Tjan and Minister for Immigration and Multicultural and Indigenous Affairs

[2005] AATA 889

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 889

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/1528

GENERAL ADMINISTRATIVE   DIVISION		)
Re		LINANTO TANASAL TJAN

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member Robin Hunt

Date14 September 2005

PlaceSydney

Decision The decision under review is affirmed.

..............................................

Ms R Hunt
  Senior Member

CATCHWORDS

MIGRATION – Business Visa – Cancelled pursuant to section 134 of the Migration Act 1958– Applicant does not have a substantial ownership interest in an ‘eligible business’ –-Applicant has not made a genuine effort to establish an ‘eligible business’ – Applicant has not made a genuine effort to be involved in the day to day management of an eligible business at a senior level - Decision of Minister’s delegate to cancel Business Skills (Migrant) Visa – Decision under review affirmed.

LEGISLATION

Migration Act 1958 s 134, 137

Migration Series Instructions No 133 (MSI 133)

Second Reading Speech introducing the Bill amending section 134(1)(b) of the Migration Act 1958 (Migration Amendment Bill (No 2) 1992)

CASES

Hope v Bathurst City Council (1980) 144 CLR 1

Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703

Re Griffiths and Migration Agents Registration Authority [2001] AATA 240

Re Tang and Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103

Re Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54

Freeman v The Secretary, Department of Social Security (1988) 19 FCR 341

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

Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299

Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656

Tan and Anor and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808

REASONS FOR DECISION

14 September 2005	Senior Member Robin Hunt
SUMMARY

1. Mr Linanto Tjan applied to the Tribunal for review of a decision, dated 25 October 2004, made by a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs to cancel his Business Skills (Migrant) Visa. The delegate cancelled the visa pursuant to section 134 of the Migration Act 1958 (the Act). The Tribunal has decided that Mr Tjan’s business interests in Australia do not amount to an eligible business for the purposes of the visa. Further, although he has made some efforts to develop a business and to investigate other opportunities in Australia, the Tribunal has decided that these are not genuine efforts to the degree warranted to reinstate the visa. Finally, the Tribunal has decided not to exercise the discretion to reinstate the visa. It follows that Mr Tjan’s application has been unsuccessful.

BACKGROUND

2. Mr Tjan was granted a subclass 127 business skills visa on 2 July 2001 and entered Australia on 6 July 2001. On 18 June 2004, Mr Tjan was sent a notice of intention to cancel his visa. He responded on 27 July 2004 and 13 September 2004 and claimed that he had substantial ownership interests in two Australian companies. On 25 October 2004, his subclass 127 visa was cancelled under subsection 134(1) of the Migration Act 1958 as the delegate was not satisfied that Mr Tjan had obtained a substantial ownership interest in an eligible business or that he had been involved in the day to day management of either business at a senior level. 

ISSUES AND LEGISLATIVE PROVISIONS GOVERNING

3. Section 134 of the Act empowers the Respondent to cancel a business visa in certain circumstances and 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.

(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.

4. In particular, sections 134(1) and (2) give rise to the main issues before the Tribunal. They are, firstly:

·     Whether Mr Tjan has acquired a substantial ownership interest in an eligible business in Australia; or

·     Whether Mr Tjan has utilised his skills in actively participating at a senior level in the day to day management of an eligible business in Australia.

5.      If I am satisfied that Mr Tjan fails to meet one of these criteria, I must then determine:

·     Whether Mr Tjan has made a genuine effort to acquire a substantial interest in an eligible business in Australia and, if so, whether he intends to continue making genuine efforts; and

·     Whether he has made a genuine effort to utilise his skills in participating at a senior level in the day to day management of an eligible business in Australia and, if so, whether he intends to continue making genuine efforts.

6. If I am satisfied that Mr Tjan has made suitable efforts for the purposes of the above issues, I must not cancel his visa by virtue of section 134(2) of the Act.

7.      Subsection 134(10) sets out that, in this section, business visa means a visa included in a class of visas, being a class that has the words "Business Skills" in its title. As well, the subsection provides that “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.

