attributable to the software problem at Manildra referred to in its letter to the applicant of 28 April 2004. This was the last shipment of flour that Galaxy made to Indonesia.

23.     On 9 August 2004 the respondent’s delegate notified the applicant’s migration agent of his intention to cancel the business visa for  reasons set out in the notice, and set a deadline of 6 September 2004 for making representations as to why the business visa should not be cancelled(T19). The applicant testified that when she was informed of the respondent’s intention to cancel the business visa she diverted her business efforts from Galaxy and Global and turned to Australian Visa and Migration Services Pty. Ltd. (‘AVMS’) for advice and assistance.

24.     On 6 September 2004 Mr Allan Hodder of AVMS wrote the respondent advising that the applicant had appointed AVMS, on 1 September 2004, to make representations that the business visa not be cancelled and requesting that a decision whether to cancel the business visa not be made before the close of business on 20 September 2004(T20).

25.     On 28 October 2004 Mark D’Rozario of AVMS lodged documents in relation to the applicant’s involvement in Optel Audio Visual Pty Ltd. (‘Optel’) to support his contention that the applicant had met her obligations as the holder of the business visa (T21).

26.     Optel is in the business of supplying audio visual equipment and it offers a range of products that include professional video and audio equipment, projectors and plasma display devices, IT and communication solutions and home theatre and automation systems. It was incorporated on 11 August 1988 as Tanby Holdings Pty Ltd. It then became Tanby Video Pty Ltd and subsequently Tanby Audio Visual Pty Ltd. before changing its name to Optel on 1 July 1997(A6). An information memorandum under the Gilete Group letterhead offered an investor the opportunity to acquire a shareholding in Optel for $250 000 that equated to 18.2% of the company equity. Shares would be issued providing the investor with normal voting rights and an annual return. The memorandum advised potential investors to contact Mr Ken Sharp at Gilete Consulting for further information (T21). The director of Optel, Mr Robert Charles MacGregor, resolved to create “A” class shares in the capital of Optel on 20 April 2004(A2). He further resolved at that time that “A” class shares would include normal voting rights but not the right to any dividend or a right of pre - emption in relation to other shares in Optel issued or transferred in the future. The resolution makes no mention of a right to capital. The regulations contained in Table A in Schedule 3 to the Companies (Western Australia) Code, with some amendments, were adopted as the articles of association of Optel, and the applicant as a member would participate in a winding up pursuant to article 97(A6). 

27.     On 27 September 2004 Optel accepted the applicant’s offer to purchase a 29.4% shareholding in Optel for $250 000 to be paid on 27 September 2004. On 11 October 2004 the applicant was issued with a share certificate for 22 189 “A” class shares paid to $1.00 per share. A transfer of $250 000 to Optel’s bank account from the applicant’s husband, Mr Robert Haslim, occurred on 5 October 2004. Optel informed the applicant in its letter of acceptance that she would have a senior management role in the day - to - day operations of the company (T21).

28.     The director of Optel, Mr Robert Macgregor , made a written announcement that the applicant would join the management team of Optel as Business Development Manager and that she will be involved in the monthly management meetings and the day to day management of the company and that her responsibilities include: promoting and expanding of the company’s specialised audio services into suitable markets in Indonesia in line with corporate strategies; assist the managing director in the preparation of marketing, strategic plan and budgets; appraisal, analysis and recommendation of new development prospects and acquisitions; update of the marketing plan, review the progress and modify in accordance with the company’s present and planned resources; co - ordinate policy formulation and review, including evaluation of policy options; oversee the implementation of organizational directives and policies; special assignments such as investigative reports; identify new product and target markets and in consultation with the managing director, develop a plan to acquire, develop and enhance these markets. In particular the applicant’s involvement in Optel would put her in a position of control and authority which allows her to make decisions that affect the overall direction and performance of the business (T21). In cross - examination Mr MacGregor stated that it was a reasonably accurate summary of the applicant’s responsibilities in Optel and when asked whether her duties also related to Optel’s activities in Perth he explained that Optel now offered a range of products in response to the applicant’s earlier concern that Optel was vulnerable as the distributor of a single brand.

