Tjang and Minister for Immigration and Multicultural and Indigenous Affairs

[2006] AATA 32

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 32

ADMINISTRATIVE APPEALS TRIBUNAL       )          No N2005/500

GENERAL ADMINISTRATIVE DIVISION		)  )
Re		SYARIFFIN TJANG

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Professor I. Shearer, Senior Member

Date17 January 2006

PlaceSydney

Decision The decision under review is affirmed

[SGD] Professor I. A. Shearer
Senior Member

  

CATCHWORDS

IMMIGRATION – cancellation of business skills visa – has not obtained substantial ownership interest in eligible business – not participating at senior level in day-to-day management of business – not making genuine efforts – residual discretion not exercised – decision affirmed.  

Migration Act 1958 ss. 134, 136

Skoljarev v Australian Fisheries Management Authority (1995) 39 ALD 517 at 521-526

Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304

Hope v Bathurst City Council (1980) 144 CLR 1

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

REASONS FOR DECISION

17 January 2006  Professor I. Shearer, Senior Member      

1.      This is an application by Syariffin Tjang (“the Applicant”) for review of the decision by the Minister for Immigration and Multicultural and Indigenous Affairs (“the Respondent”) made on 5 April 2005 to cancel the Applicant’s Subclass 127 (Business Owner) Visa (a “business visa”).

2.      Although, as will appear below, the issues are presented in the more technical terms dictated by the applicable legislation, the essential issue between the Applicant and the Respondent is whether, during the three years since the grant of his business visa, the Applicant had engaged in a sufficient level of economic activity in Australia to justify the continuation of his visa, or that he had made genuine efforts to that end.

3.      At the hearing, the Applicant was self-represented. He gave sworn evidence and was assisted by a Mandarin interpreter. The Respondent was represented by Mr N. Arora, solicitor.

4. The Tribunal had before it the documents (“T-documents”) lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, and supplementary documents submitted to the Tribunal by the Applicant in connection with the Tribunal’s conferences in the matter and dated 14 July 2005 and 10 October 2005.

5. The decision of the Minister’s delegate to cancel the Applicant’s visa is made reviewable by this Tribunal by section 136 of the Migration Act 1958 (“the Act”).

BACKGROUND

6.      The Applicant was born on 17 July 1964 in Jakarta, Indonesia. On 8 August 2001 he was granted a Subclass 127 (Business Owner) Visa. The visa extended to include members of his family unit, who were his spouse and two children. The Applicant entered Australia on 9 December 2001.

7.      Bert Industries Pty Ltd (“the Company”) was incorporated on 14 December 2001. The Applicant and his spouse are directors of the Company and they each hold 50 of the 100 issued shares, having paid $1.00 for each share. On 8 February 2002 an Australian Business Number was issued to the Company and was effective as of 1 January 2002. The Company was also issued a tax file number on 13 February 2002.

8.      On 16 December 2002 the Applicant and his spouse purchased a property at Marsfield NSW for the price of $640,000.

9.      The record of the Company’s activities show the following purchases and sales:

(a) On 21 January 2003 the Company sold water heaters which it purchased from Dux Export Department, a company situated in Australia, to PT. Arless Tirta Perkasa in Jakarta, Indonesia for AUD$47,265.00.

(b) On 28 May 2003 the Company purchased electrical goods from Longview Electrical Co Ltd in Hong Kong and sold them to PT. Lahusa Angsa Dua in Jakarta, Indonesia for USD$12,695.50.

(c) On 23 December 2003 the Company purchased electrical goods from Longview Electrical Co Ltd in Hong Kong and sold them to PT. Lahusa Angsa Dua in Jakarta, Indonesia for AUD$10,712.88.

(d) The Company’s financial statements for the year ended 30 June 2004 record the sales of $15,001.93 and a taxable income of $611.36.

(e) On 7 October 2004 the Company sold Australian oranges to PT. Mutiara Gunung Timur in Jakarta, Indonesia for AUD$31,558.59.

