Yao and Ors and Minister for Immigration and Citizenship

[2008] AATA 282

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 282

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/1257-1259

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		YOUQING YAO GU JUN SHUN YAO

Applicants

And MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal B.H. Pascoe, Senior Member    

Date9 April 2008

PlaceMelbourne

Decision The Tribunal affirms each of the decisions under review.  

(sgd) B.H. Pascoe

Senior Member

IMMIGRATION - Business Visa – substantial ownership interest in eligible business – utilising skills in actively participating at a senior level in day to day management – whether eligible business - present in Australia for three days only during period of visa – no evidence of day to day involvement in management – no present intention to immigrate to Australia – dependent visa – not extreme hardship

Migration Act 1958 s134

REASONS FOR DECISION

9 April 2008 B.H. Pascoe, Senior Member       

1. These applications are for a review of decisions of the respondent to cancel business visas pursuant to s 134 of the Migration Act 1958 (the Act).  The first applicant, Mr Youqing Yao (Mr Yao), was granted a subclass 127 business visa on 23 October 2003.  The visa was cancelled on 6 March 2007.  The second and third applicants, Ms Jun Gu and Mr Shun Yao, are the wife and son respectively of Mr Yao and their visas, as dependants of Mr Yao, were also granted and cancelled on the same dates.

2.      At the hearing, the applicants were represented by Mr A. Wong.  The respondent was represented by Mr T. Eteuati of counsel.  Evidence was given by Mr Yao, Mr Li Yum Yin (Mr Li) a nephew of Mr Yao and Mr K.G. Burbridge who described himself as a consultant and Sinologist.  A witness statement from Ms Jun Gu was tendered.

3.      Mr Yao acquired a 51 percent shareholding in an Australian company, Universe Group Pty Ltd (Universe) on 1 July 2005.  On that same day he became a director of Universe.  This company was formed in April 1997 and, until July 2005, the sole shareholder and director was Mr Li.  Until October 2007 the sole business of Universe was the importation and sale of clothing in Australia.  All of the products were sourced from companies controlled by Mr Yao which manufactured the clothing in China.  Mr Li said that, after immigrating to Australia and studying computer science, his uncle, Mr Yao, considered it appropriate in 1997 to establish an Australian company to import the clothing.  Mr Li travelled to China and, by working with his uncle and his uncle’s managers, developed the necessary skills to manage the business in Australia.  Funding was provided by extended credit facilities from Mr Yao’s companies in China.  By 30 June 2004,  Universe had sales of $5.8 million, a net profit $20,628 and assets of $3.7 million, primarily financed by trade creditors. 

4.      Mr Yao said that he is involved in several companies in China primarily involved in textile production, dyeing and clothing manufacturing.  He has, in addition, invested some $6 million in a power plant.  His main company has a turnover of some A$350 million and a profit of approximately A$6 million.  Total profits of the companies in China are approximately A$10 million.  The companies have some 10,000 employees.  Mr Yao said that his role is the overall boss to see that everything is done according to standards.  He has a manager for each company in the group with monthly meetings and annual budgets.

5.      Mr Yao said that the shares in Universe was his only investment outside China.  He said that he arranged for his nephew to establish the company in 1997 with the view of him eventually moving to Australia.  Mr Yao acknowledged that he had visited Australia once only since the grant of the visa in October 2003 and prior to its cancellation when he came here for three days in November 2003.  He said that he was not aware that he was expected to spend time in Australia.  He said that he had authorised his wife to come to Australia and represent him here.  He said that he had visited Australia three times since the cancellation of his business visa.  Mr Yao said that he paid Mr Li $113,812 for the purchase of 51 percent of shares in his name and 10 percent in the name of his wife.  He further provided $371,529 by way of loan to Universe.  It would appear that this latter amount represented part of the debt due to Mr Yao’s Chinese companies and said to have been paid by him on behalf of Universe.  He said that he was told by his lawyer how much was needed to be invested here and he did so.  He said that he was not aware of the need for a direct investment in Universe until advised by his lawyer.

6.      Mr Yao accepted that he had no present intention of migrating to Australia as he could not manage his Chinese businesses from Australia nor provide the necessary funding for the Australian business.  He said that he may be in a position to move to Australia in five years time.  Mr Yao acknowledged that his primary reason for applying for the visa in 2003 was for his family, particularly children. 

