Sutislio and Minister for Immigration, Multicultural and Indigenous Affairs

[2004] AATA 907

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 907

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W2002/280

GENERAL ADMINISTRATIVE  DIVISION		)
Re		ARIFIN SUTISLIO

Applicant

And MINISTER FOR IMMIGRATION, MULTICULTURAL AND INDIGENEOUS AFAIRS

Respondent

DECISION

Tribunal Mr M J Allen, Member

Date27 August 2004

PlacePerth

Decision The decision made on 8 July 2002 by a delegate of the respondent to cancel the subclass 127 Business Skills Visa of the applicant is affirmed.

.............(sgd M J Allen)......................

Member

CATCHWORDS

Immigration – cancellation of business skills visa – applicant has obtained a substantial ownership interest in an eligible business in Australia – applicant has not utilised his skills in actively participating at a senior level in the day to day management of that eligible business – the applicant has made genuine efforts to acquire the requisite ownership interest in an eligible business but has not made genuine efforts to be involved in the management of it to the required degree – residual discretion to not cancel the visa not excercised in applicant’s favour - cancellation decision affirmed.

Migration Act 1958 Sections 134

Migration Instruction 133

Re Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178

Commissioner for Superannuation vs Scott 71 ALR 408

Hope v Bathurst City Council (1980) 144 CLR 1

Puzey v Commissioner of Taxation [2003] FCAFC 197

Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AAT 283

Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77

Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004]      FCA 31

REASONS FOR DECISION

27 August 2004 Mr M J Allen, Member        

1.      On 8 July 2002 decisions were made to cancel the subclass 127 business skills visas held by the applicant and by his wife and three adult children.  The applicant has applied for review of the decision made in respect of his visa but no applications have been made for review by the other visa holders.

2.      At the hearing of the proceedings the applicant was represented by his solicitor, Mr Chong, and the respondent was represented by Ms Andretich, a solicitor with the Australian Government Solicitor.  The Tribunal received into evidence the documents filed pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 (T1 to T29) and Exhibits A1, A2 and SB1 to SB72 tendered by the applicant, and R1 and R2 tendered by the respondent.  Oral evidence in the proceedings was given by the applicant (with the assistance of an interpreter in the Indonesian language) and by the applicant’s daughter, Ms Yuly Johan (“Ms Johan”).

background

3.      The background to the matter is that the applicant was granted his visa in April 1999 and first entered Australia under the visa on 11 April 1999.  In March 2001 the respondent’s department wrote to the applicant requesting completion of a 24 month survey form and the applicant’s agent returned the form and provided information in May 2001.  In July 2001 a company of which the applicant was a shareholder and director, Delianjaya Pty Ltd (“Delianjaya”) wrote to the department and provided additional information (T20).

4. In February 2002 the department informed the applicant of its intention to cancel his visa and invited the applicant to make submissions regarding the proposed cancellation. Delianjaya responded on behalf of the applicant in March 2002 and in June 2002 the applicant provided additional information. A delegate then made the cancellation decisions referred to in para 1 above on 8 July 2002. The delegate considered that the applicant had failed to satisfy any of the requirements of s 134(1) of the Migration Act 1958 (“the Act”) and had not satisfied all the requirements of s 134(2) of the Act. Consequently the delegate was satisfied that the power to cancel the visa could be exercised and the delegate decided to do so.

the power to cancel the visa

5. A discretionary power to cancel a visa of the kind held by the applicant would arise if the decision-maker is satisfied that the applicant had not satisfied one or more of the three factors set out in s 134(1) of the Act, namely that the visa 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”.

6. In relation to whether or not he has complied with the requirements of s 134(1), I note that in the 24-month survey form that was returned to the department in May 2001 the applicant declared that he had not at that time engaged in business in Australia. The letter from his agent to the department at that time referred, however, to the fact that the applicant had incorporated Delianjaya and was a 60% shareholder in and a director of it. The applicant relies on his involvement in Delianjaya to satisfy the requirements of s 134(1).

7.      Delianjaya was incorporated in April 2001; the applicant, his wife and two of his children being the original directors, and Ms Johan being the company secretary.  At that time the applicant held six of the ten issued $1 shares in Delianjaya with Ms Johan and the applicant’s elder son, Deny, holding two shares each.  For the year ended 30 June 2001 Delianjaya’s financial statements reported only nominal income and expenses, with borrowings of $54,429 represented largely by cash on hand.

