Tjong and Ors and Minister for Immigration and Multicultural and Indigenous Affairs

[2003] AATA 1266

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1266

ADMINISTRATIVE APPEALS TRIBUNAL      )

)No  W2002/352- 356

GENERAL ADMINISTRATIVE  DIVISION		)
Re		EFFENDI CHANDRA TJONG ISMANTO CHANDRA TJONG MIN LIAN JONG SUGIANTO CHANDRA TJONG YULIANA TJONG

Applicant

And THE MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr M Allen, Member

Date12 December 2003

PlacePerth

Decision  The decisions made on 12 December 2001 to cancel the visas held by the applicants are affirmed.

......….....(sgd M Allen)................

Member 

CATCHWORDS

IMMIGRATION AND CITIZENSHIP – cancellation of primary and secondary business skills visas – visa holder has obtained a substantial ownership interest in an eligible business in Australia but has not participated at a senior level in day to day management – genuine efforts not made to satisfy obligations of the primary visa holder – secondary visa holders would not suffer extreme hardship as a result of cancellation

Migration Act 1958 – s134, s135

Re Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299
Re Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178

Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690

Re Wang and Minister for Immigration and Multicultural Affairs [2000] AATA 961

REASONS FOR DECISION

12 December 2003 Mr M Allen, Member          

1.      On 12 December 2001 a delegate of the respondent Minister made decisions to cancel the business skills visa held by Mr Effendi Chandra Tjong and the secondary visas held by his wife and three children, the other four applicants in these proceedings.  The five applicants now seek review of those decisions.

2. At the hearing of the matter the applicants were represented by Mr Fee, a migration agent, and the respondent was represented by Mr Blades, an officer of the Australian Government Solicitor. Mr Tjong gave evidence with the assistance of an interpreter in the Indonesian language. The Tribunal had before it the documents filed pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (T1-T19 and S1-S8), and Exhibits A1-A4 tendered by the applicants.

3.      The background to the matter is that the applicants were granted visas on 25 August 1998 and first entered Australia as holders of the visas on 30 August 1998.  By letters dated 9 August 2001 the applicants were given notice of an intention to cancel their visas and were invited to make representations concerning cancellation by 13 September 2001.

4. Submissions were made on behalf of the applicants during October 2001 but on 12 December 2001 a delegate cancelled the visas and notified the applicants accordingly by letter. Mr Tjong’s visa was cancelled under s134(1) of the Migration Act 1958 (“the Act”) and the visas held by the other family members were cancelled under s134(4) of the Act.

5. At the hearing no issues were raised concerning whether or not the cancellation decisions had been made in accordance with the various statutory time requirements of the Act.

The Power to Cancel

6. The power to cancel Mr Tjong’s visa arises only if the decision maker is satisfied that Mr Tjong had not satisfied one or more of the three factors set out in s134(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”.

I must, therefore, consider whether any one of those grounds is satisfied in Mr Tjong’s case.

7.      The evidence shows that the business with which Mr Tjong was associated in Australia was a company, Pelmec Pty Ltd (“Pelmec”), which was incorporated in Australia on 21 July 1999.  According to the Annual Return for the year 2000 lodged by Pelmec with the Australian Securities and Investment Commission (T docs folio 106) the directors of Pelmec were originally Mr Tjong and his son, Ismanto. However, the 2001 Annual Return shows that in that year Mr Tjong’s daughter, Yuliana, became a director.  The two shareholders of the company were Mr Tjong and Ismanto, each holding 50 shares of $1.00 for a total paid up capital of $100.00.

8.      Mr Tjong gave evidence that in the year to June 2001 Pelmec exported Australian goods to the value of approximately $503,000.00 and in the year to June 2003 had exported goods to the value of more than $1 million.

