Witjahya and Minister for Immigration and Multicultural Affairs

[2006] AATA 1118

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 1118

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W2005/208

GENERAL ADMINISTRATIVE DIVISION		)
Re		YONGKI WITJAHYA

Applicant

And MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS

Respondent

DECISION

Tribunal Mr A Sweidan, Senior Member

Date22 December 2006

PlacePerth

Decision The Tribunal affirms the decision under review.

……..(Sgd. Mr A Sweidan)..............

Senior Member

CATCHWORDS

IMMIGRATION – Business Skills Visa cancellation – failure to acquire substantial ownership interest in eligible business – failure to participate at a senior level in day to day management – genuine effort

LEGISLATION

Migration Act 195 8 (C’th) s 134(1) and (2)

CASES

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

Commissioner for Superannuation v Scott 71 ALR 408 at 412

Hope v Bathurst City Council 1980) 144 CLR 1,

Hope v Bathurst City Council (1980) 144 CLR 1

Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997

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

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

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

Lau v Minister for immigration and Multicultural Affairs [2002] AATA 70

REASONS FOR DECISION

22 December 2006 Mr A Sweidan, Senior Member    

BACKGROUND

1.      This is an application for review of a decision made by a delegate of the respondent on 2 May 2005 cancelling the business skills visa of Yongki Witjahya (the applicant).

2.      On 14 November 2001 the applicant was granted a sub-class 127 business skills visa.

3.      The applicant first entered Australia on 16 December 2001.  From that date until 2 May 2005 ie a period of approximately three and a half years he spent a total of 52 days in Australia.

4.      On 2 December 2003 the applicant was sent a standard 24 month survey by the respondent’s Department.  While the completed survey is dated 22 January 2004 it is not clear when it was received by the Department.

5.      The applicant stated that he had registered an Australian company, Multi Trading Pty Ltd (Multi Trading) and that he had a 100% ownership interest in Multi Trading. The core business activity of the company was stated to be  exporting metal bars.

6.      The applicant provided evidence of a total of five export transactions of metal bars by Multi Trading to two companies in Indonesia.  Two shipments were in the 2002/2003 financial year and three shipments in the 2003/2004 financial year. There was no evidence of any further business activity.

7.      On 15 December 2004 a notice of intention to cancel the visa was sent by email to the applicant’s nominated representative. 

8.      The applicant responded by letter on 17 March 2005.  In his response the applicant essentially reiterated the claims he had made in his 24 month survey.

9.      On 2 May 2005 a delegate of the respondent decided to cancel the applicant’s business skills visa and the visas held by the applicant’s family unit.

Delegate’s Decision

10.     The delegate noted that the applicant had not provided sufficient documentary evidence to demonstrate that Multi Trading was an eligible business.

11.     The delegate also noted that no documentary evidence had been provided to substantiate the applicant’s management role in Multi Trading.  Given the limited business activity the delegate was not satisfied that the applicant was committed to engaging in a business in Australia.

12.     Overall, the delegate found that the applicant had not obtained a substantial ownership interest in an eligible business, was not utilising his skills in senior management on a day to day level, nor had he made genuine efforts to do so.

EVIDENCE AND TRIBUNAL FINDINGS

13.     The Tribunal had before it the “T” documents filed by the respondent.  The applicant was the only witness called to give evidence.  He confirmed the facts set out in paras 3 to 6 above.

14.     Under cross-examination the applicant claimed to have worked 45 hours per week in Indonesia for the Multi Trading business from 2004.  When asked to explain this in light of the minimal business activity ie. 5 shipments over a 2 year period he said that he was engaged in marketing and distribution for the 2 Indonesian companies which received the 5 shipments of metal bars.  He denied that he had any financial interest in those companies and said he was not a Director of either but could not furnish any satisfactory explanation as to why he handled the marketing and distribution of the products which they had ostensibly purchased from his Australian company.

15.     The Tribunal did not find the applicant to be a credible witness.  He did not provide credible answers to many of the questions put to him and in many instances was evasive and unwilling to answer questions properly.  The Tribunal formed the view that Multi Trading and the transactions in which it purportedly engaged were all part of a façade created by the applicant to give the impression that he was complying with the requirements of his visa, when in fact this was not so.

16.     The Tribunal notes that Multi Trading had no business premises or employees in Australia and that it made minimal profits.  The Tribunal is of the view that Multi Trading did not carry on a genuine business and that what the applicant was doing was exporting the products to entities which he either controlled or was closely associated with in Indonesia, solely for the purpose stated above.

Legislation and Policy

17. Section 134 of the Migration Act 1958 (the Act) provides that the Minister has a discretion to cancel the visa if she is satisfied that the visa holder has not obtained a substantial ownership interest in an eligible business in Australia, is not utilising his skills in actively participating at a senior level in the day-to-day management of the business, or does not intend to do these things. The Minister must not cancel the visa if she is satisfied that the visa holder has made genuine efforts and intends to continue to make such genuine efforts.

