Shaikh and Minister for Immigration and Multicultural and Indigenous Affairs
[2006] AATA 1119
•22 December 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1119
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2004/402
GENERAL ADMINISTRATIVE DIVISION ) Re SHAUKAT ELLAHI SHAIKH Applicant
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Ms L R Tovey, Member Date22 December 2006
PlacePerth
Decision The Tribunal sets aside the decision under review dated 30 September 2004 and substitutes the decision that the Applicant's Subclass 127 Business Skills Visa and the subsidiary visas should not be cancelled. .......(Sgd. Ms L R Tovey)....................
Member
CATCHWORDS
IMMIGRATION – business skills visa – business - eligible business – genuine efforts – turns on own facts
Migration Act 1958 (Cth), s. 134
Migration Series Instructions 133
Budiman and Minister for Immigration and Multicultural Affairs [2006] AATA 647
Huang and Minister for Immigration and Multicultural Affairs [2002] AATA 656
Hindrodjojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724
Hope v Bathurst City Council (1980) 144 CLR 1
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 579
Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703
Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299
Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178
Puzey v Commissioner of Taxation [2003] FCAFC 197
Tang and Minister for Immigration and Multicultural Affairs [2000] AATA 997
Wong and Minister for Immigration, Multicultural and Indigenous Affairs [2002] AATA 54
REASONS FOR DECISION
22 December 2006 Ms L R Tovey, Member 1. This is an application by Mr Shaukat Ellahi Shaikh ("the Applicant") for a review of a decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs ("the Respondent") made on 30 September 2004 to cancel the Applicant's Subclass 127 business skills visa, and those of his dependents, in accordance with s. 134 of the Migration Act 1958 (Cth) ("the Act"). Initially the application was to be heard together with a similar application made by the Applicant's brother, Mr Shazada Ellahi Shaikh, in relation to his similarly cancelled business skills visa. Mr Shazada Ellahi Shaikh did not attend on the day the matters were listed for joint hearing. As a result, his matter was adjourned for hearing in February 2006. The hearing of the matter involving Mr Shazada Ellahi Shaikh was further adjourned due to medical reasons. Whilst it would have been preferable for the Tribunal to have dealt with both applications together, the circumstances have been such as to preclude this approach.
BACKGROUND
2. The Applicant was granted a business skills visa (“visa”) on 15 March 2001. He first entered Australia on 11 June 2001.
3. On 22 May 2003 the Applicant was asked by the Respondent’s Department to complete a 24 month survey form in relation to the visa. The completed survey form, together with various documents in support, was received by the Respondent’s Department on 20 June 2003. A request for further information was issued by the Respondent's Department on 18 September 2003. The Applicant responded to this request by letter dated 3 November 2003.
4. On 4 June 2004 a notice of intention to cancel the visa was sent to the Applicant. The Applicant responded to the notice of intention to cancel the visa by letter dated 22 June 2004 and provided further documentation.
5. On 30 September 2004, after taking into account all the information provided by the Applicant, a delegate of the Respondent decided to cancel the Applicant’s visa. The Applicant then sought review of the decision to cancel his visa by this Tribunal.
ISSUE
6. The issue for determination is whether, in the Tribunal's view, it is appropriate to cancel the Applicant's visa in accordance with the power granted by s. 134 of the Act.
EVIDENCE
7. The Applicant gave oral evidence at the hearing. I accept his evidence.
8. The Applicant gave evidence that he and his two brothers own and operate three publicly listed textile companies in Pakistan, that the combined turnover of these companies is approximately $US100 million and that the businesses have approximately 4500 employees. The Applicant is the managing director of this group of companies.
9. On 1 July 2002 the Applicant and his two brothers registered Ausell Corporation Pty Ltd ("Ausell"). This is a corporation registered in Australia. The Applicant owns one-third of Ausell. His two brothers are the remaining owners. The Applicant told me that he, together with his two brothers, make all decisions for Ausell and that his role is to identify all trading opportunities for Ausell, including a consideration of the risk factors involved, to purchase and sell, and to establish the banking relationship required.
