Widjojo and Minister for Immigration and Multicultural and Indige Nous Affairs

[2004] AATA 188

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 188

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/814

GENERAL ADMINISTRATIVE  DIVISION		)
Re		NIKIANTO WIDJOJO

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal M.A. Griffin

Date16 February 2004

PlaceSydney

Decision The Tribunal affirms the decision under review

[Sgd] M.A. Griffin Member

CATCHWORDS

IMMIGRATION - Business Skills Visa - cancellation of business skills visa  - substantial ownership interest - eligible business - active participation at a senior level in day to day management of a business - genuine effort - decision under review affirmed

Migration Act 1958 – section 134

Hope v Bathurst City Council (1980) 144 CLR 1

Skoljarev v Australian Fisheries Management Authority (1995) ALD 517

Choi and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 297

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

Kow and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 973

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

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

REASONS FOR DECISION

16 February 2004 M.A. Griffin            

1.      This is an application for review of a decision made on 3 April 2003, by a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (“the Respondent”), to cancel the Business Skills Visa (“the Visa”) of Mr Nikianto Widjojo (“the Applicant”). Mr Widjojo’s wife and children are secondary visa holders but they have not applied for review of the decision to cancel their visas.

2. The day before the scheduled hearing of the application, the parties agreed to dispense with a hearing and that the Tribunal should decide the matter on the papers, that is, based on the documentary material presently before the Tribunal. Those papers consist of the documents filed under section 37 of the Administrative Appeals Tribunal Act1975 (documents T1 to T17) and the parties’ Statements of Facts and Contentions, marked A1 and R1 for the Applicant and the Respondent respectively.

BACKGROUND

3.      Mr Widjojo was born in Indonesia on 27 July 1959. He owns a company in Indonesia called PD Wijaya Teknik (“PDWT”).  Mr Widjojo first entered Australia on 10 December 1999, after the grant of his business visa. He stayed for four days. He returned on 20 December 1999, for two days. Mr Widjojo did not spend any time in Australia in the calendar year 2000. He came to Australia again in September 2001 for four days.  He did not visit Australia again until May 2003. On that occasion he stayed for ten days. That is, after receiving his business visa Mr Widjojo spent a total of ten days in Australia, before his visa was cancelled in April 2003.

4.      PDWT purchased products exported by an Australian company Austraindo Star (“AS”) which is the relevant business in these proceedings.  AS, in the Applicant’s Statement of Facts and Contentions, is described as a business which exports various products out Australia including mowers, davey pumps, hammer tips, lawn mower parts, Omega3, copper tubes, shredder tips and motor pumps.  AS was registered as a business name on 15 February 1999. There is some evidence that Mr Widjojo acquired a 25% interest in AS on 1 July 2001. Thereafter AS continued to export goods to PDWT at the same address in Singapore (Tpp.49-52, 101,105-106, 112-113, 123-171). The turnover of AS for the financial year 2001/2002 was $63,990.00 (Tp.175). The net profit for the year was $2,347.00, which was distributed between the four partners equally, Mr Widjojo receiving $587.00.

LEGISLATION

5.      Section 134 of the Migration Act 1957 (“the Act”) confers a discretionary power upon the Respondent to cancel a business visa if satisfied of certain matters; it  relevantly provides as follows:

“134    Cancellation of business visas

(1)Subject to subsection (2) and to section 135, the Minister may cancel a business 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).

(3A)     …

(4)       Subject to subsection (5) and to section 135, if:

(a)the Minister cancels a person’s business visa under subsection (1) or (3A); and

(b)a business visa is held by another person who is or was a member of the family unit of the holder of the cancelled visa; and

(c)the other person would not have held that business visa if he or she had never been a member of the family unit of the holder of the cancelled visa;

the Minister must cancel the other person’s business permit or business visa by giving written notice to that person.

(5)The Minister must not cancel the other person’s business visa under subsection (4) if the cancellation of that visa would result in extreme hardship to the person.

(6)The Minister is taken not to have cancelled a person’s business visa under subsection (4) if the Administrative Appeals Tribunal has set aside the decision of the Minister to cancel the business visa of the relevant person to whom paragraph (4)(a) applied.

(7)       …

(10)     In this section:

business visa means:

(a)       a visa included in a class of visas, being a class that:

(i)        has the words “Business Skills” in its title; and

(ii)       is prescribed for the purposes of this paragraph; or

(b)       a visa:

(i)to which a prescribed provision of the Migration Reform (Transitional Provisions) Regulations applies; and

(ii)that is of a kind prescribed for the purposes of this paragraph; or

(c)a return visa that is granted to a person who is or was the holder of a business permit or business visa;

that is or was granted on or after 17 February 1992.

designated investment has the meaning given by the regulations.