7.      Mr Yao accepted that Mr Li was his representative here in charge of the business and responsible for the day to day management decisions.  He said that these were regular phone conferences at 10am on Saturday morning at which Mr Li and Ms Jun Gu reported to him on the Australian business.  Mr Yao was unable to recall the address at which his wife and son resided in Australia, the business address of Universe or the name of any employees other than Mr Li.  He accepted that he had no direct involvement with Universe employees other than Mr Li.  A bundle of purchase orders between March 2006 and July 2007 were produced at the hearing on which a signature of Mr Yao had been appended.  Mr Yao could not recall signing these orders but assumed that he had been asked to sign them and did.  He accepted that, normally, he does not see purchase orders from Australia and felt it likely that these were signed during his visit to Australia in November 2007.  In his evidence, Mr Li acknowledged that these purchase orders were produced for Mr Yao to sign in November 2007 on the advice of his immigration agent.  It is noted that the majority of these orders were in English and Mr Yao confirmed that he cannot read the English language.

8. The legislation provisions relating to these applications are in s 134 of the Migration Act 1958 (the Act).  Insofar as in relevant the section provides:

(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).

…

(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.

…

(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.

9.      The first issue is whether Mr Yao has obtained a substantial ownership in an eligible business in Australia.  From 1 July 2005, he has acquired 51 percent of the shareholding in Universe and has invested some $485,000.  This is clearly a substantial ownership in an Australian business.  It is clear that Universe operates solely as an Australian outlet for goods manufactured by companies controlled by Mr Yao in China.  There was no evidence that this company satisfied the requirements of the definition of eligible business other than possibly paragraph (b).  It has no business links with the international market being simply a vehicle for the importing of products produced by Mr Yao in China.  Only in October 2007 did the company export a small amount of Australian manufactured goods to China.  It would appear likely that this was done in an attempt to demonstrate compliance with paragraph (c) of the definition.  However, this occurred some seven months after the cancellation of the visa.  It is clear that the Tribunal should have regard to events, actions or intentions prior to or at the time of cancellation decision.  It is not appropriate to take into account facts or events which occurred after that date.  There was no evidence that Universe satisfied paragraph (d), (e), or (f) of the definition of eligible business.

10.     Universe was said to currently employ 19 people including Ms Jun Gu.  However, there was no evidence of any change in the operations of the company as a result of the acquisition of 51 percent of the shareholding by Mr Yao in 2005.  The evidence of Mr Li was that there was no significant difference in the operations of Universe pre and post the change of shareholding in 2005.  On balance, I am unable to be satisfied that paragraph (b) of the definition of eligible business applies to Universe.  It is basically a convenient entity to deal with exports by Mr Yao’s companies from China to Australia.  It makes a relatively small profit on the sale of the products in Australia. 

11.     Even if I am wrong in my view that Universe is not an eligible business, it is necessary for Mr Yao to satisfy the second limb of s 134(1) of the Act in utilising his skills in actively participating at a senior level in the day to day management of Universe. He spent only three days in Australia on one visit during the period of more than three years of the currency of his visa. He has no knowledge of the address of Universe or the names of any of its employees other than Mr Li. He manages, on a clearly full time basis, a group of large companies in China. At most, his direct involvement in Universe is limited to a weekly telephone report by his nephew and delegate, Mr Li. As has been said in a number of earlier decisions of this Tribunal the purpose of the Act in providing for business visas is to attract migrants with business skills who will be primarily resident in Australia and utilise those skills in a direct day to day involvement in the management of an eligible business. It is clearly impossible for Mr Yao to satisfy this requirement. I am satisfied that the particular orders signed by Mr Yao were produced and signed some six months after the cancellation of his visa. They provided no evidence that he was aware of or dealt with such orders and their production at this hearing was a smoke screen at the suggestion of Mr Yao’s advisors.  It is clear that the day to day management of Universe is in the hands of Mr Li who simply reports to Mr Yao in the same way as managers of his other companies in China do on a regular basis.

12. The residual question in this case in relation to Mr Yao is whether having found that he does not satisfy the requirements of s 134(1) of the Act, discretion to cancel his business visa is the correct or preferable decision. Mr Yao stated that, if his visa cancellation was maintained he may need to focus his efforts in other countries and forget Australia. He believed that he could develop further exports from Australia, increase the turnover of Universe to $20 million and proceed with plans to build a new 10,000 square metre store here. He was somewhat vague as to whether or when he may move to Australia. It was clear that he could not manage his extensive interests in China from Australia and the Australian business is not currently generating a sufficient income and is unlikely to do so in the near future. I am satisfied that there is no prospect of Mr Yao moving to Australia and taking a hands on day to day involvement in Universe within the next five years and, likely, a much longer period. It seems likely that the primary reason for his seeking a business visa was for his children to be educated here.