8.      In July 2001 Delianjaya purchased a quantity of mandarins in Australia at a price of $26,765 for shipment to Indonesia (T document page 158).  The mandarins were sold by Delianjaya to an Indonesian company, PT Trikumala, for a total price of $27,965 but Delianjaya subsequently credited PT Trikumala with an amount of $2,784 for the return of damaged fruit (SB34).  The applicant said in his oral evidence that he has no ownership or other interest in PT Trikumala and that he had located that company as a purchaser of the mandarins on referral from a business partner.

9.      In Delianjaya’s letter to the department of March 2002 (T20) the applicant informed the department that he was in the process of arranging another shipment of fresh fruit and would provide the documents as soon as possible.  Included in the papers provided was a sales contract dated 8 March 2002 pursuant to which Delianjaya agreed to purchase from an Australian wholesale agent what were described as “New Zealand Royal Gala apples” for shipment from Napier in New Zealand to Jakarta for a total contract value of NZ$42,336.  In his oral evidence the applicant initially said that he knew that the apples were Australian produce because he had been informed of that fact by the agent who supplied them.  When the documents were pointed out to him as showing shipment of the goods from New Zealand to Jakarta the applicant then said that the transaction had never proceeded and that it had been cancelled when he became aware that the apples were not Australian produce.

10.     In June 2002 the applicant provided the department with documentation relating to the purchase by Delianjaya of grapes in Australia for shipment to Indonesia at a contract price of A$46,022 (T document page 308 to 311).  Exhibit SB35 is an invoice for the sale by Delianjaya of the grapes to an Indonesian company named PT Inti Sehat for an amount of $48,013.

11.     The applicant’s oral evidence was that, despite his best efforts to find buyers in Indonesia for Australian fruit, it became apparent that the price of Australian fruit in Indonesia could not compete with fresh fruit supplied from China.  Accordingly, he decided that the export of fruit was not a viable business for Delianjaya to pursue and no further fruit transactions had been undertaken after June 2002.

12.     In the meantime, in March 2002 the applicant informed the department (via T20) that he was then in the process of purchasing an internet café in Fremantle, Western Australia.  The oral evidence of the applicant was that he became aware of the café business as a possible investment at the end of 2001 and that discussions regarding the possible purchase of the café commenced in the first half of February  2002 – when he held discussions with the vendor, a Mr Soekwanto.  According to Exhibit R1 the applicant left Australia on 16 February 2002 and did not return until 11 August 2002.  The applicant said that after his return to Indonesia information concerning the café was gathered from the vendor and real estate agent by Ms Johan and an agreement in principle setting out the basic terms of the agreement between Delianjaya and the vendor was signed by her on behalf of Delianjaya on 26 March 2002 (T documents pages 294 to 302).  The fit out of the café had not been completed at the time and the vendor undertook to arrange that.  An agreement regarding the lease that Delianjaya would take over the café premises (with effect from 15 April 2002) was signed by Ms Johan on behalf of Delianjaya on 10 April 2002 and a formal deed of lease was subsequently executed.  A formal agreement for the sale of the café business between the vendor and Delianjaya was signed by Ms Johan on 26 August 2002 (SB16).  The amount payable by Delianjaya was $125,000 for plant, equipment and goodwill plus an additional amount for stock on hand.  The café opened for business in May 2002 and employed 7 part-time staff.

13.     Although the formal agreement to purchase the business was not executed until August 2002, I am satisfied that an agreement to proceed had been reached prior to that time, including an agreement to enter into a lease of the premises.  Accordingly,  I am satisfied that it is appropriate to conclude that the applicant had acquired an ownership interest by the time of the cancellation decision and that events that occurred after the cancellation in relation to this business can be taken into account because they relate back to actions taken and events that occurred prior to the cancellation.

14.     The applicant said that in March 2002, he agreed with his brother-in-law, Mr Sukiman, that the latter would acquire a 50% interest in Delianjaya and in that month Mr Sukiman became a director of Delianjaya and was issued 10 new shares, being a 50% shareholding.  As a result of that transaction the applicant’s shareholding in Delianjaya was reduced to 30% (6 out of 20 shares) with the combined shareholdings of his son and daughter being reduced to 20%.  The applicant and Ms Johan both gave evidence that Mr Sukiman played no part in the management of Delianjaya’s affairs. 

