Widjaja and Minister for Immigration and Multicultural Affairs

[2006] AATA 197

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 197

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/1297

GENERAL ADMINISTRATIVE DIVISION

Re:         ALFONSUS WIDJAJA

Applicant

And:       MINISTER FOR IMMIGRATION AND

MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             6 March 2006

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) Regina Perton

Member

MIGRATION ‑ business skills visa ‑ cancellation - whether eligible business ‑ whether utilising skills in actively participating at a senior level in the day‑to‑day management of business ‑ whether genuine effort – decision affirmed   

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

Hope v Bathurst City Council (1980) 144 CLR 1

Puzey v Commissioner of Taxation [2003] FCA FC197

REASONS FOR DECISION

6 March 2006   Regina Perton, Member

1.        Alfonsus Widjaja is an Indonesian citizen who arrived in Australia on 25 September 2001, with his wife and four children, as the holder of a subclass 127 business skills visa.  On 21 October 2004 the Minister’s delegate cancelled the visa on the grounds that Mr Widjaja had not complied with the terms of the visa. Mr Widjaja maintains that he has satisfied all the conditions of his visa and that the decision to cancel the visa was incorrect.

2.        Mr Widjaja’s company, Amy Jap Pty Ltd (Amy Jap), is involved in import, export and consultancy regarding trade in building products and engineering services with Indonesia.  The issues before the Tribunal are whether Amy Jap is an eligible business; whether Mr Widjaja is actively participating at a senior level in the day-to-day management of the business; and whether he has made a genuine effort to obtain an interest in an eligible business and participate in day-to-day management.

EVIDENCE

3.        Mr Widjaja gave oral evidence by telephone and through an interpreter.  His migration agent, Mr Zhang, provided written documentation concerning the company and its activities.  Mr Widjaja’s Australian business was registered in October 2001.  Mr Widjaja said that although the company is small, it is an eligible business because its activities are resulting in, or will result in, the development of business links with the international market; the creation and maintenance of employment in Australia; the export of Australian goods or services; and an increase in commercial activity and competitiveness within sectors of the Australian economy.  He explained that Amy Jap has a paid-up capital of $200 (200 shares of $1 each) and he has a 12.5 per cent ownership interest (25 shares) in the company.  Sales have been as follows: $A396.00 in 2001/2002; $A5495.80 in 2002/2003; $A15,070.87 in 2003/2004; and $A3000 deposit on a transaction amounting to $A8633.15 from July 2004 to October 2004.  Mr Widjaja said that the business has been attempting to import and export a variety of products including marine and sporting goods, glass, window and shower products, insulated panels and engineering services.

4.         Mr Widjaja acknowledged that turnover had been less than $100,000, and attributed this to the difficulties of establishing a new business and to major health problems that he had suffered.  He told the Tribunal that the business has been negotiating with Australian companies for the export of Australian building products and engineering services worth millions of dollars to Indonesia.  He also referred to a proposed construction project in Bali, Indonesia, which is awaiting permits and evaluation.  Mr Widjaja said that Amy Jap has engaged in business activities by importing badminton equipment and furniture products from Indonesia.  He agreed that his major activities are the management of PT Dian Mitra Abadi (PT Dian), an Indonesian company which he partly owns; and that sales from Amy Jap had been made to that company.

5.        In respect of the management of Amy Jap, Mr Widjaja explained that he participates in day-to-day management by directing the business, making decisions and supervising negotiations and business activities.  He said that his wife and son assist in the operation of the business, and produced documentation, including emails and taxation documents, to support his claim of a direct and active involvement in the activities of the business.

6.        Mr Widjaja also produced documentation,  including contact with suppliers, market research, a business plan and letters from professionals and other contacts in Australia, to support his claim that he has made a genuine effort to promote the interests of the business.  He told the Tribunal that he has extensive experience in the field of engineering services in Indonesia, and that his business background and contacts will be valuable in promoting Australian engineering service companies.  He stated that his family has transferred more than $150,000 into Australia over the past three years, and that further funds could be arranged from sources in Indonesia and Singapore.

4.        Mr Widjaja’s son Diony told the Tribunal that he is studying in Australia but works in the business under his father’s direction, and has been involved in contacting potential suppliers in Australia.  He said that he speaks to Mr Widjaja in Indonesia up to three times each week to discuss the business, and his knowledge of English has been of particular benefit.   At the start of the hearing, Diony withdrew an application for review as a secondary applicant.  Diony advised that he has now been granted permanent residence in his own right. 

8.        Mr Widjaja’s wife, Mie Foeng Jap, told the Tribunal that she owns a share of the business and lives in Indonesia with her husband.  She said that she accompanies him to Australia when he asks, and she supported his evidence about the importance of continuing to promote the business in Australia.

