The and Minister for Immigration and Multicultural Affairs

[2006] AATA 1040

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 1040

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2005/689

GENERAL ADMINISTRATIVE  DIVISION

Re:        HWIE HWA THE

Applicant

And:       MINISTER FOR IMMIGRATION AND

MULTICULTURAL AFFAIRS

Respondent     

DECISION

Tribunal:       G.D. Friedman, Senior Member

Date:             4 December 2006

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) G.D. Friedman

Senior Member

MIGRATION ‑ business skills visa ‑ cancellation - whether eligible business ‑ whether genuine effort to obtain substantial ownership of eligible business    

Migration Act 1958 s 134(1), (2), (3), (10)

Hope v Bathurst City Council (1980) 144 CLR 1

Puzey v Commissioner of Taxation [2003] FCAFC 197

REASONS FOR DECISION

4 December 2006   G.D. Friedman, Senior Member

1.        Ms The is an Indonesian citizen who arrived in Australia on 5 February 2002 as the holder of a subclass 127 business skills visa.  On 11 July 2005 the Minister’s delegate cancelled the visa on the grounds that Ms The had not complied with the terms of the visa.  She is the sole owner of Austindo Gihon International (Austindo), which was established on 1 November 2002 and is the Australian agent for the export of Sea Spa spa bath products to Indonesia.  Ms The maintains that she has satisfied the conditions of her visa and that the decision to cancel the visa was incorrect.

2.        The issues before the Tribunal are whether Austindo is an eligible business; and whether Ms The has made a genuine effort to obtain an interest in an eligible business and participate in day-to-day management.

EVIDENCE

3.        Ms The told the Tribunal that she has established business links with the international market and the export of Australian goods and services, by exporting Sea Spa products to Indonesia and selling them through pharmacies and other outlets such as retail stores and beauty salons.  She said that Austindo had made two export shipments of Sea Spa products to Indonesia, the first in July 2004 when Austindo bought products from the manufacturer to the value of A$6,754.22 and sold them to a Singapore company for the same amount.  Ms The produced documents including a bill of lading and invoice, and said that the products were then distributed in Indonesia by PT Sammy Gracia (Gracia), an Indonesian company wholly owned by her.  Ms The said that the second shipment to the value of A$9,714.32 occurred in April 2005, and that consequently exports have been on a continuous and repetitive basis, and Austindo was an eligible business.

4.        Under cross-examination Ms The denied that the involvement of Austindo in the first export transaction was purely for the purpose of the business skills visa and had no commercial merit.  She agreed that she was unable to produce a bill of lading and invoice to support the claimed second export.  She conceded that funds deposited by Gracia into Austindo’s bank account in March 2005 were partly used to fund the purchase of products by Austindo in March 2005.  She denied that the second export (if it took place) was not a genuine commercial export transaction, even if the there was a slim margin between the purchase price and the export sale price, and taking into account other export costs.

5.        In respect of the management of Austindo, Ms The gave evidence that she has participated at a senior level in the day-to-day management of the business, as evidenced by her involvement in correspondence, emails, contracts, invoices etc.  She stated that she has remained in Indonesia to promote Sea Spa products by taking advantage of the growing spa market and maximising the exposure of the products.  She provided samples of brochures and photographs of the products displayed in various outlets in Indonesia, and said that she is responsible for the conduct of the business.  She told the Tribunal that she has employed her Australian-based daughters Cynthia and Olga Pandoe to assist in the operation of the business in Australia, and speaks to them each week to discuss family and business matters.

6.        Ms The conceded that she has been the author of only a small number of emails, including correspondence with the supplier of the products, and that most of the correspondence has been conducted through Cynthia and Olga, whose knowledge of English makes communication more practicable, although she maintained that her daughters were acting on her behalf.

7.        In respect of efforts that she has made to engage in business in Australia, Ms The produced documentation, including lists of contacts with suppliers, to support her claim that she has made a genuine effort to promote the interests of the business.  She denied that she was acting as a representative of Sea Spa products or Gracia rather than Austindo.  

8.        Ms The agreed that her major business interests in Indonesia have been the management of Gracia and the making and selling of garments through CO Collection, an Indonesian company owned and managed by her, and that Austindo has no involvement in these activities.  She stated that her intention was to reside permanently in Australia when she has settled all her business affairs in Indonesia, as her children and grandchildren live in Australia.  Ms The explained that she has carried out research in relation to the business and has succeeded in making contact with a number of department stores in Indonesia in an effort to promote Sea Spa products.  She said that the business plan envisages the future export of Australian items such as skin care, hairdressing and cosmetic products.  The plan refers to assistance by family members, with the possibility of one full-time or part-time employee as the business develops.  Ms The produced a list of companies to contact in Jakarta, but agreed that Austindo has not entered into contracts with any of them.  She also said that she has investigated the export of other products such as frozen food, dietary food products and hair care products, but for various reasons no agreements or contracts have resulted from her efforts.

9.        In relation to the length of time she has spent in Australia, Ms The agreed that she spent only 150 days in Australia between 6 December 2001 (the date of the grant of the visa) and 11 July 2005 (the date of the cancellation of the visa), but noted that her presence in Indonesia was required to market and promote the products.  Ms The stated that she has been concentrating on her other business activities with Gracia and CO Collection.  She said that she arrived in Australia on 19 November 2006 and intends to remain until January 2007.  She stated that she plans to visit the manufacturer of Sea Spa products, but has not yet contacted the company.  Ms The agreed that her visit was also arranged to coincide with the birth of her latest grandchild.

10.      Ms The agreed that she has not transferred any assets to Australia since establishing the business, and that she has not held an ownership interest in any eligible businesses in Australia.  Under cross-examination Ms The conceded that the value of the first export transaction (A$6,754.22) and the claimed second export transaction (A$9,793.00) fall considerably short of A$100,000 as outlined in Migration Series Instruction 133 (MSI-133). 