15.     The financial statements for Delianjaya for the year ended 30 June 2002 show that in that year the company had export sales of $71,205 and income from the café of $6,621.  After deducting the cost of sales the company made a gross profit from trading of $6,555.  The company’s balance sheet shows that the company had issued capital of $20, total assets of $193,926 and interest-bearing liabilities of $202,839 (SB40).  The financial statements of Delianjaya for the year ended 30 June 2003 (SB41) show that the company had export sales of $2,011, café sales of $61,779 and after deducting the cost of the sales made a gross profit from trading of $53,800.  After the deduction of all expenses the company made a net loss before income tax of $17,869.  The company’s balance sheets showed issued capital had remained at $20, total assets were valued at $122,000 and total liabilities (including interest bearing liabilities of $148,368) were $148,855 for a net asset deficit of $26,782.  The interest-bearing liabilities of the company were owed to the applicant.

16.     The applicant’s oral evidence was that the café had a turnover of approximately $600 per week and up to $1,000 per week on occasions.

17. To satisfy the requirements of s 134(1)(a), the applicant must have obtained a substantial ownership in an eligible business in Australia. Section 134(10) relevantly defines an “ownership interest” in relation to a business as meaning an interest in a business as a shareholder in a company that carries on the business. If Delianjaya carries on a business then the applicant’s shareholding in the company will constitute an ownership interest – but the question then arises whether it is a “substantial” ownership interest. The word “substantial” is not defined for the purposes of the Act and it is a matter of fact and degree whether an ownership interest will be substantial or not. It must be an interest that is “real or of substance and not insubstantial or nominal”: ReOng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178, Commissioner for Superannuation vs Scott 71 ALR 408 at 412. Relevant factors will include the value of the shareholding and the underlying business, the percentage of the shares held and the degree of influence and control that the applicant has by virtue of the shareholding. As noted above, the applicant’s shareholding in Delianjaya was originally 60%, with the balance held by close family members but from March 2002 was 30% - with his immediate family members holding another 20% and his brother-in-law the balance. Although the paid up value of the applicant’s shareholding ($6) was small, the applicant’s overall ownership interest in the company was not, in my opinion, insubstantial and was real. It was an interest of a significant percentage in a company that had significant assets and liabilities and that shareholding gave him a substantial stake in the fortunes of the company, apart from the extent of the loans made by him to the company. In my opinion the ownership interest was a substantial one.

18.     The next question to consider is whether Delianjaya carried on a business at all and, if so, whether that business was an eligible one for the purposes of s 134.

19.     The decision of the High Court in Hope v Bathurst City Council (1980) 144 CLR 1 is authority for the propositions that carrying on a business denotes activities for the purpose of profit undertaken on a continuous and repetitive basis, and that a business may be carried on even though it is done in a small way. A Full Court of the Federal court has recently summarised the position (in the context of income tax legislation) as follows in Puzey v Commissioner of Taxation [2003] FCAFC 197 (per Hill and Carr JJ, with French J agreeing):

“46.     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.

47.      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 a 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.

48.      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).”

20.     It is apparent from the evidence outlined above that Delianjaya was established by the applicant with the intention of conducting an export business and completed at least two export transactions of Australian fruit between July 2001 and May 2002.  In the meantime the company had acquired an internet café business and from May 2002 was conducting that business.  The café business was open every day of the week and employed six or seven individuals.  There is no reason to conclude that it was not run with a view to making a profit even though, in its formative phase, it was actually incurring losses.  The company had  the indicia of a business in that it was incorporated, maintained proper books of account, and lodged with the relevant authorities the periodic Business Activity statements that were required.  In my opinion Delianjaya carried on a business prior to and at the time of cancellation of the applicant’s visa.

21.     The next question is whether that business was an eligible business. Section 134(10) of the Act relevantly provides that an “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.”

22. By the time of the cancellation decision the two fruit export transactions that were completed involved substantial sums of money and may well have constituted the outcome referred to in item (c) of the factors identified in s 134(10). In any event, I consider that the café activities have created employment in Australia and at the time of cancellation of the visa that outcome was being achieved and could reasonably be expected to continue to be so. Accordingly, I am satisfied that the business of Delianjaya was an eligible one for the purposes of s 134. It follows that the applicant has satisfied the requirements of s 134(1)(a) and the next question to consider is whether he has also satisfied the requirements of s 134(1)(b), which requires that he utilise his skills in actively participating in a senior level in the day-to-day management of Delianjaya’s eligible business.