9. In the record of the decision to cancel Mr Tjong’s visa (T18 at folio 146), the delegate accepted that Mr Tjong had obtained a substantial ownership interest in an eligible business in Australia and in the respondent’s Statement of Facts and Contentions and oral submissions in these proceedings that position was not varied. I am satisfied that Mr Tjong’s 50% ownership interest in Pelmec was a substantial one, and that Pelmec conducted an eligible business in Australia. Accordingly, the ground for cancellation specified in s134(1)(a) of the Act does not exist.

10.     However, the delegate was not satisfied that Mr Tjong had utilised his skills in actively participating at a senior level in the day to day management of Pelmec’s business and that was the principal basis advanced at the hearing by the respondent for the power to cancel his visa.

11.     In the 24 month survey form that Mr Tjong completed and returned to the respondent’s department in September 2000, he said that at that time he had not engaged in any business in Australia but that he expected to commence exporting certain Australian products in October 2000 (T6, folios 29, 36 and 38). 

12.     Commencing in November 2000 Pelmec did export quantities of flour, steel and fruit products from Australia to Indonesia.  Mr Tjong gave evidence that these transactions were organised in Australia by Ismanto who had been living here and he (ie Mr Tjong) had been active in Indonesia finding buyers and distributing the products.

13.     Between August 1998 and the date of cancellation of the visa Mr Tjong had spent only 71 days out of a total of 1,199 days in Australia and the delegate noted (T documents folio 147) that Ismanto had returned to Indonesia in July 2001.  Mr Tjong’s evidence was that originally payments had been made for the goods exported by Pelmec through Pelmec’s Australian bank account, but after a time he had arranged for payments to be made directly to suppliers from his Indonesian bank accounts to avoid bank charges.

14.     Financial statements for Pelmec for the years ended June 2002 and 2003 had not been prepared but Mr Tjong thought that the company had made very little profit in those years, despite the substantial turnover.  He said that he continued to maintain Pelmec as a corporate vehicle in Australia because it helped satisfy his visa requirements and because he believed that the Australian suppliers required there to be an Australian company involved in the transactions.

15.     This Tribunal has held in other cases that a visa holder is required to participate in the day-to-day management of an eligible business in Australia albeit with trips overseas from time to time (Re Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 and Re Ng and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299).  In Ng Deputy President Wright said that:

“this does not mean that the visa holder is confined to working within the geographical limits of Australia. Obviously overseas trips may be a vitally important part of the fostering and expanding of the business. However, the Act does not contemplate an absentee entrepreneur directing operations from afar. Direct ‘hands on’ involvement with the Commonwealth of Australia is essential. A business skills visa carries with it the right of permanent residence in Australia during its existence and by departing from Australia, joining family members as secondary applicants, they too can obtain this privilege.”

16.     In my opinion, the very short period of time spent by Mr Tjong in Australia in the period prior to cancellation of his visa and the fact that Ismanto was primarily responsible for whatever day-to-day management of Pelmec was required in Australia, means that Mr Tjong did not utilise his skills in actively participating at a senior level in the day-to-day management of the business conducted by Pelmec.  According, I find that a power to cancel the visa under s134(1)(b) arises.  Although it is not necessary to do so, I also find that because Mr Tjong had not been involved in the day-to-day management of the business he could not intend to continue to do so, as required by s134(1)(c).

17. Having concluded that the power to cancel Mr Tjong’s visa did arise, I must then consider whether the provisions of s134(2) are applicable. That subsection provides that a visa must not be cancelled if the decision maker is satisfied that the holder of the visa has made genuine efforts to obtain a substantial ownership interest in an eligible business in Australia, and to utilise his skills in actively participating at a senior level in the day-to-day management of that business, and intends to continue to do so. Sub-section 134(3) of the Act sets out 9 matters that the decision maker may take into account when determining whether a person has made genuine efforts. Other factors may be taken into account if considered relevant. Further guidance regarding the assessment of genuineness of effort is found in paragraph 4.5.1 of Migration Series Instructions 133 (“MSI-133”). These guidelines are not binding upon the Tribunal but they may be taken into account and, in the interests of consistency of decision making, it is desirable to do so: see Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 at 695. The factors set out in MSI-133 and their applicability in the present case are considered below.

