Smith and Minister for Immigration and Multicultural and Indigenous Affairs
[2005] AATA 493
•30 May 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 493
ADMINISTRATIVE APPEALS TRIBUNAL )
) Nos. N2003/1620
GENERAL ADMINISTRATIVE DIVISION ) N2003/1621 Re MARK ALLAN SMITH
JUSTINE SMITHApplicants
And
MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Senior Member M D Allen Date30 May 2005
PlaceSydney
Decision The decision under review is affirmed.
(Sgd) M D Allen
..............................................Senior Member
CATCHWORDS
MIGRATION – cancellation of Applicant’s business visa and secondary visa held by Applicant’s daughter – whether Applicant has a substantial interest in the business or has made a genuine effort to obtain a substantial interest – whether cancellation of secondary visa is likely to cause extreme hardship – decisions under review affirmed.
Migration Act 1958 - section 134
Re Wong and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 54
Re Huang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656
Re Tang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 997
Re Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178
Green v R (1971) 126 CLR 28
Kim v Minister for Immigration, Multicultural and Indigenous Affairs (2004) 38 AAR 304
Re Hsu and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 620REASONS FOR DECISION
30 May 2005 Senior Member M D Allen 1. On 14 November 2003 the Tribunal granted an extension of time to both Applicants in which to lodge an application for review of decisions by the Respondent cancelling in the case of Mr Smith a business skills visa and in the case of Ms Smith a family member visa dependent upon Mr Smith’s visa.
2. The decisions to cancel the said visas were made on 4 September 2003 and the decision conveyed to the Applicants by letter dated that day. As was pointed out by the Tribunal in Re Wong and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 54, in cases of cancellation of business visas the Tribunal must consider whether the decision to cancel was the correct or preferable decision at the time of the said cancellation. That does not mean however, that later events cannot be examined to ascertain what light they may throw upon circumstances at the time of cancellation.
3. Subsections 134 (4) and (5) of the Migration Act 1958 provide, in effect, that if Mr Smith’s business skills visa is cancelled, Ms Smith’s visa, depending as it does upon the issue of a visa to Mr Smith, must also be cancelled unless cancellation of her visa would result in extreme hardship to her.
4. The criteria for the cancellation of the business skills visa as set out in section 134 of the Migration Act 1958 which reads inter alia:
“(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 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:
…
(10) In this section:
…
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.
…
family member's visa means a business visa held by a person:
(a) who is or was a member of the family unit of another person who held a business visa; and
(b) who would not have held the business visa if he or she had never been a member of the family unit of the other person.
…
ownership interest, in relation to a business, means an interest in the business as:
(a) a shareholder in a company that carries on the business; or
(b) a partner in a partnership that carries on the business; or
(c) the sole proprietor of the business;
including such an interest held indirectly through one or more interposed companies, partnerships or trusts.”
5. When this matter came on for hearing before me in Sydney on 17 May 2005 there was no appearance by or on behalf of the Applicants, however a statement and submissions had been received. The documents before the Tribunal were therefore:
T1–T14
the documents prepared for the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
A1
Statement by Mark Allan Smith
Undated
A2
Bundle of documents tendered by Mark Allan Smith
A3
Submission by Mark Allan Smith received
16 May 2005
R1
Respondent’s Statement of Facts and Contentions dated
3 May 2005
6. The grounds relied upon by the Respondent for cancelling Mr Smith’s visa were that he had not complied with the provisions of subsection 134 (1) and had not made a genuine effort to comply with those provisions as required by subsection 134 (2) of the Migration Act 1958.
7. Document T6 is an extract from the application Mr Smith made for a business skills visa. In that document he states that he and his spouse intend to bring to Australia the sum of $A600,000.00 and will reside in New South Wales.
8. In fact, since the granting of his visa, Mr Smith has spent only four days in Australia and continues to conduct his business affairs from South Africa.
9. In his statement Mr Smith says:
“At present, I am operating in Sydney and I have deliberately held back from opening up in the other centres until such time as I am satisfied that all of the hardware and software requirements, specific to Australia have been overcome. I anticipate being able to market in the other centres from about June 2004.”
(From markings on the documents it would appear that this document was received by the Tribunal on 20 April 2004 by facsimile.)
10. On 4 June 2003 Mr Smith completed a form entitled “Survey of Business Migrants – Migrant class and resident class” which form is required to be completed by the holders of a business skills visa 24 months after the granting of the said visa. In that survey form Mr Smith stated:
I.That he had a residential address at 4 Glencairn Avenue, Indooroopilly, Queensland; and
II.he had transferred to Australia after migration funds of $A100,000.00 and capital equipment of $A150,000.00;
III.that he was engaged in business trading as “VT Valutronics” which had a business address at Unit 3/36 Windorah Street, Stafford City, Queensland, which business was engaged in “selling of software and electronic devices to the manned guarding industry such as Chubb Group 4, Securitas, Tempo Services”;
IV.that he worked 18 hours per week in the business;
V.he owned 10 per cent of the business;
VI.the total annual income of the business was $A61,802.00.