10.     The Applicant spent the following periods of time in Australia since entering on his business visa for the first time on 9 December 2001 to the date of cancellation of his visa:

* 9 December 2001 – 4 January 2002

* 30 November – 14 December 2002

* 18 December 2003 – 16 January 2004

* 18 – 27 August 2004

*  6 - 18 November 2004

11. On 30 November 2004 the Respondent Minister’s Delegate wrote to the Applicant giving notice of the Minister’s intention to cancel his business visa under section 134 of the Act, and invited the Applicant to make submissions concerning the proposed cancellation. A similar letter was sent to the Applicant’s spouse, Ms. Chien Rung Tjhin, notifying her of an intention to cancel the business visa issued to her and the two minor children of the couple. (No separate application for review has, however, been made by the spouse and children in the present proceedings.) The letter of 30 November 2004 stated that a reply must be received by 6 January 2005, otherwise a decision to cancel could be made.

12.     The Applicant did not reply until 9 March 2005. Writing from Jakarta, he set out various matters in answer to the reasons given for the proposed cancellation. These are essentially the same submissions as those made by him in the present proceedings.

13.     On 5 April 2005 the Respondent notified the Applicant of the cancellation of his business visa.

14. On 21 April 2005 the Applicant applied to the Tribunal pursuant to section 136 of the Act for review of the Respondent’s decision dated 5 April 2005 to cancel his business visa.

THE APPLICABLE LEGISLATION

15. Section 134 of the Act relevantly provides as follows:

SECT 134
Cancellation of business visas

(1) Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment-linked visa or a family member's visa), by written notice given to its holder, if the Minister is satisfied that its holder:
(a) has not obtained a substantial ownership interest in an eligible business in Australia; or
(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or
(c) does not intend to continue to:
(i) hold a substantial ownership interest in; and
(ii) utilise his or her skills in actively participating at a senior level in the day-to-day management of;
an eligible business in Australia.

(2) The Minister must not cancel a business visa under subsection (1) if the Minister is satisfied that its holder:

(a) has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia; and
(b) has made a genuine effort to utilise his or her skills in actively participating at a senior level in the day-to-day management of that business; and
(c) intends to continue to make such genuine efforts.

(3) Without limiting the generality of matters that the Minister may take into account in determining whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account any or all of the following matters:
(a) business proposals that the person has developed;
(b) the existence of partners or joint venturers for the business proposals;
(c) research that the person has undertaken into the conduct of an eligible business in Australia;
(d) the period or periods during which the person has been present in Australia;
(e) the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;
(f) the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person;
(g) business activity that is, or has been, undertaken by the person;
(h) whether the person has failed to comply with a notice under section 137;
(i) if the person no longer holds a substantial ownership interest in a particular business or no longer utilises his or her skills in actively participating at a senior level of a day-to-day management of a business:
(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).

…

(10) In this section:

…

eligible business means a business that the Minister reasonably believes is resulting or will result in one or more of the following:

(a) the development of business links with the international market;
(b) the creation or maintenance of employment in Australia;
(c) the export of Australian goods or services;
(d) the production of goods or the provision of services that would otherwise be imported into Australia;
(e) the introduction of new or improved technology to Australia;
(f) an increase in commercial activity and competitiveness within sectors of the Australian economy.

…

ownership interest, in relation to a business, means an interest in the business as:

(a) a shareholder in a company that carries on the business; or
(b) a partner in a partnership that carries on the business; or
(c) the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

16.     Paragraph 4.5.1 of the Migration Series Instructions – 133: Visa Cancellation under Subdivision G – Cancellation of Business Visas provides the following factors to assist decision-makers in determining whether a ‘genuine effort’ has been made under section 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.

As was discussed by Davies J in Skoljarev v Australian Fisheries Management Authority (1995) 39 ALD 517 at 521-526, policy guidelines such as those relevant to the present proceedings, although not binding on the Tribunal, assist in securing consistency in decision-making.