8.      Subsection 134(3) sets out some of the 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 the 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).”

9. Further to the requirements of section 134(3), the Migration Series Instructions No 133 (MSI 133), at paragraph 4.5, lists policy factors to be considered in forming an opinion whether a genuine effort has been made. These factors are:

(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.

ANALYSIS

Does Mr Tjan hold a substantial ownership interest in an eligible business?

10. The first question at issue for the Tribunal is whether Mr Tjan, at the date of the cancellation, had an eligible business for the purposes of section 134(1) of the Act. The meaning of an “eligible business” is set out in section 134(1), paragraphs (a) to (f), of the Act. For Mr Tjan’s business to qualify, it must meet at least one of the criteria. Cases such as Hope v Bathurst City Council (1980) 144 CLR 1 provide guidance about the term ‘business”. The case of Hope is authority that carrying on a business is an activity undertaken on a continuous and repetitive basis for the purpose of profit. The business concerned does not have to reach a threshold of size or turnover to qualify as an eligible business although size and turnover may indicate that a business is performing well.  Also, see the Tribunal decision in Tang v Minister for Immigration and Multicultural Affairs (2000) 32 AAR 103 as to the need for activities for profit on a continuous and repetitive basis.

Linda Star

11.      Mr Tjan gave oral evidence that he has owned a business in Indonesia for over 20 years which contracts for large oil companies. He has 75 permanent staff and around 500 sub-contactors. His first Australian company is called Linda Star Pty Ltd (Linda Star) and Mr Tjan and his wife are the sole directors and shareholders. He told the Tribunal that his plan for a business in Australia was property development and that he looked in the Northern area of Sydney, where he was assisted by agents and friends, including Soni Tanuwaijaja, who he met in a church for business people. Mr Tanuwaijaja also gave evidence at the hearing and told the Tribunal that he has been a property developer since 2001 and is currently working on 2 projects. He said that Mr Tjan told him he planned to build a 2 storey house with a pool and then sell it. Mr Tanuwaijaja assisted Mr Tjan to purchase a property at Koola Avenue in Killara as the zoning there was good to build a house. Mr Tanuwaijaja told the Tribunal that the proposed development in Killara was a wise investment. I accept Tanywaijaja’s evidence that Killara was an appropriate development site. This property consisted of two lots. Contracts were exchanged on 25 March 2002 and the purchase was settled in July 2002. The purchase price was $880,000 plus stamp duty and was purchased in the names of Mr Tjan and his wife. Mr Tjan told the Tribunal that they had been advised by the bank that it would not land any money to Linda Star as it had no assets.  He and his wife borrowed $650,000 which they have now fully repaid.

12.      Mr Tjan told the Tribunal that he hired a builder and an architect and relevant plans were submitted to the Ku-ring-Gai Council to obtain development approval. Mr Tanuwaijaja told the Tribunal that he suggested to Mr Tjan that he redesign and hire a good builder, as the right builder and architect are very important, which is why the development took so long to go ahead. Mr Tjan subsequently hired another architect, to amend the plans. He also looked for another builder and spoke to around 5 other builders. It took him 8-9 months to find Mr Surya, another builder who also spoke Indonesian which made it easier for them to communicate. Mr Tjan submitted further plans and obtained development approval on 10 March 2004. Mr Tjan has spent $150,000 to $200,000 on the Killara property and estimates that he has a further $800,000 to $900,000 to spend and that it will take 8-12 months to complete. He told the Tribunal that due to his uncertainty about his status in Australia, he is reluctant to commit further funds and the development is on hold.  Upon questioning, Mr Tjan told the Tribunal that he and his wife do not earn an income from Linda Star but it has incurred expenditure. In addition, he told the Tribunal that Mr Surya has not been paid as work hasn’t commenced yet. Upon questioning why Mr Surya did not sue him for breach of contract, Mr Tjan said it was stipulated in the employment contract that Mr Surya would not be paid until work commenced. 