23.     In relation to what constitutes active involvement at a senior level in the day-to-day management of a business, two observations can be made.  The first is that day-to-day management of a business does not require daily management.  What is required is continuity and regular activity that is sufficient for the management needs of the specific business: see Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 at [93] and [95], and Re Jo and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 77 at [35]. Secondly, the Act does not require that the senior level day-to-day management of an eligible business must take place only in Australia: see Re Yam at [101] and Re Jo at [25] to [36].

24.     The applicant’s evidence was that up until October 2001 he was fully involved in the ownership and management of a substantial stationery business in Indonesia but in that month he sold the business to other family members and thereafter played no part in it.  In his witness statement filed in the proceedings (A1) the applicant said (at para 24) that he still had “very minor business interests in Indonesia [and that he had] scaled down significantly my business interests in Indonesia”.  In his oral evidence he said that, apart from bank deposits, his only business interest in Indonesia was a 10% shareholding in a family company that had bought vacant land with a view to building houses for sale – but that the development had not proceeded and he played no part in the management of the company.  He said that he had no other business interests in Indonesia and that he spent all his time working on the affairs of Delianjaya.

25.     The applicant said that he lived in southern Sumatra and that he travelled to Java (Jakarta and Surabaya mainly but also other centres) on a very regular basis.  He said that he went to Jakarta perhaps twice a week and to Surabaya perhaps once a week, each trip taking two or three days and that he had been doing this for approximately 18 months.  That evidence was given in October 2003, suggesting that the applicant had been making these trips since approximately March or April of 2002.

26.     The applicant said that the purpose of these visits was to try to find potential purchasers of products that could be exported from Australia.  Initially this had been for fruit products but subsequently had been broadened to other possible products, including flour.  The applicant said that he would spend on average (including considerable travel time) about five hours each day working on the business of Delianjaya.

27.     In the material sent to the department by the respondent’s agent with the 24- month survey form (T document pages 122 to 141) were brochures from various State and Commonwealth government departments and suppliers of meat and dairy products.  The applicant said he obtained these with his daughter’s assistance.  He said that he only got the brochures and had not contacted most of the possible suppliers.  In the material sent to the department by Delianjaya in March 2002 in response to the Notice of Intention to Cancel, (T document pages 178 to 306) there was included a quantity of material downloaded from the internet concerning possible suppliers of food products, a number of documents dealing with the cost of airfreighting goods from Perth to Indonesia and a large number of proforma letters sent to possible suppliers by Delianjaya between August 2001 and February 2002 seeking information about availability and price of various fruit products.  The applicant said in his oral evidence that he had personally had the various conversations referred to at T page 221 regarding freight rates, but he subsequently said that it was Ms Johan that had had the conversations and had reported to him about them.  All the letters were signed by the applicant and he said that some of them had been signed by him in Indonesia.  The letters had been prepared in Perth and brought to Indonesia by a relative for him to sign and then taken back to Australia for posting.

28.     In relation to the activities of the internet café, the applicant said that there was nobody who managed the business on a daily basis.  He made the decisions to employ the people who worked in the café based on recommendations of them from Ms Johan.  The applicant said that Ms Johan oversaw the business although she had a full time job with another employer.  He said that if anything went wrong in the business one of the employees would telephone Ms Johan who would then contact him.  The applicant said that Ms Johan reported to him by telephone on about a weekly basis with information about the takings of the business.  The applicant said that he did not see the annual financial statements for Delianjaya for the year ended June 2003 and was unable to nominate what had been the Company’s total income or total loss for the year.  Likewise, the applicant said that he could not say what was the total capital invested in Delianjaya or how much Mr Sukiman had invested in the company, but he was sure that Mr Sukiman had paid money into the company when he became a shareholder in March 2002.

29.     In her witness statement (A2), Ms Johan said that the applicant made all decisions in relation to Delianjaya and that her role was to take directions from him and carry them out.  She said that the applicant communicated with her by fax or telephone conversations regarding the business of the company.