(a)      Business proposals

18.     MSI-133 refers to business proposals that are considered genuine, realistic and achievable.  Mr Tjong produced no documented business plans of any kind in relation to the activities of Pelmec, but referred to efforts that had been made in the second half of 1999 and the first half of 2000 to investigate the acquisition of franchises in the food retailing industry involving organisations known as “Churchs’ Chicken” and an entity known as “A & W All American Food” (‘A & W’).  It appears that Ismanto spent time in the second half of 1999 in the United States training with the A and W organisation, and that subsequently Mr Tjong made an offer to A and W to buy the Australian franchising rights for that business for $2 million - but A and W rejected the offer because it wanted $10 million for the rights.  I note that a Mr Marzukie, the migration agent who made representations to the department on behalf of the applicants in response to the notices of intention to cancel the visas, is also the financial controller of A & W.  No evidence was adduced that would enable me to form any considered view about how far the negotiations advanced in relation to these possible acquisitions.

(b)      Contracts with partners or joint venturers

19.     Pelmec has not entered into arrangements with partners or joint venturers.

(c)      Written evidence of consultations with at least three business advisers

20.     There is no evidence of any consultations with business advisers, although Mr Tjong engaged an accounting firm to prepare financial statements for Pelmec for the year to June 2001.

(d)      Physical presence in Australia

21.     The MSI refers to the need for a visa holder to be present in Australia for more than 6 months after his arrival under a business visa.  As noted above, Mr Tjong was present in Australia for only 71 days before the cancellation of his visa and it is apparent that the vast majority of his time was spent in the management of his affairs in Indonesia and, to some extent, in handling affairs concerning the export of goods by Pelmec from Australia.

(e)      Transfer of funds to Australia

22.     The MSI refers to the need to transfer at least 50% of the funds indicated as available for transfer within 2 years.  In his application to obtain a business visa, Mr Tjong stated that he planned to invest $200,000 in a business in Australia (S7 folio 51).  Mr Tjong’s evidence was that he had transferred to Australia funds to acquire a house and car valued at approximately $460,000 and other amounts for private expenses.  The amount used to establish Pelmec was nominal.

(f)       Value of ownership interest

23.     The MSI refers to an ownership interest of a minimum of $100,000 or 10% ownership.  As noted above, Pelmec has a paid up capital of only $100 (Exhibit A4) and the financial statements for the company for the year ended June 2001 (the last available) show that it had total assets of $9,289 and net assets of $5,891. Given Mr Tjong’s evidence that Pelmec had made very little profit in the years to June 2002 and 2003 that position is unlikely to have changed. 

(g)      Business activity undertaken

24.     The MSI refers to a minimum $100,000 business activity as indicated by turnover.  The total business turnover of Pelmec prior to the cancellation of the visa was well in excess of that amount.

(h)      Compliance with notices

25.     Whether or not a visa holder has complied with an obligation to keep the Department advised of a current Australian address and to return survey forms that monitor business activities in Australia is a relevant factor.  In the present case Mr Tjong completed a 24 month survey form as requested.  He was subsequently asked for further information (T79) but no response was received by the Department.

26.     The genuine efforts made by a visa holder must be in relation to all three of the matters referred to in s134(2).  In my opinion, Mr Tjong made genuine efforts to (and succeeded in) obtaining a substantial ownership interest in an eligible business in Australia.  However, I am not 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 the business. 

27.     Mr Tjong said in his evidence that his understanding from the process of obtaining the visa was that his only obligation was to export goods from Australia and he had not understood that there was any requirement concerning personal involvement in the business or how long he needed to spend in Australia for business purposes.   On the evidence, Mr Tjong made no significant efforts to become involved in an Australian business until after completing the 24 month survey in September 2000, he spent very little time in Australia prior to the cancellation decision, and all management activities for the business that were conducted in Australia were carried out by Ismanto prior to his return to Indonesia in 2001, at about which time Yuliana became a director.. Since then it would appear that the management of the business has in fact been carried on from Indonesia, rather than in Australia.  In my opinion, although Pelmec remains a company incorporated in Australia that nominally exports goods from this country, the reality is that Mr Tjong conducts a business in Indonesia importing Australian goods rather than conducting an Australian export business. The management of that business occurs, in all important respects, in Indonesia.