29.     The Australian Securities and Investment Commission extract for Optel of 6 December 2004, shortly after the respondent’s delegate cancelled the business visa, records there were 8572 issued fully paid “A” class shares in Optel held by Joeminto Rahardjo, and 40 001 issued fully paid ordinary shares held by Wandi Investments Pty Ltd. (‘Wandi’) and Mr Robert Charles MacGregor was the current director (T22). The Optel company extract of 24 November 2005 shows no changes to the register of ordinary shareholders but records the applicant’s holding of 22 189 fully paid “A” class shares and an increase of Joeminto Rahardjo’s holding of “A” class shares to 13 283(R1).The memorandum of association of Tanby Holdings Pty Ltd provides that its authorised capital is $100 000 divided into 100 000 ordinary shares of $1. 00 with a  power to divide them into one or more classes with any preferential, deferred, qualified or special rights, privileges, conditions or stipulations and to issue shares with or without any preference priority or special privileges and subject to any postponement of rights or to any conditions or restrictions or without any right of voting(A6). In cross - examination Mr MacGregor stated that Joeminto Rahardjo is an Indonesian business skills migrant to Australia whose role in Optel was similar to that of the Applicant. Wandi is Mr MacGregor’s family company.

30.     After the applicant was notified of the respondent’s intention to cancel the business visa, she and Mr Saleh Leo met with the representative of Gilete Management Consultants and AVMS in Jakarta to discuss business investment opportunities in Perth. They then travelled to Perth for a meeting with  Mr Allan Hodder of AVMS who advised them that without additional investment in an Australian business the business visa might well be cancelled(A1;A8). They visited five businesses including Optel and after meeting with the various business owners and taking advice from Allan Hodder, the applicant decided to invest in Optel (A1).

31.     On 24 September 2004 the applicant applied for 22189 “A” class shares in Optel enclosing $250 000 with her application and authorising the board of Optel to “register the company as the holder of such shares” subject to the terms of the constitution of Optel (A6). When Optel accepted the applicant’s offer to purchase a 29.4% shareholding in Optel for $250 000 payable on 27 September 2004 and undertook to issue a share certificate to the applicant for 22 “189” A class shares in the capital of Optel (‘the shares’), she contemporaneously executed put and call option agreements in respect of the shares and a deed of understanding and indemnity with Gilete CSI Pty. Ltd. (‘Gilete CSI’) (A6).

32.     By the put option agreement, Gilete CSI granted the applicant or her personal representative an option to require Gilete CSI or its nominee to acquire the shares unencumbered for $250 000 payable by bank cheque. The put option expires at 5pm (Perth time) on 19 October 2007(A6).

33.     By the call option agreement, the applicant granted Wandi Investments Pty Ltd., or its nominee, an option to acquire the shares unencumbered for $250 000 payable by bank cheque. The call option expires at 5.00pm (Perth time) on 5 October 2007(A6).

34.     The deed of understanding and indemnity between Gilete CSI and the applicant recites that the applicant elected to purchase the shares and to hold them for a three year investment period. Recital B records that Gilete Consulting undertook a due diligence investigation of Optel and will be providing management services to Optel pursuant to Mandate Agreement 200127, concluded on 27 September 2004, until 19 October 2007 for a consultancy fee. At the hearing the applicant tendered a copy of Mandate Agreement 200127 between Optel and Gilete Consulting Pty Ltd effective from 27 September 2004 to 19 October 2007 the fee structure being $200 per hour plus disbursements for a director and $150 per hour plus disbursements for a management practitioner (A6).   Recital C records that in addition to the consultancy fee, Optel will pay Gilete CSI a facilitators fee which equates to 15% per annum of the applicant’s investment in Optel (i.e. $37 500 per annum) over three years and recital D records that all the parties have agreed that the fees referred to in B and C are for the benefit of Gilete Consulting and Gilete CSI only (A6). In consideration of the applicant’s investment in Optel and subject to the applicant retaining the shares, Gilete CSI agreed to pay the applicant a monthly return of $1 041 .66 less any withholding tax should the applicant be classified as a non - resident of Australia for income tax purposes. The monthly returns equate to an annual return of 5%.

35.     Gilete CSI indemnified the applicant against any shortfall between the $250 000 she originally invested in Optel and the amount that is received for the shares at the conclusion of the three year investment period or on the applicant’s death (A6).