13. Taking the circumstances explained by Mr Tjan and his witness into account, I find that Linda Star is not an eligible business as it has no assets or enterprise being carried out. Mr Tjan, when asked what the net worth of Linda Star was, replied nil as the house in Killara is in his name. Mr Tjan conceded that he did not obtain a substantial ownership interest in Linda Star, however, he had purchased land to develop in the names of himself and his wife. Mr Tjan further conceded that he had not done any of the things set out in subsection 134(1) in order to show he had an eligible business.

Mr Tjan’s development project

14.      However, because of the activity concerning the development project discussed above, Mr Tjan may be conducting a business in his own right. The next question is whether it is an eligible business. Subsection 134(10) sets out factors to be taken into account to determine an eligible business. In my view, Mr Tjan’s project does not meet any of these tests, apart from the money expended. Mr Tjan is not employing anyone, he has no links with the international market, he is not exporting Australian goods or services or producing goods or services which would otherwise be imported into Australia, he is not introducing a new or improved technology to Australia and he has not increased commercial activity or competitiveness within sectors of the Australian economy. As well, in my view, Mr Tjan’s project does not meet the test of repetitiveness set out in Hope above. It follows that the Tribunal finds that although Mr Tjan holds a substantial ownership interest in the property at Killara, it is not in an eligible business. 

Multiprop

15.      Mr Tjan told the Tribunal that he is a shareholder in a company called Multiprop Holdings Pty Ltd (Multiprop). Multiprop was incorporated on 9 August 2003 and was designed to be a property development company that would buy houses and rent them out. Mr Tjan provided a share certificate, dated 6 May 2004, as evidence of his 10% shareholding in the company. He purchased shares for $17,499 and attended one shareholder meeting. Mr Tjan said that there were plans to extend Multiprop into a cleaning business but nothing had been done as yet. An ASIC search undertaken around the time of the cancellation decision did not show that Mr Tjan had any shares in the company and Mr Tjan, upon questioning, said he did not know why his share certificate was not registered. When asked whether Multiprop made a profit last year, Mr Tjan said he didn’t know but he knew that it did not make a profit in its first year.

16.      Although he holds 10% of shares, I find that this is not a substantial ownership in an eligible business as there is little evidence that Multiprop is carrying on a business and financial statements show it has been running at a loss. As a result, it does not meet the test expressed in Hope as it has not run on a repetitive basis for the purpose of profit.  Further, it does not meet the tests set out in subsection 134(10).

Has Mr Tjan made a genuine effort to obtain a substantial ownership interest in an eligible business?

17. Although Mr Tjan does not presently have an eligible business, he may be able to show that he has made a genuine effort to obtain a substantial ownership interest in an eligible business for the purposes of section 134(2)(a). His visa must not be cancelled if he has made genuine efforts to obtain a substantial ownership interest in an eligible business in Australia. In addition to this, he must have made genuine efforts to actively participate at a senior level an eligible business as provided by s134(2)(b) and intend to continue to make such genuine efforts as provided by section 134(2)(c) of the Act. Matters that may be taken into account are set out in section 134(3). Guidance may also be sought from the Migration Series Instructions 133 (MSI 133).

18.      Mr Tjan stated that he made a genuine effort to create and maintain employment. He told the Tribunal that although he and his wife were the only employees of Linda Star at present, once development commenced, there would be many people involved. Mr Tjan stated that his intention, if he were able to keep his visa, was to develop as soon as possible. His intention was to have another business like his contracting business in Indonesia.  He was questioned about the 24 months survey form (T7-57) as he did not tick the box that described his business and stated that Linda Star had 2 employees – being himself and his wife. Upon questioning, he said he did not know why the box wasn’t ticked and said at the time the form was filled out, he and his wife were the only employees.

19.      As I have noted above, Linda Star is not the entity that owns the land for the development. In addition, Mr Tjan spoke of no other plans in mind for Linda Star at present. It follows that I find no genuine efforts in place for Linda Star in terms of subsection 134(2). Mr Tjan told the Tribunal that he had entered into an employment contract with Mr Steve Surya to build once development commenced. Mr Tjan stated that the development was on hold until his status in Australia was certain and that if his visa were reinstated, he would begin development.