30.     In her oral evidence Ms Johan said that she held a Bachelor of Science degree and a Masters degree in accounting.  She had been (and was still) working  for two years in an accounting role with a building company on a full time basis.  She said that she had never worked (in the sense of being employed) in the internet café business but she did prepare Business Activity Statements for the Australian Taxation Office and she did simple bookkeeping for the business.  Because her command of the English language is good, Ms Johan said that she assisted her father at times in translating documents or making enquiries on her father’s behalf with various organisations.  She had obtained the information regarding freight rates but she had not been involved in any negotiations regarding a possible investment in property that her father had considered nor had she obtained various brochures on her father’s behalf.  Ms Johan said that it had not been her idea to buy the internet café business.  The vendor had suggested that she raise the subject with her father and she had passed on that suggestion to him.  Ms Johan said that the computer technician who was employed in the café business was her husband and that all the other employees were friends or relatives of the family.  Her father decided how much to pay each employee.  She said that she had looked at the financial information regarding the café and had reported her opinions to her father for his decision about whether to invest in it.  She said that the café basically ran itself with very few decisions to be made.  Her husband deals with the repairs of any computers that have problems but apart from that she prepares the wages for the employees and reports about once a week to her father.  Ms Johan said that the other 50% owner of Delianjaya (Mr Sukiman) lives in Indonesia and to her knowledge does nothing on behalf of the company in Indonesia, nor does he undertake any duties in relation to the café business.

31.     Ms Johan said that she had dealt with the real estate agent, accountants and a lawyer (who is a cousin) in relation to the negotiations and documentation of the internet café purchase and had signed all the relevant documents as a director of Delianjaya.  She had met with Delianjaya’s accountants on a number of occasions (approximately 3 to 5 times each year).  Sometimes her father attended these meetings but he was probably not present on most occasions.

32.     In addition to the above the applicant provided to the department, in March 2002, material that was said to show his involvement in the management of Delianjaya’s affairs.  He also adduced at the hearing documents such as those contained in exhibit SB69 to show his regular contact with Ms Johan in relation to pursuing other business opportunities for Delianjaya.

33.     The first point of interest from these documents is that, according to exhibit SB69 (p 441) Ms Johan first informed the applicant of the internet café opportunity (for a 50% interest) by facsimile on 26 March 2002 – with the café said to be opening in 3 weeks time.  If that document is accurate, and I have no reason to think otherwise, then the applicant’s oral evidence that he had been involved in negotiating the purchase prior to leaving Australia on 16 February 2002 must be incorrect – and suggests he had much less of an involvement in the purchase than he said.

34.     The second point of interest from those documents is that in the information provided to the department in March 2002 the applicant provided material (T pages 247-292) that was said to show that he was “… currently in the process to purchase a land block in Perth to develop housing units …” (T p 178).  Those documents and exhibit SB69 (page 440) show that in November 2001 Ms Johan met with the principals of a company, Richvista Holdings Pty Ltd, and obtained information about a project for the development of housing units in Perth.  The project involved the possibility of Delianjaya investing approximately $345,000 in a company known as Golden Pearl Pty Ltd with a similar amount being invested by Richvista Holdings.  Golden Pearl was incorporated on 30 November 2001 (T documents page 280).

35.     On 29 November 2001 Ms Johan on behalf of Delianjaya signed a Memorandum of Understanding with Richvista Holdings concerning the proposed venture (T documents page 277 to 279).  Delianjaya was granted 60 days to execute a shareholders deed if it decided to proceed with the venture and in the meantime was to pay $20,000 into the trust account of solicitors as a sign of good faith, which was refundable if Delianjaya decided not to proceed.

36.     According to exhibit SB69 (page 440), Ms Johan first informed the applicant of the opportunity by facsimile on 30 November 2001 and sent him some information about it.  In a facsimile of the same day (SB69 p 441) the applicant asked Ms Johan to get details of the project so that she could explain it to him when she got to Indonesia.  According to exhibit R2 (movement records maintained by the respondent’s department) Ms Johan left Australia on 1 December 2001 and returned on 8 January 2002.

37.     The applicant gave oral evidence that he had decided not to proceed with the venture because the investment of about $345,000 was too large.  The applicant said that he had dealt with the other parties with the assistance of Ms Johan but Ms Johan said in her evidence that she had not been involved in negotiations because her father was able to speak to the estate agent involved because he spoke Indonesian.  There is no documentary or oral evidence to indicate whether the $20,000 was ever deposited or when the applicant made the decision to not proceed with the venture.  Given the lack of any evidence that the venture was still under active consideration by March 2002 and the difference between the oral evidence of the applicant and Ms Johan I doubt that the information supplied to the department in that month was entirely accurate.