11.      Cynthia Pandoe told the Tribunal that she works full-time as manager of a restaurant in Melbourne, and helps her mother in her spare time, usually at weekends.  She said that, under her mother’s direction, she has been involved in contacting potential suppliers in Australia.  She stated that she speaks to Ms The in Indonesia each week to discuss the business, and her knowledge of English has been of particular benefit.

12.      Ms M. Gidas, director, Nu Essence Pty Ltd, gave evidence that her company manufactures Sea Spa health and beauty products in Australia, and that Austindo has been its agent in Australia for export to Indonesia for several years.  She confirmed that the business has made two export shipments of Sea Spa products, and that she has met Ms The, Cynthia and Olga on several occasions, the most recent of which was in early 2006.  Ms Gidas noted that Ms The had not made contact since arriving in Australia in November 2006, and that no meeting had been planned.  She said that the products preferred by Ms The for export were no longer produced by Nu Essence, and that there was little demand in the Indonesian market for the company’s newer products.

LEGISLATION

13.      The relevant legislation is the Migration Act 1958 (the Act). Section 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.

IS AUSTINDO AN ELIGIBLE BUSINESS?             

14.      Section 134(10) of the Act defines eligible business as one that the Minister reasonably believes is resulting in 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.

15.      In Hope v Bathurst City Council (1980) 144 CLR 1 the High Court held that carrying on a business denotes pursuing activities for the purpose of profit, undertaken on a continuous and repetitive basis. In Puzey v Commissioner of Taxation [2003] FCAFC 197 the Full Federal Court stated that a business requires some repetition of acts and something of a permanent character. The Tribunal notes that since its registration in 2002 Austindo has made at least one export transaction, but this involved the sale of Sea Spa products to a Singapore company for the same amount as the purchase price, so that when overheads and other costs are taken into account Austindo must have made a loss. There is no persuasive evidence that the second transaction occurred, and even if it did, there appears to have been no profit involved. The transaction or transactions were with Gracia, which is owned by Ms The.

16.      In the absence of any real effort to make a profit, and a lack of repetitive and continuous activity, the transactions do not constitute business activity, because Austindo appears to be a means to transfer goods to Gracia rather than being engaged in business itself.  Cynthia has a full-time job in another industry and there is no persuasive evidence that Austindo is creating or maintaining employment in Australia, producing goods or services that would otherwise be imported to Australia, introducing new or improved technology to Australia or increasing the commercial activity and competitiveness within sectors of the Australian economy.  Because of the small amounts involved in the first export transaction and the claimed second transaction, Austindo has not demonstrated that it has developed business links with the international market or has satisfied any of the other criteria.  For these reasons the Tribunal finds that Austindo is not an eligible business for the purposes of s 134(10) of the Act, and is satisfied that Ms The has not obtained a substantial ownership interest in an eligible business in Australia (s 134(1)(a) of the Act), and the grounds exist for the cancellation of the visa.              

DID MS THE MAKE A GENUINE EFFORT TO OBTAIN SUBSTANTIAL OWNERSHIP OF AN ELIGIBLE BUSINESS?

17.      Section 134(2) of the Act provides:

(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:

(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).

…

18.      Paragraph 4.5 of the Ministerial Guidelines of MSI-133 entitled What is '”genuine effort”? contains the following factors to assist decision‑makers in determining whether a genuine effort has been made under s 134(3) of the Act:

…

(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 class migrant;

(e)transferred to, and retained in, Australia at least 50% of the funds indicated as available for transfer within two years (under Factor 4 of the Business Skills Points test);

(f)minimum A$100,000 or 10% ownership previously held by the person.  If the person is no longer in business, the reasons for 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.

19.      The Tribunal has considered the factors listed in s 134(3) of the Act and the Guidelines in MSI-133.  In assessing Ms The’s claims against these factors and the Guidelines, the Tribunal takes into account the brief business plan that sets out the broad objectives of the business, although the Tribunal notes that the plan does not contain detailed proposals (s 134(3) (a)).  There are no partners or joint venturers (s 134(3)(b)).  There is no evidence of genuine research into the conduct of an eligible business in Australia (s 134(3)(c)).  The applicant has spent 150 days in Australia from the grant of the visa until its cancellation (s 134(3)(d)), which is less than the minimum of six months suggested in the Guidelines, although the Tribunal takes into account Ms The’s evidence concerning her commitments in Indonesia to the promotion of Sea Spa products and her other commercial interests.  

20.      There is no evidence that Ms The has made a significant investment in the business (s 134(3)(e)); and she has no ownership interest in eligible businesses in Australia (s 134(3)(f)).  With one small confirmed export shipment and another for which there is little evidence that it occurred, there has been little business activity undertaken by Ms The (s 134(3)(g)).  In respect of s 134(3)(h) Ms The replied to most requests to provide additional material requested by the Department, although she failed to respond to a request for information regarding the value of assets she has invested in the business. 

21.      After considering all the relevant factors in s 134(3) of the Act, the Tribunal finds that Ms The has not made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia (s 134(2)(a) of the Act).  Therefore she cannot satisfy s 134(2) of the Act, and the Tribunal finds that the exercise of the discretion to cancel the visa is appropriate in this case.

DECISION

22.      The Tribunal affirms the decision under review.

I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Senior Member

(sgd)        Lydia Zozula

Associate

Date of hearing:  19 July 2006, 27 November 2006
Date of decision:  4 December 2006
Advocate for applicant:                Self-represented
Advocate for respondent:            Ms X. Teo
Solicitor for respondent:              Clayton Utz Lawyers