ISSUES BEFORE THE TRIBUNAL

17. Following more closely the terms used in the Act, the issues before the Tribunal are whether the Tribunal is satisfied, pursuant to section 134(1) of the Act, that the Applicant:

a.has not obtained a substantial ‘ownership interest’ in an ‘eligible business’ in Australia; or

b.is not utilizing his skills in actively participating at a senior level in the day-to-day management of that business; or

c.does not continue to:

(i)  hold a substantial ‘ownership interest’ in; and

(ii) utilize his skills in actively participating at a senior level in the day-to-day management of;

an ‘eligible business’ in Australia.

18. If the Tribunal is satisfied that the Applicant triggers one or more of the criteria set out in section 134(1) of the Act, the issue then arises whether the Tribunal is satisfied that the ameliorative provisions apply, pursuant to section 134(2) of the Act, namely, that the Applicant:

(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 utilize his 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.

19. An additional issue is whether, having regard to the residual discretion vested in the Minister under the Act (as discussed in Kim v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 304), it is appropriate to cancel the Applicant’s business visa in the circumstances.

CONSIDERATION OF THE EVIDENCE

20.      The decision of the Minister’s delegate to cancel the Applicant’s business visa, notified in her letter to the Applicant dated 5 April 2005, set out the reasons in an attachment headed “Record of Decision on Business Skills Visa Cancellation”.  In relevant parts, the reasons given were the following:

(1) Referring to section 134(1)(a) of the Act, and defining the term “business” as “a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis” (citing Hope v Bathurst City Council (1980) 144 CLR 1 per Mason J at 8-9) the Minister’s delegate stated that “although you have registered a business in Australia, it appears the business has completed a total of only two exports from Australia. The first transaction was in January 2003 and the other in October 2004. Given that your company was incorporated in December 2001, I do not consider that two business transactions over a period of more than three years can be said to be ‘continuous and repetitive’. I am not satisfied that Bert Industries Pty Ltd meets the definition of a business.”

(2) “The financial report for 2003/04 indicates that the company had a gross profit from trading of $639.64 and total assets of $2,367.22. There is no additional evidence, by way of future contracts, business plans or proposals to demonstrate that Bert Industries Pty Ltd will be engaged in any business activity in the future. I am not satisfied that this business has the capacity to undertake further growth and/or business ventures, based on the evidence provided.”

(3) “Furthermore, although you claim to have created links with international markets you have failed to provide sufficient documentary evidence to support this claim. On the basis of the documents provided it appears you may have assisted in the export of electrical goods between [sic] Hong Kong to Indonesia, thus establishing a link between these two countries, however there is no evidence this transaction is of benefit to Australia or that it meets the requirements of section 134(10).”

21. Referring to the grounds for cancellation set out in section 134(1)(b) of the Act, the Minster’s delegate stated to the Applicant:

(1) “You have failed to provide sufficient evidence to demonstrate your management roles within contracts, business plans, proposals, or other business correspondence. Similarly, your signature does not appear on any submitted documents. Nor have you provided evidence that you are using your management skills in the ongoing direction, strategic planning or growth of any Australian-based business; and”

(2) “Departmental records confirm that you have been present in Australia for ninety five (95) days since your initial arrival on your business skills visa in December 2001. Although you claim that you have undertaken a series of marketing promotions during your prolonged absences from Australia, you have failed to provide any documentary evidence to substantiate your claim. Furthermore, though you claim these promotions proved successful there is no evidence that they have resulted in any additional business/contracts/income for Bert Industries Pty Ltd. Without substantial evidence to document your role in the management of the Australian business from Indonesia, I am unable to be satisfied that you are involved in any day to day management of Bert Industries Pty Ltd.”

22. Referring to the ameliorative circumstances set out in section 134(2) of the Act where the Minister must not cancel a business visa, the Minister’s delegate declared that she did not find that these availed the Applicant for the following reasons:

(1) “You have failed to provide any evidence of funds you have transferred and maintained in Australia for use in your business, nor is there any evidence that you have purchased any property or fixed assets in Australia.” (It is noted that such evidence has since been provided: see above, paragraph 8. That point is addressed further below.)