10. In April 2002 and July/August 2002 the Applicant visited Australia for the purpose to investigate the export of Australian products by Ausell. The Applicant told me that during these business trips he visited approximately twelve ginning factories in Queensland, met with various trading companies which handle the export and purchase of cotton, and that he visited a company near Sydney which warehouses and organises the shipment of cotton on behalf of trading companies such as Ausell.
11. Initially Ausell was created with the issue of 50,000 ordinary shares at a value of $50,000. The Applicant confirmed that, whilst he was in Australia in July 2002, he opened a bank account in Ausell's name. He told me that an additional $US76,500 was later deposited into Ausell's bank account in or about June/July 2004 (see Exhibit A2). The Applicant also told me that, shortly prior to the date of the hearing, an additional amount of approximately $US100,000 was deposited into the bank account. In total, the Applicant said that approximately $AU300,000 has been deposited into Ausell's bank account.
12. The Applicant also gave evidence that in July 2002 his brother Mr Shafqat Ellahi Shaikh, on behalf of Ausell, met with representatives from George Weston Foods and established an agreement whereby Ausell would act as their agent in Pakistan. Ultimately, however, nothing came of this agreement due to freight costs from Australia to Pakistan. It was the Applicant's evidence that some of the "high end" products may become feasible for Ausell in the future.
13. The Applicant also told me that that in July 2002 Mr Shafqat Ellahi Shaikh, again on behalf of Ausell, corresponded with Mr J Whittaker, who was a manger of the International Trade Centre in Perth, and met with representatives from GFA Exports regarding the export of goods from Australia.
14. In August 2002 the Applicant corresponded with Naomi Cotton Corporation regarding the possibility of exporting Australian cotton. At this time he also corresponded with Auswool Products regarding the export of woolen products to Pakistan.
15. Also in August 2002 the Applicant arranged for Mr S Singh, who is an accountant with offices in Perth, to be added as a signatory to Ausell's banking account. A notice of change of address and authorisation for Mr Singh to act and receive communication on the Applicant's behalf concerning the visa was provided on 23 April 2003.
16. The next activity of the Applicant in relation to Ausell that is apparent from the T-documents occurred in March and April 2004. By a series of e-mails dated March 2004 and April 2004 the Applicant corresponded with Mr George Austin, apparently of Cottpak Storage and Transport Pty Ltd, Mr Paolo Cavazinni of Agriland, and a Ms Marchant. By these e-mails the Applicant sought quotes on the purchase of Australian cotton for export by Ausell. It is noted that in these e-mails the Applicant indicated that Ausell was only recently formed. As indicated above, however, Ausell was incorporated on 1 July 2002. What is also of importance is that the request for this cotton was made before the notice of intention to cancel the Applicant's visa was issued.
17. The Applicant then negotiated four contracts for the purchase of cotton from Queensland Cotton. These contracts were entered into on 15, 16, 17 and 18 June 2004. Each contract relates to the purchase by Ausell of approximately 110 bales of cotton. The Applicant told me that, prior to the cancellation of his visa, Ausell had effected three shipments of the sale of this cotton, being two shipments of approximately 110 bales of cotton and one shipment of approximately 220 bales of cotton, to buyers in Pakistan. In this regard on 27 June 2004, by contract number 101, approximately 110 bales of cotton were sold to Fazal Cloth Mills Ltd in Pakistan, with shipment to be by 15 August 2004, and on 28 June 2004, by contract number 102, approximately 220 bales of cotton were sold to Ali Asghar Textile Mills Ltd, with shipment to be by July 2004 (Exhibit A4). In his evidence, the Applicant told me of a further sale (contract number 103), dated 29 June 2004. He said that the shipments took place between 1 July and 30 September 2004. The Applicant also said that the value of the three contracts involving the 440 bales of cotton was approximately $US176,000, or approximately $AU240,000.