LEGISLATION

9.        The relevant legislation is the Migration Act 1958 (the Act). Section 134(1) of the Act provides:

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 AMY JAP AN ELIGIBLE BUSINESS?

10.      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.

11.      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 October 2001, Amy Jap has made a few sales, but most of these were to PT Dian. Consequently, the transactions do not constitute business activity, because Amy Jap appears to be a conduit to transfer goods rather than being engaged in business itself. This conclusion is supported by an absence of any real effort to make a profit, and a lack of repetitive and continuous activity.

12.      Similarly there is no persuasive evidence that Amy Jap 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.  As most of its dealings have been with PT Dian, Amy Jap has not demonstrated that it has developed business links with the international market.  For these reasons the Tribunal finds that Amy Jap is not an eligible business for the purposes of s 134(10) of the Act; and the Tribunal is satisfied that Mr Widjaja has not obtained a substantial ownership interest in an eligible business in Australia (s 134(1)(a) of the Act).

IS MR WIDJAJA ACTIVELY PARTICIPATING AT A SENIOR LEVEL IN THE DAY-TO-DAY MANAGEMENT OF THE BUSINESS?

13.      The Tribunal takes into account the existence of emails sent by Mr Widjaja to a number of suppliers with whom he has held discussions about pricing and availability of products.   The Tribunal  takes into account the evidence that there are several telephone conversations between Mr Widjaja and his son each week.  The Tribunal also takes into account Mr Widjaja’s health problems in recent years. However, on all the available material before it, the Tribunal is satisfied that Mr Widjaja and his wife live in Indonesia and he spends most of his time managing PT Dian, with his  son carrying out the limited activities of Amy Jap in Australia.  There does not appear to be a great deal of commercial activity carried out by Amy Jap, so Diony is able to maintain his involvement while studying in Australia.

14. For these reasons the Tribunal finds that Mr Widjaja is not utilising his skills in actively participating at a senior level in the day-to-day management of the business (s 134(1)(b) of the Act); and consequently he is unable to satisfy s 134(1)(c) of the Act.

DID MR WIDJAJA MAKE A GENUINE EFFORT TO OBTAIN SUBSTANTIAL OWNERSHIP OF AN ELIGIBLE BUSINESS AND TO PARTICIPATE IN DAY-TO-DAY MANAGEMENT?

15.      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).

…

16.      Paragraph 4.5 of the Ministerial Guidelines of the Migration Series Instruction (MSI) N° 133 Visa Cancellation Under Subdivision G ‑ Cancellation of Business Visas (the Guidelines), entitled What is a '”genuine effort”?, contains a list of  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.

17.     The Tribunal has considered the factors listed in s 134(3) of the Act and the Guidelines in MSI-133.  In assessing  Mr Widjaja’s claims against these factors and the Guidelines, the Tribunal takes into account Mr Widjaja’s evidence about a number of business proposals at various stages of development.  However, on the available material before it, the Tribunal is not convinced that any of those proposals are realistic or achievable (s 134(3) (a)), or that there are any Australian partners or joint venturers, other than reference to an Australian business for design work (s 134(3)(b)).  There is no written evidence of research into the conduct of an eligible business in Australia (s 134(3)(c)).  Mr Widjaja had spent 49 days in Australia from the grant of the visa in 2001 to the date of cancellation (s 134(3)(d)), which is substantially less than the minimum of six months suggested in the Guidelines, even taking into account his health problems during this period.   

18.      There is no evidence Mr Widjaja has made a significant investment in the business (s 134(3)(e)); and the value of the ownership interest in eligible businesses in Australia held by him is negligible (s 134(3)(f)).  There appears to have been little business activity undertaken by Mr Widjaja in the business (s 134(3)(g)).  In respect of s 134(3)(h), Mr Widjaja has not failed to provide additional material requested by the Department of Immigration and Multicultural Affairs.  Section 134(3)(i) is not applicable. 

19.      After considering all the relevant factors in s 134(3) of the Act, the Tribunal finds that Mr Widjaja 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), or to utilise his skills in actively participating at a senior level in the day‑to‑day management of that business (s 134(2)(b) of the Act).  Therefore, the Tribunal finds that the exercise of the discretion to cancel the visa is appropriate in this case.

DECISION

20.      The Tribunal affirms the decision under review.

I certify that the twenty [20] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  27 June 2005, 30 November 2005

Date of decision:  6 March 2006
Advocate for applicant:                Mr J. Zheng,  
Migration Agent for applicant:       Interpac Business & Migration Solutions
Advocate for respondent:            Mr A. Chand, Solicitor
Solicitor for respondent:              Clayton Utz lawyers