36.     Gilete CSI had sixty days within which to return $250 000 to the applicant in the event that she received notification from the respondent of cancellation of the business visa within six months of the date of the deed. This undertaking was conditional on the applicant giving written proof from the respondent to Mr Kenneth Sharp of Gilete CSI (A6).

37.     The above indemnities are conditional upon the applicant selling the shares to the highest bidder even if the purchaser is not an independent third party but Gilete Consulting, Gilete CSI, an existing Optel shareholder or a new shareholder introduced by Gilete Consulting (A6).

38.     Clause 1.4 of the deed of understanding and indemnity provides as follows: -

“1.4In the event Optel goes into administration receivership and or compulsory or voluntary liquidation or shall enter into any composition arrangement with or assignment for the benefit of the Optel’s creditors or shall have appointed under any Act or instrument or by order of any Court a manager or an administrator or a trustee or a receiver or a manager or liquidator in relation to any part of the Optel’s undertakings or assets or property or if any execution be issued against the Optel (whether being a corporation or person) and not be satisfied or withdrawn within 30 days thereof or the Mandate Agreement is terminated by either of the parties to it for any reason, or Gilete Consulting determines in its absolute discretion that Leo’s investment in Optel is at risk, Gilete CSI shall give notice in writing immediately to Leo that it has elected to either: and or

1.4.1pay the amount of Leo’s AUD$250,000.00 in Optel not otherwise recovered by Leo to Leo within 60 days of the date of the notice given by Gilete CSI; or

1.4.2purchase, or arrange for the purchase of, shares in another investment company nominated by Gilete Consulting or Gilete CSI Pty Ltd (“Substitute Company”) for an amount equivalent to the amount of Leo’s AUD$250,000.00 in Optel, which has not been recovered by Leo.  The shares in the Substitute Company (“Substitute Shares”) shall be the property of and be held in the name of Leo, and the parties shall enter into agreements in relation to the Substitute Shares which contain substantially the same terms, conditions and indemnities as those between the parties in relation to the Shares including but not limited to this Deed and the Put Option Agreement dated 27 September 2004, except that the investment period for the Substitute Shares shall only be for the unexpired portion of the Investment Period.  If Gilete CSI fails to comply with this clause 1.4.2 within sixty (60) days of the date of the notice given by Gilete CSI, Gilete CSI shall then be obliged to pay Leo in terms of clause 1.4.1above within seven (7) days after the sixty (60) days of the date of the notice.”  

39.     By clause 1.5, an election made pursuant to clause 1.4 shall be made in the absolute and unfettered discretion of Gilete CSI.

40.     The deed includes an acknowledgement by the parties (in clause 4) that the undertakings and indemnities are valid for the three year investment period and that should the applicant elect to retain the shares at the conclusion of the investment period, the parties will undertake negotiations in relation to the continuation or otherwise of the indemnities and undertakings contained in the deed (A6).

41.     On 27 September 2004 Optel and Gilete CSI concluded a funding arrangement that related to the investment of $250 000 in Optel by the applicant. It was agreed that the investment will be by way of equity funding into Optel; that the required facilitator fee on the investment is $37 500 per annum to be paid by Optel to Gilete CSI in monthly installments of $3 125 plus GST and that the provision of the investment is conditional upon Gilete Consulting Pty Ltd providing management consulting services to Optel as agreed in the Gilete Consulting Pty Ltd mandate of 27 September 2004 - see para. 34 of these reasons above (A6).

42.     The applicant is married to Mr Robert Haslim and they have two children, Eric Haslim and Perry Haslim, who studied in Australia before the applicant was granted the business visa. Mr Robert Haslim was included in the applicant’s visa application.

43.     The applicant started her business career in her family’s retail shop selling goods such as television sets and refrigerators. At the suggestion of her father, she commenced a business of selling musical instruments that, at the time of the hearing, had grown into a major wholesale and retail distributor of Roland musical instruments in Indonesia. The applicant’s business is located in Jakarta and includes the provision of music education to almost 2000 students.

44.     The applicant testified that she invested in Optel, rather than any of the other businesses she considered, because Optel provides products and services, including professional video and audio equipment such as projectors and plasma screens, similar to those provided by a business that she is part of in Indonesia. So she considered that she had the management skills to become involved with Optel (A1). At the hearing she explained that the business in Indonesia supplied public address systems and that she thought that she could learn a lot from Optel. She was also happy to invest in Optel because after the injection of her capital it was growing rapidly.