(2) “Business visa holders are expected to make continuous and concerted efforts to meet visa conditions. Though you have stated that you have conducted in-depth market research you have failed to provide any documentary evidence to support this claim.”

(3) “As stated above, you have been present in Australia for less than four months since your initial arrival in December 2001. Although you are not required to relocate permanently to Australia, there is no evidence that you have purchased any property or fixed assets in Australia. [But see above, paragraph 8] I am not satisfied that you have a serious intention to engage in business activity in Australia and comply with the requirements of your visa.” 

23.      The Applicant gave sworn evidence and referred also to documents tendered by him in addition to the T documents in order to meet the reasons given by the Minister for the cancellation of his business visa.  He made the following points:

(1) The low number of transactions, and the small profits recorded by the Company, were attributable to the adverse change in exchange rates between the Indonesian and Australian currencies, making exports from Australia to Indonesia much more expensive; between 2001 and 2003 the Indonesian currency declined by 43% against the Australian dollar. Because of these difficulties “he took a rest for a while”. But he was always looking, and was still looking, in Indonesia at trading opportunities for Australian products.

(2) He was at all times in control of the Company. His brother-in-law in Australia assisted in correspondence and some clerical duties.

(3) He purchased the property at Marsfield for $640,000, with the aid of a mortgage loan. His current equity in it is approximately 70%. He said “it is now valued at more than $1m”. That property could be used as security for future loans to expand his business.

(4) The two transactions whereby electrical goods were exported from Hong Kong to Indonesia were carried out under the name of the Company. This was to the benefit of Australia.

(5) After all his efforts to promote Australian products in Indonesia, in particular hot water heaters, he cannot understand why his visa was cancelled.

24.      In cross-examination the Applicant was asked why it took so long to sell the first hot water heaters to Indonesia (January 2003) after first arriving in Australia in December 2001. He replied that he spent much of that time travelling throughout Indonesia to introduce the Dux brand. “It is a big country”. It took a long time to explain the details of the product to about 300 potential customers. It also took a long time to “educate” his Indonesian agents PT Arless Tirta Perkasa, through whom sales of the water heaters were conducted. The Company made its profits from selling the heaters bought from Dux to PT Arless. Altogether these transactions in early 2003 brought a profit to the Company of less than $1,000. He was still trying to stimulate further business with Dux, but exchange rate difficulties and the failure of efforts to secure a reduced price from Dux stood in the way. He was still in contact with Dux and meeting potential customers in Indonesia. In October 2004 he shipped Australian oranges valued at approximately $30,000 from Adelaide to a customer in Jakarta. The transaction yielded a profit of just over $1,000. This was a single occasion not repeated, since oranges readily spoil “and my background is in electronics”. The Applicant owns a company in Jakarta named Electraco, stated in its letterhead to be “Importer, Distributor & Wholesaler of Electrical Merchandise.” He owns 100% of that company. While in Indonesia he estimates that he spends one day a week in managing the affairs of that company; for the rest it is in the charge of an employed general manager. The Applicant stated that since late 2004 he had been developing a different business plan for the Company: to import electrical accessories from China and distribute them in Australia. He signed an agreement on behalf of the Company with an electrical goods company in Hong Kong in November 2004 to guarantee prices and stable supplies. However the implementation of this agreement, and the development of the business plan, had been put on hold since the cancellation of his visa. In March or April of 2005 (the tendered copy of the agreement is undated) the Company entered into an agreement with PT. Lahusa Angsa Dua of Jakarta for the supply by the former to the latter of electrical accessories. No specific transactions are contemplated by the terms of the agreement, nor is the country of source of the products specified.