11. In Exhibit A1 Mr Smith said inter alia:
“7. I remained in that capacity until 1995 at which time I left to form my own company which I called “Interconnective Solutions Ltd”. The business operates telephony and security services.
8. I was the CEO of the company. In 1996, I listed the company on the Johannesburg Stock Exchange in the Venture Capital Sector.
9.Today the company turns over in excess of R20 million dollars (AUD$5 million) it employs 43 people.
10. Interconnective, though its various subsidiaries has representative offices in Botswana, Kenya, Portugal and the United Kingdom.
…
12. Amongst the various subsidiaries was the Valutronics corporate entity which was the provider of security services. The company produced, and continues to produce hardware and software for Man Guarding Sectors.
13. During 1997 I decided to investigate Australia as a potential market for Valu Tronics. I therefore visited Australia in order to conduct a full market research. I paid for my trip out of my own pocket and spent close to 3 weeks in the country. I visited Sydney, Perth, Brisbane, Melbourne and Adelaide. I had conferences with various security firms. I also located a potential agent to represent the product.
…
19.In relation to software, my Sydney office would send me almost daily requests in relation to alterations and additions as well as problem solving.
20. The contact is either with me or my technical team, which consists of 8 experts. If contact is not made with me directly, I am made aware of the most recent requests by the appropriate member of my team in South Africa. Nothing of a material nature can take place in relation to the hardware or software without my direct input.
21. At present, I am operating in Sydney and I have deliberately held back from opening up in the other centres until such time as I am satisfied that all of the hardware and software requirements, specific to Australia have been overcome. I anticipate being able to market in the other centres from about June 2004.
22. In addition to my technical contact with my other business in Australia, I also maintain at least weekly contact by telephone, email or fax in relation to other commercial matters. This will include new markets, adaption of existing products to new markets, cash flow, expenses, amongst other normal day-to-day business issues.”
12. Contained in the material in Exhibit A2 is a return to the Australian Securities and Investments Commission, being the 2002 annual return of the company VM Australia Pty Ltd. That return evidences that as at 31 August 2002 VM Australia Pty Ltd had issued 100 shares of $1 each. 80 of the shares were held by Interconnective Sol Ltd, a company registered in South Africa.
13. A balance sheet for VM Australia Pty Ltd as at 30 June 2002 evidences that as at that date the company had a net deficit in its accounts of $58,799.00 compared to a deficit of $56,948.00 for the year ending 30 June 2001.
14. Messrs David Leddy & Associates Pty Ltd, Certified Practising Accountants, prepared the 2003 financial report and income tax return for VM Australia Pty Ltd.
15. I note that the correspondence from the accountants was directed to the company at PO Box 1382, Stafford City, Qld 4053. In other words, although Mr Smith in his statement refers to his office in Sydney as at 23 March 2004, as of the date of the accountant’s letter, the office of VM Australia Pty Ltd was still in Queensland, not Sydney.
16. The Profit and Loss Account accompanying the accountant’s letter shows that in the 2003 financial year VM Australia Pty Ltd made an operating profit of $67,069.00.
17. Of the expenses incurred by the company only $43,454.00 was outlaid for wages.
18. What is quite clear from the documents supplied to the Tribunal is that as at the date of cancellation of his visa Mr Smith had not obtained a substantial interest in an eligible business in Australia. A South African public company in which Mr Smith apparently has a substantial interest has an 80 per cent interest in the Australian company.
19. Neither am I satisfied that Mr Smith has utilised his skills in the day-to-day management of that business. To start with no explanation is given as to why reference is made to a Sydney office when the company clearly, as at 23 March 2004 the latest, was operating out of Queensland.
20. Further, I am not satisfied as to the accuracy of the male Applicant’s statement. In his request for a visa he states that he will transfer to Australia funds to the value of $A600,000.00 and will reside at Indooroopilly in Queensland. To date neither event has occurred.
21. On the evidence, before me VM Australia Pty Ltd can be regarded as an eligible business as that term is defined in ss 134 (10) Migration Act 1958, in that there existed a reasonable belief as at the time of cancellation that that business would introduce new or improved technology to Australia and that it would increase competitiveness within sectors of the Australian economy.
22. The definition of eligible business refers to a “reasonable belief” which I regard as a term in plain English words meaning a belief neither foolish nor fantastic but one based upon reasonable grounds (cf Green v R (1971) 126 CLR 28).
23. Although the business may be regarded as an eligible one, I am not satisfied that Mr Smith had obtained a substantial interest in that business. Whereas “ownership interest” is defined in ss 134 (10) as “including such an interest held indirectly through one or more interposed companies…”, in this matter the shares in the Australian company are held by a publicly listed South African company. Although no evidence was led on the specific point, I am prepared to accept that Mr Smith holds a controlling interest in the South African company. Nevertheless, although Mr Smith is a director of the Australian company it is the South African public company that holds the shares and it is reasonable to assume that Mr Smith would have acted at the direction of that company.