45.     The applicant testified that she had good business connections in Indonesia through her musical instrument business and that after she invested in Optel she had approached the chairman of the University of Pelita Harapan in Jakarta to promote the installation service Optel offered. Unfortunately the chairman suffered a stroke but she had also made contact with others in the institution. The applicant tendered copies of four electronic messages she sent to Mr Robert MacGregor of Optel and copied to various persons in the Gilete Group (A3). On 6 October 2004 she requested information on Optel’s recent projects and market share in Australia. On 24 November 2004 she wrote regarding Optel’s strategic plan for 2005 stating that she would concentrate her activities on strategic management planning. On 16 February 2005 she referred to their meeting in Perth and Optel’s Notre Dame School of Medicine project. She also wrote about sales opportunities to universities, schools and within the entertainment industry. On 28 June 2005 she sent profile summaries for three reputable private universities in Indonesia including the Pelita Harapan University referred to above.

46.     The applicant tendered minutes of Optel management meetings of 12 January 2005; 9 February 2005; 25 March 2005; 14 April 2005; 12 August 2005; 30 September 2005 and 7 November 2005 (A3). She is recorded as present at the meetings of 9 February and 12 August. She testified that she had been caring for her sister in January 2005 and had enlisted the assistance of her son Eric Haslim in relation to Optel hence the references to the business proposals of Eric Haslim in the minutes of the meeting of 12 January 2005 under the heading ‘5. Business Development’. The applicant attended the meeting of 9 February 2005 and it is recorded in the minutes of that meeting under ‘5. Business Development’ that the applicant was keen to initiate new opportunities in Indonesia. In the minutes of the meeting of 25 March 2005 under ‘5. Business Development’ it is recorded that a major area of development is in digital signage where Optel has identified a number of opportunities and in the minutes of the meeting of 14 April 2005 it is recorded that two separate reports from the applicant, both dated 12 April 2005, were tabled and it is stated that her obvious knowledge and contacts in the digital signage business should prove a worthwhile asset to the company. It is recorded in the minutes of the meeting of 12 August 2005 under ‘Business Development - Opportunities in Indonesia’ that Optel had installed equipment in a local church and the applicant requested details of this project to pass on to her son Eric for consideration by his church in Indonesia. The applicant informed the meeting that she was in the process of quoting for the supply of musical instruments to various churches in Indonesia and suggested that Mr MacGregor use the opportunity to include quotes for audio visual equipment. The applicant tendered a list of her best customers that she had prepared for this purpose (A4) and explained in her evidence the business advantages to be gained by Optel in Indonesia from such introductions. She testified that Mr MacGregor would not be successful in selling Optel products and services in Indonesia without first establishing a relationship with potential customers.

47.     The applicant has not entered into a contract of employment with Optel as Business Development Manager nor does she receive a salary for her services. She was unable to recall the business address of Optel in Perth and when invited to do so gave few details of the conduct of Optel’s business.

48.     Mr Robert MacGregor, the director of Optel, testified that he was introduced to the applicant by Mr Gary Hardman of Gilete Consulting Group (A5). He said that he had been working with the Gilete Group for some 12 months prior to being introduced to the applicant, in regard to the sort of company Optel wanted to be and in relation to fundraising to expand the company’s operation. When Mr Hardman mentioned Indonesian investors he told him that that would fit well with Optel’s plan to expand into Indonesia. He explained that the applicant’s investment in Optel was critical to the growth of its business and that the applicant played a significant role in finding business opportunities for Optel in Indonesia. He mentioned religious and educational institutions as potential customers. He testified that he and the applicant had never discussed whether she was to become a director of Optel or its employee or whether she would share in any dividends from the profits of Optel. He referred to the applicant’s monthly return from Gilete CSI on her investment which he believed was linked to interest rates. He also expressed the belief that the applicant’s “A” class shares included a proportionate right to capital on a winding up of Optel. At the time of the hearing Mr MacGregor had not yet been to Indonesia to take advantage of the applicant’s business introductions but expressed an intention to do so early in 2006. Mr MacGregor is responsible for the overall or day - to - day management of Optel.