18. The Applicant told me that the profitability of the initial three shipments was very low, and that reason for this was to establish Ausell as a reliable supplier and to create a loyal client base. The Applicant said that there was little profit as they were selling near cost and that there were other incidental costs, such as accountant fees, and that this was a year to establish Ausell. It was the Applicant's evidence that whilst the profits may not be very high the transaction was important. It was also his evidence that he hoped to make profits in the following year.
19. The Applicant also told me that Ausell had received no sales revenue for the financial years 2002/2003 and 2003/2004. As to the latter, the Applicant said that Ausell had contracts but no shipments as at 30 June 2004.
20. On 15 March 2005 Ausell purchased approximately 220 bales of cotton from Queensland Cotton. The cotton was purchased for $US80,874. This cotton was then sold by Ausell to Amer Cotton Mills (Pvt) Ltd in Pakistan and a Bill of Lading dated 21 April 2005 was produced to demonstrate this sale (Exhibit A2, pp44-45).
21. The Applicant also gave evidence of six further contracts that Ausell had been able to conclude on the strength of past performance of exporting Australian cotton to mills in Pakistan. These six contracts are dated 6, 8, 14, and 16 September 2005 and relate to the sale to buyers in Pakistan of approximately 1540 bales of cotton in total (Exhibit A5). The cotton was to be delivered to the various buyers in May 2006.
22. The Applicant accepted that Ausell does not have a separate office in Australia and indicates that it uses the office of his accountant, Mr Singh. He also told me that Ausell is not listed in the telephone directory, does not employ anyone at present, and does not pay him or his brothers a salary.
23. The Applicant also accepted that he had spent only 38 days in Australia and had a large business in Pakistan. In this regard, the Applicant told me that, as his business in Pakistan related to textiles, he was able to promote the business of Ausell in the normal course of his business in Pakistan. He also told me that he worked about 48 hours per week on his business in Pakistan and that he estimated that he spent approximately 4 or 5 hours a week on Ausell. The Applicant further said that it was helpful to be close to the buyers in Pakistan.
24. The Applicant further accepted that there was no formal business plan for Ausell. He said, however, that any business plan would be very simple in that Ausell was a trading company that would initially trade in cotton and then trade in other Australian goods. He also indicated that he and his brothers had extensive business experience and, through their interests in Pakistan, had business links in the region and in Hong Kong and Japan.
25. The Applicant gave evidence that it was his intention to maintain his holding in the business in Pakistan, which he could run from Australia, but that he intended to develop Ausell into a sizable business and that he and his family would relocate from Pakistan to Australia to live. He told me that he had not purchased any real estate or other fixed assets in Australia as Ausell had to grow but that he would purchase real estate and other assets in due course.
26. As to whether he had demonstrated a genuine intention to establish and continue the business of Ausell, the Applicant told me that there had been a continuous effort on his part, although accepted that it was not necessarily a documented effort. In this regard, he said that he had met with many people in Australia concerning Ausell, had succeeded in exporting cotton from Australia and continued to make decisions for Ausell. He also said that, as indicated earlier, he and his two brothers, whilst in Pakistan, would discuss Ausell and promote the business interests of Ausell in the normal course of their business in Pakistan. The Applicant told me that the primary purpose of promoting Ausell was to deal with the buyers, keep talking to the suppliers and, in that manner, gain the trust of the buyers so that Ausell could become a viable and trustworthy supplier. He said that his business interests in Pakistan made Ausell more acceptable and that had he not had these interests Ausell may not have gotten through to some of the buyers. The Applicant further said that he and his brothers were businessmen and not bureaucratic in the sense that they did not document every activity undertaken.