CONCLUSIONS

25.      I have concluded on the evidence that, as at the date of the cancellation of the Applicant’s business visa (5 April 2005), there was very little to show from the Applicant’s efforts to establish and run a business in Australia. Only four transactions conducted by the Company are recorded before that date. These are set out in paragraph 9 above. Two of these transactions concern goods purchased in, and sent from, China to Indonesia. The profits of the Company, as evidenced from the Company’s financial statements, are very slight. It is not possible to find in this record evidence of the obtaining of “a substantial ownership interest in an eligible business in Australia” as defined by section 134(10) of the Act.

26.      Nor can I find that the Applicant has been “utilising his or her skills in actively participating at a senior level in the day to day management of that business” (section 134(1)(b) of the Act). He has spent a total of 95 days in Australia from the date of first entry to the date of cancellation of his visa (9 December 2001 to 5 April 2005). The Applicant claimed to have been involved with the management of the Company while absent from Australia in Indonesia, but he was unable to adduce evidence that would separate his activities in relation to the Company from those in relation to his company in Indonesia (Electraco). In January 2004 the Applicant completed Form 1010 – Survey of Business Migrants – in which he claimed to be working “Min. 30 hours” per week in the business. However, he was unable to substantiate this.

27. I am not satisfied that the Applicant has brought himself within the ameliorative provisions of section 134(2) of the Act, which allow for an applicant to satisfy the Minister that he or she has made “a genuine effort” to establish a business. In Re Yam and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 the Tribunal stated that the word “genuine” in section 134(2) of the Act, and the matters mentioned in section 134(3) of the Act, combine to show that there is a requirement of a level of effort beyond that which is purely superficial or token. In relation to the criteria set out in section 134(3) of the Act:

(a)  the Applicant has not developed business proposals other than with Dux Water Heaters (as discussed above) and with two Hong Kong companies of a vague and general nature;

(b) there is no evidence of any partnership or joint venture arrangements;

(c) research into the conduct of the business in Australia appears to consist entirely of undocumented travels in Indonesia to promote Dux heaters, with very meagre results;

(d) the Applicant has spent only 95 days in Australia in some 3 and a half years;

(e) the Applicant’s assets in Australia consist of an unsecured loan of $1,230.73 in the Company, and his 70% equity in the Marsfield property. That house property could be used as security for a loan to develop the business, but has not in fact been so used.

28. It seems unnecessary in the circumstances to refer to the supplementary non-binding criteria set out in paragraph 4.5.1 of the Migration Series Instructions – 133, which elaborate the factors affecting a consideration of “genuine effort”. The Applicant submitted in argument before the Tribunal that he had not been made aware of these criteria, nor of what level of activity was required at the time he was granted a business visa. However, under the provisions of the Act itself, it is clear that the Applicant cannot succeed.

29. It remains only to consider whether in all the circumstances the Tribunal considers it appropriate to exercise the residual discretion vested in the Minister under the Act not to cancel the Applicant’s business visa. The Applicant put before the Tribunal the efforts he has been making since late 2004 to develop trading links with electrical goods suppliers in Hong Kong, using the Company as the agent in export sales from China to Indonesia. In particular he submitted one dated, and one undated, agreement with two Hong Kong firms for the supply of electrical equipment. However, the Applicant stated that these arrangements had been “put on hold” since the cancellation of his visa. In any event, the agreements are general in nature and merely contemplate a future relationship; no specific sales are specified in the agreements, nor is the country of source of the products specified. I cannot find a basis in this material to justify a finding of substantial future prospects for the Applicant’s Australian business that would cause me to exercise that discretion, nor any other basis which the evidence before me raises upon which the residual discretion might be exercised.

DECISION

30.      The decision under review is affirmed.

I certify that the preceding 30 paragraphs are a true copy of the decision and reasons for decision of Professor I. Shearer, Senior Member:

Signed:         A. Garcia
          ..................................................................................……………………………….

Associate

Date of Hearing  16 November 2005

Date of Decision  17 January 2006

Representative of the Applicant                 self represented      

Solicitor for the Respondent           Mr N. Arora