49.     Mr Kenneth James Sharp, a director of the Gilete Group of companies and of AVMS, testified that the applicant’s investment in Optel had been made pursuant to a model developed by Gilete CSI and AVMS to provide safe investment opportunities in Australia for business migrants in circumstances that enabled them to satisfy their visa requirements. He said that the model had been verbally endorsed in discussions with officers of the respondent. The model involving “A” class shares was designed to put the business migrant in as risk free a position as possible at least in the initial years of their involvement in Australian business and the put and call option arrangement was an exit strategy for either party in the event the relationship turned sour. He explained that the facilitator’s fee to be paid to Gilete CSI was the cost to Optel of the time use of the applicant’s funds while she held “A” class shares with no entitlement to dividend. He regarded the margin between the facilitator’s fee and the return payable to the applicant as a ‘sinking fund’ in the event that the applicant should exercise the put option.

50. The respondent exercised the discretionary power conferred by s. 134(1) of the Act to cancel the business visa. This course of action was subject to the preliminary conditions, relating to the time of cancellation and the right of the applicant to be heard, set out in ss. 134(9) and 135 of the Act. It was not disputed, and the Tribunal finds, that these conditions were satisfied in relation to the cancellation of the business visa and that written notice of the cancellation was given to the applicant pursuant to s.134(1) of the Act.

51. The relevant provisions of the Act governing the respondent’s power to cancel the business visa are set out in s. 134 as follows:

Cancellation of business visas

(1) Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment-linked visa or a family member's visa), by written notice given to its holder, if the Minister is satisfied that its holder:

(a)has not obtained a substantial ownership interest in an eligible business in Australia; or

(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or

(c)       does not intend to continue to:

(i) hold a substantial ownership interest in; and

(ii)utilise his or her skills in actively participating at a senior level in the day-to-day management of;

an eligible business in Australia.

(2) The Minister must not cancel a business visa under subsection (1) if the Minister is satisfied that its holder:

(a) has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia; and

(b)has made a genuine effort to utilise his or her skills in actively participating at a senior level in the day-to-day management of that business; and

(c)        intends to continue to make such genuine efforts.

(3) Without limiting the generality of matters that the Minister may take into account in determining whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account any or all of the following matters:

(a)       business proposals that the person has developed;

(b)       the existence of partners or joint venturers for the business proposals;

(c) research that the person has undertaken into the conduct of an eligible business in Australia;

(d) the period or periods during which the person has been present in Australia;

(e) the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;

(f) the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person

(g) business activity that is, or has been, undertaken by the perso ;

(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).”

52.     ’Eligible business’ is defined in s.134(10) to mean a business that the respondent “reasonably believes is resulting or will result in one or more of the following:

(a)      the development of international 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.”

53.     ‘Ownership interest’ in relation to a business, is defined in s. 134(10) to mean “an interest in the business as:

(a)      a shareholder in a company that carries on the business;

(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.”

54. ‘Business’ is not defined in the Act. 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 the activity and whether it is conducted continuously and on a commercial basis to derive a profit; Evans v F C of T 89 ATC 4540 at 4554 - 4555 and the authorities cited.

55. By s. 134(1) of the Act the respondent had a discretionary power to cancel the business visa if she was satisfied, at the time of cancellation, as to one of the mutually exclusive matters in sub - paras. (a),(b) or (c) and she was not satisfied at that time that the applicant had made, and intended to continue to make, a genuine effort in relation to the matters in s.134(2)(a),(b) and (c).

56. S.134 (1) (a) of the Act relates to whether the applicant has obtained a substantial ownership interest in an eligible business in Australia. When the business visa was cancelled the applicant was the registered holder of 25% of the issued ordinary shares in, and a director of, Galaxy and Global and the holder of 29.4% of the issued shares in Optel. At that time the wheat flour activities of Galaxy and Global had ceased and it was not disputed, and the Tribunal finds, that Optel was conducting an eligible business as defined in s 134(10) of the Act. As the applicant is a shareholder in Optel the Tribunal finds that she has an ownership interest in its business as defined in s. 134(10). So the issue to be determined in relation to s.134 (1) (a) is whether the applicant had obtained a substantial ownership interest in Optel’s business when the business visa was cancelled.