27. The Applicant conceded that, prior to the cancellation of his visa, the number of exports by Ausell was not significant. The Applicant told me that there were a number of reasons for this. Firstly, there were a number of deaths in his family, including that of his mother on 13 March 2001 and his brother on 2 September 2001. In this regard, the Applicant told me that the repercussions of the family tragedies required him to spend more time with his family. He told me that his father later remarried and that created a number of issues in which he became involved. This had an impact on the time he was able to spend in Australia. Secondly, the Applicant said that the events of 9 September 2001 caused considerable turmoil in Pakistan and that, as a result, he was required to direct his attention to his business interests in Pakistan so as to save his international contacts and maintain the activity levels of those businesses. Thirdly, the Applicant told me that there was a drought in Australia. As a consequence, not only were the stocks of cotton that Australian farmers produced low, but that the price of the cotton that was available for sale was high. In this respect, the Applicant said that whilst he was willing to incur a small loss in order to promote Ausell and establish credentials, the price of the cotton, due to the low quantities available, made trading in cotton uncompetitive. In answer to questions from me, he said that the drought in Australia had been continuing for a number of years. I note that the Respondent did not suggest that the Applicant was incorrect in this statement. Fourthly, the Applicant told me that cotton is a seasonal commodity and that Australians sell cotton in advance, and that he, possibly, had missed the timing of being able to source the cotton. In this regard, he said that he was waiting for the harvest of the cotton, but that he was now doing things faster and "getting into the slot" of his buyer so he could then be the shipper of the cotton.
STATUTORY FRAMEWORK
28. Section 134 of the Act confers a discretionary power to cancel a business visa. In this regard, s. 134(1) of the Act provides:
“(1) Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment-linked visa or a family member’s visa), by written notice given to its holder, if the Minister is satisfied that its holder:
(a) has not obtained a substantial ownership interest in an eligible business in Australia; or
(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or
(c) does not intend to continue to:
(i) hold a substantial ownership interest in; and
(ii) utilise his or her skills in actively participating at a senior level in the day-to-day management of;
an eligible business in Australia.”
29. If the discretion to cancel the visa arises under s. 134(1) of the Act, then s. 134(2) of the Act provides that:
“(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
intends to continue to make such genuine efforts.”
30. In determining whether a person has made a “genuine effort” within the meaning of s. 134(2) of the Act, s. 134(3) of the Act states:
“(3) Without limiting the generality of matters that the Minister may take into account in determining whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account any or all of the following matters:
(a) business proposals that the person has developed;
(b) the existence of partners or joint venturers for the business proposals;
(c) research that the person has undertaken into the conduct of an eligible business in Australia;
(d) the period or periods during which the person has been present in Australia;
(e) the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;
(f) the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person;
(g) business activity that is, or has been, undertaken by the person;
(h) whether the person has failed to comply with a notice under section 137;
(i) if the person no longer holds a substantial ownership interest in a particular business or no longer utilises his or her skills in actively participating at a senior level of a day-to-day management of a business:
(i) the length of time that the person held the ownership interest or participated in the management (as the case requires); and
the reasons why the person no longer holds the interest or participates in the management (as the case requires).”
31. Thus the statutory framework requires the Tribunal to consider whether the Applicant has satisfied the requirements of s. 134(1) of the Act or is making a “genuine effort” to do so within the meaning of s. 134(2) of the Act. Even if neither is satisfied there remains a residual discretion not to cancel a visa if the circumstances warrant: see Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579 at [53].
32. Further, whilst the Tribunal is required to consider the position at the date of the cancellation of the visa, the Tribunal is also entitled to consider 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: see Kok at [21]; Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77 at [10]; and Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703 at [24]. This is of some relevance in this matter due to the additional shipment of the cotton in April 2005 and the further six contracts in September 2005 for the sale of cotton. Those transactions are relevant, but only to the extent that they assist in the evaluation of the relevant intention and actions of the Applicant at the date of the cancellation of the visa.
Is Ausell a business?
33. 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 [20].