38.     On the basis of the evidence outlined above I have formed the opinion that the senior management needs of Delianjaya prior to the date of the cancellation decision were not great.  Prior to March 2002, when the decision was made to purchase the café business, Delianjaya was involved in a very small number of transactions involving the export of fruit.  I consider that the applicant was the principal decision-maker in selling the products in Indonesia and in relation to the purchase of the products in Australia – although I am satisfied that he utilised Ms Johan’s English language skills in contacting various parties and making administrative arrangements.  When the decisions were made about purchasing the internet café the applicant was not in Australia and I am satisfied that Ms Johan played more than an administrative role in the evaluation of the opportunity and the negotiation of its terms.  I have no doubt that she consulted her father regularly (because it was his money that was to be used to purchase the business) and I consider it probable that the applicant was the ultimate decision-maker in relation to the purchase.  In the relatively short period the café operated before the cancellation decision was made in July 2002, the main senior management decisions that needed to be made for Delianjaya were to ensure that the fit-out of the café premises was completed satisfactorily and that staff were employed in the business.  Because of his absence from Australia at that time the applicant must have relied on Ms Johan and her husband (who was responsible for the computer equipment of the business) to a considerable degree.  Although I accept the evidence of the applicant and Ms Johan that there was regular contact between them and that it was the applicant who made the final decision about the purchase of the business, I consider that, overall, his involvement in management activities was small.  His involvement in the fruit transactions was greater than his involvement in the day-to-day management of the internet business because there was little he could do in relation to that business from a base in Indonesia.

39.     In the circumstances I am not satisfied, on balance, that the applicant has done enough to justify a conclusion that he was actively involved at a senior level in the day to day management of Delianjaya’s eligible business.  Accordingly, in my opinion, the applicant did not satisfy the requirements of s 134(1)(b) and the power to cancel his visa would arise under that paragraph.  It is not, therefore, necessary for me to consider whether the power to cancel the visa would also arise under s 134(1)(c), which requires the applicant to have, at the date of the cancellation decision, an intention to continue to hold a substantial ownership interest in and to continue to utilise his skills in actively participating in the senior day to day management of an eligible business in Australia. 

could the power to cancel be exercised?

40. The power to cancel the applicant’s visa having arisen because of his failure to satisfy the requirements of s 134(1)(b), the next question to consider is whether the applicant satisfied all of the requirements of s134(2) . If he did then the effect of that subsection is that the power to cancel the visa must not be exercised. Section 134(2) relevantly provides that the visa must not be cancelled if the respondent or the Tribunal is satisfied that its holder has done all of the following:

“(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.”

41.     For the purpose of determining whether a person has made such genuine efforts, s134(3) relevantly provides that any or all of the following matters may be taken into account:

(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 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).”

42.     The respondent’s department has issued policy instructions concerning business visas known as Migration Series Instruction 133 (MSI 133).  Paragraph 4.5.1 of MSI 133 contains notes to guide decision makers in the interpretation of the factors set out in s 134(3).  Although such indications of policy are not binding on the Tribunal, there is good reason why they should be applied in the interest of consistency of decision making: see Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 at 695 and 696 per Davies J. No weight should be given to the notes set out in paragraph 4.5.1 where the note is clearly more restrictive than the terms of the Act itself: see Re Yam at [48] to [51].  An “effort” will be “genuine” in the context of s 134 if there is a level of effort beyond that which is purely superficial or token and an effort will not be considered not genuine merely because it falls short of the examples given in s 134(3): see Re Yam at [53].  I refer below to the various factors identified by s 134(3).

43. In relation to whether the applicant satisfied the requirements of s 134(2)(a), I have already concluded that he did acquire a substantial ownership interest in Delianjaya, a company that carried on an eligible business. Although I consider his efforts regarding the acquisition of the internet café business to have been in some respects secondary to those of Ms Johan, I am satisfied that he made genuine efforts to, and in fact succeeded in, acquiring such an interest and therefore satisfied the requirements of the paragraph.

44.     In relation to the requirements of s 134(2)(b), it is appropriate to consider the applicant’s efforts in terms of the factors set out in s 134(3) and the guidelines to their application in MSI 133.  For factors (a) (b) and (c), MSI 133 refers to proposals that are considered genuine, realistic and achievable; formal contracts with partners or joint venturers; and documentary evidence of consultations with at least three business advisors.   These factors might appear to be more relevant to the issue of genuineness of efforts in relation to the acquisition of an eligible business, but it seems to me that they are applicable also to the issue of involvement in management.  For a company such as Delianjaya, a senior manager would be active in researching and documenting business proposals and consulting business advisors about business practices in Australia.  In this context I note that Ms Johan, as late as 7 March 2002 referred in a facsimile to the applicant that she had been researching the “business-buying process” in Australia (SB69 p 446).