24. In any event, I am further satisfied that Mr Smith is not utilising his skills in actively participating in the day to day management of the Australian business.
25. On his evidence, Mr Smith was concerned with the management of the South African business and had visited Australia for four days only since the grant of his visa. As was pointed out in Re Tang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 997 “the Act is intended to benefit business owners who settle here (in Australia) and actively manage that business (their Australian business)”. Further, as was pointed out in Re Huang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656 “not only must the eligible business operate in Australia to comply with the Act, the visa holder must participate at a senior level in the day-to-day management of the Australian business in Australia, albeit with trips overseas from time to time”. As I myself pointed out in Re Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 it is the business activities of an applicant in Australia that must be examined, not his business activities whilst he is residing overseas.
26. In his submissions to the Tribunal Mr Smith stressed that he had made a “genuine effort”
a)to obtain a substantial ownership interest in an eligible business in Australia and
b)to utilise his skills in actively participating at a senior level in the day to day management of that business
and that he intended to continue to make such a genuine effort.
27. Subsection 134 (3) provides a non exhaustive list of matters that a decision-maker may take into account in determining whether a person has made a genuine effort as referred to in ss 134 (2) of the Migration Act 1958. On the material before me I find
I.there is no evidence of a definite business proposal formulated by Mr Smith or the South African or Australian companies;
II.although there are Australian directors of VM Australia Pty Ltd it is clear that that company is effectively controlled by the South African company;
III.since the grant of his visa Mr Smith has visited Australia for four days only;
IV.Mr Smith primarily conducts his business affairs from South Africa.
28. What is quite clear from the material before me is that at no time has Mr Smith been genuine in utilising his skills in actively participating at a senior level in the day to day management of an eligible business in Australia. He is a South African business man who has established a subsidiary in Australia to sell products manufactured in South Africa. The control of the business remains in South Africa. The Australian company has a capital of 100 $1 shares only and in the financial years ended 30 June 2001 and 30 June 2002 operated at a loss. Turnover was low and on the 2003 figures, wages paid to Australians was minimal. Even for the year ended 30 June 2003, when accumulated losses were taken into account, the Australian company made a net loss. And as stated above, contrary to Mr Smith’s statement in his application for a visa, at no time has he resided in Australia. I find that he has failed to comply with paragraph 134 (1)(b) of the Migration Act 1958 nor, at the time of the cancellation of his visa, had he made a genuine effort to comply with the provisions of the Migration Act 1958.
29. As the decision to cancel Mr Smith’s visa will be confirmed, Ms Smith’s visa remains cancelled unless I am satisfied that to cancel her visa would result in extreme hardship to her.
30. The term “extreme hardship” was comprehensively explained in Re Hsu and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 620. At paragraph 92, Deputy President Block concluded “the term extreme must be given a meaning and so as to connote something more than ordinary hardship”.
31. No separate representation was obtained by Ms Smith. In his letter (undated) accompanying the documents which became Exhibit A2 Mr Smith states:
“My daughter who is currently 15 years and 9 months would also like to study at a University in Australia (for which I would be willing to pay). I believe that it would be a hardship if her visa were cancelled because the Minister cancels mine.
My daughter Justine would like to stay as a resident on a campus and I believe it is not safe for her to do so at a South African residence campus and thus I would like her to stay at a university in Australia (for which I would pay).
The cancellation of her visa simply because mine is cancelled would cause her undue hardship.”
32. I gather from that statement Ms Smith still resides in South Africa. No doubt at a later date she could apply for a student visa but currently, although I am conscious of the dangers which exist in post apartheid South Africa, particularly in Johannesburg, I cannot see how the cancellation of her current visa would cause her extreme hardship and in the terms discussed in Re Hsu (supra). From the statements made, I draw the inference that Ms Smith is still residing with her parents in South Africa and it is not as if she would have to be removed from Australia or from a course of education which she has commenced.
33. The only other matter to consider is the residual discretion to set aside the cancellation which resides in the Tribunal as the decision-maker as to which see Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304.
34. In this matter I see no factors which would persuade me that any discretion should be invoked in favour of Mr Smith or Ms Smith. As stated above I find that Mr Smith is a South African businessman with business interests in South Africa and elsewhere and in the course of that business he has established a subsidiary in Australia. That is the beginning and end of the matter and I find no evidence of a genuine attempt by the Applicant to relocate his business or to settle in Australia. Apart from a purported compliance with s 134 of the Migration Act 1958, no other considerations have been suggested as to why Mr Smith’s visa should not be cancelled. As stated, Ms Smith is still a student in South Africa and no other reasons apart from those cited above have been put before me as a reason not to cancel her visa.
35. The decisions under review will be affirmed.
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen
Signed: (E.Pope) .....................................................................................
AssociateDate of Hearing 17 May 2005
Date of Decision 30 May 2005
Applicants Self-Represented
Solicitor for the Respondent Mr B Cramer, Blake Dawson Waldron Lawyers.
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