20.      Although it is likely that Mr Tjan will employ people once development has commenced, there is no cogent evidence before the Tribunal to suggest that there will be any employees other than Mr Surya. Further, Mr Surya did not give evidence at the hearing of his view of the project and his contract. The contract of employment with Mr Surya does not set out a time frame for the contract to commence other than “the start of the commencement of the project”. In addition, in the case of Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299, Deputy President Wright QC held that :

“The provision of ‘employment’ in the sense of providing limited fee earning opportunities to architects and real estate agents and the provision of a one-off building contract whereby a builder could engage employees and subcontractors to build…units….is not the ‘creation or maintenance of employment in Australia’ contemplated by the s134(1) definition of ‘eligible business’ in paragraph (a).”

It follows from the reasoning in Ng, with which I agree, that even if Mr Tjan did employ people upon commencement of the development, this will not result in the creation or maintenance of employment that was contemplated by the Act.  

21. There are other tests in s134(10) that could be argued, for example the increase of commercial activity and competitiveness due to selling the property and hiring sub-contractors. However, as outlined above in relation to the development of employment, no evidence is before the Tribunal in respect of this being likely to happen at any time soon. In addition, an eligible business requires repetitiveness and profit. In the case of Tan and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808, an applicant had a single property development and spent $1,000,000 on construction costs. He nevertheless was held not to be involved in an eligible business. Mr Tjan has not demonstrated any realistic project that might be called an eligible business up to the time of the 24 month survey from the Department. Despite the funds he has invested and the length of time he has held a visa, he has not commenced any trading or any employment of Australians. He has put the project on hold. I do not find that any of the factors set out in s134(3) have been satisfied. It follows that Mr Tjan has not made a genuine effort to obtain a substantial ownership interest in an eligible business at the time of the visa cancellation.

22. In relation to Multiprop, there was no evidence before the Tribunal that there had been a genuine effort made to obtain a substantial ownership interest in an eligible business and none of the factors in s134(3) were satisfied. In making my findings that none of Mr Tjan’s ventures show a genuine effort for the purposes of subsection 134(2), I have followed the approach adopted in Freeman v The Secretary, Department of Social Security (1988) 19 FCR 341. In that case, the jurisdiction of the Tribunal in respect of a cancellation is to determine the correct or preferable decision at the time that the decision to cancel was made. This approach has been followed in a number of cases, such as that decided by Deputy President Forgie in Re Griffiths and Migration Agents Registration Authority [2001] AATA 240 and in other Tribunal decisions such as Re Wong and Minister for Immigration and Multicultural Affairs [2002] AATA 54 and Re Lau and Minister for Immigration and Multicultural Affairs [2002] AATA 703.

Has Mr Tjan utilised his skills in actively participating at a senior level in the day to day management of an eligible business 

23.      On the 24 months survey form, Mr Tjan stated that he works on Linda Star business 5 hours a day and when he is overseas he spends 1-2 hours per day on Linda Star. He told the Tribunal that, although he has not spent much time in Australia since 2001, he was still involved in the day to day management of Linda Star as, when he is Indonesia, he is still thinking about the business of Linda Star. However, there is no evidence of any letters, phone calls or meetings before the Tribunal. Upon questioning, Mr Tjan conceded that he was not involved in the day to day management of Linda Star as Linda Star has no activity.

Has Mr Tjan made a genuine effort to utilise his skills in actively participating at a senior level in the day to day management of an eligible business

24. Although I am not satisfied that either Linda Star or Multiprop or Mr Tjan carry on an eligible business or that Mr Tjan has made genuine efforts to establish an eligible business, I have considered the full range of factors described in section 134(2) in order to assist me to determine whether I should exercise my discretion under section 134(4). I have gone on to consider whether Mr Tjan has made and continues to make a genuine effort to participate at a senior level in the day to day management of such a business, as provided by section 134(2)(b) and (c).