34. Further, as was stated in Puzey v Commissioner of Taxation [2003] FCAFC 197 at [46]-[48]:
"The question whether a person is carrying on a business is a conclusion to be drawn from all relevant facts and circumstances. There are some relevant propositions which can, however, be stated. First, as was said by Barwick CJ, in Fairway Estates Pty Ltd v Federal Commissioner of Taxation 70 ATC 4061 at 4069 and it is self-evident, every business must have a first transaction. And there may be a business, even if that business is small in scope: cf Thomas v Federal Commissioner of Taxation (1972-3) 46 ALJR 397 at 401 with Hope v Bathurst City Council (1980) 144 CLR 1 at 10. A person may carry on a business, notwithstanding that the person had some other activity, such as full time employment. It is not necessary in concluding that a business is carried on that the acts to be undertaken are acts of the person seeking to establish he or she is carrying on a business. So a person may appoint another to take the steps which constitute the business activity: Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307 at 319 and, at least if the facts in Commissioner of Taxation v Lau at 218 involved a business, that case is another example.
It will be relevant in deciding whether a business is carried on that there is some repetition of acts and that the activities in question have "something of a permanent character"; Hope per Mason J at 8. What is required is that activities be engaged upon "on a continuous and repetitive basis"; Hope ibid at 9. However, perhaps not too much attention should be given to the concept of repetition where the activity is one, such 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 the profit motive (although a non profit company may still carry on a business), acting in a business like way, (although many businesses may be found which operate in a non-business like way), the keeping of books of account and records, (although the fact that there are none will not necessitate the conclusion that a business is not carried on) and repetition (although a fixed term project may still be a business)."
35. It was contended by counsel for the Respondent that Ausell was not a "business" within the meaning of s. 134 of the Act. I disagree, although it is not without some hesitation that I reach this conclusion.
36. As indicated above, the evidence of the Applicant was that that, prior to the cancellation of his visa, he had negotiated, on behalf of Ausell, four contracts for the purchase of Australian cotton and had negotiated three sales and shipments of the cotton to purchasers in Pakistan. In my view this is evidence of some continuity and repetition. There has also been repetition of activity in the nature of promotion of Ausell whilst in Pakistan and in Australia as well as the development of links with suppliers in Australia: see Hindrodjojo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 724 at [23].
37. I also accept that Ausell is being carried on with a profit motive, albeit minimal at present, and that the Applicant has acted in a business-like manner notwithstanding that there is no separate business address: see Hindrodjojo at [23]. In this regard, I accept the Applicant's evidence that whilst the profit was minimal at this stage, the reason for this was to establish Ausell as a reliable supplier and to create a client base. The requisite activities have been undertaken, however, with a view to ultimately making a profit.
38. In this regard, it should also be noted that whilst Ausell has only been involved in a limited number of transactions, every business must have its first transaction: see Puzey at [46]. Profits are, of course, often minimal at the commencement of a new business.
39. It should also be noted, as was stated in Lau at [29], that:
“Both the legislation and the policy manual make plain that commercial realities are to be taken into account. Many genuine business attempts will fail despite the best efforts of participants. Furthermore, export activity . . . involve(s) considerable lead-time in developing markets and in securing reliable suppliers and attractive prices.”
40. This, to some extent, also reflects the position in this matter. Commercial realities must be taken into account and time spent developing markets ought to be recognised. In this regard, as indicated above, it was the Applicant's evidence, which I accept, that he had visited various cotton factories and warehouses in Queensland and Sydney in relation to the purchase of cotton. He had, in addition, spent some time promoting the activities of Ausell as a reliable trader of cotton. Furthermore, it was the Applicant's evidence, which was not challenged, that he experienced difficulties with the supply of cotton due to the drought conditions experienced in Australia and due to the nature of the industry in securing sales of cotton before its production. These matters had an impact on securing reliable suppliers at competitive prices and in developing appropriate markets. They would also, in my view, have an impact on initial profits.
Is Ausell an eligible business?