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.

established business in Australia visa means a business visa a criterion for whose grant:

(a)relates to the applicant having an established business in Australia; or

(b)is that the applicant is a member of the family unit of the holder of a visa a criterion for whose grant is as mentioned in paragraph (a).

family member’s visa means a business visa held by a person:

(a)who is or was a member of the family unit of another person who held a business visa; and

(b)who would not have held the business visa if he or she had never been a member of the family unit of the other person.

…

member of the family unit has the meaning given by the regulations.

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.

relevant designated investment, in relation to an investment‑linked visa (other than a family member’s visa), means the designated investment that was, in deciding to grant the visa, regarded as satisfying the criterion referred to in paragraph (a) of the definition of investment‑linked visa.

return visa has the same meaning as in the regulations.”

ISSUES

6.      The issues for determination are, whether or not Mr Widjojo satisfies the requirements set out at section 134(1) of the Act or was making genuine efforts to do so pursuant to section 134(2).   This Tribunal must determine whether Mr Widjojo has:

(a)obtained a substantial ownership interest in an eligible business in Australia or

(b)is utilising his or her skills in actively participating at a senior level in the day‑to‑day management of that business

CONSIDERATION

7.      The law requires me to consider whether the decision to cancel the visa was the correct or preferable decision at the time of the cancellation (in this matter as at 3 April 2003). However, as Senior Member Allen said, in Kow and Minister for Immigration and Multicultural and Indigenous Affairs  [2003] AATA 973, at paragraph 12, “That does not mean of course that later events cannot be examined to see what light they throw upon circumstances at the time of cancellation”.  It is against this legislative and caselaw background that the evidence is to be considered.

Substantial ownership interest

8.      . Whether or not Mr Widjojo held a substantial ownership interest in AS is “a question of fact and degree” (Ong and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 at paragraph 25). The evidence of ownership consists of a Certificate of Registration of Business Name dated 21 March 2002 (Tp.89), which lists Mr Widjojo as one of four proprietors; a letter signed by two directors of AS stating that Mr Widjojo “is our respected business partner and rightful part owner of Austraindo Star” and the AS financial statements for 2002 showing the “partners’ profit distribution” of $587 to Mr Widjojo (Tp.78). In his written submissions, Mr Widjojo states that he acquired this ownership interest on 1 July 2001 (A1). However, in his 24-month business migrant survey response dated 24 January 2002, Mr Widjojo stated he established his ownership in AS in September 2000 (Tp.35). An account application form submitted to one of AS’s product suppliers on 5 December 2002 lists three directors/owners of AS but does not mention Mr Widjojo (Tp.169).

9.      In Ong (supra), the Tribunal held that a 12.25% holding in a private company having a share capital of 10,000 $1 shares was not a substantial ownership of that business. In Wong and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 54, a 25% ownership interest was held by the Tribunal to be substantial. 

10.     I have not had the benefit of hearing from Mr Widjojo or any of the other officers of AS. I have not been provided with evidence of the AS company registration or of significant details such as its share structure. There is little evidence of the capitalisation value of the company or of its business plan. There is contradictory evidence about the date of Mr Widjojo’s acquisition of an ownership interest in AS. In all the circumstances I find that Mr Widjojo has not obtained a substantial ownership interest in AS.

eligible business

11.     The next issue to be considered is whether AS was, at the date of cancellation of Mr Widjojo’s visa, carrying on an eligible business,  In discussing the definition of the term ‘eligible business’, Senior Member Allen in Re Kow (supra) said at paragraph 19:

”To constitute a business, there must be some element of continuity and repetition, cf Mason J (as he then was) in Hope v Bathurst City Council (1980) 144 CLR 1 at 8 where His Honour stated that a business is denoted by a commercial enterprise in the nature of a going concern and that its activities are engaged in for profit on a continuous and repetitive basis.  Similar comments (without acknowledgment) were made by the Full Court of the Federal Court in Stone v Commissioner of Taxation (2003) 198 ALR 541 at p 47 where the Court said inter alia:

“If there is system in the activity, coupled with repetition and continuity, that will be indicative of a business.”