45.     There is no evidence of research, the seeking of advice, or the documentation of the export business idea.  The other ventures considered by the applicant (the café and the property development proposals) had been documented by other people and Delianjaya did utilise the services of Australian accountants and lawyers because of the efforts of Ms Johan.  Her involvement is to be expected, given her qualifications, but it should not mean that the applicant is relieved of the obligation to make such efforts in the management of Delianjaya.

46.     In relation to factor (d), MSI 133 refers to a visa holder being present in Australia for more than six months since his first arrival.  The applicant spent only 50 days in Australia in the relevant period, which is significantly less than the suggested period.  Such prolonged periods of absence from Australia would be of less significance if there was clear evidence of the applicant undertaking activities that were obviously relevant to Delianjaya’s business.  The efforts regarding fruit did not start until about 2 years after the first entry into Australia under the visa – indeed, the applicant acknowledged that he had not taken any steps in the first 2 years.

47.     In relation to factors (e) and (f), MSI 133 refers to the transfer to, and retention in, Australia of at least 50% of the funds that the visa holder indicated were available for transfer in the application for a visa, and an ownership value of at least $100,000 or 10% ownership.  There is nothing in the documentary material filed by the respondent to indicate what amount the applicant said could be transferred to Australia.  However, the applicant said in the 24 month survey form that he had transferred approximately $250,000 to Australia since his first arrival.  The applicant’s oral evidence was that by the time of cancellation he had transferred approximately $600,000 to Australia, approximately $100,000 of which had been used as part payment for a house that had been purchased for the family to live in and a further $100,000 of which had been placed on term deposit.  The remaining $400,000, the applicant said, had been transferred to his daughter’s account, part of which had been used to make the café purchase and the balance had been used for personal expenditure including the purchase of a motor vehicle.  The applicant said that payment for the fruit transactions had been made direct to the supplier from his Indonesian account.  I note that, according to exhibit SB65, in September 2003 term deposits amounted to approximately $69,000 and an account in the name of Ms Johan and the applicant held $34,158 (SB65, p 310).  On that basis a total of about $600,000 has not been fully substantiated.

48.     In relation to factor (g), the MSI refers to a minimum $100,000 business activity as indicated by turnover.  The evidence indicates that the combined value of the fruit transactions and the turnover of the café business up to the date of cancellation would not have exceeded $100,000 but would have subsequently. 

49.     Looking at the applicant’s efforts overall, in relation to the fruit business there is no evidence that the applicant made any efforts to transact new business after the middle of 2002.   In relation to the various ideas proposed to the applicant by Ms Johan as referred to in exhibit SB69 it seems to me that the real initiative came from Ms Johan – who appears to have actively searched for business ideas and transmitted them to her father for consideration.  Given the applicant’s absence from Australia for most of the period in question it is difficult to see how it could have been otherwise.

50.     Given that efforts in Indonesia in relation to possible fruit transactions ceased by no later than mid 2002, it is not apparent to me that there was much else that the applicant did or could have done in connection with Delianjaya’s business after that time.  The café business had no connection with Indonesia and hence there was nothing the applicant could do on behalf of Delianjaya from March 2002 in relation to that business while he was in Indonesia.

51.     Taken overall, I am not satisfied that the applicant’s efforts regarding involvement in the management of Delianjaya’s business were sufficiently substantial and real, or conducted on a sufficiently regular basis, to permit a conclusion that he made genuine efforts to participate in the senior management of the company on a day-to-day basis.  Even though Delianjaya’s management needs may have been relatively small, I am not satisfied on the evidence that the applicant spent as much time on the affairs of Delianjaya in the period up to cancellation as he asserted and, in my opinion, the real efforts that were made to find investment opportunities for Delianjaya and the management of the internet café were made by Ms Johan.  On balance I do not consider that the applicant satisfied the requirements of s134(2)(b).

52.     In relation to s134(2)(c), I am satisfied that the applicant intended to maintain an involvement with Delianjaya, both as an owner and as a person who played some part in its management, but my conclusion that he had not made genuine efforts to be involved to the extent required by s 134(2)(b) means that he could not intend to continue to be involved to the requisite degree.  One cannot intend to continue doing something that one is not presently doing.