41. The definition of “eligible business” within the meaning of s. 134(1) of the Act is provided for in s. 134(10) of the Act. Relevantly:
“eligible business means a business that the Minister reasonably believes is resulting or will result in one or more of the following:
(a) the development of business links with the international market;
(b) the creation or maintenance of employment in Australia;
(c) the export of Australian goods or services;
(d) the production of goods or the provision of services that would otherwise be imported into Australia;
(e) the introduction of new or improved technology to Australia;
(f) an increase in commercial activity and competitiveness within sectors of the Australian economy.”
42. Thus, a business must meet at least one of the criteria within the definition of s. 134(10) of the Act in order to be classified as an “eligible business” within the meaning of s. 134(1) of the Act.
43. In this regard, it is my view that Ausell meets the definition of what is an "eligible business" in that it is a business which has resulted, or, importantly, "will result", in the export of Australian goods. The evidence is clear that prior to the date of cancellation Ausell has exported cotton. Events subsequent to the date of cancellation of the visa demonstrate that Ausell has exported cotton or has the ability to export cotton.
Does the Applicant have a substantial ownership interest in Ausell?
44. The question of what is a substantial “ownership interest” of an eligible business is one of fact and degree: see Wong and Minister for Immigration, Multicultural and Indigenous Affairs [2002] AATA 54.
45. Further, by s. 134(10) of the Act, an “ownership interest” in relation to a business is defined to mean:
“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.”
46. As indicated above, it was the Applicant’s evidence that he holds a one-third interest in Ausell. I accept that evidence and find that this amounts to a substantial “ownership interest". This was conceded by counsel for the Respondent at the hearing.
47. I am, accordingly, satisfied that Ausell is an “eligible business” as required by s. 134(1) of the Act and that the Applicant has obtained a substantial ownership interest in that business.
48. I am, therefore, of the view that the power to cancel the Applicant's visa did not arise under s. 134(1)(a) of the Act.
Was the Applicant "not utilising his . . . skills in actively participating at a senior level in the day-to-day management" of the business?
49. By section 134(1)(b) of the Act the visa may be cancelled if the Applicant is not utilising his skills in actively participating at a senior level in the day-to-day management of the business.
50. It is noted that it is not a requirement for the holder of a visa to demonstrate that a set number of days have been expended on the activity of the business in order to demonstrate participation at a senior level: see Lau at [32].
51. Further, the day-to-day management of a business may involve research, the securing of suppliers and orders, and the arrangement of shipping: see Lau at [33]. It may include "ideas and planning": see also Lau at [33].
52. There is some issue as to how much of the activities undertaken on the behalf of the business must take place within Australia: see, for example, Huang and Minister for Immigration and Multicultural Affairs [2002] AATA 656 at [12]; Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299 at [12]; Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 at [31]; cf Jo at [36]. It appears that it is envisioned that, at the very least, some activities may take place overseas: see also Budiman and Minister for Immigration and Multicultural Affairs [2006] AATA 647 at [36].
52. The evidence of the Applicant, indicated above, is that he and his two brothers were the main decision-makers for Ausell. In fact, the documentary evidence before me would appear to indicate that the Applicant was the main decision-maker, at least in relation to the purchase of cotton in June 2004 and the arrangement of the sale and three shipments of the cotton prior to the cancellation of his visa. Prior to this activity, the main involvement of the Applicant was to attempt to secure suppliers and develop a client base. Much of this activity is, by its very nature, intangible, but essential to the success of a business. Some of these activities took place whilst the Applicant was in Australia; some took place whilst the Applicant was in Pakistan.
53. In my view, in all of the circumstances, I am not satisfied that as at the date of cancellation of the visa the Applicant was not utilising his skills in actively participating at a senior level in the day-to-day management of that business within the meaning of s. 134(1)(b) of the Act.
54. I am, therefore, of the view that the power to cancel the Applicant's visa did not arise under s. 134(1)(b) of the Act.
Future Intention
55. Finally, I find that s. 134(1)(c) has no application to the circumstances of this matter. There is no evidence before me to suggest that the Applicant does not intend to continue to hold a substantial ownership interest in an eligible business and utilise his skills in actively participating at a senior level in the day-to-day management of an eligible business. Indeed, the Applicant’s evidence, which I accept, is to the contrary.