12.     The evidence of the business history of AS does not meet these requirements. In Huang and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 656, at paragraph 11, Senior Member Muller (as he then was) said:

“One of the most significant factors to be taken into account in determining whether or not an activity amounts to carrying on a business is whether or not there is an intention to make a profit.  If an activity has not and is not likely to result in a reasonable return for energy and money expended, then it is more likely than not that the person so engaging in the activity does so for motives other than the carrying on of a business”. 

13.     The export of various products by AS during the relevant period amounts to some five transactions. These involved the export of shredder tips, copper tubes, Omega3 capsules and some purchase orders for webbing slings and more Omega3 capsules. These transactions are dated 2 August 2001, 3 October 2001, 18 and 25 February 2002 and 26 August 2002.  Each transaction was between AS and PDWT Mr Widjojo’s Indonesian company. I am not satisfied on the basis of this evidence of five transactions during the period of the visa, that AS can be described as a commercial enterprise carried on as a going concern for the purpose of profit on a continuous and repetitive basis.

14.     Other matters set out in section 134(10) such as the development of business links with the international market; the creation or maintenance of employment in Australia; the introduction of new or improved technology to Australia or an increase in commercial activity and competitiveness within sectors of the Australian economy; have not been demonstrated on the available evidence. I am not satisfied that the transactions of AS during the period of the visa, have the character of carrying on business on a continuous and repetitive basis, as defined in Hope v Bathurst City Council (1980) 144 CLR. I find therefore that AS is not an eligible business for the purposes of section 134(10) of the Act.

15.     It follows that Mr Widjojo has not obtained a substantial ownership interest in an eligible business in Australia as stipulated in section 134(1)(a) of the Act.

utilise skills in actively participating at a senior level in the day to day management of the business

16.     Section 134(2) of the Act provides that the Minister must not cancel a Visa the visa holder has made a genuine effort to obtain a substantial ownership interest in an eligible business or to utilise his skills in actively participating, at a senior level, in the day to day management of the business and he intends to continue to make those genuine efforts.

17.     Subsection 134(3) of the Act sets out the matters, which the Minister may take into account when determining whether a person has made the genuine efforts referred to in subsection 134(2). Paragraph 4.5.1 of the Migration Series Instruction 133: Cancellation of Business Visa (“MSI”) provides guidance as to whether a genuine effort has been made for statutory purpose.  These guidelines, while not binding upon the Tribunal, do mitigate against inconsistency in decision-making: see the discussion by Davies J, Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 commencing at 695.  The factors to be considered 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.”

18.     An examination of the requirements set forth in subsection 134(3) and paragraph 4.5.1 of the MIS, outlined above, indicates that they do not assist Mr Widjojo in demonstrating that he has made a genuine effort, in particular at the date of cancellation of his business skills visa.

FINDINGS

19.     In coming to the correct and preferable decision in this matter the Tribunal took into consideration all relevant case law and legislation and considered all documentary evidence.  The Tribunal thus makes the following findings:

(a)I do not accept the contention that Mr Widjojo had to remain outside Australia to market the export business of AS. On the evidence all exports went to his company in Indonesia. There is no evidence of the marketing of AS to any external or unrelated customer. Mr Widjojo spent only ten days in total in Australia subsequent to the issue of his Visa and before the cancellation.  This limited period is inconsistent with Mr Widjojo making genuine efforts to obtain and engage in a business in Australia.  The period also falls well short of the six months referred to in item (d) of paragraph 4.5.1 quoted above.

(b)The value of Mr Widjojo’s ownership interest in AS is not in evidence but appears to be well short of the $100,000.00 ownership referred to in item (f) of paragraph 4.5.1 quoted above.

(c)There is no evidence that Mr Widjojo has transferred to and retained in Australia any substantial amount of investment capital.

(d)There is no evidence of anywhere near a minimum $100,000.00 turnover in business activity.

(e)The export transactions by AS to Mr Widjojo’s Indonesian business do not evidence a business.

(f)There is no evidence of the development of any business proposals or joint venturers.

(g)There is no reliable evidence of business research or consultation with business advisers.

DECISION

20.     I am satisfied that Mr Widjojo has not made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia nor has he made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of that business.  In all the circumstances, I am satisfied the decision to cancel the visa is the correct and preferable decision.

21.     The Tribunal affirms the decision under review.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of M.A. Griffin

Signed:         A. Krilis  Associate

Date/s of Hearing  10 December 2003
Date of Decision  16 February 2004
Solicitor for the Applicant          Michael Russell
Solicitor for the Respondent     Ben Cramer