53. It follows from the above that the applicant has not satisfied all the requirements of s134(2) and hence that subsection does not prevent the exercise of the power to cancel the applicant’s visa.

the residual discretion

54.     However, there remains a residual discretion to not cancel the applicant’s visa even though the preconditions for so doing may exist: Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31.  Neither the Act nor MSI 133 identify any factors that can or must be taken into account when deciding whether to exercise that discretion, although para 4.5.2 of the MSI confirms the existence of the residual discretion.

55.     The applicant said in his witness statement (A1) that the cancellation of his visa would cause extreme hardship to himself and to his family members because he had sold his business in Indonesia in 2001 and that it would be extremely difficult to rebuild such a business or resume any business in Indonesia.  He also said that the cancellation would cause hardship to his wife and children as it would “detrimentally affect our social well being and psychological well being” and would “ place a social stigma on us all”.  In his oral evidence the applicant reiterated that he now had no business in Indonesia and that the family would suffer social shame if their visa were to be cancelled – but did not explain how or why that might be so.

56.     No separate applications have been made by any of the applicant’s wife or children in an effort to demonstrate, pursuant to s 134(4) and (5), that they would suffer extreme hardship if their visa were cancelled – in which case the visa must not be cancelled.  Apart from Ms Johan the other visa holders did not give evidence or make witness statements. 

57.     The applicant in his oral evidence said that his son, Deny,was 27 years old and had studied in Australia for some years until he finished a management degree at the end of 2002.   Deny is single and is looking for work, but is presently financially dependent upon his father.  According to Exhibit R2 Deny has spent considerable amounts of time in Australia since July 1996 leaving Australia for one or two months each year. 

58.     The applicant said Ms Johan is 25 years old and had also studied in Australia since 1996.  According to Exhibit R2, Ms Johan has spent considerable periods of time in Australia since June 1994, also spending some months each year out of this country.  Ms Johan said in her evidence that she had come to Australia in 1994 aged 14 or 15 years.  As noted above, she is in fulltime employment having completed two university degrees.  She is also undertaking professional accounting studies, which she hoped to finish at the end of 2005.  Ms Johan is now married and her husband is employed in the café business.   Ms Johan gave no evidence regarding her husband’s immigration status or of any adverse effect on her if her visa were cancelled.

59.     In relation to his third child, Andri, the applicant said that he had been studying in Australia since the end of 2001.  According to Exhibit R2 Andri has spent extended periods in Australia (several months at a time) since 1998 and longer periods since the beginning of 2001.  Andri is currently studying at TAFE for a business diploma.

60.     No evidence was given by the applicant or Ms Johan specifically concerning the position of the applicant’s wife other than that she had spent longer periods in Australia than the applicant.

61.     In the absence of specific evidence about hardship that may be suffered by the other visa holders I am not prepared to conclude that they would suffer any particular hardship if the visa of the applicant were cancelled.  Even if the three children were required to leave Australia and return to Indonesia because of the cancellation of the applicant’s visa, which is by no means obvious – at least in relation to Ms Johan, there is no evidence of any particular hardship that they would endure.  They have all made frequent trips to Indonesia and there is no evidence to indicate that they would not be able to resume residence in that country, if that were necessary.

62.     The applicant said that he had sold his family home in Indonesia and that he and his wife were now living with relatives.  The family has purchased a residence in Australia, where the three children have been living for several years.

63.     The applicant said that when he gained his visa to migrate to Australia he intended to dispose of his business in Indonesia and move to live in Australia when he had established a viable business here.  I accept that that is so, but it remains the case that the applicant did not do anything to establish a business in Austarlia in the first two years he held his visa (apart from incorporating Delianjaya shortly after receiving the 24-month survey from to complete) and sold his business in Indonesia in October 2001.  Despite that he has spent very little time in this country since then and has not demonstrated that he has made a particular commitment to live here.  The efforts made by him to become involved in the management of a company have been insufficient and there is no evidence of any other factors that would suggest that the discretion to not cancel his visa should be exercised in his favour.  Accordingly, I am not prepared to exercise the discretion in favour of the applicant and I affirm the decision made on 8 July 2002 to cancel the applicant’s visa.    

I certify that the 63 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Allen, Member

Signed:         ..............(sgd V Wong)..................................
  Associate

Date/s of Hearing  27 October 2003 and 12 February 2004
Date of Decision  27 August 2004
Counsel for the Applicant         Mr J Chong
Solicitor for the Applicant          James Chong & Co
Counsel for the Respondent     Ms J Andretich
Solicitor for the Respondent     Australian Government Solicitor