56. Accordingly, I am satisfied that the discretion to cancel the Applicant’s visa pursuant to s. 134(1) of the Act does not arise.
Genuine Effort
57. Even if I had found that one or more of the requirements of s. 134(1) of the Act were satisfied, so as to enliven my discretion to cancel the Applicant's visa, I would have found that s. 134(2) of the Act operated to prevent the exercise of that discretion in the present case. In that regard, it is necessary to consider whether the Applicant has made a “genuine effort” to obtain a substantial ownership interest in an eligible business in Australia, utilise his 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 as required by s. 134(2) of the Act.
58. Assistance can be derived from the Migration Series Instruction 133 in relation to whether a person has made a “genuine effort” within the meaning of s. 134(2) of the Act. Migration Series Instruction 133, paragraph 4.5.1 relevantly provides:
“. . . Decision makers may take account of these notes to guide them in interpretation. . .
a.business proposal which is considered genuine, realistic and achievable;
b.formal contract with partners or joint venturers;
c.written evidence of detailed consultations with at least three business advisers (accountant, lawyer, bank/financial institution, State/Territory government business development office, Austrade, business/trade association);
d.physical presence in Australia for more than six months since first arrival as a Business Skills migrant;
e.transferred to, and retained in, Australia at least 50% of the funds indicated as available for transfer within two years . . .
f.minimum A$100,000 or 10% ownership previously held by the person. If the person is no longer in business, the reasons for the loss of ownership are also relevant.
g.minimum A$100,000 business activity as indicated by turnover. This may include other business activity not considered “eligible business” but cannot include passive investment, eg purchase of shares.
h.failure to comply with a notice for information under s. 137, ie mandatory monitoring of Australian address and return of survey forms.”
59. Further, Migration Series Instruction 133, paragraph 4.5.2 states that:
“While failure to meet one or more of these indications may 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.”
60. In this regard, it was submitted by counsel for the Respondent that there was no evidence of any business proposals, no proper evidence of formal contracts, save for those sought to be tendered at the hearing which related to transactions which were to occur in the future, and no evidence of any research conducted by the Applicant. Counsel for the Respondent also submitted that the limited presence of the Applicant in Australia was indicative of his lack of genuine effort. Counsel also submitted that there was no coherent or tangible evidence that the four or five hours a week that the Applicant said he said he devoted to Ausell was in fact spent in the development of Australian business activity. Whilst there is some force in these submissions they overlook the oral testimony of the Applicant.
61. As to the creation of the business plan, for example, it was accepted by the Applicant that no formal business plan had been created. As against this, however, it was the Applicant's evidence, which I accept, that any such business plan would have been very simple. In any event, steps had been undertaken to realise the implementation of an overall plan such as, for example, meeting and sourcing potential suppliers and the development of a client base. The Applicant has successfully exported cotton prior to the cancellation of his visa and post the date of cancellation. To a large extent it would appear that he, and his brothers, have relied on their extensive business experience in exploring the potential business opportunities and in undertaking these ventures. That, however, does not mean the efforts were not "genuine" in the relevant sense.
62. The documentary evidence as to formal contracts and written evidence of detailed consultations is not as extensive as it could have been. There are, however, contracts for the purchase of cotton and for the sale and shipment of cotton. An accountant has been appointed and there is evidence of communications with banking institutions. There is also some evidence that the Applicant's brother met with the Manager of the International Trade Centre in Perth (see T-19, p151) on behalf of Ausell.
63. The limited presence of the Applicant in Australia was accepted. This, in part, was explained on the family circumstances following the deaths of the Applicant's mother and brother. Whilst they died in 2001, it was the Applicant's evidence that the deaths, particularly that of his mother, had repercussions in relation to his father. It would appear also that the events of 9 September 2001 required the Applicant to devote energies to maintaining the international contacts of his business in Pakistan. In my view, a combination of these matters do not go so far as to explain such a limited presence by the Applicant in Australia. As against this, however, I accept the evidence of the Applicant that it was to an extent to the benefit of Ausell that he remained in Pakistan and near potential buyers.