18. Eligible business and ownership interests are defined in section 134(10) of the Act and discussed at paragraph 4.3 of the MSI-133.

19. Section 134(10) provides that eligible business means a business that the Minister reasonably believes is resulting or will result in one or more of the following:

19.1    the development of business links with the international market;

19.2    the creation or maintenance of employment in Australia;

19.3    the export of Australian goods and services;

19.4the production of goods or the provision of services that would otherwise be imported into Australia;

19.5the introduction of new or improved technology to Australia; and

19.6an increase in commercial activity and competitiveness within sectors of the Australian economy.

20.     Paragraph 4.3.2 of the MSI-133 notes that eligibility relates to achievement of stated objectives through the activities of the business, not directly to the size or scale of the business.

21. Section 134(3) provides a list of matters that the Minister may take into account when determining whether a person 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.

22.     Notes to guide the interpretation of these matters are provided at paragraph 4.5 of the MSI-133.  The matters that may be taken into account, and the notes to their interpretation provide as follows:

22.1business proposals that the person has developed.  The MSI refers to whether there is a business proposal which is considered genuine, realistic and achievable;

22.2the existence of partners or joint ventures.  The MSI refers to whether there is a formal contract with partners or joint venturers;

22.3research that the person has undertaken into the conduct of an eligible business in Australia.  The MSI refers to whether there is written evidence of detailed consultations with at least 3 business advisers;

22.4the period or periods during which the person has been present in Australia.  The MSI refers to whether there has been physical presence for more than 6 months since the first arrival as a business skills migrant;

22.5the value of assets transferred for use in obtaining an interest in an eligible business.  The MSI refers to whether there has been transfer to and retained in Australia at least 50% of the funds indicated as available for transfer within the 2 years;

22.6the value of ownership interest in the eligible business in Australia which is or has been held by the person.  The MSI refers to whether there is or has been a minimum Australian $100,000.00 or 10% ownership held by the person and provides that if the person is no longer in the business the reasons for loss of ownership are relevant;

22.7the business activity that is or has been undertaken by the person.  The MSI refers to whether there is a minimum of Australian $100,000.00 business activity as indicated by turnover and provides that this may include other business activity not considered as an eligible business but cannot include passive investment, for example the purchase of shares;

22.8whether the person has failed to comply with a notice under section 137.  The MSI refers to whether there has been a failure to comply with a notice for information under section 137, i.e. mandatory monitoring of Australian address and return of survey forms; and

22.9if 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 on the day-to-day management of the business:

22.9.1the length of time the person held the ownership interest or participated in the management as the case requires; and

22.9.2the reason why the person no longer holds the interest or participates in the management as the case requires.

RESPONDENT’S CONTENTIONS

Substantial ownership interest in an eligible business in Australia

Substantial ownership

23. Section 134(1) and (2) of the Act require the visa holder to obtain a substantial ownership interest in an eligible business in Australia.

24. Section 134 defines “ownership interest” in relation to a business to mean an interest held by the visa applicant in a business as:

24.1      a shareholder in a company that carries on the business; or

24.2a partner in a partnership that carries on the business; or

24.3the sole proprietor of a business;

24.4including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

25. The word “substantial” has been considered in Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 where Commissioner for Superannuation v Scott 71 ALR 408 at 412 was cited with approval. In Commissioner for Superannuation v Scott the Court considered a number of authorities dealing with the question of what constitutes “substantial” and held, (albeit in the context of s45D of the Trade Practices Act 1974 (Cth)) that the word “substantial” means:

“Real or of substance and not insubstantial or nominal”.

26.     What is a substantial ownership of an eligible business is also a question of fact and degree (Ong supra at [25]).

27.     According to the company report (at T19 pages 127-128) four shares have been issued in Multi Trading.  The applicant has one share giving him a personal 25% shareholding.  The applicant’s wife also has a 25% shareholding.  It is not clear who the other two share holders are.  They may be members of the applicant’s family.

28. However, the respondent accepts that the applicant’s shareholding in the company constitutes substantial ownership with in the meaning of section 134 of the Act.

Eligible business

29. The definition of an eligible business is set out in section 134(10) of the Act. A business must meet at least one of the criteria set out in paragraphs (a) to (f) of the definition in order to be classified as an eligible business.

30.     Furthermore, the Tribunal has previously found that the reference in subsection 134(1)(b) to the “day-to-day management of the business” indicates that an eligible business must have some element of continuity and repetition.  Applying Mason J’s formulation of “carrying on a business” from Hope v Bathurst City Council (1980) 144 CLR 1, Deputy President McMahon found in Tang v Minister for Immigration and Multicultural Affairs [2000] AATA 997 at [20] that the construction of “participating in the day-to-day management of the business” for subsection 134(1)(b) required a commercial enterprise in the nature of a going concern with activities engaged in for the purpose of profit on a continuous and repetitive basis.