28.     Mr Tjong said in his evidence that he would like to live in Australia at some stage, and I have no doubt that that is true.   Nevertheless, I consider that the limited time spent in Australia by Mr Tjong and the way that the business was actually conducted prior to cancellation of the visas means that he cannot be said to have made genuine efforts to be involved in the day-to-day management at a senior level of the Australian business.

29.     I therefore consider that Mr Tjong has not made genuine efforts as required and no other factors have been identified that would suggest that the residual discretion that is available to not cancel the visas should be exercised in his favour.  Accordingly, I conclude that the decisions made on 12 December 2001 to cancel the visa held by Mr Tjong should be affirmed.

The Position of the Secondary Visa Holders

30. Section 134(4) of the Act provides that where a business visa has been cancelled under s134(1), then a visa held by a member of the family unit of the holder of that visa must also be cancelled. However, s134(5) requires that the visas held by the other persons must not be cancelled if the cancellation would result in extreme hardship to the person.

31.     No oral evidence was given by any of the secondary visa holders.  Mr Tjong’s evidence was that Ismanto, who is aged 27 years, has completed his studies in Australia and has been living in Indonesia, working in the family business and dealing with the Australian suppliers of goods for export.  His daughter Yuliana (who is now aged 23 years) is currently undertaking a Masters degree at the University of Technology in Sydney and has approximately one year to completion.  It appears from document S5 folio 35 that this course was commenced in early 2002, ie after the cancellation of the visas.  The third child, Sugianto, is now aged 19 years and is presently undertaking an undergraduate course at the University of Technology Sydney.  He also commenced his course after the cancellation decisions were made.  No evidence was given concerning the position of Mr Tjong’s wife.  Mr Tjong gave evidence that his two children who were studying in Australia would experience hardship if their visas were cancelled, but he did not explain how or why that hardship would arise.

32.     In Re Wang and Minister for Immigration and Multicultural Affairs [2000] AATA 961 at 28-31, Deputy President McMahon observed that extreme hardship in the context of s134(5) must be judged subjectively; that hardship involves more than inconvenience or detriment – it must be affectation to a considerable degree; that helpful dictionary definitions of the word “extreme” include “utmost or exceedingly great in degree” or “to a very high degree”; that the hardship must necessarily result from the cancellation – a mere possibility or even a probability would not be sufficient.  The fact that a person does not wish to leave Australia of itself cannot amount to hardship because that is the result contemplated by the statute once cancellation occurs. 

33.     What must be looked at are the consequences to the person that undoubtedly would result from a cancellation.In relation to Mrs Tjong it appears that she has spent most of her time in Indonesia rather than in Australia since the visas were granted.  In the case of Ismanto, he has spent substantial periods in Australia but in recent years has been working in Indonesia with his father.  There is no evidence before me that would indicate that they would suffer any detriment that could be classified as extreme hardship.

34.     In relation to Yuliana and Sugianto, there is no evidence of any detriment that they would experience other than that, presumably, their studies would be interrupted.  There was no evidence before me that in fact their studies would be interrupted or whether they have made any efforts to obtain other visas that would allow them to continue to reside in Australia to complete their studies.  In the circumstances I am not satisfied that they would suffer extreme hardship if their visas were cancelled.

35.     Accordingly, my decision is that the decisions made on 12 December 2001 to cancel the visas held by Mr Tjong, his wife and the three children should be affirmed.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M Allen, Member

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

Date/s of Hearing  17 July 2003 
Date of Decision   12 December 2003
Counsel for the Applicant          Mr L Fee
Solicitor for the Applicant           The Immigration Group
Counsel for the Respondent     Mr D Blades
Solicitor for the Respondent      Australian Government Solicitor