64. As to the value of assets transferred to Australia, initially $AU50,000 was paid for the shares of Ausell. The Applicant and his two brothers each took a one-third share-holding. In or about June/July 2004 an additional $US76,500 was deposited into Ausell's bank account. Prior to the date of cancellation of the visa Ausell was able to purchase cotton to the value of approximately $US176,000, or approximately $AU240,000. It would appear from this that the Applicant, and his two brothers, were in a position to transfer additional funds to the business as and when required.
65. As to the business turnover of $100,000 as indicated by paragraph 4.5.1(g), as already noted, Ausell is currently a small business. It would appear that as at the date of cancellation of the Applicant's visa cotton worth more than $100,000 had been purchased by Ausell. Revenue from the sale of this cotton was not, however, received by Ausell until after the 200/2004 financial year.
66. In any event, as also indicated above, each new business must have its first sale and many genuine businesses fail. It should also be noted that this factor, of itself, is not determinative of the issue of “genuine efforts”. Moreover, in some cases, this factor has been held to be irrelevant: see Kok at [46].
67. Finally, there is no suggestion that there has been the failure to comply with a notice under s. 137 of the Act as set out in paragraph 4.5.1(h).
68. It is also to be noted that the Migration Series Instruction 133 are a guide only and are not binding on the Tribunal: see Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299 at [8].
69. Further, as stated in Kok at [22]:
“. . . no weight should be given to the guidelines in MSI133 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). 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.”
70. The efforts, of course, must be those of the relevant visa holder: see Kok at [22]. I find that the efforts expended are those of the Applicant.
71. In relation to the efforts made by the Applicant, the evidence is clear that he has sourced potential suppliers of Australian cotton and has been able to secure buyers of the cotton in Pakistan. He has given evidence, which I accept, that he has utilised his existing business connections in Pakistan to promote Ausell. He is a one-third owner of the shares in Ausell and, on the evidence before me, would appear to be the driving force behind the current activities of Ausell.
72. The Applicant's efforts were to some extent impacted upon by his family circumstances. Importantly, his efforts, in my view, were affected by both the nature of selling cotton in advance of its production and the drought conditions that existed in Australia at the relevant time which, as indicated above, was not challenged by the Respondent. Prior to the date of cancellation of the Applicant's visa Ausell exported cotton on three occasions. The Applicant, on behalf of Ausell, has exported cotton after the date of cancellation of his visa. Further contracts for the export of cotton were on foot. As to the exports which occurred after the date of cancellation of the Applicant's visa they are, in my view, indicative of his intentions at the time of cancellation.
73. In my view, the efforts of the Applicant are not purely superficial or token. It is also my view that, in all the circumstances of this matter, the Applicant has made the requisite “genuine effort” within the meaning of s. 134(2) of the Act.
74. Accordingly, on this alternate basis, it is my view that the visa should not be cancelled.
75. It is unnecessary in the circumstances to consider whether any residual discretion not to cancel the Applicant's visa ought to be exercised.
DECISION
76. For the above reasons, the Tribunal sets aside the decision under review dated 30 September 2004 and substitutes the decision that the Applicant’s Subclass 127 Business Skills visa and the subsidiary visas should not be cancelled.
I certify that the seventy six (76) preceding paragraphs are a true copy of the reasons for the decision herein of Ms LR Tovey, Member
Signed: .....................(Sgd. Ms R Riberi).........................
AssociateDate/s of Hearing 12 October 2005
Written Submissions 26 October 2005
Date of Decision 22 December 2006
Representative for the Applicant Mr E CarloseRepresentative for the Respondent Mr A Gerrard
Australian Government Solicitor
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