57. ‘Substantial ownership interest’ is not defined in the Act. ‘Substantial’ means “1.of considerable importance, size, or worth. 3. real and tangible rather than imaginary;” Oxford Dictionary of English, second edition, 2003.

58.     A share in a registered company has been described as an indivisible bundle of rights and the obligations that attach to it, as burdens or incidents of the shareholding. It is a species of transferable personal property which does not include a legal or equitable interest in the assets of the company; Re Rose, Rose v Inland Revenue Commissioners [1952] Ch 499, 513, 514; Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143, 154, 157. The nature of a share is variable from corporation to corporation, from share to share and from time to time. So where, as in this application, the business visa holder’s ownership interest in an eligible business is an interest in the business as a shareholder in a company that carries on the business, the issue as to whether that interest is substantial, for the purposes of the Act, is to be determined not only by considering the number or percentage of issued shares held and their cost but also by reference to the rights that constitute the shares and the circumstances in which they are held.

59.     The circumstances in which the applicant became a member of Optel, the nature of her shares in Optel, including the manner in which she is excluded from participating  in its profits, and the terms of the contractual arrangements by which she acquired and holds her shares, are set out fully above. These matters, when considered as a whole, lead irresistibly to the conclusion that her underlying ownership interest in the business of Optel is severely attenuated, especially in light of the rights that ordinarily accrue to the proprietors of a private company.

60. For the reasons in paras. 54 to 59 above, the Tribunal is satisfied that the applicant at the time that the business visa was cancelled by the respondent, had not obtained a substantial ownership interest in an eligible business in Australia within the ordinary meaning of ‘substantial’ as it is used in s.134(1)(a) of the Act.

61. By s.134 (2) of the Act the respondent must not cancel the business visa if she is satisfied that the applicant has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia and to utilise her skills in actively participating at a senior level in the day - to - day management of that business, and intends to continue to make such genuine efforts. ‘Genuine effort’ is not defined in the Act and so must be given its ordinary meaning within the context of the Act. ‘Genuine’ means “truly what something is said to be; authentic” and ‘effort’ means “a vigorous or determined attempt;” Oxford Dictionary of English, second edition, 2003. An inclusive list of the matters that the respondent may take into account in determining whether the applicant has made the genuine effort referred to in s 134(2) is in s.134(3) of the Act.

62.     The applicant’s endeavours to meet the business visa requirements after her first entry into Australia and up to the hearing of this application are set out above. The Tribunal finds that there is nothing in the evidence to suggest that they were not genuine and so the issues to be resolved are whether they were, on balance, vigorous and determined and, if so, whether the applicant intends to continue to make them.

63. Although s.134 (2) of the Act requires the respondent to be successively satisfied in relation to the matters in (a), (b) and (c), where, as in this matter, it is found that the business visa holder has not obtained a substantial ownership interest in an eligible business in Australia, s.134 (2) (b) has no practical application and the respondent must not cancel the business visa if satisfied in relation to the matters in s.134 (2) (a) and (c).

64. Although the applicant was only present in Australia for short periods prior to the cancellation of the business visa, the Tribunal finds that this fact does not detract from her endeavours to satisfy the business visa requirements. After considering all the relevant transactions she concluded, the proposals she made and the professional advice she sought, as a whole and in light of the matters listed in s.134 (3), the Tribunal is satisfied that the applicant has made and intends to continue to make, a genuine effort to obtain a substantial ownership interest in an eligible business in Australia and that should she succeed, she intends to make a genuine effort to utilise her skills in actively participating at a senior level in the day-to-day management of that business. So by s.134 (2) of the Act the business visa must not be cancelled.

65. The Tribunal sets aside the decision of the respondent’s delegate of 3 December 2004 to cancel the business visa pursuant to s.134 of the Act.

I certify that the 65 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor G A Barton, Member

Signed:         (sgd D Brodie)           .....................................................................................

Associate

Date/s of Hearing  29 and 29 November 2005
Date of Decision  4 April 2006
Counsel for the Applicant         Mr Goldfinch
Solicitor for the Applicant          Goldfinch & Co
Counsel for the Respondent     Mr D Blades
Solicitor for the Respondent     Australian Government Solicitor