13.     In this hearing, it was difficult to see the direct relevance of the evidence given by Mr Burbridge.  His involvement appears to have arisen from meeting Mr Yao’s son, Sun Yao, in 2007 after the cancellation of his visa.  He did not meet Mr Yao himself until only a week prior to the hearing.  From his extensive knowledge of the history, culture and people of China, Mr Burbridge said that he constructed a profile of Mr Yao and concluded that significant potential benefits will accrue to Australia from his continued engagement, involvement, industry expertise and business acumen.  Mr Burbridge had no direct knowledge of the operations of Universe or Mr Yao’s China companies and simply adopted what he had been told as to the current and future possible activities of Universe.  I am unable to accept the evidence of Mr Burbridge as being directly relevant to the matter before this Tribunal other than an apparent plea not to offend Mr Yao by cancelling his visa.

14. Having regard to my findings that Mr Yao did not, in March 2007, satisfy the requirements of s 134(1) of the Act and that he is unlikely to so satisfy those requirements in the foreseeable future, I am of the view that the discretion to cancel his business visa is the correct or preferable decision. He spent no time of any significance in Australia during the currency of his visa and is unlikely to do so in the near future. The business in which he has an ownership is primarily a vehicle through which his Chinese products are imported into Australia and this is likely to continue.

15. Having found that the decision to cancel the business visa of Mr Yao should be affirmed, the remaining issue is whether the visas of his wife, Ms Jun Gu, and his son, Mr Shun Yao, should be cancelled also. Pursuant to s 134(4) and (f), these visas must be cancelled unless the cancellation would result in extreme hardship to the holders.  It is clear that the word extreme was chosen by Parliament to require hardship at the high end of the scale.  It is accepted that the cancellation of a visa of any person who has resided for a period in Australia, developed a social life here and/or received part or the whole of his or her education here would result in the person finding it hard to readjust to life in their country of origin.  However, that hardship has to be demonstrated to be at the extreme level.

16.     All that is said by Ms Jun Gu in relation to this is in her witness statement, as follows:-

Since 6 October 2005, I have permanently based in Melbourne, and is [sic] currently the director of the company while following Mr. YAO YouQing’s directions through very close and constant communication.

Hence, cancelling our visas will make us feel utterly devastated since I have entirely concentrated on our business and family just for the purpose of migration to Australia.  I have already given up my career in China and started to re-establish my career with my husband in Universe Group Pty Ltd.

There was no evidence of what career Ms Jun Gu had in China nor any specific evidence of her role in Universe.  What is clear is that her husband has no present intention of migrating to Australia and re-establishing his career in Universe.  It is clear, also, that the cancellation of her visa will not involve financial hardship.  There is no basis for accepting that the cancellation will involve any significant hardship much less extreme hardship.

17.     No evidence was given by Shun Yao or by any other person in relation to his circumstance.  In response to the notice of intention to cancel his visa, the immigration agent stated in a letter of 4 December 2006:

Mr. YAO Shun, the son of Mr. YAO YouQing and Ms. GU Jun, is currently attending year 11 at Taylors College.  He is expected to sit for VCE examination in October 2007.

Mr. YAO Shun is a very diligent student who has achieved very good results in year 11, especially in English and General Mathematics.  (Kindly refer to Appendix 6) After Migrating to Australia, he has well established his social circle in Victoria and also it would be very hard for the child to re adjust to a different social and education environment again in China.  For instance, learning Chinese history and policies will be compulsory for the young children in China.  Since he has very minimal and exposure to these special subjects, it would be extremely difficult and unreasonable for him to pick up in a short period of time.  This will result that Mr. YAO Shun would delay one or two years to entry the university due to the fact that the completely different education system between China and Australia. 

Additionally, he now has a very close tie with Australia, including education, social and family life, it will be absolutely unfair and harsh to have his visa cancelled and resulted in extreme hardship for this young person.

The hardship suggested here is not unusual and to be expected for a young person who has attended education in Australia for a period.  It would appear by a letter from Taylors College attached to the immigration agent’s letter that Shun Yao commenced his studies on 29 September 2006, less than six months prior to the date of cancellation.  It is accepted that the cancellation may involve some emotional hardship and concern at delaying university entry but there will be no financial hardship and it is not possible to accept that his hardship could amount to extreme.

18.     It follows from the foregoing that each of the decision under review to cancel the visas of each of the applicants should be affirmed.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B.H. Pascoe, Senior Member

Signed:         Dianne Eva
  Clerk

Dates of Hearing  30 January 2008 & 6 February 2008
Date of Decision  9 April 2008
Advocate for the Applicant       Mr Wong, Immigration Agency
Solicitor for the Respondent     Mr Eteuati, Clayton Utz