31.     The respondent contends that Multi Trading is not an eligible business because the company has not engaged in business transactions with an element of continuity and repetition.  

Active participation at a senior level in the day-to-day management of an eligible business

32.     The respondent contends that the applicant has failed to demonstrate that he has utilised his skills in actively participating at a senior level in the day-to-day management of an eligible business.

33.     The Tribunal should not exercise its discretion to set aside the visa cancellation decision unless it is satisfied that the applicant is utilising his skills in actively participating at a senior level in the day-to-day management of the business (or has made and intends to continue to make genuine efforts to utilise his skills in actively participating at a senior level in the day to day management of the business).

34.     The Act is intended to benefit business owners who settle in Australia and actively manage an eligible business (Tang supra at [21]).

35. In Huang v Minister for Immigration and Multicultural Affairs [2002] AATA 656 Senior Member Muller said at [12]:

“Not only must the eligible business operate in Australia to comply with the Act, the visa holder must participate at a senior level in the day-to-day management of the Australian business in Australia, albeit with trips overseas from time to time”.

36.     Reference can be made to the Second Reading Speech of the Minister for Immigration and Ethnic Affairs introducing the Migration Amendment Bill (No 2) 1992 which introduced the new section 134 into the Act. It is clear from that speech (Hansard, House of Representatives, 7 May 1992 at 2678) that it was understood that migrants who arrived in Australia on a business skills visa would remain resident in Australia (see Ong v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 178 at [31]).

37.     In Ng v Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 299 Deputy President Wright QC commented at [12]:

“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 fostering and expanding the business.  However, the Act does not contemplate an absentee entrepreneur directing operations from afar.  Direct “hands on” involvement within the Commonwealth of Australia is essential.  A business skills visa carries with it the right of permanent residency in Australia during its existence and by departing from Australia and joining family members as secondary applicants they too can obtain this privilege.  It would be strange indeed if an overseas entrepreneur could secure these advantages by directing business operations from abroad within a day or two of his first arrival and never setting foot in this country again”.

38.     Up to the date of the cancellation of the applicant’s visa he had only spent 52 days in Australia. The respondent contends that such limited time in Australia supports the respondent’s submission that the applicant has failed to actively utilise his skills in participating at a senior level in the day-to-day management of an eligible business.

39.     Furthermore, there is little documentary evidence to support a finding that the applicant has participated at a senior level in the day-to-day management of Multi Trading whose business activities were in any event minimal.

Genuine effort to obtain a substantial ownership interest in an eligible business in Australia and to utilise skills in actively participating at a senior level in the day-to-day management of the eligible business

40.     In considering the genuine effort the applicant has made, the Tribunal should only look at events, actions and intentions that existed prior to the cancellation of the visa (Wong v Minister for Immigration and Multicultural Affairs [2002] AATA 54).

41.     However, the Tribunal when reviewing visa cancellation decisions can consider activities after cancellation in situations where there is evidence of prior intentions (Lau v Minister for immigration and Multicultural Affairs [2002] AATA 70).

42.     Paragraph 4.5.1 of the Migration Series Instructions provides a list of factors that decision-makers may look at when determining whether a genuine effort has been made.

43.     The respondent contends that the applicant has not made a genuine effort either to obtain a substantial ownership interest in an eligible business in Australia or to utilise his skills in actively participating at a senior level in the day-to-day management of the eligible business. In support of this contention and with reference to paragraph 4.5.1 of the MSI the respondent says as follows:

43.1      a detailed and realistic business plan has not been provided;

43.2there is no written evidence of detailed consultations with at least three business advisors or any other research undertaken by the applicant;

43.3     there is no evidence of significant business activity ; and

43.4the nature of the applicant’s business activity has been limited or isolated ad hoc transactions.

44.     The respondent contends that the applicant’s efforts do not amount to genuine efforts but are merely an attempt to avail himself and his family of the benefits that flow from the visas.

45.     The applicant has failed to demonstrate that he has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia or 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.

46.     The respondent submits that the delegate’s decision should be affirmed because:

46.1.the applicant has failed to obtain a substantial ownership interest in an eligible business in Australia;

46.2the applicant has failed to utilise his skills in actively participating at a senior level in the day-to-day management of the business; and

46.3the applicant has failed to make any efforts to obtain a substantial interest in an eligible business in Australia or to utilise his skills in actively participating at a senior level in the day-to-day management of an eligible business. 

DECISION

47.     The Tribunal agrees with the respondent’s contentions and in light of the Tribunal’s findings on the evidence accordingly affirms the decision under review.

I certify that the preceding forty seven (47) paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member

Signed:         .........(Sgd. Ms R Riberi)….…
    Associate

Date of Hearing  6 October 2006
Date of Decision  22 December 2006
Solicitor for the Applicants        Self-represented

Solicitor for the Respondent     Mr S Ferguson, Australian Government Solicitor