25.      Mr Tjan has only been in Australia for 227 days since his entry on the subclass 127 visa in July 2001. He gave evidence that he spent time selecting an appropriate property for development and hiring a suitable architect and builder. He also told the Tribunal that when he is in Australia he spends 5 hours a day on the property development business and that when he is away, he spends 1-2 hours a day on the property development business. This was also stated in the 24 month survey from before the Tribunal (T7-57).  No evidence was given on his involvement in the day to day management for Multiprop. 

26.      In coming to a view as to whether Mr Tjan has made a genuine effort to actively participate in the day-to-day management of an eligible business for the purposes of subsection 134(2) and (3), I have had particular regard to the cases of Tang and Wong. In Tang, the Tribunal noted that the Act is intended to benefit business owners who make the decision to settle in Australia and actively manage that business.

27.      In Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656, the Tribunal noted that an applicant was expected to manage the Australian business in Australia albeit with trips overseas from time to time. Mr Tjan has not made trips overseas from time to time. Rather, his conduct has been the reverse. He travels to Australia only occasionally. Although, in Wong, the Tribunal found an applicant who had not visited Australia other than for a holiday was making a genuine effort of the kind required, I do not find, on balance, that Mr Tjan has put sufficient time into the management of any Australian business to meet expectations for the visa when his case is compared with Huang and Tang. The amount of time Mr Tjan has spent in Australia since his visa was granted is very limited.  Mr Tjan is a director with a substantial ownership interest but his practical involvement has been restricted to seeing a bank to obtain a loan and proposed builder and related activities. This does not amount to any great depth of involvement envisaged by Parliament when passing the Act. The second reading speech of the Minister for Immigration and Ethnic Affairs when introducing the Migration Amendment Bill (No. 2) 1992 indicates that the expectation was that migrants who arrived in Australia on a business skills visa would remain resident in Australia. Also see Ong v Minister for Immigration and Multicultural Affairs [2003] AATA 178. Further, in Ng v Minister for Immigration and Multicultural Affairs [2003] AATA 299, the Tribunal commented that the Act does not contemplate an absentee entrepreneur.

28. Even though Mr Tjan is participating in the management of the property development, It follows I cannot be satisfied that Mr Tjan has made, continues and intends to make a genuine effort to utilise his skills in actively participating in the management of any property development business entity on a day-to-day basis at a senior level. In addition, he must fail as there is no evidence of an eligible business as discussed above. The evidence before me of future prospects and intentions do not reach a level to satisfy me that Mr Tjan meets the tests set out in subsections (2)(b) and (3). Equally, I am unable to conclude on the evidence before me that Mr Tjan intends to continue to make such efforts for the purposes of section 134(2)(c).

The discretion

29. Nevertheless, I am required to consider whether I should exercise the discretion available under subsection 134(1), that is, the Minister may cancel a business visa where he finds failure to meet sections 134(1)(a), (b) or (c), but is not required to do so. However, I have not found any evidence of any matter which convinces me that I should exercise the discretion available. Mr Tjan has not shown sufficient involvement and commitment to the purposes of the grant of the visa to persuade me that the visa should not be cancelled.

30.      The Tribunal is therefore not satisfied on the basis of the evidence before it that Mr Tjan has acquired an interest in an “eligible business in Australia”.  Nor is it satisfied that he has made genuine efforts to utilise his skills in “actively participating at a senior level in the day to day management of an eligible business” or that he has made “genuine attempts” to acquire an eligible business interest and intends to continue to make such genuine efforts. The Tribunal therefore affirms the decision made on to 25 October 2004 to cancel Mr Tjan’s visa.

DECISION

31.      The decision under review is affirmed.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Robin Hunt

Signed:         .....................................................................................
Zoe McDonald
Associate

Date of Hearing: 25 May 2005 
Date of Decision: 14 September 2005        
Solicitor for the Applicant: Diamond Peisah Solicitors    
Solicitor for the Respondent: Phillips Fox